10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

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: 001-35823

WRIGHT MEDICAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	13-4088127
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1023 Cherry Road, Memphis, Tennessee (Address of principal executive offices) 38117 (Zip code)

Registrant’s telephone number, including area code: (901) 867-9971

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.01 per share	NASDAQ Global Select Market
Contingent Value Rights	NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

þ Yes o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes þ No

Note —  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

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.             

þ 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).

þ Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

þ

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	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 þ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $1,055,285,164.

As of February 17, 2014, there were 49,547,524 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III is incorporated by reference from portions of the definitive proxy statement to be filed within 120 days after December 31, 2013, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the annual meeting of stockholders to be held on May 13, 2014.

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WRIGHT MEDICAL GROUP, INC.

ANNUAL REPORT ON FORM 10-K

Table of Contents

	Page
Part I
Item 1. Business.	1
Item 1A. Risk Factors.	12
Item 1B. Unresolved Staff Comments.	24
Item 2. Properties.	24
Item 3. Legal Proceedings.	24
Item 4. Mine Safety Disclosures.	26
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	27
Item 6. Selected Financial Data.	29
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.	50
Item 8. Financial Statements and Supplementary Data.	52
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	98
Item 9A. Controls and Procedures.	98
Item 9B. Other Information.	98
Part III
Item 10. Directors, Executive Officers and Corporate Governance.	99
Item 11. Executive Compensation.	99
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	99
Item 13. Certain Relationships and Related Transactions, and Director Independence.	99
Item 14. Principal Accounting Fees and Services.	99
Part IV
Item 15. Exhibits, Financial Statement Schedules.	100
Signatures	107
EX-10.8
EX 10.94
EX-12
EX-21
EX-23
EX-31.1
EX-31.2
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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SAFE-HARBOR STATEMENT

This Annual Report may contain “forward-looking statements” as defined under U.S. federal securities laws. These statements reflect management's current knowledge, assumptions, beliefs, estimates, and expectations and express management's current view of future performance, results, and trends. Forward looking statements may be identified by their use of terms such as anticipate, believe, could, estimate, expect, intend, may, plan, predict, project, will, and other similar terms. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to materially differ from those described in the forward-looking statements. The reader should not place undue reliance on forward-looking statements. Such statements are made as of the date of this Annual Report, and we undertake no obligation to update such statements after this date. Risks and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements are discussed in our filings with the Securities and Exchange Commission (including those described in Item 1A of this Annual Report on Form 10-K). By way of example and without implied limitation, such risks and uncertainties include:

• future actions of the SEC, the United States Attorney's office, the FDA, the Department of Health and Human Services or other U.S. or foreign government authorities, including those resulting from increased scrutiny under the Foreign Corrupt Practices Act and similar laws, that could delay, limit or suspend our development, manufacturing, commercialization and sale of products, or result in seizures, injunctions, monetary sanctions or criminal or civil liabilities;

• continued liability for product liability claims on OrthoRecon products sold prior to divestiture of our OrthoRecon business or for post-market regulatory obligations on such products;

• disruptions resulting from loss of personnel, systems and infrastructure changes and transition services arrangements in connection with our OrthoRecon divestiture;

• failure to realize the anticipated benefits from our acquisitions or from divestiture of our OrthoRecon business;

• adverse outcomes in existing product liability litigation;

• new product liability claims;

• inadequate insurance coverage;

• copycat claims against our modular hip systems resulting from a competitor's recall of its modular hip product;

• failure or delay in obtaining FDA approval of Augment^® Bone Graft for commercial sale in the United States;

• challenges to our intellectual property rights or inability to defend our products against the intellectual property rights of others;

• loss of a key suppliers;

• failures of, interruptions to, or unauthorized tampering with our information technology systems;

• failure or delay in obtaining FDA or other regulatory approvals for our products;

• any actual or alleged breach of the Corporate Integrity Agreement to which we are subject through September 2015, which could expose us to significant liability, including exclusion from Medicare, Medicaid and other federal healthcare programs, potential criminal prosecution, and civil and criminal fines or penalties;

• the potentially negative effect of our ongoing compliance enhancements on our relationships with customers and on our ability to deliver timely and effective medical education, clinical studies, and new products;

• the possibility of private securities litigation or shareholder derivative suits;

• insufficient demand for and market acceptance of our new and existing products;

• recently enacted healthcare laws and changes in product reimbursements which could generate downward pressure on our product pricing;

• potentially burdensome tax measures;

• lack of suitable business development opportunities;

• inability to capitalize on business development opportunities;

• product quality or patient safety issues;

• geographic and product mix impact on our sales;

• inability to retain key sales representatives, independent distributors and other personnel or to attract new talent;

• inventory reductions or fluctuations in buying patterns by wholesalers or distributors; and

• the negative impact of the commercial and credit environment on us, our customers and our suppliers.

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PART I

Item 1. Business.

Overview

Wright Medical Group, Inc., through Wright Medical Technology, Inc. (WMT) and other operating subsidiaries (Wright or we), is a global specialty orthopaedic company, that provides extremity and biologic solutions that enable clinicians to alleviate pain and restore their patients’ lifestyles. The company is the recognized leader of surgical solutions for the foot and ankle market, one of the fastest growing segments in medical technology, and markets its products in over 60 countries worldwide. 

Our business includes products that are used in foot and ankle repair, upper extremity products, and biologics products, which are used to replace damaged or diseased bone, to stimulate bone growth and to provide other biological solutions for surgeons and their patients. Extremity hardware includes implants and other devices to replace or reconstruct injured or diseased joints and bones of the foot, ankle, hand, wrist, fingers, toes, elbow and shoulder, which we generally refer to as either foot and ankle or upper extremity products. Our extensive foot and ankle product portfolio, our approximately 200 specialized foot and ankle sales representatives, and our increasing level of training of foot and ankle surgeons has resulted in us being a recognized leader in the foot and ankle market.

Our corporate headquarters and U.S. operations are located in Memphis, Tennessee, where we conduct research and development, sales and marketing administration, and administrative activities. Our manufacturing and warehousing operations are located in Arlington, Tennessee. Outside the U.S., we have distribution and administrative facilities in Amsterdam, the Netherlands, and sales and distribution offices in Canada, Australia, and throughout Europe.

For the year ended December 31, 2013, we had net sales of $242 million and net loss of $280 million on a continuing operation basis. As of December 31, 2013, we had total assets of $1.0 billion. Detailed information on our net sales by product line and our net sales, operating income and long-lived assets by geographic region can be found in Note 20 to the consolidated financial statements contained in “Financial Statements and Supplementary Data.”

On March 1, 2013, we completed our acquisition of BioMimetic Therapeutics, Inc. (BioMimetic). We previously announced plans on November 19, 2012 to acquire BioMimetic for an upfront purchase price of approximately $190 million in cash and stock plus additional milestone payments of up to approximately $190 million in cash, which are payable upon receipt of Food and Drug Administration (FDA) approval of Augment^® Bone Graft and upon achieving certain revenue milestones.

In conjunction with the closing of the transaction, we paid $30.8 million in cash, net of cash acquired, and approximately 7.0 million shares of Wright common stock and contingent value rights (CVRs) with a value of $70.1 million were issued. See Note 3 to our consolidated financial statements contained in “Financial Statements and Supplementary Data” for further information regarding this acquisition.

The transaction is intended to combine BioMimetic's biologics platform and pipeline with our established sales force and product portfolio, to further accelerate growth opportunities in our Extremities business. During the third quarter of 2013, we received a not approvable letter from the FDA in response to our Pre-Market Approval application for Augment^® Bone Graft. We filed an appeal with the FDA regarding its decision, and the FDA notified us it has elected to convene a Dispute Resolution Panel in May 2014 to consider the scientific issues in dispute before making a decision on our appeal.

On November 15, 2013, we completed our acquisition of Biotech International (Biotech). The transaction will significantly expand our direct sales channel in France and our international distribution network, and add Biotech's complementary extremity product portfolio to further accelerate global growth opportunities in our Extremities business. We previously announced plans on October 16, 2013 to acquire Biotech for an upfront purchase price of approximately $75 million in cash and stock, plus additional milestone payments of up to approximately $5 million in cash, which are payable upon the achievement of certain revenue milestones in 2014 and 2015.

In June 2013, we entered into a definitive agreement with MicroPort Scientific Corporation (MicroPort) under which MicroPort Medical B.V., a subsidiary of MicroPort, would acquire our hip/knee (OrthoRecon) business. On January 9, 2014, we completed the divestiture of our OrthoRecon business and received cash payment from MicroPort of approximately $287.1 million.

Our OrthoRecon business consisted of hip and knee implant products and generated global revenue of approximately $232 million in 2013. The OrthoRecon business has established hip and knee franchise brands including DYNASTY^® and CONSERVE^® hips, PROFEMUR^® modular stems, SUPERPATH^® minimally invasive hip surgical instrumentation, and ADVANCE^® and EVOLUTION^™ medial-pivot knee implants. We determined that the sale of the OrthoRecon business meets the criteria for classification as discontinued operations. As such, the financial results of our OrthoRecon business have been reflected within discontinued operations for all periods presented and the discussion below is on a continuing operations basis.

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Orthopaedic Industry

The total worldwide orthopaedic industry is estimated at approximately $29 billion in 2012. Six multinational companies currently dominate the orthopaedic industry, each with approximately $2 billion or more in annual sales. The size of these companies often allows them to concentrate their marketing and research and development efforts on products they believe will have a relatively high minimum threshold level of sales. As a result, there is an opportunity for a mid-sized orthopaedic company, such as Wright, to focus on less contested, higher-growth sectors of the orthopaedic market.

In recent years, we focused our efforts into growing our position in the higher-growth extremities market, and we believe this market will continue to grow by approximately 8-10% annually. We currently estimate the market for all surgical products used by extremity-focused surgeons to be over $3 billion in the U.S.

Orthopaedic devices are commonly divided into several primary sectors corresponding to the major product categories within the orthopaedic field: reconstruction; trauma; arthroscopy; spine; and biologics. We specialize in those products used by extremity focused surgeon specialists, which include products from the reconstruction, trauma and arthroscopy markets and biologic products.

Extremity Hardware. Extremity hardware includes implants and other devices to replace or reconstruct injured or diseased joints and bones of the foot, ankle, hand, wrist, fingers, toes, elbow and shoulder. Extremities hardware is one of the fastest growing market segments within orthopaedics with annual growth rates of 7-10%. Major trends in extremity hardware include procedure-specific and anatomy-specific devices, locking plates and an increase in total ankle arthroplasty procedures.

Foot and Ankle Hardware

Foot and ankle reconstruction includes implants and other devices to replace or reconstruct injured or diseased joints and bones in the foot and ankle. A large segment of the foot and ankle hardware market is comprised of plating and screw systems for reconstructing and fusing joints or repairing bones after traumatic injury. Major trends in foot and ankle hardware include the use of external fixation devices in diabetic patients, total ankle arthroplasty, and advanced tissue fixation devices and biologics. According to various customer and market surveys, we are deemed the market leader in foot and ankle surgical products. New technologies have been introduced into the foot and ankle hardware market in recent years including next generation total ankle replacements. Many of these technologies currently have low levels of market penetration. We believe that adoption of these technologies, total ankle replacement in particular, could result in significant future growth in the foot and ankle hardware market. In 2012, we expanded our INBONE^® Ankle system to offer the first-to-market PROPHECY^® Pre-Operative Navigation Technology for total ankle replacement to complement our INBONE^® II Total Ankle system that offers multiple implant options with different articular geometry. In 2012, we launched our CLAW^® II Polyaxial Compression and the ORTHOLOC^® Plating Systems utilizing our 3Di polyaxial locking technology further expanding our market leading Foot and Ankle portfolio.

Upper Extremity Reconstruction

Upper extremity reconstruction involves implanting devices to replace, reconstruct, or fixate injured or diseased joints and bones in the hand, wrist, elbow and shoulder. It is estimated that approximately 60% of the upper extremity hardware market is in total shoulder replacement implants. Major trends in upper extremity hardware include minimally invasive fracture repair devices and next generation joint arthroplasty systems. We are the market leader in several segments of the upper extremity market including finger joints, radial head replacement, ulnar shortening systems and intramedullary wrist fracture repair devices with our EVOLVE^® Elbow Plating System and the market-leading EVOLVE^® Modular Radial Head Prosthesis, and the new comprehensive EVOLVE^® TRIAD^™ Fixation System designed as one system to manage complex “terrible triad” injuries to the elbow.

Biologics Market. Biologic products use both biological tissue-based and synthetic materials to allow the body to regenerate damaged or diseased bone and to repair damaged or diseased soft tissue. These products aid the body's natural regenerative capabilities to heal itself, minimizing or delaying the need for invasive implant surgery.

Our biologic products are primarily used in extremity-related procedures as well as in trauma-induced voids of the long bones and some spine procedures. Biologic products provide a lower morbidity solution to “autografting,” a procedure that involves harvesting a patient's own bone or soft tissue and transplanting it to a different site. Following an autografting procedure, the patient typically has pain, and at times, complications result at the harvest site after surgery.

Currently, there are three main types of biological bone grafting products: osteoconductive; osteoinductive; and osteogenic. Each category refers to the way in which the materials affect bone growth. Osteoconductive materials serve as a scaffold that supports the formation of bone but do not “induce” or trigger new bone growth, whereas osteoinductive materials induce bone growth. Osteogenic materials combine the osteoinductive materials with a cell-based component. Our flagship, PRO-DENSE^® injectable regenerative graft is an osteoconductive bone graft that provides the benefits of injectability, hardness to support bone and predictable bone regeneration. Our PRO-STIM^® osteoinductive bone graft substitute is a graft that is injected through a small needle, hardens, and will be replaced by the patient's new bone over time. Products such as our GRAFTJACKET^® regenerative tissue matrix, offer a market-leading material for soft-tissue reinforcement for orthopaedic and podiatric soft-tissue reconstructive procedures.

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In March 2013, we acquired BioMimetic Therapeutics, Inc. to further accelerate our biologic growth opportunities in our extremities business. Specifically, BioMimetic's Augment^® product line, if approved by the FDA, will provide us with a unique solution for hindfoot and ankle fusions. Augment^® is based on recombinant human platelet-derived growth factor (rhPDGF-BB), a synthetic copy of one of the body's principal healing agents. During the third quarter of 2013, we received a not approvable letter from the FDA in response to our Pre-Market Approval application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. We have filed an appeal with the FDA regarding its decision. On October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. The Dispute Resolution Panel is scheduled for May 2014.

Government Regulation

United States

Our products are strictly regulated by the FDA under the Food, Drug, and Cosmetic Act (FDC Act). Some of our products are also regulated by state agencies. FDA regulations and the requirements of the FDC Act affect the pre-clinical and clinical testing, design, manufacture, safety, efficacy, labeling, storage, recordkeeping, advertising and promotion of our medical device products. Our tissue-based products are subject to FDA regulations, the National Organ Transplant Act (NOTA) and various state agency regulations. We are an accredited member of the American Association of Tissue Banks (AATB) and an FDA registered tissue establishment, which includes the packaging, processing, storage, labeling and distribution of tissue products regulated as medical devices and the storage and distribution of tissue products regulated solely as human cell and tissue products. In addition, we maintain tissue bank licenses in Florida, Maryland, New York, California and Oregon.

Generally, before we can market a new medical device, marketing clearance from the FDA must be obtained through either a premarket notification under Section 510(k) of the FDC Act or the approval of a premarket approval (PMA) application. The FDA typically grants a 510(k) clearance if the applicant can establish that the device is substantially equivalent to a predicate device. It usually takes about three months from the date of a 510(k) submission to obtain clearance, but it may take longer, particularly if a clinical trial is required. The FDA may find that a 510(k) is not appropriate or that substantial equivalence has not been shown and, as a result, require a PMA application.

PMA applications must be supported by valid scientific evidence to demonstrate the safety and effectiveness of the device, typically including the results of human clinical trials, bench tests and laboratory and animal studies. The PMA application must also contain a complete description of the device and its components, and a detailed description of the methods, facilities and controls used to manufacture the device. In addition, the submission must include the proposed labeling and any training materials. The PMA application process can be expensive and generally takes significantly longer than the 510(k) process. Additionally, the FDA may never approve the PMA application. As part of the PMA application review process, the FDA generally will conduct an inspection of the manufacturer's facilities to ensure compliance with applicable quality system regulatory requirements, which include quality control testing, documentation control and other quality assurance procedures.

If human clinical trials of a medical device are required and the device presents a significant risk, the sponsor of the trial must file an investigational device exemption (IDE) application prior to commencing human clinical trials. The IDE application must be supported by data, typically including the results of animal and/or laboratory testing. If the IDE application is approved by the FDA and one or more institutional review boards (IRBs), human clinical trials may begin at a specific number of institutional investigational sites with the specific number of patients approved by the FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA. Submission of an IDE does not give assurance that the FDA will approve the IDE. If it is approved, there can be no assurance the FDA will determine that the data derived from the trials support the safety and effectiveness of the device or warrant the continuation of clinical trials. An IDE supplement must be submitted to and approved by the FDA before a sponsor or investigator may make a change to the investigational plan in such a way that may affect its scientific soundness, study indication or the rights, safety or welfare of human subjects. The trial must also comply with the FDA's IDE regulations, and informed consent must be obtained from each subject.

The FDA has statutory authority to regulate allograft-based products, processing and materials. The FDA and other international regulatory agencies have been working to establish more comprehensive regulatory frameworks for allograft-based tissue-containing products, which are principally derived from human cadaveric tissue. The framework developed by the FDA establishes risk-based criteria for determining whether a particular human tissue-based product will be classified as human tissue, a medical device or a biologic drug requiring premarket clearance or approval. All tissue-based products are subject to extensive FDA regulation, including establishment registration requirements, product listing requirements, good tissue practice requirements for manufacturing and screening requirements that ensure that diseases are not transmitted to tissue recipients. The FDA has also proposed extensive additional requirements that address sub-contracted tissue services, tracking to the recipient/patient and donor records review. If a tissue-based product is considered human tissue, the FDA requirements focus on preventing the introduction, transmission and spread of communicable diseases to recipients. Neither clinical data nor review of safety and efficacy is required

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before the tissue can be marketed. However, if the tissue is considered a medical device or a biologic drug, then FDA clearance or approval is required.

The FDA and international regulatory authorities periodically inspect us for compliance with regulatory requirements that apply to our operations. These requirements include labeling regulations, manufacturing regulations, quality system regulations, regulations governing unapproved or off-label uses and medical device regulations. Medical device regulations require a manufacturer to report to the FDA serious adverse events or certain types of malfunctions involving its products.

Most of our products are FDA cleared through the 510(k) premarket notification process. We have conducted clinical trials to support some of our regulatory approvals. Regulations regarding the manufacture and sale of our products are subject to change. We cannot predict the effect, if any, that these changes might have on our business, financial condition and results of operations. If the FDA believes that we are not in compliance with the FDC Act, it can institute proceedings to detain or seize products, issue a market withdrawal, enjoin future violations and/or seek civil and criminal penalties against us and our officers and employees. If we fail to comply with these regulatory requirements, our business, financial condition and results of operations could be harmed.

In 2010, WMT entered into a 12-month Deferred Prosecution Agreement (DPA) with the United States Attorney's Office for the District of New Jersey (USAO). This DPA was extended for another 12 months in 2011. WMT also entered into a five-year Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the United States Department of Health and Human Services (OIG-HHS). We are continuing to enhance our Corporate Compliance Program and are applying these enhancements on a global basis. We monitor our practices on an ongoing basis to ensure that we have proper controls in place to comply with applicable laws in the jurisdictions in which we do business. Our failure to maintain compliance with United States healthcare regulatory laws could expose us to significant liability including, but not limited to, exclusion from federal healthcare program participation, including Medicaid and Medicare, civil and criminal fines or penalties and additional litigation cost and expense.

Further, we are subject to various federal and state laws concerning healthcare fraud and abuse, including false claims laws, anti-kickback laws and physician self-referral laws. Violations of these laws can result in criminal and/or civil punishment, including fines, imprisonment and, in the United States, exclusion from participation in government healthcare reimbursement programs. If a governmental authority were to determine that we do not comply with these laws and regulations, then we and our officers and employees could be subject to criminal and civil penalties.

In March 2010, comprehensive health care reform legislation in the form of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (the Affordable Care Act) was enacted. Among other provisions, these bills impose a 2.3% excise tax on U.S. sales of medical devices following December 31, 2012. In 2013, we recognized approximately $2.6 million of costs for the medical device excise tax. The Affordable Care Act also includes numerous provisions to limit Medicare spending through reductions in various fee schedule payments and by instituting more sweeping payment reforms, such as bundled payments for episodes of care and the establishment of “accountable care organizations” under which hospitals and physicians will be able to share savings that result from cost control efforts. Many of these provisions will be implemented through the regulatory process, and policy details have not yet been finalized.

International

All of our products sold internationally are subject to certain foreign regulatory approvals. We must comply with extensive regulations governing product safety, quality, manufacturing and reimbursement processes in order to market our products in all major foreign markets. These regulations vary significantly from country to country and with respect to the nature of the particular medical device. The time required to obtain foreign approvals to market our products may be longer or shorter than the time required in the United States, and requirements for such approvals may differ from FDA requirements.

To market our product devices in the member countries of the European Union (EU), we are required to comply with the European Medical Device Directives and to obtain CE mark certification. CE mark certification is the European symbol of adherence to quality assurance standards and compliance with applicable European Medical Device Directives. Under the European Medical Device Directives, all medical devices including active implants must qualify for CE marking. We also are required to comply with other foreign regulations, such as obtaining Ministry of Health Labor and Welfare (MHLW) approval in Japan, Health Protection Branch (HPB) approval in Canada and Therapeutic Goods Administration (TGA) approval in Australia.

General initiatives sponsored by government agencies, legislative bodies and the private sector to limit the growth of healthcare expenses generally and hospital costs in particular, including price regulation and competitive pricing, are ongoing. It is not possible to predict the impact of such cost containment measures on our future business.

Products

We operate our continuing operations as one reportable segment and offer products in the following market sectors: extremity reconstruction and biologics. Our business includes products that are used primarily in foot and ankle repair, upper extremity products, and biologics products, which are used to replace damaged or diseased bone, to stimulate bone growth and to provide

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other biological solutions for surgeons and their patients. Sales in each of these markets represent greater than 10% of our consolidated revenues from continuing operations. Detailed information on our net sales by product line can be found in Note 20 to the consolidated financial statements contained in “Financial Statements and Supplementary Data.” Our discontinued operations, the OrthoRecon business, includes products that are used primarily to replace or repair knee and hip that have deteriorated or have been damaged through disease or injury.

Extremity Hardware

We offer extremity products for the foot and ankle and upper extremities in a number of markets worldwide. Some of our extremity implants have over 40 years of successful clinical history. We are a recognized leader in the United States and German markets for foot and ankle surgical products. Additionally, we hold significant positions in several segments of the upper extremity market such as radial head repair, finger joint replacements and intramedullary wrist fracture implants.

Foot and Ankle Hardware

Our CHARLOTTE^® foot and ankle system is an extensive offering of fixation products for foot and ankle surgery and includes products that feature advanced design elements for simplicity, versatility and high performance. The CHARLOTTE^® portfolio includes the CLAW^® Compression plate, the first ever locking compression plate designed for corrective foot surgeries. Originally introduced by Wright in 2007, the CLAW^® Compression Plate system combined locked plating fixation with the stability of mechanical compression typical of compression staples.

In February 2012, we introduced the CLAW^® II Compression Plating System. The third-generation system expanded our plate and screw offering by introducing anatomic plates specifically designed for fusions of the midfoot. The new CLAW^® II Polyaxial Compression Plating system incorporates variable-angle locking screw technology.

The DARCO^® foot and ankle plating systems were designed to address the specific needs of reconstructive foot and ankle surgery. The DARCO^® MFS and MRS plates were the first implants to incorporate fixed angle, locking screw technology into a comprehensive fixation set for foot surgery. Surgeons believe that surgical repairs are more stable with locking screw technology.

Our INBONE^® II total ankle system represents the third generation in ankle replacement implants, utilizing a patented intramedullary alignment mechanism for more accurate placement of the implant. The unique modular nature of the implant allows the surgeon to tailor the fixation stems for the tibial and talar components in order to maximize stability of the implant. Accuracy of placement and implant stability have been shown to be key factors impacting longevity of the implant. We believe the INBONE^® system represents key advances in these critical arenas. Additionally, the INBONE^® II implant system is the only ankle replacement that offers surgeons multiple implant options with different articular geometry. These highly anatomic implants are intended to permit the surgeon to tailor the amount of implant constraint or motion based upon the patient's unique anatomical demands.

In June 2012, we introduced the PROPHECY^® INBONE^® Pre-Operative Navigation Alignment Guides. Initially developed by Wright Medical for total knee replacement, the PROPHECY^® Pre-Operative Navigation Alignment Technology utilizes computed tomography (CT) scans to create patient-specific ankle alignment guides that facilitate the surgeon's ability to precisely size, place and align the INBONE^® Total Ankle Replacement components during surgery. Wright is the first, and currently the only, company to offer pre-operative navigation for total ankle replacement.

Our ORTHOLOC^® 3Di plating system provides foot and ankle surgeons a comprehensive line of plates and screws to address most deformities of the foot and ankle. This next generation system provides multiple screw options and includes Wright's ORTHOLOC^® 3Di polyaxial locking technology, which enables the surgeon to adjust the screw trajectory to meet the anatomic requirements of the patient while providing a strong locking construct to promote bone fixation. In January 2012, we introduced the ORTHOLOC^® 3Di Ankle Fracture system, which is a comprehensive single-tray ankle fracture solution designed to address a wide range of fracture types. This system provides the surgeon with multiple anatomically-contoured plates and a comprehensive set of instrumentation. This technology coupled with the single tray design, decreases logistical complications in the operating room and enables the surgeon to match the appropriate implant construct with the patient and fracture type.

In July 2012, we introduced the ORTHOLOC^® 3Di Reconstruction Plating System. The system includes a number of anatomical plates, screws and specialized surgical instrumentation used for fracture fixation, osteotomies, and fusions of the foot. The new ORTHOLOC^® 3Di Reconstruction System offers surgeons a wide range of plate designs to address some of the most common procedures performed by foot and ankle surgeons, including bunion reconstruction and fusions of the first toe.

In November 2012, we expanded the ORTHOLOC^® 3Di Reconstruction Plating System with the introduction of the ORTHOLOC^® 3Di Midfoot Plating System. This new system provides surgeons with anatomic plates and instrumentation designed specifically for fusions of the midfoot.

The PRO-TOE^® VO Hammertoe Fixation system is designed to offer a simple and efficient means to surgically repair the lesser toes following correction of a hammertoe deformity. While a sizeable proportion of these surgeries are treated conventionally with pins, the PRO-TOE^® VO Hammertoe implant provides a stable and efficient alternative surgical solution for the deformity. The

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system arrives in the operating room as a single, sterile-packed unit, which can increase the efficiency of the procedure while removing costly cleaning and processing of a standard reusable instrument set. Additionally, the implant is fabricated from stainless steel, which simplifies the procedure by eliminating the freezer storage and special instruments required for other implant alternatives.

In October 2012, we expanded our PRO-TOE^® VO System by introducing six new implant sizes and refined instrumentation. These new product offerings, when coupled with the original implant sizes, provide surgeons with an array of implants to address the individual anatomic variations from patient to patient.

The BIOFOAM^® Wedge System is designed for corrective osteotomies of the foot. The BIOFOAM^® Cancellous Titanium material mimics the strength and flexibility of human bone, while providing an ideal environment for rapid bone in-growth and sustained rigid fixation. BIOFOAM^® wedges are sized specifically for bone corrective procedures popular for treating patients with flatfoot deformity. The sterile BIOFOAM^® wedges eliminate the risk of adverse immune response associated with traditional allografts or the patient morbidity associated with autograft harvest - the current standard of care for these procedures. Additionally, with pre-configured implants and sizing trials, BIOFOAM^® wedges eliminate the timely process of shaping traditional grafts for proper fit.

The VALOR^® TTC fusion nail provides surgeons with a solution for fusing the calcaneal, talar and tibial bones required in patients suffering from severe ankle arthritis. In addition to the INBONE^® total ankle replacement system, the VALOR^® fusion nail provides foot and ankle surgeons with what we believe to be the most compelling portfolio for treating patients with varying degrees of ankle arthritis.

Our SIDEKICK^® line of external fixators is designed to facilitate compression or distraction of bones in the foot from “the outside in” and in a minimally invasive manner. In many cases, surgeons will opt for the minimally invasive nature of “external fixation” versus more invasive plate and screw “internal fixation.” One growing application of our SIDEKICK^® is where small incisions are preferred due to wound healing issues present with these patients.

Other products in our foot and ankle portfolio include our BIOARCH^® subtalar arthroereisis implant, our line of AM^™ Surgical foot and ankle endoscopic tissue release products, and our line of Swanson toe joints.

Upper Extremity Hardware

Our EVOLVE^® modular radial head replacement prosthesis addresses the need for modularity in the anatomically highly-variable joint of the elbow and is the market leading radial head prosthesis. The EVOLVE^® modular radial head device provides different combinations of heads and stems allowing the surgeon to choose implant heads and stems to accommodate the unpredictable anatomy of each patient. The smooth stem design allows for rotational motion at the implant and bone interface and for radiocapitellar articulation. In March 2012, we released EVOLVE^® TRIAD^™ radial head plating system for surgeons who wish to repair rather than replace the damaged radial head. The EVOLVE^® TRIAD^™ system includes anatomically contoured radial head and radial neck plates featuring the ORTHOLOC^® Polyaxial Locking Technology to enable optimal screw placement. With prostheses and plating, we have a comprehensive product offering for repair of radial head fractures.

In February 2011, we announced the commercial release of our EVOLVE^®Elbow Plating System (EPS) to address fractures of the distal humerus and proximal ulna. Composed of polished stainless steel, the system was designed to accurately match the patient anatomy to reduce the need for intra-operative bending while providing a low profile design to minimize post-operative irritation. All plates incorporate our advanced ORTHOLOC^® Polyaxial Locking Technology, which allows the surgeon to place screws in the best possible trajectory and then to solidly lock the screws to the plate providing greater stability.

Our line of Swanson finger joints is used in finger joint replacement for patients suffering from rheumatoid arthritis of the hand. With nearly 40 years of clinical success, Swanson digit implants are a foundation in our upper extremity business and are used by a loyal base of hand surgeons worldwide.

Our MICRONAIL^® II intramedullary wrist fracture repair system is a next-generation minimally invasive treatment for distal radius fractures that provides immediate fracture stabilization with minimal soft tissue disruption. Also, as the nail is implanted within the bone, it has no external profile on top of the bone, thereby reducing the potential for tendon irritation or rupture, which is an appreciable problem with conventional plates designed to lie on top of the bone.

Our RAYHACK^® system is comprised of a series of precision cutting guides and procedure-specific plates for ulnar and radial shortening procedures and the surgical treatment of radial malunions and Keinbock’s Disease.

Biologics

We offer a broad line of biologic products that are used to support treatment of damaged or diseased bone, tendons and soft tissues and other biological solutions for surgeons and their patients. These products focus on supporting biological musculoskeletal repair

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by utilizing synthetic and human tissue-based materials. Internationally, we offer a bone graft product incorporating antibiotic delivery.

GRAFTJACKET^® matrix is a human-derived soft tissue graft designed for augmentation of tendon and ligament repairs such as those of the rotator cuff in the shoulder and achilles tendon in the ankle. By augmenting the strength of the tendon repair and the body incorporating it biologically, GRAFTJACKET^® regenerative tissue matrix may increase surgeons’ confidence in the surgical outcome. GRAFTJACKET^® Maxforce Extreme is our thickest GRAFTJACKET^® matrix, which provides excellent suture holding power for augmenting challenging tendon and ligament repairs. We procure our GRAFTJACKET^® product through an exclusive distribution agreement that expires December 31, 2018.

We sell our PRO-DENSE^® injectable graft in the United States and select international markets. PRO-DENSE^® injectable graft is a composite graft of surgical grade calcium sulfate and calcium phosphate. In animal studies, this unique graft composite has demonstrated excellent bone regenerative characteristics, forming new bone that is over three times stronger than the natural surrounding bone at the 13-week time point. Beyond 13 weeks, the regenerated bone gradually remodels to natural bone strength. PRO-STIM^® injectable inductive graft is built on the PRO-DENSE^® material platform, but adds demineralized bone matrix (DBM) for osteoinductive potential. PRO-STIM^® graft has demonstrated accelerated healing compared to autograft in pre-clinical testing. Since the mechanism of action is different from PRO-DENSE^® graft, PRO-STIM^® graft will allow us to expand the applicable procedures for the material platform to more challenging bone defects.

In April 2011, we announced the commercial release of our FUSIONFLEX^™ Demineralized Moldable Scaffold. FUSIONFLEX^™ scaffold is a novel form of allograft demineralized bone and is designed for use in conjunction with hardware in foot and ankle fusion procedures as well as other orthopaedic bone grafting applications. Our FUSIONFLEX^™ product is available through a supply and distribution agreement with Allosource^®.

Our OSTEOSET^® bone graft substitute is a synthetic bone graft substitute made of surgical grade calcium sulfate. As a pure synthetic, OSTEOSET^® pellets are cleared for use in infected sites, an advantage over tissue-based material. The human body resorbs the OSTEOSET^® material at a rate close to the rate that new bone grows. We offer surgeons the option of custom-molding their own beads in the operating room using the OSTEOSET^® resorbable bead kit, which is available in mixable powder form. OSTEOSET^® 2 DBM graft is a unique bone graft substitute incorporating DBM into OSTEOSET^® surgical-grade calcium sulfate pellets. These two bone graft materials, each with a long clinical history, provide an ideal combination of osteoinduction via osteoinductive DBM in OSTEOSET^® DBM and osteoconduction for guided bone regeneration. Our surgical grade calcium sulfate is manufactured using proprietary processes that consistently produce a high quality product. Our OSTEOSET^® T medicated pellets, which contain tobramycin, are currently one of the few resorbable bone void fillers used by physicians in international markets for the prevention and treatment of osteomyelitis, an acute or chronic infection of the bone.

ALLOMATRIX^® injectable putty combines a high content of DBM with our proprietary surgical grade calcium sulfate carrier. The combination provides an injectable putty with the osteoinductive properties of DBM, as well as exceptional handling qualities. Another combination we offer is ALLOMATRIX^® C bone graft putty, which includes the addition of cancellous bone granules. The addition of the bone granules increases the stiffness of the material and thereby improves handling characteristics, increases osteoconductivity scaffold and provides more structural support. Our ALLOMATRIX^® custom bone graft putty allows surgeons to customize the amount of bone granules to add to the putty based on its surgical application. ALLOMATRIX^® DR graft, which is ALLOMATRIX^® putty that has been optimized for application in smaller fractures due to the smaller particle size of its cancellous bone granules and the application-specific volume in which it is marketed.

We have a supply agreement with RTI Biologics, Inc. to develop advanced implants for use in foot and ankle surgeries. Under this agreement, we offer our CANCELLO-PURE^® bone wedge line as well as the ALLOPURE^® allograft bone wedges, which offer surgeons off-the-shelf, sterile grafts with appropriate handling characteristics. The ease of use and time savings in the operating room have made this product line an attractive option to foot and ankle surgeons and expand our offering in this key surgical area of need.

The Augment^® product line is based on recombinant human platelet-derived growth factor (rhPDGF-BB), a synthetic copy of one of the body’s principal healing agents. The product is currently available for sale as an alternative to autograft in Canada for foot and ankle fusion indications and in Australia and New Zealand for hindfoot and ankle fusion indications.

Product Development

Our research and development staff focuses on developing new products in the extremity hardware and biologics markets and on expanding our current product offerings and the markets in which they are offered. In addition, we maintain close working relationships with physicians and medical personnel in hospitals and universities who assist in product research and development. Realizing that new product offerings are a key to future success, we are committed to a strong research and development program. In addition, we have clinical and regulatory departments devoted to verifying the safety and efficacy of our products according to regulatory standards enforced by the FDA and other international regulatory bodies. Our research and development expenses totaled $20.3 million, $13.9 million and $15.4 million in 2013, 2012 and 2011, respectively. The increase in 2013 is primarily

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attributable to increased spending associated with the acquired BioMimetic activities, primarily related to the FDA approval of Augment^® Bone Graft and ongoing clinical studies to support the safety and efficacy of Augment^® Bone Graft.

In the extremity hardware areas, our research and development activities focus on building upon our already comprehensive portfolios of surgical solutions for extremity focused surgeons, including procedure and anatomy specific products. With the ultimate goal of addressing unmet clinical needs, we often pursue multiple product solutions for a particular application in order to offer surgeons the ability either to use their preferred procedural technique or to provide options and flexibility in the surgical setting with the understanding that one solution does not work for every case.

In the biologics area, we have research and development projects underway that are designed to provide differentiation of our advanced materials in the marketplace. We are particularly focused on the integration of our biologic product platforms into extremity procedures. In 2013, we launched the extremity and biologic product ALLOPURE^® Plus Allograft Bone Wedges.

Manufacturing, Facilities and Quality

We operate a state of the art manufacturing facility in Arlington, Tennessee. We lease the manufacturing facility from the Industrial Development Board of the Town of Arlington. At this facility, we primarily produce orthopaedic implants and some related surgical instrumentation while utilizing lean manufacturing philosophies. The majority of our surgical instrumentation is produced to our specifications by qualified subcontractors who serve medical device companies. We recently began construction of an expansion of our manufacturing facility, which will be completed during the second quarter of 2014. Our present manufacturing facility is adequate for our projected needs until completion of this expansion, which will then provide capacity for our production and distribution needs in the upcoming years.

We maintain a comprehensive quality system that is certified to the European standards ISO 9001 and ISO 13485 and to the Canadian Medical Devices Conformity Assessment System (CMDCAS). We are accredited by the AATB and have registrations with the FDA as a medical device establishment and as a tissue establishment. These certifications and registrations require periodic audits and inspections by various regulatory entities to determine if we have systems in place to ensure our product is safe and effective for its intended use and that we are compliant with applicable regulatory requirements. The quality system exists so that management has the proper oversight, designs are evaluated and tested, production processes are established and maintained and monitoring activities are in place to ensure products are safe, effective and manufactured according to our specifications. Consequently, our quality system provides the way for us to ensure we design and build quality into our products while meeting global requirements. We are committed to meet or exceed customer needs as we improve patient outcomes.

Supply

We rely on a limited number of suppliers for the components used in our products. We rely on one supplier for the silicone elastomer used in certain of our extremity products. We are aware of only two suppliers of silicone elastomer to the medical device industry for permanent implant usage. For certain biologic products, we depend on one supplier of demineralized bone matrix (DBM), and cancellous bone matrix (CBM). We rely on one supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products and one supplier for our xenograft bone wedge product. We maintain adequate stock from these suppliers to meet market demand. We currently rely on one supplier for a key component of our Augment^® Bone Graft. In December 2013, this supplier notified us of their intent to terminate the supply agreement at the end of the current term, which is December 2015. They are contractually required to meet our supply requirements until the termination date, and to use commercially reasonable efforts to assist us in identifying a new supplier and support the transfer of technology and supporting documentation to produce this component. See Item 1A, Risk Factors, for further information on our suppliers.

Sales, Marketing, and Medical Education

Our sales and marketing efforts are focused primarily on orthopaedic, trauma, and podiatric surgeons. Orthopaedic surgeons focused on the extremities in many instances have completed foot and ankle or upper extremity fellowship programs. Due to the nature of specialized training surrounding podiatric and orthopaedic surgeons focused on extremities, our target market is well defined. Historically, the surgeon is the primary decision-maker in orthopaedic device purchases.

We offer clinical symposia and seminars, and publish advertisements and the results of clinical studies in industry publications. We also offer surgeon-to-surgeon education on our products using our surgeon advisors in an instructional capacity. We have contractual relationships with surgeon educators, who help us train other surgeons in the safe and effective use of our products and help other surgeons perfect new surgical techniques. Additionally, approximately 16,000 practicing orthopaedic surgeons in the U.S. receive information on our latest products through our distribution network, our website and brochure mailings.

We sell our products in the U.S. through a sales force of approximately 350 people. This sales force primarily consists of direct, commission-based sales representatives and distributors/sales agents engaged principally in the business of supplying orthopaedic products to hospitals in their geographic areas. Approximately 48% of our sales force is directly employed by us through a group of corporate sales representatives in select locations throughout the U.S. Our U.S. field sales force is supported by our Tennessee-based sales and marketing organization. We also have working relationships with healthcare dealers including group purchasing

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organizations, healthcare organizations, and integrated distribution networks.

During 2012, as a result of our effort to convert several independent distributor territories to direct sales representation, we increased our foot & ankle direct sales representatives to 80%, or 160 direct employees. As of December 31, 2013, we have approximately 200 focused foot and ankle sales representatives, consisting of 160 direct and 40 indirect. Our independent distributors, independent sales representatives and direct sales representatives are provided opportunities for product training throughout the year.

We believe our success in every market sector is dependent upon having a robust and compelling product offering, and equally as important, a dedicated, highly trained, focused sales organization to service the customer. In 2013, we trained over 2,100 surgeons on our foot & ankle products, as well as over 130 upper extremity surgeons.

Our products are marketed internationally through a combination of direct sales offices (subsidiaries) in certain key international markets and distributors in other markets. We have subsidiaries in the United Kingdom, Germany, Italy, Canada and Australia that employ direct sales employees and in some cases use independent sales representatives to sell our products in their respective markets. Our products are sold in other countries in Europe, Asia, Africa and Latin America using stocking distribution partners. Stocking distributors purchase products directly from us for resale to their local customers, with product ownership generally passing to the distributor upon shipment.

Seasonal Nature of Business

We traditionally experience lower sales volumes in the third quarter than throughout the rest of the year as many of our reconstructive products are used in elective procedures, which generally decline during the summer months, typically resulting in selling, general and administrative expenses and research and development expenses as a percentage of sales that are higher during this period than throughout the rest of the year. In addition, our first quarter selling, general and administrative expenses include additional expenses that we incur in connection with the annual meeting held by the American College of Foot and Ankle Surgeons (ACFAS). During this three-day event, we display our most recent and innovative products in the foot and ankle market.

Competition

Competition in the orthopaedic device industry is intense and is characterized by extensive research efforts and rapid technological progress. Competitors include major companies in the orthopaedic and biologics industries, as well as academic institutions and other public and private research organizations that continue to conduct research, seek patent protection and establish arrangements for commercializing products that will compete with our products.

The primary competitive factors facing us include price, quality, innovative design and technical capability, clinical results, breadth of product line, scale of operations and distribution capabilities. Our ability to compete is affected by our ability to accomplish the following:

• Develop new products and innovative technologies;

• Obtain and maintain regulatory clearance and reimbursement for our products;

• Manufacture and sell our products cost-effectively;

• Meet all relevant quality standards for our products and their markets;

• Respond to competitive pressures specific to each of our geographic markets, including our ability to enforce non-compete agreements;

• Protect the proprietary technology of our products and manufacturing processes;

• Market and promote our products;

• Continue to maintain a high level of medical education for our surgeons on our products;

• Attract and retain skilled employees and focused sales representatives; and

• Support our technology and with clinically relevant studies.

Intellectual Property

We currently own or have licenses to use more than 350 patents and pending patent applications throughout the world. We seek to aggressively protect technology, inventions and improvements that we consider important through the use of patents and trade secrets in the United States and significant foreign markets. We manufacture and market products under both patents and license agreements with other parties. These patents and license agreements have a defined life and expire from time to time.

Our knowledge and experience, creative product development, marketing staff and trade secret information, with respect to manufacturing processes, materials and product design, are as important as our patents in maintaining our proprietary product lines. As a condition of employment, we require all employees to execute a confidentiality agreement with us relating to proprietary information and patent rights.

There can be no assurances that our patents will provide competitive advantages for our products or that competitors will not challenge or circumvent these rights. In addition, there can be no assurances that the United States Patent and Trademark Office (USPTO) will issue any of our pending patent applications. The USPTO may deny or require a significant narrowing of the claims

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in our pending patent applications and the patents issuing from such applications. Any patents issuing from the pending patent applications may not provide us with significant commercial protection. We could incur substantial costs in proceedings before the USPTO. These proceedings could result in adverse decisions as to the priority of our inventions and the narrowing or invalidation of claims in issued patents. Additionally, the laws of some of the countries in which our products are or may be sold may not protect our intellectual property to the same extent as the laws in the United States or at all.

While we do not believe that any of our products infringe any valid claims of patents or other proprietary rights held by others, there can be no assurances that we do not infringe any patents or other proprietary rights held by them. If our products were found to infringe any proprietary right of another party, we could be required to pay significant damages or license fees to such party and/or cease production, marketing and distribution of those products. Litigation may also be necessary to defend infringement claims of third parties or to enforce patent rights we hold or to protect trade secrets or techniques we own.

We also rely on trade secrets and other unpatented proprietary technology. There can be no assurances that we can meaningfully protect our rights in our unpatented proprietary technology or that others will not independently develop substantially equivalent proprietary products or processes or otherwise gain access to our proprietary technology. We seek to protect our trade secrets and proprietary know-how, in part, with confidentiality agreements with employees and consultants. There can be no assurances, however, that the agreements will not be breached, adequate remedies for any breach would be available, or competitors will not discover or independently develop our trade secrets.

Third-Party Reimbursement

Reimbursement is an important factor in the success of any medical device. Reimbursement in the United States depends, in part, upon our ability to obtain FDA clearances and approvals to market our products as well as obtain coverage and payment for our products. The FDA may announce changes to the regulatory review process, which in turn may slow the clearance and approval process and thereby delay the ability of medical device companies to bring new devices to market. In the United States, as well as in foreign countries, government-funded or private insurance programs, commonly known as third-party payors, pay a significant portion of the cost of a patient’s medical expenses. Health care reform initiatives, which may be implemented over the next several years, have the potential to impact the growth of sales in medical devices as third-party payors look to control spending on health care. A uniform policy of coverage does not exist among all of these payors relative to payment of claims for all products. Therefore, reimbursement and coverage can be quite different from payor to payor, from one region of the country to another, and from country to country. Coverage also depends on our ability to demonstrate the short-term and long-term clinical effectiveness, and cost-effectiveness of our products. These supportive data are obtained from surgeon clinical experience, clinical trials, and literature reviews. We pursue and present these results at major scientific and medical meetings and publish them in respected, peer-reviewed medical journals because data and evidence that can support coverage and reimbursement are important to the successful commercialization and market access of our products.

All United States and foreign third-party payors continually develop increasingly sophisticated methods of controlling healthcare costs through healthcare reform measures including, government-managed healthcare systems, health technology assessments, coverage with evidence development processes, quality initiatives, pay-for-performance, comparative effectiveness research and capitation programs, group purchasing, redesign of benefit offerings, encouragement of healthier lifestyles and exploration of more cost-effective methods of delivering care. All of these types of programs can potentially impact market access for, and pricing structures of our products, which in turn can impact future revenues.

Employees

As of December 31, 2013, we employed approximately 898 people in continuing operations in the following areas: 158 in manufacturing, 547 in sales and marketing, 114 in administration and 79 in research and development. We believe that we have a good relationship with our employees.

Environmental

Our operations and properties are subject to extensive federal, state, local and foreign environmental protection and health and safety laws and regulations. These laws and regulations govern, among other things, the generation, storage, handling, use and transportation of hazardous materials and the handling and disposal of hazardous waste generated at our facilities. Under such laws and regulations, we are required to obtain permits from governmental authorities for some of our operations. If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators. Under some environmental laws and regulations, we could also be held responsible for all of the costs relating to any contamination at our past or present facilities and at third-party waste disposal sites.

We believe our costs of complying with current and future environmental laws, regulations and permits and our liabilities arising from past or future releases of, or exposure to, hazardous substances will not materially adversely affect our business, results of operations or financial condition, although there can be no assurances of this.

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Available Information

Our website is located at www.wmt.com. Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this document. We make available, free of charge through this website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

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Item 1A. Risk Factors.

Our business and its future performance may be affected by various factors, the most significant of which are discussed below.

We are subject to substantial government regulation that could have a material adverse effect on our business.

The production and marketing of our products and its ongoing research and development, pre-clinical testing and clinical trial activities are subject to extensive regulation and review by numerous governmental authorities both in the U.S. and abroad. U.S. and foreign regulations govern the testing, marketing and registration of new medical devices, in addition to regulating manufacturing practices, reporting, labeling, relationships with healthcare professionals and recordkeeping procedures. The regulatory process requires significant time, effort and expenditures to bring our products to market, and we cannot be assured that any of our products will be approved. Our failure to comply with applicable regulatory requirements could result in these governmental authorities:

• imposing fines and penalties on us;

• preventing us from manufacturing or selling our products;

• bringing civil or criminal charges against us;

• delaying the introduction of our new products into the market;

• recalling or seizing our products; or

• withdrawing or denying approvals or clearances for our products.

Even if regulatory approval or clearance of a product is granted, this could result in limitations on the uses for which the product may be labeled and promoted. Further, for a marketed product, its manufacturer, said manufacturer's suppliers, and manufacturing facilities are subject to periodic review and inspection. Subsequent discovery of problems with a product, manufacturer or facility may result in restrictions on the product, manufacturer or facility, including withdrawal of the product from the market or other enforcement actions. Our products can only be marketed in accordance with their approved labeling. If we were to promote the use of our products in an “off-label” manner, we would be subject to civil and criminal sanctions.

We are subject to various U.S. federal and state and foreign laws concerning healthcare fraud and abuse, including false claims laws, anti-kickback laws and physician self-referral laws. Violations of these laws can result in criminal and/or civil punishment, including fines, imprisonment and, in the U.S., exclusion from participation in government healthcare programs. Greater scrutiny of marketing practices in its industry has resulted in numerous government investigations by various government authorities and this industry-wide enforcement activity is expected to continue. If a governmental authority were to determine that we do not comply with these laws and regulations, then we and our directors, officers and employees could be subject to criminal and civil penalties, including exclusion from participation in federal healthcare reimbursement programs.

In order to market our devices in the member countries of the European Union, we are required to comply with the European Medical Devices Directive and obtain CE mark certification. CE mark certification is the European symbol of adherence to quality assurance standards and compliance with applicable European Medical Device Directives. Under the European Medical Devices Directive, all medical devices including active implants must qualify for CE marking.

Although we divested our hip/knee (OrthoRecon) business, we remain responsible for liability claims on OrthoRecon products sold prior to closing, and might still be sued on products sold after closing.

Although OrthoRecon product liability expenses are accounted for under discontinued operations, our agreement with MicroPort requires we retain responsibility for product liability claims on OrthoRecon products sold prior to closing, and for any resulting settlements, judgments or other costs. Moreover, even though MicroPort is responsible for liability claims on post-closing sales, there can be no assurance we will not be named as a defendant in a lawsuit relating to such post-closing sales, or that MicroPort will have adequate resources to exonerate us from any resulting expenses or liabilities.

Although we divested our OrthoRecon business, we may continue to have post-market regulatory obligations on OrthoRecon products sold prior to closing.

In general, medical device manufacturers, pursuant to both U.S. and international law, have responsibility for monitoring their products, investigating complaints, reporting adverse events and, if applicable, issuing safety alerts and conducting field actions. Some medical devices are subject to additional post-market requirements, which can be burdensome and expensive. Examples of this include the post-market requirements FDA has imposed on manufacturers of metal on metal hip replacement systems.

In 2009, the FDA issued an order requiring manufacturers of approximately 25 Class III devices to submit a summary of information known or otherwise available concerning the safety and efficacy of the products. The metal-on-metal hip products sold prior to divesting our OrthoRecon business are included in this order.

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In 2011, the FDA issued Section 522 Orders requiring post-market surveillance of metal on metal hip products. These orders required manufacturers to submit post-market surveillance plans to the FDA for approval. We submitted our summary protocol to the FDA in late May 2011 and in November 2012 came to final agreement on a post-market clinical study protocol for our metal-on-metal hip products.  While we believe we have data that supports the efficacy and safety of our metal-on-metal hip products, we cannot predict the outcome of an industry-wide post-market surveillance.

In light of the divestiture of our OrthoRecon business, we expect to eliminate our continuing regulatory responsibilities for OrthoRecon products. However, there can be no assurance we will be successful in doing so. If we are not successful, we may be required to devote significant resources toward complying with post-market regulatory requirements on products we no longer sell, and from which we no longer realize revenue.

Divestiture of our OrthoRecon business entailed significant personnel, systems and infrastructure changes that could cause operational disruptions.

The sale of our OrthoRecon business required us to divide a single administrative infrastructure that had supported one company into separate support organizations for two companies. As part of this process, many long term employees with valuable institutional knowledge were transitioned to MicroPort, key systems were replicated across both companies, and our financial controls environment was physically moved to a new location. In some instances, existing processes could not be fully replicated, requiring that we enter into short term transition service arrangements with MicroPort, and vice versa, under which the parties perform certain services for each other pending establishment of new systems and processes. Although these transitions were painstakingly planned, it is highly possible in a transaction of this complexity that disruptions could occur. If disruptions to our financial controls, IT, administrative support, manufacturing or regulatory processes occur, and if such disruptions prove to be more severe than our planning anticipated, this could have a material adverse effect on our business.

We may never realize the expected benefits from divestiture of our OrthoRecon business.

Divestiture of our OrthoRecon business is part of a strategy to transform ourselves into a profitable, high growth, pure play medical technology company, and command the market valuation typically accorded such companies. If we are unable to achieve our growth and profitability objectives due to competition, lack of acceptance of our products, failure to gain regulatory approvals, or other risks as described in this section, or due to other events, we will not be successful in transforming our business and will not be accorded the market valuation we seek. Moreover, our OrthoRecon business generated substantial revenue and cash flow, which we have not replaced. While over time we expect to replace our OrthoRecon revenue and cash flow by accelerating higher margin revenue streams from extremities and biologic products, there is a risk we will be unable to replace the revenue and cash flow that our OrthoRecon business generated, or that the cost of such will be higher than expected. If we are unable to achieve our profit and growth objectives, such failure will be exacerbated by the loss of revenue and cash flow generated by our OrthoRecon business, and could result in a decline in our stock price.

We may never realize the expected benefits of our acquisitions.

In addition to developing new products and growing our business internally, we have sought to grow through acquisition of complementary businesses. Examples include our acquisition of BioMimetic in early 2013, as well as the more recent acquisitions of Biotech International in November 2013, Solana Surgical, LLC in January 2014, and OrthoPro, L.L.C. in February 2014. Acquiring new businesses involves a myriad of risks. Whenever a new business is acquired, there is a risk we may fail to realize some or all of the anticipated benefits of the transaction. This can occur if integration of the acquired business proves to be more complicated than planned, resulting in failure to realize operational synergies and/or failure to mitigate operational dis-synergies, diversion of management attention, and loss of key personnel. It can also occur if the acquired business fails to meet our revenue projections, exposes us to unexpected liabilities, or if our pre-acquisition due diligence fails to uncover issues that negatively affect the value or cost structure of the acquired enterprise. Although we carefully plan our acquisitions, there can be no assurance these and other risks won’t prevent us from realizing the expected benefits of our acquisitions.

Product liability lawsuits could harm our business.

The manufacture and sale of medical devices exposes us to significant risk of product liability claims, and we remain responsible for claims associated with products sold before divesting our OrthoRecon business to MicroPort.

We have received more than 700 claims for personal injury associated with metal-on-metal hip replacement systems. The number of claims continues to increase, we believe due to the negative publicity in the industry regarding these devices. We believe we have data that supports the efficacy and safety of our metal-on-metal hip replacement systems, and have been vigorously defending these cases. While continuing to dispute liability, we recently agreed to participate in court supervised mediation in the multi-district federal court litigation presently pending in the Northern District of Georgia.

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Claims for personal injury have also been made against us associated with fractures of our PROFEMUR^® long titanium modular neck product. We believe that the overall fracture rate for the product is low and the fractures appear, at least in part, to relate to patient demographics, and have been vigorously defending these matters. While continuing to dispute liability, we have been open to settling these claims in circumstances where we believe the settlement amount is reasonable relative to the risk and expense of litigation.

Legal defenses are costly, regardless of the outcome. We may experience increased legal expenses as we defend our self in these matters, and we could incur liabilities associated with adverse outcomes that exceed our products liability insurance coverage.

In the future, we may be subject to additional product liability claims. Additionally, we could experience a material design or manufacturing failure in our products, a quality system failure, other safety issues, or heightened regulatory scrutiny that would warrant a recall of some of our products. Product liability lawsuits and claims, safety alerts and product recalls, regardless of their ultimate outcome, could have a material adverse effect on our business and reputation and on our ability to attract and retain customers.

Our existing product liability insurance coverage may be inadequate to protect us from any liabilities we might incur.

If the product liability claims brought against us involve uninsured liabilities or result in liabilities that exceed our insurance coverage, our business, financial condition and results of operations could be materially and adversely affected. Further, such product liability matters may negatively impact our ability to obtain insurance coverage or cost-effective insurance coverage in future periods.

A competitor's recall of its modular hip systems, and the liability claims and adverse publicity which ensued, could generate copycat claims against modular hip systems we sold.

On July 6, 2012, Stryker announced the voluntary recall of its Rejuvenate Modular and ABG II modular neck hip stems citing risks including the potential for fretting and/or corrosion at or about the modular neck junction. Although Stryker's recalled modular neck hip stems differ in design and material from the PROFEMUR^® modular neck systems we sold before we divested our OrthoRecon business, we have previously noted the risk that Stryker's recall and the resultant publicity could negatively impact sales of modular neck systems of other manufacturers, including the PROFEMUR^® system, and that Stryker's action has increased industry focus on the safety of cobalt chrome modular neck products. We have carefully monitored the clinical performance of the PROFEMUR^® modular neck hip system, which combine a cobalt chrome modular neck and a titanium stem. With over 33,000 units sold since this version was introduced in 2009, and an extremely low complaint rate, we remain confident in the safety and efficacy of this product. Nevertheless, in light of Stryker's recall, the resulting product liability claims to which it has been subject, and the general negative publicity surrounding “metal-on-metal” articulating surfaces (which do not involve modular hip stems), there remains a risk that, even in the absence of clinical evidence, claims for personal injury relating to sales of these products before divestiture of our OrthoRecon business could increase.

We must obtain regulatory approval from the FDA before we can market Augment^® Bone Graft in the United States.

Augment^® Bone Graft is a product candidate that is regulated by the FDA. Augment^® Bone Graft will require approval of a PMA application before it can be marketed in the United States.

In June 2010, the FDA accepted for review a three-part modular PMA application seeking approval of Augment^® Bone Graft for use in hind foot and ankle fusions in the U.S. The FDA's Medical Devices Advisory Committee conducted a meeting of its Orthopedic and Rehabilitation Devices Panel (the panel) in May 2011 during which the panel reviewed Augment^® Bone Graft. The panel voted narrowly in support of the safety and efficacy of Augment^® Bone Graft for use as an alternative to autograph in hind foot and ankle fusion procedures, and narrowly in support of the finding that Augment^® Bone Graft demonstrates a reasonable benefit to risk profile for the same indication.

Despite panel approval in January 2012, the FDA issued a not approvable letter for Augment^® Bone Graft, stating that, notwithstanding the panel’s recommendation, the PMA, without additional information, must be considered not approvable and that to place the PMA in approvable form, the application must be amended. The letter listed the information that would need to be submitted for the PMA application to be approvable. The FDA's key requests included a re-reading of all 24-week CT scans, further analysis of all study adverse events, re-categorization of secondary surgeries as failures, and stratification of results by various subgroups.

In July 2012, a PMA amendment was submitted to the FDA that provided the requested information. In August 2013, the FDA issued a second not approvable letter for Augment^® Bone Graft, stating, among other things, that a new clinical trial would be required in order to gain approval. A new clinical trial would take many years to complete, be burdensome and expensive, and would offer no assurance that FDA would ultimately approve Augment^® Bone Graft for commercial sale in the U.S.

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If the FDA does not approve Augment^® Bone Graft, delays approval, requires us to perform additional clinical trials prior to approval or imposes significant labeling restrictions that reduce Augment^® Bone Graft's market potential, we may never achieve the expected benefits of the merger with BioMimetic.

On March 1, 2013, we completed our acquisition of BioMimetic, paying approximately $190 million upon closing in a combination of cash and our stock, with no assurance the FDA would approve Augment^® Bone Graft, BioMimetic’s flagship product. In August 2013, the FDA issued a not approvable letter for Augment^® Bone Graft, stating, among other things, that a new clinical trial would be required in order to gain approval. A new clinical trial would take many years to complete, be burdensome and expensive, and would offer no assurance that FDA would ultimately approve Augment^® Bone Graft for commercial sale in the U.S. Our stock price declined when the FDA’s not approvable letter was announced. We disagreed with the FDA’s not approvable determination, and appealed the decision under applicable regulations. As a result, the FDA has convened a Dispute Resolution Panel (DRP) to make recommendations as to the scientific issues in dispute. However, there can be no assurance the DRP will resolve the disputed issues in our favor. Moreover, even if the DRP does resolve the disputed issues in our favor, its determinations are not binding on the FDA. If the FDA does not withdraw or amend its not approvable determination for Augment^® Bone Graft, or if it does so in a way that leaves or creates significant obstacles to approval, or if the FDA delays its decision, or imposes labeling restrictions that reduce Augment^® Bone Graft's market potential, we may not realize any benefits from our acquisition of BioMimetic, despite the substantial sums invested. In such event, our reputation and business would be harmed and our stock price could decline further.

A substantial portion of our business is conducted outside of the United States, which could subject us to increased scrutiny under the Foreign Corrupt Practices Act.

Our international operations expose us to legal and regulatory risks. These risks include the risk that our international distributors could engage in conduct violative of U.S. or local law, including the U.S. Foreign Corrupt Practices Act (FCPA). Recent investigations of companies in our industry by the SEC and the U.S. Department of Justice have focused on potential FCPA violations in connection with the sale of medical devices in foreign countries. We believe we have compliance systems, which enable us to prevent these behaviors. However, if despite our efforts we are not successful in mitigating these risks, we could become the target of enforcement actions by U.S. or local authorities, and this could have a material adverse effect on our business, results of operations and cash flows.

A significant portion of our product sales are made through independent distributors and sales agents who we do not control.

A significant portion of our product sales are made through independent sales representatives and distributors. Because the independent distributor often controls the customer relationships within its territory (and, in certain countries outside the U.S., the regulatory relationship), there is a risk that if our relationship with the distributor ends, our relationship with the customer will be lost (and, in certain countries outside the U.S., that we could experience delays in amending or transferring our product registrations). Also, because we do not control a distributor's field sales agents, there is a risk we will be unable to ensure that our sales processes, compliance and other priorities will be consistently communicated and executed by the distributor. If we fail to maintain relationships with our key distributors, or fail to ensure that our distributors adhere to our sales processes, compliance and other priorities, this could have an adverse effect on our operations. In the past, we have experienced turnover within our independent distributor organization. This did adversely affect short term financial results as we transitioned to direct sales employees or new independent representatives. While we believe these transitions were managed effectively, there is a risk that future transitions could have a greater adverse effect on our operations than we have previously experienced.

Allegations of wrongdoing by the United States Department of Justice and OIG-HHS and related publicity could lead to further governmental investigations or actions by other third parties.

As a result of the allegations of wrongdoing made by the USAO and the publicity surrounding our recent settlement with the United States Department of Justice (DOJ) and OIG-HHS, and amendments to the DPA and CIA, other governmental agencies, including state authorities, could conduct investigations or institute proceedings that are not precluded by the terms of settlements reflected in the DPA and the CIA. In August 2012, we received a subpoena from the United States Attorney's Office for the Western District of Tennessee requesting records and documentation relating to our PROFEMUR^® series of hip replacement devices for the period from January 1, 2000 to August 2, 2012. These interactions with the authorities could increase our exposure to lawsuits by potential whistleblowers, including under the federal false claims acts, based on new theories or allegations arising from the allegations made by the USAO. The costs of defending or resolving any such investigations or proceedings could have a material adverse effect on our financial condition, results of operations and cash flows.

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If we lose any existing or future intellectual property lawsuits, a court could require us to pay significant damages or prevent us from selling our products.

The medical device industry is litigious with respect to patents and other intellectual property rights. Companies in the medical device industry have used intellectual property litigation to gain a competitive advantage.

We are party to lawsuits involving patents or other intellectual property. A legal proceeding, regardless of the outcome, could drain our financial resources and divert the time and effort of our management. If we lose one of these proceedings, a court, or a similar foreign governing body, could require us to pay significant damages to third parties, indemnify third parties from loss, require us to seek licenses from third parties, pay ongoing royalties, redesign our products, or prevent us from manufacturing, using or selling our products. In addition to being costly, protracted litigation to defend or prosecute our intellectual property rights could result in our customers or potential customers deferring or limiting their purchase or use of the affected products until resolution of the litigation.

If our patents and other intellectual property rights do not adequately protect our products, we may lose market share to our competitors and be unable to operate our business profitably.

We rely on patents, trade secrets, copyrights, know-how, trademarks, license agreements and contractual provisions to establish our intellectual property rights and protect our products. These legal means, however, afford only limited protection and may not completely protect our rights. In addition, we cannot be assured that any of our pending patent applications will issue. The USPTO may deny or require a significant narrowing of the claims in its pending patent applications and the patents issuing from such applications. Any patents issuing from the pending patent applications may not provide us with significant commercial protection. We could incur substantial costs in proceedings before the USPTO. These proceedings could result in adverse decisions as to the priority of our inventions and the narrowing or invalidation of claims in issued patents. In addition, the laws of some of the countries in which our products are or may be sold may not protect our intellectual property to the same extent as U.S. laws or at all. We also may be unable to protect our rights in trade secrets and unpatented proprietary technology in these countries.

In addition, we hold licenses from third parties that are necessary to utilize certain technologies used in the design and manufacturing of some of our products. The loss of such licenses would prevent us from manufacturing, marketing and selling these products, which could harm our business.

We seek to protect our trade secrets, know-how and other unpatented proprietary technology, in part, with confidentiality agreements with our employees, independent distributors and consultants. We cannot be assured, however, that the agreements will not be breached, adequate remedies for any breach would be available or our trade secrets, know-how, and other unpatented proprietary technology will not otherwise become known to or independently developed by our competitors.

If we lose one of our key suppliers, we may be unable to meet customer orders for our products in a timely manner or within our budget.

We have relied on a limited number of suppliers for the components used in our products. Our reconstructive joint devices are produced from various surgical grades of titanium, cobalt chrome, stainless steel, various grades of high-density polyethylenes and ceramics. We have relied on one source to supply us with a certain grade of cobalt chrome alloy, one supplier for the silicone elastomer used in some of our extremity products, and one supplier to provide a key ingredient of Augment^® Bone Graft. The manufacture of our products is highly exacting and complex, and our business could suffer if a sole source supply arrangement is unexpectedly terminated or interrupted, and we are unable to obtain an acceptable new source of supply in a timely fashion.

In December 2013, we received written notice from Novartis of its intent to terminate, effective December 1, 2015, the exclusive supply agreement under which we purchase from Novartis purified bulk recombinant human platelet-derived growth factor (rhPDGF-BB), which is a key component of Augment^® Bone Graft. Under the agreement, Novartis is obligated to cooperate with us in identifying a new supplier and in facilitating a technology transfer. We believe our existing inventory of rhPDGF-BB, together with our final purchases from Novartis, will leave us with an adequate supply of this product until a new supplier is brought on line. However, if we are not successful in identifying, qualifying, training and provisioning a new supplier before our available supply is exhausted, there is a risk our ability to supply Augment^® Bone Graft could be interrupted.

Our biologic product line includes a single sourced supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products. In addition, certain biologic products depend upon a single supplier as our source for DBM and CBM, and any failure to obtain DBM and CBM from this source in a timely manner will deplete levels of on-hand raw materials inventory and could interfere with our ability to process and distribute allograft products. During 2013, we are expecting a single not-for-profit tissue bank to meet all of our DBM and CBM order requirements, a key component in the allograft products we currently produce, market and distribute. In addition, we rely on a single supplier of soft tissue graft for BIOTAPE^® XM.

We cannot be sure that our supply of DBM, CBM and soft tissue graft for BIOTAPE^® XM will continue to be available at current levels or will be sufficient to meet our needs, or that future suppliers of DBM, CBM and soft tissue graft for BIOTAPE^®

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XM will be free from FDA regulatory action impacting their sale of DBM, CBM and soft tissue graft for BIOTAPE^® XM. As there are a small number of suppliers, if we cannot continue to obtain DBM, CBM and soft tissue graft for BIOTAPE^® XM from our current sources in volumes sufficient to meet our needs, we may not be able to locate replacement sources of DBM, CBM and soft tissue graft for BIOTAPE^® XM on commercially reasonable terms, if at all. This could interrupt our business, which could adversely affect our sales.

Suppliers of raw materials and components may decide, or be required, for reasons beyond our control to cease supplying raw materials and components to us. FDA regulations may require additional testing of any raw materials or components from new suppliers prior to our use of these materials or components and in the case of a device with a PMA application, we may be required to obtain prior FDA permission, either of which could delay or prevent our access to or use of such raw materials or components.

We are dependent on various information technology systems, and failures of, interruptions to, or unauthorized tampering of those systems could have a material adverse effect on our business.

We rely extensively on information technology systems to conduct business. These systems include, but are not limited to, ordering and managing materials from suppliers, converting materials to finished products, shipping products to customers, processing transactions, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, providing data security and other processes necessary to manage our business. If our systems are damaged or cease to function properly due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively compensate timely, we may suffer interruptions in our ability to manage operations.

Fluctuations in insurance cost and availability could adversely affect our profitability or our risk management profile.

We hold a number of insurance policies, including product liability insurance, directors' and officers' liability insurance, property insurance and workers' compensation insurance. If the costs of maintaining adequate insurance coverage should increase significantly in the future, our operating results could be materially adversely impacted. Likewise, if the availability of any of our current insurance coverage should become unavailable to us or become economically impractical, we would be required to operate our business without indemnity from commercial insurance providers.

Modifications to our marketed devices may require FDA regulatory clearances or approvals or require us to cease marketing or recall the modified devices until such additional clearances or approvals are obtained.

The FDA requires device manufacturers to make a determination of whether or not a modification to a cleared and commercialized medical device requires a new approval or clearance. However, the FDA can review a manufacturer's decision not to submit for additional approvals or clearances. Any modification to an FDA approved or cleared device that would significantly affect its safety or efficacy or that would constitute a major change in its intended use would require a new premarket approval or 510(k) clearance and could be considered misbranded if the modified device is commercialized and such additional approval or clearance was not obtained. We cannot assure you that the FDA will agree with our decisions not to seek approvals or clearances for particular device modifications or that we will be successful in obtaining additional approvals or 510(k) clearances for modifications.

We obtained 510(k) premarket clearance for certain devices we market or marketed in the United States. We have subsequently modified some of those devices or device labeling since obtaining 510(k) clearance under the view that these modifications did not significantly affect the safety or efficacy of the device, and did not require new approvals or clearances. If the FDA disagrees with our decisions and requires us to obtain additional premarket approvals or 510(k) clearances for any modifications to our products and we fail to obtain such approvals or clearances or fails to secure approvals or clearances in a timely manner, we may be required to cease manufacturing and marketing the modified device or to recall such modified device until we obtain FDA approval or clearance and we may be subject to significant regulatory fines or penalties.

If we fail to comply with the terms of the Corporate Integrity Agreement, we may be subject to criminal prosecution and/or exclusion from federal healthcare programs.

As previously reported, on September 29, 2010, our wholly-owned subsidiary, Wright Medical Technologies, Inc. (WMT) entered into a 12-month Deferred Prosecution Agreement (DPA) with the United States Attorney's Office for the District of New Jersey, referred to as the USAO. WMT also entered into a five-year Corporate Integrity Agreement (CIA) with the Inspector General of the United States Department of Health and Human Services, referred to as OIG-HHS. On September 15, 2011, WMT reached an agreement with the USAO and the OIG-HHS under which WMT voluntarily agreed to extend the term of its DPA for 12 months. On October 4, 2012, the USAO issued a press release announcing that the amended DPA expired on September 29, 2012, that the USAO had moved to dismiss the criminal complaint against WMT because WMT had fully complied with the terms of the DPA, and that the court had ordered dismissal of the complaint on October 4, 2012. WMT's obligations under the CIA expire as of September 29, 2015. The DPA imposed, and the CIA continues to impose, certain obligations on WMT to maintain compliance

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with U.S. healthcare laws. Our failure to do so could expose us to significant liability, including, but not limited to, exclusion from federal healthcare program participation, including Medicaid and Medicare, which would have a material adverse effect on our financial condition, results of operations and cash flows, potential prosecution, civil and criminal fines or penalties, and additional litigation cost and expense.

The CIA acknowledges the existence of our Corporate Compliance Program and provides for certain other compliance-related activities during the five-year term of the agreement. If we breach the CIA, the OIG-HHS may take further action against us, up to and including exclusion from participation in federal healthcare programs, which exclusion would have a material adverse effect on our financial condition, results of operations and cash flows.

Efforts to enhance our Corporate Compliance Program require the cooperation of many individuals and may divert resources from our other business activities and require substantial investment.

We are committed to the continued enhancement of our Corporate Compliance Program. This requires additional financial and human resources. Successful implementation of our enhanced Corporate Compliance Program requires the full and sustained cooperation of our employees, distributors and sales agents, as well as the healthcare professionals with whom we interact. These efforts may require increased expenses and additional investments. We may also encounter inefficiencies in the implementation of our new compliance enhancements, including delays in medical education, research and development projects, and clinical studies, which may unfavorably impact our business and our relationships with customers.

The European Union and many of its world markets rely on the CE-Mark as the path to market our products.

The European Medical Device Directive requires that many of our products that bear the CE-Mark be supported by post market clinical data. We are in the process of implementing systems and procedures to control this activity in order to comply with these requirements, including establishing contractual relationships with the HCP clinical study sites in accordance with our internal compliance requirements. We intend to obtain the needed clinical data to support our marketed products, but there can be no assurance that European regulators will accept the results. This could potentially impact business performance. In addition, changes to the certification and oversight responsibilities of notified bodies presently under consideration by the European Commission, if implemented, could result in more stringent notified body oversight requirements, require additional resources to maintain compliance, and increase the risk of negative audit observations.

Our biologics business is subject to emerging governmental regulations that can significantly impact our business.

The FDA has statutory authority to regulate allograft-based products, processing and materials. The FDA, European Union and Health Canada have been working to establish more comprehensive regulatory frameworks for allograft-based, tissue-containing products, which are principally derived from cadaveric tissue. The framework developed by the FDA establishes risk-based criteria for determining whether a particular human tissue-based product will be classified as human tissue, a medical device or biologic drug requiring 510(k) clearance or PMA approval. All tissue-based products are subject to extensive FDA regulation, including establishment of registration requirements, product listing requirements, good tissue practice requirements for manufacturing and screening requirements that ensure that diseases are not transmitted to tissue recipients. The FDA has also proposed extensive additional requirements addressing sub-contracted tissue services, traceability to the recipient/patient and donor records review. If a tissue-based product is considered human tissue, FDA requirements focus on preventing the introduction, transmission and spread of communicable diseases to recipients. Clinical data or review of safety and efficacy is not required before the tissue can be marketed. However, if tissue is considered a medical device or biologic drug, then FDA clearance or approval is required.

Additionally, our biologics business involves the procurement and transplantation of allograft tissue, which is subject to federal regulation under the National Organ Transplant Act (NOTA). NOTA prohibits the sale of human organs, including bone and other human tissue, for valuable consideration within the meaning of NOTA. NOTA permits the payment of reasonable expenses associated with the transportation, processing, preservation, quality control and storage of human tissue. We currently charge our customers for these expenses. In the future, if NOTA is amended or reinterpreted, we may not be able to charge these expenses to our customers, and, as a result, our business could be adversely affected.

Our principal allograft-based biologics offerings include ALLOMATRIX^®, GRAFTJACKET^® and IGNITE^® products.

If we fail to compete successfully in the future against our existing or potential competitors, our sales and operating results may be negatively affected, and we may not achieve future growth.

The markets for our products are highly competitive. We may not be able to meet the prices offered by our competitors or to offer products similar to or more desirable than those offered by our competitors.

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We operate in international markets that are subject to political, economic and social instability.

We operate in in international markets. Our international sales operations expose us and our representatives, agents and distributors to risks inherent in operating in foreign jurisdictions.

These risks include:

• the imposition of additional foreign governmental controls or regulations on orthopaedic implants and biologic products;

• new export license requirements, particularly related to our biologic products;

• economic instability, including currency risk between the U.S. dollar and foreign currencies, in our target markets;

• a shortage of high-quality international salespeople and distributors;

• loss of any key personnel who possess proprietary knowledge or are otherwise important to our success in international markets;

• changes in third-party reimbursement policy that may require some of the patients who receive our implant products to directly absorb medical costs or that may necessitate our reducing selling prices for our products;

• changes in tariffs and other trade restrictions, particularly related to the exportation of our biologic products;

• work stoppages or strikes in the healthcare industry, such as those that have affected our operations in France, Canada, Korea and Finland in the past;

• a shortage of nurses in some of our target markets; and

• exposure to different legal and political standards due to our conducting business in approximately 60 countries.

As a U.S.-based company doing business in foreign jurisdictions, not only are we subject to the laws of other jurisdictions, we are also subject to U.S. laws governing our activities in foreign countries, such as the FCPA, as well as various import-export laws, regulations, and embargoes. If our business activities were determined to violate these laws, regulations or rules, we could suffer serious consequences.

Healthcare regulation and reimbursement for medical devices vary significantly from country to country. This changing environment could adversely affect our ability to sell our products in some jurisdictions.

We have a significant amount of indebtedness. We may not be able to generate enough cash flow from our operations to service our indebtedness, and we may incur additional indebtedness in the future, which could adversely affect our business, financial condition and results of operations.

We have a significant amount of indebtedness, including $300 million in aggregate principal with additional accrued interest under our 2.00% Convertible Senior Notes due 2017. Our ability to make payments on, and to refinance, our indebtedness, including these notes, and to fund planned capital expenditures, research and development efforts, working capital, acquisitions and other general corporate purposes depends on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors, some of which are beyond our control. If we do not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to pay our indebtedness, including payments of principal upon conversion of outstanding convertible notes or on their maturity or in connection with a transaction involving us that constitutes a fundamental change under the indenture governing the convertible notes, or to fund our liquidity needs, we may be forced to refinance all or a portion of our indebtedness, including the convertible notes, on or before the maturity thereof, sell assets, reduce or delay capital expenditures, seek to raise additional capital or take other similar actions. We may not be able to execute any of these actions on commercially reasonable terms or at all. Our ability to refinance our indebtedness will depend on our financial condition at the time, the restrictions in the instruments governing our indebtedness and other factors, including market conditions. In addition, in the event of a default under the convertible notes, the holders and/or the trustee under the indentures governing the convertible notes may accelerate its payment obligations under the convertible notes, which could have a material adverse effect on our business, financial condition and results of operations. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would likely have an adverse effect, which could be material, on our business, financial condition and results of operations.

In addition, our significant indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences. For example, it could:

• make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation;

• limit our flexibility in planning for, or reacting to, changes in our business and our industry;

• place us at a competitive disadvantage compared to our competitors who have less debt; and

• limit our ability to borrow additional amounts for working capital, capital expenditures, research and development efforts, acquisitions, debt service requirements, execution of our business strategy or other purposes.

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Any of these factors could materially and adversely affect our business, financial condition and results of operations. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service our indebtedness would increase.

In addition, under our 2.00% Convertible Senior Notes due 2017, we are required to offer to repurchase the convertible notes upon the occurrence of a fundamental change, which could include, among other things, any acquisition of ours for consideration other than publicly traded securities. The repurchase price must be paid in cash, and this obligation may have the effect of discouraging, delaying or preventing an acquisition of ours that would otherwise be beneficial to our security holders.

Hedge and warrant transactions entered into in connection with the issuance of our convertible notes may affect the value of our common stock.

In connection with the issuance of our 2.00% Convertible Senior Notes due 2017, we entered into hedge transactions with various financial institutions with the objective of reducing the potential dilutive effect of issuing our common stock upon conversion of the convertible notes and the potential cash outlay from the cash conversion of the convertible notes. We also entered into separate warrant transactions with the same financial institutions. In connection with our hedge and warrant transactions associated with the convertible notes, these financial institutions purchased our common stock in secondary market transactions and entered into various over-the-counter derivative transactions with respect to our common stock. These entities or their affiliates are likely to modify their hedge positions from time to time prior to conversion or maturity of the convertible notes by purchasing and selling shares of our common stock, other of our securities or other instruments they may wish to use in connection with such hedging. Any of these transactions and activities could adversely affect the value of our common stock and, as a result, the number of shares and the value of the common stock holders will receive upon conversion of the convertible notes. In addition, subject to movement in the price of our common stock, if the hedge transactions settle in our favor, we could be exposed to credit risk related to the other party with respect to the payment we are owed from such other party. If any of the participants in the hedge transactions is unwilling or unable to perform its obligations for any reason, we would not be able to receive the benefit of such transaction. We cannot provide any assurances as to the financial stability or viability of any of the participants in the hedge transactions.

Rating agencies may provide unsolicited ratings on our convertible notes that could reduce the market value or liquidity of our common stock.

We have not requested a rating of our convertible notes from any rating agency and we do not anticipate that the convertible notes will be rated. However, if one or more rating agencies independently elects to rate the convertible notes and assigns the convertible notes a rating lower than the rating expected by investors, or reduces such rating in the future, the market price or liquidity of our convertible notes and our common stock could be harmed. Should a decline in the market price of our convertible notes, as compared to the price of our common stock occur, this may trigger the right of the holders of our convertible notes to convert such notes into cash and shares of our common stock, as applicable.

Turmoil in the credit markets and the financial services industry may negatively impact our business.

The credit markets and the financial services industry have been experiencing a period of unprecedented turmoil and upheaval characterized by the bankruptcy, failure, collapse or sale of various financial institutions and an unprecedented level of intervention from the U.S. and foreign governments. While the ultimate outcome of these events cannot be predicted, they may have an adverse effect on our customers' ability to borrow money from their existing lenders or to obtain credit from other sources to purchase our products. In addition, the economic crisis could also adversely impact our suppliers' ability to provide us with materials and components, either of which may negatively impact our business.

The collectability of our accounts receivable may be affected by general economic conditions.

Our liquidity is dependent on, among other things, the collection of our accounts receivable. Collections of our receivables may be affected by general economic conditions. Although current economic conditions have not had a material adverse effect on our ability to collect such receivables, we can make no assurances regarding future economic conditions or their effect on our ability to collect our receivables, particularly from our international stocking distributors.

If we are unable to continue to develop and market new products and technologies, we may experience a decrease in demand for our products, or our products could become obsolete, and our business would suffer.

We are continually engaged in product development and improvement programs, and new products represent a significant component of our growth rate. We may be unable to compete effectively with our competitors unless we can keep up with existing or new products and technologies in the orthopaedic market. If we do not continue to introduce new products and technologies, or if those products and technologies are not accepted, we may not be successful. Additionally, our competitors' new products and technologies may beat our products to market, may be more effective or less expensive than our products or may render our products obsolete.

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Our inability to maintain contractual relationships with healthcare professionals could have a negative impact on our research and development and medical education programs.

We maintain contractual relationships with respected physicians and medical personnel in hospitals and universities who assist in product research and development and in the training of surgeons on the safe and effective use of our products. We continue to place emphasis on the development of proprietary products and product improvements to complement and expand our existing product lines as well as providing high quality training on those products. If we are unable to maintain these relationships, our ability to develop and market new and improved products and train on the use of those products could decrease, and future operating results could be unfavorably affected.

Our business could suffer if the medical community does not continue to accept allograft technology.

New allograft products, technologies and enhancements may never achieve broad market acceptance due to numerous factors, including:

• lack of clinical acceptance of allograft products and related technologies;

• the introduction of competitive tissue repair treatment options that render allograft products and technologies too expensive and obsolete;

• lack of available third-party reimbursement;

• the inability to train surgeons in the use of allograft products and technologies;

• the risk of disease transmission; and

• ethical concerns about the commercial aspects of harvesting cadaveric tissue.

Market acceptance will also depend on the ability to demonstrate that existing and new allograft products and technologies are attractive alternatives to existing tissue repair treatment options. To demonstrate this, we rely upon surgeon evaluations of the clinical safety, efficacy, ease of use, reliability and cost effectiveness of our tissue repair options and technologies. Recommendations and endorsements by influential surgeons are important to the commercial success of allograft products and technologies. In addition, several countries, notably Japan, prohibit the use of allografts. If allograft products and technologies are not broadly accepted in the marketplace, we may not achieve a competitive position in the market.

If adequate levels of reimbursement from third-party payors for our products are not obtained, surgeons and patients may be reluctant to use our products and our sales may decline.

In the United States, healthcare providers who purchase our products generally rely on third-party payors, principally federally-funded Medicare, state-funded Medicaid and private health insurance plans, to pay for all or a portion of the cost of joint reconstructive procedures and products utilized in those procedures. We may be unable to sell our products on a profitable basis if third-party payors deny coverage or reduce their current levels of reimbursement. Our sales depend largely on governmental healthcare programs and private health insurers reimbursing patients' medical expenses. Surgeons, hospitals and other healthcare providers may not purchase our products if they do not receive appropriate reimbursement from third-party payors for procedures using our products. In light of healthcare reform measures and the continued downturn in our economy, payors continue to review their coverage policies for existing and new therapies and may deny coverage for treatments that include the use of our products.

In addition, some healthcare providers in the U.S. have adopted or are considering bundled payment methodologies and/or managed care systems in which the providers contract to provide comprehensive healthcare for a fixed cost per person. Healthcare providers may attempt to control costs by authorizing fewer elective surgical procedures, including joint reconstructive surgeries, or by requiring the use of the least expensive implant available. Changes in reimbursement policies or healthcare cost containment initiatives that limit or restrict reimbursement for our products may cause our revenues to decline.

If adequate levels of reimbursement from third-party payors outside of the U.S. are not obtained, international sales of our products may decline. Outside of the U.S., reimbursement systems vary significantly by country. Many foreign markets have government-managed healthcare systems that govern reimbursement for medical devices and procedures. Canada, and some European and Asian countries, in particular France, Japan, Taiwan and Korea, have tightened reimbursement rates. Additionally, Brazil, China, Russia and the United Kingdom have recently begun landmark reforms that will significantly alter their healthcare systems. Finally, some foreign reimbursement systems provide for limited payments in a given period and therefore result in extended payment periods.

Our business could be significantly and adversely impacted by recently enacted healthcare reforms.

In March 2010, comprehensive health care reform legislation in the form of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (the Affordable Care Act) was enacted. Among other provisions, these bills impose a 2.3% excise tax on U.S. sales of medical devices following December 31, 2012. In 2013, we recognized approximately $2.6 million of costs for the medical device excise tax. The Affordable Care Act also includes numerous provisions to limit Medicare

21

spending through reductions in various fee schedule payments and by instituting more sweeping payment reforms, such as bundled payments for episodes of care and the establishment of “accountable care organizations” under which hospitals and physicians will be able to share savings that result from cost control efforts. Many of these provisions will be implemented through the regulatory process, and policy details have not yet been finalized. Various healthcare reform proposals have also emerged at the state level. We cannot predict with certainty the impact that these federal and state health reforms will have on us. However, an expansion in government's role in the U.S. healthcare industry may lower reimbursements for its products, reduce medical procedure volumes, and adversely affect our business and results of operations, possibly materially.

There is an increasing trend for more criminal prosecutions and compliance enforcement activities for noncompliance with the Health Insurance Portability and Accountability Act (HIPAA) as well as for data breaches involving protected health information (PHI). In the ordinary course of our business, we may receive PHI. If we are unable to comply with HIPAA or experiences a data breach involving PHI, Wright could be subject to criminal and civil sanctions.

If we cannot retain our key personnel, we will not be able to manage and operate successfully, and we may not be able to meet our strategic objectives.

Our continued success depends, in part, upon key managerial, scientific, sales and technical personnel, as well as our ability to continue to attract and retain additional highly qualified personnel. We compete for such personnel with other companies, academic institutions, governmental entities and other organizations. There can be no assurance that we will be successful in retaining our current personnel or in hiring or retaining qualified personnel in the future. Loss of key personnel or the inability to hire or retain qualified personnel in the future could have a material adverse effect on our ability to operate successfully. Further, any inability on our part to enforce non-compete arrangements related to key personnel who have left the business could have a material adverse effect on our business.

If a natural or man-made disaster strikes our manufacturing facility, we could be unable to manufacture our products for a substantial amount of time, and our sales could be disrupted.

We rely on a single manufacturing facility in Arlington, Tennessee, which is located near the New Madrid fault line. The Arlington facility and the manufacturing equipment we use to produce our products would be difficult to replace and could require substantial lead-time to repair or replace. Our facility may be affected by natural or man-made disasters. In the event our facility is affected by a disaster, we would be forced to rely on third-party manufacturers. Although we believe we have adequate disaster recovery plans in place and we possess adequate insurance for damage to its property and the disruption of our business from casualties, such plans and insurance may not cover such disasters and all of our potential losses and may not continue to be available to us on acceptable terms or at all.

Our business plan relies on certain assumptions about the market for our products, which, if incorrect, may adversely affect our profitability.

We believe that the aging of the general population and increasingly active lifestyles will continue and that these trends will increase the need for our products. The projected demand for our products could materially differ from actual demand if our assumptions regarding these trends and acceptance of our products by the medical community prove to be incorrect or do not materialize, or if non-surgical treatments gain more widespread acceptance as a viable alternative to orthopaedic implants.

Fluctuations in foreign currency exchange rates could result in declines in our reported sales and earnings.

Because a majority of our international sales are denominated in local currencies and not in U.S. dollars, our reported sales and earnings are subject to fluctuations in foreign exchange rates. Approximately 19%, 18% and 16% of its total net sales were denominated in foreign currencies during the years ended December 31, 2013, 2012 and 2011, respectively, and we expect that foreign currencies will continue to represent a similarly significant percentage of our net sales in the future. Our international net sales were unfavorably impacted by foreign currency fluctuations of approximately $1.2 million in 2013, compared to the unfavorable impact of $1.1 million in 2012 and favorable impact of $5.8 million in 2011. Operating costs related to these sales are largely denominated in the same respective currencies, thereby partially limiting our transaction risk exposure. However, cost of sales related to these sales are primarily denominated in U.S. dollars; therefore, as the U.S. dollar strengthens, the gross margin associated with our sales denominated in foreign currencies experience declines.

We currently employ a derivative program using 30-day foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that are denominated in foreign currencies. These forward contracts are expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts are not designated as hedging instruments under Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) Section 815, Derivatives and Hedging Activities. Accordingly, the changes in the fair value and the settlement of the contracts are recognized in the period incurred. We have not historically entered into hedging activities to mitigate the risk of foreign currency fluctuations in our statement of operations.

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Our quarterly operating results are subject to substantial fluctuations, and you should not rely on them as an indication of our future results.

Our quarterly operating results may vary significantly due to a combination of factors, many of which are beyond our control. These factors include:

• demand for products, which historically has been lowest in the third quarter;

• our ability to meet the demand for our products;

• increased competition;

• the number, timing and significance of new products and product introductions and enhancements by us and our competitors;

• our ability to develop, introduce and market new and enhanced versions of our products on a timely basis;

• changes in pricing policies by us and our competitors;

• changes in the treatment practices of orthopaedic surgeons;

• changes in distributor relationships and sales force size and composition;

• the timing of material expense- or income-generating events and the related recognition of their associated financial impact;

• prevailing interest rates on our excess cash investments;

• fluctuations in foreign currency rates;

• the timing of significant orders and shipments;

• ability to obtain reimbursement for our products;

• availability of raw materials;

• work stoppages or strikes in the healthcare industry;

• changes in FDA and foreign governmental regulatory policies, requirements and enforcement practices;

• changes in accounting policies, estimates and treatments;

• restructuring charges, costs associated with our U.S. governmental inquiries and other charges;

• variations in cost of sales due to the amount and timing of excess and obsolete inventory charges, commodity prices and manufacturing variances;

• income tax fluctuations; and

• general economic factors.

We believe our quarterly sales and operating results may vary significantly in the future and period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. We cannot assure you that our sales will increase or be sustained in future periods or that we will be profitable in any future period. Any shortfalls in sales or earnings from levels expected by securities or orthopaedic industry analysts could have an immediate and significant adverse effect on the trading price of our common stock in any given period.

Potential stockholder litigation may result in financial losses or harm our reputation and may divert management resources.

It is possible that litigation could be brought by our stockholders, including private securities litigation and stockholder derivative suits, that if initiated, could divert management's attention, harm our business and/or reputation, and result in significant liabilities.

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Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our corporate headquarters are located in Memphis, TN.  We lease 92,000 square feet of office space with research and development facilities under a lease agreement that is renewable through 2034.  Our U.S operations consist of a state of the art manufacturing facility in Arlington, Tennessee. We lease the manufacturing facility from the Industrial Development Board of the Town of Arlington. At this facility, we primarily produce orthopaedic implants and some related surgical instrumentation while utilizing lean manufacturing philosophies. The majority of our surgical instrumentation is produced to our specifications by qualified subcontractors who serve medical device companies. We have started construction of an expansion to the facility, which will be completed during the second quarter of 2014 and will then provide capacity for our production and distribution needs in the upcoming years. 

Our international operations include warehouse, sales, and administrative facilities located in several countries. Our primary international warehouse is located in a leased facility in the United Kingdom. We have an international research and development facility in Costa Rica and sales office in the Netherlands. Our sales offices in Italy, the United Kingdom, Germany, Australia and Canada also include warehouse and administrative space.

Item 3. Legal Proceedings.

From time to time, we are subject to lawsuits and claims that arise out of our operations in the normal course of business. We are the plaintiff or defendant in various litigation matters in the ordinary course of business, some of which involve claims for damages that are substantial in amount.

Governmental Inquiries

On September 29, 2010, we entered into a five year Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the United States Department of Health and Human Services (OIG-HHS). The CIA was filed as Exhibit 10.2 to our current report on Form 8-K filed on September 30, 2010. The CIA will expire on September 29, 2015.

The CIA imposes on us certain obligations to maintain compliance with U.S. healthcare laws, regulations and other requirements. Our failure to do so could expose us to significant liability including, but not limited to, exclusion from federal healthcare program participation, including Medicaid and Medicare, potential prosecution, civil and criminal fines or penalties, as well as additional litigation cost and expense.

Both we and MicroPort, which completed the purchase of our OrthoRecon business in January 2014, will continue to be subject to the CIA.

In addition to the USAO and OIG-HHS, other governmental agencies, including state authorities, could conduct investigations or institute proceedings that are not precluded by the CIA. In addition, the matters which gave rise to the CIA could increase our exposure to lawsuits by potential whistleblowers, including under the federal false claims acts, based on new theories or allegations arising from these matters.

On August 3, 2012, we received a subpoena from the U.S. Attorney's Office for the Western District of Tennessee requesting records and documentation relating to our PROFEMUR^® series of hip replacement devices. The subpoena covers the period from January 1, 2000 to August 2, 2012. We continue to respond to the subpoena.

Patent Litigation

In 2011, Howmedica Osteonics Corp. (Howmedica) and Stryker Ireland, Ltd. (collectively, Stryker), each a subsidiary of Stryker Corporation, filed a lawsuit against WMT in the United States District Court for the District of New Jersey (District Court) alleging that we infringed Stryker's U.S. Patent No. 6,475,243 related to our LINEAGE^® Acetabular Cup System and DYNASTY^® Acetabular Cup System. The lawsuit seeks an order of infringement, injunctive relief, unspecified damages, and various other costs and relief. On July 9, 2013, the district court issued a claim construction ruling. Under the court's claim construction ruling, we do not believe these hip products infringe the asserted patents. In filings with the court, Stryker has conceded that under the court’s claim construction rulings it can no longer pursue its infringement claims. Stryker has asked the court to dismiss the case so it may pursue an appeal.

In 2012, Bonutti Skeletal Innovations, LLC (Bonutti) filed a patent infringement lawsuit against us in the United States Court for the District of Delaware. Bonutti originally alleged that the Link Sled Prosthesis infringes U.S. Patent 6,702,821. The Link Sled Prosthesis is a product we distributed under a distribution agreement with LinkBio Corp which expired on December 31, 2013. In January 2013, Bonutti amended its complaint, alleging that the ADVANCE^® knee system, including ODYSSEY^®

24

instrumentation, infringes U.S. Patent 8,133,229, and that the ADVANCE^® knee system, including ODYSSEY^® instrumentation and PROPHECY^® guides, infringes U.S. Patent 7,806,896, which was issued on October 5, 2010. All of the claims of the asserted patents are directed to surgical methods for minimally invasive surgery.

In June 2013, Orthophoenix filed a patent lawsuit against us in the United States District Court for the District of Delaware alleging that surgical methods using the X-REAM^® product infringe two patents.

In June 2013, Anglefix filed suit in the United States District Court for the Western District of Tennessee, alleging that our ORTHOLOC^® products infringe Anglefix’s asserted patent.

In September 2013, ConforMIS, Inc. filed suit against us in the United States District Court for the District of Massachusetts, alleging that our PROPHECY^® knee and ankle systems infringe four ConforMIS’ patents. On February 19, 2014, ConforMIS filed an amended complaint asserting four additional patents against us relating to alleged infringement by our PROPHECY^® knee and ankle systems and naming MicroPort Orthopedics as an additional defendant.

Subject to the provisions of the asset purchase agreement with MicroPort for the sale of our OrthoRecon business, we will continue to be responsible for defense of existing patent infringement cases relating to our OrthoRecon business, and for resulting liabilities, if any.

Product Liability

Wright Medical Technology, Inc. has been named as a defendant, in some cases with multiple other defendants, in lawsuits in which it is alleged that as yet unspecified defects in the design, manufacture or labeling of certain metal-on-metal hip replacement products rendered the products defective. The lawsuits generally employ similar allegations that use of the products resulted in excessive metal ions and particulate in the patients into whom the devices were implanted, in most cases resulting in revision surgery. We anticipate that additional lawsuits relating to metal on metal hip replacement products may be brought. 

Because of the similar nature of the allegations made by several plaintiffs whose cases were pending in federal courts, upon motion of one plaintiff, Danny L. James, Sr., the United States Judicial Panel on Multidistrict Litigation in February 2012 transferred certain actions pending in the federal court system related to metal on metal hip replacement products to the United States District Court for the Northern District of Georgia, for consolidated pre-trial management of the cases before a single United States District Court Judge (the MDL). The consolidated matter is known as In re: Wright Medical Technology, Inc. Conserve Hip Implant Products Liability Litigation.   

Certain plaintiffs have elected to file their lawsuits in state courts in California. In doing so, most of those plaintiffs have named a surgeon involved in the design of the allegedly defective products as a defendant in the actions, along with his personal corporation. Pursuant to contractual obligations, Wright Medical has agreed to indemnify and defend the surgeon in those actions. Similar to the MDL proceeding in federal court, because the lawsuits generally employ similar allegations, certain of those pending lawsuits in California were consolidated for pretrial handling on May 14, 2012 pursuant to procedures of California state Judicial Counsel Coordinated Proceedings. The consolidated matter is known as In re: Wright Hip Systems Cases, Judicial Counsel Coordination Proceeding No. 4710.

There are other individual lawsuits related to metal on metal hip products pending in various state courts.

Additionally, as of February 21, 2014, we are a defendant in 25 lawsuits in various state and federal courts involving claims for damages for personal injury associated with fractures of our PROFEMUR^® long titanium modular neck product.

Employment Litigation

In 2012, two former employees, Frank Bono and Alicia Napoli, each filed separate lawsuits against WMT in the Chancery Court of Shelby County, Tennessee, which asserted claims for retaliatory discharge and breach of contract based upon his or her respective separation pay agreement. In addition, Mr. Bono and Ms. Napoli each asserted a claim for defamation related to the press release issued at the time of their terminations and a wrongful discharge claim alleging violation of the Tennessee Public Protection Act. Mr. Bono and Ms. Napoli each claimed that he or she was entitled to attorney fees in addition to other unspecified damages. On October 23, 2013, Ms. Napoli moved to voluntary dismiss her lawsuit, without prejudice.

Securities Litigation

On July 6, 2011, a purported federal securities class action lawsuit was filed in the United States District Court for the Middle District of Tennessee against BioMimetic Therapeutics, Inc. and certain of its officers and directors, alleging BioMimetic was unduly positive in its public statements about the prospects for FDA approval of Augment^® Bone Graft. We acquired BioMimetic in March 2013. In January 2013, the Court granted BioMimetic's, and the other named defendants', motion to dismiss the lawsuit, known as Paula Kuyat, et. al. versus BioMimetic Therapeutics, Inc. et. al., without leave to amend the complaint. The plaintiffs filed a Motion to Alter Judgment or Amend Order and Judgment of Dismissal with Prejudice, seeking reconsideration of the Court's

25

dismissal decision. This motion was denied. Subsequently, the plaintiffs appealed the Court’s dismissal of the case to the United States Court of Appeals for the Sixth Circuit. The Court of Appeals heard oral argument on December 4, 2013. The Court of Appeals has not yet issued its decision on the plaintiff’s appeal. 

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is traded on the Nasdaq Global Select Market under the symbol “WMGI.” The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock as reported on the Nasdaq Global Select Market.

	High		Low
Fiscal Year 2012
First Quarter	$	19.87	$	15.70
Second Quarter	$	21.50	$	17.88
Third Quarter	$	22.59	$	18.11
Fourth Quarter	$	22.42	$	18.89
Fiscal Year 2013
First Quarter	$	24.58	$	20.69
Second Quarter	$	27.47	$	22.34
Third Quarter	$	28.41	$	23.70
Fourth Quarter	$	30.87	$	26.06

Holders

As of February 12, 2014, there were 481 stockholders of record. As of February 11, 2014, there were an estimated 30,905 beneficial owners of our common stock.

Dividend Policy

We have never declared or paid cash dividends on our common stock. We currently intend to retain all future earnings for the operation and expansion of our business. We do not anticipate declaring or paying cash dividends on our common stock in the foreseeable future. Any payment of cash dividends on our common stock will be at the discretion of our board of directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our board of directors. In addition, our current credit facility prohibits us from paying any cash dividends without the lenders’ consent.

Equity Compensation Plan Information

The table below sets forth information regarding the number of securities to be issued upon the exercise of the outstanding stock options granted under our equity compensation plans and the shares of common stock remaining available for future issuance under our equity compensation plans as of December 31, 2013 (in thousands):

Plan Category	Number of securities to be issued upon exercise of outstanding options (in thousands)	Weighted-average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans (in thousands)
Equity compensation plans approved by security holders	4,516	$	22.61	3,791
Equity compensation plans not approved by security holders1	940	17.21		—
Total	5,456	$	21.68	3,791

_________________________________

¹  This amount represents options to purchase 940,000 shares of our common stock granted to Robert Palmisano, Julie Tracy and James Lightman during 2011 and Daniel Garen and Pascal E. R. Girin during 2012 to induce these executives to commence employment with us. Mr. Palmisano's options will vest and become exercisable in three equal annual installments beginning on the first anniversary of the date of grant, September 17, 2011. Ms. Tracy's, Mr. Lightman's, Mr. Garen's and Mr. Girin's options will vest and become exercisable in four equal annual installments beginning on the first anniversary of the date of grant, October 17, 2011, December 29, 2011, January 30, 2012, and November 26, 2012, respectively.

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Comparison of Total Stockholder Returns

The graph below compares the cumulative total stockholder returns for the period from December 31, 2008 to December 31, 2013, for our common stock, an index composed of U.S. companies whose stock is listed on the Nasdaq Global Select Market (the Nasdaq U.S. Companies Index), and an index consisting of Nasdaq-listed companies in the surgical, medical, and dental instruments and supplies industry (the Nasdaq Medical Equipment Companies Index). The graph assumes that $100.00 was invested on December 31, 2008, in our common stock, the Nasdaq U.S. Companies Index, and the Nasdaq Medical Equipment Companies Index, and that all dividends were reinvested. Total returns for the two Nasdaq indices are weighted based on the market capitalization of the companies included therein. Historic stock price performance is not indicative of future stock price performance. We do not make or endorse any prediction as to future stock price performance.

Cumulative Total Stockholder Returns Based on Reinvestment of $100.00 Beginning on December 31, 2008
	12/31/2008		12/31/2009		12/31/2010		12/31/2011		12/31/2012		12/31/2013
Wright Medical Group, Inc.	$	100.00	$	92.71	$	76.02	$	80.76	$	102.74	$	150.32
Nasdaq U.S. Companies Index	100.00		143.74		170.17		171.08		202.39		281.91
Nasdaq Medical Equipment Companies Index	100.00		145.84		155.52		178.67		198.90		233.09
SIC Code 384 - Surgical, Medical, and Dental Instruments and Supplies	100.00		131.06		134.53		131.90		154.63		207.13

Copyright 2014 CRSP Center for Research in Security Prices, University of Chicago, Graduate School of Business. Zacks Investment Research, Inc. Used with permission. All rights reserved.

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Item 6. Selected Financial Data.

The following tables set forth certain of our selected consolidated financial data as of the dates and for the years indicated. Historical results are not necessarily indicative of the results to be expected for any future period. These tables are presented in thousands, except per share data.

	Year Ended December 31,
	2013			2012			2011			2010		2009
Statement of Operations:
Net sales	$	242,330		$	214,105		$	210,753		$	208,489	$	191,729
Cost of sales (1)	59,721			48,239			56,762			55,928		50,809
Cost of sales — restructuring (2)	—			—			667			—		—
Gross profit	182,609			165,866			153,324			152,561		140,920
Operating expenses:
Selling, general and administrative (1) (6)	230,785			150,296			131,611			124,704		108,439
Research and development (1)	20,305			13,905			15,422			17,008		12,436
Amortization of intangible assets	7,476			4,417			2,412			2,397		2,242
BioMimetic impairment charges	206,249			—			—			—		—
Gain on sale of intellectual property (3)	—			(15,000		)	—			—		—
Restructuring charges (2)	—			431			4,613			60		208
Total operating expenses	464,815			154,049			154,058			144,169		123,325
Operating (loss) income (5)	(282,206		)	11,817			(734		)	8,392		17,595
Interest expense, net	16,040			10,113			6,381			6,090		5,392
Other (income) expense, net (6)	(67,843		)	5,089			4,241			119		226
(Loss) Income before income taxes	(230,403		)	(3,385		)	(11,356		)	2,183		11,977
Provision (benefits) for income taxes(7)	49,765			2			(3,961		)	624		4,607
Net (loss) income from continuing operations	$	(280,168	)	$	(3,387	)	$	(7,395	)	$	1,559	$	7,370
Income from discontinued operations, net of tax	$	6,223		$	8,671		$	2,252		$	16,282	$	4,761
Net (loss) income	$	(273,945	)	$	5,284		$	(5,143	)	$	17,841	$	12,131
Net income (loss) from continuing operations per share:
Basic	$	(6.19	)	$	(0.09	)	$	(0.19	)	$	0.04	$	0.20
Diluted	$	(6.19	)	$	(0.09	)	$	(0.19	)	$	0.04	$	0.20
Weighted-average number of common shares outstanding — basic	45,265			38,769			38,279			37,802		37,366
Weighted-average number of common shares outstanding — diluted	45,265			39,086			38,279			37,961		37,443

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	As of December 31,
	2013		2012		2011		2010		2009
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	168,534	$	320,360	$	153,642	$	153,261	$	84,409
Marketable securities	14,548		12,646		18,099		36,345		86,819
Working capital	385,890		575,713		424,543		426,286		421,647
Total assets	1,007,451		953,453		754,580		755,239		714,284
Long-term liabilities	428,312		353,580		210,126		212,963		204,919
Stockholders’ equity	459,714		523,441		468,464		470,972		440,408

	Year Ended December 31,
	2013			2012			2011			2010			2009
Other Data:
Cash flow provided by (used in) operating activities	$	(36,601	)	$	68,822		$	61,441		$	73,194		$	71,751
Cash flow used in investing activities	(121,317		)	(1,048		)	(30,560		)	(4,173		)	(74,956		)
Cash flow provided by (used in) financing activities	6,257			98,721			(30,050		)	(198		)	532
Depreciation	26,296			38,275			40,227			35,559			32,717
Stock-based compensation expense	15,368			10,974			9,108			13,177			13,191
Capital expenditures(4)	37,530			19,323			46,957			49,038			37,190

______________________________________

(1) These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:

	Year Ended December 31,
	2013		2012		2011		2010		2009
Cost of sales	$	503	$	704	$	735	$	705	$	820
Selling, general and administrative	10,675		6,767		4,875		7,808		8,300
Research and development	780		368		320		1,631		1,606
Discontinued operations	3,410		3,135		3,178		3,034		2,464

(2) During the years ended December 31, 2012 and 2011, we recorded pre-tax charges associated with the cost improvement restructuring efforts totaling $0.4 million and $5.3 million. During the years ended December 31, 2010 and 2009, we recorded pre-tax charges associated with the restructuring of our facilities in Toulon and Creteil, France, totaling $0.1 million and $0.2 million, respectively.

(3) During the year ended December 31, 2012, we recorded income of $15 million related to a sale and license back transaction for intellectual property.

(4) During the years ended December 31, 2010 and 2009, our capital expenditures included approximately $6.0 million and $5.9 million, respectively, related to the expansion of our Arlington, Tennessee facilities.

(5) During the year ended December 31, 2013, we recognized $3.7 million in costs associated with distributor conversions and non-competes. In addition, we recognized $12.9 million in costs for due diligence and transaction costs related to the BioMimetic & Biotech acquisitions. We recognized $21.6 million for transaction costs for the OrthoRecon divestiture. Additionally, we recorded charges of $206.2 million for BioMimetic impairment charges.

(6) During the year ended December 31, 2013, we recognized a gain of approximately $7.8 million for the gain on the previously held investment in BioMimetic. During the year ended December 31, 2012, we recognized approximately $2.7 million for the write-off of unamortized deferred financing fees associated with the termination of our Senior Credit facility and the redemption of approximately $25 million of our 2014 Convertible Notes. Additionally, we recognized approximately $1.1 million of charges for the mark to market adjustment of our derivative instruments. During the year ended December 31, 2011, we recognized approximately $4.1 million for the write off of pro-rata unamortized deferred financing fees and transaction costs associated with the tender offer for our convertible notes completed during the first quarter of 2011.

(7) During the year ended December 31, 2013, we recognized a $119.6 million tax valuation allowance recorded against deferred tax assets in our U.S. jurisdiction due to recent operating losses.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management's discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition and changes in financial condition, as well as our critical accounting estimates.

On January 9, 2014, we completed the sale of our OrthoRecon business to MicroPort Scientific Corporation (MicroPort). We determined that this transaction meets the criteria for classification as discontinued operations. As such, the financial results of our OrthoRecon business have been reflected within discontinued operations for all periods presented and, unless otherwise noted, the discussion below is on a continuing operations basis.

Executive Overview

Company Description. We are a global, specialty orthopaedic medical device company that provides solutions that enable clinicians to alleviate pain and restore their patients' lifestyles. We are a recognized leader of surgical solutions for the foot and ankle market and sell our products in over 60 countries worldwide.

Our business includes products that are used in foot and ankle repair, upper extremity products, and biologics products, which are used to replace damaged or diseased bone, to stimulate bone growth and to provide other biological solutions for surgeons and their patients. Extremity hardware includes implants and other devices to replace or reconstruct injured or diseased joints and bones of the foot, ankle, hand, wrist, fingers, toes, elbow and shoulder, which we generally refer to as either foot and ankle or upper extremity products. We are a leading provider of surgical solutions for the foot and ankle market. Our extensive foot and ankle product portfolio, our approximately 200 specialized foot and ankle sales representatives, and our increasing level of training of foot and ankle surgeons has resulted in our being a recognized leader in the foot and ankle market. Biologics are used to repair or replace damaged or diseased bone, to stimulate bone growth and to provide other biological solutions for surgeons and their patients.

We have been in business for over 60 years and have built a well-known and respected brand name.

Following the sale of our hip/knee (OrthoRecon) business on January 9, 2014, we moved our corporate headquarters and U.S. operations from Arlington, Tennessee to Memphis, Tennessee, where we conduct research and development, sales and marketing administration and administrative activities. Our manufacturing and warehousing activities continue to be located in Arlington, Tennessee. Our U.S. sales accounted for 73% of total revenue in 2013. Our products are sold primarily through a network of employee sales representatives and independent sales representatives in the U.S. and by a combination of employee sales representatives, independent sales representatives and stocking distributors outside the U.S. We promote our products in approximately 60 countries with principal markets in the U.S., Europe, Asia, Canada, Australia, and Latin America.

Principal Products. We specialize in extremity and biologic products used by extremity focused surgeon specialists for the reconstruction, trauma and arthroscopy markets. Our biologics sales encompass a broad portfolio of products designed to stimulate and augment the natural regenerative capabilities of the human body. We also sell orthopaedic products not considered to be part of our extremity or biologic product lines.

Our extremities product line includes products for both the foot and ankle and the upper extremity markets. Our principal foot and ankle portfolio includes the INBONE^® total ankle system, the CLAW^® II Polyaxial Compression Plating System, the ORTHOLOC^® 3Di Reconstruction Plating System, the PRO-TOE^® VO Hammertoe System, the DARCO^® family of locked plating systems, the VALOR^® ankle fusion nail system, and the Swanson line of toe joint replacement products. Our upper extremity portfolio includes the MICRONAIL^® intramedullary wrist fracture repair system, the EVOLVE^® radial head prosthesis for elbow fractures, the RAYHACK^® osteotomy system, and the EVOLVE^® Elbow Plating System.

Our biologic products focus on biological musculoskeletal repair and include synthetic and human tissue-based materials. Our principal biologic products include the GRAFTJACKET^® line of soft tissue repair and containment membranes, the ALLOMATRIX^® line of injectable tissue-based bone graft substitutes, the PRO-DENSE^® injectable regenerative graft, the OSTEOSET^® synthetic bone graft substitute, and the PRO-STIM^® injectable inductive graft.

Significant Business Developments. On January 9, 2014, we completed the sale of the OrthoRecon business to MicroPort Scientific Corporation (MicroPort). With the divestiture of our OrthoRecon business, our transition to a high-growth global Extremities and Biologics company is complete.

On January 7, 2013, we completed the acquisition of WG Healthcare Limited, a United Kingdom extremities company (WG Healthcare), for approximately $7.6 million, plus additional contingent consideration with an estimated fair value of $2.2 million to be paid over the next five years subject to the achievement of certain revenue milestones. We acquired the facility, inventory, infrastructure and all other assets and liabilities associated with WG Healthcare's business.

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On March 1, 2013, we completed our acquisition of BioMimetic Therapeutics, Inc. (BioMimetic). The transaction combined BioMimetic's biologics platform and pipeline with our established sales force and product portfolio, to further accelerate growth opportunities in our business. The transaction included an upfront purchase price of approximately $190 million in cash and stock plus additional milestone payments of up to approximately $190 million in cash, which are payable upon receipt of FDA approval of Augment^® Bone Graft and upon achieving certain revenue milestones.

In conjunction with the closing of the transaction, we paid $30.8 million in cash, net of cash acquired, and issued approximately 7.0 million shares of Wright common stock valued at $165.9 million and contingent value rights (CVRs) valued at $70.1 million. See Note 3 to our consolidated financial statements for additional information on consideration for this acquisition.

On August 7, 2013, we received a not approvable letter from the Food & Drug Administration (FDA) in response to our Pre-Market Approval (PMA) application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures.  We filed an appeal with the FDA regarding its decision, and on October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment. As a result, we recorded charges totaling $208.5 million of impairment and other charges related to assets acquired from BioMimetic, including $2.3 million of charges recorded within Cost of Sales to write down inventory to itsestimated net realizable value in the third quarter of 2013. In addition,due to the significant decline in market value of the CVRs issued as contingent consideration for the acquired business, we recognized an unrealized gain of $66.1 million from the decreased value of the CVRs that are recorded as a liability. See Note 2, Note 9 and Note 12 to our consolidated financial statements for further discussion of these charges.

On November 15, 2013, we completed our acquisition of Biotech International (Biotech), a leading privately held French orthopaedic extremities company. The transaction significantly expands our direct sales channel in France and international distribution network, and adds Biotech's complementary extremity product portfolio to further accelerate global growth opportunities in our Extremities business. We acquired 100% of Biotech's outstanding equity on a fully diluted basis at a total offer price of up to $80 million, comprised of upfront payments of approximately $55 million in cash, subject to certain adjustments set forth in the definitive agreement, and the issuance of common stock having a value of approximately $21 million, and contingent consideration with a fair value of $4.3 million, which is based upon the achievement of certain revenue milestones in 2014 and 2015.

On January 30, 2014, we completed our acquisition of Solana Surgical, LLC (Solana), and on February 5, 2014, we completed our acquisition of OrthoPro, L.L.C. (OrthoPro), both privately held, high growth extremities companies. These acquisitions add complementary extremity product portfolios to further accelerate growth opportunities in our global Extremities business.

Under the terms of the agreement with Solana, we acquired 100% of Solana's outstanding equity for total consideration, net of cash acquired, of $90 million, consisting of approximately $47.6 million in cash, subject to certain adjustments set forth in the definitive agreement, and approximately $42.4 million of Wright common stock. Under the terms of the agreement with OrthoPro, we acquired 100% of OrthoPro's outstanding equity for a total purchase price of up to $36 million in cash, consisting of $32.5 million paid at closing, subject to certain adjustments set forth in the definitive agreement, and up to an additional $3.5 million in cash contingent upon achievement of certain revenue-based milestones.

In 2013, net sales increased 13%, totaling $242.3 million, compared to $214.1 million in 2012, driven by growth in our foot and ankle business.

Our 2013 domestic sales increased 7% as compared to 2012, as a 16% increase in our U.S. foot and ankle sales more than offset a 10% decline in our biologics business. Our international sales increased 35% during 2013 as compared to 2012 primarily due to the acquisition of a foot & ankle business in the UK, sales of Augment^® Bone Graft in Australia and growth in our Asian markets.

In 2013, our net loss from continuing operations totaled $280.2 million, compared to a net loss from continuing operations of $3.4 million in 2012. Items unfavorably impacting net loss from continuing operations in 2013 as compared to 2012 included:

• $208.5 million ($172.3 million net of taxes) of impairment (see Note 12 to our consolidated financial statements for discussion of these charges) and other charges related to assets acquired from BioMimetic, including $2.3 million of charges recorded within Cost of Sales to write down inventory to its net realizable value, partially offset by an unrealized gain of $61.1 million ($61.1 million net of taxes) associated with the mark-to-market adjustment on the contingent value rights payable as contingent consideration for the BioMimetic acquisition;

• $21.6 million ($13.2 million net of taxes) of transition costs associated with the sale of our OrthoRecon business;

• $15.0 million ($9.6 million net of taxes) gain on the sale of certain internally-developed intellectual property recognized during 2012;

• $11.1 million ($8.4 million net of taxes) increase in due diligence, transition and transaction costs associated with our acquisitions of BioMimetic and Biotech;

32

• $5.9 million ($3.5 million net of taxes) increase in non-cash interest expense associated with our 2017 Convertible Notes;

• $119.6 million tax valuation allowance recorded against deferred tax assets in our U.S. jurisdiction due to recent operating losses; and

• decreased profitability, primarily driven by investments in our U.S. field operations (including investments in our direct sales force) and operating losses associated with the acquired BioMimetic business.

These were partially offset by a $7.8 million($7.8million net of taxes) gain on our previously held investment in BioMimetic, and a $4.5 million ($2.7 million net of taxes) decrease in charges related to the write-off of deferred financing costs associated with the termination of our Senior Credit Facility and 2014 Convertible Notes and the termination of an associated interest rate swap that were incurred in 2012.

Opportunities and Challenges. Following the closing of the sales of our OrthoRecon business on January 9, 2014, we are well positioned and committed to accelerating growth in our foot and ankle business and increasing U.S. foot and ankle sales productivity. We have made changes to attempt to realize these opportunities, including aggressively converting a portion of our U.S. independent distributor foot and ankle territories to direct employee sales representation, substantially increasing our investment in foot and ankle medical education to drive market adoption of new products and technologies, and expanding our international direct sales channel and distribution network.

Business continuity and a seamless customer experience are top priorities, and we are highly focused on ensuring that no business momentum is lost during the transition period following the sale of our OrthoRecon business. As such, we will have inefficiencies immediately post the transaction but will have an excellent opportunity to improve efficiency and leverage fixed costs in the business going forward. Additionally, there will be expense dis-synergies as a result of the transaction, and we do expect some short-term revenue dis-synergies as we work through the separation of some of the remaining full-line distribution both in the U.S. and outside the U.S.

Following sale of the OrthoRecon business, we are a high growth business. However, we do anticipate having operating losses until we are able to grow our revenue to a sufficient level to support our current cost structure.

Significant Industry Factors. Our industry is affected by numerous competitive, regulatory, and other significant factors. The growth of our business relies on our ability to continue to develop new products and innovative technologies, obtain regulatory clearance and compliance for our products, protect the proprietary technology of our products and our manufacturing processes, manufacture our products cost-effectively, respond to competitive pressures specific to each of our geographic markets, including our ability to enforce non-compete agreements, and successfully market and distribute our products in a profitable manner. We, and the entire industry, are subject to extensive governmental regulation, primarily by the FDA. Failure to comply with regulatory requirements could have a material adverse effect on our business. Additionally, our industry is highly competitive and has recently experienced increased pricing pressures, specifically in the areas of reconstructive joint devices.

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Results of Operations

Comparison of the year ended December 31, 2013 to the year ended December 31, 2012

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts (in thousands) and as percentages of net sales:

	Year Ended December 31,
	2013					2012
	Amount			% of Sales		Amount			% of Sales
Net sales	$	242,330		100.0	%	$	214,105		100.0	%
Cost of sales1	59,721			24.6	%	48,239			22.5	%
Gross profit	182,609			75.4	%	165,866			77.5	%
Operating expenses:
Selling, general and administrative1	230,785			95.2	%	150,296			70.2	%
Research and development1	20,305			8.4	%	13,905			6.5	%
Amortization of intangible assets	7,476			3.1	%	4,417			2.1	%
BioMimetic impairment charges	206,249			85.1	%	—			—	%
Gain on sale of intellectual property	—			—	%	(15,000		)	(7.0	)%
Restructuring charges	—			—	%	431			0.2	%
Total operating expenses	464,815			191.8	%	154,049			72.0	%
Operating (loss) income	(282,206		)	(116.5	)%	11,817			5.5	%
Interest expense, net	16,040			6.6	%	10,113			4.7	%
Other (income) expense, net	(67,843		)	(28.0	)%	5,089			2.4	%
Loss from continuing operations before income taxes	(230,403		)	(95.1	)%	(3,385		)	(1.6	)%
Provision (benefit) for income taxes	49,765			20.5	%	2			0.0	%
Net loss from continuing operations	$	(280,168	)	(115.6	)%	$	(3,387	)	(1.6	)%
Income from discontinued operations, net of tax 1	6,223					8,671
Net (loss) income	$	(273,945	)			$	5,284

___________________________

1 These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:

	Year Ended December 31,
	2013		% of Sales		2012		% of Sales
Cost of sales	$	503	0.2	%	$	704	0.3	%
Selling, general and administrative	10,675		4.4	%	6,767		3.2	%
Research and development	780		0.3	%	368		0.2	%
Income from discontinued operations, net of tax	3,410		n/a		3,135		n/a

The following table sets forth our net sales by product line for the periods indicated (in thousands) and the percentage of year-over-year change:

	Year Ended December 31,
	2013	2012	% Change
Foot and Ankle	150,662	122,897	22.6	%
Upper Extremity	24,663	24,977	(1.3	)%
Biologics	59,792	60,495	(1.2	)%
Other	7,213	5,736	25.7	%
Total Sales	242,330	214,105	13.2	%

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The following table presents net sales by geographic area (in thousands) and the percentage of year-over-year change:

	Year Ended December 31,
	2013		2012		% Change
Domestic	$	177,648	$	166,111	6.9	%
International	64,682		47,994		34.8	%
Total Sales	$	242,330	$	214,105	13.2	%

Net sales

Net sales totaled $242.3 million in 2013, compared to $214.1 million in 2012, representing a 13% increase. U.S. net sales totaled $177.6 million in 2013, a 7% increase from $166.1 million in 2012, representing approximately 73% of total net sales in 2013 and 78% of total net sales in 2012. Our international net sales totaled $64.7 million in 2013, a 35% increase as compared to net sales of $48.0 million in 2012, primarily due to a 40% increase in Europe as the result of the WG Healthcare acquisition in the first quarter of 2013 and the acquisition of Biotech during the fourth quarter of 2013, a 90% increase in Asia due to the addition of a new distribution partner in China during the quarter ended June 30, 2013, and an 80% increase in Australia driven by sales of Augment^® Bone Graft. Our 2013 international net sales included a favorable foreign currency impact of approximately $1.2 million when compared to 2012 net sales.

Our foot and ankle sales increased23%to$150.7 millionin 2013 from$122.9 millionin 2012, driven by the success of our ORTHOLOC^®3Di Reconstruction Plating System, as well as continued growth of our INBONE^®Total Ankle Arthroplasty products. International foot and ankle sales grew 49%, driven by growth in our European markets due to the acquisition of WG Healthcare and Biotech, and growth in our Asian markets due to the addition of a new distribution partner during 2013.

Upper extremity net sales decreased to $24.7 million in 2013, representing a 1% decline from 2012, driven by a $0.4 million of unfavorable foreign currency impact.

Net sales of our biologics products decreased 1% to $59.8 million in 2013, compared to $60.5 million in 2012. A 10% decrease in our U.S. sales as a result of lower sales volumes, was partially offset by a 32% increase in our international sales, driven by a $2.8 million increase in sales in Australia, primarily related to sales of Augment^® Bone Graft.

Cost of sales

Our cost of sales as a percentage of net sales increased in2013compared to2012from22.5%to24.6%. For 2013, cost of sales included $2.3 million (1.0% of net sales) of charges associated with the write down of inventory acquired from BioMimetic to net realizable value. The remaining increase in cost of sales as a percentage of sales is primarily driven by increased provisions for excess, obsolete and lost inventory and amortization of acquired inventory step-up to fair value, partially offset by favorable manufacturing expenses.

Our cost of sales and corresponding gross profit percentages can be expected to fluctuate in future periods depending upon changes in our product sales mix and prices, distribution channels and geographies, manufacturing yields, period expenses, levels of production volume and currency exchange rates.

Selling, general and administrative

Our selling, general and administrative expenses as a percentage of net sales totaled 95.2% and 70.2% in 2013 and 2012, respectively. For 2013, selling, general and administrative expense included $21.6 million (8.9% of net sales) of transition costs associated with the sale of our OrthoRecon business, $12.9 million (5.3% of net sales) in due diligence, transition and transactions costs associated with our acquisitions in 2013, and $0.9 million (0.4% of net sales) of costs associated with U.S. distributor conversions. Selling, general and administrative expense for 2012 included $1.8 million (0.8% of net sales) of due diligence and transition costs associated with our acquisition of BioMimetic, and $1.0 million (0.5% of net sales) of costs associated with U.S. distributor conversions. The remaining increase in selling, general and administrative expense was driven by $7.7 million of expenses associated with the ongoing operations of the acquired BioMimetic business and legal and other spending associated with our appeal of the not approvable letter from the FDA (3.2% of net sales), $2.8 million of taxes related to the enacted 2.3% excise tax on U.S. sales of medical devices (1.2% of net sales), increased sales and marketing costs as a result of our initiative to convert a substantial portion of our U.S. foot and ankle sales force to direct employees, and increased spending on international growth initiatives.

We anticipate that our selling, general and administrative expenses in continuing operations will increase after the sale of our OrthoRecon business is complete due to additional expenses associated with business acquisitions in November 2013 and January 2014, as well as anticipated dis-synergies in certain corporate and international expenses that have been recorded in discontinued operations in our consolidated financial statement. Theses dis-synergies include expenses associated with our information

35

technology support, a new corporate headquarters, and international employees and facilities. These increases will be offset by anticipated decreased spending on transition costs associated with the sale of the OrthoRecon business.

Research and development

Our investment in research and development activities represented 8.4% and 6.5% of net sales in 2013 and 2012, respectively. The increase in research and development costs as a percentage of sales is attributable to spending associated with the acquired BioMimetic business.

Amortization of intangible assets

Charges associated with amortization of intangible assets totaled $7.5 million in 2013, as compared to $4.4 million in 2012. During 2013, we recorded $2.8 million of amortization expense associated with distributor non-compete agreements compared to $1.9 million in 2012. In addition, during 2013 we recognized approximately $1.0 million of impairment charges associated with certain intangible assets acquired in prior periods (see Note 12 to our consolidated financial statements). The remaining increase is driven by intangible assets acquired during 2013 (see Note 3 to our consolidated financial statements).

Based on the intangible assets held at December 31, 2013, we expect to amortize $6.9 million in 2014, $4.6 million in 2015, $3.5 million in 2016, $3.1 million in 2017 and $2.4 million in 2018. This does not include amortization associated with any intangible assets acquired in 2014 (see Note 22 to our consolidated financial statements).

BioMimetic Impairment Charges

During 2013, we recorded charges of approximately $206.2 million associated with the BioMimetic business acquired in the first quarter of 2013. On August 7, 2013, we received a not approvable letter from the FDA in response to our Pre-PMA application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures.  We have filed an appeal with the FDA regarding its decision. On October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment. As a result of this evaluation, we recorded an intangible impairment charge of approximately $88.1 million and a goodwill impairment charge of $115.0 million, as well as the recognition of a $3.2 million charge fornon-cancelable minimum inventory purchase commitments for the raw materials used in the manufacture of Augment^® Bone Graft, which we have estimated will expire unused. See Note 12 to our consolidated financial statements for further discussion of the impairment charges.

Gain on Sale of Intellectual Property

During 2012, we recognized a gain of $15.0 million related to the sale of certain intellectual property associated with biomaterial used in products marketed and sold by us as bone graft substitutes. In connection with the sale, we entered into a license agreement with the purchaser pursuant to which we obtained an exclusive, worldwide, fully paid license to use the transferred intellectual property in our fields of use.

Interest expense, net

Interest expense, net, consists of interest expense of $16.5 million in 2013 and $10.6 million in 2012, consisting primarily of:

• non-cash expense related to the amortization of the discount on our 2017 Convertible Senior Notes of $8.7 million and $2.8 million in 2013 and 2012, respectively;

• non-cash expense related to the amortization of deferred financing costs of $1.6 million and $0.5 million in 2013 and 2012, respectively; and

• cash interest expense related to our 2017 Convertible Senior Notes of $6.0 million and $2.0 million in 2013 and 2012, respectively.

The increase in interest expense amounts during 2013 is due to the issuance of the 2017 Convertible Senior Notes in the second half of 2012. The remaining interest expense in 2012 relates to cash interest expense associated with 2014 Notes and cash interest on our borrowings under our Senior Credit Facility, which was repaid during the second half of 2012. Interest income of $0.4 million was recognized during 2013 and 2012, generated by our invested cash balances and investments in marketable securities. The amounts of interest income we realize in 2014 and beyond are subject to variability, dependent upon both the rate of invested returns we realize and the amount of excess cash balances on hand.

Other expense, net

For 2013, other expense, net includes an unrealized gain of $61.1 million on CVRs issued in connection with our acquisition of BioMimetic, a $7.8 million gain on our previously held investment in BioMimetic, offset by a $1.0 million unrealized loss for mark-to-market adjustments on our derivative assets and derivative liabilities. For 2012, other expense, net includes a $1.8 million loss on the early termination of an interest rate swap, $2.7 million related to the write off of deferred financing costs associated

36

with our terminated Senior Credit Facility and the portion of our 2014 Notes that were repurchased, and a net unrealized loss of $1.1 million for mark-to-market adjustments on our derivative assets and derivative liabilities.

Provision (benefit) for income taxes

We recorded tax expense of $49.8 million in 2013 and a negligible amount of tax expense in 2012. Our effective tax rate for 2013 and 2012 was (21.6)% and (0.1)%, respectively. Our 2013 tax expense included a $119.6 million provision to record a valuation allowance against our deferred tax assets primarily associated with net operating losses in the U.S. as a result of recent cumulative operating losses in the U.S. tax jurisdiction, which had an unfavorable 51.9 percentage point impact on our 2013 effective tax rate. Our 2012 tax expense was unfavorably impacted by non-deductible expenses associated with acquisitions announced in 2013, which had an unfavorable 21.2 percentage point impact on the 2012 effective tax rate due to the relatively small loss before income taxes.

Income from Discontinued Operations, Net of Tax

Income from discontinued operations, net of tax, consists of our OrthoRecon business, which was sold to MicroPort effectiveJanuary 9, 2014. Costs associated with corporate employees and infrastructure being transferred as a part of the sale have been included in discontinued operations.

Net sales of our OrthoRecon business decreased 14% to $231.9 million in 2013 compared to $269.7 million in 2012, driven by a 16.5% decline in hip sales and a 10.4% decline in knee sales.

Income from discontinued operations, net of tax, was$6.2 millionin2013, as compared to$8.7 millionin2012. The decrease in net income was primarily driven by the decrease in sales year over year, the after tax impact of $10.9 million of legal and professional fees associated with the MicroPort transaction, and $1.7 million of taxes related to the enacted 2.3% excise tax on U.S. sales of medical devices, partially offset by the after tax impact of a $3.7 million decrease in expenses associated with the deferred prosecution agreement and U.S. governmental inquiries, and the after tax impact of a$10 million decrease in depreciation and amortization expense on long lived assets that were classified as held for sale in June 2013.

Costs associated with legal defense, income associated with product liability insurance recoveries, and changes to any contingent liabilities associated our OrthoRecon business have been reflected within results of discontinued operations, and we will continue to reflect these within results of discontinued operations in future periods.

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Comparison of the year ended December 31, 2012 to the year ended December 31, 2011

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts (in thousands) and as percentages of net sales:

	Year Ended December 31,
	2012					2011
	Amount			% of Sales		Amount			% of Sales
Net sales	$	214,105		100.0	%	$	210,753		100.0	%
Cost of sales1	48,239			22.5	%	$	56,762		26.9	%
Cost of sales - restructuring	—			—	%	$	667		0.3	%
Gross profit	165,866			77.5	%	153,324			72.8	%
Operating expenses:
Selling, general and administrative1	150,296			70.2	%	131,611			62.4	%
Research and development1	13,905			6.5	%	15,422			7.3	%
Amortization of intangible assets	4,417			2.1	%	2,412			1.1	%
Gain on sale of intellectual property	(15,000		)	(7.0	)%	—			—	%
Restructuring charges	431			0.2	%	4,613			2.2	%
Total operating expenses	154,049			72.0	%	154,058			73.1	%
Operating income	11,817			5.5	%	(734		)	(0.3	)%
Interest expense, net	10,113			4.7	%	6,381			3.0	%
Other expense, net	5,089			2.4	%	4,241			2.0	%
(Loss) income from continuing operations before income taxes	(3,385		)	(1.6	)%	(11,356		)	(5.4	)%
(Benefit) provision for income taxes	2			0.0	%	(3,961		)	(1.9	)%
Net income from continuing operations	$	(3,387	)	(1.6	)%	$	(7,395	)	(3.5	)%
Income from discontinued operations, net of tax 1	8,671					2,252
Net income (loss)	$	5,284				$	(5,143	)

___________________________

1 These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:

	Year Ended December 31,
	2012		% of Sales		2011		% of Sales
Cost of sales	$	704	0.3	%	$	735	0.3	%
Selling, general and administrative	6,767		3.2	%	4,875		2.3	%
Research and development	368		0.2	%	320		0.2	%
Loss from discontinued operations, net of tax	3,135		n/a		3,178		n/a

The following table sets forth our net sales by product line for the periods indicated (in thousands) and the percentage of year-over-year change:

	Year Ended December 31,
	2012	2011	% Change
Foot and Ankle	122,897	107,734	14.1	%
Upper Extremity	24,977	27,742	(10.0	)%
Biologics	60,495	69,409	(12.8	)%
Other	5,736	5,868	(2.2	)%
Total Sales	214,105	210,753	1.6	%

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The following table presents net sales by geographic area (in thousands) and the percentage of year-over-year change:

	Year Ended December 31,
	2012		2011		% Change
Domestic	$	166,111	166,456		(0.2	)%
International	47,994		44,297		8.3	%
Total Sales	$	214,105	$	210,753	1.6	%

Net sales

Our sales increased 2%, driven by 14% growth in our foot and ankle sales, partially offset by a 10% decline in upper extremity sales and a 13% decline in biologics sales. Our U.S. net sales totaled $166.1 million in 2012 and $166.5 million in 2011, representing approximately 78% of total net sales in 2012, 79% of total net sales in 2011. Our international net sales totaled $48.0 million in 2012, an 8% increase as compared to net sales of $44.3 million in 2011. Our 2012 international net sales included an unfavorable foreign currency impact of approximately $1.1 million when compared to 2011 net sales. However, this unfavorable currency impact was more than offset by growth in foot and ankle sales.

Our foot and ankle sales increased 14%, driven by the success of our CLAW^® II Polyaxial Compression Plating System and our ORTHOLOC^® 3Di Reconstruction Plating System, both launched in the first half of 2012, as well as the successful conversion of the majority of our foot & ankle sales force to direct representation. International foot and ankle sales grew 26%, as growth across all geographies was partially offset by $0.8 million of unfavorable currency exchange rates.

Upper extremity net sales decreased to $25.0 million in 2012, representing a 10% decline from 2011, driven by a 13% decline in the U.S.

Net sales of our biologic products totaled $60.5 million in 2012, which declined by 13%, as compared to 2011. Our U.S. biologics sales decreased 16% compared to 2011, primarily due to the license agreement entered into with KCI during the first quarter of 2011, which precluded us from marketing our GRAFTJACKET^® products in the wound care field.

Cost of sales

Our cost of sales as a percentage of net sales decreased to 22.5% in 2012 from 26.9% in 2011 primarily due to lower provisions for excess and obsolete inventory.

Cost of sales - restructuring

In 2011, we recorded charges of $0.7 million for excess and obsolete inventory provisions associated with product optimization as we reduced the size of our international product portfolio. No such provisions were recorded in 2012.

Selling, general and administrative

Our selling, general and administrative expenses as a percentage of net sales totaled 70.2% and 62.4% in 2012 and 2011, respectively. For 2012, selling, general and administrative expense included $6.8 million (3.2% of net sales) of non-cash stock-based compensation expense, $1.8 million (0.8% of net sales) of due diligence and transaction costs associated with our acquisition of BioMimetic, and $1.0 million (0.5% of net sales) of costs associated with U.S. distributor conversions. Selling, general and administrative expense for 2011 included $4.9 million (2.3% of net sales) of non-cash stock based compensation expense. The remaining increase in selling, general and administrative expense was driven by increased sales and marketing costs as a result of our initiative to convert a substantial portion of our U.S. foot and ankle sales force to direct employees, and costs associated with increased levels of medical education. Additionally, we recognized increased cash incentive compensation as compared to 2011, when we incurred lower expense associated with cash incentive compensation, as we failed to meet most incentive compensation targets.

Research and development

Our investment in research and development activities represented 6.5% and 7.3% of net sales in 2012 and 2011, respectively. The decrease in research and development expense as a percentage of sales is primarily attributable to cost reductions resulting from our cost improvement restructuring plan initiated in the third quarter of 2011 and lower costs associated with clinical studies.

Amortization of intangible assets

Charges associated with amortization of intangible assets were $4.4 million or 2.1% of sales in 2012, as compared to $2.4 million or 1.1% of sales in 2011. During 2012, we recorded $1.9 million of amortization expense associated with distributor non-compete agreements entered into during the year.

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Gain on Sale of Intellectual Property

During 2012, we recognized a gain of $15.0 million related to the sale of certain intellectual property associated with biomaterial used in products marketed and sold by us as bone graft substitutes. In connection with the sale, we entered into a license agreement with the purchaser pursuant to which we obtained an exclusive, worldwide, fully paid license to use the transferred intellectual property in our fields of use.

Restructuring Charges

During 2011, we recognized $4.6 million of restructuring charges within operating expenses, primarily for severance obligations and the impairment of long-lived assets. During 2012, we completed our cost restructuring recognizing $0.4 million of charges.

Interest expense, net

Interest expense, net, consists of interest expense of $10.6 million in 2012, primarily from borrowings under our 2017 Convertible Senior Notes, borrowings under the Term Loan and non-cash interest expense associated with the amortization of the discount on our 2017 Convertible Senior Notes. Interest expense, net, consists of interest expense of $7.0 million in 2011, primarily from borrowings under the Term Loan. Interest income of $0.4 million was recognized during 2012 and 2011, generated by our invested cash balances and investments in marketable securities.

Other expense, net

For 2012, other expense, net includes a $1.8 million loss on the early termination of an interest rate swap, $2.7 million related to the write off of deferred financing costs associated with our terminated Senior Credit Facility and the portion of our 2014 Notes that were repurchased, and a net unrealized loss of $1.1 million for mark-to-market adjustments on our derivative assets and derivative liabilities. For 2011, other expense, net includes approximately $4.1 million of expenses in 2011 for the write-off of pro-rata unamortized deferred financing fees and for bank and legal fees associated with the purchase of $170.9 million aggregate principal amount of the 2014 Notes validly tendered in the 2011 tender offer.

Provision (Benefit) for income taxes

We recorded a negligible tax provision in 2012 and a tax benefit of $4.0 million in 2011. Our effective tax rate for 2012 and 2011 was (0.1)% and 34.9% respectively. Our 2012 tax expense was unfavorably impacted by non-deductible transaction expenses associated with acquisitions announced in 2013, which had an unfavorable 21.2 percentage point impact on the 2012 effective tax rate due to the relatively small loss before income taxes.

Income from Discontinued Operations, Net of Tax

Net sales of our OrthoRecon business decreased 10.8% to $269.7 million in 2012 compared to $302.2 million in 2011, driven by a 13.1% decline in hip sales and a 7.3% decline in knee sales.

Income from discontinued operations, net of tax, was$8.7 millionin 2012, as compared$2.3 millionin 2011. The increase in net income was primarily driven by the after tax impact of a $13.2 millioncharge in 2011 for management's estimate for product liability provisions, and the after tax impact of a $6.3 million decrease in expenses associated with the deferred prosecution agreement and U.S. governmental inquiries. These decreased costs were partially offset by decreased profitability resulting from the sales decline.

Seasonal Nature of Business

We traditionally experience lower sales volumes in the third quarter than throughout the rest of the year as many of our reconstructive products are used in elective procedures, which generally decline during the summer months, typically resulting in selling, general and administrative expenses and research and development expenses as a percentage of sales that are higher during this period than throughout the rest of the year. In addition, our first quarter selling, general and administrative expenses include additional expenses that we incur in connection with the annual meeting held by the American College of Foot and Ankle Surgeons. During this three-day event, we display our most recent and innovative products in the foot and ankle market.

Restructuring

On September 15, 2011, we announced plans to implement a cost restructuring plan to foster growth, enhance profitability and cash flow, and build stockholder value. We implemented numerous initiatives to reduce spending, including streamlining select aspects of our international selling and distribution operations, reducing the size of our product portfolio, adjusting plant operations to align with our volume and mix expectations and rationalizing our research and development projects. We concluded our cost improvement restructuring efforts during the second quarter of 2012. We have realized the benefits from this restructuring within selling, general and administrative expenses beginning in the fourth quarter of 2011. This favorability is being partially offset by unfavorable income tax consequences, and incremental expenses associated with senior management changes. In total, we estimate net income includes approximately $1 million favorable impact beginning in 2012 on an annual basis. However, the favorable impact from our cost improvement restructuring plan was more than offset by the additional investments we made in 2012 and

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2013 for the transformational changes to our business, including aggressively converting a portion of our U.S. independent distributor foot and ankle territories to direct sales representation and substantially increasing our investment in foot and ankle medical education to drive market adoption of new products and technologies.

Liquidity and Capital Resources

The following table sets forth, for the periods indicated, certain liquidity measures (in thousands):

	As of December 31,
	2013		2012
Cash and cash equivalents	$	168,534	$	320,360
Short-term marketable securities	6,898		12,646
Long-term marketable securities	7,650		—
Working capital	385,890		575,713

Operating Activities. Cash (used in) provided by operating activities totaled ($36.6 million), $68.8 million, and $61.4 million in 2013, 2012 and 2011 respectively. The decrease in cash provided by operating activities in 2013 as compared to 2012 was driven by decreased cash profitability, primarily due to costs associated with the sale of our OrthoRecon business, costs associated with the acquisitions of BioMimetic and Biotech, and operating expenses associated with the acquired BioMimetic business.

In 2012 compared to 2011, the increase in cash from operating activities was primarily due to increased cash profitability and inventory reductions, partially offset by payment of approximately $10 million to buy out certain royalty agreements with health care professionals.

Investing Activities. Our capital expenditures totaled $37.5 million in 2013, $19.3 million in 2012, and $47.0 million in 2011. The increase in 2013 compared to 2012 is primarily attributable to spending on our new corporate headquarters due to the sale of our existing headquarters as part of the sale of our OrthoRecon business. The decrease in capital expenditures in 2012 compared to 2011 is attributable to decreased spending on surgical instrumentation as a result of our inventory and instrumentation optimization efforts, and the 2011 spending on instrumentation related to the launch of our EVOLUTION^™ Medial-Pivot Knee System. In addition, 2011 included spending related to the upgrade of our enterprise resource planning system. Historically, our capital expenditures have consisted principally of purchased manufacturing equipment, research and testing equipment, computer systems, office furniture and equipment and surgical instruments. We expect to incur capital expenditures in 2014 of approximately $50 million for routine capital expenditures, the expansion of our manufacturing facility in Arlington, Tennessee, and the completion of our corporate headquarters.

During 2013, we paid $95.4 million cash, net of cash acquired for the WG Healthcare, BioMimetic and Biotech acquisitions. Refer to Note 3 of our consolidated financial statements contained in “Financial Statements and Supplementary Data” for additional information regarding these acquisitions.

Financing Activities. During 2013, cash provided by financing activities totaled $6.3 million, compared to $98.7 million in 2012 and cash used in financing activities of $30.1 million in 2011. During 2013, we received $6.3 million of cash in connection with the issuance of shares in connection with our stock-based compensation plan.

During 2012, cash provided by financing activities consisted primarily of $300.0 million of proceeds from the issuance of our 2017 Convertible Senior Notes, offset by payments on our Term Loan of $144.4 million and $56.2 million of cash used to purchase hedge options on our 2017 Convertible Senior Notes. During 2011, cash used in financing activities consisted of the purchase of $170.9 million of our 2014 Notes tendered in the tender offer, mostly offset by the cash proceeds from a $150 million borrowing under the Term Loan.

On August 22, 2012, we issued $300 million of the 2017 Convertible Senior Notes, which generated net proceeds of $290.8 million. In connection with the offering of the 2017 Convertible Senior Notes, we entered into convertible note hedging transactions with three counterparties (the Option Counterparties). We also entered into warrant transactions in which we sold warrants for an aggregate of 11,794,200 shares of our common stock to the Option Counterparties. As of December 31, 2013, $300.0 million aggregate principal amount of the 2017 Convertible Senior Notes remain outstanding.

In November 2007, we issued $200 million of 2.625% Convertible Senior Notes maturing on December 1, 2014. On February 10, 2011, we announced the commencement of a tender offer to purchase for cash any and all of our outstanding 2014 Notes. Upon expiration on March 11, 2011, we purchased $170.9 million aggregate principal amount of the 2014 Notes. On August 22, 2012, we purchased $25.3 million aggregate principal amount of the 2014 Notes. As of December 31, 2013, $3.8 million aggregate principal amount of the 2014 Notes remain outstanding.

See Note 9 to our consolidated financial statements contained in “Financial Statements and Supplementary Data” for further discussion of these financing activities.

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In 2014, we will make payments of $4.2 million for the current portion of our long-term obligations, consisting of $3.8 million related to our 2014 Notes, and payments under our long-term capital leases, including interest, of $0.4 million.

As of December 31, 2013, we had an immaterial amount of cash and cash equivalents held in jurisdictions outside of the U.S., which are expected to be indefinitely reinvested for continued use in foreign operations. Repatriation of these assets to the U.S. would have negative tax consequences. We do not intend to repatriate these funds.

Discontinued Operations. Cash flows from discontinued operations are combined with cash flows from continuing operations in the Consolidated Statement of Cash Flows. During 2013, cash inflows from discontinued operations was approximately $29 million, compared to approximately $44 million in 2012. We do not expect that the absence of cash flows from discontinued operations will have an impact on our ability to meet contractual cash obligations, fund our working capital requirements, operations, and anticipated capital expenditures.

Contractual Cash Obligations. At December 31, 2013, we had contractual cash obligations and commercial commitments as follows (in thousands):

	Payments Due by Periods
	Total		2014		2015-2016		2017-2018		After 2018
Amounts reflected in consolidated balance sheet:
Capital lease obligations(1)	$	10,292	$	419	$	1,863	$	1,998	$	6,012
2017 Convertible Senior Notes(2)	300,000		—		—		300,000		—
2014 Convertible Senior Notes(3)	3,768		3,768		—		—		—
Amounts not reflected in consolidated balance sheet:
Operating leases	16,171		6,087		6,867		2,449		768
Minimum supply obligations	2,073		—		2,073		—		—
Interest on 2017 Convertible Senior Notes(4)	22,000		6,000		12,000		4,000		—
Interest on 2014 Convertible Senior Notes(5)	91		91		—		—		—
Total contractual cash obligations	$	354,395	$	16,365	$	22,803	$	308,447	$	6,780

_______________________________

(1) Payments include amounts representing interest.

(2) Represents long-term debt payment provided to holders of the 2017 Convertible Senior Notes do not exercise the option to convert each $1,000 note into 39.3140 shares of our common stock. Our 2017 Convertible Senior Notes are discussed further in Note 9 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”

(3) Represents long-term debt payment provided holders of the 2014 Convertible Senior Notes do not exercise the option to convert each $1,000 note into 30.6279 shares of our common stock. Our 2014 Convertible Senior Notes are discussed further in Note 9 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”

(4) Represents interest on the 2017 Convertible Senior Notes payable semiannually with an annual interest rate of 2.000%.

(5) Represents interest on the 2014 Convertible Senior Notes payable semiannually with an annual interest rate of 2.625%.

Portions of these payments are denominated in foreign currencies and were translated in the table above based on their respective U.S. dollar exchange rates at December 31, 2013. These future payments are subject to foreign currency exchange rate risk.

The amounts reflected in the table above for capital lease obligations represent future minimum lease payments under our capital lease agreements, which are primarily for certain property and equipment. The present value of the minimum lease payments are recorded in our balance sheet at December 31, 2013. The minimum lease payments related to these leases are discussed further in Note 9 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”

The amounts reflected in the table above for operating leases represent future minimum lease payments under non-cancelable operating leases primarily for certain equipment and office space. Our purchase obligations and royalty and consulting agreements are disclosed in Note 19 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”

In accordance with U.S. generally accepted accounting principles, our operating leases are not recognized in our consolidated balance sheet; however, the minimum lease payments related to these agreements are disclosed in Note 19 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”

Contingent consideration of up to $400,000 may be paid related to the acquisition of certain assets associated with the EZ Concept Surgical Device Corporation (EZ Frame). The potential additional cash payments are based on the future financial performance

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of the acquired assets. Additionally, in accordance with the October 2011 CCI acquisition, we will pay royalties based on sales of the acquired product. Contingent consideration of up to $182.2 million may be paid upon receipt of FDA approval of Augment^® Bone Graft and upon achieving certain revenue milestones associated with the BioMimetic acquisition. Additionally, payments of $3.9 million and $5.0 million may be paid upon achieving revenue milestones related to the acquisitions of WG Healthcare and Biotech, respectively.

In addition to the contractual cash obligations discussed above, all of our U.S. sales and a portion of our international sales are subject to commissions based on net sales. A substantial portion of our global sales are subject to royalties earned based on product sales.

Additionally, as of December 31, 2013, we had $4.7 million of unrecognized tax benefits recorded within “Other liabilities” in our consolidated balance sheet. This represents the tax benefits associated with various tax positions taken, or expected to be taken, on U.S. and international tax returns that have not been recognized in our financial statements due to uncertainty regarding their resolution. We are unable to make a reliable estimate of the eventual cash flows by period that may be required to settle these matters. Certain of these matters may not require cash settlement due to the existence of net operating loss carryforwards. Therefore, our unrecognized tax benefits are not included in the table above. See Note 14 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”

During 2013, we received a not approvable letter from the FDA in response to our PMA application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. We have filed an appeal with the FDA regarding its decision. On October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment based upon the information we had as of September 30, 2013 (see Note 9 to our consolidated financial statements contained in “Financial Statements and Supplementary Data” for further discussion of our impairment analysis). Due to the results of that analysis, we estimated that approximately $3.2 million of the non-cancelable inventory commitments for the raw materials used in the manufacture of Augment^® Bone Graft will expire unused. As such, we recorded a $3.2 million loss on this contractual obligation, which was recognized within “BioMimetic impairment charges” on our consolidated statement of operations for the year ended December 31, 2013.

In process research and development. In connection with our BioMimetic acquisition, we acquired in-process research and development (IPRD) technology related to projects that had not yet reached technological feasibility as of the acquisition date, which included Augment^® Bone Graft, which was undergoing the FDA approval process, and Augment^® Injectable Bone Graft. The acquisition date fair values of the IPRD technology was $61.2 million for Augment^® Bone Graft and $27.1 million for Augment^® Injectable Bone Graft. The fair value of the research and development projects was determined using the income approach, which discounts expected future cash flows from the acquired in-process technology to present value. The discount rate applied to the expected future cash flows included a premium to the base required rate of return, in consideration of the risks associated with the FDA approval process.

The IPRD projects acquired are as follows:

• Augment^® Bone Graft (Augment) is based on our platform regenerative technology, which combines an engineered version of recombinant human platelet-derived growth factor BB (rhPDGF-BB), one of the principal wound healing and tissue repair stimulators in the body, with tissue specific matrices, when appropriate. This product is intended to offer physicians advanced biological solutions to actively stimulate the body’s natural tissue regenerative process. Augment is targeted to be used in the open (surgical) treatment of fusions. Additionally, Augment may be useful in the future to be used in open fractures. We have evaluated Augment in several open clinical applications, including foot and ankle fusions and distal radius fractures. We believe we have demonstrated that our technology is safe and effective in stimulating bone regeneration with the Canadian regulatory approval of Augment in 2009 and the Australian and New Zealand regulatory clearance of Augment in 2011. A PMA application for the use of Augment in the U.S. as an alternative to autograft in hindfoot and ankle fusion procedures was submitted to the FDA prior to this acquisition. We’ve incurred expenses of approximately $5.8 million for Augment since the date of acquisition. Future costs related to Augment depends on the ultimate decision by the FDA on the PMA.

• Augment^® Injectable Bone Graft (Augment Injectable) combines rhPDGF-BB with an injectable bone matrix, and is targeted to be used in either open (surgical) treatment of fusions and fractures or closed (non-surgical) or minimally invasive treatment of fractures. Augment Injectable can be injected into a fusion or fracture site during an open surgical procedure, or it can be injected through the skin into a fracture site, in either case locally delivering rhPDGF-BB to promote fusion or fracture repair. Our initial clinical development program for Augment Injectable has focused on securing regulatory approval for open indications in the United States and in several markets outside the U.S. Recently, we have focused our efforts on securing FDA approval of Augment. The amount of time and cost to complete the Augment Injectable project depends upon the nature of the approval we ultimately receive for Augment, but we currently estimate

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it could take one to three years. We’ve incurred expenses of approximately $1.8 million for Augment Injectable since the date of acquisition. Future costs related to Augment depends on the ultimate decision by the FDA on the PMA for Augment.

Subsequently, during the third quarter of 2013, we received a not approvable letter from the FDA in response to our PMA application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. Following our announcement regarding the receipt of this letter, the market value of the CVRs issued in connection with the BioMimetic decreased significantly. Holders of CVRs are entitled to be paid the contingent consideration from the BioMimetic acquisition, specifically upon FDA approval of Augment^® Bone Graft, and subsequently upon the achievement of certain revenue milestones. The value of the CVRs therefore implies the market’s assessment of probability of FDA approval. Because the probability of such FDA approval is a significant input in the valuation of the BioMimetic reporting unit and related intangible assets, management determined that our goodwill and intangible assets acquired in the BioMimetic acquisition were more likely than not impaired, and therefore required a quantitative impairment test.

We have filed an appeal with the FDA regarding its decision. On October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment based upon the information we had as of September 30, 2013.

FASB ASC 350-30-35-18 requires companies to evaluate for impairment intangible assets not subject to amortization, such as our IPRD assets, if events or changes in circumstances indicate than an asset might be impaired.

We updated our discounted cash flow valuation model for the BioMimetic acquisition based on probability weighted estimates of revenues and expenses, related cash flows and the discount rate used in the model. The probabilities used in the model were based on the fair value of the CVRs as of September 30, 2013.  The fair value of the IPRD was less than the carrying values. Therefore, we recognized impairment charge of approximately $56.9 million for Augment^® and $27.1 million for Augment^® Injectable for the year ended December 31, 2013, for the amount by which the carrying value of these assets exceeded the fair value.

Other Liquidity Information. We have funded our cash needs since 2000 through various equity and debt issuances and through cash flow from operations. Although it is difficult for us to predict our future liquidity requirements, we believe that our current cash balance of approximately $168.5 million and our marketable securities balance of $14.5 million will be sufficient for the foreseeable future to fund our working capital requirements and operations, fund the acquisitions announced in January 2014 with total cash purchase price of approximately $80 million, permit anticipated capital expenditures in 2014 of approximately $50 million, and meet our contractual cash obligations in 2014. Furthermore, cash received as a result of the sale of our OrthoRecon business will allow us to continue to make investments to accelerate growth in our foot and ankle business.

Critical Accounting Estimates

All of our significant accounting policies and estimates are described in Note 2 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.” 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. Different, reasonable estimates could have been used in 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.

We believe that the following financial estimates are both important to the portrayal of our financial condition and results of operations and require subjective or complex judgments. Further, we believe that the items discussed below are properly recorded in the financial statements for all periods presented. Our management has discussed the development, selection and disclosure of our most critical financial estimates with the audit committee of our board of directors and with our independent auditors. The judgments about those financial estimates are based on information available as of the date of the financial statements. Those financial estimates include:

Discontinued Operations.On January 9, 2014, we competed the sale of our OrthoRecon business, which consists of hip and knee product implants, to MicroPort. We determined that this transaction meets the criteria for classification as discontinued operations under the provisions of FASB ASC 205-20. As such, all historical operating results for our OrthoRecon business are reflected within discontinued operations in the consolidated statements of operations. In addition, costs associated with corporate employees and infrastructure being transferred as a part of the sale have been included in discontinued operations. Further, all assets and associated liabilities to be transferred to MicroPort have been classified as assets and liabilities held for sale on our consolidated balance sheet, in accordance with FASB ASC 360.

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Revenue recognition. Our revenues are primarily generated through two types of customers, hospitals and surgery centers and stocking distributors, with the majority of our revenue derived from sales to hospitals and surgery centers. Our products are sold through a network of employee and independent sales representatives in the U.S. and by a combination of employee sales representatives, independent sales representatives and stocking distributors outside the U.S. We record revenues from sales to hospitals and surgery centers when they take title to the product, which is generally when the product is surgically implanted in a patient.

We record revenues from sales to our stocking distributors at the time the product is shipped to the distributor. Our stocking distributors, who sell the products to their customers, take title to the products and assume all risks of ownership. Our distributors are obligated to pay us within specified terms regardless of when, if ever, they sell the products. In general, our distributors do not have any rights of return or exchange; however, in limited situations, we have repurchase agreements with certain stocking distributors. Those certain agreements require us to repurchase a specified percentage of the inventory purchased by the distributor within a specified period of time prior to the expiration of the contract. During those specified periods, we defer the applicable percentage of the sales. An insignificant amount of sales related to these types of agreements were deferred and not yet recognized as revenue as of December 31, 2013 and 2012.

We must make estimates of potential future product returns related to current period product revenue. To do so, we analyze our historical experience related to product returns when evaluating the adequacy of the allowance for sales returns. Judgment must be used and estimates made in connection with establishing the allowance for product returns in any accounting period. Our allowances for product returns of approximately $0.3 million are included as a reduction of accounts receivable at December 31, 2013 and 2012. Should actual future returns vary significantly from our historical averages, our operating results could be affected.

In 2011, we entered into a trademark license agreement (License Agreement) with KCI Medical Resources, a subsidiary of Kinetic Concepts, Inc. (KCI). In exchange for $8.5 million, of which $5.5 million was received immediately and $3 million was received in January 2012, the License Agreement provides KCI with a non-transferable license to use our trademarks associated with our GRAFTJACKET^® line of products in connection with the marketing and distribution of KCI's soft tissue graft containment products used in the wound care field, subject to certain exceptions. License revenue is being recognized over 12 years on a straight line basis.

Allowances for doubtful accounts. We experience credit losses on our accounts receivable and accordingly, we must make estimates related to the ultimate collection of our accounts receivable. Specifically, we analyze our accounts receivable, historical bad debt experience, customer concentrations, customer creditworthiness and current economic trends when evaluating the adequacy of our allowance for doubtful accounts.

The majority of our accounts receivable are from hospitals, many of which are government funded. Accordingly, our collection history with this class of customer has been favorable. Historically, we have experienced minimal bad debts from our hospital customers and more significant bad debts from certain international stocking distributors, typically as a result of specific financial difficulty or geo-political factors. We write off accounts receivable when we determine that the accounts receivable are uncollectible, typically upon customer bankruptcy or the customer’s non-response to repeated collection efforts.

We believe that the amount included in our allowance for doubtful accounts has been a historically appropriate estimate of the amount of accounts receivable that are ultimately not collected. While we believe that our allowance for doubtful accounts is adequate, the financial condition of our customers and the geo-political factors that impact reimbursement under individual countries’ healthcare systems can change rapidly, which would necessitate additional allowances in future periods. Our allowances for doubtful accounts were $0.3 million and $0.3 million, at December 31, 2013 and 2012, respectively, for those customer account balances that were retained following the sale of our OrthoRecon business to MicroPort.

Excess and obsolete inventories. We value our inventory at the lower of the actual cost to purchase and/or manufacture the inventory on a first-in, first-out (FIFO) basis or its net realizable value. We regularly review inventory quantities on hand for excess and obsolete inventory and, when circumstances indicate, we incur charges to write down inventories to their net realizable value. Our review of inventory for excess and obsolete quantities is based primarily on our forecast of product demand and production requirements for the next 24 months. A significant decrease in demand could result in an increase in the amount of excess inventory quantities on hand. Additionally, our industry is characterized by regular new product development that could result in an increase in the amount of obsolete inventory quantities on hand due to cannibalization of existing products. Also, our estimates of future product demand may prove to be inaccurate in which case we may be required to incur charges for excess and obsolete inventory. In the future, if additional inventory write-downs are required, we would recognize additional cost of goods sold at the time of such determination. Regardless of changes in our estimates of future product demand, we do not increase the value of our inventory above its adjusted cost basis. Therefore, although we make every effort to ensure the accuracy of our forecasts of future product demand, significant unanticipated decreases in demand or technological developments could have a significant impact on the value of our inventory and our reported operating results.

Charges recognized for excess and obsolete inventory within our results of continuing operations were $4.7 million, $3.2 million and $11.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.

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Goodwill and long-lived assets. As of December 31, 2013, we have approximately $118.3 million of goodwill recorded as a result of the acquisition of businesses. Goodwill is tested for impairment annually, or more frequently if changes in circumstances or the occurrence of events suggest that impairment exists. The annual evaluation of goodwill impairment may require the use of estimates and assumptions to determine the fair value of our reporting units using projections of future cash flows. Unless circumstances otherwise dictate, the annual impairment test is performed in the fourth quarter.

During 2013, we completed our purchase price allocation associated with our acquisition of BioMimetic, and recognized $138.2 million of goodwill. The BioMimetic business is considered a separate reporting unit for purposes of goodwill impairment evaluation. Subsequent to the completion of the BioMimetic purchase price allocation, we recognized a significant impairment of intangible assets acquired from the BioMimetic acquisition and determined that an evaluation of the goodwill associated with the BioMimetic reporting unit was required. We updated our discounted cash flow valuation model for the BioMimetic acquisition based on probability weighted estimates of revenues and expenses, related cash flows and the discount rate used in the model. The probabilities used in the model were based on the fair value of the CVRs as of September 30, 2013.  Based on this discounted cash flow valuation model, we determined that the fair value of the BioMimetic reporting unit as of September 30, 2013 was less than its carrying value as of such date. Therefore, we recognized a goodwill impairment charge of $115.0 million for the amount by which the carrying value of these assets exceeded the fair value as of September 30, 2013. These charges are included within “BioMimetic impairment charges” on our consolidated statement of operations.

During the fourth quarter of 2013, we performed a qualitative assessment of goodwill for impairment and determined that it is more likely than not that the fair value of our reporting units exceeded their respective carrying values, indicating that goodwill was not impaired. We have determined that we have three reporting units for purposes of evaluating goodwill for impairment: 1) BioMimetic business; 2) Continuing Operations business, excluding the BioMimetic business; and 3) Discontinued Operations (OrthoRecon) business.

Our business is capital intensive, particularly as it relates to surgical instrumentation. We depreciate our property, plant and equipment and amortize our intangible assets based upon our estimate of the respective asset’s useful life. Our estimate of the useful life of an asset requires us to make judgments about future events, such as product life cycles, new product development, product cannibalization and technological obsolescence, as well as other competitive factors beyond our control. We account for the impairment of finite, long-lived assets in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 360, Property, Plant and Equipment (FASB ASC 360). Accordingly, we evaluate impairments of our property, plant and equipment based upon an analysis of estimated undiscounted future cash flows. If we determine that a change is required in the useful life of an asset, future depreciation and amortization is adjusted accordingly. Alternatively, if we determine that an asset has been impaired, an adjustment would be charged to income based on the asset’s fair market value, or discounted cash flows if the fair market value is not readily determinable, reducing income in that period.

Valuation of In-Process Research and Development.The estimated fair value attributed to IPRD represents an estimate of the fair value of purchased in-process technology for research programs that have not reached technological feasibility and have no alternative future use. Only those research programs that had advanced to a stage of development where management believed reasonable net future cash flow forecasts could be prepared and a reasonable possibility of technical success existed were included in the estimated fair value.

IPRD is recorded as an indefinite-lived intangible asset until completion or abandonment of the associated research and development projects. Accordingly, no amortization expense is reflected in the results of operations. If a project is completed, the carrying value of the related intangible asset will be amortized over the remaining estimated life of the asset beginning with the period in which the project is completed. If a project becomes impaired or is abandoned, the carrying value of the related intangible asset will be written down to its fair value and an impairment charge will be taken in the period the impairment occurs. These intangible assets are tested for impairment on an annual basis, or earlier if impairment indicators are present.

During 2013, we received a not approvable letter from the FDA in response to our PMA application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. Following our announcement regarding the receipt of this letter, the market value of the CVRs issued in connection with the BioMimetic acquisition decreased significantly. Holders of CVRs are entitled to be paid the contingent consideration from the BioMimetic acquisition, specifically upon FDA approval of Augment^® Bone Graft, and subsequently upon the achievement of certain revenue milestones. The value of the CVRs therefore implies the market’s probability of FDA approval. Because the probability of such FDA approval is a significant input in the valuation of the BioMimetic reporting unit and related intangible assets, management determined that our goodwill and intangible assets acquired in the BioMimetic acquisition were more likely than not impaired, and therefore required a quantitative impairment test.

We filed an appeal with the FDA regarding its decision and on October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment.

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We updated our discounted cash flow valuation model for the BioMimetic acquisition based on probability weighted estimates of revenues and expenses, related cash flows and the discount rate used in the model. The probabilities used in the model were based on the fair value of the CVRs as of September 30, 2013.  Based on this discounted cash flow valuation model, we determined that the fair value of the IPRD assets as of September 30, 2013 were less than their respective carrying values as of such date. Therefore, we recognized an intangible impairment charge of approximately $84.0 million for the amount by which the carrying value of these assets exceeded the fair value. These charges are included within “BioMimetic impairment charges” on our consolidated statement of operations.

Due to the uncertainty associated with research and development projects, there is risk that actual results will differ materially from the cash flow projections and that the research and development project will result in a successful commercial product. If we are successful in our appeal of the not approvable letter from the FDA, and our Augment^® Bone Graft is ultimately approved for sale in the United States, the fair value of this technology will be significantly greater than the amount recognized in our financial statements, and the future amortization expense associated with the intangible asset will be significantly less than originally estimated. The risks associated with achieving commercialization include, but are not limited to, delay or failure to obtain regulatory approvals to conduct clinical trials, delay or failure to obtain required market clearances, delays or issues with patent issuance, or validity and litigation.

Product liability claims, product liability insurance recoveries and other litigation. Periodically, claims arise involving the use of our products. We make provisions for claims specifically identified for which we believe the likelihood of an unfavorable outcome is probable and an estimate of the amount of loss has been developed. As additional information becomes available, we reassess the estimated liability related to our pending claims and make revisions as necessary.

Product liability claims associated with hip and knee products we sold prior to the sale of our OrthoRecon business will not be assumed by MicroPort. Estimated liabilities, if any, for such claims, and accrued legal defense costs for fees that have been incurred to date, are excluded from liabilities held for sale. Concomitant receivables associated with product liability insurance recoveries are excluded from assets held for sale. MicroPort will be responsible for product liability claims associated with products it sells after the closing.

In the third quarter of 2011, as a result of an increase in the number and monetary amount of claims associated with fractures of our long PROFEMUR^® titanium modular necks (PROFEMUR^® Claims), management recorded a provision for current and future claims associated with fractures of this product. See Note 19 to our consolidated financial statements for further description of this provision. Future revisions in our estimates of the liability could materially impact our results of operation and financial position. We maintain insurance coverage that limits the severity of any single claim as well as total amounts incurred per policy year, and we believe our insurance coverage is adequate. We use the best information available to us in determining the level of accrued product liabilities, and we believe our accruals are adequate. Our accrual for PROFEMUR^® Claims was $16.8 million and $23.3 million as of December 31, 2013 and December 31, 2012, respectively.

We have maintained product liability insurance coverage on a claims-made basis. As of December 31, 2012, our insurance receivable related to PROFEMUR^® Claims totaled $11.4 million, reflecting management's estimate of the probable insurance recovery of previous and future settlements and current spending on legal defense. During 2013, we received a customary reservation of rights from our primary product liability insurance carrier asserting that present and future claims related to fractures of our PROFEMUR^® titanium modular neck hip products and which allege certain types of injury (Modular Neck Claims) would be covered as a single occurrence under the policy year the first such claim was asserted. The effect of this coverage position would be to place Modular Neck Claims into a single prior policy year in which applicable claims-made coverage was available, subject to the overall policy limits then in effect. During 2013, we received payment from the primary insurance carrier and the next insurance carrier in the tower, totaling $15 million. As of December 31, 2013, our insurance receivable related to Modular Neck Claims totaled $25 million, which consists of $12 million probable recovery for cash spending associated with defense and settlement costs and $13 million associated with the probable recovery of our recorded liability for current and future Modular Neck Claims outstanding, reflecting in total the remaining amount of insurance in this policy year. See Note 19 to our consolidated financial statements contained in “Financial Statements and Supplementary Data” for further description of our insurance coverage.

Our accrual for other product liability claims was $0.7 million and $0.6 million at December 31, 2013 and December 31, 2012, respectively.

Claims for personal injury have been made against us associated with our metal-on-metal hip products (primarily our CONSERVE® product line). The pre-trial management of certain of these claims has been consolidated in the federal court system under multi-district litigation, and certain other claims in state courts in California, collectively the “Consolidated Metal-on-Metal Claims,” as further discussed in Part I Item 3 of this Annual Report. The number of these lawsuits, presently in excess of 700, continues to increase, we believe due to the increasing negative publicity in the industry regarding metal-on-metal hip products. We believe we have data that supports the efficacy and safety of our metal-on-metal hip products. While continuing to dispute liability, we recently agreed to participate in court supervised non-binding mediation in the multi-district federal court litigation (MDL) presently pending in the Northern District of Georgia.

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Every metal-on-metal hip case involves fundamental issues of science and medicine that often are uncertain, that continue to evolve, and which present contested facts and issues that can differ significantly from case to case. Such contested facts and issues include medical causation, individual patient characteristics, surgery specific factors, and the existence of actual, provable injury. Given these complexities, we are unable to reasonably estimate a possible loss or range of possible losses for the Consolidated Metal-on-Metal Claims until we know, at a minimum, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential pool of potential claimants, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (iv) any other factors that may have a material effect on the litigation or on a party’s litigation strategy. By way of example and without limitation, although we believe a significant number of claimants have not required hip revision surgery, we do not yet know how many of such cases exist within our claimant pool.

We have maintained product liability insurance coverage on a claims-made basis. During the quarter ended September 30, 2012, we received a customary reservation of rights from our primary product liability insurance carrier asserting that certain present and future claims which allege certain types of injury related to our CONSERVE^® metal-on-metal hip products (CONSERVE^® Claims) would be covered as a single occurrence under the policy year the first such claim was asserted. The effect of this coverage position would be to place CONSERVE^® Claims into a single prior policy year in which applicable claims-made coverage was available, subject to the overall policy limits then in effect. Management agrees that there is insurance coverage for the CONSERVE^® Claims, but has notified the carrier that at this time it disputes the carrier's selection of available policy years and its characterization of the CONSERVE^® Claims as a single occurrence.

Management has recorded an insurance receivable for the probable recovery of spending in excess of our retention for a single occurrence. As of December 31, 2013 and 2012, this receivable totaled $8.1 million and $5.8 million, respectively, and is solely related to defense costs incurred through December 31, 2013. However, the amount we ultimately receive may differ depending on the final conclusion of the insurance policy year or years and the number of occurrences. We believe our contracts with the insurance carriers are enforceable for these claims and, therefore, we believe it is probable that we will receive recoveries from our insurance carriers. However, our insurance carriers could still ultimately deny coverage for some or all of our insurance claims. Based on the information we have available at this time, we do not believe our liabilities, if any, in connection with these matters will exceed our available insurance. As circumstances continue to develop, our belief that we will be able to resolve the Consolidated Metal-on-Metal Claims within our available insurance coverage could change, which could materially impact our results of operations and financial position.

In February 2014, Biomet, Inc., (Biomet) announced it had reached a settlement in the multi-district litigation involving its own metal-on-metal hip products. The terms announced by Biomet include: (i) an expected base settlement amount of $200,000, (ii) an expected minimum settlement amount of $20,000 (iii) no payments to plaintiffs who did not undergo a revision surgery and (iv) a total settlement amount expected to be within Biomet’s aggregate insurance coverage. We believe our situation involves facts and circumstances which differ significantly from the Biomet cases. We therefore do not consider the Biomet situation sufficiently analogous to provide a reasonable basis for estimate, and deem it unlikely that any settlement of our cases will occur at an base settlement level as high as Biomet’s expected average settlement amount.

In addition to the Consolidated Metal-on-Metal Claims discussed above, there are currently certain other pending claims related to our metal-on-metal hip products for which we are accounting in accordance with our standard product liability accrual methodology on a case by case basis.

We are also involved in legal proceedings involving contract, patent protection and other matters. We make provisions for claims specifically identified for which we believe the likelihood of an unfavorable outcome is probable and an estimate of the amount of loss can be developed.

Accounting for income taxes. Our effective tax rate is based on income by tax jurisdiction, statutory rates and tax saving initiatives available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our effective tax rate and evaluating our tax positions. This process includes assessing temporary differences resulting from differing recognition of items for income tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. Realization of deferred tax assets in each taxable jurisdiction is dependent on our ability to generate future taxable income sufficient to realize the benefits. Management evaluates deferred tax assets on an ongoing basis and provides valuation allowances to reduce net deferred tax assets to the amount that is more likely than not to be realized.

Our valuation allowance balances totaled $134.3 million and $14.2 million as of December 31, 2013 and 2012, respectively, due to uncertainties related to our ability to realize, before expiration, certain of our deferred tax assets for both U.S. and foreign income tax purposes. During 2013, we recognized a $119.6 million valuation allowance against our U.S. deferred tax assets due to recent operating losses in the U.S. tax jurisdiction, which resulted in the determination that our U.S. deferred tax assets were not more likely than not to be utilized in the foreseeable future. These deferred tax assets primarily consist of the carryforward of certain tax basis net operating losses and general business tax credits. See Note 14 to our consolidated financial statements for further discussion of our deferred tax assets and the associated valuation allowance.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), effective January 1, 2007, which requires the tax effects of an income tax position to be recognized only if they are “more-likely-than-not” to be sustained based solely on the technical merits as of the reporting date. Effective July 1, 2009, this standard was incorporated into FASB ASC Section 740, Income Taxes. As a multinational corporation, we are subject to taxation in many jurisdictions and the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. If we ultimately determine that the payment of these liabilities will be unnecessary, we will reverse

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the liability and recognize a tax benefit in the period in which we determine the liability no longer applies. Conversely, we record additional tax charges in a period in which we determine that a recorded tax liability is less than we expect the ultimate assessment to be. Our liability for unrecognized tax benefits totaled $4.7 million and $5.1 million as of December 31, 2013 and 2012, respectively. See Note 14 to our consolidated financial statements contained in “Financial Statements and Supplementary Data” for further discussion of our unrecognized tax benefits.

We operate within numerous taxing jurisdictions. We are subject to regulatory review or audit in virtually all of those jurisdictions, and those reviews and audits may require extended periods of time to resolve. Management makes use of all available information and makes reasoned judgments regarding matters requiring interpretation in establishing tax expense, liabilities and reserves. We believe adequate provisions exist for income taxes for all periods and jurisdictions subject to review or audit.

Stock-based compensation. We calculate the grant date fair value of non-vested shares as the closing sales price on the trading day immediately prior to the grant date. We use the Black-Scholes option pricing model to determine the fair value of stock options and employee stock purchase plan shares. The determination of the fair value of these stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, which include the expected life of the award, the expected stock price volatility over the expected life of the awards, expected dividend yield and risk-free interest rate.

We estimate the expected life of options evaluating the historical activity as required by FASB ASC Topic 718, Compensation — Stock Compensation. We estimate the expected stock price volatility based upon historical volatility of our common stock. The risk-free interest rate is determined using U.S. Treasury rates where the term is consistent with the expected life of the stock options. Expected dividend yield is not considered as we have never paid dividends and have no plans of doing so in the future.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics not present in our option grants and employee stock purchase plan shares. Existing valuation models, including the Black-Scholes and lattice binomial models, may not provide reliable measures of the fair values of our stock-based compensation. Consequently, there is a risk that our estimates of the fair values of our stock-based compensation awards on the grant dates may bear little resemblance to the actual values realized upon the exercise, expiration, early termination or forfeiture of those stock-based payments in the future. Certain stock-based payments, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements. Alternatively, value may be realized from these instruments that is significantly higher than the fair values originally estimated on the grant date and reported in our financial statements. There is not currently a market-based mechanism or other practical application to verify the reliability and accuracy of the estimates stemming from these valuation models.

We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest. All stock-based awards are amortized on a straight-line basis over their respective requisite service periods, which are generally the vesting periods.

If factors change and we employ different assumptions for estimating stock-based compensation expense in future periods, such stock-based compensation expense in future periods may differ significantly from what we have recorded in the current period and could materially affect our operating income, net income and net income per share. A change in assumptions may also result in a lack of comparability with other companies that use different models, methods and assumptions.

See Note 17 to our consolidated financial statements contained in “Financial Statements and Supplementary Data” for further information regarding our stock-based compensation disclosures.

Acquisition method accounting. In accordance with FASB ASC Section 805, Business Combinations (FASB ASC 805), an acquiring entity is required to recognize all assets acquired and liabilities assumed at the acquisition date fair value. Legal fees and other transaction-related costs are expensed as incurred and are no longer included in goodwill as a cost of acquiring the business. FASB ASC 805 also requires acquirers, among other things, to estimate the acquisition-date fair value of any contingent consideration and to recognize any subsequent changes in the fair value of contingent consideration in earnings. In addition, restructuring costs the acquirer expects, but is not obligated to incur, will be recognized separately from the business acquisition.

Restructuring charges. We evaluate impairment issues for long-lived assets under the provisions of FASB ASC 360. We record severance-related expenses once they are both probable and estimable in accordance with the provisions of FASB ASC Section 712, Compensation-Nonretirement Postemployment Benefits, for severance provided under an ongoing benefit arrangement. One-time termination benefit arrangements and other costs associated with exit activities are accounted for under the provisions of FASB ASC Section 420, Exit or Disposal Cost Obligations. We estimated the expense for our restructuring initiatives by accumulating detailed estimates of costs, including the estimated costs of employee severance and related termination benefits, impairment of property, plant and equipment, contract termination payments for leases and any other qualifying exit costs. Such costs represented management’s best estimates, which were evaluated periodically to determine if an adjustment was required.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

Our exposure to interest rate risk arises principally from the interest rates associated with our invested cash balances. On December 31, 2013, we have invested short term cash and cash equivalents and marketable securities of approximately $77.6 million. We believe that a 10 basis point change in interest rates is reasonably possible in the near term. Based on our current level of investment, an increase or decrease of 10 basis points in interest rates would have an annual impact of approximately $77,000 to our interest income.

Equity Price Risk

Our 2017 Notes includes conversion and settlement provisions that are based on the price of our common stock at conversion or at maturity of the notes. In addition, the hedges and warrants associated with these convertible notes also include settlement provisions that are based on the price of our common stock. The amount of cash we may be required to pay, or the number of shares we may be required to provide to note holders at conversion or maturity of these notes, is determined by the price of our common stock. The amount of cash that we may receive from hedge counterparties in connection with the related hedges and the number of shares that we may be required to provide warrant counterparties in connection with the related warrants are also determined by the price of our common stock.

Upon the expiration of our warrants, we will issue shares of common stock to the purchasers of the warrants to the extent our stock price exceeds the warrant strike price of $29.925 at that time. The following table shows the number of shares that we would issue to warrant counterparties at expiration of the warrants assuming various closing stock prices on the date of warrant expiration:

Stock Price		Shares (in thousands)
$32.92	(10% greater than strike price)	1,072
$35.91	(20% greater than strike price)	1,966
$38.90	(30% greater than strike price)	2,722
$41.90	(40% greater than strike price)	3,370
$44.89	(50% greater than strike price)	3,931

The fair value of our 2017 Notes Conversion Derivative and our 2017 Notes Hedge is directly impacted by the price of our common stock. We entered into the 2017 Notes Hedges in connection with the issuance of our 2017 Notes with the Option Counterparties. The 2017 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments that we are required to make upon conversion of our 2017 Notes in excess of the principal amount of converted notes if our common stock price exceeds the conversion price. The following table presents the fair values of our 2017 Notes Conversion Derivative and 2017 Notes Hedge as a result of a hypothetical 10% increase and decrease in the price of our common stock. We believe that a 10% change in the stock price is reasonably possible in the near term:

(in thousands)
	Fair Value of Security Given a 10% decrease in stock price	Fair Value of Security as of December 31, 2013	Fair Value of Security Given a 10% increase in stock price
2017 Notes Hedges (Asset)	92,000	118,000	145,000
2017 Notes Conversion Derivative (Liability)	87,000	112,000	139,000

Foreign Currency Exchange Rate Fluctuations

Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies could adversely affect our financial results. Approximately 19% and 18% of our net sales from our continuing operations were denominated in foreign currencies during the years ended December 31, 2013 and 2012, respectively, and we expect that foreign currencies will continue to represent a similarly significant percentage of our net sales in the future. Cost of sales related to these sales are primarily denominated in U.S. dollars; however, operating costs related to these sales are largely denominated in the same respective currencies, thereby partially limiting our transaction risk exposure. For sales not denominated in U.S. dollars, an increase in the rate at which a foreign currency is exchanged for U.S. dollars will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases, 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 our 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.

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A substantial majority of our net sales from continuing operations denominated in foreign currencies are derived from European Union countries, which are denominated in the euro; from the United Kingdom, which are denominated in the British pound; and from Canada, which are denominated in the Canadian dollar. Additionally, we have significant intercompany receivables from our foreign subsidiaries that are denominated in foreign currencies, principally the euro, the yen, the British pound, and the Canadian dollar. Our principal exchange rate risk, therefore, exists between the U.S. dollar and the euro, the U.S. dollar and the British pound, and the U.S. dollar and the Canadian dollar. Fluctuations from the beginning to the end of any given reporting period result in the revaluation of our foreign currency-denominated intercompany receivables and payables, generating currency translation gains or losses that impact our non-operating income and expense levels in the respective period.

As discussed in Note 11 to the consolidated financial statements contained in “Financial Statements and Supplementary Data,” we enter into certain short-term derivative financial instruments in the form of foreign currency forward contracts. These forward contracts are designed to mitigate our exposure to currency fluctuations in our intercompany balances denominated currently in euros, British pounds and Canadian dollars. Any change in the fair value of these forward contracts as a result of a fluctuation in a currency exchange rate is expected to be offset by a change in the value of the intercompany balance. These contracts are effectively closed at the end of each reporting period.

A uniform 10% strengthening in the value of the U. S. dollar relative to the currencies in which our transactions are denominated would have resulted in a decrease in operating income of approximately $1.8 million for the year ended December 31, 2013. This hypothetical calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. This sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices, which can be also be affected by the change in exchange rates.

Other

As of December 31, 2013, we have outstanding $300 million principal amount of our 2017 Notes. We carry this instrument at face value less unamortized discount on our consolidated balance sheets. Since this instruments bears interest at a fixed rate, we have no financial statement risk associated with changes in interest rates. However, the fair value of these instruments fluctuates when interest rates change, and in the case of our 2017 Notes, when the market price of our stock fluctuates. We do not carry the 2017 Notes at fair value, but present the fair value of the principal amount of our 2017 Notes for disclosure purposes.

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Item 8. Financial Statements and Supplementary Data.

Wright Medical Group, Inc. Consolidated Financial Statements for the Years Ended December 31, 2012, 2011 and 2010 Index to Financial Statements
	Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	51
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets	54
Consolidated Statements of Operations	55
Consolidated Statements of Comprehensive Income	56
Consolidated Statements of Cash Flows	56
Consolidated Statements of Changes in Stockholders’ Equity	57
Notes to Consolidated Financial Statements	59

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Wright Medical Group, Inc.:

We have audited the accompanying consolidated balance sheets of Wright Medical Group, Inc. and subsidiaries (the Company) as of December 31, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders’ equity, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these

consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2014 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

(signed) KPMG LLP

Memphis, Tennessee

February 26, 2014

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Wright Medical Group, Inc.:

We have audited the effectiveness of internal control over financial reporting of Wright Medical Group, Inc. and subsidiaries(the Company) as of December 31, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control–Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders’ equity, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2013, and our report dated February 26, 2014 expressed an unqualified opinion on those consolidated financial

statements.

(signed) KPMG LLP

Memphis, Tennessee

February 26, 2014

54

Wright Medical Group, Inc. Consolidated Balance Sheets (In thousands, except share data)
	December 31, 2013			December 31, 2012
Assets:
Current assets:
Cash and cash equivalents	$	168,534		$	320,360
Marketable securities	6,898			12,646
Accounts receivable, net	45,817			31,202
Inventories	72,443			57,458
Prepaid expenses	6,508			4,814
Deferred income taxes	10,749			30,145
Current assets held for sale	142,015			166,484
Other current assets	52,351			29,036
Total current assets	505,315			652,145
Property, plant and equipment, net	70,515			41,482
Goodwill	118,263			32,414
Intangible assets, net	39,420			18,684
Marketable securities	7,650			—
Deferred income taxes	1,632			1,251
Other assets held for sale	132,443			129,730
Other assets	132,213			77,747
Total assets	$	1,007,451		$	953,453
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable	$	3,913		$	4,676
Accrued expenses and other current liabilities	80,117			38,763
Current portion of long-term obligations	4,174			—
Current liabilities held for sale	31,221			32,993
Total current liabilities	119,425			76,432
Long-term debt and capital lease obligations	271,227			258,485
Deferred income taxes	20,620			8,152
Other liabilities held for sale	1,399			2,031
Other liabilities	135,066			84,912
Total liabilities	547,737			430,012
Commitments and contingencies (Note 19)
Stockholders’ equity:
Common stock, $.01 par value, authorized: 100,000,000 shares; issued and outstanding: 47,993,765 shares at December 31, 2013 and 39,703,358 shares at December 31, 2012	473			389
Additional paid-in capital	656,770			442,055
Accumulated other comprehensive income	17,953			22,534
Retained earnings	(215,482		)	58,463
Total stockholders’ equity	459,714			523,441
Total liabilities and stockholders’ equity	$	1,007,451		$	953,453

The accompanying notes are an integral part of these consolidated financial statements.

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Wright Medical Group, Inc. Consolidated Statements of Operations (In thousands, except per share data)
	Year ended December 31,
	2013			2012			2011
Net sales	$	242,330		$	214,105		$	210,753
Cost of sales 1	59,721			48,239			56,762
Cost of sales - restructuring	—			—			667
Gross profit	182,609			165,866			153,324
Operating expenses:
Selling, general and administrative 1	230,785			150,296			131,611
Research and development 1	20,305			13,905			15,422
Amortization of intangible assets	7,476			4,417			2,412
BioMimetic impairment charges (Note 3)	206,249			—			—
Gain on sale of intellectual property	—			(15,000		)	—
Restructuring charges	—			431			4,613
Total operating expenses	464,815			154,049			154,058
Operating (loss) income	(282,206		)	11,817			(734		)
Interest expense, net	16,040			10,113			6,381
Other (income) expense, net	(67,843		)	5,089			4,241
(Loss) income from continuing operations before income taxes	(230,403		)	(3,385		)	(11,356		)
Provision (benefit) for income taxes	49,765			2			(3,961		)
Net (loss) income from continuing operations	$	(280,168	)	$	(3,387	)	$	(7,395	)
Income from discontinued operations, net of tax1	$	6,223		$	8,671		$	2,252
Net (loss) income	$	(273,945	)	$	5,284		$	(5,143	)
Net (loss) income from continuing operations per share (Note 15):
Basic	$	(6.19	)	$	(0.09	)	$	(0.19	)
Diluted	$	(6.19	)	$	(0.09	)	$	(0.19	)
Net (loss) income per share (Note 15):
Basic	$	(6.05	)	$	0.14		$	(0.13	)
Diluted	$	(6.05	)	$	0.14		$	(0.13	)
Weighted-average number of shares outstanding-basic	45,265			38,769			38,279
Weighted-average number of shares outstanding-diluted	45,265			39,086			38,279

___________________________

1 These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:

	Year Ended December 31,
	2013		2012		2011
Cost of sales	$	503	$	704	$	735
Selling, general and administrative	10,675		6,767		4,875
Research and development	780		368		320
Discontinued operations	3,410		3,135		3,178

The accompanying notes are an integral part of these consolidated financial statements.

56

WRIGHT MEDICAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Year ended December 31,
	2013			2012			2011
Net (loss) income	$	(273,945	)	$	5,284		$	(5,143	)
Other comprehensive income (loss), net of tax:
Changes in foreign currency translation	(1,381		)	(1,301		)	(2,102		)
Unrealized loss on derivative instruments, net of taxes $42 and $600, respectively	—			(65		)	(1,014		)
Termination of interest rate swap, net of taxes of $690	—			1,079			—
Reclassification of gain on equity securities, net of taxes $3,041	(4,757		)	—			—
Unrealized gain (loss) on marketable securities, net of taxes $987, $2,054, and $21, respectively	1,543			3,210			(33		)
Minimum pension liability adjustment	14			550			37
Other comprehensive (loss) income	(4,581		)	3,473			(3,112		)
Comprehensive (loss) income	$	(278,526	)	$	8,757		$	(8,255	)

The accompanying notes are an integral part of these consolidated financial statements.

Wright Medical Group, Inc. Consolidated Statements of Cash Flows (In thousands)
	Year Ended December 31,
	2013			2012			2011
Operating activities:
Net (loss) income	$	(273,945	)	$	5,284		$	(5,143	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	26,296			38,275			40,227
Stock-based compensation expense	15,368			10,974			9,108
Amortization of intangible assets	8,345			5,772			2,870
Amortization of deferred financing costs and debt discount	10,288			3,853			982
Deferred income taxes (Note 14)	51,958			3,786			(6,969		)
Write off of deferred financing costs	—			2,721			2,926
Excess tax benefit from stock-based compensation arrangements	(804		)	(507		)	(23		)
Non-cash restructuring charges	—			657			4,924
Non-cash adjustment to derivative fair value	1,000			1,142			—
Gain on sale of intellectual property	—			(15,000		)	—
Non-cash realized gain on BioMimetic stock (Note 3)	(7,798		)	—			—
BioMimetic goodwill and intangible impairment charge	203,081			—			—
Other	(2,788		)	2,232			649
Changes in assets and liabilities (net of acquisitions):
Accounts receivable	(3,477		)	(717		)	9,056
Inventories	7,374			20,622			(1,723		)
Prepaid expenses and other current assets	(21,945		)	(15,498		)	(10,556		)
Accounts payable	(1,334		)	(1,315		)	(6,398		)
Mark-to-market adjustment for CVRs (Note 2)	(61,151		)	—			—
Accrued expenses and other liabilities	12,931			6,541			21,511
Net cash (used in) provided by operating activities	(36,601		)	68,822			61,441
Investing activities:
Capital expenditures	(37,530		)	(19,323		)	(46,957		)
Acquisition of businesses	(95,409		)	—			(5,639		)
Purchase of intangible assets	(4,291		)	(4,112		)	(1,624		)
Maturities of held-to-maturity marketable securities	—			—			4,748
Sales and maturities of available-for-sale marketable securities	27,332			13,565			38,509
Investment in available-for-sale marketable securities	(20,719		)	(2,878		)	(25,097		)
Proceeds from sale of assets	9,300			11,700			5,500
Net cash used in investing activities	(121,317		)	(1,048		)	(30,560		)
Financing activities:
Issuance of common stock	6,328			1,944			540
Payments of long term borrowings	—			(144,375		)	(5,596		)
Proceeds from sale of warrants	—			34,595			—
Payment for bond hedge options	—			(56,195		)	—
Redemption of 2014 convertible senior notes	—			(25,343		)	(170,889		)
Proceeds from long term borrowings	—			—			150,000
Payments of deferred financing costs and equity issuance costs	(16		)	(9,637		)	(2,892		)
Proceeds from 2017 convertible senior notes	—			300,000			—
Payment for loss on interest rate swap termination	—			(1,769		)	—
Payments of capital leases	(859		)	(1,006		)	(1,236		)
Excess tax benefit from stock-based compensation arrangements	804			507			23
Net cash provided by (used in) financing activities	6,257			98,721			(30,050		)
Effect of exchange rates on cash and cash equivalents	36			223			(450		)
Net (decrease) increase in cash and cash equivalents	(151,625		)	166,718			381
Cash and cash equivalents, beginning of year	320,360			153,642			153,261

58

Wright Medical Group, Inc. Consolidated Statements of Cash Flows (Continued) (In thousands)
Cash and cash equivalents, end of year	$	168,735	$	320,360	$	153,642

The accompanying notes are an integral part of these consolidated financial statements.

59

Wright Medical Group, Inc. Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2011, 2012 and 2013 (In thousands, except share data)
	Common Stock, Voting				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Total Stockholders' Equity
	Number of Shares		Amount
Balance at December 31, 2010	39,171,501		$	379	$	390,098		$	58,322		$	22,173		$	470,972
2011 Activity:
Net loss	—		—		—			(5,143		)	—			(5,143		)
Foreign currency translation	—		—		—			—			(2,102		)	(2,102		)
Unrealized loss on derivative instruments, net of taxes $600	—		—		—			—			(1,014		)	(1,014		)
Unrealized gain (loss) on marketable securities, net of taxes $21	—		—		—			—			(33		)	(33		)
Minimum pension liability adjustment	—		—		—			—			37			37
Issuances of common stock	45,518		1		539			—			—			540
Grant of non-vested shares of common stock	403,084		—		—			—			—			—
Forfeitures of non-vested shares of common stock	(354,774	)	—		—			—			—			—
Vesting of stock-settled phantom stock and restricted stock units	40,789		4		(4		)	—			—			—
Tax deficits realized from stock based compensation arrangements, net	—		—		(3,869		)	—			—			(3,869		)
Stock-based compensation	—		$	—	$	9,076		$	—		$	—		$	9,076
Balance at December 31, 2011	39,306,118		$	384	$	395,840		$	53,179		$	19,061		$	468,464
2012 Activity:
Net income	—		—		—			5,284			—			5,284
Foreign currency translation	—		—		—			—			(1,301		)	(1,301		)
Unrealized loss on derivative instruments, net of $42 taxes	—		—		—			—			(65		)	(65		)
Loss on early termination of interest rate swap, net of taxes of $690	—		—		—			—			1,079			1,079
Unrealized gain (loss) on marketable securities, net of taxes $2,054	—		—		—			—			3,210			3,210
Minimum pension liability adjustment	—		—		—			—			550			550
Issuances of common stock	113,470		1		1,948			—			—			1,949
Grant of non-vested shares of common stock	269,535		—		—			—			—			—
Forfeitures of non-vested shares of common stock	(32,797	)	—		—			—			—			—
Vesting of stock-settled phantom stock and restricted stock units	47,032		4		(4		)	—			—			—
Tax deficits realized from stock based compensation arrangements, net	—		—		(116		)	—			—			(116		)
Stock-based compensation	—		—		10,932			—			—			10,932
Equity issuance costs associated with BioMimetic acquisition	—		—		(290		)	—			—			(290		)
Issuance of stock warrants, net of equity issuance costs	—		—		33,745			—			—			33,745
Balance at December 31, 2012	39,703,358		$	389	$	442,055		$	58,463		$	22,534		$	523,441

60

Wright Medical Group, Inc. Consolidated Statements of Changes in Stockholders’ Equity (Continued) For the Years Ended December 31, 2011, 2012 and 2013 (In thousands, except share data)
2013 Activity:
Net loss	—		—		—			(273,945		)	—			(273,945		)
Foreign currency translation	—		—		—			—			(1,381		)	(1,381		)
Reclassification of gain on equity securities, net of taxes $3,041	—		—		—			—			(4,757		)	(4,757		)
Unrealized gain (loss) on marketable securities, net of taxes $987	—		—		—			—			1,543			1,543
Minimum pension liability adjustment	—		—		—			—			14			14
Issuances of common stock	307,572		3		6,325			—			—			6,328
Common stock issued in connection with BioMimetic acquisition	6,956,880		70		168,691			—			—			168,761
Common stock issued in connection with Biotech acquisition	742,115		7		20,957			—			—			20,964
Grant of non-vested shares of common stock	281,496		—		—			—			—			—
Forfeitures of non-vested shares of common stock	(39,482	)	—		—			—			—			—
Vesting of stock-settled phantom stock and restricted stock units	41,826		4		(4		)	—			—			—
Tax deficits realized from stock based compensation arrangements, net	—		—		(1,045		)	—			—			(1,045		)
Stock-based compensation	—		—		19,687			—			—			19,687
Equity issuance costs associated with BioMimetic acquisition	—		—		104			—			—			104
Balance at December 31, 2013	47,993,765		$	473	$	656,770		$	(215,482	)	$	17,953		$	459,714

The accompanying notes are an integral part of these consolidated financial statements.

61

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Wright Medical Group, Inc., through Wright Medical Technology, Inc. and other operating subsidiaries (Wright or we), is a global, specialty orthopaedic company that provides extremity and biologic solutions that enable clinicians to alleviate pain and restore their patient's lifestyles. We are a leading provider of surgical solutions for the foot and ankle market. Our products are sold primarily through a network of employee sales representatives and independent sales representatives in the United States (U.S.) and by a combination of employee sales representatives, independent sales representatives and stocking distributors outside the U.S. We promote our products in approximately 60 countries with principal markets in the U.S., Europe, Asia, Canada, Australia, and Latin America. We are headquartered in Memphis, Tennessee.

2. Summary of Significant Accounting Policies

Principles of Consolidation. The accompanying consolidated financial statements include our accounts and those of our wholly owned U.S. and international subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant areas requiring the use of management estimates relate to discontinued operations, revenue recognition, the determination of allowances for doubtful accounts and excess and obsolete inventories, the evaluation of goodwill and long-lived assets, product liability claims and other litigation, income taxes, stock-based compensation, accounting for business combinations, and accounting for restructuring charges.

Discontinued Operations. In June 2013, we entered into a definitive agreement under which MicroPort Medical B.V., a subsidiary of MicroPort Scientific Corporation (MicroPort), would acquire our hip/knee (OrthoRecon) business. Our OrthoRecon business consists of hip and knee implant products. On January 9, 2014, we completed our divestiture of the OrthoRecon business to MicroPort. Pursuant to the terms of the asset purchase agreement with MicroPort, the Purchase Price (as defined in the asset purchase agreement) for the OrthoRecon Business was approximately $287.1 million, which MicroPort paid in cash.

All historical operating results for the OrthoRecon business are reflected within discontinued operations in the consolidated statements of operations. In addition, costs associated with corporate employees and infrastructure being transferred as a part of the sale have been included in discontinued operations. Further, all assets and associated liabilities to be transferred to MicroPort have been classified as assets and liabilities held for sale on our consolidated balance sheet. See Note 4 for further discussion of discontinued operations. Other than Note 4, unless otherwise stated, all discussion of assets and liabilities in these Notes to the Financial Statements reflect the assets and liabilities held and used in our continuing operations, and all discussion of revenues and expenses reflect those associated with our continuing operations.

Cash and Cash Equivalents. Cash and cash equivalents include all cash balances and short-term investments with original maturities of three months or less.

Inventories. Our inventories are valued at the lower of cost or market on a first-in, first-out (FIFO) basis. Inventory costs include material, labor costs and manufacturing overhead. We regularly review inventory quantities on hand for excess and obsolete inventory and, when circumstances indicate, we incur charges to write down inventories to their net realizable value. Our review of inventory for excess and obsolete quantities is based primarily on our estimated forecast of product demand and production requirements for the next twenty-four months. Charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $4.7 million, $3.2 million, and $11.6 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Product Liability Claims, Product Liability Insurance Recoveries, and Other Litigation. We are involved in legal proceedingsinvolving product liability claims as well as contract, patent protection and other matters. See Note 19 for additional information regarding product liability claims, product liability insurance recoveries and other litigation.

We make provisions for claims specifically identified for which we believe the likelihood of an unfavorable outcome is probable and the amount of loss can be estimated. For unresolved contingencies with potentially material exposure that are deemed reasonably possible, we evaluate whether a potential loss or range of loss can be reasonably estimated. Our evaluation of these matters is the result of a comprehensive process designed to ensure that recognition of a loss or disclosure of these contingencies is made in a timely manner. In determining whether a loss should be accrued or a loss contingency disclosed, we evaluate a number of factors including: the procedural status of each lawsuit; any opportunities for dismissal of the lawsuit before trial; the amount of time remaining before trial date; the status of discovery; the status of settlement; arbitration or mediation proceedings; and management’s

62

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

estimate of the likelihood of success prior to or at trial. The estimates used to establish a range of loss and the amounts to accrue are based on previous settlement experience, consultation with legal counsel, and management’s settlement strategies. If the estimate of a probable loss is in a range and no amount within the range is more likely, we accrue the minimum amount of the range. We recognize legal fees as an expense in the period incurred.

Property, Plant and Equipment. Our property, plant and equipment is stated at cost. Depreciation, which includes amortization of assets under capital lease, is generally provided on a straight-line basis over the estimated useful lives generally based on the following categories:

Land improvements	15	to	25	years
Buildings	10	to	25	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	1	to	14	years
Surgical instruments			6	years

Expenditures for major renewals and betterments, including leasehold improvements, that extend the useful life of the assets are capitalized and depreciated over the remaining life of the asset or lease term, if shorter. Maintenance and repair costs are charged to expense as incurred. Upon sale or retirement, the asset cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in income.

Intangible Assets and Goodwill. Goodwill is recognized for the excess of the purchase price over the fair value of net assets of businesses acquired. FASB ASC 350-30-35-18 requires companies to evaluate for impairment intangible assets not subject to amortization, such as our IPRD assets, if events or changes in circumstances indicate than an asset might be impaired. Further, FASB ASC 350-20-35-30 requires companies to evaluate goodwill and intangibles not subject to amortization for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Unless circumstances otherwise dictate, the annual impairment test is performed in the fourth quarter. During the second and third quarter of 2013, we had events that caused us to test for impairment of intangible assets and goodwill. See Note 12 for further information on the testing. During the fourth quarter of 2013, we performed a qualitative assessment of goodwill for impairment and determined that it is more likely than not that the fair value of our reporting units exceeded their respective carrying values, indicating that goodwill was not impaired. We have determined that we have three reporting units for purposes of evaluating goodwill for impairment: 1) BioMimetic business; 2) Continuing Operations (BioExtremities) business, excluding the BioMimetic business; and 3) Discontinued Operations (OrthoRecon) business.

Our intangible assets with estimable useful lives are amortized on a straight line basis over their respective estimated useful lives to their estimated residual values. This method of amortization approximates the expected future cash flow generated from their use. Finite lived intangibles are reviewed for impairment in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 360, Property, Plant and Equipment (FASB ASC 360). The weighted average amortization periods for completed technology, distribution channels, trademarks, licenses, customer relationships, non-compete agreements and other intangible assets are 9 years, 10 years, 5 years, 14 years, 12 years, 3 years and 7 years, respectively. The weighted average amortization period of our intangible assets on a combined basis is 9 years. Additionally, we have four indefinite lived trademark assets and one in-process research and development (IPRD) intangible asset. These indefinite lived intangible assets are not amortized, but are instead tested for impairment at least annually in accordance with the provisions of FASB ASC Section 350, Intangibles - Goodwill and Other.

Valuation of Long-Lived Assets. Management periodically evaluates carrying values of long-lived assets, including property, plant and equipment and intangible assets, when events and circumstances indicate that these assets may have been impaired. We account for the impairment of long-lived assets in accordance with FASB ASC 360. Accordingly, we evaluate impairment of our property, plant and equipment based upon an analysis of estimated undiscounted future cash flows. If it is determined that a change is required in the useful life of an asset, future depreciation and amortization is adjusted accordingly. Alternatively, should we determine that an asset is impaired, an adjustment would be charged to income based on the difference between the asset’s fair market value and the asset's carrying value.

Allowances for Doubtful Accounts. We experience credit losses on our accounts receivable and, accordingly, we must make estimates related to the ultimate collection of our accounts receivable. Specifically, management analyzes our accounts receivable, historical bad debt experience, customer concentrations, customer credit-worthiness and current economic trends when evaluating the adequacy of our allowance for doubtful accounts.

The majority of our accounts receivable are from hospitals, many of which are government funded. Accordingly, our collection history with this class of customer has been favorable. Historically, we have experienced minimal bad debts from our hospital

63

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

customers and more significant bad debts from certain international stocking distributors, typically as a result of specific financial difficulty or geo-political factors. We write off accounts receivable when we determine that the accounts receivable are uncollectible, typically upon customer bankruptcy or the customer’s non-response to continued collection efforts. Our allowance for doubtful accounts totaled $0.3 million at December 31, 2013 and 2012, respectively, for those customer account balances that were retained following the sale of our OrthoRecon business to MicroPort.

Concentration of Credit Risk. Financial instruments that potentially subject us to concentrations of credit risk consist principally of accounts receivable. Management attempts to minimize credit risk by reviewing customers’ credit history before extending credit and by monitoring credit exposure on a regular basis. An allowance for possible losses on accounts receivable is established based upon factors surrounding the credit risk of specific customers, historical trends and other information. Collateral or other security is generally not required for accounts receivable.

Concentrations of Supply of Raw Material. We rely on a limited number of suppliers for the components used in our products. For certain human biologic products, we depend on one supplier of demineralized bone matrix (DBM) and cancellous bone matrix (CBM). We rely on one supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products, and one supplier for our xenograft bone wedge product. Porcine biologic soft tissue graft, BIOTAPE^® XM relies on a single source supplier as well. We maintain adequate stock from these suppliers in order to meet market demand. We currently rely on one supplier for a key component of our Augment^® Bone Graft. In December 2013, this supplier notified us of their intent to terminate the supply agreement at the end of the current term, which is December 2015. They are contractually required to meet our supply requirements until the termination date, and to use commercially reasonable efforts to assist us in identifying a new supplier and support the transfer of technology and supporting documentation to produce this component. See Item 1A, Risk Factors, for further information on our suppliers.

Income Taxes. Income taxes are accounted for pursuant to the provisions of FASB ASC Section 740, Income Taxes (FASB ASC 740). Our effective tax rate is based on income by tax jurisdiction, statutory rates and tax saving initiatives available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our effective tax rate and evaluating our tax positions. This process includes assessing temporary differences resulting from differing recognition of items for income tax and financial accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

During the fourth quarter of 2013, we recognized a valuation allowance for our U.S. deferred tax assets of approximately $119.6 million, primarily related to net operating losses for our U.S. operations. See Note 14 for further discussion of our consolidated deferred tax assets and liabilities, and the associated valuation allowance.

We provide for unrecognized tax benefits based upon our assessment of whether a tax position is “more-likely-than-not” to be sustained upon examination by the tax authorities. If a tax position meets the more-likely-than-not standard, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more-likely-than-not to be realized upon ultimate settlement or disposition of the underlying tax position.

Other Taxes. Taxes assessed by a governmental authority that are imposed concurrent with our revenue transactions with customers are presented on a net basis in our consolidated statement of operations.

Revenue Recognition. Our revenues are primarily generated through two types of customers, hospitals and surgery centers, and stocking distributors, with the majority of our revenue derived from sales to hospitals. Our products are primarily sold through a network of employee sales representatives and independent sales representatives in the U.S. and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the U.S. Revenues from sales to hospitals are recorded when the hospital takes title to the product, which is generally when the product is surgically implanted in a patient.

We record revenues from sales to our stocking distributors outside the U.S. at the time the product is shipped to the distributor. Stocking distributors, who sell the products to their customers, take title to the products and assume all risks of ownership. Our distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. In general, the distributors do not have any rights of return or exchange; however, in limited situations, we have repurchase agreements with certain stocking distributors. Those certain agreements require us to repurchase a specified percentage of the inventory purchased by the distributor within a specified period of time prior to the expiration of the contract. During those specified periods, we defer the applicable percentage of the sales. An insignificant amount of deferred revenue related to these types of agreements was recorded at December 31, 2013 and 2012, respectively.

We must make estimates of potential future product returns related to current period product revenue. We develop these estimates by analyzing historical experience related to product returns. Judgment must be used and estimates made in connection with

64

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

establishing the allowance for sales returns in any accounting period. An allowance for sales returns of $0.3 million is included as a reduction of accounts receivable at December 31, 2013 and 2012, respectively.

In 2011, we entered into a trademark license agreement (License Agreement) with KCI Medical Resources, a subsidiary of Kinetic Concepts, Inc. (KCI). In exchange for $8.5 million, of which $5.5 million was received immediately and the remaining $3 million was received in January 2012, the License Agreement provides KCI with a non-transferable license to use our trademarks associated with our GRAFTJACKET^® line of products in connection with the marketing and distribution of KCI's soft tissue graft containment products used in the wound care field, subject to certain exceptions. License revenue is being recognized over 12 years on a straight line basis.

Shipping and Handling Costs. We incur shipping and handling costs associated with the shipment of goods to customers, independent distributors and our subsidiaries. Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products to customers are included in selling, general and administrative expenses. All other shipping and handling costs are included in cost of sales.

Research and Development Costs. Research and development costs are charged to expense as incurred.

Foreign Currency Translation. The financial statements of our international subsidiaries whose functional currency is the local currency are translated into U.S. dollars using the exchange rate at the balance sheet date for assets and liabilities and the weighted average exchange rate for the applicable period for revenues, expenses, gains and losses. Translation adjustments are recorded as a separate component of comprehensive income in stockholders’ equity. Gains and losses resulting from transactions denominated in a currency other than the local functional currency are included in “Other expense, net” in our consolidated statement of operations.

Comprehensive Income. Comprehensive income is defined as the change in equity during a period related to transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The difference between our net income and our comprehensive income is attributable to foreign currency translation, unrealized gains and losses (net of taxes) on our derivative instrument, adjustments to our minimum pension liability, and unrealized gains and losses on our available-for-sale marketable securities. In accordance with FASB Accounting Standards Update 2011-05, Presentation of Comprehensive Income, we have changed our presentation of comprehensive income by including a separate Statement of Comprehensive Income.

Stock-Based Compensation. We account for stock-based compensation in accordance with FASB ASC Section 718, Compensation — Stock Compensation (FASB ASC 718). Under the fair value recognition provisions of FASB ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The determination of the fair value of stock-based payment awards, such as options, on the date of grant using an option-pricing model is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables, which include the expected life of the award, the expected stock price volatility over the expected life of the awards, expected dividend yield and risk-free interest rate.

We recorded stock-based compensation expense of $12.0 million, $7.8 million, and $5.9 million during the years ended December 31, 2013, 2012 and 2011, respectively, within results of continuing operations. See Note 17 for further information regarding our stock-based compensation assumptions and expenses.

Fair Value of Financial Instruments. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates the fair value of these financial instruments at December 31, 2013 and 2012 due to their short maturities or variable rates.

The remaining outstanding $3.8 million of our 2014 Notes are carried at cost. The estimated fair value of these 2014 Notes was approximately $3.5 million at December 31, 2013 based on a limited number of trades and does not necessarily represent the value at which the entire 2014 Notes portfolio can be retired.

The $300 million of our 2017 Notes are carried at cost. The estimated fair value of these 2017 Notes was approximately $396 million at December 31, 2013, which includes the conversion derivative described in Note 11 of the financial statements, based on a quoted price in an active market (Level 1).

FASB ASC Section 820, Fair Value Measurements and Disclosures requires fair value measurements be classified and disclosed in one of the following three categories:

Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges.

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(continued)

Level 2: Financial instruments determined using prices for recently traded financial instruments 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 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

We use a third-party provider to determine fair values of our available-for-sale debt securities. The third-party provider receives market prices for each marketable security from a variety of industry standard data providers, security master files from large financial institutions and other third-party sources with reasonable levels of price transparency. The third-party provider uses these multiple prices as inputs into a pricing model to determine a weighted average price for each security. We have controls in place to review the third party provider's qualifications and procedures used to determine fair values and to validate the prices used in their determination of fair value. We classify our investment in U.S. Treasury bills and bonds and corporate equity securities as Level 1 based upon quoted prices in active markets. All other marketable securities are classified as Level 2 based upon the other than quoted prices with observable market data. These include U.S. agency debt securities, certificates of deposit, commercial paper, and corporate debt securities.

During the third quarter of 2012, we issued $300 million of our 2017 Notes, and we have recorded a derivative liability for the conversion feature (2017 Notes Conversion Derivative) of such 2017 Notes. Additionally, we entered into convertible notes hedging transactions (2017 Notes Hedges) in connection with the issuance of our 2017 Notes. The 2017 Notes Hedges and the 2017 Notes Conversion Derivative are measured at fair value using Level 3 inputs. These instruments are not actively traded and are valued using an option pricing model that uses observable and unobservable market data for inputs.

To determine the fair value of the embedded conversion option in the 2017 Notes Conversion Derivative, a binomial lattice model was used. A binomial stock price lattice generates two probable outcomes of stock price - one up and another down. This lattice generates a distribution of stock price at the maturity date. Using this stock price lattice, a conversion option lattice was created where the value of the embedded conversion option was estimated. The conversion option lattice first calculates the possible conversion option values at the maturity date using the distribution of stock price, which equals to the maximum of (x) zero, if stock price is below the strike price, or (y) stock price less the strike price, if the stock price is higher than the strike price. The value of the 2017 Notes Conversion Derivative at the valuation date was estimated using the conversion option values at the maturity date by moving back in time on the lattice. Specifically, at each node, if the Notes are eligible for early conversion, the value at this node is the maximum of (i) the early conversion value, which is the stock price less the strike price, and (ii) the discounted and probability-weighted value from the two probable outcomes in the future. If the Notes are not eligible for early conversion, the value of the conversion option at this node equals to (ii). In the conversion option lattice, credit adjustment was applied in the model as the embedded conversion option is settled with cash instead of shares.

To estimate the fair value of the 2017 Notes Hedges, we used the Black-Scholes formula combined with credit adjustments, as the bank counterparties have credit risk and the call options are cash settled. We assumed that the call options will be exercised at the maturity since our common stock does not pay any dividends and management does not expect to declare dividends in the near term.

The following assumptions were used in the fair market valuations of the 2017 Notes Hedges and 2017 Notes Conversion Derivative as of December 31, 2013:

	2017 Notes Conversion Derivative	2017 Notes Hedge
Stock Price Volatility (1)	32%	32%
Credit Spread for Wright (2)	2.2%	N/A
Credit Spread for Bank of America, N.A. (3)	N/A	0.6%
Credit Spread for Deutsche Bank AG (3)	N/A	0.6%
Credit Spread for Wells Fargo Securities, LLC (3)	N/A	0.3%

(1) Volatility selected based on historical and implied volatility of common shares of Wright Medical Group, Inc.

(2) Credit spread was estimated based on BVAL price from Bloomberg as of valuation date.

(3) Credit spread of each bank is estimated using CDS curves. Source: Bloomberg.

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(continued)

As part of the acquisitions of EZ Concepts Surgical Device Corporation, d/b/a EZ Frame^™, and CCI^® Evolution Mobile Bearing Total Ankle Replacement system (CCI acquisition), completed in 2010 and 2011, respectively, we have recorded $0.5 million of contingent liabilities for potential future cash payments related to these transactions as of December 31, 2013. As part of the acquisition of WG Healthcare on January 7, 2013, we may be obligated to pay contingent consideration upon the achievement of certain revenue milestones; therefore, we have recorded the estimated fair value of future contingent consideration of approximately $1.5 million as of December 31, 2013. As part of the acquisition of Biotech on November 15, 2013, we may be obligated to pay contingent consideration upon achievement of certain revenue milestones; therefore we have recorded the estimated fair value of future contingent consideration of approximately $4.3 million as of December 31, 2013. The fair value of the contingent consideration as of December 31, 2013, was determined using a discounted cash flow model and probability adjusted estimates of the future earnings and is classified in Level 3. Changes in the fair value of contingent consideration are recorded in “Other (income) expense, net” in our consolidated statements of operations.

On March 1, 2013, as part of the acquisition of BioMimetic Therapeutics, Inc. (BioMimetic), we issued Contingent Value Rights (CVRs) as part of the merger consideration. Each CVR entitles its holder to receive additional cash payments of up to $6.50 per share, which are payable upon receipt of FDA approval of Augment^® Bone Graft and upon achieving certain revenue milestones. The fair value of the CVRs outstanding at December 31, 2013 of $9.0 million was determined using the closing price of the security in the active market (Level 1).

The following table summarizes the valuation of our financial instruments (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2013
Assets
Cash and cash equivalents	$	168,534	$	168,534	$	—	$	—
Available-for-sale marketable securities
U.S. agency debt securities	4,998		—		4,998		—
Certificate of deposit	245		—		245		—
Corporate debt securities	5,188		—		5,188		—
U.S. government debt securities	4,117		4,117		—		—
Total available-for-sale marketable securities	14,548		4,117		10,431		—
2017 Notes Hedges	118,000		—		—		118,000
Total	$	301,082	$	172,651	$	10,431	$	118,000
Liabilities
2017 Notes Conversion Derivative	$	112,000	$	—	$	—	$	112,000
Contingent consideration	6,237		—		—		6,237
Contingent consideration (CVRs)	8,969		$	8,969	$	—	—
Total	$	127,206	$	8,969	$	—	$	118,237

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(continued)

	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2012
Assets
Cash and cash equivalents	$	320,360	$	320,360	$	—	$	—
Available-for-sale marketable securities
U.S. agency debt securities	2,500		—		2,500		—
Corporate debt securities	2,001		—		2,001		—
Total debt securities	4,501		—		4,501		—
Corporate equity securities	8,145		8,145		$	—	—
Total available-for-sale marketable securities	12,646		8,145		4,501		—
2017 Notes Hedges	62,000		$	—	$	—	62,000
Total	$	395,006	$	328,505	$	4,501	$	62,000
Liabilities
2017 Notes Conversion Derivative	$	55,000	$	—	$	—	$	55,000
Contingent consideration	983		—		—		983
Total	$	55,983	$	—	$	—	$	55,983

The following is a roll forward of our assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3):

	Balance at December 31, 2012		Transfers into Level 3		Gain/(Loss) included in Earnings		Settlements	Currency		Balance at December 31, 2013
2017 Notes Hedges	62,000		—		56,000		—	—		118,000
2017 Notes Conversion Derivative	(55,000	)	—		(57,000	)	—	—		(112,000	)
Contingent Consideration	(983	)	(6,396	)	(157	)	1,491	(191	)	(6,236	)

Derivative Instruments. We account for derivative instruments and hedging activities under FASB ASC Section 815, Derivatives and Hedging (FASB ASC 815). Accordingly, all of our derivative instruments are recorded in the accompanying consolidated balance sheets as either an asset or liability and measured at fair value. The changes in the derivative’s fair value are recognized currently in earnings unless specific hedge accounting criteria are met.

We employ a derivative program using 30-day foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that are denominated in foreign currencies. These forward contracts are expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts are not designated as hedging instruments under FASB ASC 815. Accordingly, the changes in the fair value and the settlement of the contracts are recognized in the period incurred in the accompanying consolidated statements of operations.

We recorded a net gain of approximately $0.6 million for the year ended December 31, 2013 and a net loss of approximately $0.4 million and $0.9 million for the years ended December 31, 2012 and 2011, respectively, on foreign currency contracts, which are included in “Other (income) expense, net” in our consolidated statements of operations. These losses substantially offset translation gains recorded on our intercompany receivable and payable balances, also included in “Other (income) expense, net.” At December 31, 2013 and 2012, we had no foreign currency contracts outstanding.

On August 31, 2012, we issued the 2017 Notes. The 2017 Notes Conversion Derivative requires bifurcation from the 2017 Notes in accordance with ASC Topic 815, and is accounted for as a derivative liability. We also entered into 2017 Notes Hedges in connection with the issuance of the 2017 Notes with three counterparties.  The 2017 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments that we are required to make upon conversion of the 2017 Notes in

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(continued)

excess of the principal amount of converted notes if our common stock price exceeds the conversion price. The 2017 Notes Hedges is accounted for as a derivative asset in accordance with ASC Topic 815.

Reclassifications. Certain prior year amounts in the notes to consolidated financial statements have been reclassified to conform to the current year presentation.

Supplemental Cash Flow Information. Cash paid for interest and income taxes was as follows (in thousands):

	Year Ended December 31,
	2013		2012		2011
Interest	$	5,904	$	4,639	$	6,162
Income taxes	$	1,634	$	4,973	$	7,006

In December 2013, we entered into one new capital lease for our new corporate headquarters building for approximately $8.2 million. In 2011, we entered into capital leases of approximately $0.2 million.

3. Acquisition

Biotech International

On November 15, 2013, we acquired 100% of the outstanding equity shares of Biotech International (Biotech), a leading, privately held French orthopaedic extremities company, for approximately $55.0 million in cash and $21.0 million of our common stock, plus additional contingent consideration with an estimated fair value of $4.3 million to be paid upon the achievement of certain revenue milestones in 2014 and 2015. All Wright common stock issued in connection with the transaction is subject to a lockup period of one year. The transaction will significantly expand our direct sales channel in France and international distribution network and add Biotech’s complementary extremity product portfolio to further accelerate growth opportunities in our global extremities business. The operating results from this acquisition are included in the consolidated financial statements from the acquisition date.

The acquisition was recorded by allocating the costs of the assets and liabilities acquired based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of the net assets and liabilities acquired is recorded as goodwill. The following is a summary of the estimated fair values of the assets acquired (in thousands):

Cash and cash equivalents	$	252
Accounts receivable	5,400
Inventory	5,814
Prepaid and other current assets	303
Property, plant and equipment	2,573
Intangible assets	15,500
Accounts payable and accrued liabilities	(2,091		)
Deferred tax liability - current	(52		)
Deferred tax liability - noncurrent	(3,939		)
Net assets acquired	23,760
Goodwill	56,455
Total purchase consideration	$	80,215

The above purchase price allocation is considered preliminary and is subject to revision when the valuation of intangible assets is finalized upon receipt of the final valuation report for those assets from a third party valuation expert.

The goodwill is attributable to the workforce of the acquired business and strategic opportunities that arose from the acquisition of Biotech. The goodwill is not expected to be deductible for tax purposes.

Of the estimated $15.5 million of acquired intangible assets, $9.8 million was assigned to customer relationships (12 year life), $4.8 million was assigned to purchased technology (10 year life), and $0.9 million was assigned to trademarks (2 year life).

The acquired business contributed revenues of $1.9 million and operating loss of $0.8 million to our consolidated results from the date of acquisition through December 31, 2013. Our consolidated results of operations would not have been materially different

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(continued)

than reported results had the Biotech acquisition occurred at the beginning of 2012 and therefore, pro forma financial information has not been presented.

BioMimetic Therapeutics, Inc.

On March 1, 2013, we acquired 100% of the outstanding equity shares of BioMimetic, a publicly traded company specializing in the development and commercialization of innovative products to promote the healing of musculoskeletal injuries and diseases, including therapies for orthopedic, sports medicine and spine applications. The transaction combined BioMimetic's biologics platform and pipeline with our established sales force and product portfolio, to further accelerate growth opportunities in our Extremities business. The operating results from this acquisition are included in the consolidated financial statements from the acquisition date.

Under the terms of the Agreement and Plan of Merger, each share of BioMimetic common stock was canceled and converted into the right to receive: (1) $1.50 in cash; (2) 0.2482 of a share of our common stock; and (3) one tradable CVR. Each CVR entitles its holder to receive additional cash payments of up to $6.50 per share, which are payable upon receipt of FDA approval of Augment^® Bone Graft and upon achieving certain revenue milestones. In addition, each holder of a BioMimetic stock option, whether such stock option was vested or unvested, was permitted to elect for all or any portion of such stock option to be exercised in full or on a net basis, by agreeing (if exercised on a net basis) to exchange in the merger the shares of BioMimetic stock subject to such stock option being exercised, and, in connection with such exchange, relinquish a portion of the merger consideration otherwise payable pursuant to such shares. On the completion of the merger, any such stock option that was not exercised was assumed by us and converted into a stock option at a conversion rate of 0.522106 to acquire a number of shares of our common stock (rounded to the nearest whole share).

The fair value of consideration transferred is as follows (in thousands):

Fair value of Wright shares issued at an exchange ratio of 0.2482 shares of Wright for one share of BioMimetic(1)	$	165,893
Cash transferred (2)	41,336
Contingent Value Rights (3)	70,120
Value of previously vested BioMimetic stock options converted into Wright stock options (at specified exchange ratio) (4)	2,868
Withholding tax component related to BioMimetic exercised stock options (merger consideration tendered to cover remaining unpaid value of employees' portion) (5)	2,419
Fair value of Wright's investment in BioMimetic held before the merger (6)	10,676
Total value of consideration transferred	$	293,312

(1) The fair value of our shares of $165,893 was calculated by multiplying the (a) BioMimetic shares outstanding as of February 28, 2013, 28.3 million shares, less our prior investment in BioMimetic of 1.13 million shares, and (b) the BioMimetic shares issued for exercises of BioMimetic stock options immediately prior to the merger, 1.1 million shares, by (c) the exchange ratio of 0.2482 and (d) $23.83, the closing trading price of our common stock on March 1, 2013. The fair value of the Wright shares was offset by the value of the stock component of merger consideration that would have been received by option holders of 0.2 million BioMimetic stock options. These BioMimetic stock options were exercised immediately prior to the merger, but were tendered, along with the associated CVRs, to BioMimetic to cover $1.4 million of the total employee portion of the statutory withholding tax.

(2) The cash transferred of $41,336 was calculated by multiplying the (a) BioMimetic shares outstanding as of February 28, 2013, 28.3 million shares, less our prior investment in BioMimetic of 1.13 million shares and (b) the BioMimetic shares issued for exercises of BioMimetic stock options immediately prior to the merger, 1.1 million shares, by (c) $1.50 per share to be received by BioMimetic stockholders. The cash component of merger consideration was offset by the value of the cash component of merger consideration that would have been received by option holders to cover $1.0 million of the total employee portion of the statutory withholding tax.

(3) Each CVR entitles its holder to receive an additional $3.50 per share upon approval by the FDA of Augment^® Bone Graft; an additional $1.50 per share the first time aggregate sales of specified products exceed $40 million during a consecutive 12-month period and an additional $1.50 per share the first time aggregate sales of specified products exceed $70 million during a consecutive 12-month period. The CVRs are publicly traded and will terminate on the earlier of the six-year anniversary of the completion of the merger or the payment date for the second product sales milestone.

The fair value assigned to the CVRs and the associated liability related to payments under the contingent value rights agreement of $70.5 million is based upon the CVRs' market opening price of $2.50 per CVR as of March 4, 2013, the

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(continued)

first day of trading of the CVRs, and the quantity of CVRs issued. The fair value of the CVRs was offset by the value of the CVR component of merger consideration that would have been received by option holders of 0.2 million BioMimetic stock options. This value was tendered along with the stock options to cover $1.4 million of the total employee portion of the statutory withholding tax.

The fair value of the CVRs at December 31, 2013 of $9.0 million is recorded in the “Accrued expenses and other current liabilities” line of the consolidated balance sheet. The fair value of the CVRs and the associated liability related to payments under the CVR agreement are remeasured at the end of each reporting period based on the closing trading price on the last business day of the period and the number of CVRs outstanding as of that date. Changes in fair value are recognized in results of operations.

(4) In accordance with FASB ASC Section 805, Business Combinations, the consideration transferred by us for BioMimetic includes $2.9 million for the fair value of certain BioMimetic stock options attributable to precombination service.

For purposes of calculating the consideration transferred, the fair value based measure of the BioMimetic vested options was determined on a grant-by-grant basis using the Black-Scholes option pricing model with the following assumptions: (i) the closing market price of BioMimetic common stock of $9.49 on February 28, 2013; (ii) an expected remaining life considering the original expected life for the options, the remaining service period and the contractual life of the option as of March 1, 2013; (iii) volatility based on a blend of the historical stock price volatility of common stock over the most recent period equivalent to the expected life of the options; and (iv) the risk-free interest rate based on published U.S. Treasury yields for notes with comparable terms as the expected life of the options. The fair value measurement of our replacement options was completed using the same assumptions except the closing market price of our common stock of $23.83 on March 1, 2013 was used instead of the BioMimetic common stock closing price.

(5) The withholding tax component of $2.4 million represents the merger consideration tendered to BioMimetic in connection with the exercise of 0.2 million BioMimetic stock options, immediately prior to the merger, to cover the employee portion of the statutory withholding tax, consisting of the sum of (1) the value of the stock component of merger consideration, along with the associated CVRs, to cover $1.4 million of the statutory withholding tax and (2) the cash component of merger consideration that would have been received by option holders to cover $1.0 million of the withholding tax.

(6) As of February 28, 2013, we held 1.13 million shares of BioMimetic as an available-for-sale (AFS) marketable security carried at an aggregate fair value of $10.7 million based on the closing market price of BioMimetic common stock of $9.49. The cumulative unrealized gain on this investment based on the fair value determined at closing was recognized as a gain of $7.8 million. This gain was recorded in “Other (income) expense, net” in the consolidated statement of operations for the twelve months ended December 31, 2013.

The following is a summary of the estimated fair values of the net assets acquired (in thousands):

Cash and cash equivalents	$	10,577
Marketable securities	16,882
Accounts receivables	1,595
Inventories	4,418
Prepaid and other current assets	4,234
Property, plant and equipment	2,976
Intangible assets	95,100
Deferred tax asset - noncurrent	24,495
Other long-term assets	1,133
Accounts payable and accrued liabilities	(6,003		)
Capital leases	(118		)
Deferred tax liability - current	(219		)
Other liabilities	(2		)
Net assets acquired	155,068
Goodwill	138,244
Total purchase consideration	$	293,312

The goodwill is attributable to the workforce of the acquired business and strategic opportunities that arose from the acquisition of BioMimetic. The goodwill is not expected to be deductible for tax purposes.

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(continued)

Of the $95.1 million of acquired intangible assets, $1.6 million was assigned to acquired technology (13 year useful life), $3.9 million was assigned to trademarks (indefinite useful life), $1.3 million was assigned to a non-compete agreement (2 year useful life), and $88.3 million was assigned to IPRD (indefinite useful life). The weighted average amortization period of the finite-lived intangibles acquired is approximately 10 years.

The contractual value of accounts receivable approximates fair value. Prepaid and other current assets includes $3.5 million, which represents the fair value of a contingent gain associated with disputed provisions of a license agreement with Luitpold Pharmaceuticals, Inc. During the second quarter of 2013, this dispute was settled for $3.5 million, and payment was received.

During the third quarter of 2013, we received a not approvable letter from the FDA in response to our Pre-Market Approval application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. We have filed an appeal with the FDA regarding its decision. On October 31, 2013 the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment based upon the information we had as of September 30, 2013. Ultimately, we recognized an intangible impairment charge of approximately $88.1 million and a goodwill impairment charge of $115.0 million in the three months ended September 30, 2013 for the amount by which the carrying value of these assets exceeded the fair value. See Note 12 for further discussion of our impairment analysis. Further, we recognized a $3.2 million charge for noncancelable inventory commitments for the raw materials used in the manufacture of Augment^® Bone Graft, which we have estimated will expire unused. These charges are included within “BioMimetic impairment charges” on our consolidated statement of operations. We further recognized a reduction of deferred tax liabilities associated with the impaired intangible assets, resulting in an income tax benefit of $34.3 million.

The acquired business contributed revenues of $3.6 million and operating loss of $26.6 million to our consolidated results from the date of acquisition through December 31, 2013, which does not include the amounts described above that were recorded as BioMimetic impairment charges during the three months ended September 30, 2013. Our consolidated results include $4.5 million of transaction expenses and $6.4 million of transition expenses recognized in the twelve months ended December 31, 2013.

The following unaudited pro forma summary presents our continuing operations financial results if the business combination had occurred on January 1, 2012:

	Pro Forma Year Ended December 31, 2013			Pro Forma Year Ended December 31, 2012
Revenue from continuing operations	$	242,945		$	216,577
Net loss from continuing operations	(284,480		)	(38,926		)
Net loss from continuing operations per share, basic	(6.13		)	(0.85		)
Net loss from continuing operations per share, diluted	(6.13		)	(0.85		)

The pro forma net loss for the year ended December 31, 2012 includes non-recurring items for the (a) $7.8 million gain on remeasurement of our previously held investment in BioMimetic, (b) $2.2 million of stock-based compensation expense related to the incremental fair value of replacement awards attributed to precombination service, (c) $6.6 million of stock-based compensation expense related to the acceleration of vesting of previously unvested BioMimetic awards exercised in connection with the acquisition, (d) $0.2 million of compensation expense related to retention agreements for which employees have no further service commitments to obtain the payments, (e) $0.6 million of severance expense directly attributable to the acquisition, and (f) $9.0 million of transaction costs incurred by BioMimetic and us.

WG Healthcare Limited

On January 7, 2013, we acquired 100% of the outstanding equity shares of WG Healthcare Limited, a United Kingdom company (WG Healthcare), for approximately $7.6 million, plus additional contingent consideration with an estimated fair value of $2.2 million to be paid over the next five years subject to the achievement of certain revenue milestones. We acquired the facility, inventory, infrastructure and all other assets and liabilities associated with WG Healthcare's business.

The operating results from this acquisition are included in the consolidated financial statements from the acquisition date.The two former owners of WG Healthcare have joined us as full-time employees.

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(continued)

The acquisition was recorded by allocating the costs of the assets acquired based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of the assets acquired is recorded as goodwill. The following is a summary of the estimated fair values of the assets acquired (in thousands):

Cash	$	458
Accounts receivable	1,052
Inventory	1,640
Property, plant and equipment	330
Intangible assets	4,748
Accounts payable	(1,550		)
Deferred tax liability - current	(43		)
Deferred tax liability - noncurrent	(1,139		)
Total net assets acquired	5,496
Goodwill	4,341
Total purchase consideration	$	9,837

The goodwill is attributable to the workforce of the acquired business and strategic opportunities that arose from the acquisition of WG Healthcare. The goodwill is not expected to be deductible for tax purposes.

Of the $4.7 million of acquired intangible assets, $1.9 million was assigned to trademarks (indefinite life), $0.8 million was assigned to completed technology (7 year life), $0.3 million was assigned to non-compete agreements (3 year life), and $1.7 million was assigned to customer relationships (15 year life). The weighted average amortization period of the finite-lived intangibles acquired is approximately 11 years.

The acquired business contributed revenues of $4.6 million and operating loss of $1.3 million to our consolidated results from the date of acquisition through December 31, 2013. Our consolidated results of operations would not have been materially different than reported results had the WG Healthcare acquisition occurred at the beginning of 2012 and therefore, pro forma financial information has not been presented.

4. Discontinued Operations

In June 2013, we entered into a definitive agreement under which MicroPort Medical B.V., a subsidiary of MicroPort Scientific Corporation (MicroPort), would acquire our OrthoRecon business. Our OrthoRecon business consists of hip and knee implant products. On January 9, 2014, we completed our divestiture and sale of the OrthoRecon business to MicroPort. Pursuant to the terms of the asset purchase agreement with MicroPort, the Purchase Price (as defined in the asset purchase agreement) for the OrthoRecon business was approximately $287.1 million, which MicroPort paid in cash. See Note 22 for discussion of the estimated impact of this subsequent event on our 2014 results.

All current and historical operating results for the OrthoRecon segment are reflected within discontinued operations in the consolidated financial statements. In addition,costs associated with corporate employees and infrastructure being transferred as a part of the sale have been included in discontinued operations. The following table summarizes the results of discontinued operations (in thousands):

	Twelve Months Ended
	December 31,
	2013		2012		2011
Revenue	$	231,865	$	269,671	$	302,193
Income before tax	9,489		11,946		4,700
Income tax provision	3,266		3,275		2,448
Income from discontinued operations, net of tax	6,223		8,671		2,252

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(continued)

All assets and associated liabilities to be transferred to MicroPort have been classified as assets and liabilities held for sale on our consolidated balance sheet. The following table summarizes the assets and liabilities held for sale (in thousands):

	December 31, 2013		December 31, 2012
Assets
Cash	$	201	$	—
Accounts receivable	59,172		67,434
Inventories, net	74,807		86,792
Property, plant & equipment, net	92,436		96,759
Goodwill	25,802		25,652
Intangible assets, net	1,738		2,610
Deferred income taxes	1,197		2,200
Other current and long-term assets	19,105		14,767
Assets held for sale	$	274,458	$	296,214
Liabilities
Accounts payable	$	9,553	$	5,666
Other current liabilities	21,668		27,327
Other long-term liabilities	1,399		2,031
Liabilities held for sale	$	32,620	$	35,024

Certain liabilities associated with the OrthoRecon business, including product liability claims associated with hip and knee products sold prior to the closing, will not be assumed by MicroPort. Estimated liabilities, if any, for such claims, and accrued legal defense costs for fees that have been incurred to date, are therefore excluded from liabilities held for sale. Concomitant receivables associated with liability insurance recoveries are also excluded from assets held for sale. MicroPort will be responsible for product liability claims associated with products it sells after the closing. Subject to the provisions of the definitive agreement, we will continue to be responsible for defense of existing patent infringement cases and associated legal defense costs, and for resulting liabilities, if any. Costs associated with legal defense, income associated with product liability insurance recoveries, and changes to any contingent liabilities associated the OrthoRecon business have been reflected within results of discontinued operations, and we will continue to reflect these within results of discontinued operations in future periods.

5. Inventories

Inventories consist of the following (in thousands):

	December 31,
	2013		2012
Raw materials	$	2,693	$	1,000
Work-in-process	6,950		3,377
Finished goods	62,800		53,081
	$	72,443	$	57,458

6. Marketable Securities

Our investments in marketable securities are classified as available-for-sale securities in accordance with FASB ASC Topic 320, Investments — Debt and Equity Securities. These securities are carried at their fair value, and all unrealized gains and losses are recorded within other comprehensive income. Marketable securities are classified as current for those expected to mature or be sold within 12 months and the remaining portion is classified as non-current. The cost of investment securities sold is determined by the specific identification method.

As of December 31, 2013 and 2012, we had current marketable securities totaling $6.9 million and $12.6 million, respectively, consisting of investments in corporate, government, agency bonds, certificates of deposits, and corporate equity securities, all of which are valued at fair value using a market approach. In addition, we had non-current marketable securities totaling $7.7 million as of December 31, 2013, consisting of investments in corporate, government, and agency bonds, all of which are valued at fair value using a market approach.

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(continued)

The following tables present a summary of our marketable securities (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
At December 31, 2013
Available-for-sale marketable securities
U.S. agency debt securities	$	5,002	$	—	$	(4	)	$	4,998
Certificate of deposit	245		—		—			245
Corporate debt securities	5,186		2		—			5,188
U.S. government debt securities	4,116		1		—			4,117
Total available-for-sale marketable securities	$	14,549	$	3	$	(4	)	$	14,548

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
At December 31, 2012
Available-for-sale marketable securities
U.S. agency debt securities	2,500		—		—		2,500
Corporate debt securities	2,000		1		—		2,001
Total debt securities	$	4,500	$	1	$	—	$	4,501
Corporate equity securities	2,878		$	5,267	—		8,145
Total available-for-sale marketable securities	$	7,378	$	5,268	$	—	$	12,646

The maturities of available-for-sale debt securities at December 31, 2013 are as follows:

	Available-for-Sale
	Cost Basis		Fair Value
Due in one year or less	$	6,896	$	6,898
Due after one year through two years	6,153		6,151
Due after two years through five years	1,500		1,499
	14,549		14,548

7. Property, Plant and Equipment

Property, plant and equipment, net consists of the following (in thousands):

	December 31,
	2013			2012
Land and land improvements	$	31		$	61
Buildings	13,026			2,227
Machinery and equipment	14,274			8,029
Furniture, fixtures and office equipment	47,364			19,006
Construction in progress	13,997			2,737
Surgical instruments	52,893			50,860
	141,585			82,920
Less: Accumulated depreciation	(71,070		)	(41,438		)
	$	70,515		$	41,482

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The components of property, plant and equipment recorded under capital leases consist of the following (in thousands):

	December 31,
	2013			2012
Buildings	$	8,192		$	—
Furniture, fixtures and office equipment	59			—
	8,251			—
Less: Accumulated depreciation	(48		)	—
	$	8,203		$	—

Depreciation expense recognized within results of continuing operations approximated $14.4 million, $14.8 million, and $14.0 million for the years ended December 31, 2013, 2012, and 2011, respectively, and included depreciation of assets under capital leases.

In December 2013, we entered into a capital lease for our new corporate headquarters building. Total capitalized costs associated with this capital lease will be depreciated over the lease term, which is 10 years.

8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	December 31
	2013		2012
Employee bonus	$	10,250	$	8,967
Other employee benefits	13,740		3,919
Royalties	2,669		2,829
Taxes other than income	4,722		2,170
Commissions	4,336		1,567
Professional and legal fees	7,054		4,981
Contingent consideration	12,324		444
Product liability	7,710		5,275
Distributor payments	1,253		2,701
Other	16,059		5,910
	$	80,117	$	38,763

9. Long-Term Debt and Capital Lease Obligations

Long-term debt and capital lease obligations consist of the following (in thousands):

	December 31, 2013			December 31, 2012
Capital lease obligations	$	8,238		$	—
2017 Notes	263,395			254,717
2014 Notes	3,768			3,768
	275,401			258,485
Less: current portion	(4,174		)	—
	$	271,227		$	258,485

2017 Notes

On August 31, 2012, we issued $300 million aggregate principal amount of the 2017 Notes pursuant to an indenture, dated as of August 31, 2012 between us and The Bank of New York Mellon Trust Company, N.A., as Trustee. The 2017 Notes will mature on August 15, 2017, and we pay interest on the 2017 Notes semi-annually on each February 15 and August 15 at an annual rate of 2.00%. We may not redeem the 2017 Notes prior to the maturity date, and no “sinking fund” is available for the 2017 Notes, which means that we are not required to redeem or retire the 2017 Notes periodically. The 2017 Notes are convertible at the option of the holder, during certain periods and subject to certain conditions as described below, solely into cash at an initial conversion

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

rate of 39.3140 shares per $1,000 principal amount of the 2017 Notes, subject to adjustment upon the occurrence of specified events, which represents an initial conversion price of $25.44 per share. The holder of the 2017 Notes may convert their notes at any time prior to February 15, 2017 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending December 31, 2012 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after February 15, 2017 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2017 Notes solely into cash, regardless of the foregoing circumstances. Upon conversion, a holder will receive an amount in cash, per $1,000 principal amount of the 2017 Notes, equal to the settlement amount as calculated under the indenture relating to the 2017 Notes. If we undergo a fundamental change, as defined in the indenture relating to the 2017 Notes, subject to certain conditions, holders of the 2017 Notes will have the option to require us to repurchase for cash all or a portion of their notes at a purchase price equal to 100% of the principal amount of the 2017 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date, as defined in the indenture relating to the 2017 Notes. In addition, following certain corporate transactions, we, under certain circumstances, will pay a cash make-whole premium by increasing the applicable conversion rate for a holder that elects to convert its 2017 Notes in connection with such corporate transaction. The 2017 Notes are senior unsecured obligations that rank: (i) senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2017 Notes; (ii) equal in right of payment to any of our unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. We determined that the sale of our OrthoRecon business did not constitute a fundamental change pursuant to the indenture. As a result of this transaction, we capitalized deferred financing charges of approximately $8.8 million, which are being amortized over the term of the 2017 Notes using the effective interest method.

The 2017 Notes Conversion Derivative requires bifurcation from the 2017 Notes in accordance with ASC Topic 815, Derivatives and Hedging, and is accounted for as a derivative liability. The fair value of the 2017 Notes Conversion Derivative at the time of issuance of the 2017 Notes was $48.1 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2017 Notes. This discount is amortized as interest expense using the effective interest method over the term of the 2017 Notes. For the year ended December 31, 2013 the Company recorded $8.7 million of interest expense related to the amortization of the debt discount based upon an effective rate of 6.47%.

The components of the 2017 Notes were as follows (in thousands):

	December 31, 2013			December 31, 2012
Principal amount of 2017 Notes	$	300,000		$	300,000
Unamortized debt discount	(36,605		)	(45,283		)
Net carrying amount of 2017 Notes	$	263,395		$	254,717

We entered into 2017 Notes Hedges in connection with the issuance of the 2017 Notes with three counterparties (the Option Counterparties). The 2017 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments that we would be required to make if holders elect to convert the 2017 Notes at a time when our stock price exceeds the conversion price. The aggregate cost to acquire the 2017 Notes Hedges was $56.2 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 11 for additional information regarding the 2017 Notes Hedges and the 2017 Notes Conversion Derivative.

We also entered into warrant transactions in which we sold warrants for an aggregate of 11.8 million shares of our common stock to the Option Counterparties, subject to adjustment. The strike price of the warrants was initially $29.925 per share, which was 50% above the last reported sale price of our common stock on August 22, 2012. The warrants are net-share settled and are exercisable over the 100 trading day period beginning on November 15, 2017. The warrant transactions will have a dilutive effect to the extent that the market value per share of our common stock during such period exceeds the applicable strike price of the warrants.

Aside from the initial payment of the $56.2 million premium to the Option Counterparties, we will not be required to make any cash payments to the Option Counterparties under the 2017 Notes Hedges and will be entitled to receive from the Option Counterparties cash, generally equal to the amount by which the market price per share of common stock exceeds the strike price of the convertible note hedging transactions during the relevant valuation period. The strike price under the 2017 Notes Hedges

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WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

is equal to the conversion price of the 2017 Notes. Additionally, if the market value per share of our common stock exceeds the strike price on any day during the 100 trading day measurement period under the warrant transaction, we will be obligated to issue to the Option Counterparties a number of shares equal in value to one percent of the amount by which the then-current market value of one share of our common stock exceeds the then-effective strike price of each warrant, multiplied by the number of shares of common stock into which the 2017 Notes are then convertible at or following maturity. We will not receive any additional proceeds if warrants are exercised.

2014 Convertible Senior Notes

In November 2007, we issued $200 million of 2.625% Convertible Senior Notes maturing on December 1, 2014 (2014 Notes). The 2014 Notes pay interest semi-annually at an annual rate of 2.625% and are convertible into shares of our common stock at an initial conversion rate of 30.6279 shares per $1,000 principal amount of the 2014 Notes subject to adjustment upon the occurrence of specified events, which represents an initial conversion price of $32.65 per share. The holder of the 2014 Notes may convert at any time on or prior to the close of business on the business day immediately preceding the maturity date. Beginning on December 6, 2011, we may redeem the 2014 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2014 Notes, plus accrued and unpaid interest, if the closing price of our common stock has exceeded 140% of the conversion price for at least 20 days during any consecutive 30-day trading period. Additionally, if we experience a fundamental change event, as defined in the indenture governing the 2014 Notes (Indenture), the holders may require us to purchase for cash all or a portion of the 2014 Notes, for 100% of the principal amount of the notes, plus accrued and unpaid interest. If upon a fundamental change event, a holder elects to convert its 2014 Notes, we may, under certain circumstances, increase the conversion rate for the 2014 Notes surrendered. The 2014 Notes are unsecured obligations and are effectively subordinated to (i) all of our existing and future secured debt, including our obligations under our credit agreement, to the extent of the value of the assets securing such debt, and (ii) because the 2014 Notes are not guaranteed by any of our subsidiaries, to all liabilities of our subsidiaries.

On February 10, 2011, we announced the commencement of a tender offer to purchase for cash any and all of our outstanding 2014 Notes. Upon expiration on March 11, 2011, we purchased $170.9 million aggregate principal amount of the 2014 Notes.

On August 22, 2012, we purchased $25.3 million aggregate principal amount of the 2014 Notes. As a result of this transaction, we recognized approximately $0.2 million for the write off of related pro-rata unamortized deferred financing fees. As of December 31, 2013, $3.8 million aggregate principal amount of the 2014 Notes remain outstanding and is included within current portion of long-term obligations on the consolidated balance sheet.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Maturities

Aggregate annual maturities of our long-term obligations at December 31, 2013, excluding capital lease obligations, are as follows (in thousands):

2014	$	3,768
2015	—
2016	—
2017	300,000
2018	—
	$	303,768

As discussed in Note 7, we have acquired certain property and equipment pursuant to capital leases. At December 31, 2013, future minimum lease payments under capital lease obligations, together with the present value of the net minimum lease payments, are as follows (in thousands):

2014	$	419
2015	915
2016	948
2017	982
2018	1,016
Thereafter	6,012
Total minimum payments	10,292
Less amount representing interest	(2,054		)
Present value of minimum lease payments	8,238
Current portion	(406		)
Long-term portion	$	7,832

Our capital lease associated with our corporate headquarters included a six month deferral of lease payments in the first year of the lease.

10. Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

	December 31
	2013		2012
Unrecognized tax benefits (See Note 14)	$	4,702	$	5,074
Product liability (See Note 19)	9,784		18,639
2017 Notes Conversion Derivative (See Note 11)	112,000		55,000
Deferred license revenue (See Note 2)	4,210		4,731
Contingent consideration	2,882		540
Other	1,488		928
	$	135,066	$	84,912

11. Derivative Instruments and Hedging Activities

We account for derivatives in accordance with FASB ASC 815, which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. Additionally, changes in the derivative’s fair value shall be recognized currently in earnings unless specific hedge accounting criteria are met.

Conversion Derivative and Notes Hedging

On August 31, 2012, we issued the 2017 Notes. The 2017 Notes Conversion Derivative requires bifurcation from the 2017 Notes in accordance with ASC Topic 815, and is accounted for as a derivative liability. The fair value of the 2017 Notes Conversion Derivative at the time of issuance of the 2017 Notes was $48.1 million. See Note 9 for additional information regarding the 2017 Notes.

We also entered into the 2017 Notes Hedges in connection with the issuance of the 2017 Notes with the Option Counterparties. The 2017 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments that we are required

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

to make upon conversion of the 2017 Notes in excess of the principal amount of converted notes if our common stock price exceeds the conversion price. The aggregate cost of the 2017 Notes Hedges was $56.2 million and is accounted for as a derivative asset in accordance with ASC Topic 815.

The following table summarizes the fair value and the presentation in the consolidated balance sheet (in thousands):

	Location on consolidated balance sheet	December 31, 2013		December 31, 2012
2017 Notes Hedges	Other assets	$	118,000	$	62,000
2017 Notes Conversion Derivative	Other liabilities	$	112,000	$	55,000

Neither the 2017 Notes Conversion Derivative nor the 2017 Notes Hedges qualify for hedge accounting, thus any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The following table summarizes the gain (loss) on changes in fair value (in thousands):

	Twelve Months Ended			Twelve Months Ended
	December 31,			December 31,
	2013			2012
2017 Notes Hedges	$	56,000		$	5,805
2017 Notes Conversion Derivative	(57,000		)	(6,947		)
Net loss on changes in fair value	$	(1,000	)	$	(1,142	)

Derivatives not Designated as Hedging Instruments

We employ a derivative program using 30-day foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that are denominated in foreign currencies. These forward contracts are expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts are not designated as hedging instruments under FASB ASC Topic 815. Accordingly, the changes in the fair value and the settlement of the contracts are recognized in the period incurred in the accompanying consolidated statements of operations. At December 31, 2013 and 2012, we had no foreign currency contracts outstanding.

12. Goodwill and Intangibles

Changes in the carrying amount of goodwill occurring during the year ended December 31, 2013, are as follows (in thousands):

Goodwill at December 31, 2012	$	32,414
Goodwill associated with acquisitions (see Note 3)	199,040
Goodwill impairment	(114,997		)
Foreign currency translation	1,806
Goodwill at December 31, 2013	$	118,263

The components of our identifiable intangible assets, net are as follows (in thousands):

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(continued)

	December 31, 2013					December 31, 2012
	Cost			Accumulated Amortization		Cost			Accumulated Amortization
Indefinite life intangibles:
IPRD technology	$	4,266				$	278
Trademarks	4,121					1,658
Total indefinite life intangibles	8,387					1,936
Finite life intangibles:
Distribution channels	250			$	233	1,250			$	436
Completed technology	16,714			5,702		9,781			4,243
Licenses	3,633			1,303		3,668			1,056
Customer relationships	15,578			2,371		3,788			1,799
Trademarks	2,364			1,098		1,316			922
Non-compete agreements	5,660			3,155		7,314			2,729
Other	771			75		2,171			1,355
Total finite life intangibles	44,970			$	13,937	29,288			$	12,540
Total intangibles	53,357					31,224
Less: Accumulated amortization	(13,937		)			(12,540		)
Intangible assets, net	$	39,420				$	18,684

During year ended December 31, 2013, we terminated a distribution agreement and therefore recorded a $0.4 million asset impairment charge. Additionally, as a result of lower-than-projected cash flows related to completed technology acquired in our 2011 CCI acquisition, we recognized an impairment charge of approximately $0.6 million. These charges were calculated by comparing the fair value to the carrying value of the intangible. The impairment loss was recorded for the amount by which the carrying value exceeded the fair value, and is included within Amortization of intangible assets in the consolidated statement of operations.

During the year ended December 31, 2013, we received a not approvable letter from the FDA in response to our Pre-Market Approval application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. Following our announcement regarding the receipt of this letter, the market value of the CVRs issued in connection with the BioMimetic acquisition decreased significantly. Holders of CVRs are entitled to be paid the contingent consideration from the BioMimetic acquisition, specifically upon FDA approval of Augment^® Bone Graft, and subsequently upon the achievement of certain revenue milestones. FASB ASC 350-30-35-18 requires companies to evaluate for impairment intangible assets not subject to amortization, such as our IPRD assets, if events or changes in circumstances indicate than an asset might be impaired. Further, FASB ASC 350-20-35-30 requires companies to evaluate goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. In response to our announcement of the receipt of the FDA not approvable letter, the market value of the CVRs declined significantly due to a decreased market perception of the likelihood of FDA approval of Augment^® Bone Graft. Because the probability of such FDA approval is a significant input in the valuation of the BioMimetic reporting unit and related intangible assets, management determined that our goodwill and intangible assets acquired in the BioMimetic acquisition were more likely than not impaired, and therefore required a quantitative impairment test.

We updated our discounted cash flow valuation model for the BioMimetic acquisition based on probability weighted estimates of revenues and expenses, related cash flows and the discount rate used in the model. The probabilities used in the model were based on the fair value of the CVRs as of September 30, 2013. Based on this discounted cash flow valuation model, we determined that the fair value of the IPRD, tradename and non-compete agreement assets as of September 30, 2013 were less than their respective carrying values as of such date, and the fair value of the BioMimetic reporting unit as of September 30, 2013 was less than its carrying value as of such date (after consideration of the reduced value of the intangible assets). Therefore, we recognized an intangible impairment charge of approximately $88.1 million and a goodwill impairment charge of $115.0 million in the year ended December 31, 2013 for the amount by which the carrying value of these assets exceeded the fair value using Level 3 inputs. These charges are included within “BioMimetic impairment charges” on our consolidated statement of operations.

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(continued)

We have filed an appeal with the FDA regarding its decision. On October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment.

Based on the total finite life intangible assets held at December 31, 2013, we expect to amortize approximately $6.9 million in 2014, $4.6 million in 2015, $3.5 million in 2016, $3.1 million in 2017, and $2.4 million in 2018. This does not include amortization associated with any intangible assets acquired in 2014 (see Note 22).

13. Accumulated Other Comprehensive Income (AOCI)

Other comprehensive income (OCI) includes certain gains and losses that under GAAP are included in comprehensive income but are excluded from net income as these amounts are initially recorded as an adjustment to stockholders’ equity. Amounts in OCI may be reclassified to net income upon the occurrence of certain events.

Our OCI is comprised of foreign currency translation adjustments, unrealized gains and losses on available-for-sale securities, and adjustments to our minimum pension liability. Foreign currency translation adjustments are reclassified to net income upon sale or upon a complete or substantially complete liquidation of an investment in a foreign entity. Unrealized gains and losses on available-for-sale securities are reclassified to net income if we sell the security before maturity or if the unrealized loss in a security is considered to be other-than-temporary.

Changes in and reclassifications out of AOCI, net of tax, for the twelve months endedDecember 31, 2013 were as follows (in thousands):

	Currency Translation Adjustment			Unrealized Gain (loss) on Marketable Securities			Minimum Pension Liability Adjustment		Total
Balance December 31, 2012	$	18,991		$	3,213		$	330	$	22,534
Other comprehensive (loss) income, net of tax before reclassification	(1,381		)	1,543			14		176
Reclassification to Other (Income) Expense, net: Gain on equity securities, net of tax	—			(4,757		)	—		(4,757		)
Balance December 31, 2013	$	17,610		$	(1	)	$	344	$	17,953

14. Income Taxes

The components of our income (loss) before income taxes are as follows (in thousands):

	Year Ended December 31,
	2013			2012			2011
U.S.	$	(230,975	)	$	(4,043	)	$	(12,498	)
Foreign	572			658			1,142
Income (loss) before income taxes	$	(230,403	)	$	(3,385	)	$	(11,356	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The components of our provision (benefit) for income taxes are as follows (in thousands):

	Year Ended December 31,
	2013		2012			2011
Current (benefit) provision:
U.S.:
Federal	$	296	$	(5,480	)	$	(279	)
State	85		(34		)	(81		)
Foreign	180		337			398
Total current (benefit) provision	561		(5,177		)	38
Deferred provision (benefit):
U.S.:
Federal	48,257		5,179			(3,533		)
State	884		(98		)	(472		)
Foreign	63		98			6
Total deferred provision (benefit)	49,204		5,179			(3,999		)
Total provision (benefit) for income taxes	$	49,765	$	2		$	(3,961	)

A reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate is as follows:

	Year Ended December 31,
	2013		2012		2011
Income tax provision at statutory rate	35.0	%	35.0	%	35.0	%
State income taxes	3.2	%	3.8	%	4.8	%
Change in valuation allowance	(51.9	)%	(19.7	)%	(0.8	)%
Foreign income tax rate differences	—	%	12.9	%	3.5	%
Other non-deductible expenses	(0.1	)%	(6.1	)%	(2.2	)%
Transaction costs	(0.8	)%	(21.2	)%	—	%
CVR Fair Market Value Adjustment	9.3	%	—	%	—	%
Goodwill Impairment	(17.5	)%	—	%	—	%
Other, net	1.2	%	(4.8	)%	(5.4	)%
Total	(21.6	)%	(0.1	)%	34.9	%

83

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The significant components of our deferred income taxes as of December 31, 2013 and 2012 are as follows (in thousands):

	December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	100,361		$	17,009
General business credit carryforward	3,181			734
Reserves and allowances	40,789			37,160
Stock-based compensation expense	7,852			7,256
Convertible debt notes and conversion option	46,100			22,173
Other	6,070			7,195
Valuation allowance	(134,263		)	(14,248		)
Total deferred tax assets	70,090			77,279
Deferred tax liabilities:
Depreciation	13,863			21,116
Intangible assets	9,071			2,828
Convertible note bond hedge	46,020			21,916
Other	10,136			8,219
Total deferred tax liabilities	79,090			54,079
Net deferred tax assets (liabilities)	$	(9,000	)	$	23,200

At December 31, 2013, we had net operating loss carryforwards for U.S. federal income tax purposes of approximately $236.0 million, of which approximately $2.1 million related to equity compensation deductions, for which when realized, the resulting benefit will be credited to stockholder’s equity. The federal net operating losses begin to expire in 2017 and extend through 2033. This includes approximately $163.0 million of net operating losses acquired in 2013. State net operating losses carryforwards at December 31, 2013 totaled approximately $110.0 million, which begin to expire in 2017 and extend through 2033. Additionally, we had general business credit carryforwards of approximately $3.0 million, which begin to expire in 2017 and extend through 2033. At December 31, 2013, we had foreign net operating loss carryforwards of approximately $46.0 million, the majority of which do not expire.

Certain of our U.S. and foreign net operating losses and general business credit carryforwards are subject to various limitations. We maintain valuation allowances for those net operating losses and tax credit carryforwards that we do not expect to utilize due to these limitations and it is more likely than not that such tax benefits will not be realized.

During the year ended December 31, 2013, the Company recorded approximately $119.6 million valuation allowance against its deferred tax assets. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence can be objectively verified. GAAP states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against deferred tax assets. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

The Company entered a three-year cumulative loss position during the year ended December 31, 2013. This cumulative loss position, along with other evidence, merited the establishment of a valuation allowance against the deferred tax assets. A sustained period of profitability is required before the Company would change its judgment regarding the need for a valuation allowance against its net deferred tax assets.

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. Therefore, we do not provide for deferred taxes on the excess of the financial reporting over the tax basis in our investments in foreign subsidiaries that are essentially permanent in duration. The determination of the amount of unrecognized deferred tax liabilities is not practicable. However, during fiscal year 2013, we recorded approximately $0.4 million deferred tax liability as a result of the pending stock sale of one of our foreign subsidiaries.

84

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at January 1, 2013	$	5,074
Additions for tax positions related to current year	214
Additions for tax positions of prior years	180
Reductions for tax positions of prior years	(848		)
Settlements	—
Foreign currency translation	82
Balance at December 31, 2013	$	4,702

As of December 31, 2013, our liability for unrecognized tax benefits totaled $4.7 million and is recorded in our consolidated balance sheet within “Other liabilities,” and all components, if recognized, would impact our effective tax rate. Our U.S. federal income taxes represent the substantial majority of our income taxes, and our 2009, 2010, and 2011 U.S. federal income tax returns are currently under examination by the Internal Revenue Service. It is therefore possible that our unrecognized tax benefits could change in the next twelve months.

We accrue interest required to be paid by the tax law for the underpayment of taxes on the difference between the amount claimed or expected to be claimed on the tax return and the tax benefit recognized in the financial statements. Management has made the policy election to record this interest as interest expense. As of December 31, 2013, accrued interest related to our unrecognized tax benefits totaled approximately $0.4 million, which is recorded in our consolidated balance sheet within “Other liabilities.”

We file numerous consolidated and separate company income tax returns in the U.S. and in many foreign jurisdictions. We are no longer subject to foreign income tax examinations by tax authorities in significant jurisdictions for years before 2007. With few exceptions, we are subject to U.S. federal, state and local income tax examinations for years 2010 through 2012. However, tax authorities have the ability to review years prior to these to the extent that we utilize tax attributes carried forward from those prior years.

15. Earnings Per Share

FASB ASC Topic 260, Earnings Per Share, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated to include any dilutive effect of our common stock equivalents. Our common stock equivalents consist of stock options, non-vested shares of common stock, stock-settled phantom stock units, restricted stock units, 2014 Notes, and warrants. The dilutive effect of the stock options, non-vested shares of common stock, stock-settled phantom stock units, restricted stock units, and warrants is calculated using the treasury-stock method. The dilutive effect of the 2014 Notes is calculated by applying the “if-converted” method. This assumes an add-back of interest, net of income taxes, to net income as if the securities were converted at the beginning of the period. During the years ended December 31, 2013, 2012, and 2011, the convertible notes had an anti-dilutive effect on earnings per share and we therefore excluded from the dilutive shares calculation. In addition, approximately 776,722, 267,520, and 136,000 common stock equivalents have been excluded from the computation of diluted net loss per share for the years ended December 31, 2013, 2012, and 2011, respectively, because their effect is anti-dilutive as a result of our net loss from continuing operations in those periods. During the years ended December 31, 2013 and 2012, the warrants were excluded from diluted shares outstanding because the exercise price exceeded the average market price of our common stock.

The weighted-average number of common shares outstanding for basic and diluted earnings per share purposes is as follows (in thousands):

	Year Ended December 31,
	2013	2012	2011
Weighted-average number of common shares outstanding — basic	45,265	38,769	38,279
Common stock equivalents	—	317	—
Weighted-average number of common shares outstanding — diluted	45,265	39,086	38,279

85

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The following potential common shares were excluded from the computation of diluted earnings per share, as their effect would have been anti-dilutive (in thousands):

	Year Ended December 31,
	2013	2012	2011
Stock options	2,763	2,854	3,400
Non-vested shares, restricted stock units, and stock-settled phantom stock units	197	290	430
Convertible debt	115	633	1,909
Warrants	11,794	11,794	—

16. Capital Stock

We are authorized to issue up to 100,000,000 shares of voting common stock. We have 52,006,235 shares of voting common stock available for future issuance at December 31, 2013.

17. Stock-Based Compensation Plans

We have three stock-based compensation plans, which are described below. Amounts recognized in the consolidated financial statements with respect to these plans are as follows:

	Year Ended December 31,
	2013			2012			2011
Total cost of share-based payment plans	$	11,912		$	7,811		$	5,908
Amounts capitalized as inventory	(467		)	(689		)	(725		)
Amortization of capitalized amounts	513			717			747
Charged against income before income taxes	11,958			7,839			5,930
Amount of related income tax benefit recognized in income	(3,945		)	(2,940		)	(2,094		)
Impact to net loss from continuing operations	$	8,013		$	4,899		$	3,836
Impact to net income from discontinued operations	2,320			2,308			2,326
Impact to net (loss) income	$	10,333		$	7,207		$	6,162
Impact to basic earnings per share, continuing operations	$	0.18		$	0.13		$	0.10
Impact to basic earnings per share	$	0.23		$	0.19		$	0.16
Impact to diluted earnings per share, continuing operations	$	0.18		$	0.13		$	0.10
Impact to diluted earnings per share	$	0.23		$	0.18		$	0.16

During 2013, in connection with the BioMimetic acquisition, we recognized $2.2 million of stock-based compensation expense related to the incremental fair value of replacement awards attributed to precombination service.

As of December 31, 2013, we had $17.4 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements granted to employees retained following the sale of the OrthoRecon business. This cost is expected to be recognized over a weighted-average period of 2.7  years.

Equity Incentive Plans

On December 7, 1999, we adopted the 1999 Equity Incentive Plan, which was subsequently amended and restated on July 6, 2001, May 13, 2003, May 13, 2004, May 12, 2005 and May 14, 2008 and amended on October 23, 2008. The 1999 Equity Incentive Plan expired December 7, 2009. The 2009 Equity Incentive Plan (the Plan) was adopted on May 13, 2009, which was subsequently amended and restated on May 13, 2010 and May 14, 2013. The Plan authorizes us to grant stock options and other stock-based awards, such as non-vested shares of common stock, with respect to up to 15,417,051 shares of common stock, of which full value awards (such as non-vested shares) are limited to 3,754,555 shares. Under the Plan, stock based compensation awards generally are exercisable in increments of 25% annually on each of the first through fourth anniversaries of the date of grant. All of the options issued under the plan expire after 10 years. These awards are recognized on a straight-line basis over the requisite service period, which is generally 4 years. As of December 31, 2013, there were 3,596,125 shares available for future issuance under the Plan, of which full value awards are limited to 1,798,062 shares.

Stock options

86

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

We estimate the fair value of stock options using the Black-Scholes valuation model. The Black-Scholes option-pricing model requires the input of estimates, including the expected life of stock options, expected stock price volatility, the risk-free interest rate and the expected dividend yield. The expected life of options is estimated based on historical option exercise and employee termination data. The expected stock price volatility assumption was estimated based upon historical volatility of our common stock. The risk-free interest rate was determined using U.S. Treasury rates where the term is consistent with the expected life of the stock options. Expected dividend yield is not considered as we have never paid dividends and have no plans of doing so in the future. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest. The fair value of stock options is amortized on a straight-line basis over the respective requisite service period, which is generally the vesting period.

The weighted-average grant date fair value of stock options granted to employees in 2013, 2012, and 2011 was $8.60 per share, $7.89 per share, and $6.01 per share, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model using the following assumptions:

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	0.1% - 1.4%	0.5% - 1.0%	1.0% - 2.0%
Expected option life	6 years	6 years	6 years
Expected price volatility	36%	40%	39%

A summary of our stock option activity during 2013 for employees retained following the sale of the OrthoRecon business is as follows:

	Shares (000’s)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value* ($000’s)
Outstanding at December 31, 2012	2,120	$	22.71
Granted	1,033	24.38
BioMimetic options assumed	752	19.25
Exercised	(211)	20.17
Forfeited or expired	(325)	25.30
Outstanding at December 31, 2013	3,369	$	22.36	6.4	$	28,171
Exercisable at December 31, 2013	1,772	$	21.89	4.2	$	15,657

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

The total intrinsic value of options exercised during 2013, 2012, and 2011 was $1.4 million, $0.2 million, and $0.1 million, respectively.

A summary of our stock options outstanding and exercisable at December 31, 2013, for employees retained following the sale of the OrthoRecon business is as follows (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
$2.00 — $16.00	371	5.8	$	12.35	276	$	11.53
$16.01 — $24.00	1,478	6.5	21.06		802	20.64
$24.01 — $35.87	1,520	6.4	26.07		694	27.47
	3,369	6.4	$	22.36	1,772	$	21.89

Inducement Stock Options.

87

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

During 2011, we granted 610,000 stock options under an inducement stock option agreement with an exercise price of $16.03 to induce Robert J. Palmisano to commence employment with us as our Chief Executive Officer. These options vest over a three-year service period. We also granted 30,000 stock options with an exercise price of $18.33 to Julie Tracy, Senior Vice President, Chief Communications Officer, and 65,000 stock options with an exercise price of $16.23 to James Lightman, Senior Vice President, General Counsel, and Secretary, under inducement stock option agreements. During 2012, we granted 50,000 stock options with an exercise price of $17.35 to induce Daniel Garen to commence employment with us as our Senior Vice President and Chief Compliance Officer, and 184,500 stock options with an exercise price of $21.24 to Pascal E. R. Girin, Executive Vice President and Chief Operating Officer. These options have substantially the same terms as grants made under the Plan.

A summary of our inducement grant stock option activity during 2013 is as follows:

	Shares (000’s)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value* ($000’s)
Outstanding at December 31, 2012	940	$	17.21
Granted	—	—
Exercised	—	—
Forfeited or expired	—	—
Outstanding at December 31, 2013	940	$	17.21	8.0	$	12,683
Exercisable at December 31, 2013	513	$	16.61	7.8	$	7,230

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

A summary of our stock options outstanding and exercisable at December 31, 2013, is as follows (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
$2.00 — $16.00	371	5.8	$	12.35	276	$	11.53
$16.01 — $24.00	2,418	7.0	19.56		1,315	19.07
$24.01 — $35.87	1,520	6.4	26.07		694	27.47
	4,309	6.7	$	21.24	2,285	$	20.71

Non-vested shares and stock settled phantom stock units and restricted stock units

We calculate the grant date fair value of non-vested shares of common stock, stock settled phantom stock units and restricted stock units using the closing sale prices on the trading day immediately prior to the grant date. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest.

Under the Plan, we granted 223,000, 216,000, and 345,000 non-vested shares of common stock, stock settled phantom stock units and restricted stock units to employees with weighted-average grant-date fair values of $24.66 per share, $21.22 per share, and $15.56 per share during 2013, 2012, and 2011, respectively. The fair value of these shares will be recognized on a straight-line basis over the respective requisite service period, which is generally the vesting period.

During 2013 and 2012, we granted a negligible amount of non-vested shares to non-employees. During 2011, we granted certain independent distributors and other non-employees non-vested shares of common stock of 28,000 shares at a weighted-average grant date fair values $15.27 per share.

88

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

A summary of our non-vested shares of common stock activity during 2013 is as follows:

	Shares (000’s)		Weighted-Average Grant-Date Fair Value		Aggregate Intrinsic Value* ($000’s)
Non-vested at December 31, 2012	486		$	18.44
Granted	223		24.66
Vested	(212	)	18.10
Forfeited	(41	)	17.98
Non-vested at December 31, 2013	456		$	21.69	$	14,004

___________________

* The aggregate intrinsic value is calculated as the market value of our common stock as of December 31, 2013. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

The total fair value of shares vested during 2013, 2012 and 2011 was $6.5 million, $5.6 million and $4.7 million, respectively.

Stock compensation held by employees to be transferred upon sale of OrthoRecon business

During 2013, as part of the definitive agreement to sell our OrthoRecon business to MicroPort, we agreed to modify stock compensation awards held by employees assigned to MicroPort to accelerate vesting for unvested stock compensation awards, as an incentive to induce each employee to accept and continue employment with MicroPort, contingent upon the closing of the sale. On January 12, 2014, all unvested stock compensation awards held by these former 65 employees was vested, which was comprised of approximately 500,000 options with a weighted-average exercise price of $22.50, and 266,000 non-vested shares.

The incremental cost associated with the modified stock compensation totaled $8.8 million, and will be recognized as a reduction to our gain realized upon the sale of the OrthoRecon business in the first quarter of 2014.

The table below summarizes the outstanding stock options held by employees transferred to MicroPort, as of December 31, 2013.

	Options Outstanding
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Aggregate Intrinsic Value* ($000’s)
$15.47 — $20.00	177	0.75	$	16.46
$20.01 — $30.00	857	0.75	23.77
$30.01 — $35.87	112	0.24	31.12
	1,146	0.70	$	23.20	$	8,526

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

Employee Stock Purchase Plan.

On May 30, 2002, our shareholders approved and adopted the 2002 Employee Stock Purchase Plan, which was subsequently amended and restated in 2013 (the ESPP). The ESPP authorizes us to issue up to 400,000 shares of common stock to our employees who work at least 20 hours per week. Under the ESPP, there are two six-month plan periods during each calendar year, one beginning January 1 and ending on June 30, and the other beginning July 1 and ending on December 31. Under the terms of the ESPP, employees can choose each plan period to have up to 5% of their annual base earnings, limited to $5,000, withheld to purchase our common stock. The purchase price of the stock is 85% of the lower of its beginning-of-period or end-of-period market price. Under the ESPP, we sold to employees approximately 23,000, 25,000, and 26,000 shares in 2013, 2012, and 2011, respectively, with weighted-average fair values of $6.81, $5.93, and $4.92 per share, respectively. As of December 31, 2013, there were 194,566 shares available for future issuance under the ESPP. During 2013, 2012, and 2011, we recorded nominal amounts of non-cash, stock-based compensation expense related to the ESPP.

In applying the Black-Scholes methodology to the purchase rights granted under the ESPP, we used the following assumptions:

89

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	0.1% - 0.4%	0.1% - 0.2%	0.3% - 0.4%
Expected option life	6 months	6 months	6 months
Expected price volatility	36%	40%	39%

18. Employee Benefit Plans

We sponsor a defined contribution plan under Section 401(k) of the Internal Revenue Code, which covers U.S. employees who are 21 years of age and over. Under this plan, we match voluntary employee contributions at a rate of 100% for the first 2% of an employee’s annual compensation and at a rate of 50% for the next 2% of an employee’s annual compensation. Employees vest in our contributions after three years of service. Our expense related to the plan recognized within results of continuing operations was $1.2 million in 2013, and $1.0 million in 2012 and 2011.

19. Commitments and Contingencies

Operating Leases

We lease certain equipment and office space under non-cancelable operating leases. Rental expense under operating leases approximated $8.0 million, $5.7 million, and $5.1 million for the years ended December 31, 2013, 2012, and 2011, respectively. Future minimum payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining lease terms of one year or more, are as follows at December 31, 2013 (in thousands):

2014	$	6,087
2015	4,364
2016	2,503
2017	1,267
2018	1,182
Thereafter	768
	$	16,171

Portions of our payments for operating leases are denominated in foreign currencies and were translated in the tables above based on their respective U.S. dollar exchange rates at December 31, 2013. These future payments are subject to foreign currency exchange rate risk.

Purchase Obligations

We have entered into certain supply agreements for our products, which include minimum purchase obligations. We paid approximately $3.5 million and $7.7 million during the years ended December 31, 2013, and 2011, respectively, under those supply agreements. During the year ended December 31, 2012, we paid immaterial amounts under those supply agreements. Future obligations for minimum purchases under these supply agreements are as follows at December 31, 2013 (in thousands):

	Total	2014	2015	2016	2017	2018	Thereafter
Minimum supply obligations	$2,073	—	2,073	—	—	—	—

Legal Contingencies

As described below, our business is subject to various contingencies including patent and other litigation, product liability claims and a government inquiry.  These contingencies could result in losses, including damages, fines, or penalties, any of which could be substantial, as well as criminal charges. Although such matters are inherently unpredictable, and negative outcomes or verdicts can occur, we believe we have significant defenses in all of them, are vigorously defending all of them, and do not believe any of them will have a material adverse effect on our financial position. However, we could incur judgments, pay settlements, or revise our expectations regarding the outcome of any matter. Such developments, if any, could have a material adverse effect on our results of operations in the period in which applicable amounts are accrued, or on our cash flows in the period in which amounts are paid.

Our contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss or the measurement of a loss can be complex. We have accrued for losses that are both probable and reasonably estimable. Unless otherwise indicated

90

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

we are unable to estimate the range of reasonably possible loss in excess of amounts accrued.  Our assessment process relies on estimates and assumptions that may prove to be incomplete or inaccurate. Unanticipated events and circumstances may occur that could cause us to change our estimates and assumptions.

Governmental Inquiries

On September 29, 2010, we entered into a five year Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the United States Department of Health and Human Services (OIG-HHS). The CIA was filed as Exhibit 10.2 to our current report on Form 8-K filed on September 30, 2010. The CIA will expire on September 29, 2015.

The CIA imposes on us certain obligations to maintain compliance with U.S. healthcare laws, regulations and other requirements. Our failure to do so could expose us to significant liability including, but not limited to, exclusion from federal healthcare program participation, including Medicaid and Medicare, potential prosecution, civil and criminal fines or penalties, as well as additional litigation cost and expense.

Both we and MicroPort, which completed the purchase of our OrthoRecon business in January 2014, will continue to be subject to the CIA.

In addition to the USAO and OIG-HHS, other governmental agencies, including state authorities, could conduct investigations or institute proceedings that are not precluded by the CIA. In addition, the matters which gave rise to the CIA could increase our exposure to lawsuits by potential whistleblowers, including under the federal false claims acts, based on new theories or allegations arising from these matters.

On August 3, 2012, we received a subpoena from the U.S. Attorney's Office for the Western District of Tennessee requesting records and documentation relating to our PROFEMUR^® series of hip replacement devices. The subpoena covers the period from January 1, 2000 to August 2, 2012. We continue to respond to the subpoena.

Patent Litigation

In 2011, Howmedica Osteonics Corp. (Howmedica) and Stryker Ireland, Ltd. (collectively, “Stryker”), each a subsidiary of Stryker Corporation, filed a lawsuit against WMT in the United States District Court for the District of New Jersey (District Court) alleging that we infringed Stryker's U.S. Patent No. 6,475,243 related to our LINEAGE^® Acetabular Cup System and DYNASTY^® Acetabular Cup System. The lawsuit seeks an order of infringement, injunctive relief, unspecified damages, and various other costs and relief. On July 9, 2013, the district court issued a claim construction ruling. Under the court's claim construction ruling, we do not believe these hip products infringe the asserted patents. In filings with the court, Stryker has conceded that under the court’s claim construction rulings it can no longer pursue its infringement claims. Stryker has asked the court to dismiss the case so it may pursue an appeal.

In 2012, Bonutti Skeletal Innovations, LLC (Bonutti) filed a patent infringement lawsuit against us in the United States Court for the District of Delaware. Bonutti originally alleged that the Link Sled Prosthesis infringes U.S. Patent 6,702,821. The Link Sled Prosthesis is a product we distributed under a distribution agreement with LinkBio Corp, which expired on December 31, 2013. In January 2013, Bonutti amended its complaint, alleging that the ADVANCE^® knee system, including ODYSSEY^® instrumentation, infringes U.S. Patent 8,133,229, and that the ADVANCE^® knee system, including ODYSSEY^® instrumentation and PROPHECY^® guides, infringes U.S. Patent 7,806,896, which was issued on October 5, 2010. All of the claims of the asserted patents are directed to surgical methods for minimally invasive surgery.

In June 2013, Orthophoenix filed a patent lawsuit against us in the United States District Court for the District of Delaware alleging that surgical methods using the X-REAM^® product infringe two patents.

In June 2013, Anglefix filed suit in the United States District Court for the Western District of Tennessee, alleging that our ORTHOLOC^® products infringe Anglefix’s asserted patent.

In September 2013, ConforMIS, Inc. filed suit against us in the United States District Court for the District of Massachusetts, alleging that our PROPHECY^® knee and ankle systems infringe four ConforMIS’ patents. On February 19, 2014, ConforMIS filed an amended complaint asserting four additional patents against us relating to alleged infringement by our PROPHECY^® knee and ankle systems and naming MicroPort Orthopedics as an additional defendant.

Subject to the provisions of the asset purchase agreement with MicroPort for the sale of our OrthoRecon business, we will continue to be responsible for defense of existing patent infringement cases relating to our OrthoRecon business, and for resulting liabilities, if any.

Product Liability

91

WRIGHT MEDICAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

We have received claims for personal injury against us associated with fractures of our PROFEMUR^® long titanium modular neck product (PROFEMUR^® Claims). The overall fracture rate for the product is low and the fractures appear, at least in part, to relate to patient demographics. Beginning in 2009, we began offering a cobalt-chrome version of our PROFEMUR^® modular neck, which has greater strength characteristics than the alternative titanium version. Historically, we have reflected our liability for these claims as part of our standard product liability accruals on a case-by-case basis. However, during the quarter ended September 30, 2011, as a result of an increase in the number and monetary amount of these claims, management estimated our liability to patients in North America who have previously required a revision following a fracture of a PROFEMUR^® long titanium modular neck, or who may require a revision in the future. Management has estimated that this aggregate liability ranges from approximately $17 million to $26 million. Any claims associated with this product outside of North America, or for any other products, will be managed as part of our standard product liability accruals.

Due to the uncertainty within our aggregate range of loss resulting from the estimation of the number of claims and related monetary payments, we have recorded a liability of $16.8 million, which represents the low-end of our estimated aggregate range of loss. We have classified $7 million of this liability as current in “Accrued expenses and other current liabilities” and $9.8 million as non-current in “Other liabilities” on our consolidated balance sheet. We expect to pay the majority of these claims within the next 4 years.

We have maintained product liability insurance coverage on a claims-made basis. During the quarter ended March 31, 2013, we received a customary reservation of rights from our primary product liability insurance carrier asserting that present and future claims related to fractures of our PROFEMUR^® titanium modular neck hip products and which allege certain types of injury (Modular Neck Claims) would be covered as a single occurrence under the policy year the first such claim was asserted. The effect of this coverage position would be to place Modular Neck Claims into a single prior policy year in which applicable claims-made coverage was available, subject to the overall policy limits then in effect. Management agrees with the assertion that the Modular Neck Claims should be treated as a single occurrence, but notified the carrier that it disputed the carrier's selection of available policy years. During the second quarter of 2013, we received confirmation from the primary carrier confirming their agreement with our policy year determination. Based on our insurer's treatment of Modular Neck Claims as a single occurrence, we increased our estimate of the total probable insurance recovery related to Modular Neck Claims by $19.4 million, and recognized such additional recovery as a reduction to our selling, general and administrative expenses for the three-months ended March 31, 2013. In the quarter ended June 30, 2013, we received payment from the primary insurance carrier of $5 million. In the quarter ended September 30, 2013, we received payment of $10 million from the next insurance carrier in the tower. As of December 31, 2013, our insurance receivable related to Modular Neck Claims totals $25 million, which consists of $13 million associated with our recorded liability for current and future Modular Neck Claims outstanding, and $12 million for cash spending associated with defense and settlement costs. We have classified $19 million within current receivables, and the remaining $6 million within long-term receivables.

During the quarter ended September 30, 2013, we reached the maximum insurance coverage for Modular Neck Claims of $40 million, when previous spending on legal defense costs and claim settlements are combined with our estimated product liability for future settlements. As a result, we recognized approximately $4 million of expense in income from discontinued operations for 2013 for expenses recognized in excess of the $40 million insurance recovery limit. Future expenses associated with defense costs and revisions to our estimated product liability will be recognized as incurred within the current period in results of discontinued operations. However, as noted above, our insurance receivable for cash spending is $12 million out of the remaining $25 million insurance receivable, therefore we do not anticipate actual cash spending to exceed this maximum for several years.

Claims for personal injury have also been made against us associated with our metal-on-metal hip products (primarily our CONSERVE® product line). The pre-trial management of certain of these claims has been consolidated in the federal court system under multi-district litigation, and certain other claims in state courts in California, collectively the “Consolidated Metal-on-Metal Claims,” as further discussed in Part I Item 3 of this Annual Report. The number of these lawsuits, presently in excess of 700, continues to increase, we believe due to the increasing negative publicity in the industry regarding metal-on-metal hip products. We believe we have data that supports the efficacy and safety of our metal-on-metal hip products. While continuing to dispute liability, we recently agreed to participate in court supervised non-binding mediation in the multi-district federal court litigation presently pending in the Northern District of Georgia.

Every metal-on-metal hip case involves fundamental issues of science and medicine that often are uncertain, that continue to evolve, and which present contested facts and issues that can differ significantly from case to case. Such contested facts and issues include medical causation, individual patient characteristics, surgery specific factors, and the existence of actual, provable injury. Given these complexities, we are unable to reasonably estimate a possible loss or range of possible losses for the Consolidated

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(continued)

Metal-on-Metal Claims until we know, at a minimum, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential pool of potential claimants, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (iv) any other factors that may have a material effect on the litigation or on a party’s litigation strategy. By way of example and without limitation, although we believe a significant number of claimants have not required hip revision surgery, we do not yet know how many of such cases exist within our claimant pool.

We have maintained product liability insurance coverage on a claims-made basis. During the quarter ended September 30, 2012, we received a customary reservation of rights from our primary product liability insurance carrier asserting that certain present and future claims which allege certain types of injury related to our CONSERVE^® metal-on-metal hip products (CONSERVE^® Claims) would be covered as a single occurrence under the policy year the first such claim was asserted. The effect of this coverage position would be to place CONSERVE^® Claims into a single prior policy year in which applicable claims-made coverage was available, subject to the overall policy limits then in effect. Management agrees that there is insurance coverage for the CONSERVE^® Claims, but has notified the carrier that at this time it disputes the carrier's selection of available policy years and its characterization of the CONSERVE^® Claims as a single occurrence.

Management has recorded an insurance receivable for the probable recovery of spending in excess of our retention for a single occurrence. As of December 31, 2013, this receivable totaled $8.1 million, and is solely related to defense costs incurred through December 31, 2013. However, the amount we ultimately receive may differ depending on the final conclusion of the insurance policy year or years and the number of occurrences. We believe our contracts with the insurance carriers are enforceable for these claims and, therefore, we believe it is probable that we will receive recoveries from our insurance carriers. However, our insurance carriers could still ultimately deny coverage for some or all of our insurance claims. Based on the information we have available at this time, we do not believe our liabilities, if any, in connection with these matters will exceed our available insurance. As circumstances continue to develop, our belief that we will be able to resolve the Consolidated Metal-on-Metal Claims within our available insurance coverage could change, which could materially impact our results of operations and financial position.

In February 2014, Biomet, Inc., (Biomet) announced it had reached a settlement in the multi-district litigation involving its own metal-on-metal hip products. The terms announced by Biomet include: (i) an expected base settlement amount of $200,000, (ii) an expected minimum settlement amount of $20,000 (iii) no payments to plaintiffs who did not undergo a revision surgery and (iv) a total settlement amount expected to be within Biomet’s aggregate insurance coverage. We believe our situation involves facts and circumstances which differ significantly from the Biomet cases. We therefore do not consider the Biomet situation sufficiently analogous to provide a reasonable basis for estimate, and deem it unlikely that any settlement of our cases will occur at an base settlement level as high as Biomet’s expected average settlement amount.

In addition to the Consolidated Metal-on-Metal Claims discussed above, there are currently certain other pending claims related to our metal-on-metal hip products for which we are accounting in accordance with our standard product liability accrual methodology on a case by case basis.

Product liability claims associated with hip and knee products we sold prior to the closing will not be assumed by MicroPort. Estimated liabilities, if any, for such claims, and accrued legal defense costs for fees that have been incurred to date, are excluded from liabilities held for sale. Concomitant receivables associated with product liability insurance recoveries are excluded from assets held for sale. MicroPort will be responsible for product liability claims associated with products it sells after the closing.

Employment Matters

In 2012, two former employees, Frank Bono and Alicia Napoli, each filed separate lawsuits against WMT in the Chancery Court of Shelby County, Tennessee, which asserted claims for retaliatory discharge and breach of contract based upon his or her respective separation pay agreement. In addition, Mr. Bono and Ms. Napoli each asserted a claim for defamation related to the press release issued at the time of their terminations and a wrongful discharge claim alleging violation of the Tennessee Public Protection Act. Mr. Bono and Ms. Napoli each claimed that he or she was entitled to attorney fees in addition to other unspecified damages. On October 23, 2013, Ms. Napoli moved to voluntarily dismiss her case against WMT, without prejudice.

Securities Litigation

On July 6, 2011, a purported federal securities class action lawsuit was filed in the United States District Court for the Middle District of Tennessee against BioMimetic Therapeutics, Inc. and certain of its officers and directors, alleging BioMimetic was unduly positive in its public statements about the prospects for FDA approval of Augment^® Bone Graft. We acquired BioMimetic in March 2013. In January 2013, the Court granted BioMimetic's, and the other named defendants', motion to dismiss the lawsuit,

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(continued)

known as Paula Kuyat, et. al. versus BioMimetic Therapeutics, Inc. et. al., without leave to amend the complaint. The plaintiffs filed a Motion to Alter Judgment or Amend Order and Judgment of Dismissal with Prejudice, seeking reconsideration of the Court's dismissal decision. This motion was denied. Subsequently, the plaintiffs appealed the Court’s dismissal of the case to the United States Court of Appeals for the Sixth Circuit. The Court of Appeals heard oral argument on December 4, 2013. The Court of Appeals has not yet issued its decision on the plaintiff’s appeal.

Other

In addition to those noted above, we are subject to various other legal proceedings, product liability claims, corporate governance, and other matters which arise in the ordinary course of business.

20. Segment Data

Prior to the June 2013 announcement of the divestiture of our OrthoRecon business, our chief executive officer, who is our chief operating decision maker, managed our operations as two reportable business segments: Extremities and OrthoRecon. Following this announcement, all historical operating results for the OrthoRecon segment were reflected within discontinued operations in the consolidated financial statements. See Note 4 for further information on the results of discontinued operations. For the remainder of 2013, we operated our continuing operations as one reportable business segment.

Our continuing operations business includes products that are used primarily in foot and ankle repair, upper extremity products, and biologics products, which are used to replace damaged or diseased bone, to stimulate bone growth and to provide other biological solutions for surgeons and their patients.

Our geographic regions consist of the United States, Europe (which includes the Middle East and Africa) and Other (which principally represents Latin America, Asia, Australia and Canada). Long-lived assets are those assets located in each region. Revenues attributed to each region are based on the location in which the products were sold.

Net sales by product line and by geographic region are as follows (in thousands):

	Year Ended December 31,
	2013		2012		2011
Net sales by product line:
Foot and Ankle	$	150,662	$	122,897	$	107,734
Upper Extremity	24,663		24,977		27,742
Biologics	59,792		60,495		69,409
Other	7,213		5,736		5,868
Total	$	242,330	$	214,105	$	210,753

	Year Ended December 31,
	2013		2012		2011
Net sales by geographic region:
United States	$	177,648	$	166,111	$	166,456
Europe	31,210		22,044		21,405
Other	33,472		25,950		22,892
Total	$	242,330	$	214,105	$	210,753

	December 31,
	2013		2012
Long-lived assets:
United States	$	61,179	$	36,271
Europe	6,581		3,102
Other	2,755		2,109
Total	$	70,515	$	41,482

No single foreign country accounted for more than 10% of our total net sales during 2013, 2012, or 2011.

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(continued)

21. Quarterly Results of Operations (unaudited):

The following table presents a summary of our unaudited quarterly operating results for each of the four quarters in 2013 and 2012, respectively (in thousands). This information was derived from unaudited interim financial statements that, in the opinion of management, have been prepared on a basis consistent with the financial statements contained elsewhere in this filing and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of such information when read in conjunction with our audited financial statements and related notes. The operating results for any quarter are not necessarily indicative of results for any future period.

	2013
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	56,293		$	60,572		$	57,641		$	67,824
Cost of sales	13,697			14,564			14,037			17,423
Gross profit	42,596			46,008			43,604			50,401
Operating expenses:
Selling, general and administrative	50,709			50,543			63,054			66,479
Research and development	3,507			5,868			5,518			5,412
Amortization of intangible assets	1,606			2,778			1,342			1,750
BioMimetic impairment charges	—			—			206,249			—
Total operating expenses	55,822			59,189			276,163			73,641
Operating loss	$	(13,226	)	$	(13,181	)	$	(232,559	)	$	(23,240	)
Net loss from continuing operations, net of tax	$	(4,918	)	$	(15,539	)	$	(124,500	)	$	(135,211	)
Income (loss) from discontinued operations, net of tax	$	13,353		$	(1,792	)	$	(5,520	)	$	182
Net income (loss)	$	8,435		$	(17,331	)	$	(130,020	)	$	(135,029	)
Net loss, continuing operations per share, basic	(0.13		)	(0.34		)	(2.68		)	(2.88		)
Net loss, continuing operations per share, diluted	(0.13		)	(0.34		)	(2.68		)	(2.88		)
Net income (loss) per share, basic	$	0.20		$	(0.37	)	$	(2.80	)	$	(2.88	)
Net income (loss) per share, diluted	$	0.20		$	(0.37	)	$	(2.80	)	$	(2.88	)

Our 2013 operating loss included the following:

• costs associated with distributor conversions and non-competes, for which we recognized $1.2 million, $1.1 million, $0.7 million and $0.8 million during the first, second, third and fourth quarters of 2013, respectively;

• costs associated with due diligence and transaction expenses for our acquisitions of WG Healthcare, BioMimetic and Biotech totaling $7.5 million, $1.4 million, $1.7 million and $2.3 million during the first, second, third and fourth quarters of 2013, respectively;

• transition costs associated with the divestiture of the OrthoRecon business totaling $2.6 million, $11.2 million and $7.7 million during the second, third and fourth quarters of 2013, respectively;

• charges associated with the write-down of BioMimetic inventory to net realizable value totaling $1.0 million and $1.3 million during the third and fourth quarters of 2013, respectively; and

• charges associated with the impairment of intangible assets and goodwill acquired from our BioMimetic acquisition (see Note 12), as well as the recognition of a $3.2 million charge for noncancelable inventory commitments for the raw materials used in the manufacture of Augment^® Bone Graft, which we have estimated will expire unused, totaling $206.2 million which was recognized in the third quarter of 2013.

Our 2013 net loss from continuing operations included the following:

• the after-tax effect of the above amounts;

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(continued)

• the after tax effects of mark-to-market adjustments on derivative assets and liabilities netting to a $2.0 million loss, a $1.0 million gain, a $2.0 million loss and a $2.0 million gain recognized in the first, second, third and fourth quarters of 2013, respectively;

• the after tax effects of CVR mark-to-market adjustments of $5.8 million unrealized loss, $66.1 million unrealized gain, and $0.8 million unrealized gain recognized in the second, third and fourth quarters of 2013, respectively;

• the after tax effect of a $7.8 million gain on our previously held investment in BioMimetic recognized in the first quarter of 2013; and

• a charge to record a valuation allowance against our U.S. deferred tax assets of $119.6 million recognized in the fourth quarter of 2013.

In addition to those noted above, our 2013 net loss included the following associated with our discontinued operations:

• the after tax impacts of $1.1 million, $0.7 million, $0.5 million and $0.6 million of U.S governmental inquiries and DPA costs during the first, second, third and fourth quarters of 2013, respectively;

• the after tax impacts of costs associated with amortization of distributor conversions and non-competes, for which we recognized $0.5 million, $0.4 million, $0.3 million and $0.3 million during the first, second, third and fourth quarters of 2013, respectively;

• the after tax impacts of costs associated with the sale of our OrthoRecon business of $2.8 million, $5.2 million and $2.9 million recognized during the second, third and fourth quarters of 2013, respectively; and

• the after tax impact of a gain of $19.4 million for estimated product liability insurance recoveries during the first quarter of 2013.

Additionally, in conjunction with preparing our financial statements for the year ended December 31, 2013, an immaterial error was identified in the previously reported loss from discontinued operations for the quarter ended September 30, 2013. The error related primarily to depreciation and amortization charges recorded on assets held for sale, and totaled approximately $2.7 million, net of tax. Management has concluded that this error was not material to the interim financial information taken as a whole and recorded an adjustment of $2.7 million, net of tax, to income from discontinued operations in the fourth quarter of 2013.

	2012
	First Quarter		Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	52,873	$	51,964		$	50,888		$	58,380
Cost of sales	11,434		11,779			11,704			13,322
Gross profit	41,439		40,185			39,184			45,058
Operating expenses:
Selling, general and administrative	34,524		35,885			36,730			43,157
Research and development	3,361		3,490			3,428			3,626
Amortization of intangible assets	655		982			1,289			1,491
Gain on sale of intellectual property	—		—			—			(15,000		)
Restructuring charges	177		254			—			—
Total operating expenses	38,717		40,611			41,447			33,274
Operating income (loss)	$	2,722	$	(426	)	$	(2,263	)	$	11,784
Net income (loss), continuing operations, net of tax	$	424	$	(1,367	)	$	(4,088	)	$	1,644
Net income (loss), discontinued operations, net of tax	$	4,137	$	2,077		$	(1,251	)	$	3,708
Net income (loss)	$	4,561	$	710		$	(5,339	)	$	5,352
Net income (loss), continuing operations per share, basic	$	0.02	$	(0.04	)	$	(0.11	)	$	0.04
Net income (loss), continuing operations per share, diluted	$	0.02	$	(0.04	)	$	(0.11	)	$	0.04
Net income (loss) per share, basic	$	0.12	$	0.02		$	(0.14	)	$	0.14
Net income (loss) per share, diluted	$	0.12	$	0.02		$	(0.14	)	$	0.14

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(continued)

Our operating income from continuing operations during the first and second quarters of 2012 included $0.2 million and $0.3 million of restructuring charges related to our cost improvement measures. We recognized $0.6 million, $1.2 million, and $1.2 million in the second, third, and fourth quarters of 2012, respectively, for costs associated with distributor conversions and non-competes. In the fourth quarter of 2012, we recognized $1.8 million for due diligence and transaction costs.

Net income from continuing operations in 2012 included the after-tax effect of the above amounts. In the third and fourth quarters of 2012, net income from continuing operations includes the after tax effects of $0.7 million and $2.1 million non-cash interest expense related to our 2017 Convertible Notes, respectively. Additionally, net income from continuing operations in the third quarter of 2012 includes the after tax effects of $1.8 million loss for the termination of a derivative instrument, $2.7 million charge for the write-off of unamortized deferred financing costs, and $2.3 million gain for mark-to-market adjustments on derivative assets and liabilities. Net income from continuing operations in the fourth quarter of 2012 includes the after tax effects of a $15.0 million gain on the sale of assets and a $3.5 million loss for mark-to-market adjustments on derivative assets and liabilities.

In addition to those noted above, our 2012 net income (loss) from discontinued operations included the after tax impacts of $2.9 million, $2.1 million and $1.7 million of U.S governmental inquires and DPA costs in the first, second and third quarters of 2012, respectively; $0.2 million, $0.4 million and $0.5 million of amortization of distributor non-competes in the second, third and fourth quarters of 2012, respectively; $2.4 million increase to management's estimate of the Company's probable insurance recovery for previously recognized costs associated with product liability claims during the fourth quarter of 2012; and $0.7 million and $0.5 million of restructuring charges during the first and second quarters of 2012, respectively.

22. Subsequent Event

Completion of Asset Purchase Agreement

On January 9, 2014, pursuant to the previously disclosed Asset Purchase Agreement, dated as of June 18, 2013 (the Purchase Agreement), by and among Wright Medical Group, Inc. (the Company), MicroPort Scientific Corporation, a corporation formed under the laws of the Cayman Islands (MicroPort), and MicroPort Medical B.V., a besloten vennootschap formed under the laws of the Netherlands, we completed our divesture and sale of our business operations operating under the OrthoRecon operating segment (the OrthoRecon Business) to MicroPort. Pursuant to the terms of the Purchase Agreement, the purchase price (as defined in the Purchase Agreement) for the OrthoRecon Business was approximately $287.1 million, which MicroPort paid in cash. As a result of the transaction, we estimate we will recognize in 2014 approximately $26 million as the gain on disposal of the OrthoRecon business, before the effect of income taxes. Our 2013 net income from discontinued operations includes the after tax effect of approximately $11 million of transaction costs associated with the sale of the OrthoRecon business.

Acquisitions

Subsequent to year-end, we completed the following acquisitions:

• Solana Surgical, LLC, a privately held extremity company based in Memphis, TN on January 30, 2014 for $47.6 million in cash, subject to certain adjustments set forth in the definitive agreement, and approximately $42.4 million of Wright common stock.

• OrthoPro, L.L.C., a privately held extremity company based in Salt Lake City, Utah on February 5, 2014, for $32.5 million in cash, subject to certain adjustments set forth in the definitive agreement, and up to an additional $3.5 million in cash contingent upon certain revenue-based milestones.

These acquisitions add complementary extremity product portfolios to further accelerate growth opportunities in our global Extremities business.

Based on the timing of the completion of these acquisitions in relation to the date of issuance of the financial statements, the initial purchase price accounting was not completed for these acquisitions. The financial results of these acquired businesses will be included in our consolidated results of operations from the date of acquisition and is expected to be immaterial to our 2014 results.

97

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Our disclosure controls and procedures are designed to ensure that material information relating to us, including our consolidated subsidiaries, is made known to our principal executive officer and principal financial officer by others within our organization. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2013 to ensure that the information required to be disclosed by us 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 SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2013.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2013. Our internal control over financial reporting as of December 31, 2013, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

Changes in Internal Control Over Financial Reporting

During the three months ended December 31, 2013, there were no changes in our internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this item is incorporated by reference from the definitive proxy statement to be filed within 120 days after December 31, 2013, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the annual meeting of stockholders to be held on May 13, 2014.

Item 11. Executive Compensation.

The information required by this item is incorporated by reference from the definitive proxy statement to be filed within 120 days after December 31, 2013, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the annual meeting of stockholders to be held on May 13, 2014.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated by reference from the definitive proxy statement to be filed within 120 days after December 31, 2013, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the annual meeting of stockholders to be held on May 13, 2014.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated by reference from the definitive proxy statement to be filed within 120 days after December 31, 2013, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the annual meeting of stockholders to be held on May 13, 2014.

Item 14. Principal Accounting Fees and Services.

The information required by this item is incorporated by reference from the definitive proxy statement to be filed within 120 days after December 31, 2013, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the annual meeting of stockholders to be held on May 13, 2014.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

Financial Statements

See Index to Consolidated Financial Statements in “Financial Statements and Supplementary Data.”

Financial Statement Schedules

See Schedule II — Valuation and Qualifying Accounts on page S-1 of this report.

Index to Exhibits

Exhibit No.	Description
3.1	Fourth Amended and Restated Certificate of Incorporation of Wright Medical Group, Inc., (1) as amended by Certificate of Amendment of Fourth Amended and Restated Certificate of Incorporation of Wright Medical Group, Inc. (2) and Certificate of Amendment for Fourth Amended and Restated Certificate of Incorporation of Wright Medical Group, Inc. (3)
3.2	Third Amended and Restated By-laws of Wright Medical Group, Inc. (4)
4.1	Form of Common Stock certificate. (1)
4.2	Indenture, dated as of November 26, 2007, between Wright Medical Group, Inc. and The Bank of New York as trustee (including form of 2.625% Convertible Senior Notes due 2014). (5)
4.3	Underwriting Agreement, dated as of November 19, 2007, among Wright Medical Group, Inc. and J.P. Morgan Securities Inc., Piper Jaffray & Co. and Wachovia Capital Markets, LLC. (5)
4.4	Indenture, dated as of August 31, 2012, between Wright Medical Group, Inc. and The Bank of New York, as trustee (including form of 2.000% Cash Convertible Senior Notes due 2017).(23)
4.5	Purchase Agreement, dated as of August 22, 2012, among Wright Medical Group, Inc. and J.P. Morgan Securities LLC, as Representative of the Initial Purchasers. (22)
10.1	Credit Agreement dated as of February 10, 2011, among Wright Medical Group, Inc., as the Borrower; the U.S. subsidiaries of the Borrower, as the Guarantors; the Lenders named therein; Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer; SunTrust Bank and Wells Fargo Bank, N.A., as Co-Syndication Agents; and US Bank National Association, as Documentation Agent. (17)
10.2*	Fifth Amended and Restated 1999 Equity Incentive Plan (the 1999 Plan), (7) as amended by First Amendment to the 1999 Plan. (8)
10.3*	Second Amended and Restated 2009 Equity Incentive Plan (2009 Plan) (9)
10.4*	Form of Executive Stock Option Agreement pursuant to the 2009 Plan.(26)
10.5*	Form of Non-US Employee Stock Option Agreement pursuant to the 2009 Plan.(26)
10.6*	Form of Non-Employee Director Stock Option Agreement (one year vesting) pursuant to the 2009 Plan.(26)
10.7*	Form of Non-Employee Director Stock Option Agreement (four year vesting) pursuant to the 2009 Plan.(26)
10.8*	Form of Executive Restricted Stock Grant Agreement pursuant to the 2009 Plan.
10.9*	Form of Non-Employee Director Restricted Stock Grant Agreement (one year vesting) pursuant to the 2009 Plan.(26)
10.10*	Form of Non-Employee Director Restricted Stock Grant Agreement (four year vesting) pursuant to the 2009 Plan.(26)
10.11*	Form of Non-US Employee Restricted Stock Unit Grant Agreement pursuant to the 2009 Plan.(26)
10.12*	Form of Executive Stock Option Agreement pursuant to the 1999 Plan. (10)
10.13*	Form of Non-US Employee Stock Option Agreement pursuant to the 1999 Plan. (10)
10.14*	Form of Non-Employee Director Stock Option Agreement (one year vesting) pursuant to the 1999 Plan. (10)
10.15*	Form of Non-Employee Director Stock Option Agreement (four year vesting) pursuant to the 1999 Plan. (10)

100

10.16*	Form of Executive Restricted Stock Grant Agreement pursuant to the 1999 Plan. (10)
10.17*	Form of Non-US Employee Phantom Stock Unit Grant Agreement pursuant to the 1999 Plan. (10)
10.18*	Form of Non-Employee Director Restricted Stock Grant Agreement (four year vesting) pursuant to the 1999 Plan.(11)
10.19*	Wright Medical Group, Inc. Executive Performance Incentive Plan. (12)
10.20*	Wright Medical Group, Inc. 2010 Executive Performance Incentive Plan. (13)
10.21*	Form of Indemnification Agreement between Wright Medical Group, Inc. and its directors and executive officers. (14)
10.22*	Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Lance A. Berry. (15)
10.23*	Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and William L. Griffin, Jr. (15)
10.24*	Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Eric A. Stookey.(15)
10.25*	Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Daniel J. Garen.(26)
10.26*	Employment Agreement dated as of September 17, 2011 between Wright Medical Technology, Inc. and Robert J. Palmisano. (20)
10.27*	Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Timothy E. Davis, Jr. (15)
10.28*	Separation Pay Agreement dated as of November 29, 2012 between Wright Medical Technology, Inc. and Pascal E.R. Girin.(26)
10.29*	Inducement Stock Option Grant Agreement dated as of September 17, 2011 between Wright Medical Technology, Inc. and Robert J. Palmisano. (20)
10.30*	Inducement Stock Option Grant Agreement between the Registrant and Julie D. Tracy dated October 17, 2011. (21)
10.31*	Inducement Stock Option Grant Agreement between Registrant and James A. Lightman dated December 29, 2011(21)
10.32*	Inducement Stock Option Grant Agreement between Registrant and Daniel Garen dated January 30, 2012. (21)
10.33*	Inducement Stock Option Grant Agreement between Registrant and Pascal E.R. Girin dated November 26, 2012.(26)
10.34	Settlement Agreement dated September 29, 2010, among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, and Wright Medical Technology, Inc. (16)
10.35	Corporate Integrity Agreement dated September 29, 2010, between Wright Medical Technology, Inc. and the Office of Inspector General of the Department of Health and Human Services. (16)
10.36	Deferred Prosecution Agreement dated September 29, 2010, between Wright Medical Technology, Inc. and the United States Attorney's Office for the District of New Jersey. (16)
10.37	Amendment to the Corporate Integrity Agreement dated September 14, 2011, between Wright Medical Technology, Inc. and the Office of Inspector General of the Department of Health and Human Services. (19)
10.38	Addendum and Amendment to the Deferred Prosecution Agreement dated September 15, 2011, between Wright Medical Technology, Inc. and the United States Attorney's Office for the District of New Jersey. (19)
10.39†	Amended and Restated Supply and Development Agreement dated January 28, 2011 between Wright Medical Technology, Inc. and LifeCell Corporation. (18)
10.40†	Trademark License Agreement dated January 28, 2011 between Wright Medical Technology, Inc. and KCI Medical Records. (18)
10.41	Base Call Option Transaction Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Bank of America, N.A. (22)

101

10.42	Base Call Option Transaction Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc. (22)
10.43	Base Call Option Transaction Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc., and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC (22)
10.44	Base Warrants Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Bank of America, N.A. (22)
10.45	Base Warrants Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc. (22)
10.46	Base Warrants Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC (22)
10.47	Additional Call Option Transaction Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Bank of America, N.A. (23)
10.48	Additional Call Option Transaction Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc. (23)
10.49	Additional Call Option Transaction Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC (23)
10.50	Additional Warrants Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Bank of America, N.A. (23)
10.51	Additional Warrants Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc. (23)
10.52	Additional Warrants Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC (23)
10.53†	Agreement and Plan of Merger by and among BioMimetic Therapeutics, Inc., Wright Medical Group, Inc., Achilles Merger Subsidiary, Inc. and Achilles Acquisition Subsidiary, LLC, dated as of November 19, 2012 (24)
10.54†	Contingent Value Rights Agreement by and between Wright Medical Group, Inc. and American Stock Transfer & Trust Company, LLC, dated as of March 1, 2013 (25)
10.55†	Supply Agreement, dated as of November 2, 2012, by and between Wright Medical Technologies, Inc. and Orchid MPS Holdings, LLC.(23)
10.56	Asset Purchase Agreement by and among MicroPort Medical B.V., MicroPort Scientific Corporation and Wright Medical Group, Inc., dated as of June 18, 2013 (27)
10.57†	License Agreement between BioMimetic Therapeutics, Inc. and President and Fellows of Harvard College, dated as of April 10, 2001. (28)
10.58†	Exclusive Patent License Agreement between BioMimetic Therapeutics, Inc. and ZymoGenetics, Inc., dated as of March 28, 2001. (28)
10.59†	Second Exclusive Patent License Agreement between BioMimetic Therapeutics, Inc. and ZymoGenetics, Inc., dated as of January 21, 2003. (28)
10.60†	Letter Agreement between BioMimetic Therapeutics, Inc. and ZymoGenetics, Inc., dated October 17, 2005. (28)
10.61†	Supply Agreement between BioMimetic Therapeutics, Inc. and Orthovita, Inc. dated as of August 2, 2002. (28)
10.62†	Development, Manufacturing and Supply Agreement between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation, dated as of June 28, 2005. (28)
10.63†	Patent Purchase Agreement by and among BioMimetic Therapeutics, Inc. and Institute of Molecular Biology, Inc. dated November 4, 2005. (28)
10.64	Amendment No. 1 to Exclusive Sublicense Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated as of December 21, 2005. (28)
10.65	Amendment No. 1 to Manufacturing and Supply Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated as of December 21, 2005. (28)

102

10.66†	Letter Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated as of December 21, 2005. (28)
10.67	Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC effective January 1, 2007. (29)
10.68	Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated August 17, 2007. (30)
10.69†	Asset Purchase Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated December 14, 2007. (31)
10.70†	Amended and Restated Exclusive Sublicense Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008. (31)
10.71†	Exclusive License Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008. (31)
10.72†	Supply Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008. (31)
10.73	Agreement Terminating Research, Development and Marketing Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008. (31)
10.74	Agreement Terminating Manufacturing and Supply Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008. (31)
10.75	Amendment and Waiver Agreement with respect to Asset Purchase Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008. (31)
10.76	Amendment to Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated January 22, 2008. (32)
10.77†	Distribution Agreement between BioMimetic Therapeutics, Inc. and Joint Solutions Alliance Corporation dated April 18, 2008. (33)
10.78	Second Amendment to Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated January 9, 2009. (34)
10.79†	Release and Settlement Agreement, effective as of December 21, 2009, between BioMimetic Therapeutics, Inc. and Deutsche Bank Securities, Inc. (35)
10.80†	Amended and Restated Manufacturing and Supply Agreement, effective as of December 1, 2009, between BioMimetic Therapeutics, Inc. and Novartis Vaccines and Diagnostics, Inc. (35)
10.81†	First Amendment to Development, Manufacturing and Supply Agreement, effective August 15, 2006, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation. (36)
10.82†	Second Amendment to Development, Manufacturing and Supply Agreement, effective November 1, 2006, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation. (36)
10.83†	Third Amendment to Development, Manufacturing and Supply Agreement, effective April 2, 2008, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation. (36)
10.84†	Fourth Amendment to Development, Manufacturing and Supply Agreement, effective September 30, 2010, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation. (37)
10.85	Amendment No. 1 to Amended and Restated Exclusive Sublicense Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated November 1, 2010. (38)
10.86	Amendment No. 1 to Asset Purchase Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated November 1, 2010. (38)
10.87	Amendment No. 1 to Agreement Terminating Research, Development and Marketing Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated November 1, 2010. (38)
10.88	Logistical Support Agreement between BioMimetic Therapeutics, Inc. and Joint Solutions Alliance Corporation dated November 3, 2010. (37)

103

10.89†	Supply Agreement between BioMimetic Therapeutics, Inc. and Integra LifeSciences Corporation dated July 15, 2010. (37)
10.90	Third Amendment to Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated April 8, 2011. (39)
10.91	Amendment to Patent License Agreements between BioMimetic Therapeutics, Inc. and Bristol-Myers Squibb Company dated June 30, 2011. (40)
10.92†	Amendment to Amended and Restated Manufacturing and Supply Agreement, effective as of January 1, 2012, between BioMimetic Therapeutics, Inc. and Novartis Vaccines and Diagnostics, Inc. (41)
10.93	Sales and Purchase Agreement between Upperside SA, Naxicap Rendement 2018, and Banque Populaire Developpement as Sellers and Wright Medical Group, Inc. as Purchaser, dated as of October 16, 2013.(42)
10.94	Agreement of Lease, dated December 28, 2013, by and between Wright Medical Technology, Inc. and RBM Cherry Road Partners
10.95	Agreement and Plan of Merger, dated as of January 30, 2014, by and among Wright Medical Group, Inc., WMMS, LLC, OrthoPro, LLC and OP CHA, Inc., as Company Holders’ Agent (43)
10.96	Agreement and Plan of Merger, dated as of January 30, 2014, by and among Wright Medical Group, Inc., Winter Solstice LLC, Solana Surgical, LLC, and Alan Taylor, as Members’ Representative (43)
11	Computation of earnings per share (included in Note 15 of the Notes to Consolidated Financial Statements in Financial Statements and Supplementary Data). (26)
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) Under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
101	The following materials from Wright Medical Group, Inc. Annual Report on Form 10-K for the year ended December 31, 2013 formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets; (2) Parenthetical Data to the Consolidated Balance Sheets; (3) the Consolidated Statements of Operations; (4) Parenthetical Data to the Consolidated Statements of Operations; (5) the Consolidated Statements of Comprehensive Income; (6) Parenthetical Data to the Consolidated Statements of Comprehensive Income; (7) the Consolidated Statements of Cash Flows; (8) the Consolidated Statements of Changes in Stockholders’ Equity; and (9) Notes to Consolidated Financial Statements.

_________________________________

(1) Incorporated by reference to our Registration Statement on Form S-1 (Registration No. 333-59732), as amended.

(2) Incorporated by reference to our Registration Statement on Form S-8 (Registration No. 333-115541) filed on May 14, 2004.

(3) Incorporated by reference to our current report on Form 8-K filed on May 17, 2013 (Commission file number 001-35823).

(4) Incorporated by reference to our current report on Form 8-K filed on February 20, 2014 (Commission file number 000-32883).

(5) Incorporated by reference to our current report on Form 8-K filed on November 26, 2007 (Commission file number 000-32883).

(6) Incorporated by reference to our current report on Form 8-K filed July 8, 2011 (Commission file number 000-32883).

(7) Incorporated by reference to our definitive Proxy Statement filed on April 14, 2008 (Commission file number 000-32883).

(8) Incorporated by reference to our quarterly report on Form 10-Q for the quarter ended September 30, 2008 (Commission file number 000-32883).

(9) Incorporated by reference to our definitive Proxy Statement filed on April 4, 2013 (Commission file number 000-335823).

(10) Incorporated by reference to our quarterly report on Form 10-Q for the quarter ended June 30, 2009 (Commission file number 000-32883).

(11) Incorporated by reference to our Registration Statement on Form S-8 (Registration No. 333-151756) filed on June 18, 2008.

(12) Incorporated by reference to our current report on Form 8-K filed on February 10, 2005 (Commission file number 000-32883).

(13) Incorporated by reference to our current report on Form 8-K filed on March 25, 2010 (Commission file number 000-32883).

(14) Incorporated by reference to our current report on Form 8-K filed on April 7, 2009 (Commission file number 000-32883).

104

(15) Incorporated by reference to our current report on Form 8-K filed on November 6, 2012 (Commission file number 000-32883).

(16) Incorporated by reference to our current report on Form 8-K filed on September 30, 2010 (Commission file number 000-32883).

(17) Incorporated by reference to our annual report on Form 10-K for the fiscal year ended December 31, 2010 (Commission file number 000-32883).

(18) Incorporated by reference to our current report on Form 8-K/A filed on May 18, 2011 (Commission file number 000-32883).

(19) Incorporated by reference to our current report on Form 8-K filed September 15, 2011 (Commission file number 000-32883).

(20) Incorporated by reference to our current report on Form 8-K filed on September 22, 2011 (Commission file number 000-32883).

(21) Incorporated by reference to our annual report on Form 10-K for the fiscal year ended December 31, 2011 (Commission file number 000-32883).

(22) Incorporated by reference to our current report on Form 8-K filed on August 28, 2012 (Commission file number 000-32883).

(23) Incorporated by reference to our current report on Form 8-K filed on September 4, 2012 (Commission file number 000-32883).

(24) Incorporated by reference to our current report on Form 8-K filed on November 19, 2012 (Commission file number 000-32883).

(25) Incorporated by reference to our current report on Form 8-K filed on March 1, 2013 (Commission file number 000-32883).

(26) Incorporated by reference to our annual report on Form 10-K for the fiscal year ended December 31, 2012 (Commission file number 000-32883).

(27) Incorporated by reference to our current report on Form 8-K filed on June 21, 2013 (Commission file number 001-35823).

(28) Incorporated by reference to BioMimetic Therapeutics, Inc.'s Registration Statement on Form S-1 (Registration No. 333-131718), as amended.

105

(29) Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on May 7, 2007 (Commission file number 000-51934).

(30) Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on August 21, 2007 (Commission file number 000-51934).

(31) Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2007 (Commission file number 000-51934).

(32) Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K file on January 25, 2008 (Commission file number 000-51934).

(33) Incorporated by reference to BioMimetic Therapeutics, Inc.'s quarterly report on Form 10-Q for the quarter ended June 30, 2008 (Commission file number 000-51934).

(34) Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2008 (Commission file number 000-51934).

(35) Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2009 (Commission file number 000-51934).

(36) Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K/A for the fiscal year ended December 31, 2009 (Commission file number 000-51934).

(37) Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2010 (Commission file number 000-51934).

(38) Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on November 19, 2010 (Commission file number 000-51934).

(39) Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on April 14, 2011 (Commission file number 000-51934).

(40) Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on July 1, 2011 (Commission file number 000-51934).

(41) Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on February 27, 2012 (Commission file number 000-51934).

(42) Incorporated by reference to our current report on Form 8-K filed October 18, 2013 (Commission file number 001-35823).

(43) Incorporated by reference to our current report on Form 8-K filed January 31, 2014 (Commission file number 001-35823).

* Denotes management contract or compensatory plan or arrangement.

† Confidential treatment granted under 17 CFR 24b-2. The confidential portions of this exhibit have been omitted and are marked accordingly. The confidential portions have been filed separately with the Securities and Exchange Commission pursuant to the Confidential Treatment Request.

106

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

February 26, 2014

Wright Medical Group, Inc.
By:	/s/ Robert J. Palmisano
	Robert J. Palmisano
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

Signature	Title	Date
/s/ Robert J. Palmisano Robert J. Palmisano	President, Chief Executive Officer and Director (Principal Executive Officer)	February 26, 2014
/s/ Lance A. Berry Lance A. Berry	Chief Financial Officer (Principal Financial Officer )	February 26, 2014
/s/ Julie B. Andrews Julie B. Andrews	Chief Accounting Officer (Principal Accounting Officer )	February 26, 2014
/s/ David D. Stevens David D. Stevens	Director	February 26, 2014
/s/ Gary D. Blackford Gary D. Blackford	Director	February 26, 2014
/s/ Martin J. Emerson Martin J. Emerson	Director	February 26, 2014
/s/ Lawrence W. Hamilton Lawrence W. Hamilton	Director	February 26, 2014
/s/ Ronald K. Labrum Ronald K. Labrum	Director	February 26, 2014
/s/ John L. Miclot John L. Miclot	Director	February 26, 2014
/s/ Amy S. Paul Amy S. Paul	Director	February 26, 2014
/s/ Robert J. Quillinan Robert J. Quillinan	Director	February 26, 2014
/s/ Douglas G. Watson Douglas G. Watson	Director	February 26, 2014

107

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Wright Medical Group, Inc.:

Under date of February 26, 2014, we reported on the consolidated balance sheets of Wright Medical Group, Inc. and subsidiaries (the Company) as of December 31, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders’ equity, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2013. These consolidated financial statements, and our report thereon, are included in the annual report on Form 10–K for the year ended December 31, 2013. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule listed in Item 15 in the annual report on Form 10-K. The financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.

In our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

(signed) KPMG LLP

Memphis, Tennessee

February 26, 2014

108

Wright Medical Group, Inc. Schedule II-Valuation and Qualifying Accounts (In thousands)
	Balance at Beginning of Period		Charged to Cost and Expenses			Deductions and Other		Balance at End of Period
Allowance for doubtful accounts:
For the period ended:
December 31, 2013	$	291	$	(66	)	$	47	$	272
December 31, 2012	$	293	$	(2	)	$	—	$	291
December 31, 2011	$	353	$	(60	)	$	—	$	293
Sales returns and allowance:
For the period ended:
December 31, 2013	$	298	$	(16	)	$	—	$	282
December 31, 2012	$	313	$	(15	)	$	—	$	298
December 31, 2011	$	321	$	(8	)	$	—	$	313

S-1

EX-10.8

WRIGHT MEDICAL GROUP, INC.

Restricted Stock Grant Agreement

Executive

Award Granted to (“Grantee”):

Grant Date:

Number of Shares (“Shares”):

THIS RESTRICTED STOCK GRANT AGREEMENT (the “Agreement”) is made as of the Grant Date by and between Wright Medical Group, Inc., a Delaware corporation with its principal place of business at 5677 Airline Road, Arlington, Tennessee 38002 (the “Company”) and Grantee pursuant to the Wright Medical Group, Inc. 2009 Equity Incentive Plan, as amended from time to time (the “Plan”) and which is hereby incorporated by reference.

WHEREAS, Grantee is associated with the Company or its affiliate as an employee; and

WHEREAS, the Compensation Committee of the Company’s Board of Directors (the “Committee”) has authorized that Grantee be granted shares of the Company’s Common Stock (“Stock”) subject to the restrictions stated below;

NOW, THEREFORE, the parties agree as follows:

1. Grant of Stock. Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to Grantee the Shares.

2. Vesting Schedule. The interest of Grantee in the Shares shall vest as to one-fourth (¼) of the Shares on the first anniversary of the Grant Date, and as to an additional one-fourth (¼) on each succeeding anniversary date, so as to be 100% vested on the fourth anniversary thereof, conditioned upon Grantee maintaining status as an Eligible Person (as defined in the Plan) as of each vesting date. Notwithstanding the foregoing, the interest of Grantee in the Shares shall vest as to:

2.1. A percentage of the unvested Shares upon a Life Event occurring. For purposes of this Agreement, a “Life Event” shall mean the Grantee’s death, Disability (as defined in the Plan), or Qualified Retirement. For purposes of this Agreement, a “Qualified Retirement” shall occur upon the Grantee’s voluntary resignation from the Company or any Related Entity (as defined in the Plan), provided that on the date of the Grantee’s voluntary resignation, Grantee is sixty-five (65) years or older and the Grantee has been

Restricted Stock Grant Agreement

Page 2

continuously employed by the Company or any Related Entity for five (5) or more years. With such percentage to be calculated as a number of Shares equal to the product of: (a) the Shares, and (b) the quotient of: (x) the number of days the Grantee remained an Eligible Person since the Grant Date, if the Life Event occurred less than one year after the Grant Date, or since the most recent anniversary of the Grant Date, if the Life Event occurred a year or more after the Grant Date; and (y) 1,460, rounded down to the nearest whole Share; and

2.2. 100% of the then unvested Shares upon a Change of Control. For purposes of this Agreement, a “Change of Control” shall mean the first to occur on or after the Grant Date of any of the following:

(a)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more (on a fully diluted basis) of either (A) the then outstanding shares of Stock, taking into account as outstanding for this purpose such Stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such Stock (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (x) any acquisition by the Company or any “affiliate” of the Company, within the meaning of 17 C.F.R. § 230.405 (an “Affiliate”), (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate, (z) any acquisition by any corporation or business entity pursuant to a transaction which complies with clauses (A) and (B) of subsection (a) of this Section 2.2 (persons and entities described in clauses (x), (y), and (z) being referred to herein as “Permitted Holders”);

(b)The consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any Permitted Holder) beneficially owns, directly or indirectly, 50% or more (on a fully diluted basis) of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination, taking into account as outstanding for this purpose such common stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such common stock, or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement providing for such Business Combination;

(c) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company;

(d)The sale of at least 80% of the assets of the Company to an unrelated party, or completion of a transaction having a similar effect; or

(e) The individuals who on the date of this Agreement constitute the Board of Directors thereafter cease to constitute at least a majority thereof; provided that any person becoming a member of the Board of Directors subsequent to the date of this Agreement and

Restricted Stock Grant Agreement

Page 3

whose election or nomination was approved by a vote of at least two-thirds of the directors who then comprised the Board of Directors immediately prior to such vote shall be considered a member of the Board of Directors on the date of this Agreement.

2.3. 100% of the unvested Shares upon Grantee’s death.

3. Restrictions.

3.1. The Shares granted hereunder may not be sold, pledged or otherwise transferred until the Shares become vested in accordance with this Agreement. The period of time between the Grant Date and the date that the Shares become vested is referred to as the “Restricted Period.”

3.2. If at any time Grantee fails to maintain Grantee’s status as an Eligible Person, the balance of the Shares subject to the provisions of this Agreement which have not vested at the time of Grantee’s loss of status as an Eligible Person shall be forfeited by Grantee, and ownership transferred back to the Company.

3.3. By accepting the Shares, Grantee represents and agrees for Grantee and Grantee’s transferees (whether by will or the laws of descent and distribution) that:

(a)        For the period commencing on the Grant Date and ending on the first anniversary of the date upon which Grantee loses status as an Eligible Person (such period is hereinafter referred to as the “Covenant Period”), with respect to any state in which the Company is engaged in business during Grantee’s employment with the Company, Grantee shall not participate or engage, directly or indirectly, for Grantee or on behalf of or in conjunction with any person, partnership, corporation or other entity, whether as an employee, agent, officer, director, stockholder, partner, joint venturer, investor or otherwise, in any business activities if such activity consists of any activity undertaken or expressly planned to be undertaken by the Company or any of its subsidiaries or by Grantee at any time during which Grantee maintained status as an Eligible Person.

(b)        Except with the Company's prior written approval or as may otherwise be required by law or legal process, Grantee shall not disclose any material or information which is confidential to the Company or its subsidiaries and not in the public domain or generally known in the industry, whether tangible or intangible, made available, disclosed or otherwise known to Grantee as a result of Grantee’s status as an Eligible Person.

(c)        During the Covenant Period, Grantee shall not attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any employee of the Company or its subsidiaries to give up, or to not commence, employment or a business relationship with the Company.

3.4. The Company shall have the right, but not the obligation, to purchase and acquire from Grantee any or all of the Shares (the “Repurchased Shares”) if the Committee reasonably determines that Grantee has violated the covenants set forth in this Agreement or Grantee’s loss of status as an Eligible Person is a result of termination of employment for Cause (as defined in the Plan) or Grantee’s loss of status as an Eligible Person could have resulted from termination of employment for Cause. The Company may exercise the right granted to it under this Section 3.4 by delivering written notice to Grantee stating that the Company is exercising the repurchase right granted to it under this Section 3.4. The delivery of such notice by the Company to Grantee shall constitute a binding commitment of the Company to purchase and acquire all of the Repurchased Shares. The total purchase price for the Repurchased Shares shall be delivered to the Grantee against delivery by Grantee of certificates evidencing the Repurchased Shares no later than 30 days after the delivery of the election notice by the Company. The price per share of the Repurchased Shares shall be the lesser of 1) the Fair Market Value (as defined in the Plan) of each of the Repurchased Shares on the date of the Company's delivery of its written notice to Grantee or 2) the Fair Market Value of each of the Repurchased Shares on the date that such shares vested to the Grantee without regard to any election by the Grantee under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”).

3.5. The Company shall have the right, and not the obligation, to cancel any or all of the Shares if the Committee

Restricted Stock Grant Agreement

Page 4

reasonably determines that Grantee has violated the covenants set forth in this Agreement. The Company may exercise the right granted to it under this Section 3.5 by delivering a written notice to Grantee stating that the Company is exercising the cancellation right granted to it under this Section 3.5.

3.6. Notwithstanding anything in this Section 3 to the contrary, the Company shall not be obligated to purchase any Stock at any time to the extent that the purchase would result in a violation of any law, statute, rule, regulation, order, writ, injunction, decree or judgment promulgated or entered by any Federal, state, local or foreign court or governmental authority applicable to the Company or any of its property.

3.7. The parties intend the restrictions in Section 3.3 to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.

4. Legend. All certificates representing any shares of Stock subject to the provisions of this Agreement shall have endorsed thereon the following legend:

TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED PURSUANT TO THE TERMS OF A RESTRICTED STOCK GRANT AGREEMENT, DATED AS OF __________ BETWEEN WRIGHT MEDICAL GROUP, INC. AND _________. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICES OF THE WRIGHT MEDICAL GROUP, INC. AT 5677 AIRLINE ROAD, ARLINGTON, TENNESSEE 38002.

5. Issuance of Shares. The Shares shall be issued and held in a restricted book entry account in the name of Grantee until expiration of the Restricted Period. Upon expiration of the Restricted Period, the Company shall remove the restrictions of such restricted book entry account for such Shares which have not been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividend or stock dividends shall be credited to Grantee’s account with respect to such Shares and any interest thereon, if any. Notwithstanding the foregoing, the Company may, in its discretion, issue certificates for Shares for which the Restricted Period has expired in the name of Holder in lieu of removing the restrictions of such restricted book entry account.

6. Stockholder Rights. During the Restricted Period, Grantee shall have all the rights and privileges of a stockholder as to Shares, including the right to vote such Shares, except for the right to transfer the Shares as set forth in Section 3 and Section 7 of this Agreement and Section 10(b) of the Plan. Cash dividends and stock dividends with respect to the Shares shall be currently paid to Grantee.

7. Changes in Stock. In the event that as a result of (i) any stock dividend, stock split or other change in the Stock, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, and by virtue of any such change Grantee shall in Grantee’s capacity as owner of unvested shares of Stock which have been awarded to Grantee (the “Prior Stock”) be entitled to new or additional or different shares or securities, such new or additional or different shares or securities shall thereupon be considered unvested Shares and shall be subject to all of the conditions and restrictions which were applicable to the Prior Stock pursuant to this Agreement.

8. Disability of Grantee. In the event of the Disability (as defined in the Plan) of Grantee, any unpaid but vested Shares shall be paid to Grantee if legally competent or to a legally designated guardian or representative if Grantee is legally incompetent.

9. Death of Grantee. In the event of Grantee’s death after the vesting date but prior to the payment of Shares, such Shares shall be paid to Grantee’s estate or designated beneficiary.

10.Taxes. Grantee understands that Grantee will recognize income for federal and, if applicable, state income tax purposes in an amount equal to the amount by which the fair market value of the Shares, as of the Grant Date or vesting date, as applicable, exceeds any consideration paid by Grantee for such Shares. Grantee shall be liable for any and all taxes, including withholding taxes, arising out of this grant or the vesting of Shares hereunder. By accepting the Shares, Grantee covenants to report such income in accordance with applicable federal and state laws. To the extent that the receipt of the Shares or the end of a Restricted Period with respect to the Shares or any portion thereof results in income to Grantee and withholding obligations of the Company, including federal or state withholding obligations, Grantee agrees that each such withholding obligation shall be satisfied in one of the following ways:

Restricted Stock Grant Agreement

Page 5

o Grantee may deliver to the Company or its designee an amount of cash determined by the Company to be adequate to satisfy the Company’s withholding obligation. If Grantee does not deliver such amount of cash, the Company shall have the right to either delay delivery of the applicable Shares until payment is made or withhold an amount of the Grantee’s current or future remuneration in an amount that satisfies the Company’s withholding obligation. Notwithstanding the foregoing, the Grantee may direct the Company to withhold from the Shares to be issued the specific number of Shares having a fair market value on the vesting date equal to the amount required to satisfy the Company’s withholding obligation.

o With the consent of the Company, Grantee may establish, witha registered broker(s) retained by the Company, a lawful 10b5-1 Plan which complies with such Company policies and procedures

Restricted Stock Grant Agreement

Page 6

as may from time to time be in effect, pursuant to which Grantee may sell such number of Shares as may be necessary to satisfy the Company’s withholding obligations, after deduction of the broker’s commission, and the broker shall remit to the Company the cash necessary in order for the Company to satisfy its withholding obligations. Grantee covenants to execute any such documents as are requested by the broker or the Company in order to effectuate the adoption of the 10b5-1 Plan, the sale of the Shares and the payment of the tax obligations to the Company. ^*

11.Governing Law. The grant of Shares and the provisions of this Agreement are governed by, and subject to, the laws of the State of Delaware, without regard to the conflict of law provisions, as provided in the Plan.

For purposes of litigating any dispute that arises under this grant or the Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Tennessee,agree that such litigation shall be conducted in the courts of Shelby County, Tennessee, or the federal courts for the United States for the Western District of Tennessee, where this grant is made and/or to be performed.

12.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in 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.

13.Miscellaneous.

___________________________

*     Grantee understands that the sale of Shares to satisfy withholding obligations will be considered a sale for purposes of short-swing liability under Section 16(b) of the Exchange Act. Any profit realized in a purchase of shares of the Company’s stock within six months of the sale may be recovered by the Company or by a stockholder of the Company on behalf of the Company.

Restricted Stock Grant Agreement

Page 7

13.1. The Company shall not be required (i) to transfer on its books any shares of Stock of the Company which have been sold or transferred in violation of any provisions set forth in this Agreement, or (ii) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.

13.2. The parties agree to execute such further instruments and to take such action as may be reasonably necessary to carry out the intent of this Agreement.

13.3. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to Grantee at the address of Grantee then on file with the Company.

13.4. Neither the Plan nor this Agreement nor any provisions under either shall be construed so as to grant Grantee any right to remain associated with the Company or any of its affiliates.

13.5. This Agreement, subject to the provisions of the Plan, constitutes the entire agreement of the parties with respect to the subject matter hereof.

AGREED AND ACCEPTED:	WRIGHT MEDICAL GROUP, INC.
GRANTEE:	By:	/s/: James A. Lightman
		James A. Lightman
		General Counsel and Secretary

EX-10.94

AGREEMENT OF LEASE

between

RBM CHERRY ROAD PARTNERS

Landlord

and

WRIGHT MEDICAL TECHNOLOGY, INC.

Tenant

Dated: As of December 31, 2013

Premises:

Office Building 1

First Floor of Office Building 2

1023 Cherry Road

Memphis, Tennessee 38117

TABLE OF CONTENTS

Page

REFERENCE PAGE..............................................................................................................................................................	3
ARTICLE I GLOSSARY......................................................................................................................................................	5
ARTICLE II DEMISE, PREMISES, TERM, RENT.........................................................................................................	11
ARTICLE III REIMBURSABLE OPERATING EXPENSES AND TAXES..................................................................	14
ARTICLE IV USE AND OCCUPANCY..............................................................................................................................	18
ARTICLE V INITIAL CONSTRUCTION AND ALTERATIONS...................................................................................	22
ARTICLE VI REPAIRS........................................................................................................................................................	25
ARTICLE VII [RESERVED]...............................................................................................................................................	26
ARTICLE VIII REQUIREMENTS OF LAW.....................................................................................................................	26
ARTICLE IX SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT.......................................................	28
ARTICLE X RULES AND REGULATIONS.....................................................................................................................	30
ARTICLE XI INSURANCE, PROPERTY LOSS OR DAMAGE, REIMBURSEMENT..............................................	30
ARTICLE XII DESTRUCTION BY FIRE OR OTHER CAUSE....................................................................................	32
ARTICLE XIII EMINENT DOMAIN.................................................................................................................................	33
ARTICLE XIV ASSIGNMENT, SUBLETTING, MORTGAGE, ETC. .........................................................................	33
ARTICLE XV ACCESS TO PREMISES............................................................................................................................	35
ARTICLE XVI CERTIFICATE OF OCCUPANCY..........................................................................................................	36
ARTICLE XVII DEFAULT..................................................................................................................................................	36
ARTICLE XVIII REMEDIES AND DAMAGES...............................................................................................................	38
ARTICLE XIX FEES AND EXPENSES.............................................................................................................................	39
ARTICLE XX NO REPRESENTATIONS BY LANDLORD...........................................................................................	40
ARTICLE XXI END OF TERM..........................................................................................................................................	40
ARTICLE XXII POSSESSION............................................................................................................................................	41
ARTICLE XXIII NO WAIVER...........................................................................................................................................	41
ARTICLE XXIV WAIVER OF TRIAL BY JURY.............................................................................................................	41
ARTICLE XXV INABILITY TO PERFORM....................................................................................................................	42
ARTICLE XXVI BILLS AND NOTICES...........................................................................................................................	42
ARTICLE XXVII SERVICES AND EQUIPMENT...........................................................................................................	42
ARTICLE XXVIII [RESERVED]........................................................................................................................................	44
ARTICLE XXIX [RESERVED]...........................................................................................................................................	44
ARTICLE XXX SIGNS.........................................................................................................................................................	44
ARTICLE XXXI BROKER...................................................................................................................................................	44
ARTICLE XXXII INDEMNITY............................................................................................................................................	44
ARTICLE XXXIII RESERVED............................................................................................................................................	45
ARTICLE XXXIV MEMORANDUM OF LEASE...............................................................................................................	46
ARTICLE XXXV TENANT LABS........................................................................................................................................	46
ARTICLE XXXVI COVENANT OF QUIET ENJOYMENT..............................................................................................	46
ARTICLE XXXVII MISCELLANEOUS.............................................................................................................................	46

EXHIBITS:

Exhibit A    Legal Description    

Exhibit B    Plat Showing Building 1, Building 2 and Driveway

Exhibit C    Rules and Regulations    

Exhibit D    Acceptance of Premises

Exhibit E    Floor Plans    

Exhibit F    Tenant Design and Construction Standards

Exhibit G    Tenant’s Reserved Parking Spaces

Exhibit H    Work Letter Agreement

Exhibit I    Mobile Labs Parking Area

Exhibit J    Access Parcel

Exhibit K    Base Rent Schedule

Exhibit L    Base Rent Schedule for Selected Expansion Space

Exhibit M    Location of Tenant Generators

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AGREEMENT OF LEASE

AGREEMENT OF LEASE, made as of the 31^st day of December, 2013, between RBM CHERRY ROAD PARTNERS, a Tennessee general partnership (“Landlord”), and WRIGHT MEDICAL TECHNOLOGY, INC., a Delaware corporation (“Tenant”).

REFERENCE PAGE

In addition to other terms elsewhere defined in this Lease, the following terms whenever used in this Lease shall have the meanings set forth in this Reference Page.

(1) Premises:    All of Building 1, plus the first floor of Building 2, as shown on the floor plans attached hereto as Exhibit “E”, excluding, however, any portions thereof which are defined as Common Area(s). In the event that Selected Expansion Space shall be leased by Tenant in accordance with Section 2.8, then such area shall become a part of the Premises. It is acknowledged that no part of the Adjacent Property shall be a part of the Premises.

(2) Commencement Date:    January 1, 2014.

(3) Expiration Date:    October 31, 2024, subject to adjustment pursuant to any of the terms, conditions or covenants of this Lease (including, but not limited to, the terms and provisions of Section 2.7 hereof).

(4) Term:     One Hundred Thirty (130) months, unless extended or terminated sooner as described and permitted herein, beginning on the Commencement Date and expiring on the Expiration Date.

(5) Base Rent (or Base Rental):    The amounts set forth in the schedules provided in Exhibit “K”, subject to adjustment pursuant to Section 2.8 or as otherwise specified herein.

(6) Tenant’s Proportionate Share:    Tenant’s Proportionate Share of the Real Property shall be 100% during the first three (3) years of the Term, then shall be 75% for the remainder of the Term, subject to upward adjustment in the event that Tenant elects to exercise all or a portion of the Expansion Option pursuant to Section 2.8 hereof.

(7) Landlord’s Proportionate Share:    Landlord’s Proportionate Share of the Real Property shall be 0% during the first three (3) years of the Term, then shall be the difference between 100% and Tenant’s Proportionate Share for the remainder of the Term.

(8) Calendar Year:     For the purpose of this Lease, Calendar Year shall be a period of twelve (12) months commencing on each January 1 during the Term occurring on and after January 1, 2014.

(9) Base Year:    A period of twelve (12) months comprising Calendar Year 2014.

(10) Permitted Use:    Corporate headquarters, corporate and/or general office, administrative, research and development, marketing, customer service and/or other office related operations and including,

3

without limitation, those specific uses and activities described in Section 4.1 of this Lease. The Landlord shall take no action during the Term of this Lease to effect any change to the Restrictive Covenants without the prior written consent of the Tenant.

(11) Security Deposit:    NONE

(12) Landlord’s Broker:    CB Richard Ellis Memphis, LLC

2620 Thousand Oaks Boulevard, Suite 4000

Memphis, Tennessee 38118

Attention: Ron Kastner

(13) Tenant’s Broker:    NONE

(14) Landlord’s Notice    RBM Cherry Road Partners

Address:    1025 Cherry Road

Memphis, Tennessee 38117

Attention: Scott Imorde

Email: scott@rbmvco.com

Fax: 901-821-4250

With Copy to:          Christopher C. Lamberson

Glankler Brown, PLLC

6000 Poplar Avenue, Suite 400

Memphis, TN 38119

Email: clamberson@glankler.com

Fax: 901-525-2389                    

(15) Tenant’s Notice    Wright Medical Technology, Inc.

Address:    1023 Cherry Road

Memphis, Tennessee 38117

Attention: Chief Operating Officer

Email: pascal.girin@wmt.com

Fax: 901-867-8249

With Copies to:    Wright Medical Technology, Inc.

1023 Cherry Road

Memphis, Tennessee 38117

Attention: General Counsel

Email: jim.lightman@wmt.com

Fax: 901-867-4398

And:    Lodie V. Biggs

Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.

165 Madison Avenue, Suite 2000

Memphis, Tennessee 38103

Email: lbiggs@bakerdonelson.com

Fax: 901-577-4223

(16) Address for Payment    RBM Cherry Road Partners

of Rent:    1025 Cherry Road

Memphis, Tennessee 38117

Attention: Rawleigh Martin

4

W I T N E S S E T H:

The parties hereto, for themselves, their legal representatives, successors and assigns, hereby agree as follows:

ARTICLE I

GLOSSARY

The following terms shall have the meanings indicated below:

“Access Easement” shall have the meaning set forth in Section 4.3.

“Access Parcel” shall have the meaning set forth in Section 4.3.

“ADA” shall mean the Americans With Disabilities Act of 1990, as modified and supplemented from time to time.

“Additional Rent” shall have the meaning set forth in Section 2.2.

“Adjacent Property” shall mean the real property south of and adjacent to the Land, consisting of approximately 18.910 acres, as shown on Exhibit “B” attached hereto.

“Adjacent Property Utility Payment” shall mean the payment by Landlord to Tenant of ten percent (10%) of Tenant’s aggregate annual MLGW payments in connection with Building 1 only during the Term, which shall be payable by Landlord to Tenant within ten (10) days after receipt of a Building 1 Utility Statement.

“Alterations” shall mean alterations, installations, improvements, additions, or other physical changes in or about the Premises; provided, however, that the term “Alterations” shall exclude those made by Landlord or Tenant in accordance with and pursuant to any provisions of this Lease in order to prepare the Premises and Common Area for Tenant’s initial occupancy including, without limitation, Tenant's Work as defined in the Work Letter Agreement attached as Exhibit "H" hereto.

“Applicable Rate” shall mean the lesser of (x) four percentage points above the then current Base Rate, or (y) the maximum rate permitted by applicable law.

“Approved Examiner” shall have the meaning set forth in Section 3.5.

“ASHRAE” shall mean the American Society of Heating, Refrigeration and Air-Conditioning Engineers.

“Bankruptcy Code” shall mean 11 U.S.C. Section 101 et seq., or any statute, federal or state, of similar nature and purpose.

“Base Lease” shall have the meaning set forth in Section 3.2.

“Base Rate” shall mean the “Prime Rate” of interest as published in The Wall Street Journal.

“Building 1” shall mean that certain three (3) story office building located on the Land and having an address of 1023 Cherry Road, Memphis, Tennessee 38117, and all of the equipment and other improvements and appurtenances related thereto of every kind and description now located or hereafter erected, constructed or placed upon the Land and any and all alterations, renewals, and replacements thereof, additions thereto and substitutions therefor. Building 1 is located as shown on Exhibit “B” attached hereto.

5

“Building 1 Utility Statement” shall mean a statement containing a summary of MLGW utility payments made by Tenant in connection with Building 1 only for each Operating Year, which shall be delivered by Tenant to Landlord within thirty (30) days following each Operating Year.

“Building 2” shall mean that certain two (2) story office building located on the Land and having an address of 1023 Cherry Road, Memphis, Tennessee 38117, and all of the equipment and other improvements and appurtenances related thereto of every kind and description now located or hereafter erected, constructed or placed upon the Land and any and all alterations, renewals, and replacements thereof, additions thereto and substitutions therefor. Building 2 is located as shown on Exhibit “B” attached hereto.

“Building Insurance” shall have the meaning set forth in Section 11.2.

“Building Standard Condition” shall mean the condition of the Premises as of the date of this Lease (reasonable wear and tear excepted), plus any Alterations approved by Landlord and Tenant's Work, except to the extent Landlord’s approval is conditioned upon Tenant’s removal of the approved Alteration prior to the Expiration Date.

“Building Systems” shall mean the base building mechanical, electrical, sanitary, heating, air conditioning, ventilating, elevator, plumbing, life-safety (including fire alarm and monitoring system that services the Adjacent Property to the extent the hardware of such system is located on the Real Property) and other service systems of the Buildings, including service systems included as part of Tenant’s Work and Major Mechanicals; provided, however, that “Building Systems” shall specifically exclude all Non-Standard Building Installations.

“Buildings” shall mean Building 1 and Building 2.

“Business Days” shall mean all days, excluding Saturdays, Sundays and all days observed as holidays by the State of Tennessee or the federal government.

“Common Area” shall mean any and all portions of the Land and the improvements thereon not part of Building 1 or Building 2; provided, however, in the event that another tenant leases space on the second floor of Building 2 and Tenant is occupying some (but not all) of the second floor of Building 2, then this definition may be expanded to include certain interior portions of Building 2 as set forth in Section 2.8 herein. Common Area includes all landscaping, fountains and related water works, walkways, sidewalks, parking lots, parking garages, parking decks, loading platforms, driveways, trash removal facilities, mechanical, electrical and utility rooms and service areas on the Land, regardless of whether they are part of Building 1 or Building 2.

“Control” shall have the meaning set forth in Section 14.2.

“Deficiency” shall have the meaning set forth in Section 18.2.

“EDGE Board” shall have the meaning set forth in Section 3.2.

“Event of Default” shall have the meaning set forth in Section 17.1.

“Excluded Operating Expenses” shall have the meaning set forth in Section 6.1.

“Expansion Area” shall have the meaning set forth in Section 2.8.

“Expansion Option” shall have the meaning set forth in Section 2.8.

“Expansion Option Term” shall have the meaning set forth in Section 2.8.

“Expansion Option Termination Fee” shall have the meaning set forth in Section 2.8(d).

"Expansion Space Allowance" shall have the meaning set forth in Section 2.8(b).

6

“FDA” means the U.S. Food and Drug Administration.

“Foreclosure” shall have the meaning set forth in Section 9.3.

“Government Authority (Authorities)” shall mean the United States of America, the State of Tennessee, the County of Shelby, the City of Memphis, any political subdivision thereof and any agency, department, commission, board, bureau or instrumentality of any of the foregoing, now existing or hereafter created, having jurisdiction over the Real Property or any portion thereof.

“HVAC” shall mean heat, ventilation and air conditioning.

“HVAC System” shall mean the Building Systems providing HVAC.

“Hazardous Materials” shall have the meaning set forth in Section 8.2.

“Land” shall mean the land containing approximately 6.587 acres of real estate located in Shelby County, Tennessee, and more particularly described in Exhibit “A”.

“Landlord” on the date as of which this Lease is made, shall mean RBM Cherry Road Partners, a Tennessee general partnership, its successors and assigns.

“Landlord Indemnitees” shall mean Landlord, its trustees, partners, shareholders, officers, directors, employees, agents and contractors and the Manager.

“Landlord’s Tax Payment” shall have the meaning set forth in Section 3.2(a).

“Landlord’s Operating Payment” shall have the meaning set forth in Section 3.3(a).

“Lease Termination Fee” shall have the meaning set forth in Section 2.9.

“Lease Termination Option” shall have the meaning set forth in Section 2.9.

“Lessor” shall mean the EDGE Board, or any other governmental or quasi-governmental entity authorized to acquire fee title to property and enter into lease agreements with owners in order to qualify such property for state and local PILOT programs.

“License Agreement” shall have the meaning set forth in Section 4.3.

“MLG&W” shall mean Memphis, Light, Gas and Water Division, a municipal public utility serving Memphis and Shelby County, Tennessee.

“Major Mechanical” shall mean HVAC systems (including HVAC boilers, HVAC chillers, HVAC controls and HVAC water towers), elevators, electrical switch gears and life safety generators.  “Major Mechanical” does not include plumbing (drains, pipes, fixtures), lighting, doors, windows, fire alarm systems and any Non-Standard Building Installations.

“Major Mechanical Replacement” means the replacement of a Major Mechanical for which the following conditions are satisfied and for which notice that such conditions have been satisfied has been provided to Landlord in advance of the commencement of any work to replace such Major Mechanical:

(a)  the replaced Major Mechanical is not working at the time notice of replacement is provided to Landlord;

7

(b) Fifteen Thousand Dollars ($15,000) or more has been spent by Tenant on repairing (not maintenance contract costs) the replaced Major Mechanical within the past 6 months; provided, however, that if there is a catastrophic failure to a Major Mechanical which renders such Major Mechanical unable to be repaired, then satisfaction of this condition (b) will not be required for the replacement of a Major Mechanical to be considered a Major Mechanical Replacement; and

(c) The cost to repair and put the replaced Major Mechanical in good working condition is more than Fifteen Thousand Dollars ($15,000) as quoted by a vendor who has made all or a portion of such repairs over the past six (6) months. 

“Major Mechanical Replacement Event” shall have the meaning set forth in Section 6.3(b).

“Market Rental Rate” shall have the meaning set forth in Section 2.7.

“Mobile Labs” shall have the meaning set forth in Section 4.1(xiv).

“Mortgage(s)” shall mean any trust deed, trust indenture or mortgage which may now or hereafter affect the Real Property, the Buildings, and all renewals, extensions, supplements, amendments, modifications, consolidations and replacements thereof or thereto, substitutions therefor, and advances made thereunder.

“Mortgagee(s)” shall mean any trustee under, or mortgagee or holder of, a Mortgage.

“Non-Standard Building Installations” shall mean (i) the Security System, (ii) any low voltage installations that are part of Tenant’s Work, (iii) any specialty rooms, labs and installations that are part of such Tenant’s Work, including without limitation anything regulated by the FDA, (iv) Tenant’s Generators, and (v) Alterations made by Tenant after the date of this Lease not included as Tenant’s Work under the Work Letter Agreement.

“Notice(s)” shall have the meaning set forth in Section 26.1.

“Office Use” shall mean those uses which are included in the definition of Office Square Footage as such term is used in the Restrictive Covenants.

“Operating Hours” shall mean 6:00 a.m. to 7:00 p.m. on Business Days.

“Operating Year” shall mean each calendar year that includes any part of the Term.

“Parties” shall have the meaning set forth in Section 37.2.

“Person or Person(s)” shall mean any natural person or persons, a partnership, a corporation, a limited liability company, a limited partnership and any other form of business or legal association or entity.

“Persons Within Landlord’s Control” shall mean and include Landlord, all of Landlord’s respective principals, officers, agents, contractors, servants, employees, licensees and invitees.

“Persons Within Tenant’s Control” shall mean and include Tenant, all of Tenant’s respective principals, officers, agents, contractors, servants, employees, licensees and invitees.

“PILOT” shall have the meaning set forth in Section 3.2.

"PILOT Documents" shall have the meaning set forth in Section 3.2.

“PILOT Incentives” shall have the meaning set forth in Section 3.2.

8

“Real Property” shall mean Building 1, Building 2 and the Land.

“Register’s Office” shall mean the Shelby County, Tennessee Register’s Office.

“Reimbursable Operating Expenses” shall have the meaning set forth in Section 3.1(a).

“Reimbursable Taxes” shall have the meaning set forth in Section 3.1(b).

“Renewal Option” shall have the meaning set forth in Section 2.7.

“Renewal Rental Rate” shall have the meaning set forth in Section 2.7.

“Rentable Square Feet” or "RSF" shall mean the actual measurement of rentable area in accordance with the American National Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996 or any successor standard adopted on or before the Commencement Date and reasonably agreed to by Landlord and Tenant.

“Rental” shall mean and be deemed to include Base Rent, Additional Rent and any other sums payable by Tenant hereunder.

“Requirements” shall mean (i) all present and future laws, rules, ordinances, regulations, statutes, requirements, codes and executive orders, extraordinary as well as ordinary, retroactive and prospective, of all Governmental Authorities now existing or hereafter created, and of any applicable fire rating bureau, or other body exercising similar functions, affecting the Real Property, or any street, avenue or sidewalk comprising a part or in front thereof or any vault in or under the same, or requiring removal of any encroachment, or affecting the maintenance, use or occupation of the Real Property, (ii) all requirements, obligations and conditions of all instruments of record on the date of this Lease including, without limitation, the Restrictive Covenants, and (iii) all requirements, obligations and conditions imposed by the carrier of Tenant’s hazard insurance policy (or policies) for the Buildings.

“Restrictive Covenants” shall mean those restrictions, building lines and easements of record in Plat Book 92, Page 47, as rerecorded in Plat Book 95, Page 32; Plat Book 126, Page 22; Plat Book 131, Page 1; Plat Book 143, Page 65; Plat Book 145, Page 22, as rerecorded in Plat Book 148, Page 15, as rerecorded in Plat Book 155, Page 8, as rerecorded in Plat 188, Page 11, as rerecorded in Plat Book 204, Page 29; and in Plat Book 187, Page 64, all in the Register’s Office of Shelby County, Tennessee.

“Rules and Regulations” shall mean the rules and regulations annexed hereto as Exhibit “C”, and such other and further reasonable rules and regulations as Landlord and Landlord’s agents may from time to time adopt, on notice to Tenant to be given in accordance with the terms of this Lease.

“Second Entrance” shall have the meaning set forth in Section 2.8(d).

“Security System” shall mean the security and access system(s) in use in the Buildings and located at various locations on the Real Property as of the Commencement Date, if any, and any subsequent additions and modifications made thereto by Tenant from time to time.

“Selected Expansion Space” shall have the meaning set forth in Section 2.8.

“Shared Use Documents” shall have the meaning set forth in Section 4.3.

“Sublease Additional Rent” shall have the meaning set forth in Section 14.4.

“Successor Landlord” shall have the meaning set forth in Section 9.3.

“Taxes” shall mean the aggregate amount of (i) all personal property taxes levied on personal property of Tenant located on the Real Property, and (ii) all real estate taxes or payments in lieu of taxes, and any general or special

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assessments (exclusive of penalties and interest thereon) imposed upon the Real Property or any portion thereof and the various estates therein, including, without limitation, each of the following: (a) assessments made upon or with respect to any “air” and “development” rights now or hereafter appurtenant to or affecting the Real Property; and (b) any assessments levied after the date of this Lease for public benefits to all or any portion of the Real Property; provided that if, because of any change in the taxation of real estate, any other tax or assessment, however denominated (including, without limitation, any profit, sales, use, occupancy, gross receipts or rental tax), is imposed upon Landlord, Tenant or the owner of all or any portion the Real Property, or the occupancy, rents or income therefrom, in substitution for any of the foregoing Taxes or for an increase in any of the foregoing Taxes, such other tax or assessment shall be deemed part of Taxes.

“Tax Year” shall mean each period of twelve (12) months, commencing on the first day of January of each year, that includes any part of the Term, or such other period of twelve (12) months as may be duly adopted as the fiscal year for real estate tax purposes by the City of Memphis and Shelby County.

“Tenant”, on the date as of which this Lease is made, shall mean the Tenant named in this Lease, but thereafter “Tenant” shall mean only the tenant under this Lease at the time in question; provided, however, that the Tenant named in this Lease and any permitted successor tenant hereunder shall not be released from liability hereunder in the event of any assignment of this Lease unless released in writing by the Landlord, in its sole discretion.

“Tenant Appeal Period” shall have the meaning set forth in Section 3.2(b)(i).

"Tenant's Generators" shall have the meaning set forth in Section 5.7.

“Tenant Indemnitees” shall mean Tenant, its trustees, partners, shareholders, officers, directors, employees, agents and contractors.

“Tenant’s Property” shall mean Tenant’s equipment, furniture, furnishings and other movable items of personal property.

“Tenant’s Operating Statement” shall mean a statement containing a computation of Reimbursable Operating Expenses delivered by Tenant to Landlord pursuant to Section 3.3(a).

“Tenant's Reserved Parking Spaces” shall have the meaning set forth in Section 4.2.

“Tenant’s Statement” shall mean either a Tenant’s Operating Statement or a Tenant’s Tax Statement.

“Tenant’s Tax Statement” shall mean a statement containing a computation of Reimbursable Taxes delivered by Tenant to Landlord pursuant to Section 3.2(a).

“Term” shall mean the period from the Commencement Date through the Expiration Date.

“Untenantable” shall mean that the Premises are unfit for the Permitted Use.

“Utility Discount Programs” shall have the meaning set forth in Section 3.7.

“Utility Easement” shall have the meaning set forth in Section 4.3.

“Work Letter Agreement” shall have the meaning set forth in Section 5.1.

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ARTICLE II

DEMISE, PREMISES, TERM, RENT

Section 2.1. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term to commence on the Commencement Date and to end on the Expiration Date. The Commencement Date shall be January 1, 2014 (which beginning date shall be memorialized by an executed Acceptance of Premises in the form attached hereto as Exhibit “D”).

Section 2.2. Tenant shall pay to Landlord, in lawful money of the United States of America, without notice or demand, by good and sufficient check drawn to Landlord’s order on a bank or trust company with an office in the United States of America, at the office of Landlord or at such other place as Landlord may designate from time to time, by wire transfer to an account designated by Landlord or direct draft from Tenant’s account through bank draft, ACH transfer, or other equivalent funds transfer to Landlord’s designated account (or other payment mechanism acceptable to Landlord), the following:

(a)    the Base Rent as set forth in and in accordance with the Base Rent Schedule provided in Exhibit “K” attached hereto, subject to adjustment pursuant to Section 2.8, which shall be payable in monthly installments of Base Rent in advance on the first day of each and every calendar month during the Term as indicated therein; and

(b)    additional rent (“Additional Rent”) consisting of all other sums of money as shall become due from and be payable by Tenant hereunder.

Section 2.3. [RESERVED]

Section 2.4. If the Expiration Date is other than the last day of a calendar month, Rental for such month shall be prorated on a per diem basis.

Section 2.5. Tenant shall pay the Base Rent and Additional Rent when due without abatement, deduction, counterclaim, setoff or defense for any reason whatsoever, except said abatement as may be occasioned by the occurrence of any event permitting an abatement of Base Rent as specifically set forth in this Lease. Any payment made by Tenant to Landlord on account of Base Rent may be credited by Landlord to the payment of any late charges then due and payable and to any Base Rent or Additional Rent then past due before being credited to Base Rent currently due.

Section 2.6.  Tenant shall pay to Landlord as Additional Rent, concurrently, upon proper notice to Tenant hereunder, with payment of Base Rent or Additional Rent to Landlord, all taxes (including but not limited to any and all sales, rent or excise taxes) directly imposed upon Base Rent or Additional Rent, as levied or assessed by any governmental or political body or subdivision thereof against Landlord, but specifically excluding any taxes based upon the income or profits of Landlord including, without limitation, income taxes.

Section 2.7.  Provided Tenant is not in default (beyond any cure periods hereunder) under this Lease at the time an option is exercised, Landlord grants Tenant two (2) options to renew this Lease, with respect to the portion of the Premises then leased by Tenant, with each option being for an additional term of five (5) years, upon the same terms and conditions as set forth herein (the first renewal term commencing at the end of the initial Term and the second renewal term commencing at the end of the first renewal term, if previously exercised, each of which must be exercised in accordance with the notice requirements provided hereunder), except that the rental rates in each case shall be determined in accordance with the provisions of this Section 2.7 as shown below (the “Renewal Option”). Each option shall be exercised by Tenant’s delivery of written notice to Landlord at least ten (10) months prior to the then-current Expiration Date.

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(a)    The renewal Base Rent rates for each option period shall be equal to ninety-five percent (95%) of the Market Rental Rate (as defined hereinafter) (such rate being hereinafter referred to as the “Renewal Rental Rate”). The “Market Rental Rate” is the rental rate then being charged by landlords (including Landlord) for office space in the East Memphis office submarket on new and renewal leases to tenants of a similar credit quality to Tenant for space of similar quality and size as the Premises, taking into account all relevant factors, including without limitation, age, extent and quality of tenant improvements, leasing commissions, length of term, amenities of the Buildings and the Real Property, reasonable projections of Base Rent, Additional Rent and allowances or concessions that have been granted such as abatements, lease assumptions and leasehold improvement allowances.

(b)    Within thirty (30) days after Tenant’s exercise of each of the options to renew, Landlord shall notify Tenant in writing of the Renewal Rental Rate for that renewal period as determined by the above definition. Tenant shall have thirty (30) days from the receipt of Landlord’s notice to either accept or dispute Landlord’s determination of the Renewal Rental Rate. In the event that Tenant disputes Landlord’s determination, Tenant shall so notify Landlord and advise Landlord of Tenant’s determination of the Renewal Rental Rate for the option period as determined by the above definition. If Landlord and Tenant cannot agree upon the Renewal Rental Rate within thirty (30) days of Tenant’s original notice of its intent to exercise its Renewal Option, the following dispute resolution mechanisms shall be utilized:

The parties, within ten (10) days thereafter, shall each select an MAI-certified commercial real estate appraiser with a minimum of ten (10) years’ experience in the Memphis market (each party to pay the cost of the appraiser selected by it). Each appraiser, within thirty (30) days after selection, shall present to the other his or her determination of the Market Rental Rate. If the Market Rental Rates determined by each appraiser are within ten percent (10%) of each other, then the Renewal Rental Rate for the option period shall be equal to ninety-five (95%) of the average of the two (2) Market Rental Rates as determined by the parties’ appraisers. If the appraisers’ determinations are greater than ten percent (10%) apart, then the appraisers shall jointly select, within ten (10) days thereafter, a third MAI-certified commercial real estate appraiser with a minimum of ten (10) years’ experience in the Memphis market, with the cost of the third appraiser to be divided equally between Landlord and Tenant. Within thirty (30) days after appointment, the third appraiser shall announce his or her determination of the Market Rental Rate. The Renewal Rental Rate shall be equal to ninety-five (95%) of the average of the Market Rental Rate determined by the two appraisers whose determinations are numerically closest to each other (disregarding the determination of the appraiser whose determination is further apart from either of the others). Notwithstanding the foregoing, in the event that the third appraiser’s determination is exactly in the middle of the first two appraisers’ determinations, then the Renewal Rental Rate shall be equal to ninety-five (95%) of the third appraiser’s determination of the Market Rental Rate.

(c)    Landlord and Tenant shall execute an amendment to this Lease within the earlier of (i) thirty (30) days after the determination of the Renewal Rental Rate or (ii) the Expiration Date, which amendment shall set forth the extended Term and all other terms and conditions applicable to the renewal period, and shall establish the Renewal Rental Rate as the annual Base Rent for the renewal period.

(d)    Except for the Renewal Rental Rate as set forth above, this Lease, and all of the terms and conditions hereof, shall remain in full force and effect throughout the entire renewal term(s).

Section 2.8. During the first three (3) years of the Term (the “Expansion Option Term”), Tenant shall have the exclusive option (the “Expansion Option”) to expand the Premises to include all or some portion (but not less than 15,000 Rentable Square Feet) of the second floor of Building 2 as designated by mutual agreement of Landlord and Tenant (the second floor of Building 2 containing approximately 30,315 Rentable Square Feet) (the “Expansion Area”) by providing Landlord written notice, given at any time prior to the expiration of the Expansion Option Term, of its intent to lease all or a portion of the Expansion Area. Tenant may exercise this Expansion Option multiple times during the Expansion Option Term. During the Expansion Option Term, Landlord will not lease the Expansion Area to any other prospective tenant; and, unless the Expansion Option is timely exercised, Tenant shall not have the right to occupy or use the Expansion Area during the Term. In the event the Expansion Option is exercised during the Expansion Option Term, all or a portion (but not less than 15,000 Rentable Square Feet) of the Expansion Area (as designated by mutual agreement of Landlord and Tenant) (the “Selected Expansion Space”) shall be leased by Landlord to Tenant (and shall become part of the Premises) pursuant to and in accordance with the following terms and conditions:

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(a)The Base Rent payable for the Selected Expansion Space shall be calculated based upon the Base Rent Schedule for Selected Expansion Space attached hereto as Exhibit “L”.

(b)Landlord shall give Tenant an improvement allowance with regard to the Selected Expansion Space (the "Expansion Space Allowance") equal to a pro rata portion of $20.00 per RSF of the Selected Expansion Space (determined by taking the number of months remaining in the Term upon Tenant's exercise of the Expansion Option, dividing such number by 130 and then multiplying such number by $20.00). The payment of the Expansion Space Allowance shall be made pursuant to the applicable terms and conditions of the Work Letter Agreement.

(c)The term of the lease for the Selected Expansion Space shall coincide with the Term remaining under this Lease at the time of Tenant's exercise of the Expansion Option (including any time periods under a Renewal Option).

(d)At the end of the Expansion Option Term, if Tenant has not elected to lease 100% of the Expansion Area, then Tenant will remit to Landlord an amount equal to $500,000 (the “Expansion Option Termination Fee”). Furthermore, at that time, Landlord shall have the right for the remainder of the Term to elect to recapture a portion of the ground floor of Building 2 for the purposes of creating a second building entrance, vestibule and elevator lobby so that access to the second floor can be achieved for third party tenants (the “Second Entrance”). The exact location(s) and design of the Second Entrance shall be determined in the reasonable discretion of Landlord with Landlord involving Tenant and communicating with Tenant during the determination of said location and design of the Second Entrance; provided, however, that Landlord agrees not to permit any signage for such third party tenant(s) to be placed on the east façade of Building 2. All costs in connection with the creation of the Second Entrance shall be solely borne by Landlord, including, without limitation, any and all actual, documented out of pocket costs incurred by Tenant as a direct result of the creation and/or construction of the Second Entrance including, without limitation, reconfiguring of Tenant's existing floor plans in the Premises and/or movement of Tenant's fixtures, equipment or employees. All construction and related activities as to the Second Entrance shall be conducted by Landlord, and anyone acting by or through Landlord, in a good and workmanlike manner, shall be made to a standard consistent with the then existing design and classification of the Premises and shall be made with minimal disruption to Tenant and Tenant's business activities on the Premises and Common Area.

(e)Tenant’s Proportionate Share shall be increased proportionately according to the number of Rentable Square Feet in the Selected Expansion Space. It is agreed that Tenant’s exercise of its option to lease the entire Expansion Area would add an additional 25% to Tenant’s Proportionate Share (bringing that number up to 100%); likewise, Tenant’s leasing anything less than the entire Expansion Area would add a pro-rata amount to Tenant’s Proportionate Share.

Section 2.9 Tenant shall have the one (1) time right to terminate this Lease, which termination shall be effective May 31, 2021 (the “Lease Termination Option”), for a lump sum payment to Landlord on or prior to such date of:

(a) $4,444,579 in consideration of the termination of the Lease with respect to the initial Premises (consisting of all of Building 1 and the first floor of Building 2); plus

(b) in the event that Tenant has exercised any Expansion Option, the product of: RSF in Tenant’s Selected Expansion Space divided by the total Expansion Area RSF, multiplied by $1,566,414 (together with (a), the “Lease Termination Fee”).

In order to exercise the Lease Termination Option, Tenant must not be in default under this Lease (beyond and applicable cure periods under this Lease) and must deliver to Landlord written notice of its intent to exercise such option prior to September 1, 2020. If written notice is not received by Landlord prior to September 1, 2020, or if

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payment of the Lease Termination Fee is not delivered on or prior to May 31, 2021, then this Lease Termination Option shall be null and void.

ARTICLE III

REIMBURSABLE OPERATING EXPENSES AND TAXES

Section 3.1. For the purposes of this Article III, the following terms shall have the meanings set forth below:

(a)    “Reimbursable Operating Expenses” shall mean the aggregate of all actual costs, expenses and disbursements paid by Tenant with respect to the following: (i) casualty insurance required to be provided by Tenant under this Lease; (ii) operation and repair of Building Systems including repair and maintenance of Major Mechanicals; (iii) pest control, guard, watchman or other security personnel service (excluding the Security System), fire extinguishers, the costs of operation, cleaning, repair, and maintenance of the existing power generators used to power the Buildings’ life safety equipment, but specifically excluding Tenant’s Generators; (iv)  exterior and interior landscaping, irrigation, lighting and tree care; (v) waste removal; and (vi) gas, electricity, oil, steam, water, sewer and other utilities furnished to the Buildings, and utility taxes, less the Adjacent Property Utility Payment. Notwithstanding the foregoing, Reimbursable Operating Expenses shall not include (a) any repair and maintenance of any elevators or (b) any Excluded Operating Expenses.

(b)    “Reimbursable Taxes” shall mean all real estate taxes or payments in lieu of taxes, and any general or special assessments (exclusive of penalties and interest thereon) (i) during the term of any PILOT Documents (hereinafter defined), based upon and calculated specifically for the portion of the Real Property not leased to Tenant, or (ii) after the term of any PILOT Documents, allocable to the percentage of the total RSF of the Buildings not leased to Tenant, either of which are paid by Tenant; provided that if, because of any change in the taxation of real estate, any other tax or assessment, however denominated (including, without limitation, any profit, sales, use, occupancy, gross receipts or rental tax), is imposed upon Landlord, Tenant or the owner of all or any portion the Real Property, or the occupancy, rents or income therefrom, in substitution for any of the foregoing Reimbursable Taxes or for an increase in any of the foregoing Reimbursable Taxes, such other tax or assessment shall be deemed part of Reimbursable Taxes to the extent (i) paid by Tenant and (ii) allocable to that portion of the Real Property not occupied by Tenant, or, as applicable, allocable to the percentage of the total RSF of the Buildings not leased to Tenant.

Section 3.2. Tenant shall be solely responsible for the payment of all Taxes accruing during the Term, and such obligation shall survive the expiration or earlier termination of this Lease.  

(a)    Landlord shall reimburse Tenant all Reimbursable Taxes accruing on or after January 1, 2017 for such Tax Year and for each successive Tax Year during the Term (“Landlord’s Tax Payment”). Landlord’s Tax Payment shall be payable by Landlord to Tenant within ten (10) days after receipt of a Tenant’s Tax Statement, which shall be delivered to Landlord within sixty (60) days following any such applicable Tax Year (or, for purposes of the final Landlord’s Tax Payment, on or after the first day of the year following the expiration or earlier termination of the Term.

(b)    (i)    Tenant, in its discretion, shall exclusively be eligible to institute tax reduction or other proceedings to reduce Taxes during the period a Tax bill is received until no later than thirty (30) days prior to the date such appeal must be filed (each a “Tenant Appeal Period”). If, after a Tenant’s Tax Statement has been sent to Landlord, a refund of Taxes is actually received by or on behalf of Tenant or Landlord, then, promptly after receipt of such refund, Landlord’s Tax Payment shall be adjusted appropriately (taking into account Tenant’s expenses therefor).

(ii)    In the event Tenant does not contest any increase in ad valorem Taxes applicable to the Real Property during any Tenant Appeal Period, Tenant shall promptly notify Landlord of such decision on or prior

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to the expiration of such Tenant Appeal Period so that Landlord shall have the right to contest any such increase. Regardless of which party initiates an appeal, the appealing party shall keep the other party informed of the steps being taken. Each party agrees to fully cooperate with the other in prosecuting any appeal. During the pendency of any such contest, both Landlord and Tenant shall take all actions required to prevent the execution/enforcement by the taxing authorities of any rights against Landlord, Tenant and/or the Real Property. If, after a Tenant’s Tax Statement has been sent to Landlord, a refund of Taxes is actually received as a result of a contest made by Landlord, then, promptly after receipt of such refund, Landlord’s Tax Payment shall be adjusted appropriately. All actual, documented out of pocket costs incurred by either party in connection with an appeal shall be prorated between Tenant and Landlord based on Tenant’s Proporationate Share and Landlord’s Proportionate Share at the time such costs and expenses are incurred.

(iii)    Landlord will cooperate with Tenant in seeking to obtain a property tax reduction/partial abatement with respect to all or a portion of the Real Property and other incentives (collectively, the “PILOT Incentives”) under the Payment-In-Lieu Of Taxes (“PILOT”) program of The Economic Development Growth Engine Industrial Development Board of the City of Memphis and County of Shelby, Tennessee (the “EDGE Board”). Landlord agrees to provide Tenant and the EDGE Board such information concerning Landlord and the Real Property as may be reasonably required by Tenant or the EDGE Board in connection with the PILOT application. Landlord and Tenant understand that the PILOT program will require (i) that Landlord convey the Real Property (including the Premises) to the EDGE Board, (ii) that the EDGE Board lease the same back to Landlord pursuant to a Real Property Lease Agreement (the “Base Lease”), and (iii) that Landlord and Tenant enter into other related PILOT Incentives documents as required by the EDGE Board or its counsel (together with the Base Lease, the "PILOT Documents"). Landlord agrees to cooperate with the Tenant's documentation of the PILOT (including any documentation and actions necessary during and throughout the term of the PILOT Documents); provided, however, that Landlord shall have the right to review and negotiate all PILOT Documents in its reasonable discretion. Landlord acknowledges that only Tenant shall enjoy any ad valorem tax reductions and abatements applicable to the Premises and Real Property as a result of Tenant’s PILOT and that no portion of the Real Property unoccupied by Tenant shall receive tax abatements under Tenant’s PILOT. All costs associated with the PILOT application and placing the Real Property into the PILOT program shall be paid by Tenant as incurred. Furthermore, Tenant shall reimburse Landlord (or directly pay) for any and all actual, documented costs and expenses that it incurs in connection therewith, including without limitation Landlord’s reasonable legal fees and the costs of obtaining a leasehold policy of title insurance in the name of Landlord (and, if applicable, an updated or endorsed Mortgagee loan policy), including all endorsements reasonably required by Landlord. All benefits accruing from the placing the Real Property into the PILOT program with respect to the Premises will inure to Tenant’s benefit. Tenant shall, upon request of the EDGE Board or Landlord, give its consent to (x) any mortgage financing which Landlord seeks to place against the Real Property; (y) any sale and assignment by Landlord of its leasehold interest and option to purchase as contained in the PILOT Documents; and (z) any easements over or across portions of the Real Property for utilities and/or ingress and egress provided such easements do not unreasonably interfere with Tenant’s operations at the Premises. Any such consents shall be given in writing within ten (10) business days following receipt by Tenant of such request. Tenant shall indemnify, defend and hold Landlord harmless from and against any loss, cost or damages, including reasonable attorneys’ fees and court costs, arising out of failure of Tenant to timely deliver any such requested consent. Upon conveyance of the Real Property by Landlord to the EDGE Board, Tenant shall, to the extent provided in subparagraph (A) below, assume all of the obligations of Landlord in its capacity as lessee under the terms of the PILOT Documents with respect to the Real Property (other than those obligations that are expressly imposed upon Landlord under the terms and provisions of this Lease), and shall agree to indemnify, defend and hold Landlord harmless from and against any and all liabilities, expenses, claims, charges or losses which may arise from the negotiation, execution and implementation of the PILOT Documents and its operation except as to Landlord's negligence or willful acts or omissions. All of the obligations of the Landlord with respect to the PILOT Incentives, the PILOT, and the PILOT Documents, contained anywhere in this Lease shall be binding upon Landlord, and their respective heirs, personal representatives, successors and assigns.

In the event the PILOT transaction is completed, the following provisions shall become part of this Lease:

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(A)    Pursuant to the foregoing provisions, Tenant shall assume all of the obligations of Landlord applicable to the Real Property subject to the PILOT Documents in its capacity as a lessee under the terms of the PILOT Documents (other than those obligations that are expressly imposed upon Landlord under the terms and provisions of this Lease), including without limitation the payment as and when due of (I) all Basic Rent and Additional Rent (including the PILOT payments) (each as defined in the PILOT Documents) and other charges which shall be due with respect to the Real Property subjected to the PILOT Documents, (II) all costs and expenses to exercise the Purchase Option (as defined in the PILOT Documents (including the option price of $1,000.00, recording expenses and attorneys’ fees), and (III) all indemnification and reimbursement due from Landlord to the EDGE Board under the PILOT Documents, except to the extent the same are attributable to the acts or omissions of Landlord. Such assumed obligations by Tenant shall be subject to the following provisions:

1.    Such assumed obligations shall not abate unless (and only to the extent that) an abatement is expressly provided under the terms of the PILOT Documents.

2.    Tenant shall at all times throughout the term of the PILOT Documents cause the Real Property and/or the Premises to constitute a “Project” within the meaning of Section 7-53-101 of the Tennessee Code Annotated.

(B)    Landlord shall at all times be responsible and fully liable for any and all claims, damages, expenses, liability and demands suffered by Tenant resulting from Landlord's negligence, intentional misconduct or failure to perform any of the lessee's obligations under the PILOT Documents that are expressly imposed upon Landlord under the terms and provisions of this Lease, including, but not limited to, Landlord’s obligation to execute such documents (with such reasonable assurances and indemnities from Tenant as Landlord may reasonably require), respond to notice or notify Tenant, or take such other ministerial acts as may be required under the PILOT Documents, all at Tenant’s cost and expense. Landlord shall take no action intended to terminate or void the PILOT Documents unless Tenant has so requested or is in default (with any applicable cure period having expired) under any material term or provision of this Lease, and Landlord shall not be liable for any damages which may be suffered by Tenant unless the same are suffered as a direct and proximate result of the gross negligence or willful misconduct of Landlord. Notwithstanding the above, Landlord shall have no liability for the Landlord's obligations under the PILOT Documents that are specifically assumed by the Tenant under this Lease.

(C)    Tenant shall undertake full responsibility to monitor the termination date of the PILOT Documents and shall take all necessary steps to exercise, on behalf of Landlord, the option to repurchase the Real Property as provided in the PILOT Documents, at its termination. Tenant shall give notice to Landlord in a timely fashion to allow Landlord to take necessary steps to join with Tenant in the exercise of the option, and Tenant shall indemnify Landlord against any loss which may arise as a result of the failure of Tenant to initiate actions to exercise the PILOT Documents purchase option.

(D)    Within ten (10) days after the receipt of any real property tax and/or payment in lieu of tax bills from either the Shelby County Trustee or the City of Memphis Treasurer, the Landlord shall provide a copy of such bills to the Tenant.

(c)    Tenant shall pay to Landlord within thirty (30) days after demand as Additional Rent any occupancy tax or rent tax now in effect or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord.

(d)    In the event that Landlordreceives notice of an assessment change or reassessment of the Real Property, Landlord shall promptly send notice to Tenant pursuant to the notice provisions of this Lease.

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(e)    If the Commencement Date or the Expiration Date occurs on a date other than January 1 or December 31, respectively, Landlord’s Tax Payment under this Article III for the Tax Year in which such Commencement Date or Expiration Date occurs shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31 or from January 1 to the Expiration Date, as the case may be, both inclusive, bears to the total number of days in such Tax Year. If the Commencement Date or the Expiration Date occurs on a date other than January 1 or December 31, respectively, any Landlord’s Operating Payment under this Article III for the Operating Year in which such Commencement Date or Expiration Date occurs shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31 or from January 1 to the Expiration Date, as the case may be, both inclusive, bears to the total number of days in such Operating Year. In the event of a termination of this Lease, any Landlord’s Tax Payment and Landlord’s Operating Payment under this Article III shall be paid or adjusted within thirty (30) days after submission of a Tenant’s Statement. The rights and obligations of Landlord and Tenant under the provisions of Article III with respect to any Landlord’s Tax Payment shall survive the expiration or termination of this Lease.

Section 3.3. (a)    Landlord shall reimburse Tenant a portion of Reimbursable Operating Expenses accruing on or after January 1, 2017 for such Operating Year and for each successive Operating Year during the Term in an amount (“Landlord’s Operating Payment”) equal to Landlord’s Proportionate Share of the Reimbursable Operating Expenses. Landlord’s Operating Payment shall be payable by Landlord to Tenant within ten (10) days after receipt of a Tenant’s Operating Statement, which shall be delivered to Landlord within sixty (60) days following any such applicable Operating Year pursuant to Section 3.3(c).

(b)     Following each Operating Year, Landlord shall deliver to Tenant an Adjacent Property Utility Payment within ten (10) days after receipt of a Building 1 Utility Statement.

(c)    Within sixty (60) days following the end of each applicable Operating Year, Tenant shall furnish to Landlord a Tenant’s Operating Statement for such Operating Year. Each such year-end Tenant’s Operating Statement shall be accompanied by a computation of Reimbursable Operating Expenses prepared by a qualified professional employee or agent of Tenant from which Tenant shall make, in reasonably sufficient itemized detail, the computation of Landlord’s Proportionate Share of the Reimbursable Operating Expenses due.

(d)    Tenant shall pay to the appropriate taxing authority, as and when due, any and all taxes due with respect to Tenant’s personal property in the Premises.

Section 3.4. Tenant’s failure to timely render any Tenant’s Statement with respect to any Tax Year or Operating Year shall not prejudice its right thereafter to render a Tenant’s Statement with respect thereto or with respect to any subsequent Tax Year or Operating Year, as the case may be.

Section 3.5. Any Tenant’s Statement sent to Landlord shall be conclusively binding upon Landlord unless, within ninety (90) days after such Tenant’s Statement is sent, Landlord shall send a written notice to Tenant objecting to such Tenant’s Statement and specifying, to the extent reasonably practicable, the respects in which such Tenant’s Statement is disputed. If Landlord shall send such notice with respect to a Tenant’s Statement, Landlord may select and pay an independent certified public accountant or a member of an independent firm which is engaged in the business of auditing lease escalation clauses (an “Approved Examiner”) provided that such Approved Examiner is not and has not during the Term been affiliated with, a shareholder in, an officer, director, partner, or employee of, Landlord, and such Approved Examiner may, during normal Operating Hours and upon reasonable advance written notice to Tenant, examine Tenant’s books and records relating to the Reimbursable Operating Expenses and Reimbursable Taxes to determine the accuracy of Tenant’s Statement. Landlord recognizes the confidential nature of Tenant’s books and records, and agrees that any information obtained by an Approved Examiner during any examination shall be maintained in strict confidence by such Approved Examiner, without revealing same to any Person except Landlord and/or those advisors of Landlord who also agree to keep such information confidential. If, after such examination, such Approved Examiner shall dispute such Tenant’s Statement, either party may refer the decision of the issues raised to a reputable independent firm of certified public accountants, selected by Tenant (provided that such independent firm is not and has not during the Term been affiliated with, a shareholder in, an officer, director, partner, or employee of, Tenant), and

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approved by Landlord, which approval shall not be unreasonably withheld or delayed, and the decision of such accountants shall be conclusively binding upon the parties. The fees and expenses involved in resolving such dispute shall be borne by Landlord, unless the final determination is that Tenant’s Statement overstated Reimbursable Operating Expenses and/or Reimbursable Taxes by more than five percent (5%), in which case Tenant shall pay the reasonable fees and expenses involved in resolving the dispute including, without limitation, the costs and expenses of Landlord's Approved Examiner and of the independent firm of certified public accountants selected by Tenant. Notwithstanding the giving of such notice by Landlord, and pending the resolution of any such dispute, Landlord shall pay to Tenant when due the amount shown on any such Tenant’s Statement, as provided in this Article III. Landlord shall pay the amount of any underpayment to Tenant and Tenant shall refund the amount of any overpayment to Landlord, within thirty (30) days after resolution of such dispute.

Section 3.6. Landlord shall be responsible for (a) the maintenance, repair and replacement of the front gate and access driveway located on the Access Parcel (as defined hereinafter) which are both located on the Adjacent Property and (b) the entrance landscaping, irrigation, lighting, seasonal decorations and tree care, each situated on and around the access drive located on the Adjacent Property to the same standard and care as required of Tenant (as to other items) under Section 6.1 hereunder. Following each Operating Year, Landlord shall deliver to Tenant a statement containing a summary of the costs and expenses incurred by Landlord in connection therewith within thirty (30) days following each Operating Year; and fifty percent (50%) of such costs and expenses shall be payable by Tenant to Landlord within ten (10) days after receipt of such statement.

Section 3.7 Landlord shall allow Tenant (and cooperate with Tenant) to place all necessary items for the care, use and maintenance of the Premises and Real Property in Tenant's name and under Tenant's control pursuant to the terms of this Lease, including, without limitation, Tenant placing the utilities servicing the Premises and Real Property in Tenant's name. In addition, Landlord will reasonably cooperate with Tenant with respect to Tenant's participation in any utility or other incentive program related to the Premises and/or Real Property, including, without limitation, any grant or utility cost discount programs offered by Memphis Light Gas and Water and/or the Tennessee Valley Authority (the "Utility Discount Programs").

ARTICLE IV

USE AND OCCUPANCY

Section 4.1. Tenant shall use and occupy the Premises for the Permitted Use and for no other purpose without the prior written consent of Landlord, which may be withheld or conditioned in Landlord’s sole, but reasonable, discretion. Tenant and Tenant’s use of the Premises shall comply in all respects with the Restrictive Covenants; however, the Landlord shall not take any action during the Term of this Lease to effect any change to the Restrictive Covenants without prior written notice to Tenant, and such change shall not materially interfere with Tenant’s use and occupancy of the Premises; and Tenant shall indemnify Landlord against any loss, cost or damage (including costs of defense and reasonable attorneys’ fees) arising as a result of the failure of the Tenant or Tenant’s use of the Premises to so comply. The Permitted Use hereunder shall also include the following uses and activities:

(i) Perform simulated use testing of “Products” (e.g. medical devices, medical products, medical implants, biologic implants, biologic products, and related or similar products) and materials to determine the physical, chemical and mechanical properties of samples. Product samples for such simulated-use testing may be fabricated or assembled in the lab. Lab tests conducted on-site may include the use of mechanical test machines for fatigue testing, tensile testing, and similar tests. During these tests, Products are mechanically broken, damaged and/or crushed in these machines. Mechanical testing may also include use of slaughterhouse products (including, among other things, pork shoulder and bovine femur) and human cadaver tissues in simulated use scenarios.

(ii) The simulated product testing requires the use of hydraulic oil, including the disposal of used oil.

(iii) Perform metallography and material analysis of Products received from suppliers and other specimen parts. Perform specimen preparation of product parts, including metal, ceramic and polymer materials,

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for laboratory usage. These procedures will include grinding, wet polishing and etching metal parts. These procedures may also include the use of hydrofluoric acid, nitric acid and hydrochloric acid. A byproduct of these tests is particulate that will enter into the drainage system.

(iv) Perform benchtop tests, such as FTIR (Fourier transform infrared spectroscopy), x-ray diffraction (State of Tennessee certified radiation), DSC (differential scanning calorimetry), light microscopy, dissolution, set-time, curing temperature, particle size, surface area and scanning electron microscopy to analyze sample materials using, among other techniques, image analysis and chemical identification. Liquid nitrogen and carbon tetrachloride are used in some of these analyses.

(v) Perform testing on joint replacement Products to analyze the friction, lubrication and wear of the joints. To simulate human bodily fluids, the tests are performed using a bovine serum. The chemical sodium azide is used as a preservative in these tests.

(vi) Perform general cell culture. Materials used in the cell culture process include, among other things, bovine serum, osteosarcoma cells, rat marrow cells, antibiotics, human stem cells, mouse derived fibroblasts (cells of connective tissue), carbon dioxide, buffer solutions, culture media, protolytic enzyme inhibitors and DMSO (dimethyl sulfoxide).

(vii) Perform analysis of Products that are retrieved from the field after active usage. This will include preparation such as cutting, and any variety of the various tests and procedures discussed above. In order to perform the analysis, the product retrieved from the field may be delivered to the facility along with human bone and tissue. Permanent (e.g. metal or polymer) implant specimens received by the facility will be sterilized before delivery. Biological implant specimens are typically received non-sterile and fixed in formalin.

(viii) Perform analysis for the FDA, product release and quality control. This will include any variety of the various tests and procedures discussed above.

(ix) Perform analysis on competitive Products. This will include any variety of the various tests and procedures discussed above.

(x) Utilize and store the following gases in compressed states (i) nitrogen, (ii) argon, (iii) oxygen, and (iv) carbon dioxide.

(xii) Perform product demonstrations and education for surgeons, sales representatives and new employees of Wright Medical Technology, Inc. with sawbones (synthetic material which mimics the human body) and human cadavers being utilized.

(xiii) Utilize rapid prototype development machines, or similar processes and/or procedures, to create various Products at the facility for research and analysis. The use of small scale saw mills and lathes will be used in the creation of parts and Products for research and in other non-saleable goods (i.e., test procedures only). Other materials used in product formulation activities may include, but are not limited to, calcium sulfate, calcium phosphate, polymer powders, glycolic acid, bone marrow aspirate, processed (non-fixed) human bone, porcine and bovine bone, tissue and tendon, and ethanol. No Products produced in the laboratory will be used for commercial sales purposes.

(xiv) Park mobile labs on the Land (in such areas designated in or agreed upon pursuant to Section 4.2) for use in product demonstration and education which may include any of the uses and activities described above (“Mobile Labs”).

(xv) And all other current and future procedures and processes related to the research and development of medical devices, medical products, medical implants, biologic implants, biologic products, and related or similar products.

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Notwithstanding the foregoing, (a) Tenant’s use and occupancy of the Premises shall at all times be in compliance with the Requirements, including without limitation all rules and regulations of the FDA, and (b) the Premises shall not be used for any purpose that would violate the certificate of occupancy of the Buildings, create unreasonable or excessive elevator, parking or floor loads, or loud noises, excessive vibrations or offensive odors; materially impair or interfere with any of the Buildings’ operations; materially interfere with the use of the other areas of Building 2 by any other tenants; or materially impair the appearance of the Buildings.

Section 4.2. As long as Tenant continues to lease all of Building 1 and, at a minimum, the entire first floor of Building 2, Landlord shall keep and provide seventy-five percent (75%) of the existing parking spaces located upon the Real Property for Tenant’s use (or an incremental proportionate share of the total parking spaces located upon the Real Property if Tenant exercises the Expansion Option). Notwithstanding the foregoing or any other provision in this Lease, during the first three (3) years of the Term, Landlord shall keep and provide one hundred percent (100%) of the existing parking spaces located on the Real Property for Tenant's use. Such parking shall include the exclusive use of the two-story parking deck immediately west of Building 1, and shall also include surface parking in areas and parking within the garage beneath Building 2 designated from time to time by Landlord (subject to Tenant's Reserved Parking Spaces, as defined below).Parking within the garage beneath Building 2 as well as the surrounding surface parking spaces of Building 2 shall be allocated on a pro rata basis to be shared by Tenant with other tenant(s) of Building 2, if any. In no event shall Tenant be permitted to use any parking spaces located on the Adjacent Property. Tenant also may park and operate its Mobile Labs in the areas designated and as shown on Exhibit “I” attached hereto, or in other locations mutually agreeable to Landlord and Tenant. Further, Tenant may, in Tenant's reasonable discretion, and at Tenant's sole cost, reconfigure the surface parking area and/or the Premises to provide adequate space for the ingress, egress, and parking of the Mobile Labs; provided, however, that any loss of parking spaces in connection therewith shall be deducted from Tenant’s share of parking spaces hereunder in the event that there is another tenant(s) in Building 2. With respect to any and all parking spaces designated by Landlord for the use of the Tenant, the Tenant shall have guaranteed, exclusive use of such spaces during Operating Hours. If Landlord is unable to provide such use, the Tenant shall have the right, in addition to any other rights under this Lease or otherwise, at Landlord's expense, to tow any impediments, including, but not limited to vehicles and equipment. Landlord shall not allow any third-parties to use any of the parking spaces designated for use by Tenant hereunder for any reason during Operating Hours, unless approved in the sole discretion of the Tenant. With respect to all of the parking spaces specifically designated to the Tenant in the garage beneath Building 2, Tenant shall have guaranteed, exclusive use of such spaces at all times during the Term of this Lease. Tenant shall be allowed ten (10) reserved and marked parking spaces in the garage beneath Building 2 as shown on Exhibit “G” hereto for Tenant's exclusive use (the "Tenant's Reserved Parking Spaces") at all times, and the installation and maintenance of any signage indicating Tenant’s Reserved Parking Spaces shall be at Tenant’s sole discretion, cost and expense.

Notwithstanding anything in this Section 4.2 or the Lease to the contrary and in addition to Landlord's obligations under this Section 4.2, Tenant shall control all access and use of the parking lot, parking spaces (both surface spaces and spaces located within the two-story parking deck immediately west of Building 1 and the garage beneath Building 2), drives/road and Common Areas located on the Real Property; provided, however, that Tenant agrees to provide for and permit the reasonable use of such parking lot, parking spaces, drives/road and Common Areas located on the Real Property to other tenants of Building 2 (if any) with the use of parking spaces by other tenants of Building 2 based upon the percentage of the Buildings occupied by specific tenants of Building 2.

Section 4.3. The Real Property and Adjacent Property are encumbered by certain agreements related to the upkeep and maintenance of the Real Property, Adjacent Property and a portion of the Adjacent Property described in Exhibit “J” attached hereto (the “Access Parcel”) with such agreements being identified by name, date and Register’s Office recording number as follows: (i) Access Easement Agreement dated as of September 18, 2003 recorded at 03196359 in the Register Office (“Access Easement”), (ii) Utility and Drainage Easement Agreement dated as of September 18, 2003 recorded at 03196360 in the Register’s Office (“Utility Easement”) and (iii) Revocable License Agreement dated as of September 18, 2003 recorded at 03196361 in the Register’s Office (“License Agreement”) (the Access Easement, Utility Easement and License Agreement are collectively referred to as the “Shared Use Documents”).

In order to provide Tenant with suitable access from Cherry Road to the Real Property and the use of certain drainage and utility easements and license rights benefitting the Real Property, Landlord hereby grants Tenant the right to use

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and enjoy, during the Term of this Lease (including any renewal terms under the Renewal Option under Section 2.7 of this Lease or otherwise) and to the full extent allowed and exercisable by Landlord thereunder, all of Landlord's rights, easements, uses and licenses (including, without limitation, access, maintenance and self-help rights right thereunder) contained in the Shared Use Documents with such granting of rights under the Shared Use Documents being irrevocable by Landlord, its successor and/or assigns (or any party succeeding to Landlord's rights under this Lease in any manner) during the Term of this Lease (including any renewal terms under the Renewal Option under Section 2.7 of this Lease or otherwise). In addition, Landlord and Tenant agree that (i) the rights granted to Tenant and obligations of Landlord under this Section 4.3 shall be clearly referenced (including by Register's Office recording numbers) in the Memorandum of Lease to be recorded pursuant to Section 34.1 of this Lease and such Memorandum of Lease shall also include an identification of both the Real Property and Adjacent Property, (ii) the Shared Use Documents shall not be amended, modified, cancelled, revoked or otherwise altered in any way during the Term of this Lease (including any renewal terms under the Renewal Option under Section 2.7 of this Lease or otherwise) without the written consent of Tenant, (iii) Landlord shall, at all times during the Term of this Lease (including any renewal terms under the Renewal Option under Section 2.7 of this Lease or otherwise), fully comply with all obligations and requirements of the fee owner of the Real Property under the Shared Use Documents irrespective of whether Landlord retains fee ownership in the Real Property or if fee ownership is transferred to the Lessor (EDGE Board) and Landlord retains a leasehold interest in the Real Property, (iv) if Landlord fails to comply with its obligations under the Shared Use Documents, or is otherwise in default thereunder, Tenant shall, in addition to all other remedies available at law or in equity, have the right to perform such obligations or cure such default on behalf of Landlord and be reimbursed by Landlord upon demand for the actual costs thereof together with interest at the Base Rate, (v) Landlord shall exercise its rights under the Shared Use Documents in such a manner so as not to unreasonably interfere with, obstruct or delay the conduct and operations of the business of Tenant at any time conducted on the Real Property, including, without limitation, access to and from the Real Property and Premises (Tenant shall have a right of access over, under, in and across the Access Parcel with such right of access being non-exclusive and shall be for the purposes of passage by Tenant and its agents, contractors, employees, licensees and invitees to have egress, ingress and access over and across the Access Parcel and for any other rights contained in the Shared Use Documents) and (vi) both Landlord and Tenant agree that all actions taken under the Shared Use Documents shall be lawful and in conformance with all Requirements.

In the event of a violation or threat thereof of any of the provisions of this Section 4.3, Landlord agrees that such violation or threat thereof shall cause the Tenant to suffer irreparable harm and Tenant shall have no adequate remedy at law. As a result, in the event of a violation or threat thereof of any of the provisions of this Section 4.3, Tenant, in addition to all remedies available at law or otherwise under this Lease, shall be entitled to injunctive or other equitable relief to enjoin a violation or threat thereof of Section 4.3 of this Lease.

In the event that there is a conflict between any of the Shared Use Documents and this Lease, the terms of this Lease shall control.

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ARTICLE V

INITIAL CONSTRUCTION AND ALTERATIONS

Section 5.1. Landlord and Tenant agree that the construction of Tenant’s Work, as defined in the Work Letter Agreement attached hereto as Exhibit “H” and incorporated herein (the “Work Letter Agreement”), shall be performed in accordance with the terms and conditions of the Work Letter Agreement. TENANT HEREBY ACCEPTS THE PREMISES “AS IS, WHERE IS,” AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, EXCEPT AS OTHERWISE SET FORTH IN THIS LEASE.

Section 5.2.  (a)    Except as otherwise set out in Section 5.2(f) hereof and except for the improvements, construction and alternations made by Tenant pursuant to the terms and conditions of the Work Letter Agreement, Tenant shall not make or permit to be made any Alterations without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Reference is made to Exhibit “F” hereto, which contains the “Tenant Design and Construction Standards” applicable to the Buildings, which is incorporated by reference in this Lease. Landlord reserves the right to make reasonable changes and additions thereto.

(b)    (1)     Prior to making any Alterations, Tenant shall (i) submit to Landlord two (2) sets of detailed plans and specifications (including layout, architectural, electrical, mechanical and structural drawings) that comply with all Requirements for each proposed Alteration, and Tenant shall not commence any such Alterations without first obtaining Landlord’s prior written approval of such plans and specifications; (ii), at Tenant’s expense, obtain all permits, approvals and certificates required by any Governmental Authorities; and (iii) furnish to Landlord duplicate original policies or certificates thereof of worker’s compensation insurance (covering all persons to be employed by Tenant and/or Tenant’s contractors and subcontractors in connection with such Alterations) and commercial general liability insurance (including premises operation, bodily injury, personal injury, death, independent contractors, products and completed operations, broad form contractual liability and broad form property damage coverages) in such form, with such companies, for such periods and in such amounts as Landlord may reasonably approve, naming Landlord and its agents, any Lessor and any Mortgagee, as additional insureds. Upon completion of such Alterations, Tenant, at Tenant’s expense, shall obtain certificates of final approval of such Alterations required by any Governmental Authority and shall furnish Landlord with copies thereof, together with the “as built” plans and specifications for such Alterations. All Alterations shall be made and performed in accordance with the plans and specifications therefor as approved by Landlord, all Requirements, Restrictive Covenants and the Rules and Regulations. All materials and equipment to be incorporated in the Premises as a result of any Alterations shall be first quality and no such materials or equipment shall be subject to any lien, encumbrance, chattel mortgage, title retention or security agreement. In addition, any such Alterations for which the cost of labor and materials (as estimated by Landlord’s architect, engineer or contractor) is in excess of Seventy-Five Thousand Dollars ($75,000.00), either individually or in the aggregate with any other Alterations constructed in any twelve (12) month period, shall be performed only under the supervision of a licensed architect reasonably satisfactory to Landlord.

(2)     Landlord reserves the right to disapprove any plans and specifications in whole or in part, to reserve approval of items shown thereon pending its review and approval of other plans and specifications, and to condition its approval upon Tenant making revisions to the plans and specifications or supplying additional information; provided, however, that Landlord shall be reasonable in its exercise of these rights. In the event Landlord fails to respond to Tenant’s plans and specifications within five (5) Business Days of Landlord’s receipt thereof, Landlord shall be deemed to have approved Tenant’s plans and specifications. Tenant agrees that any reviews or approvals by Landlord of any plans and/or specifications with respect to any Alterations are solely for Landlord’s benefit, and without any representation or warranty whatsoever to Tenant or any other Person with respect to the adequacy, correctness or sufficiency thereof or with respect to whether such plans and/or specifications meet or comply with any Requirements or Restrictive Covenants applicable thereto.

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(c)    Alterations shall be performed at Tenant’s expense and at such times and in such manner as Landlord may from time to time reasonably designate, unless, at the time of the Alterations, Tenant is the only occupant of the Buildings, in which event, Tenant may control the times and manner (but always in accordance with all Requirements, Rules and Regulations, and Restrictive Covenants) to perform the Alterations. All Alterations shall become a part of the Buildings and shall be Landlord’s property from and after the installation thereof and may not be removed or changed without Landlord’s prior written consent. Notwithstanding the foregoing, however, Landlord, upon notice provided to the Tenant at or before the time of Landlord's approval of the plans as specified in Section 5.2(b)(1)(i) hereof, may require Tenant to remove any specified Alterations (other than Tenant’s Work as such is contemplated in the original Work Letter Agreement) and to repair and restore in a good and workmanlike manner to Building Standard Condition (reasonable wear and tear excepted) any damage to the Premises or the Buildings caused by such removal. All Tenant’s Property shall remain the property of Tenant and, unless Landlord and Tenant shall agree otherwise, on or before the Expiration Date, Tenant's Property shall, at Tenant’s cost, be removed from the Premises by Tenant, and Tenant shall repair and restore in a good and workmanlike manner to Building Standard Condition (reasonable wear and tear excepted) any damage to the Premises or the Buildings caused by such removal. The provisions of this Section 5.2(c) shall survive the expiration or earlier termination of this Lease.

(d)    All Alterations shall be performed, at Tenant’s sole cost and expense, by contractors, subcontractors or mechanics approved by Landlord in Landlord’s reasonable discretion.

(e)    (1)     Any mechanic’s lien filed against the Premises or the Real Property for work claimed to have been done for, or materials claimed to have been furnished to, Tenant shall be canceled or discharged, or a bond may be filed, by or for Tenant, at Tenant’s expense, within thirty (30) days after such lien shall be filed, by payment or filing of the bond required by law, and Tenant shall indemnify, defend and hold Landlord harmless from and against any and all costs, expenses, claims, losses or damages resulting therefrom by reason thereof.

(2)     If Tenant shall fail to discharge such mechanic’s lien [as stated in Section 5.2(e)(1) above] within the aforesaid period, then, in addition to any other right or remedy of Landlord, Landlord may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit in court or bonding, and in any such event, Landlord shall be entitled, if Landlord so elects, to compel the prosecution of an action for the foreclosure of such mechanic’s lien by the lienor and to pay the amount of the judgment, if any, in favor of the lienor, with interest, costs and allowances.

(3)     Any amount paid by Landlord for any of the aforesaid charges and for all reasonable expenses of Landlord (including, but not limited to, reasonable attorneys’ fees and expenses) incurred in defending any such action, discharging said lien or in procuring the discharge of said lien, with interest on all such amounts at the Applicable Rate from the date of payment, shall be repaid by Tenant within thirty (30) days after written demand therefor, and all amounts so repayable, together with such interest, shall be considered Additional Rent.

(f)    Notwithstanding anything to the contrary set forth in this Article V, Tenant, without Landlord’s consent, is permitted to make Alterations to the Premises which relate only to the cosmetic appearance, nonstructural components, and/or non-load-bearing portions of the Premises (and which do not affect the structural and/or load-bearing elements of the Building), provided such Alterations do not exceed, in the aggregate, more than Two Hundred and Fifty Thousand Dollars ($250,000.00) during any twelve (12) month period during the Term.

Section 5.3. Any plans for Alterations shall be prepared at Tenant’s sole cost and expense, and Landlord shall not charge Tenant a fee or charge (regardless of the form) for Landlord’s (and/or Landlord’s agents’) review of any plans.

Section 5.4. Landlord, upon the request of Tenant, shall join in any applications for any permits, approvals or certificates required to be obtained by Tenant in connection with any permitted Alterations (provided that the provisions of the applicable Requirements shall require that Landlord join in such application or Landlord's joinder is

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otherwise required) and shall otherwise cooperate with Tenant in connection therewith, provided that Landlord shall not be obligated to incur any cost or expense or liability in connection therewith and shall be reimbursed by Tenant for any and all reasonable expenses incurred by Landlord in connection therewith (including reasonable attorneys’ fees and disbursements).

Section 5.5. Upon Landlord's written request, Tenant shall furnish to Landlord copies of records of all Alterations and of the cost thereof within sixty (60) days after the completion of such Alterations.

Section 5.6. During the course of any Alterations and any construction by Tenant or Landlord, whether on the Land or on any real property adjacent to the Land, Landlord and Tenant shall cooperate with each other, and shall cause their contractors and subcontractors to cooperate, so as to minimize interruption and interference with each other’s construction activities.

Section 5.7 Tenant shall have the right to install additional generators ("Tenant's Generators") in the areas on the Real Property as shown in Exhibit M hereto and in other locations designated by Tenant with such other locations being subject to Landlord’s approval, which shall not be unreasonably withheld, conditioned or delayed. Tenant's Generators shall at all times be the property of the Tenant and may be removed by the Tenant at any time in Tenant's sole discretion; provided, however, that such removal shall be done in a workmanlike manner and shall not materially disturb the Building Systems, the Real Property the Adjacent Property or any other tenant(s) of Building 2.

Section 5.8 Subject to Landlord consent, which shall not be unreasonably withheld, conditioned or delayed, Tenant shall have the right to cause any number of mobile telephone companies to install equipment and/or wiring necessary for the use and functionality of mobile phones and other electronic devices and/or equipment as required by Tenant throughout the Premises.

Section 5.9. Reserved.

Section 5.10. To the extent such warranties are still in effect and valid and to the extent such transfers and/or assignments are permissible, Tenant hereby transfers and assigns to Landlord (without any representation as to validity of the underlying warranties or the ability to transfer or assign the same) (i) any and all of its rights in all warranties given by Tenant’s contractors and subcontractors in connection with the Work Letter Agreement effective as of the end of the Term and (ii) any such warranties given in connection with any other Alterations in the future effective as of the end of the Term.

Section 5.11. Notwithstanding anything in this Lease to the contrary, Tenant may, at all times, make, without any Landord consent or approval, all alterations, improvements, repairs, replacements, upgrades and similar activities to the Security System as deemed necessary or desirable by Tenant located anywhere on or within the Premises and the Real Property.

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ARTICLE VI

REPAIRS

Section 6.1. Tenant covenants to use due care in its use and occupancy of the Premises. At Tenant’s sole cost and expense, Tenant shall maintain the Buildings in a Class A manner and shall operate, maintain and make all necessary repairs and replacements (both structural and non-structural) to the Real Property, including without limitation to the Buildings, Building Systems, Non-Standard Building Installations, Premises and the Common Area, both exterior and interior, in conformance with standards applicable to Class A office buildings in Memphis, Tennessee, except for those repairs or replacements which are necessary as a result of the negligent or willful acts or omissions of Landlord or for which Landlord is responsible pursuant to any other provision of this Lease, including without limitation Section 6.3. All maintenance and repairs and replacements shall be performed by Tenant in a manner and with materials and design of first class and quality consistent with first-class office buildings in Memphis, Tennessee, and shall be made in accordance with the provisions of Article V, and Tenant shall use its commercially reasonable efforts to minimize interference with any other tenant’s use and occupancy of their premises in making any and all necessary or reasonable repairs, alterations, additions, improvements or replacements hereunder. If Tenant shall fail, after thirty (30) days’ notice (or such shorter period as may be required because of an emergency), to proceed with due diligence to make any repairs or replacements required to be made hereunder, the same may be made by Landlord, at the expense of Tenant, and the actual, documented expenses thereof incurred by Landlord, with interest thereon at the Applicable Rate, shall be paid to Landlord, as Additional Rent, within thirty (30) days after rendition of a bill or statement therefor. For the avoidance of doubt, Tenant’s obligations hereunder shall apply to the entirety of the Real Property, regardless of whether or not there may be other tenants occupying portions of Building 2; provided, however, that Landlord shall always be responsible for payment of any reimburseable expenses or charges due to Tenant by Landlord under Article III of this Lease or otherwise based upon Landlord's Proportionate Share and Tenant shall not look to other occupants of the Buildings or Real Property for any such payments (it being understood that Landlord is primarily liable for all such amounts).

Notwithstanding anything in this Section 6.1 to the contrary, in the event that there is another tenant or tenants occupying portions of Building 2, Tenant shall not be responsible for any repair and maintenance obligations, and Landlord shall be responsible for the entire maintenance, management and cost thereof, in connection with the following items with respect to such other tenant(s) space: (1) housekeeping; (2) IT systems; (3) plumbing and plumbing fixtures; (4) lighting and electrical; (5) VAV boxes and filters; (6) interior finishes; and (7) any elevator servicing the Second Entrance (collectively, “Excluded Operating Expenses”). Notwithstanding anything in this Lease to the contrary, Landlord and its agents shall have the right to access the Real Property for the purposes of repair and maintenance of items comprising Excluded Operating Expenses in connection with such other tenant(s)’ space.

Section 6.2. Tenant shall not locate or move any safe, heavy machinery or heavy equipment into or out of the Buildings (except to the extent required by Tenant's Work under the Work Letter Agreement or an Alteration under this Lease) without Landlord’s prior consent and supervision, which consent and supervision shall not be unreasonably with-held, conditioned or delayed. All work in connection therewith shall be done at Tenant’s cost and shall comply with the Requirements, and shall be done during such hours as Landlord may reasonable designate. Business machines and mechanical equipment shall be placed and maintained by Tenant, at Tenant’s expense, in settings sufficient, in Landlord’s reasonable judgment, to absorb and prevent vibration, noise and annoyance.

Section 6.3. (a) Landlord shall only be responsible for the maintenance, repair and replacement of the roofs of the Buildings at such time as recommended by a qualified roofing contractor with Landlord using commercially reasonable efforts to minimize interference with Tenant’s use and occupancy of the Premises and Real Property in making any and all such necessary or reasonable repairs or replacements.

(b) Notwithstanding Section 6.3(a) or any other provision of this Lease, Landlord agrees to reimburse Tenant for any Major Mechanical Replacement to the extent that the costs and expenses for parts and labor in connection with any single such replacement occurrence exceeds $50,000 (a "Major Mechanical Reimbursement Event"), and only for those costs and expenses in excess of $50,000. Such reimbursement obligations of Landlord shall be on the following terms:

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(i) Landlord shall not be obligated to reimburse Tenant for maintenance costs and expenses made by Tenant in the ordinary course of operating any Major Mechanical;

(ii) There are no limits to the number of Major Mechanical Reimbursement Events that may occur during the Term of this Lease or during any other time period under this Lease (for example, per year);

(iii) There is no monetary cap or cumulative maximum amount to be paid under this Lease by Landlord for any and all Major Mechanical Reimbursement Events;

(iv) The need for repairs and/or replacements to any Major Mechanical shall be determined by Tenant in its discretion as operator of the Major Mechanicals; provided, however, that replacement of a Major Mechanical will be considered a “Major Mechanical Replacement” only if the conditions in the definition of “Major Mechanical Replacement” are satisfied in all respects;

(v) Within fifteen (15) days following the completion of a Major Mechanical Replacement, Tenant will invoice Landlord for the amount payable by Landlord, and Landlord will pay such amount in full within fifteen (15) days after receipt. If Landlord fails to pay such amount to Tenant within such fifteen (15) day period, then Tenant may set off such amounts against any payments due to Landlord from Tenant under this Lease, including, without limitation, Rental, and Tenant may continue such set off until the full amounts owed to Tenant by Landlord for unpaid Major Mechanical Replacements have been paid in full. The set off rights in this Section 6.3(b)(v) are specially agreed to between Landlord and Tenant notwithstanding any other provision in this Lease to the contrary; and

(vi) Landlord acknowledges and agrees that Tenant's acceptance of the Premises in an "as is, where is" state does not negate Landlord's obligations of reimbursement under this Section 6.3(b), and Landlord's obligation for reimbursement under this Section 6.3(b) applies at all times during the Term of this Lease (including any renewal terms under Section 2.7 hereunder) to all Major Mechanicals regardless of their condition upon the Commencement Date of this Lease.

Section 6.4. Without abatement or diminution in Rental, Landlord reserves and shall have the following additional rights (but not obligations):

(a)As to any portion of Building 2 not occupied by Tenant and commencing upon the 3rd year of the Term hereunder, to erect, use and maintain pipes and conduits in and through Building 2 and/or the Land as necessary or desirable for the operation thereof; provided that all such conduits and pipes shall be located behind then-existing walls, under floors or above suspended ceilings and shall not interfere with the use and operation of the Premises, or any equipment or facilities located therein; and

(b)To take any and all reasonable measures, including inspections, repairs, alterations, additions and improvements to the Premises or to the Buildings, as may be necessary or desirable for the safety, protection or preservation of the Premises or the Buildings.

ARTICLE VII

[RESERVED]

ARTICLE VIII

REQUIREMENTS OF LAW

Section 8.1. Tenant shall not do, and shall not permit Persons Within Tenant’s Control to do, any act or thing in or upon the Premises or the Buildings which will invalidate or be in conflict with the certificate of occupancy for the Premises or the Buildings or violate any Requirements or Restrictive Covenants. Tenant shall, at Tenant’s sole cost

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and expense, take all action, including making any required Alterations necessary to comply with all Requirements (including, but not limited to, applicable terms of the ADA) which shall impose any violation, order or duty upon Landlord or Tenant arising from, or in connection with, the Premises, Tenant’s occupancy, use or manner of use of the Premises (including, without limitation, any occupancy, use or manner of use that constitutes a “place of public accommodation” under the ADA) or any installations by Tenant in the Premises, or required by reason of a breach of any of Tenant’s covenants or agreements under this Lease, whether or not such Requirements shall now be in effect or hereafter enacted or issued, and whether or not any work required shall be ordinary or extraordinary or foreseen or unforeseen at the date hereof; provided, however, that Landlord shall be responsible for complying with such Requirement or Restrictive Covenant and for the cost of such compliance if and to the extent that non-compliance arose because of the acts or omissions of Landlord.

Section 8.2. Tenant covenants and agrees that Tenant shall, at Tenant’s sole cost and expense, comply at all times with all Requirements governing the use, generation, storage, treatment and/or disposal of any Hazardous Materials (as defined below), the presence of which results from or in connection with the act or omission of Tenant or Persons Within Tenant’s Control or the breach of this Lease by Tenant or Persons Within Tenant’s Control. The term “Hazardous Materials” shall mean any biologically or chemically active or other toxic or hazardous wastes, pollutants or substances, including, without limitation, asbestos, PCBs, petroleum products and by-products, substances defined or listed as “hazardous substances” or “toxic substances” or similarly identified in or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., and as hazardous wastes under the Resource Conservation and Recovery Act, 42 U.S.C. 6010, et seq., any chemical substance or mixture regulated under the Toxic Substance Control Act of 1976, as amended 15 U.S.C. 2601, et seq., any “toxic pollutant” under the Clean Water Act, 33 U.S.C. 466 et seq., as amended, any hazardous air pollutant under the Clean Air Act, 42 U.S.C. 7401 et seq., hazardous materials identified in or pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. 1802, et seq., and any hazardous or toxic substances or pollutant regulated as such under any other Requirements. Tenant shall indemnify, defend and hold harmless all Landlord Indemnitees from and against any loss, cost, damage, liability or expense (including reasonable attorneys’ fees and disbursements) arising by reason of any clean up, removal, remediation, detoxification action or any other activity required of any Landlord Indemnitees or Tenant Indemnities by any Governmental Authority by reason of the presence in or about the Building or the Premises of any Hazardous Materials, as a result of or in connection with the act or omission of Tenant or Persons Within Tenant’s Control or the breach of this Lease by Tenant or Persons Within Tenant’s Control. Landlord shall indemnify, defend and hold harmless all Tenant Indemnitees from and against any loss, cost, damage, liability or expense (including reasonable attorneys’ fees and disbursements) arising by reason of any clean up, removal, remediation, detoxification action or any other activity required of any Landlord Indemnitees or Tenant Indemnities by any Governmental Authority by reason of the presence in or about the Building or the Premises of any Hazardous Materials, as a result of or in connection with the act or omission of Landlord or Persons Within Landlord's Control or the breach of this Lease by Landlord or Persons Within Landlord's Control. The foregoing covenants and indemnity shall survive the expiration or any termination of this Lease.

Section 8.3. If Tenant shall receive notice of any violation of, or defaults under, any Requirements, liens or other encumbrances applicable to the Premises, Tenant shall give prompt notice thereof to Landlord.

Section 8.4. If any governmental license or permit shall be required for the proper and lawful conduct of Tenant’s business and if the failure to secure such license or permit would materially and negatively affect Landlord or the Buildings, then Tenant, at Tenant’s expense, shall promptly procure and thereafter maintain, submit for the reasonable inspection by Landlord, and at all times comply with the terms and conditions of, each such license or permit.

Section 8.5. Tenant, at Tenant’s sole cost and expense and after notice to Landlord, may contest, by appropriate proceedings prosecuted diligently and in good faith, the legality or applicability of any Requirement affecting the Premises provided that: (a) neither Landlord nor any Landlord Indemnitees shall be subject to criminal penalties, nor shall the Real Property or any part thereof be subject to being condemned or vacated, nor shall the certificate of occupancy for the Premises or the Buildings be suspended, by reason of noncompliance or by reason of such contest; (b) before the commencement of such contest, if Landlord or any Landlord Indemnitees may be subject to any civil fines or penalties or if Landlord may be liable to any independent third party as a result of such noncompliance, then Tenant

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shall furnish to Landlord either (i) a bond of a surety company satisfactory to Landlord, in form and substance reasonably satisfactory to Landlord, and in an amount at least equal to Landlord's reasonable estimate of the sum of (A) the cost of such compliance, (B) the penalties or fines that may accrue by reason of such noncompliance (as reasonably estimated by Landlord) and (C) the amount of such liability to independent third parties, and shall indemnify Landlord (and any Landlord Indemnitees) against the cost of such compliance and liability resulting from or incurred in connection with such contest or noncompliance; or (ii) other security reasonably satisfactory to Landlord; (c) such noncompliance or contest shall not constitute or result in a violation (either with the giving of notice or the passage of time or both) of the terms of any Mortgage, or if such Mortgage conditions such noncompliance or contest upon the taking of action or furnishing of security by Landlord, such action shall be taken or such security shall be furnished at the expense of Tenant; and (d) Tenant shall keep Landlord regularly advised as to the status of such proceedings.

ARTICLE IX

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT

Section 9.1. This Lease shall be subject and subordinate to each Mortgage placed upon the Real Property and any portion thereof by Landlord, whether made prior to or after the execution of this Lease, and to all renewals, extensions, supplements, amendments, modifications, consolidations and replacements thereof or thereto, substitutions there-for, and advances made thereunder. This clause shall be self-operative and no further agreement of subordination shall be required to make the interest of any Lessor or Mortgagee superior to the interest of Tenant hereunder. In confirmation of such subordination, however, Tenant shall promptly execute and deliver, at its own cost and expense, a document, in recordable and reasonable form if requested, that Landlord, any Lessor or any Mortgagee may reasonably request to evidence such subordination. Tenant shall not do anything, or permit anything under its reasonable control that would constitute a default under any Mortgage, or omit to do anything that Tenant is obligated to do under the terms of this Lease so as to cause Landlord to be in default thereunder. Notwithstanding the foregoing, before any foreclosure sale under a Mortgage, the Mortgagee shall have the right to subordinate the Mortgage to this Lease, and, in the event of a foreclosure, this Lease may continue in full force and effect and Tenant shall attorn to and recognize as its landlord the purchaser of Landlord's interest under this Lease. Tenant shall, upon the request of a Mortgagee or purchaser at foreclosure, execute, acknowledge and deliver an instrument in reasonable form that has for its purpose and effect of the subordination of the lien of any Mortgage to this Lease or Tenant's attornment to such purchaser.

Section 9.2. If, at any time prior to the expiration of the Term, any Mortgagee comes into possession of the Real Property or any portion thereof by receiver or otherwise, Tenant agrees, at the election and upon demand of any owner of the Real Property or any portion thereof, or of any Mortgagee in possession of the Real Property or any portion thereof, to attorn, from time to time, to any such owner or Mortgagee or any person acquiring the interest of Landlord as a result of any such termination, or as a result of a foreclosure of the Mortgage or the granting of a deed in lieu of foreclosure, upon the then-executory terms and conditions of this Lease (except as provided below), for the remainder of the Term, provided that such owner or Mortgagee, as the case may be, or receiver caused to be appointed by any of the foregoing, is then entitled to possession of the Premises. Any such attornment shall be made upon the condition that no such owner or Mortgagee shall be:

1.    liable for any act or omission of any prior landlord (including, without limitation, the then defaulting landlord); or

2.    subject to any defense or offsets (except as set forth in this Lease and/or the Work Letter Agreement) which Tenant may have against any prior landlord (including, without limitation, the then defaulting landlord); or

3.    bound by any payment of Rental which Tenant might have paid for more than the current month to any prior landlord (including, without limitation, the then defaulting landlord); or

4.    bound by any obligation to perform any work or to make improvements to the Premises except for (i) repairs and maintenance pursuant to the provisions of Article VI, (ii) repairs to the

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Premises or any part thereof as a result of damage by fire or other casualty pursuant to Article XII, but only to the extent that such repairs can be reasonably made from the net proceeds of any insurance actually made available to such owner or Mortgagee and (iii) repairs to the Premises as a result of a partial condemnation pursuant to Article XIII, but only to the extent that such repairs can be reasonably made from the net proceeds of any award made available to such owner or Mortgagee. The provisions of this Section 9.2 shall inure to the benefit of any such owner or Mortgagee, shall apply notwithstanding that, as a matter of law, this Lease may terminate, and shall be self-operative upon any such demand, and no further agreement shall be required to give effect to said provisions. Tenant, however, upon demand of any such owner or Mortgagee, shall execute, from time to time, agreements in confirmation of the foregoing provisions of this Section 9.2, reasonably satisfactory to any such owner, Lessor or Mortgagee, and acknowledging such attornment and setting forth the terms and conditions of its tenancy. Nothing contained in this Section 9.2 shall be construed to impair any right otherwise exercisable by any such owner or Mortgagee.

Section 9.3. Notwithstanding any provisions of Sections 9.1 & 9.2 hereof or any other provision of this Lease, Tenant and Landlord (and all Landlord's successor's and assigns) agree that, in the event any Mortgagee or any other person or entity (a “Successor Landlord”) becomes the owner of the Real Property (a) through foreclosure of a Mortgage, (b) by other proceeding to enforce a Mortgage, or (c) by deed-in-lieu of foreclosure of a Mortgage or the exercise of another right thereunder (individually and collectively, a “Foreclosure”), then, as long as Tenant is not in default in the payment or performance of its obligations under this Lease beyond any applicable notice and cure periods, Tenant’s possession of the Premises and all other rights granted Tenant under this Lease will not be disturbed and this Lease will continue in full force and effect between Successor Landlord and Tenant; provided, however, that if, notwithstanding the foregoing, this Lease is terminated as a result of a Foreclosure, a new replacement lease between Successor Landlord and Tenant will be deemed to be created, with no further instrument required, on the same terms as this Lease except that the term of the replacement lease will be the then unexpired Term of this Lease, and Successor Landlord and Tenant will execute a replacement lease at the request of either of them. In the event a Mortgagee exercises its rights under a Mortgage at any time while Tenant is not then in default under this Lease, Mortgagee agrees that it will not name Tenant as a party to any judicial or non-judicial proceeding to enforce the Mortgage or any right thereunder unless joinder is required under applicable law. As long as this Lease otherwise remains in force and effect, Tenant’s options to extend the Term of this Lease set forth in Section 2.7 of this Lease shall not be terminated, extinguished or in any way modified by a Foreclosure.

Section 9.4. At any time and from time to time upon not less than twenty (20) days’ prior notice to Tenant or Landlord given by the other, or to Tenant given by a Mortgagee, Tenant or Landlord, as the case may be, shall, without charge, execute, acknowledge and deliver a statement in writing addressed to such party as Tenant, Landlord or Mortgagee, as the case may be, may designate, in form reasonably satisfactory to Tenant, Landlord or Mortgagee, as the case may be, certifying all or any of the following: (i) that this Lease is unmodified and in full force and effect (or if there have been modifications, that this Lease is in full force and effect as modified and stating the modifications); (ii) whether the Term has commenced and Base Rent and Additional Rent have become payable hereunder and, if so, the dates to which they have been paid; (iii) whether or not, to the best knowledge of the signer of such certificate, either Landlord or Tenant is in default in performance of any of the terms of this Lease and, if so, specifying each such event of default of which the signer may have knowledge; (iv) whether Tenant has accepted possession of the Premises; (v) whether Tenant has made any claim against Landlord under this Lease and, if so, the nature thereof and the dollar amount, if any, of such claim; (vi) whether or not, to the best knowledge of the signer of such certificate, any Hazardous Materials exist in, on, under or about the Premises, the Buildings or the Land, and (vii) such further information with respect to the Lease or the Premises as Landlord or Tenant may reasonably request or Mortgagee may require; it being intended that any such statement delivered pursuant hereto may be relied upon by any prospective purchaser of the Real Property or any part thereof or of the interest of Landlord in any part thereof, by any Mortgagee or prospective Mortgagee, by any tenant or prospective tenant of the Real Property or any part thereof, by any prospective assignee of any Mortgage, or by any assignee of Tenant.

Section 9.5. As long as any Mortgage exists, Tenant shall not seek to terminate this Lease by reason of any act or omission of Landlord until Tenant has given written notice of such act or omission to all Mortgagees at such addresses as may have been furnished to Tenant in writing by such Mortgagees and, if any such Mortgagee notifies

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Tenant within thirty (30) days following receipt of such notice that it intends to remedy such act or omission, Mortgagee shall have a reasonable period of time to remedy such act or omission.

ARTICLE X

RULES AND REGULATIONS

Section 10.1. Tenant and Persons Within Tenant’s Control shall comply with Exhibit “C”, “Rules and Regulations”, along with any and all reasonable modifications of the same made by Landlord so long as such modifications do not materially impede Tenant's normal business operations, conflict with provisions of this Lease or interfere with Tenant's rights hereunder. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or the terms, covenants or conditions in any other lease against any other tenant, and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its employees, agents, visitors or licensees. In case of any conflict or inconsistency between the provisions of this Lease and of any of the Rules and Regulations as originally or as hereinafter adopted, the provisions of this Lease shall control.

ARTICLE XI

INSURANCE, PROPERTY LOSS OR DAMAGE, REIMBURSEMENT

Section 11.1.  (a)      Landlord and Landlord’s agents shall not be liable for any damage to any of Tenant’s Property or for interruption of Tenant’s business, however caused, including but not limited to damage caused by other tenants or persons upon the Real Property, except as to actual damages caused by Landlord or Persons Within Landlord's Control or resulting from a breach by Landlord of this Lease.  Notwithstanding the foregoing, under no circumstances whatsoever shall Landlord ever be liable to hereunder for any incidental, consequential or special damages.  Landlord shall not be liable for any latent defect in the Premises or the Buildings.

        (b)     Tenant shall give written notice to Landlord promptly after Tenant learns of any accident, emergency or occurrence for which Landlord might be liable, fire or other casualty, and all damages to or defects in the Premises or the Buildings for the repair of which Landlord might be responsible or which constitutes Landlord’s property. 

        Section 11.2.  Tenant shall not do or permit to be done any act or thing in or upon the Premises which will invalidate or be in conflict with the terms of the State of Tennessee standard policies of fire insurance and liability (hereinafter referred to as “Building Insurance”) or Requirements; and Tenant, at Tenant’s own expense, shall comply with all rules, orders, regulations and requirements of all insurance boards, and shall not do or permit anything to be done in or upon the Premises or bring or keep anything therein or use the Premises in a manner which increases the rate of premium for any Building Insurance over the rate in effect on the Commencement Date unless Tenant agrees to exclude 100% of such increase in premium from Reimbursable Operating Expenses.

        Section 11.3.  If by reason of any failure of Tenant to comply with the provisions of this Lease, the rate of premium for Building Insurance or other insurance on the property and equipment of Landlord shall increase, Tenant shall exclude 100% of any such increase in premium from Reimbursable Operating Expenses to the extent such expenses increased because of such failure by Tenant.  Tenant shall make said reimbursement on the first day of the month following such payment by Landlord.

        Section 11.4.  (a)      At Tenant’s own cost and expense, Tenant shall obtain, maintain and keep in full force and effect during the Term:

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i. commercial general liability insurance in a form approved in the State of Tennessee (including broad form property damage coverages), with limits of liability not less than Ten Million Dollars ($10,000,000.00) per occurrence, which amount may be satisfied with a primary commercial general liability policy of not less than One Million Dollars ($1,000,000.00) and an excess or “umbrella” liability policy affording coverage, at least as broad as that afforded by the primary commercial general liability policy, in an amount not less than Five Million Dollars ($5,000,000.00), provided, however, that both policies together shall constitute the minimum $10,000,000 coverage per occurrence;

i. “all risk” full replacement cost property insurance on the Buildings in amounts not less than $12,000,000 for Building 1 and $10,000,000 for Building 2, which shall include (A) earthquake and flood coverage and (B), as and to the extent customarily included by prudent owners of comparable first class office buildings in Memphis, Tennessee, boiler and machinery and electrical apparatus coverage;

i. business interruption insurance in amounts not less than six months’ Base Rent; and

i. “all risk” full replacement cost property insurance covering all Alterations, leasehold improvements and Tenant’s Property in an amount reasonably satisfactory to Landlord. 

Landlord, any Lessors and any Mortgagees shall be included as additional insureds on the commercial general liability policy described in Section 11.4(a)(i). Landlord shall be the loss payee for the above-mentioned address on the property insurance policy described in Section 11.4(a)(ii).  All said policies of insurance shall be written as “occurrence” policies and non-catastrophic deductibles thereunder shall exceed $25,000.  Whenever, in Landlord’s reasonable judgment, good business practice and changing conditions indicate a need for additional amounts or different types of insurance coverage, Tenant shall, within ten (10) days after Landlord’s request, obtain such insurance coverage, at Tenant’s expense.

                (b)     All policies of insurance shall: (i), to the extent applicable, be written as primary policy coverage and not contributing with or in excess of any coverage which Landlord or any Lessor may carry; (ii) provide that the insurance company waives all rights of recovery by way of subrogation against Landlord, Tenant and any tenant of space upon the Real Property in connection with any loss or damage covered by any such policy; and (iii) issued by reputable and independent insurance companies rated in Best’s Insurance Guide or any successor thereto (or, if there is none, an organization having a national reputation), as having a general policyholder rating of “A” and a financial rating of at least “VII”, and which are licensed to do business in the State of Tennessee.  Tenant shall, not later than ten (10) days following the Commencement Date, deliver to Landlord (A) the policies of insurance (provided, however, if Tenant is unable to deliver within 10 days following the Commencement Date, then not later than 45 days thereafter) and (B) certificates thereof and shall thereafter furnish to Landlord, as soon as practicable prior to the expiration of any such policies and any renewal thereof, a new policy and certificate.  Each of said policies shall also contain a provision whereby the insurer provides notice of cancellation in accordance with the policy provisions. Tenant shall promptly send to Landlord a copy of all notices sent to Tenant by Tenant’s insurer.

        (c)     Tenant shall pay all premiums and charges for all of said policies, and, if Tenant shall fail to make any payment when due or carry any such policy, Landlord may, but shall not be obligated to, make such payment or carry such policy, and the amount paid by Landlord, with interest thereon (at the Applicable Rate), shall be repaid to Landlord by Tenant on demand, and all such amounts so repayable, together with such interest, shall be deemed to constitute Additional Rent hereunder.  Payment by Landlord of any such premium, or the carrying by Landlord of any such policy, shall not be deemed to waive or release the default of Tenant with respect thereto.

       Section 11.5 Tenant agrees to include, consult with and cooperate with Landlord on the administration of any claim with Tenant’s carriers hereunder.

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ARTICLE XII

DESTRUCTION BY FIRE OR OTHER CAUSE

Section 12.1.  If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord.  Landlord shall, as loss payee under the property insurance policy described in Section 11.4(a)(ii) and subject to the provisions of Sections 12.2 and 12.3 below, proceed with reasonable diligence within one hundred twenty (120) days of the casualty to repair or cause to be repaired such damage to the extent covered by such policy; and, if the Premises, or any part thereof, shall be rendered Untenantable by reason of such damage and such damage shall not be due to the negligence or fault of Tenant or Persons Within Tenant’s Control, then the Base Rent hereunder, or an amount thereof apportioned on a pro rata basis according to the area of the Premises so rendered Untenantable (if less than the entire Premises shall be so rendered Untenantable), shall be abated for the period from the date of such damage to the date when the repair of such damage shall have been substantially completed.  Landlord covenants and agrees to cooperate with Tenant in its efforts to collect insurance proceeds (including rent insurance proceeds) payable to Tenant. 

        Section 12.2.  Landlord shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from damage from fire or other casualty or the repair thereof except to the extent caused by the gross negligence or intentional misconduct of Landlord or Persons Within Landlord's Control.  Tenant understands that Landlord will not carry insurance of any kind on Tenant’s Property, Tenant's Alterations and on leasehold improvements, and that Landlord shall not be obligated to repair any damage thereto or replace the same.

        (a)     Notwithstanding anything to the contrary contained in Sections 12.1 and 12.2 above, in the event that the Premises shall be totally or substantially (greater than 50%) damaged and Untenantable, then Tenant may terminate this Lease and the term and estate hereby granted, by notifying Landlord in writing of such termination prior to commencement of work to repair the damage to the Premises or within one hundred twenty (120) days after the date of such damage, whichever first occurs.  In the event that such a notice of termination shall be given, then this Lease and the Term and estate hereby granted shall expire as of the date of such notice of termination with the same effect as if that were the Expiration Date, and the Base Rent hereunder shall be apportioned as of such date.  Notwithstanding the foregoing, Tenant’s option to terminate this Lease pursuant to this Section 12.2 shall only be exercisable if there is no existing Event of Default hereunder. 

        (b)     Notwithstanding anything to the contrary contained in this Section 12.2, prior to commencement of work to repair the damage to the Premises, Landlord shall deliver to Tenant an estimate prepared by a reputable contractor selected by Landlord setting forth such contractor’s estimate as to the time reasonably required to repair such damage.  If the period to repair set forth in any such estimate exceeds twelve (12) months, Tenant may elect to terminate this Lease by notice to Landlord given not later than thirty (30) days following Tenant’s receipt of such estimate.  If Tenant exercises such election, this Lease and the term and estate hereby granted shall expire as of the sixtieth (60^th) day after notice of such election given by Tenant with the same effect as if that were the Expiration Date, and the Base Rent hereunder shall be apportioned as of such date.

        Section 12.3.  Nothing herein contained shall relieve Tenant from any liability to Landlord or to Landlord’s insurers, allow Tenant the right to terminate this Lease or provide Tenant with a right to abatement of Rental in connection with any damage to the Premises or the Buildings by fire or other casualty if such damage results from the negligent or willful acts or omissions of Tenant or Persons Within Tenant’s Control.

        Section 12.4.  This Lease shall be considered an express agreement governing any case of damage to or destruction of the Buildings or any part thereof by fire or other casualty.

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ARTICLE XIII

EMINENT DOMAIN

Section 13.1. If the whole of the Real Property or the Premises is acquired or condemned for any public or quasi-public use or purpose, this Lease and the Term shall end as of the date of the vesting of title or the date upon which Tenant is denied use and possession of the Premises pursuant to the terms of this Lease, whichever occurs first, with the same effect as if said date were the Expiration Date. If only a part of the Real Property and not the entire Premises is so acquired or condemned then, (a) except as hereinafter provided in this Section 13.1, this Lease and the Term shall continue in effect but, if a part of the Premises is included in the part of the Real Property so acquired or condemned, from and after the date of the vesting of title or Tenant's denial of use and possession, whichever occurs first, the Base Rent shall be reduced in the proportion which the area of the part of the Premises so acquired or condemned bears to the total area of the Premises immediately prior to such acquisition or condemnation; and (b) if the part of the Real Property so acquired or condemned contains more than thirty percent (30%) of the total area of the Premises immediately prior to such acquisition or condemnation, or if, by reason of such acquisition or condemnation, Tenant no longer has access to the Premises, Tenant, at Tenant’s option, may give to Landlord, within sixty (60) days next following the date upon which Tenant receives notice of vesting of title, a thirty (30) day notice of termination of this Lease. If any such thirty (30) day notice of termination is given, by Tenant, this Lease and the Term shall come to an end and expire upon the expiration of said thirty (30) days with the same effect as if the date of expiration of said thirty (30) days were the Expiration Date. In the event of any termination of this Lease and the Term pursuant to the provisions of this Section 13.1, the Base Rent shall be apportioned as of the date of the termination and any prepaid portion of the Base Rent for any period after such date shall be refunded by Landlord to Tenant.

Section 13.2. In the event of any such acquisition or condemnation of all or any part of the Real Property, Landlord shall be entitled to pursue an award for any such acquisition or condemnation as to the Buildings (subject to Tenant's rights under this Section 13.2). Tenant shall be entitled to pursue an award for any loss from the condemning authority, including, without limitation, for the value of any unexpired portion of the Term, Tenant's Work, Alterations and/or Tenant's Property.

ARTICLE XIV

ASSIGNMENT, SUBLETTING, MORTGAGE, ETC.

Section 14.1. Except as otherwise provided in this Article XIV, Tenant shall not without Landlord’s prior written consent, which consent may be withheld or conditioned in Landlord's reasonable discretion, (a) assign this Lease (whether by operation of law, transfers of interests in Tenant or otherwise); or (b) mortgage or encumber Tenant’s interest in this Lease, in whole or in part; or (c) sublet, or permit the subletting of, the Premises or any part thereof. Tenant shall not advertise or authorize a broker to advertise the availability of space for a potential subtenant or assignee without, in each instance, obtaining the prior written consent of Landlord, which consent may be withheld or conditioned in Landlord's reasonable discretion in each instance.

Section 14.2. If Tenant’s interest in this Lease shall be assigned in violation of the provisions of this Article XIV, such assignment shall be invalid, void and of no force and effect against Landlord; provided, however, that Landlord may collect an amount equal to the then Base Rent plus any other item of Rental from the assignee as a fee for its use and occupancy. If the Premises or any part thereof are sublet to, or occupied by, or used by, any person other than Tenant, whether or not in violation of this Article XIV, Landlord, after default by Tenant under this Lease, may collect any item of Rental or other sums paid by the subtenant, user or occupant as a fee for its use and occupancy, and shall apply the net amount collected to the Base Rent and the items of Rental reserved in this Lease. No such assignment, subletting, occupancy, or use, whether with or without Landlord’s prior written consent, nor any such collection or application of Rental or fee for use and occupancy, shall be deemed a waiver by Landlord of any term, covenant or condition of this Lease or the acceptance by Landlord of such assignee, subtenant, occupant or user as Tenant hereunder, nor shall the same, in any circumstances, relieve Tenant of any of its obligations under this Lease. The consent by Landlord to any assignment, subletting, occupancy or use shall not relieve Tenant from its underlying obligations under this Lease or the obligation to obtain the express prior consent of Landlord to any further assignment, subletting,

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occupancy or use. Any person to which this Lease is assigned with Landlord’s consent shall be deemed without more to have assumed and agreed to perform all of the obligations arising under this Lease from and after the date of such assignment and shall execute and deliver to Landlord, upon demand, an instrument confirming such assumption. Subsequent to any assignment, Tenant’s primary liability hereunder shall continue notwithstanding (a) any subsequent amendment hereof, or (b) Landlord’s forbearance in enforcing against Tenant any obligation or liability, without notice to Tenant, to each of which Tenant hereby consents in advance.

(a)    For purposes of this Article XIV, (i) an agreement by any other person or entity, directly or indirectly, to assume Tenant’s obligations under this Lease shall be deemed an assignment except if such agreement is made pursuant to any transaction allowed under Section 14.2(b) below, (ii) any person or legal representative of Tenant, to whom Tenant’s interest under this Lease passes by operation of law, or otherwise, shall be bound by the provisions of this Article XIV, and (iii) a modification, amendment or extension of a sublease shall be deemed a sublease.

(b)    The provisions of clauses (a) and (c) of Section 14.1 shall not apply to transactions with a corporation, limited liability company or other entity into or with which Tenant is merged or consolidated or with a Person to which substantially all of Tenant’s assets or capital stock are transferred or sold (provided such merger or transfer of assets or stock is for a good and reasonable business purpose and not principally for the purpose of transferring the leasehold estate created by this Lease, and provided further, that the assignee has a net worth at least equal to or in excess of the net worth of Tenant as of the date of this Lease or as of the date immediately prior to such merger or transfer, whichever is greater), nor shall the provisions of clause (a) and (c) of Section 14.1 apply to transactions with an entity that directly or indirectly controls or is directly or indirectly controlled by Tenant or is under common direct or indirect control with Tenant. Tenant shall notify Landlord before any such transaction is consummated.

(c)    The term “control” as used in this Lease (i) in the case of a corporation shall mean ownership of more than fifty percent (50%) of the outstanding voting capital stock of that corporation, (ii) in the case of a general partnership, shall mean more than fifty percent (50%) of the general partnership interest of the partnership, (iii) in the case of a limited partnership, shall mean more than fifty percent (50%) of the general and limited partnership interests of such limited partnership; (iv) in the case of a limited liability company, shall mean more than fifty percent (50%) of the membership interests of such limited liability company, and (v) in the case of a limited liability partnership, shall mean more than fifty percent (50%) of the partnership interest of such limited liability partnership.

Section 14.3.    [RESERVED]

Section 14.4.     If Tenant sublets any portion of the Premises to a Person in a transaction for which Landlord’s consent is required, Landlord shall be entitled to and Tenant shall pay to Landlord, as Additional Rent (the “Sublease Additional Rent”), a sum equal to fifty percent (50%) of any rents, additional charges and other consideration payable under the sublease to Tenant by the subtenant in excess of the Base Rent accruing during the term of the sublease in respect of the subleased space (at the rate per square foot payable by Tenant under this Lease) pursuant to the terms of this Lease (including, but not limited to, sums paid for the sale or rental of Tenant’s Property and Alterations less the then net unamortized or undepreciated cost thereof determined on the basis of Tenant’s federal income tax or federal information returns). Such Sublease Additional Rent shall be payable to Landlord as and when received by Tenant

Section 14.5.     If Tenant shall assign this Lease to a Person in a transaction for which Landlord’s consent is required, Landlord shall be entitled to and Tenant shall pay to Landlord, as Additional Rent, an amount equal to fifty percent (50%) of all sums and other consideration paid to Tenant by the assignee for or by reason of such assignment (including, but not limited to, sums paid for the sale or rental of Tenant’s Property and Alterations less the then net unamortized or undepreciated cost thereof determined on the basis of Tenant’s federal income tax or federal information returns). Such Additional Rent shall be payable to Landlord as and when received by Tenant from the assignee.

Section 14.6. Landlord shall have no liability for brokerage commissions incurred with respect to any assignment of this Lease or any subletting of all or any part of the Premises by or on behalf of Tenant. Tenant shall pay, and shall indemnify, defend and hold Landlord harmless from and against, any and all cost, expense (including reasonable attorneys’ fees and disbursements) and liability in connection with any compensation, commissions or charges claimed by any broker or agent with respect to any such assignment or subletting.

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ARTICLE XV

ACCESS TO PREMISES

Section 15.1. (a)    Tenant shall permit Landlord, Landlord’s agents and independent contractors, and public utilities servicing the Real Property to have reasonable access to the roof for the purpose of maintenance, repair and replacement of same and to access all Common Areas within the Real Property in connection therewith. Landlord or Landlord’s agents shall have the right to enter the Premises at all reasonable times upon (except in case of emergency) reasonable prior notice, which notice may be oral, to examine the same, to show the same to prospective purchasers, Mortgagees or lessees of the Real Property or space therein, and to make such repairs, alterations, improvements or additions, all with as little interruption to Tenant's operation on the Premises as reasonably possible (i) as Landlord may deem necessary or desirable to the roof (to the extent permitted or required pursuant to this Lease), or (ii) which Landlord may elect to perform at least ten (10) days after notice (except in an emergency when no notice shall be required) following Tenant’s failure to make repairs or perform any work which Tenant is obligated to make or perform under this Lease, , including without limitation for the purpose of complying with Requirements, and Landlord shall be allowed to take all material, supplies and equipment into and upon the Premises that may be required therefor without the same constituting an eviction or constructive eviction of Tenant in whole or in part and the Base Rent (and any other item of Rental) shall in no respect abate or be reduced by reason of said repairs, alterations, improvements or additions, wherever located, or while the same are being made, by reason of loss or interruption of business of Tenant, or otherwise. Landlord shall promptly repair any damage caused to the Premises or Tenant's Property by such work, alterations, improvements or additions, except as may be necessary as a result of the negligent or willful acts or omissions of Tenant. Tenant shall, at Tenant’s cost, take such action as may be reasonably necessary to grant to Landlord, its agents and independent contractors clearance and access by means of the Security System for the purposes herein set out.

(b)    Any work performed or installations made pursuant to this Article XV shall be made with reasonable diligence and otherwise pursuant to the same standards required of Tenant under Section 6.1;

(c)    Any pipes, ducts, or conduits installed in or through the Premises pursuant to this Article XV shall, if reasonably practicable, either be concealed behind, beneath or within partitioning, columns, ceilings or floors located or to be located in the Premises, or completely furred at points immediately adjacent to partitioning, columns or ceilings located or to be located in the Premises.

Section 15.2. If Tenant is not present when for any reason entry into the Premises may be necessary or permissible, Landlord or Landlord’s agents may enter the same without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord’s agents accord reasonable care to Tenant’s Property), and without in any manner affecting this Lease.

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ARTICLE XVI

CERTIFICATE OF OCCUPANCY

Section 16.1. Tenant shall not at any time use or occupy the Premises in violation of the certificate of occupancy at such time issued for the Premises or for any portion of the Real Property and, in the event that any Governmental Authority hereafter contends or declares by notice, violation, order or in any other manner whatsoever that the Premises are used by Tenant for a purpose that is a violation of such certificate of occupancy, Tenant shall, upon three (3) Business Days’ written notice from Landlord or any Government Authority, immediately discontinue such use of the Premises; provided, however, that nothing herein shall prevent Tenant from contesting such violation pursuant to and in accordance with the provisions of Section 8.5.

ARTICLE XVII

DEFAULT

Section 17.1. Each of the following events shall be an “Event of Default” under this Lease:

(a)    if Tenant shall on any occasion default in the payment of any installment of Base Rent when due and the same shall not be cured within five (5) days after written notice; or,

(b)    if Tenant shall on any occasion default in the payment of any item of Additional Rent and the same shall not be cured within five (5) days after written notice of default by Landlord to Tenant; provided, if Tenant shall fail on three (3) or more occasions in any period of eighteen (18) consecutive months to make a payment when due of any item of Additional Rent, and Landlord shall have given Tenant written notice of such default after the first two (2) such occurrences, no such notice shall be required upon the third occurrence; or

(c)    if the Premises shall become vacant or abandoned and Tenant ceases to pay Rent; or

(d)    if Tenant’s interest in this Lease shall devolve upon or pass to any person, whether by operation of law or otherwise, except as expressly permitted under Article XIV hereof; or

(e)    (1)     if Tenant shall not, or shall be unable to, or shall admit in writing Tenant’s inability to, as to any obligation, pay Tenant’s debts as they become due; or

(2)     if Tenant shall commence or institute any case, proceeding or other action (A) seeking relief on Tenant’s behalf as debtor, or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to Tenant or Tenant’s debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; or

(3)     if Tenant shall make a general assignment for the benefit of creditors; or

(4)     if any case, proceeding or other action shall be commenced or instituted against Tenant (A) seeking to have an order for relief entered against Tenant as debtor or to adjudicate Tenant a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to Tenant or Tenant’s debts under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,

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reorganization or relief of debtors, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for Tenant or for all or any substantial part of Tenant’s property, which either (i) results in any such entry of an order for relief, adjudication of bankruptcy or insolvency or such an appointment or the issuance or entry of any other order having a similar effect or (ii) remains undismissed for a period of sixty (60) days; or

(5)     if a trustee, receiver or other custodian shall be appointed for any substantial part of the assets of Tenant which appointment is not vacated or effectively stayed within sixty (60) days; or

(f)    if Tenant shall default in the observance or performance of any other term, covenant or condition of this Lease on Tenant’s part to be observed or performed and Tenant shall fail to remedy such default within thirty (30) days after notice by Landlord to Tenant of such default, or if such default is of such a nature that it cannot with due diligence be completely remedied within said period of thirty (30) days and the continuation of which for the period required for cure will not subject Landlord to the risk of criminal liability or foreclosure of any Mortgage, if Tenant shall not, (i) within said thirty (30) day period advise Landlord of Tenant’s intention duly to institute all steps necessary to remedy such situation, (ii) duly institute within said thirty (30) day period, and thereafter diligently and continuously prosecute to completion all steps necessary to remedy the same and (iii) complete such remedy within such time after the date of the giving of said notice by Landlord as shall reasonably be necessary.

Section 17.2. If an Event of Default shall occur, Landlord may, at any time thereafter, at Landlord’s option, give written notice to Tenant stating that this Lease and the Term shall expire and terminate on the date specified in such notice, which date shall not be less than three (3) days after Tenant’s receipt of such notice, or such longer term as specified in the notice, whereupon this Lease and the Term and all rights of Tenant under this Lease shall automatically expire and terminate as if the date specified in the notice given pursuant to this Section 17.2 were the Expiration Date, and Tenant immediately shall quit and surrender the Premises, but Tenant shall remain liable for damages as provided herein or pursuant to law. Anything contained herein to the contrary notwithstanding, if such termination shall be stayed by order of any court having jurisdiction over any proceeding described in Section 17.1(e), or by federal or state statute, then, following the expiration of any such stay, or if the trustee appointed in any such proceeding, Tenant or Tenant as debtor-in-possession fails to assume Tenant’s obligations under this Lease within the period prescribed therefor by law or within one hundred twenty (120) days after entry of the order for relief or as may be allowed by the court, or if said trustee, Tenant or Tenant as debtor-in-possession shall fail to provide adequate protection of Landlord’s right, title and interest in and to the Premises or adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease, Landlord, to the extent permitted by law or by leave of the court having jurisdiction over such proceeding, shall have the right, at its election, to terminate this Lease on three (3) days’ prior written notice to Tenant, Tenant as debtor-in- possession or said trustee and upon the expiration of said three (3) day period this Lease shall cease and expire as aforesaid and Tenant, Tenant as debtor-in-possession or said trustee shall immediately quit and surrender the Premises as aforesaid.

Section 17.3. If, at any time, (i) Tenant shall consist of two (2) or more persons, or (ii) Tenant’s obligations under this Lease shall have been guaranteed by any person other than Tenant, or (iii) Tenant’s interest in this Lease has been assigned, the word “Tenant” as used in Section 17.1(e), shall be deemed to mean any one or more of the persons primarily or secondarily liable for Tenant’s obligations under this Lease. Any monies received by Landlord from or on behalf of Tenant during the pendency of any proceeding of the types referred to in Section 17.1(e) shall be deemed paid as compensation for the use and occupancy of the Premises and the acceptance of any such compensation by Landlord shall not be deemed an acceptance of Rental or a waiver on the part of Landlord of any rights under Section 17.2.

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ARTICLE XVIII

REMEDIES AND DAMAGES

Section 18.1. (a)    If any Event of Default shall occur, or this Lease and the Term shall expire and come to an end as provided in Article XVII:

1.    Tenant shall quit and peacefully surrender the Premises to Landlord, and Landlord and its agents may immediately, or at any time after such Event of Default or after the date upon which this Lease and the Term shall expire and come to an end, re-enter the Premises or any part thereof, without notice, either by summary proceedings, or by any other applicable action or proceeding or otherwise (without being liable to indictment, prosecution or damages therefor), but excluding by force, and may repossess the Premises and dispossess Tenant and any other persons from the Premises by summary proceedings or otherwise (excluding by force) and remove any and all of their property and effects from the Premises (and Tenant shall remain liable for damages as provided herein or pursuant to law); and

2.    Landlord, at Landlord’s option, may relet the whole or any part or parts of the Premises from time to time, either in the name of Landlord or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rent or rentals and upon such other conditions, which may include concessions and free rent periods, as Landlord, in Landlord’s sole discretion, may determine; and Landlord, at Landlord’s option, may make such Alterations, in and to the Premises as Landlord, in Landlord’s sole discretion, shall consider advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.

(b)    Tenant hereby waives the service of any notice of intention to re-enter that may otherwise be required to be given under any present or future law. Tenant, on its own behalf and on behalf of all persons claiming through or under Tenant, including all creditors, does further hereby waive any and all rights that Tenant and all such persons might otherwise have under any present or future law to redeem the Premises, or to re-enter or repossess the Premises, or to restore the operation of this Lease, after (1) Tenant shall have been dispossessed by a judgment or by warrant of any court or judge, or (2) any re-entry by Landlord, or (3) any expiration or termination of this Lease and the Term, whether such dispossess, re-entry, expiration or termination is by operation of law or pursuant to the provisions of this Lease.

The words “re-entry,” “re-enter” and “re-entered” as used in this Lease shall not be deemed to be restricted to their technical legal meanings. In the event of a breach or threatened breach by Tenant, or any persons claiming through or under Tenant, of any term, covenant or condition of this Lease, Landlord shall have the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re-entry, summary proceedings and other special remedies were not provided in this Lease for such breach. The rights to invoke the remedies hereinbefore set forth are cumulative and shall not preclude Landlord from invoking any other remedy allowed at law or in equity.

Section 18.2. (a)    If this Lease and the Term shall expire and come to an end as provided in Article XVIII, or by or under any summary proceeding or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 18.1, or by or under any summary proceeding or any other action or proceeding, then, in any of said events:

1.    Tenant shall pay to Landlord all Base Rent, Additional Rent and other items of Rental payable under this Lease by Tenant to Landlord to the date upon which this Lease and the Term shall have expired and come to an end or to the date of re-entry upon the Premises by Landlord, as the case may be;

2.    Tenant also shall be liable for and shall pay to Landlord, as damages, any deficiency (“Deficiency”) between the Rental for the period which otherwise would have constituted the unexpired portion of the Term and the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of Section 18.1(a)(2) for any part of such period (after first deducting from the rents collected under any such

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reletting all of Landlord’s expenses in connection with the termination of this Lease, Landlord’s re-entry upon the Premises and such reletting including, but not limited to, all repossession costs, brokerage commissions, attorneys’ fees and disbursements, alteration costs and other expenses of preparing the Premises for such reletting); any such Deficiency shall be paid in monthly installments by Tenant on the days specified in this Lease for payment of installments of Base Rent; Landlord shall be entitled to recover from Tenant each monthly Deficiency as the same shall arise, and no suit to collect the amount of the Deficiency for any month shall prejudice Landlord’s right to collect the Deficiency for any subsequent month by a similar proceeding; and

3.    Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents exceed the Base Rent reserved in this Lease.

Section 18.3. The provisions of this Article XVIII shall survive the expiration or earlier termination of this Lease

ARTICLE XIX

FEES AND EXPENSES

Section 19.1. If an Event of Default shall have occurred, Landlord may (a) perform the obligations of Tenant for the account of Tenant, or (b) make any expenditure or incur any obligation for the payment of money in connection with any obligation owed by Tenant to Landlord, including, but not limited to, reasonable attorneys’ fees and disbursements in instituting, prosecuting or defending any action or proceeding arising out of such Event of Default, and in either case the cost thereof, with interest thereon at the Applicable Rate, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Landlord within ten (10) days after rendition of any bill or statement to Tenant therefor.

Section 19.2. If Tenant shall fail to pay any installment of Base Rent, Additional Rent or any other item of Rental for a period longer than five (5) days after the same shall have become due, Tenant shall pay to Landlord, in addition to such installment of Base Rent, Additional Rent or other item of Rental, as the case may be, as a late charge and as Additional Rent, a sum equal to interest at the Applicable Rate on the amount unpaid, computed from the date such payment was due, without regard to any such grace period, to and including the date of payment.

Section 19.3. If Landlord defaults in the performance of any of the terms, covenants, agreements or conditions contained in this Lease and the Tenant places the enforcement of this Lease, or any part thereof in the hands of an attorney, or files suit upon the same, if the Tenant is the prevailing party, the Landlord agrees to pay the reasonable attorney's fees and expenses incurred by the Tenant. Notwithstanding the foregoing, if Landlord defaults in the performance of any term, covenant or condition contained in this Lease, Landlord shall be permitted thirty (30) days after notice to Landlord from Tenant to remedy such default, or if such default is of such a nature that it cannot with due diligence be completely remedied within said period of thirty (30) days, Landlord shall (i) within said thirty (30) day period advise Tenant of Landlord’s intention duly to institute all steps necessary to remedy such situation and (ii) duly institute within said thirty (30) day period, and thereafter diligently and continuously prosecute to completion, all steps necessary to remedy the same. Notwithstanding anything in this Section 19.3 or this Lease to the contrary, in the case of an emergency situation related to the Real Property and/or Tenant's use of the same, including, without limitation, a roof leak (or material problem with the roof) or issues related to access and security to the Real Property (including, without limitation, defects, obstructions and/or damages to the driveway providing Tenant access to the Real Property or the front gate located on Cherry Road), whether such event(s) is an event of default by Landlord hereunder or not, Tenant shall have the right to immediately remedy such emergency situation using all actions required by Tenant with the costs of such remedial actions being paid according to the other respective provisions of this Lease.

Section 19.4. The provisions of this Article XIX shall survive the expiration or earlier termination of this Lease.

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ARTICLE XX

NO REPRESENTATIONS BY LANDLORD

Section 20.1. Landlord and Landlord’s agents have made no representations or promises with respect to the Real Property or the Premises except as herein expressly set forth, and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth herein. Notwithstanding the foregoing, Landlord confirms that the Real Property is in compliance with Requirements as of the Commencement Date, unless such non-compliance is the result of Tenant’s Work or of any other acts or omissions of Tenant or Tenant’s Indemnitees. Except as otherwise set forth in this Lease, Tenant shall accept possession of the Premises in its “AS IS” condition on the Commencement Date as provided in Section 5.1, and Landlord shall have no obligation to perform any work or make any installations in order to prepare the Premises for Tenant’s occupancy. The taking of occupancy of the whole or any part of the Premises by Tenant shall be conclusive evidence, as against Tenant, that Tenant accepts possession of the same and that the Premises and the Real Property were in good and satisfactory condition at the time such occupancy was so taken. All references in this Lease to the consent or approval of Landlord shall be deemed to mean the written consent or approval executed by Landlord and no other consent or approval of Landlord shall be effective for any purpose whatsoever.

ARTICLE XXI

END OF TERM

Section 21.1. Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises, vacant, broom clean, in good order and condition, ordinary wear and tear excepted, and Tenant shall remove all of Tenant’s Alterations as may be required pursuant to Article V. Tenant shall also remove all of Tenant’s Property and all other personal property and personal effects of all persons claiming through or under Tenant, and shall pay the cost of repairing all damage to the Premises and the Real Property occasioned by such removal. Any Tenant’s Property or other personal property that remains in the Premises or upon any portion of the Real Property after the termination of this Lease shall be deemed to have been abandoned and either may be retained by Landlord as its property or may be disposed of in such manner as Landlord may see fit. If such Tenant’s Property or other personal property or any part thereof is sold, Landlord may receive and retain the proceeds of such sale as the property of Landlord. Any expense incurred by Landlord in removing or disposing of such Tenant’s Property or other personal property or Alterations required to be removed as provided in Article V, as well as the cost of repairing all damage to the Buildings or the Premises caused by such removal, shall be reimbursed to Landlord by Tenant, as Additional Rent, on demand. Notwithstanding the foregoing, however, Landlord may require Tenant to remove certain Alterations pursuant to and in compliance with Section 5.2(c) hereof.

Section 21.2. If the Expiration Date falls on a day which is not a Business Day, then Tenant’s obligations under Section 21.1 shall be performed on or prior to the immediately succeeding Business Day.

Section 21.3. In the event that Tenant shall not immediately surrender the Premises to Landlord on the Expiration Date or earlier termination of this Lease, Tenant shall be deemed to be a tenant-at-will pursuant to the terms and provisions of this Lease, except the monthly Base Rent shall be 150% the monthly Base Rent specified herein for the 125^th month of the Term. Notwithstanding the foregoing, if Tenant shall hold over after the Expiration Date or earlier termination of this Lease, and Landlord shall desire to regain possession of the Premises, then Landlord may forthwith re-enter and take possession of the Premises without process, or by any legal process provided under applicable state law. Tenant shall indemnify Landlord against all liabilities and damages sustained by Landlord by reason of Landlord's retention of possession, including, without limitation, anyclaims made by any succeeding tenant or prospective tenant founded upon such delay and agrees to be liable to Landlord for (i) any payment or rent concession which Landlord may be required to make to any tenant obtained by Landlord for all or any part of the Premises in order to induce such tenant not to terminate its lease by reason of the holding-over by Tenant and (ii) the loss of the benefit of the bargain if any such tenant shall terminate its lease by reason of the holding-over by Tenant.

Section 21.4. Tenant’s obligations under this Article XXI shall survive the expiration or earlier termination

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of this Lease.

ARTICLE XXII

POSSESSION

Section 22.1. Tenant acknowledges that, as of the date of this Lease, it is in possession of the Premises pursuant to and in accordance with the terms of that certain Early Access Agreement entered into by and between Landlord and Tenant as of August 14, 2013, and that no further act on Landlord’s part is required as a condition to tender Possession of the Premises.

ARTICLE XXIII

NO WAIVER

Section 23.1 No act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing signed by Landlord. Only an executive officer of Landlord shall have the power to accept surrender of the Premises prior to the termination of this Lease.

Section 23.2. The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease, or any of the Rules and Regulations, shall not prevent a subsequent act, which would have originally constituted a violation, from having all of the force and effect of an original violation. The receipt by Landlord of Base Rent, Additional Rent or any other item of Rental with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations against Tenant or any other tenant of the Real Property or the Adjacent Property shall not be deemed a waiver of any such Rules and Regulations. No provision of this Lease shall be deemed to have been waived by Landlord, unless such waiver shall be in writing and shall be signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the Rental then due and payable shall be deemed to be other than on account of the earliest item(s) of Rental, or as Landlord may elect to apply the same, nor shall any endorsement or statement on any check or any letter accompanying any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance due of the Rental or pursue any other remedy in this Lease provided. This Lease contains the entire agreement between the parties and all other prior negotiations and agreements are merged herein. Any executory agreement hereafter made shall be ineffective to change, discharge or effect an abandonment of this Lease in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, discharge or abandonment is sought.

ARTICLE XXIV

WAIVER OF TRIAL BY JURY

Section 24.1. LANDLORD AND TENANT SHALL AND THEY HEREBY DO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, WHETHER DURING OR AFTER THE TERM, OR FOR THE ENFORCEMENT OF ANY REMEDY UNDER ANY STATUTE, EMERGENCY OR OTHERWISE.

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ARTICLE XXV

INABILITY TO PERFORM

Section 25.1. This Lease, the obligations of Tenant to pay Rental hereunder and the obligations of the parties to perform all of the other covenants and agreements hereunder shall in no way be affected, impaired or excused because either party is unable to fulfill any of either party's obligations under this Lease, expressly or implicitly to be performed by either party, or because either party is unable to make or is delayed in making any repairs, additions, alterations, improvements or decorations, or is unable to supply or is delayed in supplying any services, equipment or fixtures, if either party is prevented from or delayed in so doing by reason of acts of God, casualty, strikes or labor troubles, accident, governmental preemption in connection with an emergency, Requirements, Restrictive Covenants, conditions of supply and demand which have been or are affected by war, acts of terrorism or other emergency, or any other cause whatsoever, whether similar or dissimilar to the foregoing, beyond either party's reasonable control.

ARTICLE XXVI

BILLS AND NOTICES

Section 26.1. (a)    Except as otherwise expressly provided in this Lease, any bills, statements, consents, notices, demands, requests or other communications given or required to be given under this Lease (“Notice(s)”) shall be in writing and, unless personal delivery is effected earlier, shall be deemed sufficiently given: (i) three Business Days after deposit in the United States Mail, postage prepaid, registered or certified mail, return receipt requested, on a business day; or (ii) one Business Day after delivery to any nationally recognized overnight delivery service on a Business Day for prepaid delivery on the next Business Day; or (iii) on the Business Day sent, if sent by facsimile (and the sending facsimile generates a written confirmation of sending) or email prior to 4:00 p.m. Central Time, with a confirming copy being sent by one of the other specified methods on the same Business Day, and in any case addressed:

(i)    if to Tenant, at Tenant’s address set forth on the Reference Page, Item 14, with a copy to its legal counsel as indicated therein; and

(ii)    if to Landlord, at Landlord’s address set forth on the Reference Page, Item 13, with a copy to its legal counsel as indicated therein, and with a copy to any Mortgagee who may have requested the same in writing by Tenant, by Notice given in accordance with the provisions of this Article XXVI, at the address designated by such Mortgagee, or

to such other address(es) as either Landlord or Tenant may designate as its new address(es) for such purpose by notice given to the other in accordance with the provisions of this Article XXVI.

(b)    Notice given by counsel for either party on behalf of such party or by the Manager on behalf of Landlord shall be deemed valid notices if addressed and sent in accordance with the provisions of this Article XXVI.

ARTICLE XXVII

SERVICES AND EQUIPMENT

Section 27.1. Tenant shall:

(a)    Provide passenger elevator service to the Buildings on Business Days during Operating Hours and, subject to Section 27.2, have one passenger elevator on call in each Building at all other times.

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(b)    Keep the Premises in reasonable order and shall cause the Premises to be cleaned on Business Days nightly consistent with Tenant's usual and customary cleaning protocol and practices using contractors selected by Tenant.

(c)    In Tenant's sole discretion and at its sole cost and expense, provide for and maintain security systems required by Tenant for the Premises and/or Real Property.Tenant, at its sole discretion and expense, shall also be permitted to make additions to the existing Security System as the same relates to the Premises and/or Real Property. Additionally, Landlord will allow all entrances to the Premises and front gate used to access the Real Property located on Cherry Road to be secured with controlled access (i.e., key card access) and will allow for gated access at such front gate, all at Tenant’s sole cost and expense.

Section 27.2. Tenant reserves the right to stop the furnishing of the Buildings’ services and to stop service of the Building Systems, when necessary, by reason of accident, or emergency, and Tenant shall have no responsibility or liability for failure to supply air-conditioning, ventilation, heat, elevator, plumbing, electric, or other services during said period or when prevented from so doing by strikes, lockouts, difficulty of obtaining materials, accidents or by any cause beyond Tenant’s reasonable control, or by Requirements or failure of electricity, water, steam, coal, oil or other suitable fuel or power supply, or inability by exercise of reasonable diligence to obtain electricity, water, steam, coal, oil or other suitable fuel or power. Tenant shall resume the furnishing of the Buildings' services and the service of the Building Systems as soon as possible.

Section 27.3. RESERVED

Section 27.4. The life safety generators provide power to the Buildings for life safety purposes only. Any additional power requirements provided via generator and/or uninterruptible power source may be provided by Tenant in a location near the Buildings as designated by Landlord, and the initial cost for such may, at the election of Tenant, be (a) a part of the “Exterior Improvement Allowance” or the “Interior Improvement Allowance” (each as defined in the Work Letter Agreement) or (b) paid directly by Tenant.

Section 27.5. RESERVED

Section 27.6. In the event that another Tenant occupies any portion of Building 2, Tenant shall provide all usual, customary and reasonable services to Building 2, including but not limited to:

(a)    Furnish and distribute to Building 2, through the HVAC System, during Operating Hours and on Saturdays from 8:00 a.m. to 2:00 p.m. (excluding all days observed as holidays by the State of Tennessee or the federal government), air conditioning and heat or ventilation, as needed; provided that Tenant shall, at all times, cooperate fully with Landlord and abide by all of the Rules and Regulations which Landlord may prescribe for the proper functioning of the HVAC System. Tenant shall provide “after-hours” HVAC services to any other tenant(s) of Building 2 upon reasonable advance notice. Tenant will not be responsible for the failure of the HVAC System if such failure results from another tenant’s occupancy of Building 2 by more persons than the number of persons for which HVAC System is designed.

(b)    Furnish hot and cold water to Building 2 for ordinary drinking, cleaning and lavatory purposes.

Section 27.7    Tenant shall have twenty-four (24) hour/seven (7) day a week access to the Premises and Real Property, however the main gate at the entrance of the Premises shall remain open during Operating Hours.

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ARTICLE XXVIII

[RESERVED]

ARTICLE XXIX

[RESERVED]

ARTICLE XXX

SIGNS

Section 30.1. Tenant shall have the right to install (i) a sign on the east façade of the exterior of Building 2 with a size and design substantially similar to the rendering in Exhibit "I" attached hereto, (ii) a sign at the main entrance which serves the Real Property and the Adjacent Property and along the driveway which identify the Tenant and/or direct traffic to the Tenant's business and parking area with all such signs being mutually agreed to by Landlord and Tenant using reasonable standards, and (iii) in Tenant's sole discretion, signs in the lobby areas of the Buildings (excluding any lobby area created under Section 2.8 hereof). Except for provided above, the location, size, materials, quality, design, color and lettering of any signs desired by Tenant shall be subject to the prior approval of Landlord, which shall not be unreasonably withheld, conditioned or delayed, and shall be in compliance with all Requirements, the terms and conditions contained in the Restrictive Covenants, and the standards set forth in the “Tenant Design and Construction Standards” in Exhibit “F” attached hereto. Tenant shall be responsible for any and all costs related to or in connection with the signage, including without limitation, costs for: design, fabrication and installation; permitting; maintenance; and removal at the end of the Term (pursuant to the requirements of Section 21.1). Subject to Section 2.8(d),Landlord retains the right to permit other tenants to place signage at or on the Real Property or Building 2.

ARTICLE XXXI

BROKER

Section 31.1. Each of Landlord and Tenant warrant that it has had no discussions, negotiations and/or other dealings with any real estate broker or agent in connection with the negotiation of this Lease other than Landlord’s Broker identified in Reference Page, Item 11, and that it knows of no other real estate broker or agent who is or may be entitled to any commission or finder’s fee in connection with this Lease.  Landlord shall pay Landlord’s Broker a commission pursuant to a separate brokerage agreement. Each of Landlord and Tenant agree to indemnify the other and hold the other harmless from and against any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation, attorneys’ fees and costs) with respect to any leasing commission or equivalent compensation alleged to be owing on account of such party’s discussions, negotiations and/or dealings with any real estate broker or agent.

ARTICLE XXXII

INDEMNITY

Section 32.1. Tenant shall indemnify and save harmless the Landlord Indemnitees from and against any and all losses, damages, claims, fines, demands, suits, liabilities and expenses (including reasonable attorneys’ fees and disbursements) resulting or arising from (a) any act, omission or negligence of Tenant or Persons Within Tenant’s Control, (b) any accident, injury or damage occurring in or about the Premises during the Term or during Tenant’s occupancy of the Premises, unless and to the extent caused by the negligence or willful misconduct of Landlord or Persons Within Landlord’s Control, (c) any accident, injury or damage occurring outside of the Premises but anywhere

44

within or about the Real Property, where such accident, injury or damage results from an act, omission or negligence of Tenant or Persons Within Tenant’s Control, and (d) any breach, violation or non-performance of any covenant, condition or agreement contained in this Lease to be fulfilled, kept, observed and performed by Tenant except as otherwise provided in this Lease; provided, however, that the indemnity and save harmless provision set out in this Section 32.1 and in Section 32.2 shall have no effect to the extent that Landlord Indemnities are or should be protected by insurance required to be maintained under the provisions of Article XI hereof. All the provisions of this Article XXXII shall survive the expiration or earlier termination of this Lease.

Section 32.2. If any claim, action or proceeding is made or brought against any one or more of the Landlord Indemnitees, against which claim, action or proceeding Tenant is obligated to indemnify such Landlord Indemnitee(s) pursuant to the terms of this Lease, then, upon demand by Landlord, Tenant, at its sole cost and expense, shall defend such claim, action or proceeding in the name of the Landlord Indemnitee(s) by such attorneys as the Landlord Indemnitee and Tenant may mutually select, at all times maintaining sufficient and appropriate defense strategies.

Section 32.3. Landlord shall indemnify and save harmless the Tenant Indemnitees from and against any and all losses, damages, claims, fines, demands, suits, liabilities and expenses (including reasonable attorneys’ fees and disbursements) resulting or arising from (a) any accident, injury or damage occurring in or about the Premises during the Term of this Lease to the extent such accident, injury or damage is caused by or results directly from the negligent or intentional acts or omissions of Landlord or Persons Within Landlord’s Control, (b) any accident, injury or damage occurring outside of the Premises but anywhere within or about the Real Property during the Term of this Lease to the extent caused by the negligence or willful misconduct of Landlord or Persons Within Landlord’s Control, and (c) any breach, violation or non-performance of any covenant, condition or agreement in this Lease to be fulfilled, kept, observed and performed by Landlord, except as otherwise provided in this Lease; provided, however, that the indemnity and save harmless provision set out in this Section 32.3 and in Section 32.4 shall have no effect to the extent that Tenant Indemnitees are or should be protected by insurance required to be maintained under the provisions of Article XI hereof.

Section 32.4. If any claim, action or proceeding is made or brought against any Tenant Indemnitee, against which claim, action or proceeding Landlord is obligated to indemnify such Tenant Indemnitee pursuant to the terms of this Lease, then, upon demand by the Tenant Indemnitee, Landlord, at its sole cost and expense, shall defend such claim, action or proceeding in the Tenant Indemnitee’s name by such attorneys as the Landlord and Tenant may mutually select, at all times maintaining sufficient and appropriate defense strategies.

ARTICLE XXXIII

RESERVED

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ARTICLE XXXIV

MEMORANDUM OF LEASE

Section 34.1.    This Lease shall not be recorded; however, Landlord and Tenant shall execute a Memorandum of Lease, in form and substance mutually acceptable to Landlord and Tenant, which sets forth the pertinent terms contained herein including, without limitation, the rights and obligations of the parties, and identification of the Shared Use Documents, as set forth in Section 4.3 of this Lease. The Memorandum of Lease shall be executed contemporaneously herewith and shall be place of record with the Register's Office of Shelby County. All costs of recording said Memorandum of Lease shall be shared equally between Landlord and Tenant.

ARTICLE XXXV

TENANT LABS

TENANT WILL CONSTRUCT VARIOUS LABORATORIES WITHIN THE INTERIOR OF THE BUILDINGS. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, ACCESS TO THE INTERIOR OF THE LABORATORIES BY THE LANDLORD OR ANY AGENT OF LANDLORD SHALL BE LIMITED TO EMERGENCY ACCESS ONLY AND THEN ONLY STRICTLY IN COMPLIANCE WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS, WHATEVER THE SOURCE. ANY SERVICES UNDER THIS LEASE THAT MAY BE PROVIDED ONLY BY ENTRANCE TO THE LABORATORIES BY LANDLORD OR LANDLORD'S AGENT SHALL BE PERFORMED BY THE TENANT, AND ALL RECORDS RELATED TO SUCH LABORATORIES ARE AND SHALL REMAIN THE CONFIDENTIAL INFORMATION OF TENANT AND SHALL NOT BE DISCLOSED BY TENANT TO LANDLORD OR ANY PARTY UNLESS REQUIRED BY APPLICABLE LAWS, RULES AND REGULATIONS.

ARTICLE XXXVI

COVENANT OF QUIET ENJOYMENT

Section 36.1. Landlord covenants that, upon Tenant paying the Base Rent and Additional Rent and observing and performing all the terms, agreements, covenants, provisions and conditions of this Lease on Tenant’s part to be observed and performed, Tenant may peaceably and quietly enjoy the Premises, subject nevertheless to the terms and conditions of this Lease; provided, however, that no impairment or deprivation of Tenant’s use of the Premises which results from a violation of Restrictive Covenants or Requirements shall be construed as a breach of this covenant nor permit abatement of Rental due hereunder unless such violation results from the negligent or intentional acts or omissions of Landlord in which Tenant played no part; and provided further that this covenant shall bind and be enforceable against Landlord or any successor to Landlord’s interest, subject to the terms hereof, only so long as Landlord or any successor to Landlord’s interest is in possession and is collecting rent from Tenant, but not thereafter.

ARTICLE XXXVII

MISCELLANEOUS

Section 37.1.    Landlord retains all air rights over the Premises and the Real Property. Tenant may not place anything on or attach anything to the roof of the Premises without first obtaining Landlord’s written consent, which consent may be granted or withheld in Landlord’s reasonable discretion. Notwithstanding the above, the Tenant, (i) in its reasonable discretion may install an HVAC unit on the roof of Building 2 and (ii) cause any number of mobile

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telephone companies to install equipment necessary for the use and functionality of mobile phones and other electronic devices and/or equipment as required by Tenant on the roof of the Buildings.

Section 37.2. The obligations of Landlord under this Lease shall not be binding upon Landlord named herein after the sale, conveyance, assignment or transfer by such Landlord (or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent landlord) of its interest in the Buildings or the Real Property, as the case may be, and in the event of any such sale, conveyance, assignment or transfer, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord under this Lease thereafter arising, and the transferee shall be deemed to have assumed, subject to the remaining provisions of this Section 37.2, all obligations of the Landlord under this Lease arising after the effective date of the transfer. No trustee, partner, shareholder, director or officer of Landlord, or of any partner or shareholder of Landlord (collectively, the “Parties”) shall have any direct or personal liability for the performance of Landlord’s obligations under this Lease, and Tenant shall look solely to Landlord’s interest in the Real Property to enforce Landlord’s obligations hereunder and shall not otherwise seek any damages against Landlord personally or any of the Parties whatsoever.

Section 37.3. [RESERVED]

Section 37.4. [RESERVED]

Section 37.5. [RESERVED]

Section 37.6. [RESERVED]

Section 37.7. [RESERVED]

Section 37.8. This Lease shall be construed without regard to any presumption or other rule requiring construction against the party causing this Lease to be drafted. If any words or phrases in this Lease are stricken out or otherwise eliminated, whether or not any other words or phrases have been added, this Lease shall be construed as if the words or phrases stricken out or otherwise eliminated were never included in this Lease and no implication or inference shall be drawn from the fact that such words or phrases were stricken out or otherwise eliminated.

Section 37.9. [RESERVED]

Section 37.10. [RESERVED]

Section 37.11. If any of the provisions of this Lease, or the application thereof to any person or circumstance, shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such provisions to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby and shall remain valid and enforceable, and every provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.

Section 37.12. Landlord shall have the right to erect any gate, chain or other obstruction or to close off any portion of the Real Property to the public at any time to the extent necessary to prevent a dedication thereof for public use.

Section 37.13. Tenant agrees that in all disputes arising directly or indirectly out of this Lease Tenant shall be subject to service of process in, and the jurisdiction of the courts of, Shelby County, Tennessee. The provisions of this Section 37.13 shall survive the expiration or earlier termination of this Lease.

Section 37.14. This Lease contains the entire agreement between the parties and all prior negotiations and agreements are merged into this Lease. Except as otherwise specifically provided herein, this Lease may not be changed, abandoned or discharged, in whole or in part, nor may any of its provisions be waived except by a written agreement that (a) expressly refers to this Lease, (b) is executed by the party against whom enforcement of the change, abandonment, discharge or waiver is sought, and (c) is permissible under the Mortgage(s).

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Section 37.15. Any apportionment or prorations of Rental to be made under this Lease shall be computed on the basis of a three hundred sixty-five (365) day year.

Section 37.16. The laws of the State of Tennessee applicable to contracts made and to be performed wholly within the State of Tennessee shall govern and control the validity, interpretation, performance and enforcement of this Lease.

Section 37.17. Tenant warrants and represents that it is duly incorporated under the laws of the State of Delaware and is duly qualified to do business in the State of Tennessee (a copy of evidence thereof to be supplied to Landlord upon request from time to time); and that each person executing this Lease on behalf of Tenant is an officer of Tenant and that he or she is duly authorized to execute, acknowledge and deliver this Lease to Landlord (a copy of a resolution to that effect to be supplied to Landlord upon request).

Section 37.18. The captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease nor the intent of any provision thereof.

Section 37.19. The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives, successors, and, except as otherwise provided in this Lease, their assigns.

Section 37.20. For the purposes of this Lease and all agreements supplemental to this Lease, unless the context otherwise requires:

(a)    The words “herein”, “hereof”, “hereunder” and “hereby” and words of similar import shall be construed to refer to this Lease as a whole and not to any particular Article or Section unless expressly so stated.

(b)    Reference to “termination of this Lease” or “expiration of this Lease” and words of like import includes expiration or sooner termination of this Lease and the Term and the estate hereby granted or cancellation of this Lease pursuant to any of the provisions of this Lease or to law. Upon the termination of this Lease, the Term and estate granted by this Lease shall end at noon on the date of termination as if such date were the Expiration Date, and neither party shall have any further obligation or liability to the other after such termination except (i) as shall be expressly provided for in this Lease, and (ii) for such obligations as by their nature under the circumstances can only be, or by the provisions of this Lease, may be, performed after such termination, and, in any event, unless expressly otherwise provided in this Lease, any liability for a payment (which shall be apportioned as of such termination) which shall have accrued to or with respect to any period ending at the time of termination shall survive the termination of this Lease.

(c)    Words and phrases used in the singular shall be deemed to include the plural and vice versa, and nouns and pronouns used in any particular gender shall be deemed to include any other gender.

[signature page and exhibits to follow]

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the day and year first above written.

LANDLORD:

RBM CHERRY ROAD PARTNERS,

a Tennessee general partnership

BY: RBM Venture Company,

a Delaware corporation,

its Managing Partner

By:	/s/ Scott Imorde
	Scott Imorde, President

TENANT:

WRIGHT MEDICAL TECHNOLOGY, INC.,

a Delaware corporation

By:	/s/ Lance A. Berry
Name:	Lance A. Berry
Title:	Sr. Vice President and Chief Financial Officer

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Exhibit “A”

Legal Description

The real property on which exists a three (3) story office building and a two (2) story office building is situated in Memphis, Shelby County, Tennessee, and is described more particularly as follows:

BEING THE RBM CHERRY ROAD PARTNERS PROPERTY AS RECORDED IN INSTRUMENT NO. 13011058 AND BEING LOT 1 OF P.D. 99-366, PHASE I, RBM CHERRY ROAD PARTNERS AS RECORDED IN PLAT BOOK 204 AT PAGE 29 IN THE REGISTER'S OFFICE OF SHELBY COUNTY, TENNESSEE AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

COMMENCING AT A POINT ON THE CENTERLINE OF CHERRY ROAD (R.O.W. VARIES), 1087.24 FEET NORTH OF THE INTERSECTION OF HAVERHILL ROAD (50 FT. R.O.W.) AND SAID CHERRY ROAD; THENCE N89°37'17" W A DISTANCE OF 30.00 FEET TO THE POINT OF BEGINNING, SAID POINT BEING A FOUND AXLE ON THE WEST LINE OF SAID CHERRY ROAD, SAID POINT ALSO BEING THE SOUTHEAST CORNER OF THE DIXON GALLERY AND GARDENS PROPERTY (INSTRUMENT K8-7671); THENCE ALONG SAID WEST LINE OF CHERRY ROAD S0°00'14"E A DISTANCE OF 30.00 FEET TO A SET IRON PIN AT THE NORTHEAST CORNER OF LOT 2 OF SAID P.D. 99-366, PHASE I, RBM CHERRY ROAD PARTNERS (PB 204, PG 29); THENCE WITH THE NORTH LINE OF SAID LOT 2 N89° 37'17'W A DISTANCE OF 264.26 FEET TO A SET IRON PIN; THENCE S0°00'14"E A DISTANCE OF 237.92 FEET TO A SET IRON PIN; THENCE N89°37'17"W A DISTANCE OF 222.36 FEET TO ASET IRON PIN; THENCE S27°16'38'W A DISTANCE OF 188.13 FEET TO A SET IRON PIN; THENCE N86°44'15'W A DISTANCE OF 173.28 FEET TO A POINT; THENCE N3°15'45"E A DISTANCE OF 27.58 FEET TOA POINT; THENCE N86°44'15'W A DISTANCE OF 75.95 FEET TO A POINT; THENCE S30°15'47'W A DISTANCE OF 48.67 FEET TO A SET CHISEL MARK IN A CONCRETE WALK; THENCE N59°52'06"W A DISTANCE OF 225.85 FEET TO A SET IRON PIN ON THE EAST LINE OF LOT 26 OF AUDUBON PARK SUBDIVISION (PLAT BOOK 14, PAGE 30), SAID POINT BEING 15.11 FEET SOUTH OF THE NORTH LINE OF SAID LOT 26; THENCE ALONG SAID EAST LINE AND THE EAST LINE OF THE RESUBDIVISION OF LOTS 21-25, AUDUBON PARK SUBDIVISION (PLAT BOOK 15, PAGE 4) N0°13'10"W A DISTANCE OF 325.74 FEET TO A FOUND AXLE, SAID AXLE ALSO BEING THE SOUTHWEST CORNER OF SAID DIXON GALLERY AND GARDENS PROPERTY; THENCE ALONG THE SOUTH LINE OF SAID DIXON GALLERY AND GARDENS PROPERTY S89°37'17"E A DISTANCE OF 1041.19 FEET TO THE POINT OF BEGINNING.

Exhibit “B”

Plat Showing Building 1, Building 2 and Driveway

See attached

Exhibit “C”

Rules and Regulations

Definitions	1.	Wherever in these Rules and Regulations the word “Tenant” is used, it shall be taken to apply to and include the Tenant and his agents, employees, invitees, licensees, visitors, subtenants and contractors, and shall be deemed of such number and gender as the circumstances require. The word “Landlord” shall be taken to include the employees and agents of Landlord.
Obstructions	2.	The streets, sidewalks, entrances, driveways, halls, passages, elevators, stairways and Common Areas provided by Landlord shall not be obstructed by Tenant.
Washrooms	3.	Toilet rooms, water-closets and other water apparatus shall not be used for any purposes other than those for which constructed.
Fire Prevention	4.	Tenant shall not do anything in the Premises or bring or keep anything therein, which shall in any way increase or tend to increase the risk of fire or the rate of fire insurance, or which shall conflict with the regulations of the Fire Department or the fire laws, or with the rules and regulations of the City of Memphis, or equivalent bodies, or with any insurance policy on the Buildings or any part thereof, or with any law, ordinance, rule or regulation affecting the occupancy and use the Premises, now existing or hereafter enacted or promulgated by any public authority or by the City of Memphis or any equivalent body.
Tenant's Equipment	5.	It is Tenant’s responsibility to properly operate all business equipment and coffee machines and to service such equipment and machines.
General Prohibitions	6.	In order to insure proper use and care of the Premises, Tenant shall not, without the consent of Landlord or unless otherwise permitted in the Lease:
	a.	Keep or permit animals or birds in the Buildings except as required for handicapped persons or except as used in a Permitted Use under the Lease.
	b.	Use the Premises as sleeping apartments.
	c.	Allow any sign, advertisement or notice to be fixed to the Buildings, inside or outside, without Landlord’s written consent, except as provided for in Section 30.1 of the Lease.
	d.	Make improper noise or disturbances of any kind, or otherwise do anything to disturb other tenants or tend to injure the reputation of the Buildings.
	e.	Mark or defile elevators, water closets, toilet rooms, walls, windows, doors or any other parts of the Buildings.
	f.	Place anything on the outside of the Buildings, including roof setbacks, window ledges and other projections except as provided for in Sections 30.1 and 37.1 of the Lease; or drop anything from the windows, stairways or parapets; or place trash or other matter in the halls, stairways, elevators or light wells of the Buildings.
	g.	Cover, block or obstruct any window, skylight, door or transom or any other surface that admits light, except building standard blinds.
	h.	RESERVED
	i.	RESERVED
	j.	RESERVED
	k.	RESERVED
	l.	RESERVED

	m.	Install call boxes, or any kind of wire in or on the Buildings without Landlord’s permission and direction, except as provided for in Sections 5.8 and 37.1 of the Lease.
	n.	RESERVED
	o.	RESERVED
	p.	RESERVED
	q.	RESERVED
	r.	Leave the Land and enter the Adjacent Property, except via the designated entrance driveway between the Land and Cherry Road, but then only during the course of arriving and leaving for work.
Tenant Moves	7.	Landlord’s tenant move in/move out policy is as follows:
	a.	RESERVED
	b.	Tenant’s contractor shall provide a certificate of insurance evidencing liability, property damage and workmen’s compensation insurance of not less than $2,000,000, naming Landlord as additional insured.
Rights Reserved to Landlord	8.	Without abatement or diminution in rent, Landlord reserves and shall have the following additional rights:
	a.	During the last six (6) months of the Term or any part thereof, if during or prior to that time the Tenant vacates the Premises, to decorate, remodel, repair, alter or otherwise prepare the Premises for re-occupancy. To install and maintain signs for other tenants.
	b.	RESERVED
	c.	Landlord may reasonably enter upon the Premises and may exercise any or all of the foregoing rights hereby reserved without being deemed guilty of an eviction or disturbance of Tenant’s use or possession and without being liable in any manner to the Tenant.
	d.	RESERVED
Regulation Change	9.	Landlord shall have the right to make such other and further reasonable rules and regulations as in the judgment of Landlord, may from time to time be needful for the safety, appearance, care and cleanliness of the Buildings and for the preservation of order therein, Landlord shall not be responsible to Tenant for any violation of rules and regulations by other tenants or occupants of the Real Property or Adjacent Property.
Smoking Areas	10.	Tenant shall have the right, from time to time, to designate and thereafter to change, alter or redesignate, smoking and non-smoking area(s) outside the Buildings, and shall prohibit or limit such activity in order to fully comply with any applicable governmental ordinance, law or regulation. Tenant shall not permit any of its employees, agents or invitees to smoke except in the designated smoking area(s) and, in any event, never inside the Buildings.
Plumbing	11.	Plumbing fixtures and appliances shall be used only for purposes for which constructed, and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed therein. Damage resulting to any such fixtures or appliances from misuse by Tenant shall be repaired and replaced at Tenant’s sole cost and expense, and Landlord shall not in any case be responsible therefor.
Miscellaneous	13.	In case of any conflict or inconsistency between the provisions of the Lease and of any of these Rules and Regulations, the provisions of this Lease shall control.

Exhibit “D”

Acceptance of Premises

ACCEPTANCE OF PREMISES

THIS ACCEPTANCE OF PREMISES is attached to and made a part of the Agreement Of Lease dated as of December 31, 2013, by and between RBM CHERRY ROAD PARTNERS, as Landlord, and WRIGHT MEDICAL TECHNOLOGY, INC., as Tenant.

The undersigned hereby agree and confirm that the Commencement Date, Expiration Date, and Base Rent schedule are as stated below:

1. The Commencement Date as defined in item (2) of the Reference Page of the Lease is January 1, 2014, and the Expiration Date as defined in item (3) of the Reference Page of the Lease is October 31, 2024.

2. The initial Base Rent as defined in item (5) of the Reference Page of the Lease is as shown on the attached Schedule 1.

3. Tenant has accepted possession of the Premises for occupancy, and the condition of the Premises and the Land is satisfactory and in conformity with the provisions of the Lease in all respects.

4. Any capitalized terms not otherwise defined herein shall have the meaning as set forth in the Lease.

TENANT:LANDLORD:

WRIGHT MEDICAL TECHNOLOGY, INC.,RBM CHERRY ROAD PARTNERS,

a Delaware corporation                    a Tennessee general partnership

By:    RBM Venture Company,

a Delaware corporation

its Managing Member

By:	/s/ Fred R. Courtney
Name:	Fred R. Courtney	By:	/s/ Scott Imorde
Title:	Director of Facilities & Maintenance		Scott Imorde, President

Exhibit “E”

Site Plan

See attached

Exhibit “F”

Tenant Design and Construction Standards

Tenant agrees to furnish Landlord the following information in drawings, in accordance with the below-listed schedules.

1.    PRELIMINARY DRAWINGS

No later than four (4) weeks prior to the projected construction commencement date, Tenant shall furnish Landlord two (2) complete sets of prints of 1/8" scale preliminary drawings showing at least the following information:

a. Floor plan including furniture layout, partition layout, door layout, power and telephone outlet locations, items above standard finish, floor loading information beyond 70 psf, etc.

b. Reflected ceiling plan including lighting layout, exit signs, registers, grilles, diffusers, exhaust fans, ceiling breaks, etc.

c. Written scope sheet of special Tenant mechanical and electrical requirements and/or custom construction and finish requirements.

d. Take-off sheet of building standard items shall be used.

2. ARCHITECTURAL WORKING DRAWINGS FOR CONSTRUCTION

No later than two (2) weeks prior to the projected construction commencement date, Tenant shall furnish Landlord two (2) sets of prints of complete 1/8” scale working drawings on or before showing at least the following information and marked “issued for engineering and Landlord review”:

a. Location and type of all partitions and doors (specify hardware and provide keying schedule), glass partitions, windows and glass doors (indicate framing sections if not building standard).

b. Indication of all critical dimensions necessary for construction.

c. Location of telephone/computer equipment room accompanied by an approval of the telephone company.

d. Location of all building standard and above building standard electrical items including outlets, switches, telephone outlets and lighting.

e. Location and type of equipment that require special electrical; requirements including manufacturer's specifications for use and operations.

f. Location, weight per square foot and description of any exceptionally heavy equipment or filing system exceeding 75 psf live load including 20 psf for partitions.

g. Requirements for special air conditioning or ventilation including occupancy information for each room and space.

h. Type and color of floor covering, wall covering, and building standard and above-building standard paint or finishes.

i. Requirements for special plumbing including all line sizes, fixtures and specifications.

j. Location and type of kitchen equipment including specifications.

k. Details showing:

(1) Construction of all partition types;

(2) Head, jamb and sill sections with elevations for all door types;

(3) Shelving, cabinet work and architectural millwork with dimensions and dimensions of all equipment to be built in;

(4) Special corridor entrance with framing and support requirements; and

(5) Bracing or support of special walls, glass partitions, drapery track, etc.

3. MECHANICAL/ELECTRICAL WORKING DRAWINGS FOR CONSTRUCTION

No later than two (2) weeks prior to the projected construction commencement date, Tenant shall furnish two (2) sets of prints of 1/8" scale mechanical/electrical working drawings which, among other things, shall identify requirements beyond the building standard scope.

4. Tenant shall be responsible for obtaining city review and approval of preliminary drawings (as referred to in paragraph 1 above). Tenant shall make application and obtain a city building permit.

Exhibit “G”

Tenant’s Reserved Parking Spaces

Tenant to provide to Landlord within 30 days of the Commencement Date.

Exhibit “H”

Work Letter Agreement

See attached

WORK LETTER AGREEMENT

To induce Tenant to enter into that certain Agreement of Lease dated as of December 31, 2013 (the “Lease”, to which this Work Letter Agreement is attached) and in consideration of the mutual covenants hereinafter contained, Landlord and Tenant agree as follows:

1. Landlord shall deliver the Premises to Tenant, and Tenant shall accept the Premises from Landlord, in “AS IS, WHERE IS” condition as provided, and as further described and excepted to, in Section 5.1 of the Lease. Notwithstanding the foregoing, the parties acknowledge that improvements and modifications have been and will be installed and/or constructed in and on the Premises and upon Building 1, Building 2 and the Common Area, and that such tenant improvement work (“Tenant’s Work”) will consist of any improvements, modifications and upgrades desired by Tenant in its use of the Premises and Common Area (including both hard and soft costs) including, without limitation, improvements and modifications to the interior of the Premises (including data and phone cabling, networks and related equipment), to the exteriors of Building 1 and Building 2, and to the Common Area (including the parking lots, decks, driveways, entrances, sidewalks and landscaping located on the Land), and all of Tenant’s Work will be constructed in accordance with the following terms and conditions:

(a)(1) Tenant shall deliver to Landlord two (2) signed sets each of Tenant’s proposed, detailed plans and specifications consisting of, without limitation, finished layout (i.e., structural drawings and exterior elevations), architectural (i.e., interior space layout plan), electrical, mechanical, plumbing and HVAC plans (and other plans as necessary for Tenant’s Work) for the Premises and Common Area that comply with all Requirements in effect upon submission by Tenant, together with an electronic (CAD) version, if available (“Plans”), prepared by The Pickering Firm, or another architectural/engineering firm(s) selected by Tenant and reasonably acceptable to Landlord (“Architect”). Architect shall prepare the mechanical and electrical drawings for the Premises, or such mechanical and electrical drawings shall be prepared by other contractors selected by the Architect and/or Tenant reasonably acceptable to Landlord, which drawings shall be submitted as Plans and shall be deemed a part thereof. Tenant may submit incremental Plans and/or Plans representing portions of Tenant's Work, even if Tenant's Work has not yet been completely designed. Tenant shall be entitled to commence Tenant’s Work as long as it has first obtained Landlord’s prior written approval of the then-existing Plans at the time that Tenant's Work is scheduled to commence. As soon as reasonably possible but, in any event, within five (5) business days after receipt by Landlord of the Plans so submitted by Tenant (“Approval Period”), Landlord shall either approve the Plans or disapprove the Plans by written notice to Tenant; provided, however, Landlord’s approval shall not be unreasonably withheld, conditioned or delayed. Landlord and Tenant agree and acknowledge that the Plans may be delivered to Landlord in multiple sets of Plans and at different times. Failure of Landlord to respond within the Approval Period shall be deemed an approval of the Plans so submitted. If there are subsequent submissions of Plans and/or submissions of alternative Plans required due to Landlord's disapproval of the Plans or items in such

Plans, the subsequent submissions shall be approved or disapproved in writing by Landlord within five (5) business days of receipt with the failure of Landlord to so respond within such applicable Approval Period being deemed an approval of the Plans or changes thereto. If Landlord disapproves the Plans, Landlord shall advise Tenant in writing within the Approval Period of those revisions or corrections which Landlord reasonably requires and Tenant shall, within ten (10) days thereafter, submit two (2) signed sets of the Plans as so revised or corrected to Landlord for Landlord’s approval in accordance with this Section 1(a). Landlord may disapprove the Plans if Landlord reasonably determines that the Plans: (A) do not provide for a first class finish consistent with a first class office building in Memphis, Tennessee, or are not consistent with the design of any Plans previously approved by Landlord; (B) would subject Landlord, one or both of the Buildings or any portion of the Premises to any liability, claim, damage, loss, violation, fine, penalty, or forfeiture or any additional cost or expense to Landlord, all as a result of a violation of the Requirements in effect upon submission of the Plans; (C) would provide for or require any installation or work which is unlawful or which would create an unsound or dangerous condition that cannot be mitigated by the use of reasonable and customary precautions (however, any work or installation required or necessary for the Permitted Use under the Lease shall be allowed); or (D) do not conform to the requirements of the City of Memphis and all other applicable laws (including, without limitation, the Requirements in effect upon submission of the Plans.

(2) Any review or approval by Landlord of the Plans is solely for Landlord’s benefit, and without any representation or warranty whatsoever to Tenant with respect to the adequacy, correctness or efficiency thereof or otherwise.

(b) After initial approval by Landlord, the Plans may subsequently be modified by Tenant. Changes and/or modifications to the approved Plans that will cause the cost of Tenant's Work to increase by more than $100,000 shall require Landlord’s approval; provided, however, Landlord’s approval shall not be unreasonably withheld, conditioned or delayed and shall be consistent with Landlord's approval and obligations under Section 1(a)(1) hereof. The Plans shall be prepared at Tenant’s sole cost and expense, and Landlord shall not charge Tenant a fee or charge (regardless of the form) for Landlord’s (and/or Landlord’s agents’) review of any Plans.

(c) Tenant's Work shall be furnished and installed by H and M Construction Co., Inc. (which company is approved by Landlord) and/or one or more other contractors or vendors chosen by Tenant and approved by Landlord in its reasonable discretion (individually or collectively, “Tenant’s Contractor”), to be selected by Tenant upon the following terms and conditions:

(1) Tenant’s Work shall be performed and completed by Tenant’s Contractor (and by its subcontractors) in a good and workmanlike manner at Tenant’s sole cost and expense (subject to the Allowances) and in accordance with: (A) the approved Plans and (B) all Requirements.

(2) No improvements shall be installed in any portion of the Premises unless and until: (A) Tenant has submitted to Landlord certificates of insurance (in addition to that

required by Article XI of the Lease) evidencing that Tenant’s Contractor has in full force and effect insurance coverage in types and amounts as indicated below and with insurers reasonably approved by Landlord (and which insurance Tenant shall cause to be maintained during the period any construction is being performed upon the Premises and/or the Real Property by Tenant, Tenant’s Contractor and/or any of their respective employees, subcontractors, agents or other representatives) in accordance with the following: (1) worker’s compensation insurance covering each worker employed at the jobsite in the performance of the contract with a minimum coverage of not less than the required statutory amount, (2) commercial general liability insurance covering bodily injury and damage arising out of the performance of the contract at the jobsite with a minimum coverage of not less than One Million Dollars ($1,000,000) combined single limit, (3) business automobile liability insurance covering all vehicles involved in the performance of Tenant’s Work, whether owned, rented or otherwise, with a minimum coverage of not less than Five Hundred Thousand Dollars ($500,000) combined single limit, (4) aggregate products and completed operations insurance with a minimum coverage of not less than One Million Dollars ($1,000,000), (5) builder’s risk insurance on an all risk basis (including collapse) on a completed value (non-reporting) form, or by endorsement, for full replacement value covering all work incorporated in the Buildings and all materials and equipment in or about the Premises, and (6) Umbrella liability insurance in excess of the underlying coverages required above, with limits of not less than Two Million Dollars ($2,000,000) per occurrence / Four Million Dollars ($4,000,000) aggregate. The insurance required hereby shall be written for not less than any limit required by law or as stated above, whichever is greater. Landlord shall be shown as an additional insured on the above-mentioned insurance policies and be provided a minimum of thirty (30) days prior written notice in the event of cancellation or modification thereof; provided, however, that such insurance policies shall not be cancelled nor coverages thereunder reduced by Tenant’s Contractor without the written consent of Landlord. Such insurance policies shall cover claims and damages arising out of Tenant’s Work, whether caused directly or indirectly by Tenant’s Contractor, its employees, agents or subcontractors. Tenant shall cause Tenant’s Contractor to waive and shall cause Tenant’s respective insurance carriers to waive any and all rights of recovery, claims, actions or causes of action against the other for any loss or damage with respect to Tenant’s property, leasehold improvements, the Buildings, the Premises, or any contents thereof, including rights, claims, actions and causes of action based on negligence, which loss or damage is (or would have been, had the insurance required by this Work Letter Agreement been carried) covered by insurance;(B) Tenant has obtained all permits, approvals and certificates necessary for the construction of Tenant’s Work and submitted copies thereof to Landlord; and(C) Tenant shall obtain in Tenant’s agreement with Tenant’s Contractor an indemnification of Landlord substantially the same as provided in Section 3(b) hereof.

(d) Landlord shall have no obligation to do any work (or supervision) with respect to the installation of any improvements in or upon the Premises, and, as between Landlord and Tenant, Tenant shall be responsible for the contracting of, supervising of and payment for all of Tenant’s Work (subject to the Allowances). Tenant and Tenant's Contractor shall have full and exclusive access to and use of the Real Property during any construction of Tenant’s Work subject to the requirements of this Work Letter Agreement and the Lease, and except to the extent Landlord is

required or permitted to access and/or use the Real Property. Landlord shall pay electric utility charges for the Real Property during construction of Tenant’s Work through and including December 31, 2013; and Tenant shall be responsible for the payment of all electric utility charges for the Real Property on and after January 1, 2014 subject and pursuant to the terms of the Lease.

(e)Notwithstanding the foregoing, or any other provision of this Work Letter Agreement, Landlord and Tenant agree and acknowledge that the following Plans have been approved by Landlord: (A) demolition and pre-construction Plans for both Building 1 and Building 2, (B) space plans, electrical, data, cabling and network connection Plans for Tenant’s temporary occupancy of Building 2 pursuant and subject to that certain Early Access Agreement related to the Premises by and between Landlord and Tenant dated as of August 14, 2013, which terminated by its terms as of the date hereof, (C) architectural renderings of the front entrances for both Building 1 and Building 2; and (D) all other Plans submitted to Landlord by Tenant (or its agents) forTenant’s Work on or before the date of this Work Letter Agreement.

2.Landlord’s agreement to permit Tenant’s Contractor to perform Tenant’s Work is conditioned upon Tenant’s compliance with Section 1 of this Work Letter Agreement and upon Tenant’s Contractor refraining from interfering with Landlord’s (and its agents, contractors or employees) (a) access to the Real Property in accordance with the Lease and otherwise in connection with routine work or work at the request of Tenant or Tenant Contractor upon the Real Property and (b) use and enjoyment of the Adjacent Property. If at any time Tenant’s entry shall not be so in compliance, Landlord shall give Tenant written notice of the same and Tenant shall immediately remedy the problem, which in no event shall take longer than three (3) business days. In the event that Tenant does not remedy the problem within such 3-day period, then Tenant shall not be permitted access to the Real Property in connection with Tenant’s Work until such problem is remedied. However, Tenant’s (and Tenant’s agents’) access to the Premises for any and all other reasons other than for Tenant’s Work shall be controlled by the provisions of the Lease.

3.(a) Landlord hereby agrees to wire transfer to Tenant the sum of Three Million Eight Hundred Seventy Three Thousand Twenty Dollars ($3,873,020.00) (the “Lease Improvement Payment”) on January 2, 2014, which sum has been paid by Tenant to Tenant’s Contractor in connection with Tenant’s Work and which is the tenant improvement allowance provided by Landlord to Tenant for reimbursement of Tenant’s Work (1) as to interior improvements and modifications to the Premises (the “Interior Improvement Allowance”), and (2) as to improvements and modifications to the exterior of the Buildings and Common Area (including, without limitation, the parking lots, driveways, sidewalks, landscaping and decks) (the “Exterior Improvement Allowance” and, together with the Interior Improvement Allowance, the “Allowances”). The Interior Improvement Allowance shall be an amount of Three Million One Hundred Twenty-Three Thousand Twenty Dollars ($3,123,020). The Exterior Improvement Allowance shall be an amount of Seven Hundred Fifty Thousand Dollars ($750,000). Landlord hereby acknowledges and agrees that all requirements for the payment of the Lease Improvement Payment by Landlord under this Work Letter Agreement, the Lease or otherwise have been satisfied and/or waived.

(b) Reserved

(c) Reserved

(d) Reserved

(e) Notwithstanding any provision of the Lease or this Work Letter Agreement, Tenant has received a One Million Dollar ($1,000,000.00) economic development grant from the State of Tennessee (the ”State Grant”) in connection with Tenant’s move to and improvements made to the Real Property and Tenant's other costs, expenses and purchases associated therewith. Landlord and Tenant agree that (1) Landlord shall, to the extent reasonably required, cooperate with Tenant as to any documentation or other requirements of the State Grant (all at Tenant’s cost and expense), (2) Tenant shall present payments made by Tenant to Tenant’s Contractor (but not payments made by Landlord to Tenant’s Contractor) for Tenant’s Work for reimbursement by the State under the State Grant, (3) Tenant, and not Landlord, shall be entitled to receive all funds paid by the State under the State Grant, (4) receipt of the State Grant by Tenant shall not in any manner effect, reduce or diminish Landlord’s obligations to pay and fund the full amount of the Lease Improvement Payment as set forth in this Work Letter Agreement, and (5) Landlord shall have no claim or right to any amounts paid under the State Grant.

(f) Anything in the Lease to the contrary notwithstanding, Tenant shall indemnify Landlord and save it harmless from all claims, damages, losses, liabilities and expenses (including reasonable attorneys’ fees) arising out of Tenant’s Work or any act or omission of Tenant, Tenant’s Contractor, or either of their respective employees or agents in performing Tenant’s Work or in connection with or arising out of any incorrectness in the certifications required hereinabove.

4.Tenant designates Fred R. Courtney, Tenant’s Global Director of Facilities Engineering, or another representative of Tenant designated in writing to Landlord at a later date (individually, a “Tenant’s Representative”), and Landlord designates Rawleigh Martin, or another representative of Landlord designated in writing to Tenant at a later date(individually, a “Landlord’s Representative”), as their respective representatives who shall be authorized with respect to Tenant’s Work to (a) make all decisions on their behalf, (b) receive all notices under this Work Letter Agreement, (c) give all approvals under this Work Letter Agreement, and (d) be available at all reasonable times, as may be necessary or desirable, to discuss matters relating to Tenant’s Work or this Work Letter Agreement. Tenant and Landlord may change their respective representatives from time to time upon notice to the other in accordance with the notice requirements provided under the Lease. Subject to Section 1(b) hereunder, no change order, approval or other decision shall be effective without the written authorization of a Tenant’s Representative and a Landlord’s Representative.

5.Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Lease.

6.All notices required or permitted hereunder shall be in writing and may be given via overnight delivery or email to the following addressees:

If to Landlord:If to Tenant:

RBM Cherry Road PartnersWright Medical Technology, Inc.

1025 Cherry Road5677 Airline Road

Memphis, Tennessee 38117Arlington, Tennessee 38002

Attention: Rawleigh MartinAttention: Fred R. Courtney

Email: rawl@rbmvco.comEmail: bud.courtney@wmt.com

7.This Work Letter Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts together constitute but one and the same agreement. The delivery by any party of an executed signature page to this Work Letter Agreement by facsimile transmission or by electronic email in Adobe Corporation’s Portable Document Format (or PDF) shall be deemed to be, and shall be enforceable to the same extent as, an original signature page hereto or thereto. Any party who delivers such a signature page agrees to later deliver an original counterpart to any party that requests it.

* * * * * *

[Signature Page to Follow]

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Work Letter Agreement as of the 31^st day of December, 2013.

LANDLORD:

RBM CHERRY ROAD PARTNERS,

a Tennessee general partnership

BY: RBM Venture Company,

a Delaware corporation,

its Managing Partner

By:	/s/ Scott Imorde
	Scott Imorde, President

TENANT:

WRIGHT MEDICAL TECHNOLOGY, INC.,

a Delaware corporation

By:	/s/ Eric A. Stookey
Name:	Eric A. Stookey
Title:	President, Extremities

Exhibit “I”

Mobile Labs Parking Area

See attached

Exhibit “J”

Access Parcel

LAND LOCATED IN SHELBY COUNTY, TENNESSEE:

RIGHTS OF ACCESS CREATED BY ACCESS EASEMENT AGREEMENT OF RECORD AT INSTRUMENT NO. 03196359 OF SAID REGISTER’S RECORDS IN AND TO:

BEGINNING AT A POINT ON THE WEST LINE OF CHERRY ROAD (R.O.W. VARIES) 216.35 FEET SOUTH (AS MEASURED ALONG CHERRY ROAD) OF THE NORTHEASTERNMOST CORNER OF LOT 2 OF P.D. 99-366, PHASE I, RBM CHERRY ROAD PARTNERS (PB 204, PG 29), THENCE S89°59'46"W A DISTANCE OF 34.33 FEET TO A POINT OF CURVATURE; THENCE ALONG A 38.00 FOOT RADIUS CURVE TO THE LEFT AN ARC DISTANCE OF 13.20 FEET (CHORD S80°02'45"W, 13.13 FEET) TO A POINT OF TANGENCY; THENCE S70°05'44"W A DISTANCE OF 35.33 FEET TO A POINT OF CURVATURE; THENCE ALONG A 412.00 FOOT RADIUS CURVE TO THE RIGHT AN ARC DISTANCE OF 129.81 FEET (CHORD S79°07'18'W, 129.27 FEET) TO A POINT OF REVERSE CURVATURE; THENCE ALONG A 263.00 FOOT RADIUS CURVE TO THE LEFT AN ARC DISTANCE OF 131.42 FEET (CHORD S73°49'59"W 130.05 FEET) TO A POINT; THENCE N30°28'54'W A DISTANCE OF 23.92 FEET TO A POINT; THENCE N0°22'43"E A DISTANCE OF 35.00 FEET TO A POINT; THENCE S89°37'17"E A DISTANCE OF 90.25 FEET TO A POINT; THENCE ALONG A 287.00 FOOT RADIUS CURVE TO THE RIGHT AN ARC DISTANCE OF 46.13 FEET (CHORD N83°32'37"E, 46.08 FEET) TO A POINT OF REVERSE CURVATURE; THENCE ALONG A 388.00 FOOT RADIUS CURVE TO THE LEFT AN ARC DISTANCE OF 122.25 FEET (CHORD N79°07'18"E, 121.74 FEET) TO A POINT OF TANGENCY; THENCE N70°05'44"E A DISTANCE OF 35.33 FEET TO A POINT OF CURVATURE; THENCE ALONG A 62.00 FOOT RADIUS CURVE TO THE RIGHT HAVING AN ARC DISTANCE OF 21.53 FEET (CHORD N80°02'45"E, 21.43 FEET) TO A POINT OF TANGENCY; THENCE N89°56'46"E A DISTANCE OF 34.33 FEET TO A POINT ON THE WEST LINE OF CHERRY ROAD; THENCE ALONG SAID WEST LINE S0°00'14"E A DISTANCE OF 24.00 FEET TO THE POINT OF BEGINNING.

Exhibit “K”

Base Rent Schedule

See attached

Exhibit “L”

Base Rent Schedule for Selected Expansion Space

The Base Rent payable in connection with the Selected Expansion Space shall be calculated by multiplying the Rentable Square Feet of such space by the RSF column on the attached schedule

Exhibit “M”

Location of Tenant Generators

See attached

EX-12

Exhibit 12

Wright Medical Group, Inc.

Ratio of Earnings to Fixed Charges

The following table presents our historical ratios of earnings to fixed charges for the years ended December 31 of the years indicated. We compute this ratio by dividing the sum of earnings before income taxes and fixed charges by fixed charges. Fixed charges represent interest expense, amortization of debt issuance costs, and the interest factor of all rentals, consisting of an appropriate interest factor on operating leases.

	Year ended December 31,
	2013(1)		2012(1)	2011(1)		2010	2009
Ratio of earnings to fixed charges	(11.56	)	0.71	(0.45	)	1.29	2.62

⁽¹⁾Earnings were inadequate to cover fixed charges for the years ended December 31, 2013, 2012, 2011 by $230.4 million, $3.4 million, and $11.4 million, respectively.

EX-21

Exhibit 21

WRIGHT MEDICAL GROUP, INC.

LIST OF SUBSIDIARIES

1	.	Wright Medical Technology, Inc. (USA)
2	.	Wright Medical Capital, Inc. (USA)
3	.	Wright International, Inc. (USA)
4	.	White Box Orthopedics, LLC (USA)
5	.	KHC-WDM, LLC (USA)
6	.	Wright Medical Technology Canada Ltd. (Canada)
7	.	Wright Medical Japan, K.K. (Japan)
8	.	2Hip Holdings SAS (France)
9	.	Wright Medical Europe SAS (France)
10	.	Wright Medical Europe Manufacturing SA (France)
11	.	Wright Medical France SAS (France)
12	.	Wright Medical Italy Srl (Italy)
13	.	Wright Medical UK Limited (UK)
14	.	Wright Medical Instruments Limited (UK)
15	.	Wright Medical Deutschland GmbH (Germany)
16	.	Wright Medical Belgium NV (Belgium)
17	.	Wright Medical Netherlands, B.V. (Netherlands)
18	.	Wright Medical EMEA, B.V. (Netherlands)
19	.	Wright Medical Europe, C.V. (Netherlands)
20	.	INBONE Technologies, Inc. (USA)
21	.	Wright Medical Australia Pty Ltd. (Australia)
22	.	Wright Medical Costa Rica S.A. (Costa Rica)
23	.	Wright Medical Brasil Ltda (Brazil)
24	.	TMW Insurance, Inc. (USA)
25	.	WG Healthcare UK Limited (UK)
26	.	BioMimetic Therapeutics, LLC (USA)
27	.	BioMimetic Therapeutics, Ltd (UK)
28	.	BioMimetic Therapeutics, Pty Ltd (Australia)
29	.	BioMimetic Therapeutics USA, Inc. (USA)
30	.	BioMimetic Therapeutics Canada, Inc. (Canada)
31	.	Biotech International (France)

32	.	Biotech Ortho (France)
33	.	Biotech Benelux SPRL (Belgium)
34	.	Biotech CH (France)
35	.	TriMed Biotech, Inc. (USA)
36	.	TriMed Biotech SAS (France)
37	.	TriMed Hellas S.A (Greece)
38	.	Wright PacRim, Inc. (USA)
39	.	Solana Surgical, LLC (USA)
40	.	OrthoPro, LLC (USA)

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Wright Medical Group, Inc.:

We consent to the incorporation by reference in the registration statement (No. 333-147487 and 333-193940) on Form S-3 and the registration statements (Nos. 333-75176, 333-90024, 333-108638, 333-115541, 333-125231, 333-151756, 333-159227, 333-167682, 333-18359, 333-189012 and 333-189018) on Form S-8 of Wright Medical Group, Inc. of our reports dated February 24, 2014, with respect to the consolidated balance sheets of Wright Medical Group, Inc. and subsidiaries (the Company) as of December 31, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders' equity, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2013, and the financial statement schedule, and the effectiveness of internal control over financial reporting as of December 31, 2013, which reports appear in the December 31, 2013 annual report on Form 10-K of Wright Medical Group, Inc.

(signed) KPMG LLP

Memphis, Tennessee

February 26, 2014

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934

I, Robert J. Palmisano, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2013, of Wright Medical Group, Inc.;

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 registrant’s other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.

Date: February 26, 2014

/s/ Robert J. Palmisano 

Robert J. Palmisano

President and Chief Executive Officer 

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934

I, Lance A. Berry, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2013, of Wright Medical Group, Inc.;

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 registrant’s other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.

Date: February 26, 2014

/s/ Lance A. Berry  

Lance A. Berry 

Senior Vice President and Chief Financial Officer 

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(b) UNDER

THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 1350 OF

CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

Each of the undersigned, Robert J. Palmisano and Lance A. Berry, certifies pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 (the Exchange Act) and Section 1350 of Chapter 63 of Title 18 of the United States Code, that (1) this Annual Report on Form 10-K for the year ended December 31, 2013 (the Report) of Wright Medical Group, Inc. (the Company) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 26, 2014

/s/ Robert J. Palmisano

Robert J. Palmisano

President and Chief Executive Officer 

/s/ Lance A. Berry  

Lance A. Berry 

Senior Vice President and Chief Financial Officer 

XML

Marketable Securities (Tables)

12 Months Ended

Dec. 31, 2013

Marketable Securities [Abstract]

Summary of Marketable Securities Table

The following tables present a summary of our marketable securities (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
At December 31, 2013
Available-for-sale marketable securities
U.S. agency debt securities	$	5,002	$	—	$	(4	)	$	4,998
Certificate of deposit	245		—		—			245
Corporate debt securities	5,186		2		—			5,188
U.S. government debt securities	4,116		1		—			4,117
Total available-for-sale marketable securities	$	14,549	$	3	$	(4	)	$	14,548

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
At December 31, 2012
Available-for-sale marketable securities
U.S. agency debt securities	2,500		—		—		2,500
Corporate debt securities	2,000		1		—		2,001
Total debt securities	$	4,500	$	1	$	—	$	4,501
Corporate equity securities	2,878		$	5,267	—		8,145
Total available-for-sale marketable securities	$	7,378	$	5,268	$	—	$	12,646

Investments Classified by Contractual Maturity Date [Table Text Block]

The maturities of available-for-sale debt securities at December 31, 2013 are as follows:

	Available-for-Sale
	Cost Basis		Fair Value
Due in one year or less	$	6,896	$	6,898
Due after one year through two years	6,153		6,151
Due after two years through five years	1,500		1,499
	14,549		14,548

XML

Organization and Description of Business (Details)	Dec. 31, 2013 countries
Organization and Description of Business [Abstract]
Number of countries in which entity operates	60

XML

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Weighted Average Number of Shares Outstanding for Basic and Diluted Earnings Per Share

The weighted-average number of common shares outstanding for basic and diluted earnings per share purposes is as follows (in thousands):

	Year Ended December 31,
	2013	2012	2011
Weighted-average number of common shares outstanding — basic	45,265	38,769	38,279
Common stock equivalents	—	317	—
Weighted-average number of common shares outstanding — diluted	45,265	39,086	38,279

Antidilutive Potential Common Shares Resulting from Reasons Other Than Net Loss Incurred Excluded from the Diluted Earnings Per Share Computation

The following potential common shares were excluded from the computation of diluted earnings per share, as their effect would have been anti-dilutive (in thousands):

	Year Ended December 31,
	2013	2012	2011
Stock options	2,763	2,854	3,400
Non-vested shares, restricted stock units, and stock-settled phantom stock units	197	290	430
Convertible debt	115	633	1,909
Warrants	11,794	11,794	—

XML

Long-Term Debt and Capital Lease Obligations (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	0 Months Ended	3 Months Ended		9 Months Ended	11 Months Ended	12 Months Ended						12 Months Ended				3 Months Ended	12 Months Ended
	Mar. 11, 2011	Sep. 30, 2013	Mar. 31, 2012	Sep. 30, 2012	Dec. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Aug. 31, 2012	Dec. 31, 2013 Capital Lease Obligations [Member]	Dec. 31, 2012 Capital Lease Obligations [Member]	Dec. 31, 2013 2017 Convertible Debt [Member]	Dec. 31, 2012 2017 Convertible Debt [Member]	Sep. 30, 2012 2017 Convertible Debt [Member]	Aug. 31, 2012 2017 Convertible Debt [Member]	Mar. 31, 2013 2014 Convertible Debt [Member]	Dec. 31, 2013 2014 Convertible Debt [Member]	Dec. 31, 2012 2014 Convertible Debt [Member]	Nov. 30, 2007 2014 Convertible Debt [Member]	Aug. 31, 2012 2017 Notes Conversion Derivative [Member]
Debt Instrument [Line Items]
Long-term debt, gross													$ 300,000,000
Debt and Capital Lease Obligations [Abstract]
Debt and capital lease obligations						275,401,000	258,485,000			8,238,000	0	263,395,000	254,717,000				3,768,000	3,768,000	200,000,000
Less: current portion						(4,174,000)	0
Long-term debt and capital lease obligations						271,227,000	258,485,000
Stated percentage rate															2.00%				2.625%
Maturity date												Aug. 15, 2017				Dec. 01, 2014
Extinguishment of debt, amount	170,900,000				25,300,000	0	25,343,000	170,889,000
Write off of pro-rata unamortized deferred financing fees and for bank and legal fees						200,000
Debt instrument, deferred financing charges														8,800,000
Debt instrument, convertible, conversion ratio												39.3140				30.6279
Conversion price (in dollars per share)												$ 25.44					$ 32.65
wmgi_ThresholdForConversionAsPercentOfConversionPrice												130.00%					140.00%
wmgi_ThresholdForConversion												98.00%
Debt instrument, convertible, minimum consecutive period												20 days					20 days
Debt instrument, convertible, trading period												30 days					30 days
Debt instrument, convertible, purchase price as a percent of principal amount if fundamental change event occurs												100.00%					100.00%
Maturities of Long-term Obligations [Abstract]
2014						3,768,000
2015						0
2016						0
2017						300,000,000
2018						0
Long-term Debt						303,768,000
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments, Fiscal Year Maturity [Abstract]
2014						419,000
2015						915,000
2016						948,000
2017						982,000
2018						1,016,000
LongTermDebtMaturitiesRepaymentsOfPrincipalThereafter						6,012,000
Total minimum payments						10,292,000
Less amount representing interest						2,054,000
Present value of minimum lease payments						8,238,000
Current portion						406,000
Long-term portion						7,832,000
Debt Discount at Time of Issuance									48,100,000											48,100,000
Amortization of Debt Discount (Premium)						8,700,000
Debt Instrument, Interest Rate, Effective Percentage														6.47%
Payments for (Proceeds from) Hedge, Financing Activities			56,200,000			0	56,195,000	0
Debt Instrument, Unamortized Discount												$ (36,605,000)	$ 45,283,000
Incremental Common Shares Attributable to Call Options and Warrants		11.8
Investment Warrants, Exercise Price				$ 29.925

XML

Summary of Significant Accounting Policies - Estimated Useful Lives of Property Plant and Equipment (Details)	12 Months Ended
	Dec. 31, 2013
Surgical instruments [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	6 years
Minimum [Member] | Land improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	15 years
Minimum [Member] | Buildings [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	10 years
Minimum [Member] | Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	3 years
Minimum [Member] | Furniture, fixtures and office equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	1 year
Maximum [Member] | Land improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	25 years
Maximum [Member] | Buildings [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	25 years
Maximum [Member] | Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	14 years
Maximum [Member] | Furniture, fixtures and office equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	14 years

XML

Income Taxes - Tax Credit Carryforward (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2013
Tax Credit Carryforward [Line Items]
Valuation Allowance Charge	$ 119.6
Deferred Tax Liability on Sale of Foreign Subsidiary		0.4
US Federal Operating Loss [Member]
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards	236.0	236.0
Equity Compensation [Member]
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards	2.1	2.1
Acquired Operating Loss [Member]
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards	163.0	163.0
US State Operating loss [Member]
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards	110.0	110.0
General Business [Member]
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards	3.0	3.0
Foreign Operating Loss [Member]
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards	$ 46.0	$ 46.0

XML

Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2013

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

Changes in and reclassifications out of AOCI, net of tax, for the twelve months endedDecember 31, 2013 were as follows (in thousands):

	Currency Translation Adjustment			Unrealized Gain (loss) on Marketable Securities			Minimum Pension Liability Adjustment		Total
Balance December 31, 2012	$	18,991		$	3,213		$	330	$	22,534
Other comprehensive (loss) income, net of tax before reclassification	(1,381		)	1,543			14		176
Reclassification to Other (Income) Expense, net: Gain on equity securities, net of tax	—			(4,757		)	—		(4,757		)
Balance December 31, 2013	$	17,610		$	(1	)	$	344	$	17,953

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Principles of Consolidation Policy

Principles of Consolidation. The accompanying consolidated financial statements include our accounts and those of our wholly owned U.S. and international subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates Policy

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant areas requiring the use of management estimates relate to discontinued operations, revenue recognition, the determination of allowances for doubtful accounts and excess and obsolete inventories, the evaluation of goodwill and long-lived assets, product liability claims and other litigation, income taxes, stock-based compensation, accounting for business combinations, and accounting for restructuring charges.

Cash and Cash Equivalents Policy

Cash and Cash Equivalents. Cash and cash equivalents include all cash balances and short-term investments with original maturities of three months or less.

Inventory Policy

Inventories. Our inventories are valued at the lower of cost or market on a first-in, first-out (FIFO) basis. Inventory costs include material, labor costs and manufacturing overhead. We regularly review inventory quantities on hand for excess and obsolete inventory and, when circumstances indicate, we incur charges to write down inventories to their net realizable value. Our review of inventory for excess and obsolete quantities is based primarily on our estimated forecast of product demand and production requirements for the next twenty-four months.

Product Liability Policy

Product Liability Claims, Product Liability Insurance Recoveries, and Other Litigation. We are involved in legal proceedingsinvolving product liability claims as well as contract, patent protection and other matters. See Note 19 for additional information regarding product liability claims, product liability insurance recoveries and other litigation.

We make provisions for claims specifically identified for which we believe the likelihood of an unfavorable outcome is probable and the amount of loss can be estimated. For unresolved contingencies with potentially material exposure that are deemed reasonably possible, we evaluate whether a potential loss or range of loss can be reasonably estimated. Our evaluation of these matters is the result of a comprehensive process designed to ensure that recognition of a loss or disclosure of these contingencies is made in a timely manner. In determining whether a loss should be accrued or a loss contingency disclosed, we evaluate a number of factors including: the procedural status of each lawsuit; any opportunities for dismissal of the lawsuit before trial; the amount of time remaining before trial date; the status of discovery; the status of settlement; arbitration or mediation proceedings; and management’s estimate of the likelihood of success prior to or at trial. The estimates used to establish a range of loss and the amounts to accrue are based on previous settlement experience, consultation with legal counsel, and management’s settlement strategies. If the estimate of a probable loss is in a range and no amount within the range is more likely, we accrue the minimum amount of the range. We recognize legal fees as an expense in the period incurred.

Property, Plant and Equipment Policy

Property, Plant and Equipment. Our property, plant and equipment is stated at cost. Depreciation, which includes amortization of assets under capital lease, is generally provided on a straight-line basis over the estimated useful lives generally based on the following categories:

Land improvements	15	to	25	years
Buildings	10	to	25	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	1	to	14	years
Surgical instruments			6	years

Expenditures for major renewals and betterments, including leasehold improvements, that extend the useful life of the assets are capitalized and depreciated over the remaining life of the asset or lease term, if shorter. Maintenance and repair costs are charged to expense as incurred. Upon sale or retirement, the asset cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in income.

Intangible Assets and Goodwill Policy

Intangible Assets and Goodwill. Goodwill is recognized for the excess of the purchase price over the fair value of net assets of businesses acquired. FASB ASC 350-30-35-18 requires companies to evaluate for impairment intangible assets not subject to amortization, such as our IPRD assets, if events or changes in circumstances indicate than an asset might be impaired. Further, FASB ASC 350-20-35-30 requires companies to evaluate goodwill and intangibles not subject to amortization for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Unless circumstances otherwise dictate, the annual impairment test is performed in the fourth quarter. During the second and third quarter of 2013, we had events that caused us to test for impairment of intangible assets and goodwill. See Note 12 for further information on the testing. During the fourth quarter of 2013, we performed a qualitative assessment of goodwill for impairment and determined that it is more likely than not that the fair value of our reporting units exceeded their respective carrying values, indicating that goodwill was not impaired. We have determined that we have three reporting units for purposes of evaluating goodwill for impairment: 1) BioMimetic business; 2) Continuing Operations (BioExtremities) business, excluding the BioMimetic business; and 3) Discontinued Operations (OrthoRecon) business.

Our intangible assets with estimable useful lives are amortized on a straight line basis over their respective estimated useful lives to their estimated residual values. This method of amortization approximates the expected future cash flow generated from their use. Finite lived intangibles are reviewed for impairment in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 360, Property, Plant and Equipment (FASB ASC 360). The weighted average amortization periods for completed technology, distribution channels, trademarks, licenses, customer relationships, non-compete agreements and other intangible assets are 9 years, 10 years, 5 years, 14 years, 12 years, 3 years and 7 years, respectively. The weighted average amortization period of our intangible assets on a combined basis is 9 years. Additionally, we have four indefinite lived trademark assets and one in-process research and development (IPRD) intangible asset. These indefinite lived intangible assets are not amortized, but are instead tested for impairment at least annually in accordance with the provisions of FASB ASC Section 350, Intangibles - Goodwill and Other.

Valuation of Long-Lived Assets Policy

Valuation of Long-Lived Assets. Management periodically evaluates carrying values of long-lived assets, including property, plant and equipment and intangible assets, when events and circumstances indicate that these assets may have been impaired. We account for the impairment of long-lived assets in accordance with FASB ASC 360. Accordingly, we evaluate impairment of our property, plant and equipment based upon an analysis of estimated undiscounted future cash flows. If it is determined that a change is required in the useful life of an asset, future depreciation and amortization is adjusted accordingly. Alternatively, should we determine that an asset is impaired, an adjustment would be charged to income based on the difference between the asset’s fair market value and the asset's carrying value.

Allowance for Doubtful Accounts Policy

Allowances for Doubtful Accounts. We experience credit losses on our accounts receivable and, accordingly, we must make estimates related to the ultimate collection of our accounts receivable. Specifically, management analyzes our accounts receivable, historical bad debt experience, customer concentrations, customer credit-worthiness and current economic trends when evaluating the adequacy of our allowance for doubtful accounts.

The majority of our accounts receivable are from hospitals, many of which are government funded. Accordingly, our collection history with this class of customer has been favorable. Historically, we have experienced minimal bad debts from our hospital customers and more significant bad debts from certain international stocking distributors, typically as a result of specific financial difficulty or geo-political factors. We write off accounts receivable when we determine that the accounts receivable are uncollectible, typically upon customer bankruptcy or the customer’s non-response to continued collection efforts.

Concentration of Credit Risk Policy

Concentration of Credit Risk. Financial instruments that potentially subject us to concentrations of credit risk consist principally of accounts receivable. Management attempts to minimize credit risk by reviewing customers’ credit history before extending credit and by monitoring credit exposure on a regular basis. An allowance for possible losses on accounts receivable is established based upon factors surrounding the credit risk of specific customers, historical trends and other information. Collateral or other security is generally not required for accounts receivable.

Income Tax Policy

Income Taxes. Income taxes are accounted for pursuant to the provisions of FASB ASC Section 740, Income Taxes (FASB ASC 740). Our effective tax rate is based on income by tax jurisdiction, statutory rates and tax saving initiatives available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our effective tax rate and evaluating our tax positions. This process includes assessing temporary differences resulting from differing recognition of items for income tax and financial accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

During the fourth quarter of 2013, we recognized a valuation allowance for our U.S. deferred tax assets of approximately $119.6 million, primarily related to net operating losses for our U.S. operations. See Note 14 for further discussion of our consolidated deferred tax assets and liabilities, and the associated valuation allowance.

We provide for unrecognized tax benefits based upon our assessment of whether a tax position is “more-likely-than-not” to be sustained upon examination by the tax authorities. If a tax position meets the more-likely-than-not standard, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more-likely-than-not to be realized upon ultimate settlement or disposition of the underlying tax position.

Other Taxes Policy

Other Taxes. Taxes assessed by a governmental authority that are imposed concurrent with our revenue transactions with customers are presented on a net basis in our consolidated statement of operations.

Revenue Recognition Policy

Revenue Recognition. Our revenues are primarily generated through two types of customers, hospitals and surgery centers, and stocking distributors, with the majority of our revenue derived from sales to hospitals. Our products are primarily sold through a network of employee sales representatives and independent sales representatives in the U.S. and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the U.S. Revenues from sales to hospitals are recorded when the hospital takes title to the product, which is generally when the product is surgically implanted in a patient.

We record revenues from sales to our stocking distributors outside the U.S. at the time the product is shipped to the distributor. Stocking distributors, who sell the products to their customers, take title to the products and assume all risks of ownership. Our distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. In general, the distributors do not have any rights of return or exchange; however, in limited situations, we have repurchase agreements with certain stocking distributors. Those certain agreements require us to repurchase a specified percentage of the inventory purchased by the distributor within a specified period of time prior to the expiration of the contract. During those specified periods, we defer the applicable percentage of the sales. An insignificant amount of deferred revenue related to these types of agreements was recorded at December 31, 2013 and 2012, respectively.

We must make estimates of potential future product returns related to current period product revenue. We develop these estimates by analyzing historical experience related to product returns. Judgment must be used and estimates made in connection with establishing the allowance for sales returns in any accounting period. An allowance for sales returns of $0.3 million is included as a reduction of accounts receivable at December 31, 2013 and 2012, respectively.

In 2011, we entered into a trademark license agreement (License Agreement) with KCI Medical Resources, a subsidiary of Kinetic Concepts, Inc. (KCI). In exchange for $8.5 million, of which $5.5 million was received immediately and the remaining $3 million was received in January 2012, the License Agreement provides KCI with a non-transferable license to use our trademarks associated with our GRAFTJACKET^® line of products in connection with the marketing and distribution of KCI's soft tissue graft containment products used in the wound care field, subject to certain exceptions. License revenue is being recognized over 12 years on a straight line basis.

Shipping and Handling Costs Policy

Shipping and Handling Costs. We incur shipping and handling costs associated with the shipment of goods to customers, independent distributors and our subsidiaries. Amounts billed to customers for shipping and handling of products are included in net sales.

Research and Development Policy

Research and Development Costs. Research and development costs are charged to expense as incurred.

Foreign Currency Translations Policy

Foreign Currency Translation. The financial statements of our international subsidiaries whose functional currency is the local currency are translated into U.S. dollars using the exchange rate at the balance sheet date for assets and liabilities and the weighted average exchange rate for the applicable period for revenues, expenses, gains and losses. Translation adjustments are recorded as a separate component of comprehensive income in stockholders’ equity. Gains and losses resulting from transactions denominated in a currency other than the local functional currency are included in “Other expense, net” in our consolidated statement of operations.

Comprehensive Income Policy

Comprehensive Income. Comprehensive income is defined as the change in equity during a period related to transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The difference between our net income and our comprehensive income is attributable to foreign currency translation, unrealized gains and losses (net of taxes) on our derivative instrument, adjustments to our minimum pension liability, and unrealized gains and losses on our available-for-sale marketable securities.

Stock-based Compensation Policy

Stock-Based Compensation. We account for stock-based compensation in accordance with FASB ASC Section 718, Compensation — Stock Compensation (FASB ASC 718). Under the fair value recognition provisions of FASB ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The determination of the fair value of stock-based payment awards, such as options, on the date of grant using an option-pricing model is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables, which include the expected life of the award, the expected stock price volatility over the expected life of the awards, expected dividend yield and risk-free interest rate.

Fair Value of Financial Instruments Policy

Fair Value of Financial Instruments. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates the fair value of these financial instruments at December 31, 2013 and 2012 due to their short maturities or variable rates.

The remaining outstanding $3.8 million of our 2014 Notes are carried at cost. The estimated fair value of these 2014 Notes was approximately $3.5 million at December 31, 2013 based on a limited number of trades and does not necessarily represent the value at which the entire 2014 Notes portfolio can be retired.

The $300 million of our 2017 Notes are carried at cost. The estimated fair value of these 2017 Notes was approximately $396 million at December 31, 2013, which includes the conversion derivative described in Note 11 of the financial statements, based on a quoted price in an active market (Level 1).

FASB ASC Section 820, Fair Value Measurements and Disclosures requires fair value measurements be classified and disclosed in one of the following three categories:

Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges.

Level 2: Financial instruments determined using prices for recently traded financial instruments 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 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

Derivative Instruments Policy

Derivative Instruments. We account for derivative instruments and hedging activities under FASB ASC Section 815, Derivatives and Hedging (FASB ASC 815). Accordingly, all of our derivative instruments are recorded in the accompanying consolidated balance sheets as either an asset or liability and measured at fair value. The changes in the derivative’s fair value are recognized currently in earnings unless specific hedge accounting criteria are met.

We employ a derivative program using 30-day foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that are denominated in foreign currencies. These forward contracts are expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts are not designated as hedging instruments under FASB ASC 815. Accordingly, the changes in the fair value and the settlement of the contracts are recognized in the period incurred in the accompanying consolidated statements of operations.

Reclassifications

Reclassifications. Certain prior year amounts in the notes to consolidated financial statements have been reclassified to conform to the current year presentation.

XML

Earnings Per Share (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share [Abstract]
Weighted-average number of shares outstanding, basic	45,265,000	38,769,000	38,279,000
Common stock equivalents	0	317,000	0
Weighted-average number of shares outstanding, diluted	45,265,000	39,086,000	38,279,000
Anti-dilutive common stock equivalents excluded from diluted earnings per share computation as a result of net loss	776,722	267,520	136,000
Stock options	2,763,000	2,854,000	3,400,000
Non-vested shares, restricted stock units, and stock-settled phantom stock units	197,000	290,000	430,000
Convertible debt	115,000	633,000	1,909,000
Antidilutive Warrants	11,794,000	11,794,000	0

XML

Goodwill and Intangibles (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Finite And Indefinite Lived Intangible Assets [Line Items]
Total intangibles		$ 53,357,000	$ 31,224,000
Less: Accumulated amortization		13,937,000	12,540,000
Intangible assets, net		39,420,000	18,684,000
Goodwill [Roll Forward]
Goodwill at December 31, 2012	32,414,000	32,414,000
Goodwill, Acquired During Period		199,040,000
Goodwill, Impairment Loss	115,000,000	(114,997,000)
Foreign currency translation		1,806,000
Goodwill at December 31, 2013		118,263,000
Future amortization [Abstract]
2014		6,900,000
2015		4,600,000
2016		3,500,000
2017		3,100,000
2018		2,400,000
Finite-Lived Intangible Assets [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		44,970,000	29,288,000
Less: Accumulated amortization		13,937,000	12,540,000
Finite-Lived Intangible Assets [Member] | Distribution channels [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		250,000	1,250,000
Less: Accumulated amortization		233,000	436,000
Finite-Lived Intangible Assets [Member] | Completed technology [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		16,714,000	9,781,000
Less: Accumulated amortization		5,702,000	4,243,000
Finite-Lived Intangible Assets [Member] | Licenses [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		3,633,000	3,668,000
Less: Accumulated amortization		1,303,000	1,056,000
Finite-Lived Intangible Assets [Member] | Customer Relationships [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		15,578,000	3,788,000
Less: Accumulated amortization		2,371,000	1,799,000
Finite-Lived Intangible Assets [Member] | Trademarks [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		2,364,000	1,316,000
Less: Accumulated amortization		1,098,000	922,000
Finite-Lived Intangible Assets [Member] | Noncompete Agreements [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		5,660,000	7,314,000
Less: Accumulated amortization		3,155,000	2,729,000
Finite-Lived Intangible Assets [Member] | Other [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Definite life intangibles, Cost		771,000	2,171,000
Less: Accumulated amortization		75,000	1,355,000
Indefinite-Lived Intangible Assets [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Indefinite life intangibles		8,387,000	1,936,000
Indefinite-Lived Intangible Assets [Member] | Completed technology [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Indefinite life intangibles		4,266,000	278,000
Indefinite-Lived Intangible Assets [Member] | Trademarks [Member]
Finite And Indefinite Lived Intangible Assets [Line Items]
Indefinite life intangibles		$ 4,121,000	$ 1,658,000

XML

Schedule II - Valuation and Qualifying Accounts (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Allowance for doubtful accounts [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period	$ 291	$ 293	$ 353
Charged to Cost and Expenses	(66)	(2)	(60)
Deductions and Other	47	0	0
Balance at End of Period	272	291	293
Sales returns and allowance [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Period	298	313	321
Charged to Cost and Expenses	(16)	(15)	(8)
Deductions and Other	0	0	0
Balance at End of Period	$ 282	$ 298	$ 313

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Summary of Significant Accounting Policies - Allowance for Doubtful Accounts and Concentration of Credit Risk (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Accounting Policies [Abstract]
Allowance for sales returns	$ 0.3
Allowance for doubtful accounts	$ 0.3

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Components of income before income taxes [Abstract]
U.S.	$ (230,975)	$ (4,043)	$ (12,498)
Foreign	572	658	1,142
Income (loss) before income taxes	(230,403)	(3,385)	(11,356)
Current provision (benefit):
Federal	296	(5,480)	(279)
State	85	(34)	(81)
Foreign	180	337	398
Total current provision	561	(5,177)	38
Deferred (benefit) provision:
Federal	48,257	5,179	(3,533)
State	884	(98)	(472)
Foreign	63	98	6
Total deferred (benefit) provision	49,204	5,179	(3,999)
Total provision for income taxes	49,765	2	(3,961)
Reconciliation of statutory U.S. federal income tax rate to effective income tax rate [Abstract]
Income tax provision at statutory rate	35.00%	35.00%	35.00%
State income taxes	3.20%	3.80%	4.80%
Change in valuation allowance	(51.90%)	(19.70%)	(0.80%)
Foreign income tax rate differences	0.00%	12.90%	3.50%
Other non-deductible expenses	(0.10%)	(6.10%)	(2.20%)
Transaction Costs	(0.80%)	(21.20%)	0.00%
Deferred Tax Write Off	9.30%	0.00%	0.00%
EffectiveTaxReconciliationGoodwillImpairment	(17.50%)	0.00%	0.00%
Other, net	1.20%	(4.80%)	(5.40%)
Total	(21.60%)	(0.10%)	34.90%
Deferred Tax Assets:
Net operating loss carryforwards	100,361	17,009
General business credit carryforward	3,181	734
Reserves and allowances	40,789	37,160
Stock-based compensation expense	7,852	7,256
Other	6,070	7,195
Convertible debt notes and conversion option	46,100	22,173
Valuation allowance	(134,263)	(14,248)
Total deferred tax assets	70,090	77,279
Deferred Tax Liabilities:
Depreciation	13,863	21,116
Intangible assets	9,071	2,828
Deferred Tax Liabilities, Derivatives	46,020	21,916
Other	10,136	8,219
Total deferred tax liabilities	79,090	54,079
Net deferred tax assets	$ (9,000)	$ 23,200

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Segment Data (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 67,824	$ 57,641	$ 60,572	$ 56,293	$ 58,380	$ 50,888	$ 51,964	$ 52,873	$ 242,330	$ 214,105	$ 210,753
Property, Plant and Equipment, Net	70,515				41,482				70,515	41,482
Concentration risk percentage									10.00%
UNITED STATES
Segment Reporting Information [Line Items]
Net sales									177,648	166,111	166,456
Property, Plant and Equipment, Net	61,179				36,271				61,179	36,271
Europe
Segment Reporting Information [Line Items]
Net sales									31,210	22,044	21,405
Property, Plant and Equipment, Net	6,581				3,102				6,581	3,102
Other
Segment Reporting Information [Line Items]
Net sales									33,472	25,950	22,892
Property, Plant and Equipment, Net	2,755				2,109				2,755	2,109
Foot and Ankle [Member]
Segment Reporting Information [Line Items]
Net sales									150,662	122,897	107,734
Upper Extremities [Member]
Segment Reporting Information [Line Items]
Net sales									24,663	24,977	27,742
Biologics [Member]
Segment Reporting Information [Line Items]
Net sales									59,792	60,495	69,409
Other Extremities [Member]
Segment Reporting Information [Line Items]
Net sales									$ 7,213	$ 5,736	$ 5,868

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Stock-based Compensation (Details) (USD $)	3 Months Ended		12 Months Ended
	Dec. 31, 2013		Dec. 31, 2013		Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
wmgi:incremental cost associated with the modified stock compensation	$ 8,800,000
Amounts Recognized in the consolidated financial statements
Total cost of share-based payment plans			11,912,000		7,811,000	5,908,000
Amounts capitalized as inventory and intangible assets			(467,000)		(689,000)	(725,000)
Amortization of capitalized amounts			513,000		717,000	747,000
Charged against income before income taxes			11,958,000		7,839,000	5,930,000
Amount of related income tax benefit recognized in income			(3,945,000)		(2,940,000)	(2,094,000)
Impact to net income (loss), continuing operations			8,013,000		4,899,000	3,836,000
Impact To Net Income (loss), discontinuing operations			2,320,000		2,308,000	2,326,000
Impact to net income (loss)			10,333,000		7,207,000	6,162,000
Share based compensation effect on earnings per share continuing operations, basic			$ 0.18		$ 0.13	$ 0.10
Impact to basic earnings per share			$ 0.23		$ 0.19	$ 0.16
Share based compensation effect on earnings per share, continuing operations, diluted			$ 0.18		$ 0.13	$ 0.10
Impact to diluted earnings per share			$ 0.23		$ 0.18	$ 0.16
Summary of stock option activity
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsAssumedInPeriod			752,000
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsAssumedInPeriodWeightedAverageExercisePrice			$ 19.25
Summary of stock options outstanding and exercisable
Number Outstanding	4,309,000		4,309,000
Weighted-Average Remaining Contractual Life			6 years 8 months
Weighted-Average Exercise Price	$ 21.24		$ 21.24
Number Exercisable	2,285,000		2,285,000
Weighted-Average Exercise Price	$ 20.71		$ 20.71
Narrative
Nonvested Awards, Total Compensation Cost Not yet Recognized	17,400,000		17,400,000
Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition			2 years 8 months 12 days
Number of Shares Authorized	15,417,051		15,417,051
Annual Vesting Percent	25.00%		25.00%
Expiration Term	10 years		10 years
Number of Shares Available for Grant	3,596,125		3,596,125
Options, Exercises in Period, Total Intrinsic Value			1,400,000		200,000	100,000
Award Requisite Service Period			4 years
Share Based Compensation, Exercise Price Range 1 [Member]
Summary of stock options outstanding and exercisable
Exercise Price Range, Lower Range Limit			$ 2.00
Exercise Price Range, Upper Range Limit			$ 16.00
Number Outstanding	371,000		371,000
Weighted-Average Remaining Contractual Life			5 years 9 months
Weighted-Average Exercise Price	$ 12.35		$ 12.35
Number Exercisable	276,000		276,000
Weighted-Average Exercise Price	$ 11.53		$ 11.53
Share Based Compensation, Exercise Price Range 2 [Member]
Summary of stock options outstanding and exercisable
Exercise Price Range, Lower Range Limit			$ 16.01
Exercise Price Range, Upper Range Limit			$ 24.00
Number Outstanding	2,418,000		2,418,000
Weighted-Average Remaining Contractual Life			7 years
Weighted-Average Exercise Price	$ 19.56		$ 19.56
Number Exercisable	1,315,000		1,315,000
Weighted-Average Exercise Price	$ 19.07		$ 19.07
Share Based Compensation, Exercise Price Range 3 [Member]
Summary of stock options outstanding and exercisable
Exercise Price Range, Lower Range Limit			$ 24.01
Exercise Price Range, Upper Range Limit			$ 35.87
Number Outstanding	1,520,000		1,520,000
Weighted-Average Remaining Contractual Life			6 years 5 months
Weighted-Average Exercise Price	$ 26.07		$ 26.07
Number Exercisable	694,000		694,000
Weighted-Average Exercise Price	$ 27.47		$ 27.47
Share Based Compensation, MicroPort Exercise Price Range 1 [Member] [Member]
Summary of stock options outstanding and exercisable
Exercise Price Range, Lower Range Limit			$ 15.47
Exercise Price Range, Upper Range Limit			$ 20.00
Weighted-Average Remaining Contractual Life			9 months
Weighted-Average Exercise Price	$ 16.46		$ 16.46
Share Based Compensation, MicroPort Exercise Price Range 2 [Member] [Member]
Summary of stock options outstanding and exercisable
Exercise Price Range, Lower Range Limit			$ 20.01
Exercise Price Range, Upper Range Limit			$ 30.00
Weighted-Average Remaining Contractual Life			9 months
Weighted-Average Exercise Price	$ 23.77		$ 23.77
Share Based Compensation, MicroPort Exercise Price Range 3 [Member] [Member]
Summary of stock options outstanding and exercisable
Exercise Price Range, Lower Range Limit			$ 30.01
Exercise Price Range, Upper Range Limit			$ 35.87
Weighted-Average Remaining Contractual Life			2 months 27 days
Weighted-Average Exercise Price	$ 31.12		$ 31.12
Full Value Awards [Member]
Narrative
Number of Shares Authorized	3,754,555		3,754,555
Number of Shares Available for Grant	1,798,062		1,798,062
Inducement Grant [Member]
Summary of stock option activity
Options Outstanding, Beginning Balance			940,000
Granted			0
Exercised			0
Forfeited or expired			0
Options Outstanding, Ending Balance	940,000		940,000
Exercisable at December 31, 2013	513,000		513,000
Outstanding, Weighted-Average Exercise Price, Beginning Balance			$ 17.21
Granted, Weighted-Average Exercise Price			$ 0
Exercised, Weighted-Average Exercise Price			$ 0
Forfeited or expired, Weighted-Average Exercise Price			$ 0
Outstanding, Weighted-Average Exercise Price, Ending Balance	$ 17.21		$ 17.21
Exercisable, Weighted-Average Exercise Price	$ 16.61		$ 16.61
Outstanding, Weighted-Average Remaining Contractual Life			7 years 11 months 27 days
Exercisable, Weighted-Average Remaining Contractual Life			7 years 10 months 6 days
Outstanding, Aggregate Intrinsic Value	12,683,000	[1]	12,683,000	[1]
Exercisable, Aggregate Intrinsic Value	7,230,000	[1]	7,230,000	[1]
Inducement Grant [Member] | Chief Executive Officer [Member]
Summary of stock option activity
Granted					610,000
Granted, Weighted-Average Exercise Price					$ 16.03
Inducement Grant [Member] | Chief Communications Officer [Member]
Summary of stock option activity
Granted					30,000
Granted, Weighted-Average Exercise Price					$ 18.33
Inducement Grant [Member] | General Counsel [Member]
Summary of stock option activity
Granted					65,000
Granted, Weighted-Average Exercise Price					$ 16.23
Inducement Grant [Member] | Chief Compliance Officer [Member]
Summary of stock option activity
Granted					50,000
Granted, Weighted-Average Exercise Price					$ 17.35
Inducement Grant [Member] | Chief Operating Officer [Member]
Summary of stock option activity
Granted					184,500
Granted, Weighted-Average Exercise Price					$ 21.24
Stock Options [Member]
Fair Value Assumptions
Fair Value Assumptions, Risk Free Interest Rate, Minimum			0.10%		0.50%	1.00%
Fair Value Assumptions, Risk Free Interest Rate, Maximum			1.40%		1.00%	2.00%
Fair Value Assumptions, Expected Volatility Rate			36.00%		40.00%	39.00%
Summary of stock option activity
Options Outstanding, Beginning Balance			2,120,000
Granted			1,033,000
Exercised			(211,000)
Forfeited or expired			(325,000)
Options Outstanding, Ending Balance	3,369,000		3,369,000		2,120,000
Exercisable at December 31, 2013	1,772,000		1,772,000
Outstanding, Weighted-Average Exercise Price, Beginning Balance			$ 22.71
Granted, Weighted-Average Exercise Price			$ 24.38
Exercised, Weighted-Average Exercise Price			$ 20.17
Forfeited or expired, Weighted-Average Exercise Price			$ 25.30
Outstanding, Weighted-Average Exercise Price, Ending Balance	$ 22.36		$ 22.36		$ 22.71
Exercisable, Weighted-Average Exercise Price	$ 21.89		$ 21.89
Outstanding, Weighted-Average Remaining Contractual Life			6 years 5 months
Exercisable, Weighted-Average Remaining Contractual Life			4 years 2 months
Outstanding, Aggregate Intrinsic Value	28,171,000	[1]	28,171,000	[1]
Exercisable, Aggregate Intrinsic Value	15,657,000	[1]	15,657,000	[1]
Summary of stock options outstanding and exercisable
Number Outstanding	3,369,000		3,369,000
Weighted-Average Remaining Contractual Life			6 years 5 months
Weighted-Average Exercise Price	$ 22.36		$ 22.36
Number Exercisable	1,772,000		1,772,000
Weighted-Average Exercise Price	$ 21.89		$ 21.89
Narrative
Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 8.60		$ 7.89	$ 6.01
Stock Options [Member] | Share Based Compensation, Exercise Price Range 1 [Member]
Summary of stock options outstanding and exercisable
Number Outstanding	371,000		371,000
Weighted-Average Remaining Contractual Life			5 years 9 months
Weighted-Average Exercise Price	$ 12.35		$ 12.35
Number Exercisable	276,000		276,000
Weighted-Average Exercise Price	$ 11.53		$ 11.53
Stock Options [Member] | Share Based Compensation, Exercise Price Range 2 [Member]
Summary of stock options outstanding and exercisable
Number Outstanding	1,478,000		1,478,000
Weighted-Average Remaining Contractual Life			6 years 6 months
Weighted-Average Exercise Price	$ 21.06		$ 21.06
Number Exercisable	802,000		802,000
Weighted-Average Exercise Price	$ 20.64		$ 20.64
Stock Options [Member] | Share Based Compensation, Exercise Price Range 3 [Member]
Summary of stock options outstanding and exercisable
Number Outstanding	1,520,000		1,520,000
Weighted-Average Remaining Contractual Life			6 years 5 months
Weighted-Average Exercise Price	$ 26.07		$ 26.07
Number Exercisable	694,000		694,000
Weighted-Average Exercise Price	$ 27.47		$ 27.47
Nonvested Common Stock [Member]
Summary of stock option activity
Common Stock, Market Value	$ 30.71		$ 30.71
Nonvested Shares Roll Forward
Nonvested Shares, Beginning Balance			486,000
Granted			223,000
Vested			(212,000)
Forfeited			(41,000)
Nonvested Shares, Ending Balance	456,000		456,000		486,000
Nonvested, Weighted-Average Grant-Date Fair Value, Beginning Balance			$ 18.44
Granted			$ 24.66
Vested			$ 18.10
Forfeited			$ 17.98
Nonvested, Weighted-Average Grant-Date Fair Value, Ending Balance	$ 21.69		$ 21.69		$ 18.44
Aggregate Intrinsic Value	$ 14,004,000	[2]	$ 14,004,000	[2]
Narrative
Equity Instruments Other than Options, Vested in Period, Total Fair Value			6,500,000		5,600,000	4,700,000
Nonvested Common Stock Granted to Employees [Member]
Nonvested Shares Roll Forward
Granted			223,000		216,000	345,000
Granted			$ 24.66		$ 21.22	$ 15.56
Nonvested Common Stock Granted to Non-Employees [Member]
Nonvested Shares Roll Forward
Granted						28,000
Granted						$ 15.27
Employee Stock [Member]
Fair Value Assumptions
Fair Value Assumptions, Risk Free Interest Rate, Minimum			0.10%		0.10%	0.30%
Fair Value Assumptions, Risk Free Interest Rate, Maximum			0.40%		0.20%	0.40%
Fair Value Assumptions, Expected Term			6 months
Fair Value Assumptions, Expected Volatility Rate			36.00%		40.00%	39.00%
Nonvested Shares Roll Forward
Granted			$ 6.81		$ 5.93	$ 4.92
Narrative
Number of Shares Authorized	400,000		400,000
Number of Shares Available for Grant	194,566		194,566
Employee Stock Purchase Plan, Eligibility, Minimum Hours Worked Per Week	20		20
Employee Stock Purchase Plan, Number of Plan Periods During Each Year	2		2
Maximum Employee Subscription Rate	5.00%		5.00%
Maximum Purchase Amount Per Employeee	5,000		5,000
Percent of Market Value at Lower of Beginning or Ending Period Market Price , Purchase Date			85.00%
Shares Issued in Period			23,000		25,000	26,000
Discontinued Operations [Member]
Summary of stock option activity
Options Outstanding, Ending Balance	500,000		500,000
Outstanding, Weighted-Average Exercise Price, Ending Balance	$ 22.50		$ 22.50
Outstanding, Aggregate Intrinsic Value	8,526,000	[1]	8,526,000	[1]
Summary of stock options outstanding and exercisable
Number Outstanding	1,146,000		1,146,000
Weighted-Average Remaining Contractual Life			8 months 12 days
Weighted-Average Exercise Price	$ 23.20		$ 23.20
Nonvested Shares Roll Forward
Nonvested Shares, Ending Balance	266,000		266,000
Discontinued Operations [Member] | Share Based Compensation, MicroPort Exercise Price Range 1 [Member] [Member]
Summary of stock options outstanding and exercisable
Number Outstanding	177,000		177,000
Discontinued Operations [Member] | Share Based Compensation, MicroPort Exercise Price Range 2 [Member] [Member]
Summary of stock options outstanding and exercisable
Number Outstanding	857,000		857,000
Discontinued Operations [Member] | Share Based Compensation, MicroPort Exercise Price Range 3 [Member] [Member]
Summary of stock options outstanding and exercisable
Number Outstanding	112,000		112,000
BioMimetics [Member]
Amounts Recognized in the consolidated financial statements
Charged against income before income taxes			$ 2,200,000

[1] The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 201

[2] The aggregate intrinsic value is calculated as the market value of our common stock as of December 31, 2013. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

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Quarterly Results of Operations (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Quarterly Financial Information [Line Items]
Net sales	$ 67,824,000	$ 57,641,000	$ 60,572,000	$ 56,293,000	$ 58,380,000	$ 50,888,000	$ 51,964,000	$ 52,873,000	$ 242,330,000		$ 214,105,000		$ 210,753,000
Cost of sales	17,423,000	14,037,000	14,564,000	13,697,000	13,322,000	11,704,000	11,779,000	11,434,000	59,721,000	[1]	48,239,000	[1]	56,762,000	[1]
Cost of sales - restructuring									0		0		667,000
Gross profit	50,401,000	43,604,000	46,008,000	42,596,000	45,058,000	39,184,000	40,185,000	41,439,000	182,609,000		165,866,000		153,324,000
Operating expenses:
Selling, general and administrative	66,479,000	63,054,000	50,543,000	50,709,000	43,157,000	36,730,000	35,885,000	34,524,000	230,785,000	[1]	150,296,000	[1]	131,611,000	[1]
Research and development	5,412,000	5,518,000	5,868,000	3,507,000	3,626,000	3,428,000	3,490,000	3,361,000	20,305,000	[1]	13,905,000	[1]	15,422,000	[1]
Amortization of intangible assets	1,750,000	1,342,000	2,778,000	1,606,000	1,491,000	1,289,000	982,000	655,000	7,476,000		4,417,000		2,412,000
Asset Impairment Charges	0	206,249,000	0	0					206,249,000		0		0
Gain on Disposition of Intangible Assets					(15,000,000)	0	0	0	0		(15,000,000)		0
Restructuring charges					0	0	254,000	177,000	0		431,000		4,613,000
Total operating expenses	73,641,000	276,163,000	59,189,000	55,822,000	33,274,000	41,447,000	40,611,000	38,717,000	464,815,000		154,049,000		154,058,000
Operating income	(23,240,000)	(232,559,000)	(13,181,000)	(13,226,000)	11,784,000	(2,263,000)	(426,000)	2,722,000	(282,206,000)		11,817,000		(734,000)
Income (Loss) from Continuing Operations Attributable to Parent	(135,211,000)	(124,500,000)	(15,539,000)	(4,918,000)	1,644,000	(4,088,000)	(1,367,000)	424,000	(280,168,000)		(3,387,000)		(7,395,000)
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent	182,000	(5,520,000)	(1,792,000)	13,353,000	3,708,000	(1,251,000)	2,077,000	4,137,000	6,223,000		8,671,000		2,252,000
Net income (loss)	(135,029,000)	(130,020,000)	(17,331,000)	8,435,000	5,352,000	(5,339,000)	710,000	4,561,000	(273,945,000)		5,284,000		(5,143,000)
Income (Loss) from Continuing Operations, Per Basic Share	$ (2.88)	$ (2.68)	$ (0.34)	$ (0.13)	$ 0.04	$ (0.11)	$ (0.04)	$ 0.02	$ (6.19)		$ (0.09)		$ (0.19)
Income (Loss) from Continuing Operations, Per Diluted Share	$ (2.88)	$ (2.68)	$ (0.34)	$ (0.13)	$ 0.04	$ (0.11)	$ (0.04)	$ 0.02	$ (6.19)		$ (0.09)		$ (0.19)
Net (loss) income per share, basic	$ (2.88)	$ (2.80)	$ (0.37)	$ 0.20	$ 0.14	$ (0.14)	$ 0.02	$ 0.12	$ (6.05)		$ 0.14		$ (0.13)
Net (loss) income per share, diluted	$ (2.88)	$ (2.80)	$ (0.37)	$ 0.20	$ 0.14	$ (0.14)	$ 0.02	$ 0.12	$ (6.05)		$ 0.14		$ (0.13)
Restructuring charges					300,000	200,000
DistributorConversionCharges	800,000	700,000	1,100,000	1,200,000	1,200,000	1,200,000	600,000
Business Combination, Acquisition Related Costs					1,800,000
Unrealized loss on derivative instruments, net of taxes $42 and $600, respectively									0		(1,769,000)		0
Inventory write-down	1,300,000	1,000,000							4,700,000		3,200,000		11,600,000
Raw Material Purchase Commitment Charge		3,200,000
Amortization of Debt Discount (Premium)									8,700,000
Write off of pro-rata unamortized deferred financing fees and for bank and legal fees									200,000
Non Cash Adjustment Derivative Fair Value									(1,000,000)		(1,142,000)		0
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability									(61,151,000)		0		0
Gain On Previously Held Investment									(7,798,000)		0		0
Valuation Allowance Charge	119,600,000
Immaterial Error									2,700,000
Continuing Operations [Member]
Operating expenses:
Gain on Disposition of Intangible Assets					(15,000,000)
Unrealized loss on derivative instruments, net of taxes $42 and $600, respectively						1,800,000
Amortization of Debt Discount (Premium)					2,100,000	700,000
Write off of pro-rata unamortized deferred financing fees and for bank and legal fees						2,700,000
Non Cash Adjustment Derivative Fair Value	2,000,000	2,000,000	1,000,000	2,000,000	3,500,000	2,300,000
Gain On Previously Held Investment				7,800,000
Discontinued Operations [Member]
Operating expenses:
Charges related to U.S. government inquiries	600,000	500,000	700,000	1,100,000		1,700,000	2,100,000	2,900,000
Restructuring charges							500,000	700,000
DistributorConversionCharges	300,000	300,000	400,000	500,000	500,000	400,000	200,000
Product Liability Accrual, Period Expense					2,400,000
Increase Decrease in Estimated Recovery from Third Party									19,400,000
Acquisitions in 2013 [Member]
Operating expenses:
Business Combination, Acquisition Related Costs		1,700,000	1,400,000	7,500,000					2,300,000
MicroPort [Member]
Operating expenses:
Business Combination, Acquisition Related Costs	7,700,000	11,200,000	2,600,000
MicroPort [Member] | Discontinued Operations [Member]
Operating expenses:
Business Combination, Acquisition Related Costs	2,900,000	5,200,000	2,800,000
Contingent Value Rights [Member] | Continuing Operations [Member]
Operating expenses:
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	$ 800,000	$ 66,100,000	$ 5,800,000

[1] These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated: Year Ended December 31, 2013 2012 2011Cost of sales$503 $704 $735Selling, general and administrative10,675 6,767 4,875Research and development780 368 320Discontinued operations3,410 3,135 3,178

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Income Taxes - Unrecognized Tax Benefits Roll Forward (Details) (USD $)	12 Months Ended
	Dec. 31, 2013
Unrecognized Tax Benefits [Roll Forward]
Balance at January 1, 2013	$ 5,074,000
Additions for tax positions related to current year	214,000
Additions for tax positions of prior years	180,000
Reductions for tax positions of prior years	(848,000)
Settlements	0
Foreign currency translation	82,000
Balance at December 31, 2013	4,702,000
Accrued interest related to unrecognized tax benefits	$ 400,000

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Other Long-Term Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Other Long-Term Liabilities [Abstract]
Unrecognized tax benefits (See Note 14)	$ 4,702	$ 5,074
Product liability (see Note 19)	9,784	18,639
Derivative Liability, Fair Value, Gross Liability	112,000	55,000
Trademark License Deferred Revenue	4,210	4,731
Contingent Consideration, noncurrent	2,882	540
Other	1,488	928
Other liabilities	$ 135,066	$ 84,912

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Capital Stock

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Capital Stock

Capital Stock

We are authorized to issue up to 100,000,000 shares of voting common stock. We have 52,006,235 shares of voting common stock available for future issuance at December 31, 2013.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Payments Under Non-Cancelable Operating Leases

Future minimum payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining lease terms of one year or more, are as follows at December 31, 2013 (in thousands):

2014	$	6,087
2015	4,364
2016	2,503
2017	1,267
2018	1,182
Thereafter	768
	$	16,171

Long-term Purchase Commitment [Table Text Block]

Future obligations for minimum purchases under these supply agreements are as follows at December 31, 2013 (in thousands):

	Total	2014	2015	2016	2017	2018	Thereafter
Minimum supply obligations	$2,073	—	2,073	—	—	—	—

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Long-Term Debt and Capital Lease Obligations (Tables)

12 Months Ended

Dec. 31, 2013

Long-term Debt and Capital Lease Obligations [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt and capital lease obligations consist of the following (in thousands):

	December 31, 2013			December 31, 2012
Capital lease obligations	$	8,238		$	—
2017 Notes	263,395			254,717
2014 Notes	3,768			3,768
	275,401			258,485
Less: current portion	(4,174		)	—
	$	271,227		$	258,485

Components Of Convertible Debt

The components of the 2017 Notes were as follows (in thousands):

	December 31, 2013			December 31, 2012
Principal amount of 2017 Notes	$	300,000		$	300,000
Unamortized debt discount	(36,605		)	(45,283		)
Net carrying amount of 2017 Notes	$	263,395		$	254,717

Schedule of Maturities of Long-term Obligations

Aggregate annual maturities of our long-term obligations at December 31, 2013, excluding capital lease obligations, are as follows (in thousands):

2014	$	3,768
2015	—
2016	—
2017	300,000
2018	—
	$	303,768

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

At December 31, 2013, future minimum lease payments under capital lease obligations, together with the present value of the net minimum lease payments, are as follows (in thousands):

2014	$	419
2015	915
2016	948
2017	982
2018	1,016
Thereafter	6,012
Total minimum payments	10,292
Less amount representing interest	(2,054		)
Present value of minimum lease payments	8,238
Current portion	(406		)
Long-term portion	$	7,832

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ 17,953	$ 22,534
Accumulated Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amount Of Gain Loss Reclassified From Accumulated Other Comprehensive Income Amount Net Of Tax	0
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	(1,381)
Accumulated Other Comprehensive Income (Loss), Net of Tax	17,610	18,991
Unrealized Gain(Loss) Marketable Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amount Of Gain Loss Reclassified From Accumulated Other Comprehensive Income Amount Net Of Tax	(4,757)
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	1,543
Accumulated Other Comprehensive Income (Loss), Net of Tax	(1)	3,213
Minimum Pension Liability [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amount Of Gain Loss Reclassified From Accumulated Other Comprehensive Income Amount Net Of Tax	0
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	14
Accumulated Other Comprehensive Income (Loss), Net of Tax	344	330
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amount Of Gain Loss Reclassified From Accumulated Other Comprehensive Income Amount Net Of Tax	(4,757)
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	176
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ 17,953	$ 22,534

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2013

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

The following table summarizes the results of discontinued operations (in thousands):

	Twelve Months Ended
	December 31,
	2013		2012		2011
Revenue	$	231,865	$	269,671	$	302,193
Income before tax	9,489		11,946		4,700
Income tax provision	3,266		3,275		2,448
Income from discontinued operations, net of tax	6,223		8,671		2,252

All assets and associated liabilities to be transferred to MicroPort have been classified as assets and liabilities held for sale on our consolidated balance sheet. The following table summarizes the assets and liabilities held for sale (in thousands):

	December 31, 2013		December 31, 2012
Assets
Cash	$	201	$	—
Accounts receivable	59,172		67,434
Inventories, net	74,807		86,792
Property, plant & equipment, net	92,436		96,759
Goodwill	25,802		25,652
Intangible assets, net	1,738		2,610
Deferred income taxes	1,197		2,200
Other current and long-term assets	19,105		14,767
Assets held for sale	$	274,458	$	296,214
Liabilities
Accounts payable	$	9,553	$	5,666
Other current liabilities	21,668		27,327
Other long-term liabilities	1,399		2,031
Liabilities held for sale	$	32,620	$	35,024

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Quarterly Results of Operations (Tables)

12 Months Ended

Dec. 31, 2013

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

	2013
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	56,293		$	60,572		$	57,641		$	67,824
Cost of sales	13,697			14,564			14,037			17,423
Gross profit	42,596			46,008			43,604			50,401
Operating expenses:
Selling, general and administrative	50,709			50,543			63,054			66,479
Research and development	3,507			5,868			5,518			5,412
Amortization of intangible assets	1,606			2,778			1,342			1,750
BioMimetic impairment charges	—			—			206,249			—
Total operating expenses	55,822			59,189			276,163			73,641
Operating loss	$	(13,226	)	$	(13,181	)	$	(232,559	)	$	(23,240	)
Net loss from continuing operations, net of tax	$	(4,918	)	$	(15,539	)	$	(124,500	)	$	(135,211	)
Income (loss) from discontinued operations, net of tax	$	13,353		$	(1,792	)	$	(5,520	)	$	182
Net income (loss)	$	8,435		$	(17,331	)	$	(130,020	)	$	(135,029	)
Net loss, continuing operations per share, basic	(0.13		)	(0.34		)	(2.68		)	(2.88		)
Net loss, continuing operations per share, diluted	(0.13		)	(0.34		)	(2.68		)	(2.88		)
Net income (loss) per share, basic	$	0.20		$	(0.37	)	$	(2.80	)	$	(2.88	)
Net income (loss) per share, diluted	$	0.20		$	(0.37	)	$	(2.80	)	$	(2.88	)

	2012
	First Quarter		Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	52,873	$	51,964		$	50,888		$	58,380
Cost of sales	11,434		11,779			11,704			13,322
Gross profit	41,439		40,185			39,184			45,058
Operating expenses:
Selling, general and administrative	34,524		35,885			36,730			43,157
Research and development	3,361		3,490			3,428			3,626
Amortization of intangible assets	655		982			1,289			1,491
Gain on sale of intellectual property	—		—			—			(15,000		)
Restructuring charges	177		254			—			—
Total operating expenses	38,717		40,611			41,447			33,274
Operating income (loss)	$	2,722	$	(426	)	$	(2,263	)	$	11,784
Net income (loss), continuing operations, net of tax	$	424	$	(1,367	)	$	(4,088	)	$	1,644
Net income (loss), discontinued operations, net of tax	$	4,137	$	2,077		$	(1,251	)	$	3,708
Net income (loss)	$	4,561	$	710		$	(5,339	)	$	5,352
Net income (loss), continuing operations per share, basic	$	0.02	$	(0.04	)	$	(0.11	)	$	0.04
Net income (loss), continuing operations per share, diluted	$	0.02	$	(0.04	)	$	(0.11	)	$	0.04
Net income (loss) per share, basic	$	0.12	$	0.02		$	(0.14	)	$	0.14
Net income (loss) per share, diluted	$	0.12	$	0.02		$	(0.14	)	$	0.14

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Property, Plant and Equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	$ 141,585,000	$ 82,920,000
Less: Accumulated depreciation	(71,070,000)	(41,438,000)
Property, plant and equipment, net	70,515,000	41,482,000
Depreciation	14,400,000	14,800,000	14,000,000
Land and land improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	31,000	61,000
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	13,026,000	2,227,000
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	14,274,000	8,029,000
Furniture, fixtures and office equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	47,364,000	19,006,000
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	13,997,000	2,737,000
Surgical instruments [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	$ 52,893,000	$ 50,860,000

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Summary of Significant Accounting Policies - Narrative (Details) (USD $)	0 Months Ended	3 Months Ended		12 Months Ended
	Jan. 09, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Business Acquisition [Line Items]
Purchase Price Discontinued Operations	$ 287,100,000
Summary of Significant Accounting Policies [Abstract]
Inventory write-down		1,300,000	1,000,000	4,700,000	3,200,000	11,600,000
Valuation Allowance Charge		119,600,000
Allowance for sales returns		300,000		300,000
Stock-based compensation expense				12,000,000	7,800,000	5,900,000
Contingent consideration at fair value, current		12,324,000		12,324,000	444,000
Gain (loss) on foreign currency contracts not designated as hedging instruments				(600,000)	(400,000)	900,000
Trademark revenue, period for recognition					12 years
Inventory Write Down, Restructuring				0	0	667,000
Capital lease obligations incurred				8,200,000		200,000
PROFEMUR Titanium Modular Neck Product [Member]
Summary of Significant Accounting Policies [Abstract]
Product liability accrual, net		16,800,000		16,800,000
Estimatedrecoveryfromthirdparty				25,000,000
Graftjacket Products [Member]
Summary of Significant Accounting Policies [Abstract]
Trademark license agreement, total consideration					8,500,000
Trademark license agreement, portion received immediately					5,500,000
Trademark license agreement, remaining amount receivable					$ 3,000,000

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Before Income Taxes

The components of our income (loss) before income taxes are as follows (in thousands):

	Year Ended December 31,
	2013			2012			2011
U.S.	$	(230,975	)	$	(4,043	)	$	(12,498	)
Foreign	572			658			1,142
Income (loss) before income taxes	$	(230,403	)	$	(3,385	)	$	(11,356	)

Components of Provision for Income Taxes

The components of our provision (benefit) for income taxes are as follows (in thousands):

	Year Ended December 31,
	2013		2012			2011
Current (benefit) provision:
U.S.:
Federal	$	296	$	(5,480	)	$	(279	)
State	85		(34		)	(81		)
Foreign	180		337			398
Total current (benefit) provision	561		(5,177		)	38
Deferred provision (benefit):
U.S.:
Federal	48,257		5,179			(3,533		)
State	884		(98		)	(472		)
Foreign	63		98			6
Total deferred provision (benefit)	49,204		5,179			(3,999		)
Total provision (benefit) for income taxes	$	49,765	$	2		$	(3,961	)

Reconciliation of the Statutory U.S. Federal Income Tax Rate to Effective Income Tax Rate

A reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate is as follows:

	Year Ended December 31,
	2013		2012		2011
Income tax provision at statutory rate	35.0	%	35.0	%	35.0	%
State income taxes	3.2	%	3.8	%	4.8	%
Change in valuation allowance	(51.9	)%	(19.7	)%	(0.8	)%
Foreign income tax rate differences	—	%	12.9	%	3.5	%
Other non-deductible expenses	(0.1	)%	(6.1	)%	(2.2	)%
Transaction costs	(0.8	)%	(21.2	)%	—	%
CVR Fair Market Value Adjustment	9.3	%	—	%	—	%
Goodwill Impairment	(17.5	)%	—	%	—	%
Other, net	1.2	%	(4.8	)%	(5.4	)%
Total	(21.6	)%	(0.1	)%	34.9	%

Significant Components of Deferred Income Taxes

The significant components of our deferred income taxes as of December 31, 2013 and 2012 are as follows (in thousands):

	December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	100,361		$	17,009
General business credit carryforward	3,181			734
Reserves and allowances	40,789			37,160
Stock-based compensation expense	7,852			7,256
Convertible debt notes and conversion option	46,100			22,173
Other	6,070			7,195
Valuation allowance	(134,263		)	(14,248		)
Total deferred tax assets	70,090			77,279
Deferred tax liabilities:
Depreciation	13,863			21,116
Intangible assets	9,071			2,828
Convertible note bond hedge	46,020			21,916
Other	10,136			8,219
Total deferred tax liabilities	79,090			54,079
Net deferred tax assets (liabilities)	$	(9,000	)	$	23,200

Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at January 1, 2013	$	5,074
Additions for tax positions related to current year	214
Additions for tax positions of prior years	180
Reductions for tax positions of prior years	(848		)
Settlements	—
Foreign currency translation	82
Balance at December 31, 2013	$	4,702

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Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	BioMimetics [Member]	BioMimetics [Member] Common Stock [Member]	BioMimetics [Member] Additional Paid-in Capital [Member]	BioMimetics [Member] Retained Earnings [Member]	BioMimetics [Member] Accumulated Other Comprehensive Income [Member]	Biotech [Member]	Biotech [Member] Common Stock [Member]	Biotech [Member] Additional Paid-in Capital [Member]	Biotech [Member] Retained Earnings [Member]	Biotech [Member] Accumulated Other Comprehensive Income [Member]
Balance at Dec. 31, 2010	$ 470,972	$ 379	$ 390,098	$ 58,322	$ 22,173
Balance (in shares) at Dec. 31, 2010		39,171,501
Net (loss) income	(5,143)	0	0	(5,143)	0
Foreign currency translation	(2,102)	0	0	0	(2,102)
Unrealized loss on derivative instruments, net of taxes	(1,014)				(1,014)
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI for Write-down of Securities, Net of Tax	0
Loss on early termination of interest rate swap, net of taxes	0
Unrealized (gain) loss on marketable securities	(33)	0	0	0	(33)
Minimum pension liability adjustment	37	0	0	0	(37)
Issuances of common stock (in shares)		45,518
Issuances of common stock	540	1	539	0	0
Grant of non-vested shares of common stock (in shares)		403,084
Grant of non-vested shares of common stock	0	0	0	0	0
Cancellation of non-vested shares of common stock (in shares)		(354,774)
Vesting of stock-settled phantom stock units and non-vested shares of common stock (in shares)		40,789
Vesting of stock-settled phantom stock units and non-vested shares of common stock	0	4	(4)	0	0
Tax benefits (deficits) realized from stock based compensation	(3,869)	0	(3,869)	0	0
Stock-based compensation	9,076	0	9,076	0	0
Balance at Dec. 31, 2011	468,464	384	395,840	53,179	19,061
Balance (in shares) at Dec. 31, 2011		39,306,118
Net (loss) income	5,284		0	5,284	0
Foreign currency translation	(1,301)		0	0	(1,301)
Unrealized loss on derivative instruments, net of taxes	(65)				(65)
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI for Write-down of Securities, Net of Tax	0
Loss on early termination of interest rate swap, net of taxes	1,079				1,079
Unrealized (gain) loss on marketable securities	3,210	0	0	0	3,210
Minimum pension liability adjustment	550	0	0	0	550
Issuances of common stock (in shares)		113,470
Issuances of common stock	1,949	1	1,948	0	0
Grant of non-vested shares of common stock (in shares)		269,535
Grant of non-vested shares of common stock	0	0	0	0	0
Cancellation of non-vested shares of common stock (in shares)		(32,797)
Vesting of stock-settled phantom stock units and non-vested shares of common stock (in shares)		47,032
Vesting of stock-settled phantom stock units and non-vested shares of common stock	0	4	(4)	0	0
Tax benefits (deficits) realized from stock based compensation	(116)		(116)	0	0
Stock-based compensation	10,932		10,932	0	0
Equity issuance costs associated with pending acquisition	(290)		(290)	0	0
Issuance of stock warrants, net of equity issuance costs	33,745		33,745	0	0
Balance at Dec. 31, 2012	523,441	389	442,055	58,463	22,534
Balance (in shares) at Dec. 31, 2012		39,703,358
Net (loss) income	(273,945)		0	(273,945)	0
Foreign currency translation	(1,381)		0	0	(1,381)
Unrealized loss on derivative instruments, net of taxes					0
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI for Write-down of Securities, Net of Tax	(4,757)				(4,757)
Loss on early termination of interest rate swap, net of taxes					0
Unrealized (gain) loss on marketable securities	1,543	0	0	0	1,543
Minimum pension liability adjustment	14	0	0	0	14
Issuances of common stock (in shares)		307,572					6,956,880					742,115
Issuances of common stock	6,328	3	6,325	0	0	168,761	70	168,691	0	0	20,964	7	20,957	0	0
Grant of non-vested shares of common stock (in shares)		281,496
Grant of non-vested shares of common stock	0	0	0	0	0
Cancellation of non-vested shares of common stock (in shares)		(39,482)
Vesting of stock-settled phantom stock units and non-vested shares of common stock (in shares)		41,826
Vesting of stock-settled phantom stock units and non-vested shares of common stock	0	4	(4)	0	0
Tax benefits (deficits) realized from stock based compensation	(1,045)		(1,045)	0	0
Stock-based compensation	19,687		19,687	0	0
Equity issuance costs associated with pending acquisition	104		104	0	0
Balance at Dec. 31, 2013	$ 459,714	$ 473	$ 656,770	$ (215,482)	$ 17,953
Balance (in shares) at Dec. 31, 2013		47,993,765

XML

Summary of Significant Accounting Policies Fair Value Measurements (Assets and Liabilities Measured At Fair Value On A Recurring Basis Using Unobservable Inputs (Level 3)) (Details) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value	$ 118,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings	56,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Settlements	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Currency	0
2017 Notes Conversion Derivative [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value	(112,000)	55,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers Into Level 3	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Currency	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings	(57,000)
Contingent Consideration [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value	(6,236)	(983)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers Into Level 3	6,396
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements	1,491
Fair Value, Measurement with Unobservable Inputs Reconciliation, Currency	(191)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings	157
2017 Notes Hedges [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value Assumptions, Expected Volatility Rate	32.00%
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value		$ 62,000
2017 Notes Conversion Derivative [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value Assumptions, Expected Volatility Rate	32.00%
Fair Value Inputs, Entity Credit Risk	2.20%
DEUTSCHE BANK SUPER X [Member] | 2017 Notes Hedges [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value Inputs, Entity Credit Risk	0.60%
BANK OF AMERICA - MERRILL LYNCH ATS [Member] | 2017 Notes Hedges [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value Inputs, Entity Credit Risk	0.60%
WELLS FARGO LIQUIDITY CROSS ATS [Member] | 2017 Notes Hedges [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value Inputs, Entity Credit Risk	0.30%

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Other Long-Term Liabilities (Tables)

12 Months Ended

Dec. 31, 2013

Other Long-Term Liabilities [Abstract]

Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

	December 31
	2013		2012
Unrecognized tax benefits (See Note 14)	$	4,702	$	5,074
Product liability (See Note 19)	9,784		18,639
2017 Notes Conversion Derivative (See Note 11)	112,000		55,000
Deferred license revenue (See Note 2)	4,210		4,731
Contingent consideration	2,882		540
Other	1,488		928
	$	135,066	$	84,912

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Segment Data

12 Months Ended

Dec. 31, 2013

Segment Data [Abstract]

Segment Data

Segment Data

Prior to the June 2013 announcement of the divestiture of our OrthoRecon business, our chief executive officer, who is our chief operating decision maker, managed our operations as two reportable business segments: Extremities and OrthoRecon. Following this announcement, all historical operating results for the OrthoRecon segment were reflected within discontinued operations in the consolidated financial statements. See Note 4 for further information on the results of discontinued operations. For the remainder of 2013, we operated our continuing operations as one reportable business segment.

Our continuing operations business includes products that are used primarily in foot and ankle repair, upper extremity products, and biologics products, which are used to replace damaged or diseased bone, to stimulate bone growth and to provide other biological solutions for surgeons and their patients.

Our geographic regions consist of the United States, Europe (which includes the Middle East and Africa) and Other (which principally represents Latin America, Asia, Australia and Canada). Long-lived assets are those assets located in each region. Revenues attributed to each region are based on the location in which the products were sold.

Net sales by product line and by geographic region are as follows (in thousands):

	Year Ended December 31,
	2013		2012		2011
Net sales by product line:
Foot and Ankle	$	150,662	$	122,897	$	107,734
Upper Extremity	24,663		24,977		27,742
Biologics	59,792		60,495		69,409
Other	7,213		5,736		5,868
Total	$	242,330	$	214,105	$	210,753

	Year Ended December 31,
	2013		2012		2011
Net sales by geographic region:
United States	$	177,648	$	166,111	$	166,456
Europe	31,210		22,044		21,405
Other	33,472		25,950		22,892
Total	$	242,330	$	214,105	$	210,753

	December 31,
	2013		2012
Long-lived assets:
United States	$	61,179	$	36,271
Europe	6,581		3,102
Other	2,755		2,109
Total	$	70,515	$	41,482

No single foreign country accounted for more than 10% of our total net sales during 2013, 2012, or 2011.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

We lease certain equipment and office space under non-cancelable operating leases. Rental expense under operating leases approximated $8.0 million, $5.7 million, and $5.1 million for the years ended December 31, 2013, 2012, and 2011, respectively. Future minimum payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining lease terms of one year or more, are as follows at December 31, 2013 (in thousands):

2014	$	6,087
2015	4,364
2016	2,503
2017	1,267
2018	1,182
Thereafter	768
	$	16,171

Portions of our payments for operating leases are denominated in foreign currencies and were translated in the tables above based on their respective U.S. dollar exchange rates at December 31, 2013. These future payments are subject to foreign currency exchange rate risk.

Purchase Obligations

We have entered into certain supply agreements for our products, which include minimum purchase obligations. We paid approximately $3.5 million and $7.7 million during the years ended December 31, 2013, and 2011, respectively, under those supply agreements. During the year ended December 31, 2012, we paid immaterial amounts under those supply agreements. Future obligations for minimum purchases under these supply agreements are as follows at December 31, 2013 (in thousands):

	Total	2014	2015	2016	2017	2018	Thereafter
Minimum supply obligations	$2,073	—	2,073	—	—	—	—

Legal Contingencies

As described below, our business is subject to various contingencies including patent and other litigation, product liability claims and a government inquiry.  These contingencies could result in losses, including damages, fines, or penalties, any of which could be substantial, as well as criminal charges. Although such matters are inherently unpredictable, and negative outcomes or verdicts can occur, we believe we have significant defenses in all of them, are vigorously defending all of them, and do not believe any of them will have a material adverse effect on our financial position. However, we could incur judgments, pay settlements, or revise our expectations regarding the outcome of any matter. Such developments, if any, could have a material adverse effect on our results of operations in the period in which applicable amounts are accrued, or on our cash flows in the period in which amounts are paid.

Our contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss or the measurement of a loss can be complex. We have accrued for losses that are both probable and reasonably estimable. Unless otherwise indicated we are unable to estimate the range of reasonably possible loss in excess of amounts accrued.  Our assessment process relies on estimates and assumptions that may prove to be incomplete or inaccurate. Unanticipated events and circumstances may occur that could cause us to change our estimates and assumptions.

Governmental Inquiries

On September 29, 2010, we entered into a five year Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the United States Department of Health and Human Services (OIG-HHS). The CIA was filed as Exhibit 10.2 to our current report on Form 8-K filed on September 30, 2010. The CIA will expire on September 29, 2015.

The CIA imposes on us certain obligations to maintain compliance with U.S. healthcare laws, regulations and other requirements. Our failure to do so could expose us to significant liability including, but not limited to, exclusion from federal healthcare program participation, including Medicaid and Medicare, potential prosecution, civil and criminal fines or penalties, as well as additional litigation cost and expense.

Both we and MicroPort, which completed the purchase of our OrthoRecon business in January 2014, will continue to be subject to the CIA.

In addition to the USAO and OIG-HHS, other governmental agencies, including state authorities, could conduct investigations or institute proceedings that are not precluded by the CIA. In addition, the matters which gave rise to the CIA could increase our exposure to lawsuits by potential whistleblowers, including under the federal false claims acts, based on new theories or allegations arising from these matters.

On August 3, 2012, we received a subpoena from the U.S. Attorney's Office for the Western District of Tennessee requesting records and documentation relating to our PROFEMUR^® series of hip replacement devices. The subpoena covers the period from January 1, 2000 to August 2, 2012. We continue to respond to the subpoena.

Patent Litigation

In 2011, Howmedica Osteonics Corp. (Howmedica) and Stryker Ireland, Ltd. (collectively, “Stryker”), each a subsidiary of Stryker Corporation, filed a lawsuit against WMT in the United States District Court for the District of New Jersey (District Court) alleging that we infringed Stryker's U.S. Patent No. 6,475,243 related to our LINEAGE^® Acetabular Cup System and DYNASTY^® Acetabular Cup System. The lawsuit seeks an order of infringement, injunctive relief, unspecified damages, and various other costs and relief. On July 9, 2013, the district court issued a claim construction ruling. Under the court's claim construction ruling, we do not believe these hip products infringe the asserted patents. In filings with the court, Stryker has conceded that under the court’s claim construction rulings it can no longer pursue its infringement claims. Stryker has asked the court to dismiss the case so it may pursue an appeal.

In 2012, Bonutti Skeletal Innovations, LLC (Bonutti) filed a patent infringement lawsuit against us in the United States Court for the District of Delaware. Bonutti originally alleged that the Link Sled Prosthesis infringes U.S. Patent 6,702,821. The Link Sled Prosthesis is a product we distributed under a distribution agreement with LinkBio Corp, which expired on December 31, 2013. In January 2013, Bonutti amended its complaint, alleging that the ADVANCE^® knee system, including ODYSSEY^® instrumentation, infringes U.S. Patent 8,133,229, and that the ADVANCE^® knee system, including ODYSSEY^® instrumentation and PROPHECY^® guides, infringes U.S. Patent 7,806,896, which was issued on October 5, 2010. All of the claims of the asserted patents are directed to surgical methods for minimally invasive surgery.

In June 2013, Orthophoenix filed a patent lawsuit against us in the United States District Court for the District of Delaware alleging that surgical methods using the X-REAM^® product infringe two patents.

In June 2013, Anglefix filed suit in the United States District Court for the Western District of Tennessee, alleging that our ORTHOLOC^® products infringe Anglefix’s asserted patent.

In September 2013, ConforMIS, Inc. filed suit against us in the United States District Court for the District of Massachusetts, alleging that our PROPHECY^® knee and ankle systems infringe four ConforMIS’ patents. On February 19, 2014, ConforMIS filed an amended complaint asserting four additional patents against us relating to alleged infringement by our PROPHECY^® knee and ankle systems and naming MicroPort Orthopedics as an additional defendant.

Subject to the provisions of the asset purchase agreement with MicroPort for the sale of our OrthoRecon business, we will continue to be responsible for defense of existing patent infringement cases relating to our OrthoRecon business, and for resulting liabilities, if any.

Product Liability

We have received claims for personal injury against us associated with fractures of our PROFEMUR^® long titanium modular neck product (PROFEMUR^® Claims). The overall fracture rate for the product is low and the fractures appear, at least in part, to relate to patient demographics. Beginning in 2009, we began offering a cobalt-chrome version of our PROFEMUR^® modular neck, which has greater strength characteristics than the alternative titanium version. Historically, we have reflected our liability for these claims as part of our standard product liability accruals on a case-by-case basis. However, during the quarter ended September 30, 2011, as a result of an increase in the number and monetary amount of these claims, management estimated our liability to patients in North America who have previously required a revision following a fracture of a PROFEMUR^® long titanium modular neck, or who may require a revision in the future. Management has estimated that this aggregate liability ranges from approximately $17 million to $26 million. Any claims associated with this product outside of North America, or for any other products, will be managed as part of our standard product liability accruals.

Due to the uncertainty within our aggregate range of loss resulting from the estimation of the number of claims and related monetary payments, we have recorded a liability of $16.8 million, which represents the low-end of our estimated aggregate range of loss. We have classified $7 million of this liability as current in “Accrued expenses and other current liabilities” and $9.8 million as non-current in “Other liabilities” on our consolidated balance sheet. We expect to pay the majority of these claims within the next 4 years.

We have maintained product liability insurance coverage on a claims-made basis. During the quarter ended March 31, 2013, we received a customary reservation of rights from our primary product liability insurance carrier asserting that present and future claims related to fractures of our PROFEMUR^® titanium modular neck hip products and which allege certain types of injury (Modular Neck Claims) would be covered as a single occurrence under the policy year the first such claim was asserted. The effect of this coverage position would be to place Modular Neck Claims into a single prior policy year in which applicable claims-made coverage was available, subject to the overall policy limits then in effect. Management agrees with the assertion that the Modular Neck Claims should be treated as a single occurrence, but notified the carrier that it disputed the carrier's selection of available policy years. During the second quarter of 2013, we received confirmation from the primary carrier confirming their agreement with our policy year determination. Based on our insurer's treatment of Modular Neck Claims as a single occurrence, we increased our estimate of the total probable insurance recovery related to Modular Neck Claims by $19.4 million, and recognized such additional recovery as a reduction to our selling, general and administrative expenses for the three-months ended March 31, 2013. In the quarter ended June 30, 2013, we received payment from the primary insurance carrier of $5 million. In the quarter ended September 30, 2013, we received payment of $10 million from the next insurance carrier in the tower. As of December 31, 2013, our insurance receivable related to Modular Neck Claims totals $25 million, which consists of $13 million associated with our recorded liability for current and future Modular Neck Claims outstanding, and $12 million for cash spending associated with defense and settlement costs. We have classified $19 million within current receivables, and the remaining $6 million within long-term receivables.

During the quarter ended September 30, 2013, we reached the maximum insurance coverage for Modular Neck Claims of $40 million, when previous spending on legal defense costs and claim settlements are combined with our estimated product liability for future settlements. As a result, we recognized approximately $4 million of expense in income from discontinued operations for 2013 for expenses recognized in excess of the $40 million insurance recovery limit. Future expenses associated with defense costs and revisions to our estimated product liability will be recognized as incurred within the current period in results of discontinued operations. However, as noted above, our insurance receivable for cash spending is $12 million out of the remaining $25 million insurance receivable, therefore we do not anticipate actual cash spending to exceed this maximum for several years.

Claims for personal injury have also been made against us associated with our metal-on-metal hip products (primarily our CONSERVE® product line). The pre-trial management of certain of these claims has been consolidated in the federal court system under multi-district litigation, and certain other claims in state courts in California, collectively the “Consolidated Metal-on-Metal Claims,” as further discussed in Part I Item 3 of this Annual Report. The number of these lawsuits, presently in excess of 700, continues to increase, we believe due to the increasing negative publicity in the industry regarding metal-on-metal hip products. We believe we have data that supports the efficacy and safety of our metal-on-metal hip products. While continuing to dispute liability, we recently agreed to participate in court supervised non-binding mediation in the multi-district federal court litigation presently pending in the Northern District of Georgia.

Every metal-on-metal hip case involves fundamental issues of science and medicine that often are uncertain, that continue to evolve, and which present contested facts and issues that can differ significantly from case to case. Such contested facts and issues include medical causation, individual patient characteristics, surgery specific factors, and the existence of actual, provable injury. Given these complexities, we are unable to reasonably estimate a possible loss or range of possible losses for the Consolidated Metal-on-Metal Claims until we know, at a minimum, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential pool of potential claimants, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (iv) any other factors that may have a material effect on the litigation or on a party’s litigation strategy. By way of example and without limitation, although we believe a significant number of claimants have not required hip revision surgery, we do not yet know how many of such cases exist within our claimant pool.

We have maintained product liability insurance coverage on a claims-made basis. During the quarter ended September 30, 2012, we received a customary reservation of rights from our primary product liability insurance carrier asserting that certain present and future claims which allege certain types of injury related to our CONSERVE^® metal-on-metal hip products (CONSERVE^® Claims) would be covered as a single occurrence under the policy year the first such claim was asserted. The effect of this coverage position would be to place CONSERVE^® Claims into a single prior policy year in which applicable claims-made coverage was available, subject to the overall policy limits then in effect. Management agrees that there is insurance coverage for the CONSERVE^® Claims, but has notified the carrier that at this time it disputes the carrier's selection of available policy years and its characterization of the CONSERVE^® Claims as a single occurrence.

Management has recorded an insurance receivable for the probable recovery of spending in excess of our retention for a single occurrence. As of December 31, 2013, this receivable totaled $8.1 million, and is solely related to defense costs incurred through December 31, 2013. However, the amount we ultimately receive may differ depending on the final conclusion of the insurance policy year or years and the number of occurrences. We believe our contracts with the insurance carriers are enforceable for these claims and, therefore, we believe it is probable that we will receive recoveries from our insurance carriers. However, our insurance carriers could still ultimately deny coverage for some or all of our insurance claims. Based on the information we have available at this time, we do not believe our liabilities, if any, in connection with these matters will exceed our available insurance. As circumstances continue to develop, our belief that we will be able to resolve the Consolidated Metal-on-Metal Claims within our available insurance coverage could change, which could materially impact our results of operations and financial position.

In February 2014, Biomet, Inc., (Biomet) announced it had reached a settlement in the multi-district litigation involving its own metal-on-metal hip products. The terms announced by Biomet include: (i) an expected base settlement amount of $200,000, (ii) an expected minimum settlement amount of $20,000 (iii) no payments to plaintiffs who did not undergo a revision surgery and (iv) a total settlement amount expected to be within Biomet’s aggregate insurance coverage. We believe our situation involves facts and circumstances which differ significantly from the Biomet cases. We therefore do not consider the Biomet situation sufficiently analogous to provide a reasonable basis for estimate, and deem it unlikely that any settlement of our cases will occur at an base settlement level as high as Biomet’s expected average settlement amount.

In addition to the Consolidated Metal-on-Metal Claims discussed above, there are currently certain other pending claims related to our metal-on-metal hip products for which we are accounting in accordance with our standard product liability accrual methodology on a case by case basis.

Product liability claims associated with hip and knee products we sold prior to the closing will not be assumed by MicroPort. Estimated liabilities, if any, for such claims, and accrued legal defense costs for fees that have been incurred to date, are excluded from liabilities held for sale. Concomitant receivables associated with product liability insurance recoveries are excluded from assets held for sale. MicroPort will be responsible for product liability claims associated with products it sells after the closing.

Employment Matters

In 2012, two former employees, Frank Bono and Alicia Napoli, each filed separate lawsuits against WMT in the Chancery Court of Shelby County, Tennessee, which asserted claims for retaliatory discharge and breach of contract based upon his or her respective separation pay agreement. In addition, Mr. Bono and Ms. Napoli each asserted a claim for defamation related to the press release issued at the time of their terminations and a wrongful discharge claim alleging violation of the Tennessee Public Protection Act. Mr. Bono and Ms. Napoli each claimed that he or she was entitled to attorney fees in addition to other unspecified damages. On October 23, 2013, Ms. Napoli moved to voluntarily dismiss her case against WMT, without prejudice.

Securities Litigation

On July 6, 2011, a purported federal securities class action lawsuit was filed in the United States District Court for the Middle District of Tennessee against BioMimetic Therapeutics, Inc. and certain of its officers and directors, alleging BioMimetic was unduly positive in its public statements about the prospects for FDA approval of Augment^® Bone Graft. We acquired BioMimetic in March 2013. In January 2013, the Court granted BioMimetic's, and the other named defendants', motion to dismiss the lawsuit, known as Paula Kuyat, et. al. versus BioMimetic Therapeutics, Inc. et. al., without leave to amend the complaint. The plaintiffs filed a Motion to Alter Judgment or Amend Order and Judgment of Dismissal with Prejudice, seeking reconsideration of the Court's dismissal decision. This motion was denied. Subsequently, the plaintiffs appealed the Court’s dismissal of the case to the United States Court of Appeals for the Sixth Circuit. The Court of Appeals heard oral argument on December 4, 2013. The Court of Appeals has not yet issued its decision on the plaintiff’s appeal.

Other

In addition to those noted above, we are subject to various other legal proceedings, product liability claims, corporate governance, and other matters which arise in the ordinary course of business.

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Summary of Significant Accounting Policies - Intangible Assets (Details)	12 Months Ended
	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	9 years
Completed technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	9 years
Distribution channels [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	5 years
Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	14 years
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	12 years
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	3 years
Other intangible assets [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	7 years

XML

Derivative Instruments and Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2013

Derivative Instruments, Gain (Loss) [Line Items]

Summary of fair value and the presentation in the consolidated balance sheet

The following table summarizes the fair value and the presentation in the consolidated balance sheet (in thousands):

	Location on consolidated balance sheet	December 31, 2013		December 31, 2012
2017 Notes Hedges	Other assets	$	118,000	$	62,000
2017 Notes Conversion Derivative	Other liabilities	$	112,000	$	55,000

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block]

The following table summarizes the gain (loss) on changes in fair value (in thousands):

	Twelve Months Ended			Twelve Months Ended
	December 31,			December 31,
	2013			2012
2017 Notes Hedges	$	56,000		$	5,805
2017 Notes Conversion Derivative	(57,000		)	(6,947		)
Net loss on changes in fair value	$	(1,000	)	$	(1,142	)

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Quarterly Results of Operations

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (unaudited)

Quarterly Results of Operations (unaudited):

The following table presents a summary of our unaudited quarterly operating results for each of the four quarters in 2013 and 2012, respectively (in thousands). This information was derived from unaudited interim financial statements that, in the opinion of management, have been prepared on a basis consistent with the financial statements contained elsewhere in this filing and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of such information when read in conjunction with our audited financial statements and related notes. The operating results for any quarter are not necessarily indicative of results for any future period.

	2013
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	56,293		$	60,572		$	57,641		$	67,824
Cost of sales	13,697			14,564			14,037			17,423
Gross profit	42,596			46,008			43,604			50,401
Operating expenses:
Selling, general and administrative	50,709			50,543			63,054			66,479
Research and development	3,507			5,868			5,518			5,412
Amortization of intangible assets	1,606			2,778			1,342			1,750
BioMimetic impairment charges	—			—			206,249			—
Total operating expenses	55,822			59,189			276,163			73,641
Operating loss	$	(13,226	)	$	(13,181	)	$	(232,559	)	$	(23,240	)
Net loss from continuing operations, net of tax	$	(4,918	)	$	(15,539	)	$	(124,500	)	$	(135,211	)
Income (loss) from discontinued operations, net of tax	$	13,353		$	(1,792	)	$	(5,520	)	$	182
Net income (loss)	$	8,435		$	(17,331	)	$	(130,020	)	$	(135,029	)
Net loss, continuing operations per share, basic	(0.13		)	(0.34		)	(2.68		)	(2.88		)
Net loss, continuing operations per share, diluted	(0.13		)	(0.34		)	(2.68		)	(2.88		)
Net income (loss) per share, basic	$	0.20		$	(0.37	)	$	(2.80	)	$	(2.88	)
Net income (loss) per share, diluted	$	0.20		$	(0.37	)	$	(2.80	)	$	(2.88	)

Our 2013 operating loss included the following:

• costs associated with distributor conversions and non-competes, for which we recognized $1.2 million, $1.1 million, $0.7 million and $0.8 million during the first, second, third and fourth quarters of 2013, respectively;

• costs associated with due diligence and transaction expenses for our acquisitions of WG Healthcare, BioMimetic and Biotech totaling $7.5 million, $1.4 million, $1.7 million and $2.3 million during the first, second, third and fourth quarters of 2013, respectively;

• transition costs associated with the divestiture of the OrthoRecon business totaling $2.6 million, $11.2 million and $7.7 million during the second, third and fourth quarters of 2013, respectively;

• charges associated with the write-down of BioMimetic inventory to net realizable value totaling $1.0 million and $1.3 million during the third and fourth quarters of 2013, respectively; and

• charges associated with the impairment of intangible assets and goodwill acquired from our BioMimetic acquisition (see Note 12), as well as the recognition of a $3.2 million charge for noncancelable inventory commitments for the raw materials used in the manufacture of Augment^® Bone Graft, which we have estimated will expire unused, totaling $206.2 million which was recognized in the third quarter of 2013.

Our 2013 net loss from continuing operations included the following:

• the after-tax effect of the above amounts;

• the after tax effects of mark-to-market adjustments on derivative assets and liabilities netting to a $2.0 million loss, a $1.0 million gain, a $2.0 million loss and a $2.0 million gain recognized in the first, second, third and fourth quarters of 2013, respectively;

• the after tax effects of CVR mark-to-market adjustments of $5.8 million unrealized loss, $66.1 million unrealized gain, and $0.8 million unrealized gain recognized in the second, third and fourth quarters of 2013, respectively;

• the after tax effect of a $7.8 million gain on our previously held investment in BioMimetic recognized in the first quarter of 2013; and

• a charge to record a valuation allowance against our U.S. deferred tax assets of $119.6 million recognized in the fourth quarter of 2013.

In addition to those noted above, our 2013 net loss included the following associated with our discontinued operations:

• the after tax impacts of $1.1 million, $0.7 million, $0.5 million and $0.6 million of U.S governmental inquiries and DPA costs during the first, second, third and fourth quarters of 2013, respectively;

• the after tax impacts of costs associated with amortization of distributor conversions and non-competes, for which we recognized $0.5 million, $0.4 million, $0.3 million and $0.3 million during the first, second, third and fourth quarters of 2013, respectively;

• the after tax impacts of costs associated with the sale of our OrthoRecon business of $2.8 million, $5.2 million and $2.9 million recognized during the second, third and fourth quarters of 2013, respectively; and

• the after tax impact of a gain of $19.4 million for estimated product liability insurance recoveries during the first quarter of 2013.

Additionally, in conjunction with preparing our financial statements for the year ended December 31, 2013, an immaterial error was identified in the previously reported loss from discontinued operations for the quarter ended September 30, 2013. The error related primarily to depreciation and amortization charges recorded on assets held for sale, and totaled approximately $2.7 million, net of tax. Management has concluded that this error was not material to the interim financial information taken as a whole and recorded an adjustment of $2.7 million, net of tax, to income from discontinued operations in the fourth quarter of 2013.

	2012
	First Quarter		Second Quarter			Third Quarter			Fourth Quarter
Net sales	$	52,873	$	51,964		$	50,888		$	58,380
Cost of sales	11,434		11,779			11,704			13,322
Gross profit	41,439		40,185			39,184			45,058
Operating expenses:
Selling, general and administrative	34,524		35,885			36,730			43,157
Research and development	3,361		3,490			3,428			3,626
Amortization of intangible assets	655		982			1,289			1,491
Gain on sale of intellectual property	—		—			—			(15,000		)
Restructuring charges	177		254			—			—
Total operating expenses	38,717		40,611			41,447			33,274
Operating income (loss)	$	2,722	$	(426	)	$	(2,263	)	$	11,784
Net income (loss), continuing operations, net of tax	$	424	$	(1,367	)	$	(4,088	)	$	1,644
Net income (loss), discontinued operations, net of tax	$	4,137	$	2,077		$	(1,251	)	$	3,708
Net income (loss)	$	4,561	$	710		$	(5,339	)	$	5,352
Net income (loss), continuing operations per share, basic	$	0.02	$	(0.04	)	$	(0.11	)	$	0.04
Net income (loss), continuing operations per share, diluted	$	0.02	$	(0.04	)	$	(0.11	)	$	0.04
Net income (loss) per share, basic	$	0.12	$	0.02		$	(0.14	)	$	0.14
Net income (loss) per share, diluted	$	0.12	$	0.02		$	(0.14	)	$	0.14

Our operating income from continuing operations during the first and second quarters of 2012 included $0.2 million and $0.3 million of restructuring charges related to our cost improvement measures. We recognized $0.6 million, $1.2 million, and $1.2 million in the second, third, and fourth quarters of 2012, respectively, for costs associated with distributor conversions and non-competes. In the fourth quarter of 2012, we recognized $1.8 million for due diligence and transaction costs.

Net income from continuing operations in 2012 included the after-tax effect of the above amounts. In the third and fourth quarters of 2012, net income from continuing operations includes the after tax effects of $0.7 million and $2.1 million non-cash interest expense related to our 2017 Convertible Notes, respectively. Additionally, net income from continuing operations in the third quarter of 2012 includes the after tax effects of $1.8 million loss for the termination of a derivative instrument, $2.7 million charge for the write-off of unamortized deferred financing costs, and $2.3 million gain for mark-to-market adjustments on derivative assets and liabilities. Net income from continuing operations in the fourth quarter of 2012 includes the after tax effects of a $15.0 million gain on the sale of assets and a $3.5 million loss for mark-to-market adjustments on derivative assets and liabilities.

In addition to those noted above, our 2012 net income (loss) from discontinued operations included the after tax impacts of $2.9 million, $2.1 million and $1.7 million of U.S governmental inquires and DPA costs in the first, second and third quarters of 2012, respectively; $0.2 million, $0.4 million and $0.5 million of amortization of distributor non-competes in the second, third and fourth quarters of 2012, respectively; $2.4 million increase to management's estimate of the Company's probable insurance recovery for previously recognized costs associated with product liability claims during the fourth quarter of 2012; and $0.7 million and $0.5 million of restructuring charges during the first and second quarters of 2012, respectively.

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Subsequent Event

12 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

Subsequent Event

Completion of Asset Purchase Agreement

On January 9, 2014, pursuant to the previously disclosed Asset Purchase Agreement, dated as of June 18, 2013 (the Purchase Agreement), by and among Wright Medical Group, Inc. (the Company), MicroPort Scientific Corporation, a corporation formed under the laws of the Cayman Islands (MicroPort), and MicroPort Medical B.V., a besloten vennootschap formed under the laws of the Netherlands, we completed our divesture and sale of our business operations operating under the OrthoRecon operating segment (the OrthoRecon Business) to MicroPort. Pursuant to the terms of the Purchase Agreement, the purchase price (as defined in the Purchase Agreement) for the OrthoRecon Business was approximately $287.1 million, which MicroPort paid in cash. As a result of the transaction, we estimate we will recognize in 2014 approximately $26 million as the gain on disposal of the OrthoRecon business, before the effect of income taxes. Our 2013 net income from discontinued operations includes the after tax effect of approximately $11 million of transaction costs associated with the sale of the OrthoRecon business.

Acquisitions

Subsequent to year-end, we completed the following acquisitions:

• Solana Surgical, LLC, a privately held extremity company based in Memphis, TN on January 30, 2014 for $47.6 million in cash, subject to certain adjustments set forth in the definitive agreement, and approximately $42.4 million of Wright common stock.

• OrthoPro, L.L.C., a privately held extremity company based in Salt Lake City, Utah on February 5, 2014, for $32.5 million in cash, subject to certain adjustments set forth in the definitive agreement, and up to an additional $3.5 million in cash contingent upon certain revenue-based milestones.

These acquisitions add complementary extremity product portfolios to further accelerate growth opportunities in our global Extremities business.

Based on the timing of the completion of these acquisitions in relation to the date of issuance of the financial statements, the initial purchase price accounting was not completed for these acquisitions. The financial results of these acquired businesses will be included in our consolidated results of operations from the date of acquisition and is expected to be immaterial to our 2014 results.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating activities:
Net (loss) income	$ (273,945)	$ 5,284	$ (5,143)
Adjustments to reconcile net income to net cash provided by operating activities:
Consolidated Depreciation	26,296	38,275	40,227
Stock-based compensation expense	15,368	10,974	9,108
Consolidated Intangible Amortization	8,345	5,772	2,870
Amortization of Financing Costs and Discounts	10,288	3,853	982
Deferred income taxes	51,958	3,786	(6,969)
Write off of deferred financing costs	0	2,721	2,926
Excess tax benefit from stock-based compensation arrangements	(804)	(507)	(23)
Non-cash restructuring charges	0	657	4,924
Non Cash Adjustment Derivative Fair Value	1,000	1,142	0
Gain on Disposition of Intangible Assets	0	(15,000)	0
Gain On Previously Held Investment	(7,798)	0	0
Goodwill and Intangible Asset Impairment	203,081	0	0
Other	(2,788)	2,232	649
Changes in assets and liabilities (net of acquisitions):
Accounts receivable	(3,477)	(717)	9,056
Inventories	7,374	20,622	(1,723)
Prepaid expenses and other current assets	(21,945)	(15,498)	(10,556)
Accounts payable	(1,334)	(1,315)	(6,398)
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	(61,151)	0	0
Accrued expenses and other liabilities	12,931	6,541	21,511
Net cash provided by operating activities	(36,601)	68,822	61,441
Investing activities:
Capital expenditures	(37,530)	(19,323)	(46,957)
Acquisition of business	(95,409)	0	(5,639)
Purchase of intangible assets	(4,291)	(4,112)	(1,624)
Maturities of held-to-maturity marketable securities	0	0	4,748
Sales and maturities of available-for-sale marketable securities	27,332	13,565	38,509
Investment in available-for-sale marketable securities	(20,719)	(2,878)	(25,097)
Proceeds from sale of assets	9,300	11,700	5,500
Net cash used in investing activities	(121,317)	(1,048)	(30,560)
Financing activities:
Issuance of common stock	6,328	1,944	540
Payments of long term borrowings	0	(144,375)	(5,596)
Proceeds from Issuance of Warrants	0	34,595	0
Payments for (Proceeds from) Hedge, Financing Activities	0	(56,195)	0
Redemption of convertible senior notes	0	(25,343)	(170,889)
Proceeds from long term borrowings	0	0	150,000
Payment of Financing and Stock Issuance Costs	(16)	(9,637)	(2,892)
Proceeds From Cash Settled Convertible Debt	0	300,000	0
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, before Tax	0	1,769	0
Repayments of Long-term Capital Lease Obligations	(859)	(1,006)	(1,236)
Excess tax benefit from stock-based compensation arrangements	804	507	23
Net cash provided by (used in) financing activities	6,257	98,721	(30,050)
Net increase in cash and cash equivalents	(151,625)	166,718	381
Effect of exchange rates on cash and cash equivalents	36	223	(450)
Consolidated cash and cash equivalents, beginning of year	320,360	153,642	153,261
Consolidated Cash and Equivalents, end of year	$ 168,735	$ 320,360	$ 153,642

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2013

Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

Wright Medical Group, Inc. Schedule II-Valuation and Qualifying Accounts (In thousands)
	Balance at Beginning of Period		Charged to Cost and Expenses			Deductions and Other		Balance at End of Period
Allowance for doubtful accounts:
For the period ended:
December 31, 2013	$	291	$	(66	)	$	47	$	272
December 31, 2012	$	293	$	(2	)	$	—	$	291
December 31, 2011	$	353	$	(60	)	$	—	$	293
Sales returns and allowance:
For the period ended:
December 31, 2013	$	298	$	(16	)	$	—	$	282
December 31, 2012	$	313	$	(15	)	$	—	$	298
December 31, 2011	$	321	$	(8	)	$	—	$	313

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Commitments and Contingencies - Operating Leases (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Commitments and Contingencies Disclosure [Abstract]
Rental expense under operating leases	$ 8,000,000	$ 5,700,000	$ 5,100,000
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2014	6,087,000
2015	4,364,000
2016	2,503,000
2017	1,267,000
2018	1,182,000
Thereafter	768,000
Total	$ 16,171,000

XML

Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment, Net [Abstract]

Schedule of Property, Plant and Equipment

Property, plant and equipment, net consists of the following (in thousands):

	December 31,
	2013			2012
Land and land improvements	$	31		$	61
Buildings	13,026			2,227
Machinery and equipment	14,274			8,029
Furniture, fixtures and office equipment	47,364			19,006
Construction in progress	13,997			2,737
Surgical instruments	52,893			50,860
	141,585			82,920
Less: Accumulated depreciation	(71,070		)	(41,438		)
	$	70,515		$	41,482

Property, Plant and Equipment Recorded Under Capital Leases

The components of property, plant and equipment recorded under capital leases consist of the following (in thousands):

	December 31,
	2013			2012
Buildings	$	8,192		$	—
Furniture, fixtures and office equipment	59			—
	8,251			—
Less: Accumulated depreciation	(48		)	—
	$	8,203		$	—

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Schedule II - Valuation and Qualifying Accounts Valuation and Qualifying Accounts (Tables)

12 Months Ended

Dec. 31, 2013

Valuation and Qualifying Accounts Disclosure [Line Items]

Allowance for doubtful accounts and sales returns

Wright Medical Group, Inc. Schedule II-Valuation and Qualifying Accounts (In thousands)
	Balance at Beginning of Period		Charged to Cost and Expenses			Deductions and Other		Balance at End of Period
Allowance for doubtful accounts:
For the period ended:
December 31, 2013	$	291	$	(66	)	$	47	$	272
December 31, 2012	$	293	$	(2	)	$	—	$	291
December 31, 2011	$	353	$	(60	)	$	—	$	293
Sales returns and allowance:
For the period ended:
December 31, 2013	$	298	$	(16	)	$	—	$	282
December 31, 2012	$	313	$	(15	)	$	—	$	298
December 31, 2011	$	321	$	(8	)	$	—	$	313

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Derivative Instruments and Hedging Activities (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Aug. 31, 2012
Derivatives, Fair Value [Line Items]
Debt Discount at Time of Issuance					$ 48,100,000
Payments for (Proceeds from) Hedge, Financing Activities	56,200,000	0	56,195,000	0
Derivative Liability, Fair Value, Gross Liability		112,000,000	55,000,000
Non Cash Adjustment Derivative Fair Value		(1,000,000)	(1,142,000)	0
2017 Notes Hedges [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset		118,000,000	62,000,000
Derivative, Gain (Loss) on Derivative, Net		56,000,000	5,805,000
2017 Notes Conversion Derivative [Member]
Derivatives, Fair Value [Line Items]
Debt Discount at Time of Issuance					48,100,000
Derivative Liability, Fair Value, Gross Liability		112,000,000	55,000,000
Derivative, Gain (Loss) on Derivative, Net		$ (57,000,000)	$ (6,947,000)

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 168,534	$ 320,360
Marketable securities	6,898	12,646
Accounts receivable, net	45,817	31,202
Inventories	72,443	57,458
Prepaid expenses	6,508	4,814
Deferred income taxes	10,749	30,145
Current assets held for sale	142,015	166,484
Other current assets	52,351	29,036
Total current assets	505,315	652,145
Property, plant and equipment, net	70,515	41,482
Goodwill	118,263	32,414
Intangible assets, net	39,420	18,684
Marketable securities	7,650	0
Deferred income taxes	1,632	1,251
Other assets held for sale	132,443	129,730
Other assets	132,213	77,747
Total assets	1,007,451	953,453
Current liabilities:
Accounts payable	3,913	4,676
Accrued expenses and other current liabilities	80,117	38,763
Current portion of long-term obligations	4,174	0
Current liabilities held for sale	31,221	32,993
Total current liabilities	119,425	76,432
Long-term debt and capital lease obligations	271,227	258,485
Deferred income taxes	20,620	8,152
Other liabilities held for sale	1,399	2,031
Other liabilities	135,066	84,912
Total liabilities	547,737	430,012
Commitments and contingencies (Note 19)
Stockholders' equity:
Common stock, $.01 par value, authorized: 100,000,000 shares; issued and outstanding: 47,993,765 shares at December 31, 2013 and 39,703,358 shares at December 31, 2012	473	389
Additional paid-in capital	656,770	442,055
Accumulated Other Comprehensive Income (Loss), Net of Tax	17,953	22,534
Retained earnings	(215,482)	58,463
Total stockholders' equity	459,714	523,441
Total liabilities and stockholders' equity	$ 1,007,451	$ 953,453

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Goodwill and Intangibles (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the Carrying Amount of Goodwill Table

Changes in the carrying amount of goodwill occurring during the year ended December 31, 2013, are as follows (in thousands):

Goodwill at December 31, 2012	$	32,414
Goodwill associated with acquisitions (see Note 3)	199,040
Goodwill impairment	(114,997		)
Foreign currency translation	1,806
Goodwill at December 31, 2013	$	118,263

Components of Identifiable Assets Table

The components of our identifiable intangible assets, net are as follows (in thousands): December 31, 2013 December 31, 2012 Cost AccumulatedAmortization Cost AccumulatedAmortizationIndefinite life intangibles:       IPRD technology$4,266   $278  Trademarks4,121   1,658  Total indefinite life intangibles8,387   1,936          Finite life intangibles:        Distribution channels250 $233 1,250 $436 Completed technology16,714 5,702 9,781 4,243 Licenses3,633 1,303 3,668 1,056 Customer relationships15,578 2,371 3,788 1,799 Trademarks2,364 1,098 1,316 922 Non-compete agreements5,660 3,155 7,314 2,729 Other771 75 2,171 1,355Total finite life intangibles44,970 $13,937 29,288 $12,540        Total intangibles53,357   31,224  Less: Accumulated amortization(13,937)   (12,540)  Intangible assets, net$39,420   $18,684  

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net (loss) income	$ (273,945)	$ 5,284	$ (5,143)
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Changes in foreign currency translation	(1,381)	(1,301)	(2,102)
Unrealized loss on derivative instruments, net of taxes $42 and $600, respectively		(65)	(1,014)
Termination of interest rate swap, net of taxes $690		1,079	0
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI for Write-down of Securities, Net of Tax	(4,757)	0	0
Unrealized (gain) loss on marketable securities, net of taxes $987, $2,054, and $21, respectively	1,543	3,210	(33)
Minimum pension liability adjustment	14	550	37
Other Comprehensive Income (Loss)	(4,581)	3,473	(3,112)
Comprehensive Income (Loss)	(278,526)	8,757	(8,255)
Accumulated Other Comprehensive Income (Loss) [Member]
Net (loss) income	0	0	0
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Changes in foreign currency translation	(1,381)	(1,301)	(2,102)
Unrealized loss on derivative instruments, net of taxes $42 and $600, respectively	0	(65)	(1,014)
Termination of interest rate swap, net of taxes $690	0	1,079
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI for Write-down of Securities, Net of Tax	(4,757)
Unrealized (gain) loss on marketable securities, net of taxes $987, $2,054, and $21, respectively	1,543	3,210	(33)
Minimum pension liability adjustment	$ 14	$ 550	$ (37)

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Summary of Significant Accounting Policies - Valuation of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 168,534	$ 320,360
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	14,548
Liabilities
Derivative Liability, Fair Value, Gross Liability	112,000	55,000
Fair Value, Measurements, Recurring [Member]
Assets
Cash and cash equivalents	168,534	320,360
Available-for-sale marketable securities
Total available-for-sale marketable securities	14,548	12,646
Derivative Asset, Fair Value, Gross Asset	118,000		62,000
Total assets	301,082	395,006
Liabilities
Derivative Liability, Fair Value, Gross Liability	112,000	55,000
Contingent Consideration Fair Value		983
Total liabilities	127,206	55,983
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets
Cash and cash equivalents		320,360
Available-for-sale marketable securities
Total available-for-sale marketable securities	4,117	8,145
Derivative Asset, Fair Value, Gross Asset	0	0
Total assets	172,651	328,505
Liabilities
Derivative Liability, Fair Value, Gross Liability	0
Contingent Consideration Fair Value		0
Total liabilities	8,969	0
Interest Rate Swap Fair Value Liability		0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Cash and cash equivalents	0	0
Available-for-sale marketable securities
Total available-for-sale marketable securities	10,431	4,501
Derivative Asset, Fair Value, Gross Asset	0	0
Total assets	10,431	4,501
Liabilities
Derivative Liability, Fair Value, Gross Liability	0
Contingent Consideration Fair Value		0
Total liabilities	0	0
Interest Rate Swap Fair Value Liability		0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets
Cash and cash equivalents	0	0
Available-for-sale marketable securities
Total available-for-sale marketable securities	0	0
Derivative Asset, Fair Value, Gross Asset	118,000
Total assets	118,000	62,000
Liabilities
Derivative Liability, Fair Value, Gross Liability	112,000
Contingent Consideration Fair Value		983
Total liabilities	118,237	55,983
Contingent Value Rights [Member] | Fair Value, Measurements, Recurring [Member]
Liabilities
Contingent Consideration Fair Value	8,969
Contingent Value Rights [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Liabilities
Contingent Consideration Fair Value	8,969
Contingent Value Rights [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Liabilities
Contingent Consideration Fair Value	0
Contingent Value Rights [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Liabilities
Contingent Consideration Fair Value	0
Contingent Consideration [Member] | Fair Value, Measurements, Recurring [Member]
Liabilities
Contingent Consideration Fair Value	6,237
Contingent Consideration [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Liabilities
Contingent Consideration Fair Value	0
Contingent Consideration [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Liabilities
Contingent Consideration Fair Value	0
Contingent Consideration [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Liabilities
Contingent Consideration Fair Value	6,237
US Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	4,117
US Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	4,117
US Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	0
US Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	0
U.S. agency debt security [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	4,998	2,500
U.S. agency debt security [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	0	0
U.S. agency debt security [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	4,998	2,500
U.S. agency debt security [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	0	0
Certificates of Deposit [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	245
Certificates of Deposit [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	0
Certificates of Deposit [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	245
Certificates of Deposit [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure	0
Corporate debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale marketable securities
Total available-for-sale marketable securities		4,501
Available-for-sale Securities, Fair Value Disclosure	5,188	2,001
Corporate debt securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale marketable securities
Total available-for-sale marketable securities		0
Available-for-sale Securities, Fair Value Disclosure	0	0
Corporate debt securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale marketable securities
Total available-for-sale marketable securities		4,501
Available-for-sale Securities, Fair Value Disclosure	5,188	2,001
Corporate debt securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale marketable securities
Total available-for-sale marketable securities		0
Available-for-sale Securities, Fair Value Disclosure	0	0
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure		8,145
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure		8,145
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure		0
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale marketable securities
Available-for-sale Securities, Fair Value Disclosure		$ 0

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives of Property, Plant and Equipment

Depreciation, which includes amortization of assets under capital lease, is generally provided on a straight-line basis over the estimated useful lives generally based on the following categories:

Land improvements	15	to	25	years
Buildings	10	to	25	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	1	to	14	years
Surgical instruments			6	years

Credit Risk Assumptions for Derivatives [Table Text Block]

The following assumptions were used in the fair market valuations of the 2017 Notes Hedges and 2017 Notes Conversion Derivative as of December 31, 2013:

	2017 Notes Conversion Derivative	2017 Notes Hedge
Stock Price Volatility (1)	32%	32%
Credit Spread for Wright (2)	2.2%	N/A
Credit Spread for Bank of America, N.A. (3)	N/A	0.6%
Credit Spread for Deutsche Bank AG (3)	N/A	0.6%
Credit Spread for Wells Fargo Securities, LLC (3)	N/A	0.3%

Valuation of Financial Instruments at Fair Value Table

The following table summarizes the valuation of our financial instruments (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2013
Assets
Cash and cash equivalents	$	168,534	$	168,534	$	—	$	—
Available-for-sale marketable securities
U.S. agency debt securities	4,998		—		4,998		—
Certificate of deposit	245		—		245		—
Corporate debt securities	5,188		—		5,188		—
U.S. government debt securities	4,117		4,117		—		—
Total available-for-sale marketable securities	14,548		4,117		10,431		—
2017 Notes Hedges	118,000		—		—		118,000
Total	$	301,082	$	172,651	$	10,431	$	118,000
Liabilities
2017 Notes Conversion Derivative	$	112,000	$	—	$	—	$	112,000
Contingent consideration	6,237		—		—		6,237
Contingent consideration (CVRs)	8,969		$	8,969	$	—	—
Total	$	127,206	$	8,969	$	—	$	118,237

	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2012
Assets
Cash and cash equivalents	$	320,360	$	320,360	$	—	$	—
Available-for-sale marketable securities
U.S. agency debt securities	2,500		—		2,500		—
Corporate debt securities	2,001		—		2,001		—
Total debt securities	4,501		—		4,501		—
Corporate equity securities	8,145		8,145		$	—	—
Total available-for-sale marketable securities	12,646		8,145		4,501		—
2017 Notes Hedges	62,000		$	—	$	—	62,000
Total	$	395,006	$	328,505	$	4,501	$	62,000
Liabilities
2017 Notes Conversion Derivative	$	55,000	$	—	$	—	$	55,000
Contingent consideration	983		—		—		983
Total	$	55,983	$	—	$	—	$	55,983

Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation

The following is a roll forward of our assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3):

	Balance at December 31, 2012		Transfers into Level 3		Gain/(Loss) included in Earnings		Settlements	Currency		Balance at December 31, 2013
2017 Notes Hedges	62,000		—		56,000		—	—		118,000
2017 Notes Conversion Derivative	(55,000	)	—		(57,000	)	—	—		(112,000	)
Contingent Consideration	(983	)	(6,396	)	(157	)	1,491	(191	)	(6,236	)

Supplemental Cash Flow Information

Supplemental Cash Flow Information. Cash paid for interest and income taxes was as follows (in thousands):

	Year Ended December 31,
	2013		2012		2011
Interest	$	5,904	$	4,639	$	6,162
Income taxes	$	1,634	$	4,973	$	7,006

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Inventory, Raw Materials, Net of Reserves	$ 2,693	$ 1,000
Inventory, Work in Process, Net of Reserves	6,950	3,377
Inventory, Finished Goods, Net of Reserves	62,800	53,081
Total Inventory	$ 72,443	$ 57,458

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Accumulated Other Comprehensive Income (Notes)

12 Months Ended

Dec. 31, 2013

Accumulated Other Comprehensive Income [Abstract]

Comprehensive Income (Loss), Note

Accumulated Other Comprehensive Income (AOCI)

Other comprehensive income (OCI) includes certain gains and losses that under GAAP are included in comprehensive income but are excluded from net income as these amounts are initially recorded as an adjustment to stockholders’ equity. Amounts in OCI may be reclassified to net income upon the occurrence of certain events.

Our OCI is comprised of foreign currency translation adjustments, unrealized gains and losses on available-for-sale securities, and adjustments to our minimum pension liability. Foreign currency translation adjustments are reclassified to net income upon sale or upon a complete or substantially complete liquidation of an investment in a foreign entity. Unrealized gains and losses on available-for-sale securities are reclassified to net income if we sell the security before maturity or if the unrealized loss in a security is considered to be other-than-temporary.

Changes in and reclassifications out of AOCI, net of tax, for the twelve months endedDecember 31, 2013 were as follows (in thousands):

	Currency Translation Adjustment			Unrealized Gain (loss) on Marketable Securities			Minimum Pension Liability Adjustment		Total
Balance December 31, 2012	$	18,991		$	3,213		$	330	$	22,534
Other comprehensive (loss) income, net of tax before reclassification	(1,381		)	1,543			14		176
Reclassification to Other (Income) Expense, net: Gain on equity securities, net of tax	—			(4,757		)	—		(4,757		)
Balance December 31, 2013	$	17,610		$	(1	)	$	344	$	17,953

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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2013

Biotech [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following is a summary of the estimated fair values of the assets acquired (in thousands):

Cash and cash equivalents	$	252
Accounts receivable	5,400
Inventory	5,814
Prepaid and other current assets	303
Property, plant and equipment	2,573
Intangible assets	15,500
Accounts payable and accrued liabilities	(2,091		)
Deferred tax liability - current	(52		)
Deferred tax liability - noncurrent	(3,939		)
Net assets acquired	23,760
Goodwill	56,455
Total purchase consideration	$	80,215

BioMimetics [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following is a summary of the estimated fair values of the net assets acquired (in thousands):

Cash and cash equivalents	$	10,577
Marketable securities	16,882
Accounts receivables	1,595
Inventories	4,418
Prepaid and other current assets	4,234
Property, plant and equipment	2,976
Intangible assets	95,100
Deferred tax asset - noncurrent	24,495
Other long-term assets	1,133
Accounts payable and accrued liabilities	(6,003		)
Capital leases	(118		)
Deferred tax liability - current	(219		)
Other liabilities	(2		)
Net assets acquired	155,068
Goodwill	138,244
Total purchase consideration	$	293,312

Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block]

The fair value of consideration transferred is as follows (in thousands):

Fair value of Wright shares issued at an exchange ratio of 0.2482 shares of Wright for one share of BioMimetic(1)	$	165,893
Cash transferred (2)	41,336
Contingent Value Rights (3)	70,120
Value of previously vested BioMimetic stock options converted into Wright stock options (at specified exchange ratio) (4)	2,868
Withholding tax component related to BioMimetic exercised stock options (merger consideration tendered to cover remaining unpaid value of employees' portion) (5)	2,419
Fair value of Wright's investment in BioMimetic held before the merger (6)	10,676
Total value of consideration transferred	$	293,312

Business Acquisition, Pro Forma Information [Table Text Block]

The following unaudited pro forma summary presents our continuing operations financial results if the business combination had occurred on January 1, 2012:

	Pro Forma Year Ended December 31, 2013			Pro Forma Year Ended December 31, 2012
Revenue from continuing operations	$	242,945		$	216,577
Net loss from continuing operations	(284,480		)	(38,926		)
Net loss from continuing operations per share, basic	(6.13		)	(0.85		)
Net loss from continuing operations per share, diluted	(6.13		)	(0.85		)

WG Healthcare [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following is a summary of the estimated fair values of the assets acquired (in thousands):

Cash	$	458
Accounts receivable	1,052
Inventory	1,640
Property, plant and equipment	330
Intangible assets	4,748
Accounts payable	(1,550		)
Deferred tax liability - current	(43		)
Deferred tax liability - noncurrent	(1,139		)
Total net assets acquired	5,496
Goodwill	4,341
Total purchase consideration	$	9,837

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Earnings Per Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

FASB ASC Topic 260, Earnings Per Share, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated to include any dilutive effect of our common stock equivalents. Our common stock equivalents consist of stock options, non-vested shares of common stock, stock-settled phantom stock units, restricted stock units, 2014 Notes, and warrants. The dilutive effect of the stock options, non-vested shares of common stock, stock-settled phantom stock units, restricted stock units, and warrants is calculated using the treasury-stock method. The dilutive effect of the 2014 Notes is calculated by applying the “if-converted” method. This assumes an add-back of interest, net of income taxes, to net income as if the securities were converted at the beginning of the period. During the years ended December 31, 2013, 2012, and 2011, the convertible notes had an anti-dilutive effect on earnings per share and we therefore excluded from the dilutive shares calculation. In addition, approximately 776,722, 267,520, and 136,000 common stock equivalents have been excluded from the computation of diluted net loss per share for the years ended December 31, 2013, 2012, and 2011, respectively, because their effect is anti-dilutive as a result of our net loss from continuing operations in those periods. During the years ended December 31, 2013 and 2012, the warrants were excluded from diluted shares outstanding because the exercise price exceeded the average market price of our common stock.

The weighted-average number of common shares outstanding for basic and diluted earnings per share purposes is as follows (in thousands):

	Year Ended December 31,
	2013	2012	2011
Weighted-average number of common shares outstanding — basic	45,265	38,769	38,279
Common stock equivalents	—	317	—
Weighted-average number of common shares outstanding — diluted	45,265	39,086	38,279

The following potential common shares were excluded from the computation of diluted earnings per share, as their effect would have been anti-dilutive (in thousands):

	Year Ended December 31,
	2013	2012	2011
Stock options	2,763	2,854	3,400
Non-vested shares, restricted stock units, and stock-settled phantom stock units	197	290	430
Convertible debt	115	633	1,909
Warrants	11,794	11,794	—

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Property, Plant and Equipment - Capital Leases (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Capital Leased Assets [Line Items]
Capital leased property, plant and equipment, gross	$ 8,251	$ 0
Less: Accumulated depreciation	(48)	0
Capital leased property, plant and equipment, net	8,203	0
Buildings [Member]
Capital Leased Assets [Line Items]
Capital leased property, plant and equipment, gross	8,192	0
Furniture, fixtures and office equipment [Member]
Capital Leased Assets [Line Items]
Capital leased property, plant and equipment, gross	$ 59	$ 0

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statement of Comprehensive Income [Abstract]
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Tax	$ 0	$ 42	$ 600
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax	0	690	0
Other Comprehensive Income (Loss), Reclassification Adjustment for Write-down of Securities Included in Net Income, Tax	3,041	0	0
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax	$ 987	$ 2,054	$ 21

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Consolidated Balance Sheet (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common Stock, Shares, Issued	47,993,765	39,703,358

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Accrued Expenses and Other Current Liabilities

12 Months Ended

Dec. 31, 2013

Accrued Expenses and Other Current Liabilities [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	December 31
	2013		2012
Employee bonus	$	10,250	$	8,967
Other employee benefits	13,740		3,919
Royalties	2,669		2,829
Taxes other than income	4,722		2,170
Commissions	4,336		1,567
Professional and legal fees	7,054		4,981
Contingent consideration	12,324		444
Product liability	7,710		5,275
Distributor payments	1,253		2,701
Other	16,059		5,910
	$	80,117	$	38,763

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Document and Entity Information Document (USD $)	12 Months Ended
	Dec. 31, 2013	Feb. 17, 2014	Jun. 30, 2013
Document Information [Line Items]
Entity Registrant Name	WRIGHT MEDICAL GROUP INC
Entity Central Index Key	0001137861
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		49,547,524
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 1,055,285,164

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Long-Term Debt and Capital Lease Obligations

12 Months Ended

Dec. 31, 2013

Long-term Debt and Capital Lease Obligations [Abstract]

Long Term Debt and Capital Lease Obligations

Long-Term Debt and Capital Lease Obligations

Long-term debt and capital lease obligations consist of the following (in thousands):

	December 31, 2013			December 31, 2012
Capital lease obligations	$	8,238		$	—
2017 Notes	263,395			254,717
2014 Notes	3,768			3,768
	275,401			258,485
Less: current portion	(4,174		)	—
	$	271,227		$	258,485

2017 Notes

On August 31, 2012, we issued $300 million aggregate principal amount of the 2017 Notes pursuant to an indenture, dated as of August 31, 2012 between us and The Bank of New York Mellon Trust Company, N.A., as Trustee. The 2017 Notes will mature on August 15, 2017, and we pay interest on the 2017 Notes semi-annually on each February 15 and August 15 at an annual rate of 2.00%. We may not redeem the 2017 Notes prior to the maturity date, and no “sinking fund” is available for the 2017 Notes, which means that we are not required to redeem or retire the 2017 Notes periodically. The 2017 Notes are convertible at the option of the holder, during certain periods and subject to certain conditions as described below, solely into cash at an initial conversion rate of 39.3140 shares per $1,000 principal amount of the 2017 Notes, subject to adjustment upon the occurrence of specified events, which represents an initial conversion price of $25.44 per share. The holder of the 2017 Notes may convert their notes at any time prior to February 15, 2017 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending December 31, 2012 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after February 15, 2017 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2017 Notes solely into cash, regardless of the foregoing circumstances. Upon conversion, a holder will receive an amount in cash, per $1,000 principal amount of the 2017 Notes, equal to the settlement amount as calculated under the indenture relating to the 2017 Notes. If we undergo a fundamental change, as defined in the indenture relating to the 2017 Notes, subject to certain conditions, holders of the 2017 Notes will have the option to require us to repurchase for cash all or a portion of their notes at a purchase price equal to 100% of the principal amount of the 2017 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date, as defined in the indenture relating to the 2017 Notes. In addition, following certain corporate transactions, we, under certain circumstances, will pay a cash make-whole premium by increasing the applicable conversion rate for a holder that elects to convert its 2017 Notes in connection with such corporate transaction. The 2017 Notes are senior unsecured obligations that rank: (i) senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2017 Notes; (ii) equal in right of payment to any of our unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. We determined that the sale of our OrthoRecon business did not constitute a fundamental change pursuant to the indenture. As a result of this transaction, we capitalized deferred financing charges of approximately $8.8 million, which are being amortized over the term of the 2017 Notes using the effective interest method.

The 2017 Notes Conversion Derivative requires bifurcation from the 2017 Notes in accordance with ASC Topic 815, Derivatives and Hedging, and is accounted for as a derivative liability. The fair value of the 2017 Notes Conversion Derivative at the time of issuance of the 2017 Notes was $48.1 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2017 Notes. This discount is amortized as interest expense using the effective interest method over the term of the 2017 Notes. For the year ended December 31, 2013 the Company recorded $8.7 million of interest expense related to the amortization of the debt discount based upon an effective rate of 6.47%.

The components of the 2017 Notes were as follows (in thousands):

	December 31, 2013			December 31, 2012
Principal amount of 2017 Notes	$	300,000		$	300,000
Unamortized debt discount	(36,605		)	(45,283		)
Net carrying amount of 2017 Notes	$	263,395		$	254,717

We entered into 2017 Notes Hedges in connection with the issuance of the 2017 Notes with three counterparties (the Option Counterparties). The 2017 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments that we would be required to make if holders elect to convert the 2017 Notes at a time when our stock price exceeds the conversion price. The aggregate cost to acquire the 2017 Notes Hedges was $56.2 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 11 for additional information regarding the 2017 Notes Hedges and the 2017 Notes Conversion Derivative.

We also entered into warrant transactions in which we sold warrants for an aggregate of 11.8 million shares of our common stock to the Option Counterparties, subject to adjustment. The strike price of the warrants was initially $29.925 per share, which was 50% above the last reported sale price of our common stock on August 22, 2012. The warrants are net-share settled and are exercisable over the 100 trading day period beginning on November 15, 2017. The warrant transactions will have a dilutive effect to the extent that the market value per share of our common stock during such period exceeds the applicable strike price of the warrants.

Aside from the initial payment of the $56.2 million premium to the Option Counterparties, we will not be required to make any cash payments to the Option Counterparties under the 2017 Notes Hedges and will be entitled to receive from the Option Counterparties cash, generally equal to the amount by which the market price per share of common stock exceeds the strike price of the convertible note hedging transactions during the relevant valuation period. The strike price under the 2017 Notes Hedges is equal to the conversion price of the 2017 Notes. Additionally, if the market value per share of our common stock exceeds the strike price on any day during the 100 trading day measurement period under the warrant transaction, we will be obligated to issue to the Option Counterparties a number of shares equal in value to one percent of the amount by which the then-current market value of one share of our common stock exceeds the then-effective strike price of each warrant, multiplied by the number of shares of common stock into which the 2017 Notes are then convertible at or following maturity. We will not receive any additional proceeds if warrants are exercised.

2014 Convertible Senior Notes

In November 2007, we issued $200 million of 2.625% Convertible Senior Notes maturing on December 1, 2014 (2014 Notes). The 2014 Notes pay interest semi-annually at an annual rate of 2.625% and are convertible into shares of our common stock at an initial conversion rate of 30.6279 shares per $1,000 principal amount of the 2014 Notes subject to adjustment upon the occurrence of specified events, which represents an initial conversion price of $32.65 per share. The holder of the 2014 Notes may convert at any time on or prior to the close of business on the business day immediately preceding the maturity date. Beginning on December 6, 2011, we may redeem the 2014 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2014 Notes, plus accrued and unpaid interest, if the closing price of our common stock has exceeded 140% of the conversion price for at least 20 days during any consecutive 30-day trading period. Additionally, if we experience a fundamental change event, as defined in the indenture governing the 2014 Notes (Indenture), the holders may require us to purchase for cash all or a portion of the 2014 Notes, for 100% of the principal amount of the notes, plus accrued and unpaid interest. If upon a fundamental change event, a holder elects to convert its 2014 Notes, we may, under certain circumstances, increase the conversion rate for the 2014 Notes surrendered. The 2014 Notes are unsecured obligations and are effectively subordinated to (i) all of our existing and future secured debt, including our obligations under our credit agreement, to the extent of the value of the assets securing such debt, and (ii) because the 2014 Notes are not guaranteed by any of our subsidiaries, to all liabilities of our subsidiaries.

On February 10, 2011, we announced the commencement of a tender offer to purchase for cash any and all of our outstanding 2014 Notes. Upon expiration on March 11, 2011, we purchased $170.9 million aggregate principal amount of the 2014 Notes.

On August 22, 2012, we purchased $25.3 million aggregate principal amount of the 2014 Notes. As a result of this transaction, we recognized approximately $0.2 million for the write off of related pro-rata unamortized deferred financing fees. As of December 31, 2013, $3.8 million aggregate principal amount of the 2014 Notes remain outstanding and is included within current portion of long-term obligations on the consolidated balance sheet.

Maturities

Aggregate annual maturities of our long-term obligations at December 31, 2013, excluding capital lease obligations, are as follows (in thousands):

2014	$	3,768
2015	—
2016	—
2017	300,000
2018	—
	$	303,768

As discussed in Note 7, we have acquired certain property and equipment pursuant to capital leases. At December 31, 2013, future minimum lease payments under capital lease obligations, together with the present value of the net minimum lease payments, are as follows (in thousands):

2014	$	419
2015	915
2016	948
2017	982
2018	1,016
Thereafter	6,012
Total minimum payments	10,292
Less amount representing interest	(2,054		)
Present value of minimum lease payments	8,238
Current portion	(406		)
Long-term portion	$	7,832

Our capital lease associated with our corporate headquarters included a six month deferral of lease payments in the first year of the lease.

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Capital Stock (Details)	Dec. 31, 2013	Dec. 31, 2012
Equity [Abstract]
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Shares of voting common stock available for future issuance	52,006,235

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Income Statement [Abstract]
Net sales	$ 242,330		$ 214,105		$ 210,753
Cost of sales	59,721	[1]	48,239	[1]	56,762	[1]
Cost of sales - restructuring	0		0		667
Gross profit	182,609		165,866		153,324
Operating expenses:
Selling, general and administrative	230,785	[1]	150,296	[1]	131,611	[1]
Research and development	20,305	[1]	13,905	[1]	15,422	[1]
Amortization of intangible assets	7,476		4,417		2,412
BioMimetic impairment charges	206,249		0		0
Gain on Disposition of Intangible Assets	0		(15,000)		0
Restructuring charges	0		431		4,613
Total operating expenses	464,815		154,049		154,058
Operating income	(282,206)		11,817		(734)
Interest expense, net	16,040		10,113		6,381
Other expense, net	(67,843)		5,089		4,241
Income (loss) before income taxes	(230,403)		(3,385)		(11,356)
Provision (benefit) for income taxes	49,765		2		(3,961)
Income (Loss) from Continuing Operations Attributable to Parent	(280,168)		(3,387)		(7,395)
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent	6,223		8,671		2,252
Net (loss) income	$ (273,945)		$ 5,284		$ (5,143)
Net income (loss) per share (Note 15):
Basic (in dollars per share)	$ (6.05)		$ 0.14		$ (0.13)
Income (Loss) from Continuing Operations, Per Basic Share	$ (6.19)		$ (0.09)		$ (0.19)
Diluted (in dollars per share)	$ (6.05)		$ 0.14		$ (0.13)
Income (Loss) from Continuing Operations, Per Diluted Share	$ (6.19)		$ (0.09)		$ (0.19)
Weighted-average number of shares outstanding-basic (in shares)	45,265		38,769		38,279
Weighted-average number of shares outstanding, diluted (in shares)	45,265		39,086		38,279

[1] These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated: Year Ended December 31, 2013 2012 2011Cost of sales$503 $704 $735Selling, general and administrative10,675 6,767 4,875Research and development780 368 320Discontinued operations3,410 3,135 3,178

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Acquisitions (Notes)

12 Months Ended

Dec. 31, 2013

Business Combination Disclosure [Text Block]

Acquisition

Biotech International

On November 15, 2013, we acquired 100% of the outstanding equity shares of Biotech International (Biotech), a leading, privately held French orthopaedic extremities company, for approximately $55.0 million in cash and $21.0 million of our common stock, plus additional contingent consideration with an estimated fair value of $4.3 million to be paid upon the achievement of certain revenue milestones in 2014 and 2015. All Wright common stock issued in connection with the transaction is subject to a lockup period of one year. The transaction will significantly expand our direct sales channel in France and international distribution network and add Biotech’s complementary extremity product portfolio to further accelerate growth opportunities in our global extremities business. The operating results from this acquisition are included in the consolidated financial statements from the acquisition date.

The acquisition was recorded by allocating the costs of the assets and liabilities acquired based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of the net assets and liabilities acquired is recorded as goodwill. The following is a summary of the estimated fair values of the assets acquired (in thousands):

Cash and cash equivalents	$	252
Accounts receivable	5,400
Inventory	5,814
Prepaid and other current assets	303
Property, plant and equipment	2,573
Intangible assets	15,500
Accounts payable and accrued liabilities	(2,091		)
Deferred tax liability - current	(52		)
Deferred tax liability - noncurrent	(3,939		)
Net assets acquired	23,760
Goodwill	56,455
Total purchase consideration	$	80,215

The above purchase price allocation is considered preliminary and is subject to revision when the valuation of intangible assets is finalized upon receipt of the final valuation report for those assets from a third party valuation expert.

The goodwill is attributable to the workforce of the acquired business and strategic opportunities that arose from the acquisition of Biotech. The goodwill is not expected to be deductible for tax purposes.

Of the estimated $15.5 million of acquired intangible assets, $9.8 million was assigned to customer relationships (12 year life), $4.8 million was assigned to purchased technology (10 year life), and $0.9 million was assigned to trademarks (2 year life).

The acquired business contributed revenues of $1.9 million and operating loss of $0.8 million to our consolidated results from the date of acquisition through December 31, 2013. Our consolidated results of operations would not have been materially different than reported results had the Biotech acquisition occurred at the beginning of 2012 and therefore, pro forma financial information has not been presented.

BioMimetic Therapeutics, Inc.

On March 1, 2013, we acquired 100% of the outstanding equity shares of BioMimetic, a publicly traded company specializing in the development and commercialization of innovative products to promote the healing of musculoskeletal injuries and diseases, including therapies for orthopedic, sports medicine and spine applications. The transaction combined BioMimetic's biologics platform and pipeline with our established sales force and product portfolio, to further accelerate growth opportunities in our Extremities business. The operating results from this acquisition are included in the consolidated financial statements from the acquisition date.

Under the terms of the Agreement and Plan of Merger, each share of BioMimetic common stock was canceled and converted into the right to receive: (1) $1.50 in cash; (2) 0.2482 of a share of our common stock; and (3) one tradable CVR. Each CVR entitles its holder to receive additional cash payments of up to $6.50 per share, which are payable upon receipt of FDA approval of Augment^® Bone Graft and upon achieving certain revenue milestones. In addition, each holder of a BioMimetic stock option, whether such stock option was vested or unvested, was permitted to elect for all or any portion of such stock option to be exercised in full or on a net basis, by agreeing (if exercised on a net basis) to exchange in the merger the shares of BioMimetic stock subject to such stock option being exercised, and, in connection with such exchange, relinquish a portion of the merger consideration otherwise payable pursuant to such shares. On the completion of the merger, any such stock option that was not exercised was assumed by us and converted into a stock option at a conversion rate of 0.522106 to acquire a number of shares of our common stock (rounded to the nearest whole share).

The fair value of consideration transferred is as follows (in thousands):

Fair value of Wright shares issued at an exchange ratio of 0.2482 shares of Wright for one share of BioMimetic(1)	$	165,893
Cash transferred (2)	41,336
Contingent Value Rights (3)	70,120
Value of previously vested BioMimetic stock options converted into Wright stock options (at specified exchange ratio) (4)	2,868
Withholding tax component related to BioMimetic exercised stock options (merger consideration tendered to cover remaining unpaid value of employees' portion) (5)	2,419
Fair value of Wright's investment in BioMimetic held before the merger (6)	10,676
Total value of consideration transferred	$	293,312

(1) The fair value of our shares of $165,893 was calculated by multiplying the (a) BioMimetic shares outstanding as of February 28, 2013, 28.3 million shares, less our prior investment in BioMimetic of 1.13 million shares, and (b) the BioMimetic shares issued for exercises of BioMimetic stock options immediately prior to the merger, 1.1 million shares, by (c) the exchange ratio of 0.2482 and (d) $23.83, the closing trading price of our common stock on March 1, 2013. The fair value of the Wright shares was offset by the value of the stock component of merger consideration that would have been received by option holders of 0.2 million BioMimetic stock options. These BioMimetic stock options were exercised immediately prior to the merger, but were tendered, along with the associated CVRs, to BioMimetic to cover $1.4 million of the total employee portion of the statutory withholding tax.

(2) The cash transferred of $41,336 was calculated by multiplying the (a) BioMimetic shares outstanding as of February 28, 2013, 28.3 million shares, less our prior investment in BioMimetic of 1.13 million shares and (b) the BioMimetic shares issued for exercises of BioMimetic stock options immediately prior to the merger, 1.1 million shares, by (c) $1.50 per share to be received by BioMimetic stockholders. The cash component of merger consideration was offset by the value of the cash component of merger consideration that would have been received by option holders to cover $1.0 million of the total employee portion of the statutory withholding tax.

(3) Each CVR entitles its holder to receive an additional $3.50 per share upon approval by the FDA of Augment^® Bone Graft; an additional $1.50 per share the first time aggregate sales of specified products exceed $40 million during a consecutive 12-month period and an additional $1.50 per share the first time aggregate sales of specified products exceed $70 million during a consecutive 12-month period. The CVRs are publicly traded and will terminate on the earlier of the six-year anniversary of the completion of the merger or the payment date for the second product sales milestone.

The fair value assigned to the CVRs and the associated liability related to payments under the contingent value rights agreement of $70.5 million is based upon the CVRs' market opening price of $2.50 per CVR as of March 4, 2013, the first day of trading of the CVRs, and the quantity of CVRs issued. The fair value of the CVRs was offset by the value of the CVR component of merger consideration that would have been received by option holders of 0.2 million BioMimetic stock options. This value was tendered along with the stock options to cover $1.4 million of the total employee portion of the statutory withholding tax.

The fair value of the CVRs at December 31, 2013 of $9.0 million is recorded in the “Accrued expenses and other current liabilities” line of the consolidated balance sheet. The fair value of the CVRs and the associated liability related to payments under the CVR agreement are remeasured at the end of each reporting period based on the closing trading price on the last business day of the period and the number of CVRs outstanding as of that date. Changes in fair value are recognized in results of operations.

(4) In accordance with FASB ASC Section 805, Business Combinations, the consideration transferred by us for BioMimetic includes $2.9 million for the fair value of certain BioMimetic stock options attributable to precombination service.

For purposes of calculating the consideration transferred, the fair value based measure of the BioMimetic vested options was determined on a grant-by-grant basis using the Black-Scholes option pricing model with the following assumptions: (i) the closing market price of BioMimetic common stock of $9.49 on February 28, 2013; (ii) an expected remaining life considering the original expected life for the options, the remaining service period and the contractual life of the option as of March 1, 2013; (iii) volatility based on a blend of the historical stock price volatility of common stock over the most recent period equivalent to the expected life of the options; and (iv) the risk-free interest rate based on published U.S. Treasury yields for notes with comparable terms as the expected life of the options. The fair value measurement of our replacement options was completed using the same assumptions except the closing market price of our common stock of $23.83 on March 1, 2013 was used instead of the BioMimetic common stock closing price.

(5) The withholding tax component of $2.4 million represents the merger consideration tendered to BioMimetic in connection with the exercise of 0.2 million BioMimetic stock options, immediately prior to the merger, to cover the employee portion of the statutory withholding tax, consisting of the sum of (1) the value of the stock component of merger consideration, along with the associated CVRs, to cover $1.4 million of the statutory withholding tax and (2) the cash component of merger consideration that would have been received by option holders to cover $1.0 million of the withholding tax.

(6) As of February 28, 2013, we held 1.13 million shares of BioMimetic as an available-for-sale (AFS) marketable security carried at an aggregate fair value of $10.7 million based on the closing market price of BioMimetic common stock of $9.49. The cumulative unrealized gain on this investment based on the fair value determined at closing was recognized as a gain of $7.8 million. This gain was recorded in “Other (income) expense, net” in the consolidated statement of operations for the twelve months ended December 31, 2013.

The following is a summary of the estimated fair values of the net assets acquired (in thousands):

Cash and cash equivalents	$	10,577
Marketable securities	16,882
Accounts receivables	1,595
Inventories	4,418
Prepaid and other current assets	4,234
Property, plant and equipment	2,976
Intangible assets	95,100
Deferred tax asset - noncurrent	24,495
Other long-term assets	1,133
Accounts payable and accrued liabilities	(6,003		)
Capital leases	(118		)
Deferred tax liability - current	(219		)
Other liabilities	(2		)
Net assets acquired	155,068
Goodwill	138,244
Total purchase consideration	$	293,312

The goodwill is attributable to the workforce of the acquired business and strategic opportunities that arose from the acquisition of BioMimetic. The goodwill is not expected to be deductible for tax purposes.

Of the $95.1 million of acquired intangible assets, $1.6 million was assigned to acquired technology (13 year useful life), $3.9 million was assigned to trademarks (indefinite useful life), $1.3 million was assigned to a non-compete agreement (2 year useful life), and $88.3 million was assigned to IPRD (indefinite useful life). The weighted average amortization period of the finite-lived intangibles acquired is approximately 10 years.

The contractual value of accounts receivable approximates fair value. Prepaid and other current assets includes $3.5 million, which represents the fair value of a contingent gain associated with disputed provisions of a license agreement with Luitpold Pharmaceuticals, Inc. During the second quarter of 2013, this dispute was settled for $3.5 million, and payment was received.

During the third quarter of 2013, we received a not approvable letter from the FDA in response to our Pre-Market Approval application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. We have filed an appeal with the FDA regarding its decision. On October 31, 2013 the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment based upon the information we had as of September 30, 2013. Ultimately, we recognized an intangible impairment charge of approximately $88.1 million and a goodwill impairment charge of $115.0 million in the three months ended September 30, 2013 for the amount by which the carrying value of these assets exceeded the fair value. See Note 12 for further discussion of our impairment analysis. Further, we recognized a $3.2 million charge for noncancelable inventory commitments for the raw materials used in the manufacture of Augment^® Bone Graft, which we have estimated will expire unused. These charges are included within “BioMimetic impairment charges” on our consolidated statement of operations. We further recognized a reduction of deferred tax liabilities associated with the impaired intangible assets, resulting in an income tax benefit of $34.3 million.

The acquired business contributed revenues of $3.6 million and operating loss of $26.6 million to our consolidated results from the date of acquisition through December 31, 2013, which does not include the amounts described above that were recorded as BioMimetic impairment charges during the three months ended September 30, 2013. Our consolidated results include $4.5 million of transaction expenses and $6.4 million of transition expenses recognized in the twelve months ended December 31, 2013.

The following unaudited pro forma summary presents our continuing operations financial results if the business combination had occurred on January 1, 2012:

	Pro Forma Year Ended December 31, 2013			Pro Forma Year Ended December 31, 2012
Revenue from continuing operations	$	242,945		$	216,577
Net loss from continuing operations	(284,480		)	(38,926		)
Net loss from continuing operations per share, basic	(6.13		)	(0.85		)
Net loss from continuing operations per share, diluted	(6.13		)	(0.85		)

The pro forma net loss for the year ended December 31, 2012 includes non-recurring items for the (a) $7.8 million gain on remeasurement of our previously held investment in BioMimetic, (b) $2.2 million of stock-based compensation expense related to the incremental fair value of replacement awards attributed to precombination service, (c) $6.6 million of stock-based compensation expense related to the acceleration of vesting of previously unvested BioMimetic awards exercised in connection with the acquisition, (d) $0.2 million of compensation expense related to retention agreements for which employees have no further service commitments to obtain the payments, (e) $0.6 million of severance expense directly attributable to the acquisition, and (f) $9.0 million of transaction costs incurred by BioMimetic and us.

WG Healthcare Limited

On January 7, 2013, we acquired 100% of the outstanding equity shares of WG Healthcare Limited, a United Kingdom company (WG Healthcare), for approximately $7.6 million, plus additional contingent consideration with an estimated fair value of $2.2 million to be paid over the next five years subject to the achievement of certain revenue milestones. We acquired the facility, inventory, infrastructure and all other assets and liabilities associated with WG Healthcare's business.

The operating results from this acquisition are included in the consolidated financial statements from the acquisition date.The two former owners of WG Healthcare have joined us as full-time employees.

The acquisition was recorded by allocating the costs of the assets acquired based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of the assets acquired is recorded as goodwill. The following is a summary of the estimated fair values of the assets acquired (in thousands):

Cash	$	458
Accounts receivable	1,052
Inventory	1,640
Property, plant and equipment	330
Intangible assets	4,748
Accounts payable	(1,550		)
Deferred tax liability - current	(43		)
Deferred tax liability - noncurrent	(1,139		)
Total net assets acquired	5,496
Goodwill	4,341
Total purchase consideration	$	9,837

The goodwill is attributable to the workforce of the acquired business and strategic opportunities that arose from the acquisition of WG Healthcare. The goodwill is not expected to be deductible for tax purposes.

Of the $4.7 million of acquired intangible assets, $1.9 million was assigned to trademarks (indefinite life), $0.8 million was assigned to completed technology (7 year life), $0.3 million was assigned to non-compete agreements (3 year life), and $1.7 million was assigned to customer relationships (15 year life). The weighted average amortization period of the finite-lived intangibles acquired is approximately 11 years.

The acquired business contributed revenues of $4.6 million and operating loss of $1.3 million to our consolidated results from the date of acquisition through December 31, 2013. Our consolidated results of operations would not have been materially different than reported results had the WG Healthcare acquisition occurred at the beginning of 2012 and therefore, pro forma financial information has not been presented.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Principles of Consolidation. The accompanying consolidated financial statements include our accounts and those of our wholly owned U.S. and international subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant areas requiring the use of management estimates relate to discontinued operations, revenue recognition, the determination of allowances for doubtful accounts and excess and obsolete inventories, the evaluation of goodwill and long-lived assets, product liability claims and other litigation, income taxes, stock-based compensation, accounting for business combinations, and accounting for restructuring charges.

Discontinued Operations. In June 2013, we entered into a definitive agreement under which MicroPort Medical B.V., a subsidiary of MicroPort Scientific Corporation (MicroPort), would acquire our hip/knee (OrthoRecon) business. Our OrthoRecon business consists of hip and knee implant products. On January 9, 2014, we completed our divestiture of the OrthoRecon business to MicroPort. Pursuant to the terms of the asset purchase agreement with MicroPort, the Purchase Price (as defined in the asset purchase agreement) for the OrthoRecon Business was approximately $287.1 million, which MicroPort paid in cash.

All historical operating results for the OrthoRecon business are reflected within discontinued operations in the consolidated statements of operations. In addition, costs associated with corporate employees and infrastructure being transferred as a part of the sale have been included in discontinued operations. Further, all assets and associated liabilities to be transferred to MicroPort have been classified as assets and liabilities held for sale on our consolidated balance sheet. See Note 4 for further discussion of discontinued operations. Other than Note 4, unless otherwise stated, all discussion of assets and liabilities in these Notes to the Financial Statements reflect the assets and liabilities held and used in our continuing operations, and all discussion of revenues and expenses reflect those associated with our continuing operations.

Cash and Cash Equivalents. Cash and cash equivalents include all cash balances and short-term investments with original maturities of three months or less.

Inventories. Our inventories are valued at the lower of cost or market on a first-in, first-out (FIFO) basis. Inventory costs include material, labor costs and manufacturing overhead. We regularly review inventory quantities on hand for excess and obsolete inventory and, when circumstances indicate, we incur charges to write down inventories to their net realizable value. Our review of inventory for excess and obsolete quantities is based primarily on our estimated forecast of product demand and production requirements for the next twenty-four months. Charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $4.7 million, $3.2 million, and $11.6 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Product Liability Claims, Product Liability Insurance Recoveries, and Other Litigation. We are involved in legal proceedingsinvolving product liability claims as well as contract, patent protection and other matters. See Note 19 for additional information regarding product liability claims, product liability insurance recoveries and other litigation.

We make provisions for claims specifically identified for which we believe the likelihood of an unfavorable outcome is probable and the amount of loss can be estimated. For unresolved contingencies with potentially material exposure that are deemed reasonably possible, we evaluate whether a potential loss or range of loss can be reasonably estimated. Our evaluation of these matters is the result of a comprehensive process designed to ensure that recognition of a loss or disclosure of these contingencies is made in a timely manner. In determining whether a loss should be accrued or a loss contingency disclosed, we evaluate a number of factors including: the procedural status of each lawsuit; any opportunities for dismissal of the lawsuit before trial; the amount of time remaining before trial date; the status of discovery; the status of settlement; arbitration or mediation proceedings; and management’s estimate of the likelihood of success prior to or at trial. The estimates used to establish a range of loss and the amounts to accrue are based on previous settlement experience, consultation with legal counsel, and management’s settlement strategies. If the estimate of a probable loss is in a range and no amount within the range is more likely, we accrue the minimum amount of the range. We recognize legal fees as an expense in the period incurred.

Property, Plant and Equipment. Our property, plant and equipment is stated at cost. Depreciation, which includes amortization of assets under capital lease, is generally provided on a straight-line basis over the estimated useful lives generally based on the following categories:

Land improvements	15	to	25	years
Buildings	10	to	25	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	1	to	14	years
Surgical instruments			6	years

Expenditures for major renewals and betterments, including leasehold improvements, that extend the useful life of the assets are capitalized and depreciated over the remaining life of the asset or lease term, if shorter. Maintenance and repair costs are charged to expense as incurred. Upon sale or retirement, the asset cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in income.

Intangible Assets and Goodwill. Goodwill is recognized for the excess of the purchase price over the fair value of net assets of businesses acquired. FASB ASC 350-30-35-18 requires companies to evaluate for impairment intangible assets not subject to amortization, such as our IPRD assets, if events or changes in circumstances indicate than an asset might be impaired. Further, FASB ASC 350-20-35-30 requires companies to evaluate goodwill and intangibles not subject to amortization for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Unless circumstances otherwise dictate, the annual impairment test is performed in the fourth quarter. During the second and third quarter of 2013, we had events that caused us to test for impairment of intangible assets and goodwill. See Note 12 for further information on the testing. During the fourth quarter of 2013, we performed a qualitative assessment of goodwill for impairment and determined that it is more likely than not that the fair value of our reporting units exceeded their respective carrying values, indicating that goodwill was not impaired. We have determined that we have three reporting units for purposes of evaluating goodwill for impairment: 1) BioMimetic business; 2) Continuing Operations (BioExtremities) business, excluding the BioMimetic business; and 3) Discontinued Operations (OrthoRecon) business.

Our intangible assets with estimable useful lives are amortized on a straight line basis over their respective estimated useful lives to their estimated residual values. This method of amortization approximates the expected future cash flow generated from their use. Finite lived intangibles are reviewed for impairment in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 360, Property, Plant and Equipment (FASB ASC 360). The weighted average amortization periods for completed technology, distribution channels, trademarks, licenses, customer relationships, non-compete agreements and other intangible assets are 9 years, 10 years, 5 years, 14 years, 12 years, 3 years and 7 years, respectively. The weighted average amortization period of our intangible assets on a combined basis is 9 years. Additionally, we have four indefinite lived trademark assets and one in-process research and development (IPRD) intangible asset. These indefinite lived intangible assets are not amortized, but are instead tested for impairment at least annually in accordance with the provisions of FASB ASC Section 350, Intangibles - Goodwill and Other.

Valuation of Long-Lived Assets. Management periodically evaluates carrying values of long-lived assets, including property, plant and equipment and intangible assets, when events and circumstances indicate that these assets may have been impaired. We account for the impairment of long-lived assets in accordance with FASB ASC 360. Accordingly, we evaluate impairment of our property, plant and equipment based upon an analysis of estimated undiscounted future cash flows. If it is determined that a change is required in the useful life of an asset, future depreciation and amortization is adjusted accordingly. Alternatively, should we determine that an asset is impaired, an adjustment would be charged to income based on the difference between the asset’s fair market value and the asset's carrying value.

Allowances for Doubtful Accounts. We experience credit losses on our accounts receivable and, accordingly, we must make estimates related to the ultimate collection of our accounts receivable. Specifically, management analyzes our accounts receivable, historical bad debt experience, customer concentrations, customer credit-worthiness and current economic trends when evaluating the adequacy of our allowance for doubtful accounts.

The majority of our accounts receivable are from hospitals, many of which are government funded. Accordingly, our collection history with this class of customer has been favorable. Historically, we have experienced minimal bad debts from our hospital customers and more significant bad debts from certain international stocking distributors, typically as a result of specific financial difficulty or geo-political factors. We write off accounts receivable when we determine that the accounts receivable are uncollectible, typically upon customer bankruptcy or the customer’s non-response to continued collection efforts. Our allowance for doubtful accounts totaled $0.3 million at December 31, 2013 and 2012, respectively, for those customer account balances that were retained following the sale of our OrthoRecon business to MicroPort.

Concentration of Credit Risk. Financial instruments that potentially subject us to concentrations of credit risk consist principally of accounts receivable. Management attempts to minimize credit risk by reviewing customers’ credit history before extending credit and by monitoring credit exposure on a regular basis. An allowance for possible losses on accounts receivable is established based upon factors surrounding the credit risk of specific customers, historical trends and other information. Collateral or other security is generally not required for accounts receivable.

Concentrations of Supply of Raw Material. We rely on a limited number of suppliers for the components used in our products. For certain human biologic products, we depend on one supplier of demineralized bone matrix (DBM) and cancellous bone matrix (CBM). We rely on one supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products, and one supplier for our xenograft bone wedge product. Porcine biologic soft tissue graft, BIOTAPE^® XM relies on a single source supplier as well. We maintain adequate stock from these suppliers in order to meet market demand. We currently rely on one supplier for a key component of our Augment^® Bone Graft. In December 2013, this supplier notified us of their intent to terminate the supply agreement at the end of the current term, which is December 2015. They are contractually required to meet our supply requirements until the termination date, and to use commercially reasonable efforts to assist us in identifying a new supplier and support the transfer of technology and supporting documentation to produce this component. See Item 1A, Risk Factors, for further information on our suppliers.

Income Taxes. Income taxes are accounted for pursuant to the provisions of FASB ASC Section 740, Income Taxes (FASB ASC 740). Our effective tax rate is based on income by tax jurisdiction, statutory rates and tax saving initiatives available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our effective tax rate and evaluating our tax positions. This process includes assessing temporary differences resulting from differing recognition of items for income tax and financial accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

During the fourth quarter of 2013, we recognized a valuation allowance for our U.S. deferred tax assets of approximately $119.6 million, primarily related to net operating losses for our U.S. operations. See Note 14 for further discussion of our consolidated deferred tax assets and liabilities, and the associated valuation allowance.

We provide for unrecognized tax benefits based upon our assessment of whether a tax position is “more-likely-than-not” to be sustained upon examination by the tax authorities. If a tax position meets the more-likely-than-not standard, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more-likely-than-not to be realized upon ultimate settlement or disposition of the underlying tax position.

Other Taxes. Taxes assessed by a governmental authority that are imposed concurrent with our revenue transactions with customers are presented on a net basis in our consolidated statement of operations.

Revenue Recognition. Our revenues are primarily generated through two types of customers, hospitals and surgery centers, and stocking distributors, with the majority of our revenue derived from sales to hospitals. Our products are primarily sold through a network of employee sales representatives and independent sales representatives in the U.S. and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the U.S. Revenues from sales to hospitals are recorded when the hospital takes title to the product, which is generally when the product is surgically implanted in a patient.

We record revenues from sales to our stocking distributors outside the U.S. at the time the product is shipped to the distributor. Stocking distributors, who sell the products to their customers, take title to the products and assume all risks of ownership. Our distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. In general, the distributors do not have any rights of return or exchange; however, in limited situations, we have repurchase agreements with certain stocking distributors. Those certain agreements require us to repurchase a specified percentage of the inventory purchased by the distributor within a specified period of time prior to the expiration of the contract. During those specified periods, we defer the applicable percentage of the sales. An insignificant amount of deferred revenue related to these types of agreements was recorded at December 31, 2013 and 2012, respectively.

We must make estimates of potential future product returns related to current period product revenue. We develop these estimates by analyzing historical experience related to product returns. Judgment must be used and estimates made in connection with establishing the allowance for sales returns in any accounting period. An allowance for sales returns of $0.3 million is included as a reduction of accounts receivable at December 31, 2013 and 2012, respectively.

In 2011, we entered into a trademark license agreement (License Agreement) with KCI Medical Resources, a subsidiary of Kinetic Concepts, Inc. (KCI). In exchange for $8.5 million, of which $5.5 million was received immediately and the remaining $3 million was received in January 2012, the License Agreement provides KCI with a non-transferable license to use our trademarks associated with our GRAFTJACKET^® line of products in connection with the marketing and distribution of KCI's soft tissue graft containment products used in the wound care field, subject to certain exceptions. License revenue is being recognized over 12 years on a straight line basis.

Shipping and Handling Costs. We incur shipping and handling costs associated with the shipment of goods to customers, independent distributors and our subsidiaries. Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products to customers are included in selling, general and administrative expenses. All other shipping and handling costs are included in cost of sales.

Research and Development Costs. Research and development costs are charged to expense as incurred.

Foreign Currency Translation. The financial statements of our international subsidiaries whose functional currency is the local currency are translated into U.S. dollars using the exchange rate at the balance sheet date for assets and liabilities and the weighted average exchange rate for the applicable period for revenues, expenses, gains and losses. Translation adjustments are recorded as a separate component of comprehensive income in stockholders’ equity. Gains and losses resulting from transactions denominated in a currency other than the local functional currency are included in “Other expense, net” in our consolidated statement of operations.

Comprehensive Income. Comprehensive income is defined as the change in equity during a period related to transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The difference between our net income and our comprehensive income is attributable to foreign currency translation, unrealized gains and losses (net of taxes) on our derivative instrument, adjustments to our minimum pension liability, and unrealized gains and losses on our available-for-sale marketable securities. In accordance with FASB Accounting Standards Update 2011-05, Presentation of Comprehensive Income, we have changed our presentation of comprehensive income by including a separate Statement of Comprehensive Income.

Stock-Based Compensation. We account for stock-based compensation in accordance with FASB ASC Section 718, Compensation — Stock Compensation (FASB ASC 718). Under the fair value recognition provisions of FASB ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The determination of the fair value of stock-based payment awards, such as options, on the date of grant using an option-pricing model is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables, which include the expected life of the award, the expected stock price volatility over the expected life of the awards, expected dividend yield and risk-free interest rate.

We recorded stock-based compensation expense of $12.0 million, $7.8 million, and $5.9 million during the years ended December 31, 2013, 2012 and 2011, respectively, within results of continuing operations. See Note 17 for further information regarding our stock-based compensation assumptions and expenses.

Fair Value of Financial Instruments. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates the fair value of these financial instruments at December 31, 2013 and 2012 due to their short maturities or variable rates.

The remaining outstanding $3.8 million of our 2014 Notes are carried at cost. The estimated fair value of these 2014 Notes was approximately $3.5 million at December 31, 2013 based on a limited number of trades and does not necessarily represent the value at which the entire 2014 Notes portfolio can be retired.

The $300 million of our 2017 Notes are carried at cost. The estimated fair value of these 2017 Notes was approximately $396 million at December 31, 2013, which includes the conversion derivative described in Note 11 of the financial statements, based on a quoted price in an active market (Level 1).

FASB ASC Section 820, Fair Value Measurements and Disclosures requires fair value measurements be classified and disclosed in one of the following three categories:

Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges.

Level 2: Financial instruments determined using prices for recently traded financial instruments 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 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

We use a third-party provider to determine fair values of our available-for-sale debt securities. The third-party provider receives market prices for each marketable security from a variety of industry standard data providers, security master files from large financial institutions and other third-party sources with reasonable levels of price transparency. The third-party provider uses these multiple prices as inputs into a pricing model to determine a weighted average price for each security. We have controls in place to review the third party provider's qualifications and procedures used to determine fair values and to validate the prices used in their determination of fair value. We classify our investment in U.S. Treasury bills and bonds and corporate equity securities as Level 1 based upon quoted prices in active markets. All other marketable securities are classified as Level 2 based upon the other than quoted prices with observable market data. These include U.S. agency debt securities, certificates of deposit, commercial paper, and corporate debt securities.

During the third quarter of 2012, we issued $300 million of our 2017 Notes, and we have recorded a derivative liability for the conversion feature (2017 Notes Conversion Derivative) of such 2017 Notes. Additionally, we entered into convertible notes hedging transactions (2017 Notes Hedges) in connection with the issuance of our 2017 Notes. The 2017 Notes Hedges and the 2017 Notes Conversion Derivative are measured at fair value using Level 3 inputs. These instruments are not actively traded and are valued using an option pricing model that uses observable and unobservable market data for inputs.

To determine the fair value of the embedded conversion option in the 2017 Notes Conversion Derivative, a binomial lattice model was used. A binomial stock price lattice generates two probable outcomes of stock price - one up and another down. This lattice generates a distribution of stock price at the maturity date. Using this stock price lattice, a conversion option lattice was created where the value of the embedded conversion option was estimated. The conversion option lattice first calculates the possible conversion option values at the maturity date using the distribution of stock price, which equals to the maximum of (x) zero, if stock price is below the strike price, or (y) stock price less the strike price, if the stock price is higher than the strike price. The value of the 2017 Notes Conversion Derivative at the valuation date was estimated using the conversion option values at the maturity date by moving back in time on the lattice. Specifically, at each node, if the Notes are eligible for early conversion, the value at this node is the maximum of (i) the early conversion value, which is the stock price less the strike price, and (ii) the discounted and probability-weighted value from the two probable outcomes in the future. If the Notes are not eligible for early conversion, the value of the conversion option at this node equals to (ii). In the conversion option lattice, credit adjustment was applied in the model as the embedded conversion option is settled with cash instead of shares.

To estimate the fair value of the 2017 Notes Hedges, we used the Black-Scholes formula combined with credit adjustments, as the bank counterparties have credit risk and the call options are cash settled. We assumed that the call options will be exercised at the maturity since our common stock does not pay any dividends and management does not expect to declare dividends in the near term.

The following assumptions were used in the fair market valuations of the 2017 Notes Hedges and 2017 Notes Conversion Derivative as of December 31, 2013:

	2017 Notes Conversion Derivative	2017 Notes Hedge
Stock Price Volatility (1)	32%	32%
Credit Spread for Wright (2)	2.2%	N/A
Credit Spread for Bank of America, N.A. (3)	N/A	0.6%
Credit Spread for Deutsche Bank AG (3)	N/A	0.6%
Credit Spread for Wells Fargo Securities, LLC (3)	N/A	0.3%

(1) Volatility selected based on historical and implied volatility of common shares of Wright Medical Group, Inc.

(2) Credit spread was estimated based on BVAL price from Bloomberg as of valuation date.

(3) Credit spread of each bank is estimated using CDS curves. Source: Bloomberg.

As part of the acquisitions of EZ Concepts Surgical Device Corporation, d/b/a EZ Frame^™, and CCI^® Evolution Mobile Bearing Total Ankle Replacement system (CCI acquisition), completed in 2010 and 2011, respectively, we have recorded $0.5 million of contingent liabilities for potential future cash payments related to these transactions as of December 31, 2013. As part of the acquisition of WG Healthcare on January 7, 2013, we may be obligated to pay contingent consideration upon the achievement of certain revenue milestones; therefore, we have recorded the estimated fair value of future contingent consideration of approximately $1.5 million as of December 31, 2013. As part of the acquisition of Biotech on November 15, 2013, we may be obligated to pay contingent consideration upon achievement of certain revenue milestones; therefore we have recorded the estimated fair value of future contingent consideration of approximately $4.3 million as of December 31, 2013. The fair value of the contingent consideration as of December 31, 2013, was determined using a discounted cash flow model and probability adjusted estimates of the future earnings and is classified in Level 3. Changes in the fair value of contingent consideration are recorded in “Other (income) expense, net” in our consolidated statements of operations.

On March 1, 2013, as part of the acquisition of BioMimetic Therapeutics, Inc. (BioMimetic), we issued Contingent Value Rights (CVRs) as part of the merger consideration. Each CVR entitles its holder to receive additional cash payments of up to $6.50 per share, which are payable upon receipt of FDA approval of Augment^® Bone Graft and upon achieving certain revenue milestones. The fair value of the CVRs outstanding at December 31, 2013 of $9.0 million was determined using the closing price of the security in the active market (Level 1).

The following table summarizes the valuation of our financial instruments (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2013
Assets
Cash and cash equivalents	$	168,534	$	168,534	$	—	$	—
Available-for-sale marketable securities
U.S. agency debt securities	4,998		—		4,998		—
Certificate of deposit	245		—		245		—
Corporate debt securities	5,188		—		5,188		—
U.S. government debt securities	4,117		4,117		—		—
Total available-for-sale marketable securities	14,548		4,117		10,431		—
2017 Notes Hedges	118,000		—		—		118,000
Total	$	301,082	$	172,651	$	10,431	$	118,000
Liabilities
2017 Notes Conversion Derivative	$	112,000	$	—	$	—	$	112,000
Contingent consideration	6,237		—		—		6,237
Contingent consideration (CVRs)	8,969		$	8,969	$	—	—
Total	$	127,206	$	8,969	$	—	$	118,237

	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2012
Assets
Cash and cash equivalents	$	320,360	$	320,360	$	—	$	—
Available-for-sale marketable securities
U.S. agency debt securities	2,500		—		2,500		—
Corporate debt securities	2,001		—		2,001		—
Total debt securities	4,501		—		4,501		—
Corporate equity securities	8,145		8,145		$	—	—
Total available-for-sale marketable securities	12,646		8,145		4,501		—
2017 Notes Hedges	62,000		$	—	$	—	62,000
Total	$	395,006	$	328,505	$	4,501	$	62,000
Liabilities
2017 Notes Conversion Derivative	$	55,000	$	—	$	—	$	55,000
Contingent consideration	983		—		—		983
Total	$	55,983	$	—	$	—	$	55,983

The following is a roll forward of our assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3):

	Balance at December 31, 2012		Transfers into Level 3		Gain/(Loss) included in Earnings		Settlements	Currency		Balance at December 31, 2013
2017 Notes Hedges	62,000		—		56,000		—	—		118,000
2017 Notes Conversion Derivative	(55,000	)	—		(57,000	)	—	—		(112,000	)
Contingent Consideration	(983	)	(6,396	)	(157	)	1,491	(191	)	(6,236	)

Derivative Instruments. We account for derivative instruments and hedging activities under FASB ASC Section 815, Derivatives and Hedging (FASB ASC 815). Accordingly, all of our derivative instruments are recorded in the accompanying consolidated balance sheets as either an asset or liability and measured at fair value. The changes in the derivative’s fair value are recognized currently in earnings unless specific hedge accounting criteria are met.

We employ a derivative program using 30-day foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that are denominated in foreign currencies. These forward contracts are expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts are not designated as hedging instruments under FASB ASC 815. Accordingly, the changes in the fair value and the settlement of the contracts are recognized in the period incurred in the accompanying consolidated statements of operations.

We recorded a net gain of approximately $0.6 million for the year ended December 31, 2013 and a net loss of approximately $0.4 million and $0.9 million for the years ended December 31, 2012 and 2011, respectively, on foreign currency contracts, which are included in “Other (income) expense, net” in our consolidated statements of operations. These losses substantially offset translation gains recorded on our intercompany receivable and payable balances, also included in “Other (income) expense, net.” At December 31, 2013 and 2012, we had no foreign currency contracts outstanding.

On August 31, 2012, we issued the 2017 Notes. The 2017 Notes Conversion Derivative requires bifurcation from the 2017 Notes in accordance with ASC Topic 815, and is accounted for as a derivative liability. We also entered into 2017 Notes Hedges in connection with the issuance of the 2017 Notes with three counterparties.  The 2017 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments that we are required to make upon conversion of the 2017 Notes in excess of the principal amount of converted notes if our common stock price exceeds the conversion price. The 2017 Notes Hedges is accounted for as a derivative asset in accordance with ASC Topic 815.

Reclassifications. Certain prior year amounts in the notes to consolidated financial statements have been reclassified to conform to the current year presentation.

Supplemental Cash Flow Information. Cash paid for interest and income taxes was as follows (in thousands):

	Year Ended December 31,
	2013		2012		2011
Interest	$	5,904	$	4,639	$	6,162
Income taxes	$	1,634	$	4,973	$	7,006

In December 2013, we entered into one new capital lease for our new corporate headquarters building for approximately $8.2 million. In 2011, we entered into capital leases of approximately $0.2 million.

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of our income (loss) before income taxes are as follows (in thousands):

	Year Ended December 31,
	2013			2012			2011
U.S.	$	(230,975	)	$	(4,043	)	$	(12,498	)
Foreign	572			658			1,142
Income (loss) before income taxes	$	(230,403	)	$	(3,385	)	$	(11,356	)

The components of our provision (benefit) for income taxes are as follows (in thousands):

	Year Ended December 31,
	2013		2012			2011
Current (benefit) provision:
U.S.:
Federal	$	296	$	(5,480	)	$	(279	)
State	85		(34		)	(81		)
Foreign	180		337			398
Total current (benefit) provision	561		(5,177		)	38
Deferred provision (benefit):
U.S.:
Federal	48,257		5,179			(3,533		)
State	884		(98		)	(472		)
Foreign	63		98			6
Total deferred provision (benefit)	49,204		5,179			(3,999		)
Total provision (benefit) for income taxes	$	49,765	$	2		$	(3,961	)

A reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate is as follows:

	Year Ended December 31,
	2013		2012		2011
Income tax provision at statutory rate	35.0	%	35.0	%	35.0	%
State income taxes	3.2	%	3.8	%	4.8	%
Change in valuation allowance	(51.9	)%	(19.7	)%	(0.8	)%
Foreign income tax rate differences	—	%	12.9	%	3.5	%
Other non-deductible expenses	(0.1	)%	(6.1	)%	(2.2	)%
Transaction costs	(0.8	)%	(21.2	)%	—	%
CVR Fair Market Value Adjustment	9.3	%	—	%	—	%
Goodwill Impairment	(17.5	)%	—	%	—	%
Other, net	1.2	%	(4.8	)%	(5.4	)%
Total	(21.6	)%	(0.1	)%	34.9	%

The significant components of our deferred income taxes as of December 31, 2013 and 2012 are as follows (in thousands):

	December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	100,361		$	17,009
General business credit carryforward	3,181			734
Reserves and allowances	40,789			37,160
Stock-based compensation expense	7,852			7,256
Convertible debt notes and conversion option	46,100			22,173
Other	6,070			7,195
Valuation allowance	(134,263		)	(14,248		)
Total deferred tax assets	70,090			77,279
Deferred tax liabilities:
Depreciation	13,863			21,116
Intangible assets	9,071			2,828
Convertible note bond hedge	46,020			21,916
Other	10,136			8,219
Total deferred tax liabilities	79,090			54,079
Net deferred tax assets (liabilities)	$	(9,000	)	$	23,200

At December 31, 2013, we had net operating loss carryforwards for U.S. federal income tax purposes of approximately $236.0 million, of which approximately $2.1 million related to equity compensation deductions, for which when realized, the resulting benefit will be credited to stockholder’s equity. The federal net operating losses begin to expire in 2017 and extend through 2033. This includes approximately $163.0 million of net operating losses acquired in 2013. State net operating losses carryforwards at December 31, 2013 totaled approximately $110.0 million, which begin to expire in 2017 and extend through 2033. Additionally, we had general business credit carryforwards of approximately $3.0 million, which begin to expire in 2017 and extend through 2033. At December 31, 2013, we had foreign net operating loss carryforwards of approximately $46.0 million, the majority of which do not expire.

Certain of our U.S. and foreign net operating losses and general business credit carryforwards are subject to various limitations. We maintain valuation allowances for those net operating losses and tax credit carryforwards that we do not expect to utilize due to these limitations and it is more likely than not that such tax benefits will not be realized.

During the year ended December 31, 2013, the Company recorded approximately $119.6 million valuation allowance against its deferred tax assets. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence can be objectively verified. GAAP states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against deferred tax assets. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

The Company entered a three-year cumulative loss position during the year ended December 31, 2013. This cumulative loss position, along with other evidence, merited the establishment of a valuation allowance against the deferred tax assets. A sustained period of profitability is required before the Company would change its judgment regarding the need for a valuation allowance against its net deferred tax assets.

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. Therefore, we do not provide for deferred taxes on the excess of the financial reporting over the tax basis in our investments in foreign subsidiaries that are essentially permanent in duration. The determination of the amount of unrecognized deferred tax liabilities is not practicable. However, during fiscal year 2013, we recorded approximately $0.4 million deferred tax liability as a result of the pending stock sale of one of our foreign subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at January 1, 2013	$	5,074
Additions for tax positions related to current year	214
Additions for tax positions of prior years	180
Reductions for tax positions of prior years	(848		)
Settlements	—
Foreign currency translation	82
Balance at December 31, 2013	$	4,702

As of December 31, 2013, our liability for unrecognized tax benefits totaled $4.7 million and is recorded in our consolidated balance sheet within “Other liabilities,” and all components, if recognized, would impact our effective tax rate. Our U.S. federal income taxes represent the substantial majority of our income taxes, and our 2009, 2010, and 2011 U.S. federal income tax returns are currently under examination by the Internal Revenue Service. It is therefore possible that our unrecognized tax benefits could change in the next twelve months.

We accrue interest required to be paid by the tax law for the underpayment of taxes on the difference between the amount claimed or expected to be claimed on the tax return and the tax benefit recognized in the financial statements. Management has made the policy election to record this interest as interest expense. As of December 31, 2013, accrued interest related to our unrecognized tax benefits totaled approximately $0.4 million, which is recorded in our consolidated balance sheet within “Other liabilities.”

We file numerous consolidated and separate company income tax returns in the U.S. and in many foreign jurisdictions. We are no longer subject to foreign income tax examinations by tax authorities in significant jurisdictions for years before 2007. With few exceptions, we are subject to U.S. federal, state and local income tax examinations for years 2010 through 2012. However, tax authorities have the ability to review years prior to these to the extent that we utilize tax attributes carried forward from those prior years.

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Other Long-Term Liabilities

12 Months Ended

Dec. 31, 2013

Other Long-Term Liabilities [Abstract]

Other Long-Term Liabilities

Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

	December 31
	2013		2012
Unrecognized tax benefits (See Note 14)	$	4,702	$	5,074
Product liability (See Note 19)	9,784		18,639
2017 Notes Conversion Derivative (See Note 11)	112,000		55,000
Deferred license revenue (See Note 2)	4,210		4,731
Contingent consideration	2,882		540
Other	1,488		928
	$	135,066	$	84,912

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Commitments and Contingencies - Commitments and Purchase Obligations (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2011
Unrecorded Unconditional Purchase Obligation [Line Items]
Operating Leases, Future Minimum Payments Due	$ 2,073,000
Operating Leases, Future Minimum Payments Due, Next Twelve Months	0
Supply Agreements, Amount Paid	3,500,000	7,700,000
Operating Leases, Future Minimum Payments, Due in Two Years	2,073,000
Operating Leases, Future Minimum Payments, Due in Three Years	0
Operating Leases, Future Minimum Payments, Due in Four Years	0
Operating Leases, Future Minimum Payments, Due in Five Years	0
Contractual Obligations, Due Thereafter	$ 0

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Marketable Securities

12 Months Ended

Dec. 31, 2013

Marketable Securities [Abstract]

Marketable Securities

Marketable Securities

Our investments in marketable securities are classified as available-for-sale securities in accordance with FASB ASC Topic 320, Investments — Debt and Equity Securities. These securities are carried at their fair value, and all unrealized gains and losses are recorded within other comprehensive income. Marketable securities are classified as current for those expected to mature or be sold within 12 months and the remaining portion is classified as non-current. The cost of investment securities sold is determined by the specific identification method.

As of December 31, 2013 and 2012, we had current marketable securities totaling $6.9 million and $12.6 million, respectively, consisting of investments in corporate, government, agency bonds, certificates of deposits, and corporate equity securities, all of which are valued at fair value using a market approach. In addition, we had non-current marketable securities totaling $7.7 million as of December 31, 2013, consisting of investments in corporate, government, and agency bonds, all of which are valued at fair value using a market approach.

The following tables present a summary of our marketable securities (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
At December 31, 2013
Available-for-sale marketable securities
U.S. agency debt securities	$	5,002	$	—	$	(4	)	$	4,998
Certificate of deposit	245		—		—			245
Corporate debt securities	5,186		2		—			5,188
U.S. government debt securities	4,116		1		—			4,117
Total available-for-sale marketable securities	$	14,549	$	3	$	(4	)	$	14,548

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
At December 31, 2012
Available-for-sale marketable securities
U.S. agency debt securities	2,500		—		—		2,500
Corporate debt securities	2,000		1		—		2,001
Total debt securities	$	4,500	$	1	$	—	$	4,501
Corporate equity securities	2,878		$	5,267	—		8,145
Total available-for-sale marketable securities	$	7,378	$	5,268	$	—	$	12,646

The maturities of available-for-sale debt securities at December 31, 2013 are as follows:

	Available-for-Sale
	Cost Basis		Fair Value
Due in one year or less	$	6,896	$	6,898
Due after one year through two years	6,153		6,151
Due after two years through five years	1,500		1,499
	14,549		14,548

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Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Abstract]
Interest	$ 5,904,000	$ 4,639,000	$ 6,162,000
Income taxes	1,634,000	4,973,000	7,006,000
Capital lease obligations incurred	$ 8,200,000		$ 200,000

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Discontinued Operations (Notes)

12 Months Ended

Dec. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations

In June 2013, we entered into a definitive agreement under which MicroPort Medical B.V., a subsidiary of MicroPort Scientific Corporation (MicroPort), would acquire our OrthoRecon business. Our OrthoRecon business consists of hip and knee implant products. On January 9, 2014, we completed our divestiture and sale of the OrthoRecon business to MicroPort. Pursuant to the terms of the asset purchase agreement with MicroPort, the Purchase Price (as defined in the asset purchase agreement) for the OrthoRecon business was approximately $287.1 million, which MicroPort paid in cash. See Note 22 for discussion of the estimated impact of this subsequent event on our 2014 results.

All current and historical operating results for the OrthoRecon segment are reflected within discontinued operations in the consolidated financial statements. In addition,costs associated with corporate employees and infrastructure being transferred as a part of the sale have been included in discontinued operations. The following table summarizes the results of discontinued operations (in thousands):

	Twelve Months Ended
	December 31,
	2013		2012		2011
Revenue	$	231,865	$	269,671	$	302,193
Income before tax	9,489		11,946		4,700
Income tax provision	3,266		3,275		2,448
Income from discontinued operations, net of tax	6,223		8,671		2,252

All assets and associated liabilities to be transferred to MicroPort have been classified as assets and liabilities held for sale on our consolidated balance sheet. The following table summarizes the assets and liabilities held for sale (in thousands):

	December 31, 2013		December 31, 2012
Assets
Cash	$	201	$	—
Accounts receivable	59,172		67,434
Inventories, net	74,807		86,792
Property, plant & equipment, net	92,436		96,759
Goodwill	25,802		25,652
Intangible assets, net	1,738		2,610
Deferred income taxes	1,197		2,200
Other current and long-term assets	19,105		14,767
Assets held for sale	$	274,458	$	296,214
Liabilities
Accounts payable	$	9,553	$	5,666
Other current liabilities	21,668		27,327
Other long-term liabilities	1,399		2,031
Liabilities held for sale	$	32,620	$	35,024

Certain liabilities associated with the OrthoRecon business, including product liability claims associated with hip and knee products sold prior to the closing, will not be assumed by MicroPort. Estimated liabilities, if any, for such claims, and accrued legal defense costs for fees that have been incurred to date, are therefore excluded from liabilities held for sale. Concomitant receivables associated with liability insurance recoveries are also excluded from assets held for sale. MicroPort will be responsible for product liability claims associated with products it sells after the closing. Subject to the provisions of the definitive agreement, we will continue to be responsible for defense of existing patent infringement cases and associated legal defense costs, and for resulting liabilities, if any. Costs associated with legal defense, income associated with product liability insurance recoveries, and changes to any contingent liabilities associated the OrthoRecon business have been reflected within results of discontinued operations, and we will continue to reflect these within results of discontinued operations in future periods.

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Inventories

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following (in thousands):

	December 31,
	2013		2012
Raw materials	$	2,693	$	1,000
Work-in-process	6,950		3,377
Finished goods	62,800		53,081
	$	72,443	$	57,458

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment, Net [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment, net consists of the following (in thousands):

	December 31,
	2013			2012
Land and land improvements	$	31		$	61
Buildings	13,026			2,227
Machinery and equipment	14,274			8,029
Furniture, fixtures and office equipment	47,364			19,006
Construction in progress	13,997			2,737
Surgical instruments	52,893			50,860
	141,585			82,920
Less: Accumulated depreciation	(71,070		)	(41,438		)
	$	70,515		$	41,482

The components of property, plant and equipment recorded under capital leases consist of the following (in thousands):

	December 31,
	2013			2012
Buildings	$	8,192		$	—
Furniture, fixtures and office equipment	59			—
	8,251			—
Less: Accumulated depreciation	(48		)	—
	$	8,203		$	—

Depreciation expense recognized within results of continuing operations approximated $14.4 million, $14.8 million, and $14.0 million for the years ended December 31, 2013, 2012, and 2011, respectively, and included depreciation of assets under capital leases.

In December 2013, we entered into a capital lease for our new corporate headquarters building. Total capitalized costs associated with this capital lease will be depreciated over the lease term, which is 10 years.

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Discontinued Operations (Details) (USD $)	0 Months Ended	3 Months Ended								12 Months Ended
	Jan. 09, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents		$ 201,000				$ 0				$ 201,000	$ 0
Purchase Price Discontinued Operations	287,100,000
Disposal Group, Including Discontinued Operation, Revenue										231,865,000	269,671,000	302,193,000
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax										9,489,000	11,946,000	4,700,000
Discontinued Operation, Tax Effect of Discontinued Operation										3,266,000	3,275,000	2,448,000
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent		182,000	(5,520,000)	(1,792,000)	13,353,000	3,708,000	(1,251,000)	2,077,000	4,137,000	6,223,000	8,671,000	2,252,000
Disposal Group, Including Discontinued Operation, Accounts, Notes and Loans Receivable, Net		59,172,000				67,434,000				59,172,000	67,434,000
Disposal Group, Including Discontinued Operation, Inventory		74,807,000				86,792,000				74,807,000	86,792,000
Disposal Group, Including Discontinued Operation, Property, Plant, and Equipment, Net		92,436,000				96,759,000				92,436,000	96,759,000
Disposal Group, Including Discontinued Operation, Goodwill		25,802,000				25,652,000				25,802,000	25,652,000
Disposal Group, Including Discontinued Operation, Intangible Assets, Net		1,738,000				2,610,000				1,738,000	2,610,000
Disposal Group, Including Discontinued Operation, Deferred Tax Assets		1,197,000				2,200,000				1,197,000	2,200,000
Disposal Group, Including Discontinued Operation, Other Assets		19,105,000				14,767,000				19,105,000	14,767,000
Assets of Disposal Group, Including Discontinued Operation		274,458,000				296,214,000				274,458,000	296,214,000
Disposal Group, Including Discontinued Operation, Accounts Payable		9,553,000				5,666,000				9,553,000	5,666,000
Disposal Group, Including Discontinued Operation, Other Current Liabilities		21,668,000				27,327,000				21,668,000	27,327,000
Disposal Group, Including Discontinued Operation, Other Noncurrent Liabilities		1,399,000				2,031,000				1,399,000	2,031,000
Liabilities of Disposal Group, Including Discontinued Operation		$ 32,620,000				$ 35,024,000				$ 32,620,000	$ 35,024,000

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Commitments and Contingencies - Product Liability Contingency (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2013
CONSERVE (R) Metal-on-metal [Member]
Product Liability Contingency [Line Items]
Product Liability Contingency, Third Party Recovery			$ 8.1
PROFEMUR Titanium Modular Neck Product [Member]
Product Liability Contingency [Line Items]
Estimated product liability range, minimum			17
Estimated product liability range, maximum			26
Product liability accrual, net			16.8
Estimated Recovery From Third Party Current and Future Claims			13
Insurance Recovery Cash Spend			12
Product liability, current			7
Product liability, non-current			9.8
EstimatedRecoveryFromThirdPartyCurrent			19
EstimatedRecoveryFromThirdPartyNoncurrent			6
Maximum Estimated Third Party Recovery			40
Product Liability Costs in Excess of Threshold			4
Third Party Recovery	10	5
Estimatedrecoveryfromthirdparty			$ 25

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Marketable Securities (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Marketable Securities [Abstract]
Current Marketable Securities	$ 6,898	$ 12,646
Noncurrent Marketable Securities	7,650	0
Schedule of Marketable Securities [Line Items]
Amortized Cost	14,549
Estimated Fair Value	14,548
Available-for-sale Securities, Debt Maturities, Next Twelve Months, Amortized Cost Basis	6,896
Available-for-sale Securities, Debt Maturities, Next Twelve Months, Fair Value	6,898
Availableforsalesecuritiesdebtmaturitiesafteronethroughtwoyearsamortizedcost	6,153
AvailableForSaleSecuritiesDebtMaturitiesAfterOneThroughTwoYearsFairValue	6,151
AvailableForSaleSecuritiesDebtMaturitiesAfterTwoYearsAmortizedCost	1,500
AvailableForSaleSecuritiesDebtMaturitiesAfterTwoYearsFairValue	1,499
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member]
Schedule of Marketable Securities [Line Items]
Amortized Cost	14,549	7,378
Gross Unrealized Gains	3	5,268
Gross Unrealized Losses	(4)	0
Estimated Fair Value	14,548	12,646
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member] | U.S. agency debt security [Member]
Schedule of Marketable Securities [Line Items]
Amortized Cost	5,002	2,500
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(4)	0
Estimated Fair Value	4,998	2,500
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member] | Certificates of Deposit [Member]
Schedule of Marketable Securities [Line Items]
Amortized Cost	245
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Estimated Fair Value	245
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member] | Corporate Debt Securities [Member]
Schedule of Marketable Securities [Line Items]
Amortized Cost	5,186	2,000
Gross Unrealized Gains	2	1
Gross Unrealized Losses	0	0
Estimated Fair Value	5,188	2,001
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member] | US Government Debt Securities [Member]
Schedule of Marketable Securities [Line Items]
Amortized Cost	4,116
Gross Unrealized Gains	1
Gross Unrealized Losses	0
Estimated Fair Value	4,117
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member] | Equity Securities [Member]
Schedule of Marketable Securities [Line Items]
Amortized Cost		2,878
Gross Unrealized Gains		5,267
Gross Unrealized Losses		0
Estimated Fair Value		8,145
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member] | Debt Securities [Member]
Schedule of Marketable Securities [Line Items]
Amortized Cost		4,500
Gross Unrealized Gains		1
Gross Unrealized Losses		0
Estimated Fair Value		$ 4,501

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Acquisitions (Details) (USD $)	3 Months Ended	9 Months Ended	12 Months Ended			1 Months Ended	3 Months Ended	12 Months Ended	2 Months Ended	12 Months Ended				3 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended		1 Months Ended	2 Months Ended	12 Months Ended		1 Months Ended	2 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Nov. 15, 2013 Biotech [Member]	Dec. 31, 2013 Biotech [Member]	Dec. 31, 2013 Biotech [Member]	Mar. 01, 2013 BioMimetics [Member]	Dec. 31, 2013 BioMimetics [Member]	Dec. 31, 2012 BioMimetics [Member]	Mar. 04, 2013 BioMimetics [Member]	Feb. 28, 2013 BioMimetics [Member]	Mar. 31, 2013 WG Healthcare [Member]	Dec. 31, 2013 WG Healthcare [Member]	Jan. 07, 2013 WG Healthcare [Member]	Nov. 15, 2013 Customer Relationships [Member] Biotech [Member]	Dec. 31, 2013 Customer Relationships [Member] WG Healthcare [Member]	Jan. 07, 2013 Customer Relationships [Member] WG Healthcare [Member]	Nov. 15, 2013 Completed Technology [Member] Biotech [Member]	Mar. 01, 2013 Completed Technology [Member] BioMimetics [Member]	Dec. 31, 2013 Completed Technology [Member] WG Healthcare [Member]	Jan. 07, 2013 Completed Technology [Member] WG Healthcare [Member]	Nov. 15, 2013 Trademarks [Member] Biotech [Member]	Mar. 01, 2013 Noncompete Agreements [Member] BioMimetics [Member]	Dec. 31, 2013 Noncompete Agreements [Member] WG Healthcare [Member]	Jan. 07, 2013 Noncompete Agreements [Member] WG Healthcare [Member]	Mar. 01, 2013 Trademarks [Member] BioMimetics [Member]	Jan. 07, 2013 Trademarks [Member] WG Healthcare [Member]
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Stock Based Expense, Precombination											$ 2,200,000
Business Acquisition, Pro Forma Revenue										242,945,000	216,577,000				4,600,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets									88,300,000																			3,900,000	1,900,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned						21,000,000			165,893,000
BusinessAcquisitionNumberOfCommonStockSharesBeforeMerger													28,300,000
BusinessAcquisitionNumberOfCommonStockSharesPreviouslyHeld													1,130,000
Business Acquisition Number Of Common Stock BMTI Shares Issued Exercises PreMerger													1,100,000
WMGIshareprice									$ 23.83
Business acquisition Options Exercised Prior to Merger for Witholding									200,000
Payments Related to Tax Withholding for Share-based Compensation									1,400,000
Tax Witholding Employee Portion									1,000,000
Additional cash per CVR Upon FDA Approval Augment									$ 3.50
Additional cash payment per CVR Upon $40M Aggregate Sales									$ 1.50
Additional cash payment per CVR Upon $70M Aggregate Sales									$ 1.50
Revenue Target 2 for Contingent Consideration									70,000,000
Revenue Target 1 for Contingent consideration									40,000,000
Business Acquisition, Purchase Price Allocation, Current Assets, Cash and Cash Equivalents (Deprecated 2013-01-31)						252,000			10,577,000							458,000
Business Acquisition, Effective Date of Acquisition								Nov. 15, 2013		Mar. 01, 2013					Jan. 07, 2013
Impairment of Intangible Assets (Excluding Goodwill)			88,100,000
Contingent Consideration Fair Value						4,300,000	4,300,000	4,300,000							1,500,000	2,200,000
Goodwill, Impairment Loss		115,000,000	(114,997,000)
Business Combination Consideration Transferred Equity Interests Issued And Issuable Cash Paid For Each Share Of Acquired Entitys Shares									1.50
Business Combination, Acquired Receivables, Fair Value						5,400,000
Business Acquisition, Purchase Price Allocation, Current Assets, Inventory (Deprecated 2013-01-31)						5,814,000			4,418,000							1,640,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets						303,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment						2,573,000			2,976,000							330,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill						15,500,000			95,100,000							4,748,000	9,800,000			4,800,000				900,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles																			1,700,000		1,600,000		800,000		1,300,000		300,000
Acquired Finite-lived Intangible Assets, Useful Life									10 years								12 years	15 years		10 years	13 years	7 years		2 years	2 years	3 years
Business Acquisition, Preacquisition Contingency, Amount of Settlement									3,500,000
Business Acquisition, Purchase Price Allocation, Current Liabilities, Accounts Payable and accrued liabilities						(2,091,000)			(6,003,000)
BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedDeferredTaxLiabilitiesCurrent						(52,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent						(3,939,000)										(1,139,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net						23,760,000			155,068,000							5,496,000
Goodwill			118,263,000	32,414,000		56,455,000			138,244,000							4,341,000
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net						80,215,000			293,312,000							9,837,000
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual							1,900,000			3,600,000
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual							800,000			26,600,000
Business Combination Consideration Transferred Equity Interests Issued And Issuable Number Of Shares For Each Share Of Acquired Entitys Shares									0.2482
Business Acquisition, Contingent Consideration, Potential Cash Payment (Deprecated 2013-01-31)									6.50
Business Acquisition, Stock Option Conversion Ratio									0.522106
Payments to Acquire Businesses, Gross						55,000,000			41,336,000					7,600,000
Business Acquisition, Contingent Consideration, at Fair Value (Deprecated 2013-01-31)									70,120,000			70,500,000
CVR Opening Market Price												$ 2.50
Business Acquisition, Previously Vested Stock Converted									2,868,000
Business Acquisition, Withholding Tax Related to Exercised Options									2,419,000
Business Acquisition, Fair Value of Stock Previously Held									10,676,000
Business Combination, Consideration Transferred									293,312,000
Business Acquisition, Stock Options Attributable Precombination Service, Fair Value									2,900,000
Share Price													$ 9.49
Business Acquisition Tax Withholding									2,400,000
Business Acquisition Fair Value of Previously Held Stock													10,700,000
Gain On Previously Held Investment			(7,798,000)	0	0				7,800,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Marketable Securities									16,882,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables									1,595,000							1,052,000
Business Acquisition, Purchase Price Allocation, Prepaid and Other Current Assets									4,234,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets Noncurrent									24,495,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets									1,133,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Capital Lease Obligation									(118,000)
Business Acquisition, Purchase Price Allocation, Deferred Tax Liabilities, current									(219,000)							(43,000)
Business Acquisition, Purchase Price Allocation, Other Liabilities (Deprecated 2013-01-31)									(2,000)
Raw Material Purchase Commitment Charge	3,200,000								3,200,000
Impairment Income Tax Benefit									34,300,000
Business Combination, Acquisition Related Costs										4,500,000	9,000,000
Business Combination, Acquisition Related Costs, Transition Costs										6,400,000
Business Acquisition, Pro Forma Net Income (Loss)										(284,480,000)	(38,926,000)				1,300,000
Business Acquisition, Pro Forma Earnings Per Share, Basic										$ (6.13)	$ (0.85)
Business Acquisition, Pro Forma Earnings Per Share, Diluted										$ (6.13)	$ (0.85)
BusinessAcquisitionProFormaStockBasedExpenseUnvestedAwards											6,600,000
Business Acquisition Pro Forma Compensation Expense											200,000
Business Acquisition Pro Forma Severance Costs											600,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable																$ (1,550,000)
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life															11 years

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Earnings Per Share Policy (Policies)

12 Months Ended

Dec. 31, 2013

Earnings Per Share Policies [Abstract]

Earnings Per Share [Abstract]

FASB ASC Topic 260, Earnings Per Share, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated to include any dilutive effect of our common stock equivalents. Our common stock equivalents consist of stock options, non-vested shares of common stock, stock-settled phantom stock units, restricted stock units, 2014 Notes, and warrants. The dilutive effect of the stock options, non-vested shares of common stock, stock-settled phantom stock units, restricted stock units, and warrants is calculated using the treasury-stock method. The dilutive effect of the 2014 Notes is calculated by applying the “if-converted” method. This assumes an add-back of interest, net of income taxes, to net income as if the securities were converted at the beginning of the period.

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Segment Data (Tables)

12 Months Ended

Dec. 31, 2013

Segment Data [Abstract]

Net Sales and Operating Income by Product Line and Information by Geographic Region

Net sales by product line and by geographic region are as follows (in thousands):

	Year Ended December 31,
	2013		2012		2011
Net sales by product line:
Foot and Ankle	$	150,662	$	122,897	$	107,734
Upper Extremity	24,663		24,977		27,742
Biologics	59,792		60,495		69,409
Other	7,213		5,736		5,868
Total	$	242,330	$	214,105	$	210,753

	Year Ended December 31,
	2013		2012		2011
Net sales by geographic region:
United States	$	177,648	$	166,111	$	166,456
Europe	31,210		22,044		21,405
Other	33,472		25,950		22,892
Total	$	242,330	$	214,105	$	210,753

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country

	December 31,
	2013		2012
Long-lived assets:
United States	$	61,179	$	36,271
Europe	6,581		3,102
Other	2,755		2,109
Total	$	70,515	$	41,482

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Goodwill and Intangibles

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

Goodwill and Intangibles

Changes in the carrying amount of goodwill occurring during the year ended December 31, 2013, are as follows (in thousands):

Goodwill at December 31, 2012	$	32,414
Goodwill associated with acquisitions (see Note 3)	199,040
Goodwill impairment	(114,997		)
Foreign currency translation	1,806
Goodwill at December 31, 2013	$	118,263

The components of our identifiable intangible assets, net are as follows (in thousands):

	December 31, 2013					December 31, 2012
	Cost			Accumulated Amortization		Cost			Accumulated Amortization
Indefinite life intangibles:
IPRD technology	$	4,266				$	278
Trademarks	4,121					1,658
Total indefinite life intangibles	8,387					1,936
Finite life intangibles:
Distribution channels	250			$	233	1,250			$	436
Completed technology	16,714			5,702		9,781			4,243
Licenses	3,633			1,303		3,668			1,056
Customer relationships	15,578			2,371		3,788			1,799
Trademarks	2,364			1,098		1,316			922
Non-compete agreements	5,660			3,155		7,314			2,729
Other	771			75		2,171			1,355
Total finite life intangibles	44,970			$	13,937	29,288			$	12,540
Total intangibles	53,357					31,224
Less: Accumulated amortization	(13,937		)			(12,540		)
Intangible assets, net	$	39,420				$	18,684

During year ended December 31, 2013, we terminated a distribution agreement and therefore recorded a $0.4 million asset impairment charge. Additionally, as a result of lower-than-projected cash flows related to completed technology acquired in our 2011 CCI acquisition, we recognized an impairment charge of approximately $0.6 million. These charges were calculated by comparing the fair value to the carrying value of the intangible. The impairment loss was recorded for the amount by which the carrying value exceeded the fair value, and is included within Amortization of intangible assets in the consolidated statement of operations.

During the year ended December 31, 2013, we received a not approvable letter from the FDA in response to our Pre-Market Approval application for Augment^® Bone Graft for use as an alternative to autograft in hindfoot and ankle fusion procedures. Following our announcement regarding the receipt of this letter, the market value of the CVRs issued in connection with the BioMimetic acquisition decreased significantly. Holders of CVRs are entitled to be paid the contingent consideration from the BioMimetic acquisition, specifically upon FDA approval of Augment^® Bone Graft, and subsequently upon the achievement of certain revenue milestones. FASB ASC 350-30-35-18 requires companies to evaluate for impairment intangible assets not subject to amortization, such as our IPRD assets, if events or changes in circumstances indicate than an asset might be impaired. Further, FASB ASC 350-20-35-30 requires companies to evaluate goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. In response to our announcement of the receipt of the FDA not approvable letter, the market value of the CVRs declined significantly due to a decreased market perception of the likelihood of FDA approval of Augment^® Bone Graft. Because the probability of such FDA approval is a significant input in the valuation of the BioMimetic reporting unit and related intangible assets, management determined that our goodwill and intangible assets acquired in the BioMimetic acquisition were more likely than not impaired, and therefore required a quantitative impairment test.

We updated our discounted cash flow valuation model for the BioMimetic acquisition based on probability weighted estimates of revenues and expenses, related cash flows and the discount rate used in the model. The probabilities used in the model were based on the fair value of the CVRs as of September 30, 2013. Based on this discounted cash flow valuation model, we determined that the fair value of the IPRD, tradename and non-compete agreement assets as of September 30, 2013 were less than their respective carrying values as of such date, and the fair value of the BioMimetic reporting unit as of September 30, 2013 was less than its carrying value as of such date (after consideration of the reduced value of the intangible assets). Therefore, we recognized an intangible impairment charge of approximately $88.1 million and a goodwill impairment charge of $115.0 million in the year ended December 31, 2013 for the amount by which the carrying value of these assets exceeded the fair value using Level 3 inputs. These charges are included within “BioMimetic impairment charges” on our consolidated statement of operations.

We have filed an appeal with the FDA regarding its decision. On October 31, 2013, the FDA notified us it has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on our appeal. While we believe our appeal has strong merits, we were required to evaluate assets associated with the BioMimetic acquisition for impairment.

Based on the total finite life intangible assets held at December 31, 2013, we expect to amortize approximately $6.9 million in 2014, $4.6 million in 2015, $3.5 million in 2016, $3.1 million in 2017, and $2.4 million in 2018. This does not include amortization associated with any intangible assets acquired in 2014 (see Note 22).

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Stock-based Compensation

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Plans

Stock-Based Compensation Plans

We have three stock-based compensation plans, which are described below. Amounts recognized in the consolidated financial statements with respect to these plans are as follows:

	Year Ended December 31,
	2013			2012			2011
Total cost of share-based payment plans	$	11,912		$	7,811		$	5,908
Amounts capitalized as inventory	(467		)	(689		)	(725		)
Amortization of capitalized amounts	513			717			747
Charged against income before income taxes	11,958			7,839			5,930
Amount of related income tax benefit recognized in income	(3,945		)	(2,940		)	(2,094		)
Impact to net loss from continuing operations	$	8,013		$	4,899		$	3,836
Impact to net income from discontinued operations	2,320			2,308			2,326
Impact to net (loss) income	$	10,333		$	7,207		$	6,162
Impact to basic earnings per share, continuing operations	$	0.18		$	0.13		$	0.10
Impact to basic earnings per share	$	0.23		$	0.19		$	0.16
Impact to diluted earnings per share, continuing operations	$	0.18		$	0.13		$	0.10
Impact to diluted earnings per share	$	0.23		$	0.18		$	0.16

During 2013, in connection with the BioMimetic acquisition, we recognized $2.2 million of stock-based compensation expense related to the incremental fair value of replacement awards attributed to precombination service.

As of December 31, 2013, we had $17.4 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements granted to employees retained following the sale of the OrthoRecon business. This cost is expected to be recognized over a weighted-average period of 2.7  years.

Equity Incentive Plans

On December 7, 1999, we adopted the 1999 Equity Incentive Plan, which was subsequently amended and restated on July 6, 2001, May 13, 2003, May 13, 2004, May 12, 2005 and May 14, 2008 and amended on October 23, 2008. The 1999 Equity Incentive Plan expired December 7, 2009. The 2009 Equity Incentive Plan (the Plan) was adopted on May 13, 2009, which was subsequently amended and restated on May 13, 2010 and May 14, 2013. The Plan authorizes us to grant stock options and other stock-based awards, such as non-vested shares of common stock, with respect to up to 15,417,051 shares of common stock, of which full value awards (such as non-vested shares) are limited to 3,754,555 shares. Under the Plan, stock based compensation awards generally are exercisable in increments of 25% annually on each of the first through fourth anniversaries of the date of grant. All of the options issued under the plan expire after 10 years. These awards are recognized on a straight-line basis over the requisite service period, which is generally 4 years. As of December 31, 2013, there were 3,596,125 shares available for future issuance under the Plan, of which full value awards are limited to 1,798,062 shares.

Stock options

We estimate the fair value of stock options using the Black-Scholes valuation model. The Black-Scholes option-pricing model requires the input of estimates, including the expected life of stock options, expected stock price volatility, the risk-free interest rate and the expected dividend yield. The expected life of options is estimated based on historical option exercise and employee termination data. The expected stock price volatility assumption was estimated based upon historical volatility of our common stock. The risk-free interest rate was determined using U.S. Treasury rates where the term is consistent with the expected life of the stock options. Expected dividend yield is not considered as we have never paid dividends and have no plans of doing so in the future. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest. The fair value of stock options is amortized on a straight-line basis over the respective requisite service period, which is generally the vesting period.

The weighted-average grant date fair value of stock options granted to employees in 2013, 2012, and 2011 was $8.60 per share, $7.89 per share, and $6.01 per share, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model using the following assumptions:

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	0.1% - 1.4%	0.5% - 1.0%	1.0% - 2.0%
Expected option life	6 years	6 years	6 years
Expected price volatility	36%	40%	39%

A summary of our stock option activity during 2013 for employees retained following the sale of the OrthoRecon business is as follows:

	Shares (000’s)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value* ($000’s)
Outstanding at December 31, 2012	2,120	$	22.71
Granted	1,033	24.38
BioMimetic options assumed	752	19.25
Exercised	(211)	20.17
Forfeited or expired	(325)	25.30
Outstanding at December 31, 2013	3,369	$	22.36	6.4	$	28,171
Exercisable at December 31, 2013	1,772	$	21.89	4.2	$	15,657

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

The total intrinsic value of options exercised during 2013, 2012, and 2011 was $1.4 million, $0.2 million, and $0.1 million, respectively.

A summary of our stock options outstanding and exercisable at December 31, 2013, for employees retained following the sale of the OrthoRecon business is as follows (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
$2.00 — $16.00	371	5.8	$	12.35	276	$	11.53
$16.01 — $24.00	1,478	6.5	21.06		802	20.64
$24.01 — $35.87	1,520	6.4	26.07		694	27.47
	3,369	6.4	$	22.36	1,772	$	21.89

Inducement Stock Options.

During 2011, we granted 610,000 stock options under an inducement stock option agreement with an exercise price of $16.03 to induce Robert J. Palmisano to commence employment with us as our Chief Executive Officer. These options vest over a three-year service period. We also granted 30,000 stock options with an exercise price of $18.33 to Julie Tracy, Senior Vice President, Chief Communications Officer, and 65,000 stock options with an exercise price of $16.23 to James Lightman, Senior Vice President, General Counsel, and Secretary, under inducement stock option agreements. During 2012, we granted 50,000 stock options with an exercise price of $17.35 to induce Daniel Garen to commence employment with us as our Senior Vice President and Chief Compliance Officer, and 184,500 stock options with an exercise price of $21.24 to Pascal E. R. Girin, Executive Vice President and Chief Operating Officer. These options have substantially the same terms as grants made under the Plan.

A summary of our inducement grant stock option activity during 2013 is as follows:

	Shares (000’s)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value* ($000’s)
Outstanding at December 31, 2012	940	$	17.21
Granted	—	—
Exercised	—	—
Forfeited or expired	—	—
Outstanding at December 31, 2013	940	$	17.21	8.0	$	12,683
Exercisable at December 31, 2013	513	$	16.61	7.8	$	7,230

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

A summary of our stock options outstanding and exercisable at December 31, 2013, is as follows (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
$2.00 — $16.00	371	5.8	$	12.35	276	$	11.53
$16.01 — $24.00	2,418	7.0	19.56		1,315	19.07
$24.01 — $35.87	1,520	6.4	26.07		694	27.47
	4,309	6.7	$	21.24	2,285	$	20.71

Non-vested shares and stock settled phantom stock units and restricted stock units

We calculate the grant date fair value of non-vested shares of common stock, stock settled phantom stock units and restricted stock units using the closing sale prices on the trading day immediately prior to the grant date. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest.

Under the Plan, we granted 223,000, 216,000, and 345,000 non-vested shares of common stock, stock settled phantom stock units and restricted stock units to employees with weighted-average grant-date fair values of $24.66 per share, $21.22 per share, and $15.56 per share during 2013, 2012, and 2011, respectively. The fair value of these shares will be recognized on a straight-line basis over the respective requisite service period, which is generally the vesting period.

During 2013 and 2012, we granted a negligible amount of non-vested shares to non-employees. During 2011, we granted certain independent distributors and other non-employees non-vested shares of common stock of 28,000 shares at a weighted-average grant date fair values $15.27 per share.

A summary of our non-vested shares of common stock activity during 2013 is as follows:

	Shares (000’s)		Weighted-Average Grant-Date Fair Value		Aggregate Intrinsic Value* ($000’s)
Non-vested at December 31, 2012	486		$	18.44
Granted	223		24.66
Vested	(212	)	18.10
Forfeited	(41	)	17.98
Non-vested at December 31, 2013	456		$	21.69	$	14,004

___________________

* The aggregate intrinsic value is calculated as the market value of our common stock as of December 31, 2013. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

The total fair value of shares vested during 2013, 2012 and 2011 was $6.5 million, $5.6 million and $4.7 million, respectively.

Stock compensation held by employees to be transferred upon sale of OrthoRecon business

During 2013, as part of the definitive agreement to sell our OrthoRecon business to MicroPort, we agreed to modify stock compensation awards held by employees assigned to MicroPort to accelerate vesting for unvested stock compensation awards, as an incentive to induce each employee to accept and continue employment with MicroPort, contingent upon the closing of the sale. On January 12, 2014, all unvested stock compensation awards held by these former 65 employees was vested, which was comprised of approximately 500,000 options with a weighted-average exercise price of $22.50, and 266,000 non-vested shares.

The incremental cost associated with the modified stock compensation totaled $8.8 million, and will be recognized as a reduction to our gain realized upon the sale of the OrthoRecon business in the first quarter of 2014.

The table below summarizes the outstanding stock options held by employees transferred to MicroPort, as of December 31, 2013.

	Options Outstanding
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Aggregate Intrinsic Value* ($000’s)
$15.47 — $20.00	177	0.75	$	16.46
$20.01 — $30.00	857	0.75	23.77
$30.01 — $35.87	112	0.24	31.12
	1,146	0.70	$	23.20	$	8,526

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

Employee Stock Purchase Plan.

On May 30, 2002, our shareholders approved and adopted the 2002 Employee Stock Purchase Plan, which was subsequently amended and restated in 2013 (the ESPP). The ESPP authorizes us to issue up to 400,000 shares of common stock to our employees who work at least 20 hours per week. Under the ESPP, there are two six-month plan periods during each calendar year, one beginning January 1 and ending on June 30, and the other beginning July 1 and ending on December 31. Under the terms of the ESPP, employees can choose each plan period to have up to 5% of their annual base earnings, limited to $5,000, withheld to purchase our common stock. The purchase price of the stock is 85% of the lower of its beginning-of-period or end-of-period market price. Under the ESPP, we sold to employees approximately 23,000, 25,000, and 26,000 shares in 2013, 2012, and 2011, respectively, with weighted-average fair values of $6.81, $5.93, and $4.92 per share, respectively. As of December 31, 2013, there were 194,566 shares available for future issuance under the ESPP. During 2013, 2012, and 2011, we recorded nominal amounts of non-cash, stock-based compensation expense related to the ESPP.

In applying the Black-Scholes methodology to the purchase rights granted under the ESPP, we used the following assumptions:

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	0.1% - 0.4%	0.1% - 0.2%	0.3% - 0.4%
Expected option life	6 months	6 months	6 months
Expected price volatility	36%	40%	39%

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Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2013

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Amounts Recognized Within the Consolidated Financial Statements

Amounts recognized in the consolidated financial statements with respect to these plans are as follows:

	Year Ended December 31,
	2013			2012			2011
Total cost of share-based payment plans	$	11,912		$	7,811		$	5,908
Amounts capitalized as inventory	(467		)	(689		)	(725		)
Amortization of capitalized amounts	513			717			747
Charged against income before income taxes	11,958			7,839			5,930
Amount of related income tax benefit recognized in income	(3,945		)	(2,940		)	(2,094		)
Impact to net loss from continuing operations	$	8,013		$	4,899		$	3,836
Impact to net income from discontinued operations	2,320			2,308			2,326
Impact to net (loss) income	$	10,333		$	7,207		$	6,162
Impact to basic earnings per share, continuing operations	$	0.18		$	0.13		$	0.10
Impact to basic earnings per share	$	0.23		$	0.19		$	0.16
Impact to diluted earnings per share, continuing operations	$	0.18		$	0.13		$	0.10
Impact to diluted earnings per share	$	0.23		$	0.18		$	0.16

Schedule of Option Valuation Assumptions

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model using the following assumptions:

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	0.1% - 1.4%	0.5% - 1.0%	1.0% - 2.0%
Expected option life	6 years	6 years	6 years
Expected price volatility	36%	40%	39%

Schedule of Stock Option Activity

A summary of our inducement grant stock option activity during 2013 is as follows:

	Shares (000’s)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value* ($000’s)
Outstanding at December 31, 2012	940	$	17.21
Granted	—	—
Exercised	—	—
Forfeited or expired	—	—
Outstanding at December 31, 2013	940	$	17.21	8.0	$	12,683
Exercisable at December 31, 2013	513	$	16.61	7.8	$	7,230

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

A summary of our stock option activity during 2013 for employees retained following the sale of the OrthoRecon business is as follows:

	Shares (000’s)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value* ($000’s)
Outstanding at December 31, 2012	2,120	$	22.71
Granted	1,033	24.38
BioMimetic options assumed	752	19.25
Exercised	(211)	20.17
Forfeited or expired	(325)	25.30
Outstanding at December 31, 2013	3,369	$	22.36	6.4	$	28,171
Exercisable at December 31, 2013	1,772	$	21.89	4.2	$	15,657

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of December 31, 2013, and the exercise price of the shares. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 201

Schedule of Stock Options Outstanding and Exercisable by Exercise Price Range

A summary of our stock options outstanding and exercisable at December 31, 2013, for employees retained following the sale of the OrthoRecon business is as follows (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
$2.00 — $16.00	371	5.8	$	12.35	276	$	11.53
$16.01 — $24.00	1,478	6.5	21.06		802	20.64
$24.01 — $35.87	1,520	6.4	26.07		694	27.47
	3,369	6.4	$	22.36	1,772	$	21.89

A summary of our stock options outstanding and exercisable at December 31, 2013, is as follows (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable	Weighted-Average Exercise Price
$2.00 — $16.00	371	5.8	$	12.35	276	$	11.53
$16.01 — $24.00	2,418	7.0	19.56		1,315	19.07
$24.01 — $35.87	1,520	6.4	26.07		694	27.47
	4,309	6.7	$	21.24	2,285	$	20.71

Schedule of Employee Stock Purchase Plan, Valuation Assumptions

In applying the Black-Scholes methodology to the purchase rights granted under the ESPP, we used the following assumptions:

	Year Ended December 31,
	2013	2012	2011
Risk-free interest rate	0.1% - 0.4%	0.1% - 0.2%	0.3% - 0.4%
Expected option life	6 months	6 months	6 months
Expected price volatility	36%	40%	39%

Nonvested Common Stock [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Other Share-based Compensation, Activity

A summary of our non-vested shares of common stock activity during 2013 is as follows:

	Shares (000’s)		Weighted-Average Grant-Date Fair Value		Aggregate Intrinsic Value* ($000’s)
Non-vested at December 31, 2012	486		$	18.44
Granted	223		24.66
Vested	(212	)	18.10
Forfeited	(41	)	17.98
Non-vested at December 31, 2013	456		$	21.69	$	14,004

___________________

* The aggregate intrinsic value is calculated as the market value of our common stock as of December 31, 2013. The market value as of December 31, 2013 is $30.71 per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.

Discontinued Operations [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Stock Options Outstanding and Exercisable by Exercise Price Range

The table below summarizes the outstanding stock options held by employees transferred to MicroPort, as of December 31, 2013.

	Options Outstanding
Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Aggregate Intrinsic Value* ($000’s)
$15.47 — $20.00	177	0.75	$	16.46
$20.01 — $30.00	857	0.75	23.77
$30.01 — $35.87	112	0.24	31.12
	1,146	0.70	$	23.20	$	8,526

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Accrued Expenses and Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2013

Accrued Expenses and Other Current Liabilities [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	December 31
	2013		2012
Employee bonus	$	10,250	$	8,967
Other employee benefits	13,740		3,919
Royalties	2,669		2,829
Taxes other than income	4,722		2,170
Commissions	4,336		1,567
Professional and legal fees	7,054		4,981
Contingent consideration	12,324		444
Product liability	7,710		5,275
Distributor payments	1,253		2,701
Other	16,059		5,910
	$	80,117	$	38,763

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Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock-based compensation expense	$ 12,000	$ 7,800	$ 5,900
Cost of Sales [Member]
Stock-based compensation expense	503	704	735
Selling, general and administrative [Member]
Stock-based compensation expense	10,675	6,767	4,875
Research and Development [Member]
Stock-based compensation expense	780	368	320
Discontinued Operations [Member]
Stock-based compensation expense	$ 3,410	$ 3,135	$ 3,178

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Subsequent Event (Details) (USD $)	0 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended		3 Months Ended
	Jan. 09, 2014	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Solana [Member]	Jan. 30, 2014 Solana [Member]	Mar. 31, 2014 OrthoPro [Member]	Feb. 05, 2014 OrthoPro [Member]
Subsequent Event [Line Items]
Purchase Price Discontinued Operations	$ 287,100,000
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax		26,000,000
wmgi: disposal transaction costs, net of tax			11,000,000
Payments to Acquire Businesses, Gross				47,600,000		32,500,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned					42,400,000
Contingent Consideration Fair Value							$ 3,500,000

XML

Organization and Description of Business

12 Months Ended

Dec. 31, 2013

Organization and Description of Business [Abstract]

Organization and Description of Business

Organization and Description of Business

Wright Medical Group, Inc., through Wright Medical Technology, Inc. and other operating subsidiaries (Wright or we), is a global, specialty orthopaedic company that provides extremity and biologic solutions that enable clinicians to alleviate pain and restore their patient's lifestyles. We are a leading provider of surgical solutions for the foot and ankle market. Our products are sold primarily through a network of employee sales representatives and independent sales representatives in the United States (U.S.) and by a combination of employee sales representatives, independent sales representatives and stocking distributors outside the U.S. We promote our products in approximately 60 countries with principal markets in the U.S., Europe, Asia, Canada, Australia, and Latin America. We are headquartered in Memphis, Tennessee.

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Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) (USD $)	Dec. 31, 2013 2014 Convertible Debt [Member] Carrying (Reported) Amount, Fair Value Disclosure [Member]	Dec. 31, 2013 2014 Convertible Debt [Member] Portion at Fair Value, Fair Value Disclosure [Member]	Dec. 31, 2012 2017 Convertible Debt [Member]	Dec. 31, 2013 2017 Convertible Debt [Member] Carrying (Reported) Amount, Fair Value Disclosure [Member]	Dec. 31, 2013 2017 Convertible Debt [Member] Portion at Fair Value, Fair Value Disclosure [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Dec. 31, 2013 Acquisitions Prior to 2012 [Member]	Dec. 31, 2013 WG Healthcare [Member]	Jan. 07, 2013 WG Healthcare [Member]	Dec. 31, 2013 Biotech [Member]	Nov. 15, 2013 Biotech [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Contingent Consideration Fair Value						$ 983,000	$ 0	$ 0	$ 983,000	$ 500,000	$ 1,500,000	$ 2,200,000	$ 4,300,000	$ 4,300,000
Convertible senior notes		3,500,000			396,000,000
Long-term debt, gross	$ 3,800,000		$ 300,000,000	$ 300,000,000

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Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Y	Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]
Minimum eligibility age (in years)	21
Employer matching contribution per employee on first 2% of employee's annual compensation	100.00%
Percentage of employee annual compensation eligible for 100% employer matching contribution	2.00%
Employer matching contribution per employee on second 2% of employee's annual compensatio	50.00%
Percentage of employee annual compensation eligible for 50% employer matching contribution	2.00%
Defined contribution plan requisite service period (in years)	3
Defined contribution plan expense	$ 1.2	$ 1.0

XML

Accrued Expenses and Other Current Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Accrued Expenses and Other Current Liabilities [Abstract]
Accrued Bonuses, Current	$ 10,250	$ 8,967
Other Employee Related Liabilities, Current	13,740	3,919
Royalties	2,669	2,829
Taxes other than income	4,722	2,170
Commissions	4,336	1,567
Professional and legal fees	7,054	4,981
Contingent consideration at fair value, current	12,324	444
Product liability	7,710	5,275
Distributor payments	1,253	2,701
Other	16,059	5,910
Accrued Expenses And Other Current Liabilities	$ 80,117	$ 38,763

XML

Employee Benefit Plans

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

We sponsor a defined contribution plan under Section 401(k) of the Internal Revenue Code, which covers U.S. employees who are 21 years of age and over. Under this plan, we match voluntary employee contributions at a rate of 100% for the first 2% of an employee’s annual compensation and at a rate of 50% for the next 2% of an employee’s annual compensation. Employees vest in our contributions after three years of service. Our expense related to the plan recognized within results of continuing operations was $1.2 million in 2013, and $1.0 million in 2012 and 2011.

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Goodwill and Intangibles Narrative (Details) (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2013
Acquired Finite-Lived Intangible Assets [Line Items]
Impairment of Intangible Assets (Excluding Goodwill)		$ 88,100,000
Goodwill, Impairment Loss	115,000,000	(114,997,000)
Finite-Lived Intangible Assets [Member] | Completed technology [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Impairment of Intangible Assets, Finite-lived		600,000
Finite-Lived Intangible Assets [Member] | Distribution channels [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Impairment of Intangible Assets, Finite-lived		$ 400,000

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Inventories (Tables)

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following (in thousands):

	December 31,
	2013		2012
Raw materials	$	2,693	$	1,000
Work-in-process	6,950		3,377
Finished goods	62,800		53,081
	$	72,443	$	57,458

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Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

We account for derivatives in accordance with FASB ASC 815, which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. Additionally, changes in the derivative’s fair value shall be recognized currently in earnings unless specific hedge accounting criteria are met.

Conversion Derivative and Notes Hedging

On August 31, 2012, we issued the 2017 Notes. The 2017 Notes Conversion Derivative requires bifurcation from the 2017 Notes in accordance with ASC Topic 815, and is accounted for as a derivative liability. The fair value of the 2017 Notes Conversion Derivative at the time of issuance of the 2017 Notes was $48.1 million. See Note 9 for additional information regarding the 2017 Notes.

We also entered into the 2017 Notes Hedges in connection with the issuance of the 2017 Notes with the Option Counterparties. The 2017 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments that we are required to make upon conversion of the 2017 Notes in excess of the principal amount of converted notes if our common stock price exceeds the conversion price. The aggregate cost of the 2017 Notes Hedges was $56.2 million and is accounted for as a derivative asset in accordance with ASC Topic 815.

The following table summarizes the fair value and the presentation in the consolidated balance sheet (in thousands):

	Location on consolidated balance sheet	December 31, 2013		December 31, 2012
2017 Notes Hedges	Other assets	$	118,000	$	62,000
2017 Notes Conversion Derivative	Other liabilities	$	112,000	$	55,000

Neither the 2017 Notes Conversion Derivative nor the 2017 Notes Hedges qualify for hedge accounting, thus any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The following table summarizes the gain (loss) on changes in fair value (in thousands):

	Twelve Months Ended			Twelve Months Ended
	December 31,			December 31,
	2013			2012
2017 Notes Hedges	$	56,000		$	5,805
2017 Notes Conversion Derivative	(57,000		)	(6,947		)
Net loss on changes in fair value	$	(1,000	)	$	(1,142	)

Derivatives not Designated as Hedging Instruments

We employ a derivative program using 30-day foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that are denominated in foreign currencies. These forward contracts are expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts are not designated as hedging instruments under FASB ASC Topic 815. Accordingly, the changes in the fair value and the settlement of the contracts are recognized in the period incurred in the accompanying consolidated statements of operations. At December 31, 2013 and 2012, we had no foreign currency contracts outstanding.