10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 29, 2019

or

☐ 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: 001-35065

WRIGHT MEDICAL GROUP N.V.

(Exact name of registrant as specified in its charter)

The	Netherlands	98-0509600
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Prins Bernhardplein 200				None
1097 JB	Amsterdam,	The	Netherlands	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (+31) 20 521 4777

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, par value €0.03 per share	WMGI	Nasdaq Global Select Market

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. ☑ Yes ☐ 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. ☐ Yes ☑ No

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.     ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑    Accelerated filer ☐

Non-accelerated filer ☐    Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No

The aggregate market value of the ordinary shares held by non-affiliates of the registrant on June 30, 2019 was $3.7 billion based on the closing sale price of the ordinary shares on that date, as reported by the Nasdaq Global Select Market. For purposes of the foregoing calculation only, the registrant has assumed that all executive officers and directors of the registrant, and their affiliated entities, are affiliates.

As of February 20, 2020, there were 128,733,780 ordinary shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Annual Report on Form 10-K incorporates by reference certain portions of the registrant’s definitive proxy statement for its Extraordinary General Meeting of Shareholders (“Proxy Statement”) anticipated to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this report. Except as expressly incorporated by reference, the registrant’s Proxy Statement shall not be deemed to be part of this report.

WRIGHT MEDICAL GROUP N.V.

ANNUAL REPORT ON FORM 10-K

Table of Contents

	Page
Part I
Item 1. Business.	5
Item 1A. Risk Factors.	18
Item 1B. Unresolved Staff Comments.	44
Item 2. Properties.	44
Item 3. Legal Proceedings.	45
Item 4. Mine Safety Disclosures.	47
Part II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.	48
Item 6. Selected Financial Data.	50
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	52
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.	73
Item 8. Financial Statements and Supplementary Data.	78
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	131
Item 9A. Controls and Procedures.	131
Item 9B. Other Information.	132
Part III
Item 10. Directors, Executive Officers and Corporate Governance.	133
Item 11. Executive Compensation.	133
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.	133
Item 13. Certain Relationships and Related Transactions, and Director Independence.	133
Item 14. Principal Accounting Fees and Services.	133
Part IV
Item 15. Exhibits, Financial Statement Schedules.	134
Item 16. Form 10-K Summary.	142
Signatures	143
Schedule II-Valuation and Qualifying Accounts	144

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and that are subject to the safe harbor created by those sections. 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 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 U.S. Securities and Exchange Commission (SEC) (including those described in “Part I. Item 1A. Risk Factors” of this report). By way of example and without implied limitation, such risks and uncertainties include:

• the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement that we entered into with Stryker Corporation (Stryker) and its wholly-owned acquisition subsidiary on November 4, 2019, pursuant to which we expect to become a wholly-owned subsidiary of Stryker;

• the failure to satisfy required closing conditions under the agreement with Stryker, including, but not limited to, the tender of a minimum number of our outstanding ordinary shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders and the receipt of required regulatory approvals, or the failure to complete the acquisition in a timely manner;

• risks related to disruption of management’s attention from our ongoing business operations due to the pendency of the transaction with Stryker;

• the effect of the announcement of the transaction with Stryker on our operating results and business generally, including, but not limited to, our ability to retain and hire key personnel and maintain our relationships with customers, strategic partners and suppliers;

• the impact of the pending transaction with Stryker on our strategic plans and operations and our ability to respond effectively to competitive pressures, industry developments and future opportunities;

• the outcome of any legal proceedings that have been, or in the future may be, instituted against us and others relating to the proposed transaction with Stryker;

• inability to achieve or sustain profitability;

• failure to realize the anticipated benefits from previous acquisitions and dispositions, including our October 2018 acquisition of Cartiva, Inc. (Cartiva);

• failure to obtain anticipated commercial sales of our AUGMENT^® Bone Graft and AUGMENT^® Injectable products;

• liability for product liability claims on hip/knee (OrthoRecon) products sold by Wright Medical Technology, Inc. (WMT) prior to the divestiture of the OrthoRecon business;

• risks and uncertainties associated with our metal-on-metal master settlement agreements and the settlement agreements with certain of our insurance companies, including without limitation, the effect of the broad release of certain insurance coverage for present and future claims;

• adverse outcomes in existing product liability litigation;

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

• the ability of a creditor of any one particular entity within our corporate structure to reach the assets of the other entities within our corporate structure not liable for the underlying claims of the one particular entity, despite our corporate structure which is intended to ring-fence liabilities;

• new product liability claims;

• pending and future other litigation, which could have an adverse effect on our business, financial condition, or operating results;

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

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

• inadequate insurance coverage;

• inability to generate sufficient cash flow to satisfy our capital requirements, including future milestone payments, and existing debt, including the conversion features of our convertible senior notes, or refinance our existing debt as it matures;

• risks associated with our credit, security and guaranty agreement for our senior secured asset-based line of credit and term loan facility;

• inability to raise additional financing when needed and on favorable terms;

• the loss of key suppliers, which may result in our inability to meet customer orders for our products in a timely manner or within our budget;

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• the incurrence of significant expenditures of resources to maintain relatively high levels of inventory, which could reduce our cash flows and increase the risk of inventory obsolescence, which could harm our operating results;

• our inability to timely manufacture products or instrument sets to meet demand;

• our private label manufacturers failing to provide us with sufficient supply of their products, or failing to meet appropriate quality requirements;

• our plans to bring the manufacturing of certain of our products in-house and possible disruptions we may experience in connection with such transition;

• our plans to increase our gross margins by taking certain actions designed to do so;

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

• not successfully competing against our existing or potential competitors and the effect of significant recent consolidations amongst our competitors;

• not successfully developing and marketing new products and technologies and implementing our business strategy;

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

• the reliance of our business plan on certain market assumptions;

• future actions of the SEC, the United States Attorney’s office, the U.S. Food and Drug Administration (FDA), the Department of Health and Human Services, or other U.S. or foreign government authorities, including those resulting from increased scrutiny under the U.S. 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;

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

• the compliance of our products and activities with the laws and regulations of the countries in which they are marketed, which compliance may be costly and time-consuming;

• the use, misuse or off-label use of our products that may harm our image in the marketplace or result in injuries that may lead to product liability suits, which could be costly to our business or result in governmental sanctions;

• changes in healthcare laws, which could generate downward pressure on our product pricing;

• ability of healthcare providers to obtain reimbursement for our products or a reduction in the current levels of reimbursement, which could result in reduced use of our products and a decline in sales;

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

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

• our inability to maintain effective internal controls;

• product quality or patient safety issues;

• geographic and product mix impact on our sales;

• deriving a significant portion of our revenues from operations in certain geographic markets that are subject to political, economic, and social instability, including in particular France, and risks and uncertainties involved in launching our products in certain new geographic markets;

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

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

• consolidation in the healthcare industry that could lead to demands for price concessions or the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, financial condition, or operating results;

• our clinical trials and their results and our reliance on third parties to conduct them;

• potentially burdensome tax measures; and

• fluctuations in foreign currency exchange rates.

For more information regarding these and other uncertainties and factors that could cause our actual results to differ materially from what we have anticipated in our forward-looking statements or otherwise could materially adversely affect our business, financial condition, or operating results, see “Part I. Item 1A. Risk Factors” of this report. The risks and uncertainties described above and in “Part I. Item 1A. Risk Factors” of this report are not exclusive and further information concerning us and our business, including factors that potentially could materially affect our financial results or condition, may emerge from time to time. We assume no obligation to update, amend, or clarify forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. We advise you, however, to consult any further disclosures we make on related subjects in our future Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K we file with or furnish to the SEC.

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PART I

Item 1. Business.

Overview

Wright Medical Group N.V. (Wright or we) is a global medical device company focused on extremities and biologics products. We are committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and are a recognized leader of surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics. We market our products in approximately 50 countries with principal markets in the United States, Europe, Asia, Canada, Australia, and Latin America. We believe we are differentiated in the marketplace by our strategic focus on extremities and biologics, our full portfolio of upper and lower extremities and biologics products, and our specialized and focused sales organization.

Our product portfolio consists of the following product categories:

• Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;

• Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;

• Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and

• Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products.

Our global corporate headquarters are located in Amsterdam, the Netherlands. We also have significant operations located in Memphis, Tennessee (U.S. headquarters, research and development, sales and marketing administration, and administrative activities); Bloomington, Minnesota (upper extremities sales and marketing and warehousing operations); Arlington, Tennessee (manufacturing and warehousing operations); Franklin, Tennessee (manufacturing and warehousing operations); Columbia City, Indiana (research and development); Alpharetta, Georgia (manufacturing and warehousing operations); Montbonnot, France (manufacturing and warehousing operations); Plouzané, France (research and development); and Macroom, Ireland (manufacturing). In addition, we have local sales and distribution offices in Canada, Australia, Asia, Latin America, and throughout Europe. For purposes of this report, references to “international” or “foreign” relate to non-U.S. matters while references to “domestic” relate to U.S. matters.

On November 4, 2019, we entered into a definitive agreement with Stryker Corporation (Stryker) and its subsidiary, Stryker B.V. Under the terms of the purchase agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash (the Offer). The Offer is currently scheduled to expire at 9:00 a.m., Eastern Time, on February 27, 2020, but may be extended in accordance with the terms of the purchase agreement between Stryker and Wright. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, completion of the tender offer, and other customary closing conditions.

On October 1, 2015, we became Wright Medical Group N.V. following the merger (the Wright/Tornier merger or the merger) of legacy Wright with legacy Tornier. References in this section and certain other sections of Part I of this report to “we,” “our” and “us” refer to Wright Medical Group N.V. and its subsidiaries after the Wright/Tornier merger and Wright Medical Group, Inc. and its subsidiaries before the merger.

Orthopaedic Industry

The total worldwide orthopaedic industry is estimated at approximately $53 billion in 2019. Five 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 us, to focus on less contested, higher-growth sectors of the orthopaedic market.

We have focused our efforts into growing our position in the high-growth extremities and biologics markets. We believe a more active and aging patient population with higher expectations regarding “quality of life,” an increasing global awareness of extremities and biologics solutions, improved clinical outcomes as a result of the use of such products, and technological advances resulting in specific designs for such products that simplify procedures and address unmet needs for early interventions, and the growing need for revisions and revision-related solutions will drive the market for extremities and biologics products.

The extremities market is one of the fastest growing market segments within orthopaedics, with annual growth rates of 7-10%. We believe the extremities market will continue to grow by approximately 6-10% annually. We currently estimate the market for all surgical products used by extremities-focused surgeons to be approximately $3.56 billion in the United States. We believe

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major trends in the extremities market include procedure-specific and anatomy-specific devices, locking plates, and an increase in total ankle replacement or arthroplasty procedures.

Upper extremities reconstruction involves implanting devices to replace, reconstruct, or fixate injured or diseased joints and bones in the shoulder, elbow, wrist, and hand. It is estimated that approximately 60% of the upper extremities market is in total shoulder replacement or arthroplasty implants. We believe major trends in the upper extremities market include next-generation joint arthroplasty systems, bone preserving solutions, virtual planning systems, and revision of failed previous shoulder replacements in older patients.

Lower extremities reconstruction involves implanting devices to replace, reconstruct, or fixate injured or diseased joints and bones in the foot and ankle. A large segment of the lower extremities market is comprised of plating and screw systems for reconstructing and fusing joints or repairing bones after traumatic injury. We believe major trends in the lower extremities market include the use of external fixation devices in diabetic patients, total ankle arthroplasty, advanced tissue fixation devices, virtual planning systems, and biologics. According to various customer and market surveys, we are a market leader in foot and ankle surgical products. New technologies have been introduced into the lower extremities market in recent years, including next-generation total ankle replacement systems. Many of these technologies currently have low levels of market penetration. We believe that market adoption of total ankle replacement, which currently represents approximately 8% of the U.S. foot and ankle device market, will result in significant future growth in the lower extremities market.

The field of biologics employs tissue engineering and regenerative medicine technologies focused on remodeling and regeneration of tendons, ligaments, bone, and cartilage. 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. 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. Biologically or synthetically derived soft tissue grafts and scaffolds are used to treat soft tissue injuries and are complementary to many sports medicine applications, including rotator cuff tendon repair and Achilles tendon repair. Hard tissue biologics products are used in many bone fusion or trauma cases where healing potential may be compromised and additional biologic factors are desired to enhance healing, where the surgeon needs additional bone, or in cases where the surgeon wishes to use materials that are naturally incorporated by the body over time. We estimate that the worldwide orthobiologics market to be over $3.7 billion, and with annual growth rates of 3-4%. Three multinational companies currently dominate the orthobiologics industry.

An important product within our biologics product portfolio is AUGMENT^®, which is based on recombinant human platelet-derived growth factor (rhPDGF-BB), a synthetic copy of one of the body’s principal healing agents. We obtained FDA approval of AUGMENT^® in the United States for ankle and/or hindfoot fusion indications during the third quarter of 2015. In June 2018, we received premarket approval (PMA) from the FDA for AUGMENT^® Injectable. We estimate the U.S. market opportunity for AUGMENT^® Bone Graft and AUGMENT^® Injectable for ankle and/or hindfoot fusion indications to be approximately $300 million. The main competitors for AUGMENT^® Bone Graft and AUGMENT^® Injectable are autologous bone grafts, various forms of allograft, and synthetic bone growth substitutes. Autologous bone grafts, which account for a significant portion of total graft volume, are taken directly from the patient. This generally necessitates an additional procedure to obtain the graft, which in turn creates added expense, and increased pain and recovery time. Allografts, which are currently the second most commonly used bone grafts, are taken from human cadavers and processed by either bone banks or commercial firms. Although an obvious advantage to allografts is the fact that a second-site harvesting operation is not required, they carry a slight risk of transmitting pathogens and can also cause immune system reactions. Synthetic grafts are derived from numerous materials, including polymers, calcium sulfate, calcium phosphate, bovine collagen, and coral.

Product Portfolio

We offer a broad product portfolio of approximately 150 extremities products and approximately 20 biologics products that are designed to provide solutions to our surgeon customers, with the goal of improving clinical outcomes and the “quality of life” for their patients. Our product portfolio consists of the following product categories:

• Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;

• Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;

• Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and

• Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products.

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Upper Extremities

The upper extremities product category includes joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand. Our global net sales from this product category was $448.2 million, or 48.7% of total net sales, for the fiscal year ended December 29, 2019, as compared to $395.8 million, or 47.3% of total net sales, for the fiscal year ended December 30, 2018.

Our shoulder products are used to treat painful shoulder conditions due to arthritis, irreparable rotator cuff tendon tears, bone disease, fractured humeral heads, or failed previous shoulder replacement surgery. Our shoulder products include the following:

• Total Shoulder Joint Replacement. Our total shoulder joint replacement products have two components: a humeral implant consisting of a metal stem or base attached to a metal head, and a plastic implant for the glenoid (shoulder socket). Together, these two components mimic the function of a natural shoulder joint. Our total shoulder joint replacement products include the AEQUALIS ASCEND^®, AEQUALIS^® PRIMARY™, AEQUALIS^® PERFORM™ and SIMPLICITI^® shoulder systems. Our BLUEPRINT™ 3D Planning Software can be used with our AEQUALIS^® PERFORM™ Glenoid System to assist surgeons in accurately positioning the glenoid implant and replicating the pre-operative surgical plan. In addition, we received FDA 510(k) clearance in June 2016 of our AEQUALIS^® PERFORM™+ Glenoid System, the first anatomic augmented glenoid. This system was designed to specifically address posterior glenoid deficiencies and deliver bone preservation. SIMPLICITI^® is the first minimally invasive, ultra-short stem total shoulder available in the United States.

• Hemi Shoulder Joint Replacement. Our hemi shoulder joint replacement products replace only the humeral head and allow it to articulate against the native glenoid. These products include our PYC HUMERAL HEAD™ and INSPYRE™. PYC stands for pyrocarbon, which is a biocompatible material that has low joint surface friction and a high resistance to wear. The PYC HUMERAL HEAD™ is currently available in certain international markets and has been submitted for FDA approval.

• Reversed Shoulder Joint Replacement. Our reversed shoulder joint replacement products are used in arthritic patients lacking rotator cuff function. The components are different from a traditional “total” shoulder in that the humeral implant has the plastic socket and the glenoid has the metal head. This design has the biomechanical impact of shifting the pivot point of the joint away from the body centerline and recruiting the deltoid muscles to enable the patient to elevate the arm. Our reversed joint replacement products include the AEQUALIS^® REVERSED II™ shoulder. We received FDA 510(k) clearance in December 2016 of our AEQUALIS^® PERFORM™ REVERSED Glenoid System, our first reverse augmented glenoid, and we commercially launched it during first quarter of 2017. This system was designed to specifically address posterior glenoid deficiencies and deliver bone preservation. We continue to release new options for our BLUEPRINT™ 3D Planning Software, which can be used with our AEQUALIS^® PERFORM™ REVERSED Glenoid System to assist surgeons in accurately positioning the glenoid implant and replicating the pre-operative surgical plan.

• Convertible Shoulder Joint Replacement. Our convertible shoulder joint replacement products are modular implants that can be converted from a total or hemi shoulder implant to a reversed implant at a later date if the patient requires it. Our convertible joint replacement products include the AEQUALIS ASCEND^® FLEX™ convertible shoulder system, which provides anatomic and reversed options within a single system and is designed to offer precise intra-operative implant-to-patient fit and easy conversion to reversed if necessary. We received FDA 510(k) clearance of AEQUALIS^® FLEX REVIVE™ revision shoulder system in the third quarter of 2018. The AEQUALIS^® FLEX REVIVE™ revision shoulder system is the first system developed specifically for shoulder revision, which was designed to help surgeons remove the old implant with universal instrumentation designed specifically for shoulder applications, rebuild the new implant with control of height, version, and fixation, and to restore stability and function from successful humeral and glenoid reconstruction. AEQUALIS^® FLEX REVIVE™ was launched to limited users early in the first quarter of 2019 and was fully launched at the end of the second quarter of 2019.

• Shoulder Resurfacing Implants. An option for some patients is shoulder resurfacing where the damaged humeral head is sculpted to receive a metal “cap” that fits onto the bone, functioning as a new, smooth humeral head. This procedure can be less invasive than a total shoulder replacement. Our shoulder resurfacing implants are designed to preserve bone, which may benefit more active or younger patients with shoulder arthritis. Our resurfacing implants include the AEQUALIS^® RESURFACING HEAD™.

• Shoulder Trauma Devices. Our shoulder trauma devices, such as plates, pins, screws, and nails, are non-articulating implants used to help stabilize fractures of the humerus. Our shoulder trauma products include the AEQUALIS^® IM NAIL™, AEQUALIS^® PROXIMAL HUMERAL PLATE™, AEQUALIS^® FRACTURE™ shoulder and AEQUALIS^® REVERSED FRACTURE™ shoulder.

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In addition to our shoulder products, our upper extremities product portfolio consists of implants, plates, pins, screws, and nails that are used to treat the elbow, wrist, and hand, and include the following:

• Total Elbow and Radial Head Replacement. Our total elbow and radial head replacement products address the need for modularity in the anatomically highly-variable joint of the elbow and are designed to give surgeons the ability to reproduce the natural flexion/extension axis and restore natural kinematics of the elbow. Our total elbow replacement products include our LATITUDE^® EV™ total elbow prosthesis. Our radial head replacement products include our EVOLVE^® modular radial head device, which is a market leading radial head prosthesis that provides different combinations of heads and stems allowing the surgeon to choose implant heads and stems to accommodate the unpredictable anatomy of each patient.

• Elbow Fracture Repair. We have several plating and screw products designed to repair a fractured elbow. Our radial head plating systems and screws are for surgeons who wish to repair rather than replace a damaged radial head and include our EVOLVE^® TRIAD™ fixation system. Our EVOLVE^® Elbow Plating System addresses fractures of the distal humerus and proximal ulna. Composed of polished stainless steel, this 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. Both of these products and several of our other products incorporate our ORTHOLOC™ 3Di Polyaxial Locking Technology which is designed to enable optimal screw placement and stability.

• Wrist Fracture Repair. We have several plating and screw products designed to repair a fractured wrist. Our MICRONAIL^® II Intramedullary Distal Radius System is a next-generation minimally invasive treatment for distal radius fractures that is designed to provide 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 intended to reduce the potential for tendon irritation or rupture, which is an appreciable problem with conventional plates designed to lie on top of the bone. In addition, 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.

• Hand Fixation. Our hand fixation products include our FUSEFORCE^® Hand Fixation System, which is a shape-memory compression-ready fixation system that can be used in fixation for fractures, fusions, or osteotomies of the bones in the hand.

• Thumb and Finger Joint Replacement. Our Swanson finger joints are used in finger joint replacement for patients suffering from rheumatoid arthritis of the hand. With nearly 45 years of clinical success, Swanson digit implants are a foundation in our upper extremities business and are used by a loyal base of hand surgeons worldwide. Our ORTHOSPHERE^® implants are used in thumb joint replacement procedures.

Lower Extremities

The lower extremities product category includes joint implants and bone fusion and fixation devices, including plates, pins, screws, and nails, for the foot and ankle. Our global net sales from this product category for the fiscal year ended December 29, 2019 was $340.5 million, or 37.0% of total net sales, as compared to $311.5 million, or 37.3% of total net sales, for the fiscal year ended December 30, 2018.

We are a recognized leader in the United States for foot and ankle surgical products. Our lower extremities product portfolio includes:

• Total Ankle Joint Replacement. Total ankle joint replacement, also known as total ankle arthroplasty, is a surgical procedure that orthopaedic surgeons use to treat ankle arthritis. Our total ankle joint replacement products include implants for the ankle that involve replacing the joint with an articulating multi-component implant. These joint implants may be mobile bearing, in which the plastic component is free to slide relative to the metal bearing surfaces, or fixed bearing, in which this component is constrained. Our INBONE^® Total Ankle Systems, including our third-generation INBONE^® II Total Ankle System, are modular prostheses that are designed to allow the surgeon to tailor the fixation stems for the tibial and talar components in order to maximize stability of the implant. The INBONE^® II Total Ankle System is the only ankle replacement that offers surgeons multiple implant options with different articular geometry. Our INFINITY^® Total Ankle System features a distinctive talar resurfacing option for preservation of talar bone. The combination and interchangeability of both the INBONE^® and INFINITY^® systems are designed to provide the surgeon with an implant continuum of care concept, allowing the surgeon to address a more bone conserving implant option with INFINITY^® all the way to addressing a more complex ankle deformity with INBONE^®. Our INBONE^® and INFINITY^® Total Ankle Systems can be used with our PROPHECY^® Preoperative Navigation Guides, which combine computer imaging with a patient’s CT scan, and are designed to provide alignment accuracy while reducing surgical steps. The most recent addition to our Total Ankle System, INVISION™ Total

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Ankle Revision System is the first and only system developed specifically for total ankle revision arthroplasty. The INVISION™ Total Ankle Revision System provides a unique solution for even the most difficult revision procedures. Whether leveraged as a standalone construct or in conjunction with INFINITY^® and INBONE^® components, the INVISION™ Total Ankle Revision System is an important addition to the continuum of care from total ankle replacement through any necessary revisions. The INVISION™ Total Ankle Revision System is designed to help surgeons re-build bone lost through previous surgeries and provide modularity to help restore natural joint height.

• Ankle Fusion. We have several products used in ankle fusion procedures, which fuse together the tibia, fibula, and talus bones into one bone, and are intended to treat painful, end-stage arthritis in the ankle joint. These products include our ORTHOLOC™ 3Di Ankle Fusion System, VALOR^® TTC fusion nail, and the legacy Tornier Maxlock Extreme™ Plate and Screws System.

• Ankle Fixation and Fracture Repair. We sell a broad range of anatomically designed plates, screws, and nails used to stabilize and heal fractured ankle bones, including our ORTHOLOC™ 2 3Di Ankle Fracture Low Profile System features a complete range of ankle fracture plates designed specifically for the foot and ankle surgeon. The system features low-profile, anatomic plate designs and ORTHOLOC™ 3Di polyaxial locking screw technology, providing an innovative fracture solution that is intended to address a primary need for one of the foot and ankle’s largest market segments.

• Foot Fusion. We have several products used in foot fusion procedures, which fuse together three bones in the back of the foot into one bone and are used to treat a wide range of conditions, including arthritis, flat feet, rheumatoid arthritis, and previous injuries, such as fractures caused by wear and tear to bones and cartilage. Our foot fusion products include our ORTHOLOC™ 3Di Midfoot Plating System, VALOR^® TTC fusion nail and the legacy Tornier Maxlock Extreme™ Plate and Screws System.

• Foot Fixation and Fracture Repair. Our foot fixation and fracture repair products include plates, screws, and nails used to stabilize and heal foot deformities and fractures. Our CHARLOTTE^® CLAW^® Compression Plate is the first ever locking compression plate designed for corrective foot surgeries. Our next-generation CLAW^® II Compression Plating System expands our plate and screw offering by introducing anatomic plates specifically designed for fusions of the midfoot, and the CLAW^® II Polyaxial Compression Plating System incorporates variable-angle locking screw technology and our ORTHOLOC™ 3Di Reconstruction Plating System utilizes our 3Di polyaxial locking technology. We further expanded the ORTHOLOC™ 3Di portfolio with the launch of the ORTHOLOC™ 3Di CROSSCHECK^® Plating System. This modular addition is comprised of five uniquely designed plates which offer an inter-fragmentary solution. Our SALVATION™ limb salvage portfolio, which is designed to address the unique demands of advanced midfoot reconstruction, specifically for the treatment of Charcot. Other foot products include the MAXLOCK^®, MINIMAX LOCK™ and MINIMAX LOCK EXTREME™ plate and screw systems, BIOFOAM^® Wedge System, BIOARCH^® Subtalar Arthroereisis Implant, MDI Metatarsal Resurfacing Implant, and TENFUSE^® Nail Allograft.

• Hammertoe Correction. Hammertoe is a contracture (bending) of one or both joints of the second, third, fourth, or fifth (little) toes. Our hammertoe correction products include the PRO-TOE^® VO Hammertoe Fixation System, PRO-TOE^® C2 Hammertoe Implant, PHALINX^® Hammertoe Fixation System, Cannulink Intraosseous Fixation System (IFS), and TENFUSE^® PIP Hammertoe Allograft.

• Toe Joint Replacement. As a result of our acquisition of Cartiva, our lower extremities product portfolio includes Cartiva’s Synthetic Cartilage Implant (SCI), the only PMA approved product for treatment of first Metatarsophalangeal (MTP) joint osteoarthritis. We also sell our Swanson line of toe joint replacement products.

• Minimally-Invasive Foot and Ankle Surgery. The PROstep™ Minimally-Invasive Foot and Ankle system and MICA™ are designed on the premise that all “current” procedures can be performed through a smaller, minimally invasive, incision, with a focus on preserving the soft tissues. We have MICA™ Screws, PROstep™ Power Box, PROstep™ Burrs, and instruments to perform minimally invasive procedures such as Chevron, Akin, Calcaneal Osteotomies, Hammer toe/Claw toe, Cheilectomy, Bunionectomy, Bunionette and DMMO.

Biologics

The biologics product category includes 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 or to stimulate bone growth. These products focus on supporting biological musculoskeletal repair by utilizing synthetic and human tissue-based materials. Our biologic products are primarily used in extremities-related procedures as well as in trauma-induced voids of the long bones and some spine procedures. Internationally, we offer a bone graft product incorporating antibiotic delivery. Our global net sales from this product category for the fiscal year ended December 29, 2019 was $113.5 million, or 12.3% of total net sales, compared to $108.8 million, or 13.0% of total net sales, for the fiscal year ended December 30, 2018.

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Our biologics products include the following:

• AUGMENT^®. An important product within our biologics product portfolio is AUGMENT^® Bone Graft. Our AUGMENT^® Bone Graft 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. We obtained FDA approval of AUGMENT^® Bone Graft for ankle and/or hindfoot fusion indications in the United States during third quarter of 2015. Prior to FDA approval, this product was available for sale in Canada for foot and ankle fusion indications and in Australia and New Zealand for hindfoot and ankle fusion indications. In June 2018, we received premarket approval from the FDA for AUGMENT^® Injectable.

• Hard Tissue Repair. Our other bone or hard tissue repair products include our PRO-DENSE^® Injectable Regenerative Graft. PRO-DENSE^® is a composite graft composed of surgical grade calcium sulfate and calcium phosphate, and in animal studies, 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. Our PRO-STIM^® Injectable Inductive Graft is built on the PRO-DENSE^® material platform, but adds demineralized bone matrix (DBM), and has demonstrated accelerated healing compared to autograft in pre-clinical testing. Our other hard tissue repair products, including our IGNITE^® Power Mix Injectable Stimulus, FUSIONFLEX™ Demineralized Moldable Scaffold, ALLOMATRIX^® Injectable Putty, OSTEOSET^® Resorbable Bead Kit, MIIG^® Injectable Graft, ALLOPURE^® Allograft Bone Wedges, and TENSIX^® DBM.

• Soft Tissue Repair. Our soft tissue repair products include our GRAFTJACKET^® Regenerative Tissue Matrix, which 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 foot and ankle. GRAFTJACKET^® Maxforce Extreme is our thickest GRAFTJACKET^® matrix, which provides excellent suture holding power for augmenting challenging tendon and ligament repairs. In January 2019, we commenced commercialization of GRAFTJACKET NOW™, a ready to use human acellular dermal scaffold, procured through a separate distribution agreement, and are actively transitioning customers to GRAFTJACKET NOW™. Other soft tissue repair products include our ACTISHIELD™ and ACTISHIELD™ CF Amniotic Barrier Membranes, and VIAFLOW™ and VIAFLOW™ C Flowable Placental Tissue Matrices. Additionally, we introduced BIOSKIN™ Amniotic Wound Matrix in the third quarter of 2019, which is designed to address chronic wounds treated by surgical podiatrists.

Sports Medicine and Other

The sports medicine and other product category includes products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products. Because of its close relationship to extremities joint replacement and bone fixation, our sports medicine portfolio is comprised of products used to complement our upper and lower extremities product portfolios, providing surgeons a variety of products that may be used in upper and lower extremities surgical procedures. Our global net sales from this product category for the fiscal year ended December 29, 2019 was $18.8 million, or 2.0% of total net sales, compared to $20.1 million, or 2.4% of total net sales, for the fiscal year ended December 30, 2018.

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 upper or lower extremities fellowship programs. We offer surgeon-to-surgeon education on our products using surgeon advisors in an instructional capacity. We have contractual relationships with these surgeon advisors, who help us train other surgeons in the safe and effective use of our products and help other surgeons perfect new surgical techniques. Together with these surgeon advisors, we provide surgeons extensive “hands on” orthopaedic training and education, including upper and lower extremities fellowships and masters courses that are not easily accessible through traditional medical training programs. We also offer clinical symposia and seminars and publish advertisements and the results of clinical studies in industry publications. We believe that our history of innovation and focus on quality and improving clinical outcomes and “quality of life” for patients, along with our training programs, allow us to reach surgeons early in their careers and provide on-going value, which includes experiencing the clinical benefits of our products.

Due to the nature of specialized training surrounding podiatric and orthopaedic surgeons focused on extremities and biologics, our target market is well defined. Historically, surgeons are the primary decision-makers in orthopaedic device purchases. While we market our broad portfolio of products to surgeons, our revenue is generated from sales of our products to healthcare institutions and stocking distributors.

United States

As of December 29, 2019, our sales and distribution system in the United States consisted of approximately 80 geographic sales territories that are staffed by over 500 direct sales representatives and 29 independent sales agencies or distributors. These sales representatives and independent sales agencies and distributors are generally aligned to selling either our upper extremities products or lower extremities products, but, in some cases, certain agencies or direct sales representatives sell products from both our upper

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and lower extremities product portfolios in their territories. Our direct sales representatives and independent sales agencies and distributors are provided opportunities for product training throughout the year. We also have working relationships with healthcare dealers, including group purchasing organizations, healthcare organizations, and integrated distribution networks. 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 our customers. We plan to continue to strategically focus on and invest in building a competitively superior U.S. sales organization by training and certifying our sales representatives on our innovative product portfolio, continuing to develop and implement strong performance management practices, and enhancing sales productivity.

International

Internationally, we utilize several distribution approaches that are tailored to the needs and requirements of each individual market. Our international sales and distribution system currently consists of 13 direct sales offices and approximately 90 distributors that sell our products in approximately 50 countries. We have subsidiaries with direct sales offices in the United Kingdom, France, Germany, Italy, Netherlands, Canada, Japan, Australia, Switzerland, and Norway 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.

Manufacturing, Facilities, and Quality

We utilize a combination of internal manufacturing and a network of qualified outsourced manufacturing partners to produce our products and surgical instrumentation. We manufacture our internally-sourced products in five locations: Arlington, Tennessee; Franklin, Tennessee; Alpharetta, Georgia; Montbonnot, France; and Macroom, Ireland. We lease the manufacturing facility in Arlington, Tennessee from the Industrial Development Board of the Town of Arlington. Our internal manufacturing operations are focused on product quality, continuous improvement, and efficient production. Our internal manufacturing operations have been practicing lean manufacturing concepts for many years with a philosophy focused on high productivity, flexibility, and capacity optimization. Our operations in France have a long history and deep experience with orthopaedic manufacturing and process innovation. Additionally, we believe we are the only company to have vertically integrated operations for the manufacturing of pyrocarbon orthopaedic products. We believe that this capability gives us a competitive advantage in design for manufacturing and prototyping of this innovative material.

We outsource products to our manufacturing partners when it provides us with cost efficiency, expertise, flexibility, and instances where we need additional capacity. A significant portion of our lower extremities products and surgical instrumentation is produced to our specifications by qualified subcontractors who serve medical device companies. We continuously look for opportunities to optimize our internal manufacturing capacity and insource manufacturing where we believe it makes sense to do so.

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 American Association of Tissue Banks (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 global regulatory entities to determine if we have systems in place to ensure our products are safe and effective for their intended use and that we are compliant with applicable regulatory requirements. Our 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 strive to improve patient outcomes.

Supply

We use a diverse and broad range of raw materials in the manufacturing of our products. We purchase all of our raw materials and select components used in the manufacturing of our products from external suppliers. In addition, we purchase some supplies from single or limited number of sources for reasons of proprietary know-how, quality assurance, sole source, cost-effectiveness, or constraints resulting from regulatory requirements. We work closely with our suppliers to ensure continuity of supply while maintaining high quality and reliability.

We rely on a limited number of suppliers for certain components and materials 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 rely 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 extremities products, one supplier for our pyrocarbon products, and one supplier to provide a key ingredient of AUGMENT^® Bone Graft.

In April 2016, we entered into a commercial supply agreement with FUJIFILM Diosynth Biotechnologies U.S.A., Inc. pursuant to which Fujifilm agreed to manufacture and sell to us and we agreed to purchase recombinant human platelet-derived growth

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factor (rhPDGF-BB) for use in AUGMENT^® Bone Graft. The agreement reflects the culmination of a technology transfer from our former supplier to Fujifilm which began in December 2013 when we were notified that our former supplier was exiting the rhPDGF-BB business. Pursuant to our supply agreement with Fujifilm, commercial production of rhPDGF-BB is expected to begin in 2020. Although we believe that our current supply of rhPDGF-BB from our former supplier should be sufficient to last until after rhPDGF-BB becomes available under the new agreement, no assurance can be provided that it will be sufficient. In addition, since Fujifilm has not previously manufactured rhPDGF-BB, its ability to do so and perform its obligations under the agreement are not yet fully proven.

Our biologic product line includes one current supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products. We had previously contracted with two suppliers for this product, but ended our relationship with one of the suppliers at the end of 2019. We can continue selling the remaining inventory from this supplier until the inventory is depleted. In addition, certain biologic products depend upon a single supplier as our source for demineralized bone matrix (DBM) and cancellous bone matrix (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. In addition, we rely on a single supplier of soft tissue graft for BIOTAPE^® XM and a single supplier for the calcium sulfate used in our PRO-DENSE™ Injectable Regenerative Graft (PRO-DENSE™). We cannot be sure that our supply of these single source materials will continue to be available at current levels or will be sufficient to meet our needs, or that future suppliers of such materials will be free from FDA regulatory action impacting their sale of such materials.

Some of our products are provided by suppliers under private-label distribution agreements. Under these agreements, the supplier generally retains the intellectual property and exclusive manufacturing rights. The supplier private labels the products under our brands for sale in certain fields of use and geographic territories. These agreements may be subject to minimum purchase or sales obligations and are terminable by either party upon notice. Our private-label distribution agreements do not, individually or in the aggregate, represent a material portion of our business and we are not substantially dependent on them.

Our business, and the orthopaedic industry in general, is capital intensive, particularly as it relates to inventory levels and surgical instrumentation. Our business requires a significant level of inventory driven by our global footprint, the requirement to provide products within a short period of time, and the number of different sizes of many of our products. In addition, we must maintain a significant investment in surgical instrumentation as we provide these instruments to healthcare facilities and surgeons for their use to facilitate the implantation of our products.

Competition

Competition in the orthopaedic device industry is intense and is characterized by extensive research efforts and rapid technological progress. Competitors include major and mid-sized 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, distribution capabilities, brand reputation, and strong customer service. Our ability to compete is affected by our ability to accomplish the following:

• Develop new products and innovative technologies;

• Obtain and maintain regulatory clearances or approvals 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 qualified scientific, management and sales employees and focused sales representatives; and

• Support our technology with clinically relevant studies.

Research and Development

Realizing that new product offerings are a key to our future success, we are committed to a strong research and development program. The intent of our program is to develop new extremities and biologics products and expand our current product offerings and the markets in which they are offered. Our research and development teams are organized and aligned with our product

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marketing teams and are focused on improving clinical outcomes by designing innovative, clinically differentiated products with improved ease-of-use and by developing new product features and enhanced surgical techniques that can be leveraged across a broader base of surgeon customers. Our internal research and development teams work closely with external research and development consultants and a global network of physicians and medical personnel in hospitals and universities to ensure we have broad access to best-in-class ideas and technologies to drive our product development pipeline. We also have an active business development team that actively evaluates novel technologies and development stage products. In addition, our clinical and regulatory departments are 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 $74.1 million, $59.1 million and $50.1 million in 2019, 2018, and 2017, respectively. Our research and development activities are principally located in Memphis, Tennessee; Montbonnot, France; Plouzané, France; and Columbia City, Indiana, with additional staff in Grenoble, France; and Bloomington, Minnesota.

In the extremities area, our research and development activities focus on building upon our already comprehensive portfolio of surgical solutions for extremities 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. Additionally, with the acquisition of IMASCAP, whose Glenosys technology is the preoperative planning software behind our BLUEPRINT™ 3D planning software, we have a rich pipeline of potential breakthrough technologies under development. We believe the future of orthopaedic implant surgery will include advanced elements of artificial intelligence and augmented reality.

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 extremities procedures and potential new applications for our AUGMENT^® Bone Graft and AUGMENT^® Injectable.

Intellectual Property

Patents, trade secrets, know-how, and other proprietary rights are important to the continued success of our business. We currently own more than 1,800 patents and pending patents throughout the world. We currently have licenses to use approximately 800 patents. 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. We are not materially dependent on any one or more of our patents. In addition to patents, 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.

Although we believe that, in the aggregate, our patents are valuable, and patent protection is beneficial to our business and competitive positioning, our patent protection will not necessarily deter or prevent competitors from attempting to develop similar products. 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) or foreign patent offices will issue any of our pending patent applications. The USPTO and foreign patent offices may deny or require a significant narrowing of the claims 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 or foreign patent offices, including opposition and other post-grant proceedings. These proceedings could result in adverse decisions as to the patentability, 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, we are currently subject to patent infringement litigation and there can be no assurances that we do not infringe any patents or other proprietary rights. 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 also may 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 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 protect our proprietary rights through a variety of methods. As a condition of employment, we generally require employees to execute an agreement relating to the confidential nature of and company ownership of proprietary information and assigning intellectual property rights to us. We generally require confidentiality agreements with vendors, consultants, and others who may have access to proprietary information. We generally limit access to our facilities and review the release of company information

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in advance of public disclosure. There can be no assurances, however, that confidentiality agreements with employees, vendors, and consultants will not be breached, adequate remedies for any breach would be available, or competitors will not discover or independently develop our trade secrets. Litigation also may be necessary to protect trade secrets or techniques we own.

Government Regulation

We are subject to varying degrees of government regulation in the countries in which we conduct business. In some countries, such as the United States, Europe, Canada, and Japan, government regulation is significant and, we believe there is a general trend toward increased and more stringent regulation throughout the world. As a manufacturer and marketer of medical devices, we are subject to extensive regulation by the U.S. Food and Drug Administration, other federal governmental agencies, and state agencies in the United States and similar foreign governmental authorities in countries located outside the United States. These regulations generally govern the introduction of new medical devices; the observance of certain standards with respect to the design, manufacture, testing, labeling, promotion, and sales of the devices; the maintenance of certain records; the ability to track devices; the reporting of potential product defects; the import and export of devices; as well as other matters. In addition, as a participant in the healthcare industry, we are also subject to various other U.S. federal, state, and foreign laws.

We strive to comply with regulatory requirements governing our products and operations and to conduct our affairs in an ethical manner. This practice is reflected in our Code of Business Conduct, various other compliance policies and through the responsibility of the nominating, corporate governance and compliance committee of our board of directors, which oversees our corporate compliance program and compliance with legal and regulatory requirements as well as our ethical standards and policies. We devote significant time, effort, and expense to addressing the extensive government and regulatory requirements applicable to our business. Such regulatory requirements are subject to change and we cannot predict the effect, if any, that these changes might have on our business, financial condition, and results of operations. Governmental regulatory actions against us could result in warning letters, delays in approving or refusal to approve a product, the recall or seizure of our products, suspension or revocation of the authority necessary for the production or sale of our products, litigation expense, and 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.

United States

In the United States, our products are strictly regulated by the FDA under the U.S. 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 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 the appropriate tissue bank licenses based on state requirements.

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 de novo or PMA application. Most of our products are FDA cleared through the 510(k) premarket notification process. 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 de novo or 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 is 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. A PMA can include post-approval conditions including, among other things, restrictions on labeling, promotion, sale and distribution, data reporting (surveillance), or requirements to do additional clinical studies post-approval. Even after approval of a PMA, the FDA must grant subsequent approvals for a new PMA or a PMA supplement to authorize certain modifications to the device, its labeling, or its manufacturing process.

One or more clinical trials may be required to support a 510(k) application or a de novo submission and almost always are required to support a PMA application. Clinical trials of unapproved or uncleared medical devices or devices being studied for uses for which they are not approved or cleared (investigational devices) must be conducted in compliance with FDA requirements. If human clinical trials of a medical device are required and the device presents a significant risk, the sponsor of the trial must file

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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 an IDE 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. During the trial, the sponsor must comply with the FDA’s IDE requirements including, for example, investigator selection, trial monitoring, adverse event reporting, and recordkeeping. The investigators must obtain patient informed consent, rigorously follow the investigational plan and trial protocol, control the disposition of investigational devices, and comply with reporting and recordkeeping requirements. We, the FDA and the IRB at each institution at which a clinical trial is being conducted may suspend a clinical trial at any time for various reasons, including a belief that the subjects are being exposed to an unacceptable risk. We are currently conducting a few clinical trials.

After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply and we continue to be subject to inspection by the FDA to determine our compliance with these requirements, as do our suppliers, contract manufacturers, and contract testing laboratories. These requirements include, among others, the following:

• Quality System regulations, which govern, among other things, how manufacturers design, test, manufacture, modify, label, exercise quality control over and document manufacturing of their products;

• labeling and claims regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling;

• FDA guidance of off-label dissemination of information and responding to unsolicited requests for information;

• Medical Device Reporting (MDR) regulation, which requires reporting to the FDA certain adverse experiences associated with use of our products;

• complaint handling regulations designed to track, monitor, and resolve complaints related to our products;

• Part 806 reporting of certain corrections, removals, enhancements, and recalls of products;

• complying with federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to FDA’s Global Unique Device Identification Database (GUDID); and

• in some cases, ongoing monitoring and tracking of our products’ performance and periodic reporting to the FDA of such performance results.

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 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 and our third-party manufacturers for compliance with applicable regulatory requirements. 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.

We are subject to various U.S. federal and state laws concerning healthcare fraud and abuse, including anti-kickback and false claims laws, and other matters. The U.S. federal Anti-Kickback Statute (and similar state laws) prohibits certain illegal remuneration to physicians and other health care providers that may financially bias prescription decisions and result in an over-utilization of goods and services reimbursed by the federal government. The U.S. federal False Claims Act (and similar state laws) prohibits

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conduct on the part of a manufacturer which may cause or induce an inappropriate reimbursement for devices reimbursed by the federal government. We are also subject to the U.S. federal Physician Payments Sunshine Act and various state laws on reporting remunerative relationships with healthcare providers. These laws impact the kinds of financial arrangements we may have with hospitals, surgeons or other potential purchasers of our products. They particularly impact how we structure our sales offerings, including discount practices, customer support, education and training programs, physician consulting, research grants and other arrangements. These laws are administered by, among others, the U.S. Department of Justice, the Office of Inspector General of the Department of Health and Human Services and state attorneys general. Many of these agencies have increased their enforcement activities with respect to medical device manufacturers in recent years. If our operations are found to be in violation of these laws, we may be subject to penalties, including potentially significant criminal, civil and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations.

We are also subject to data privacy and security regulation by both the U.S. federal government and the states in which we conduct our business. Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), and their respective implementing regulations, imposes specified requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as service providers of covered entities that create, receive, maintain, or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, many state laws govern the privacy and security of health information in certain circumstances, many of which differ from HIPAA and each other in significant ways and may not have the same effect.

The FDA, in cooperation with U.S. Customs and Border Protection, administers controls over the import of medical devices into the United States. The U.S. Customs and Border Protection imposes its own regulatory requirements on the import of our products, including inspection and possible sanctions for noncompliance. We are also subject to foreign trade controls administered by certain U.S. government agencies, including the Bureau of Industry and Security within the Commerce Department and the Office of Foreign Assets Control within the Treasury Department.

International

Outside the United States, we are subject to government regulation in the countries in which we operate and sell our products. We must comply with extensive regulations governing product approvals, product safety, quality, manufacturing, and reimbursement processes in order to market our products in all major foreign markets. Although many of the regulations applicable to our products in these countries are similar to those of the FDA, 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, 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 must qualify for CE marking. To obtain authorization to affix the CE mark to one of our products, a recognized European Notified Body must assess our quality systems and the product’s conformity to the requirements of the European Medical Device Directives. We are subject to inspection by the Notified Bodies for compliance with these requirements. We also are required to comply with regulations of other countries in which our products are sold, such as obtaining Ministry of Health Labor and Welfare approval in Japan, Health Protection Branch approval in Canada and Therapeutic Goods Administration approval in Australia. The new European MDR intended to replace the current Medical Device Directives came into force May 2017. Manufacturers of approved medical devices will have until May 2020 to transition their devices to meet the requirements of the MDR. After May 2020, manufacturers are offered a grace period which further extends the transition time for some medical devices.  We are currently reviewing our product portfolios, quality system and processes in an effort to meet the new regulations within the timeframes we are afforded. 

Our manufacturing facilities are subject to environmental health and safety laws and regulations, including those relating to the use, registration, handling, storage, disposal, recycling and human exposure to hazardous materials and discharges of substances in the air, water and land. For example, in France, requirements known as the Installations Classées pour la Protection de l’Environnement regime provide for specific environmental standards related to industrial operations such as noise, water treatment, air quality, and energy consumption. In Ireland, our manufacturing facilities are likewise subject to local environmental regulations, such as related to water pollution and water quality, which are administered by the Environmental Protection Agency.

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Our operations in countries outside the United States are subject to various other laws such as those regarding recordkeeping and privacy; laws regarding sanctioned countries, entities and persons; customs and import-export, and laws regarding transactions in foreign countries. We are also subject to the U.S. Foreign Corrupt Practices Act, which generally prohibits covered entities and their intermediaries from engaging in bribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business or other benefits, as well as similar anti-corruption laws of other countries, such as the UK Bribery Act.

Third-Party Reimbursement

Sales of our products depend in part on the availability of coverage and reimbursement from insurers/third-party payors. Third-party payors may include governmental programs such as the U.S. Medicare and Medicaid programs, private insurance plans, and workers’ compensation plans. These third-party payors may deny coverage or reimbursement for a product or procedure if they determine that the product or procedure is investigational or is not medically necessary. Third-party payors also may place limitations on coverage of products or procedures, such as the types of conditions for which a procedure will be covered, the types of physicians who can perform specific types of procedures, or the care setting in which the procedure may be performed (e.g., outpatient or in a hospital). Also, third-party payors are increasingly auditing and challenging the charges submitted for medical products and services and are raising concerns related to potential upcoding, miscoding, and/or inappropriate modifiers uses. Some third-party payors may require prior-authorization, pre-determination, or prior approval to determine coverage for innovative devices or procedures before they will reimburse healthcare providers for associated claims. Even though a new product may have been approved or cleared for commercial sale by the FDA, demand may be limited if reimbursement barriers are imposed by governmental and/or private third-party payors. In the United States, there is no uniform coverage and payment policy across all third-party payors; instead, coverage and payment can be quite different from payor to payor, and from one region of the country to another. Coverage also depends on our ability to demonstrate the short-term and long-term clinical effectiveness, and in some cases the cost-effectiveness, of our products. Such supportive data are obtained from clinical trials and published literature. We conduct research and present results at major scientific and medical meetings, and publish results in respected, peer-reviewed medical journals both to promote medical innovation and because we believe data and evidence that can support coverage and payment are important to the successful commercialization of and market access for our products.

The Centers for Medicare & Medicaid Services (CMS), the U.S. agency responsible for administering the Medicare program, sets national Medicare coverage and payment policies for the Medicare program. CMS may adopt policy changes that impact our products through national coverage determinations, Medicare payment regulations or other mechanisms. CMS is responsible for establishing level II Healthcare Common Procedure Coding System (HCPCS) codes used to identify certain medical products, biologics, and implants. Local coverage determinations also can be adopted by CMS contractors. Additionally, Congress periodically adopts legislation that impacts reimbursement under federal health programs.

Payment to physicians for procedures using our products also can be impacted by changes to Current Procedural Terminology (CPT) codes, which are used to submit claims to payers for medical services. CPT codes are assigned, maintained and annually updated by the American Medical Association and its CPT Editorial Board. The relative values assigned to CPT codes, which represent resources used to perform a procedure, also can be revised by CMS. If the CPT codes that apply to procedures performed using our products are changed, or the relative values are decreased, reimbursement for performances of these procedures may be adversely affected.

We believe that the overall escalating cost of medical products and services for governments and private health insurers is increasing pressures on the healthcare and medical device industry to reduce the costs of products and services. Third-party payors are developing increasingly-sophisticated methods of controlling healthcare costs through measures including, but not limited to, bundled payments, episode-of-care risk-sharing methodologies, health technology assessments, coverage with evidence development requirements, payment linked to quality, pay-for-performance, comparative effectiveness reviews, prospective reimbursement, capitation programs, group purchasing, redesign of benefit offerings, pre-approvals and second opinion requirements, site-of-care limitations, careful review of bills, encouragement of healthier lifestyles and promotion of preventative services, and exploration of more cost-effective methods of delivering healthcare. Adoption or expansion of these or other types of cost control measures could potentially impact market access and pricing structures for our products, which in turn could impact our future sales. There can be no assurance that third-party reimbursement will be available or adequate, or that current and future legislation, regulation or reimbursement policies of third-party payors will not adversely affect the demand for our products or our ability to sell our products on a profitable basis. If third-party payor reimbursement is unavailable or inadequate, it could have a material adverse effect on our business, operating results, and financial condition.

Outside the United States, healthcare reimbursement systems vary significantly by country, and many countries have instituted price ceilings on specific product lines and procedures. We have received increased requests for clinical data to support registration and reimbursement outside the United States. We have experienced more frequent local, product-specific clinical evidence requirements being applied as an overlay to medical device regulation. For instance, Australia requires that clinical data for clearance and reimbursement be in the form of prospective, multi-center studies, a high bar not previously applied. In addition, in France, certain innovative devices (such as some of our products made from pyrolytic carbon) must provide clinical evidence to support “mark-specific” reimbursement. There can be no assurances that procedures using our products will be considered

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medically reasonable and necessary for a specific indication, that our products will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be available, or that the third-party payors’ reimbursement policies will not adversely affect our ability to sell our products profitably.

Environmental

Our operations and properties are subject to extensive U.S. 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.

Seasonality

We traditionally experience lower sales volumes in the third quarter than throughout the rest of the year as many of our products are used in elective procedures, which generally decline during June, July, and August. This typically results in our selling, general and administrative expenses and research and development expenses as a percentage of our net sales that are higher during third quarter 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) and the American Academy of Orthopaedic Surgeons (AAOS). During these three-day events, we display our most recent and innovative products.

Backlog

The time period between the placement of an order for our products and shipment is generally short. As such, we do not consider our backlog of firm orders to be material to an understanding of our business.

Employees

As of December 29, 2019, we had 3,030 employees. We believe that we have a good relationship with our employees.

Available Information

We are a public company with limited liability (naamloze vennootschap) organized under the laws of the Netherlands. We were initially formed as a private company with limited liability (besloten vennootschap) in June 2006. Our principal executive offices are located at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands. Our telephone number at this address is (+31) 20 521 4777. Our corporate website is located at www.wright.com. The information contained on our website or connected to our website is not incorporated by reference into and should not be considered part of this report.

We make available, free of charge and through our Internet corporate website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to any such reports filed or furnished 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 Securities and Exchange Commission.

Item 1A. Risk Factors.

We are affected by risks specific to us as well as factors that affect all businesses operating in a global market. In addition to the other information set forth in this report, careful consideration should be taken of the factors described below, which could materially adversely affect our business, financial condition or operating results. The risk factors described below may relate solely to one or more of the legal entities contained in our corporate structure and may not necessarily apply to Wright Medical Group N.V. or one or more of the other legal entities contained in our corporate structure.

Risks Related to the Proposed Acquisition of Wright by Stryker

The proposed acquisition of Wright by Stryker is subject to a number of conditions beyond our control. Failure to complete the proposed acquisition within the expected time frame, or at all, could have a material adverse effect on our business, operating results, financial condition and our share price.

On November 4, 2019, we entered into a Purchase Agreement (the Purchase Agreement) with Stryker and Stryker’s subsidiary, Stryker B.V., related to the proposed acquisition of Wright by Stryker (the Acquisition). Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer (the Offer) to purchase all of our outstanding ordinary shares. If certain conditions are satisfied or waived to the extent they can be waived and the Offer closes,

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Stryker may acquire any Wright shares that were not tendered in the Offer through a reorganization of the company. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the condition that there be validly tendered and not withdrawn prior to the expiration of the Offer a number of ordinary shares representing at least 95% of the ordinary shares outstanding as of the scheduled expiration of the Offer (such condition, the Minimum Condition); provided, that Stryker may elect to reduce the Minimum Condition to a percentage of not less than 80%; and provided further that if Wright’s shareholders have adopted certain resolutions related to the reorganization of the company at an extraordinary general meeting of shareholders, the Minimum Condition will be reduced to 80%. The Minimum Condition may not be waived by Stryker without the prior written consent of Wright. The obligation of Stryker B.V. to consummate the Offer is also subject to the expiration of the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), and the receipt of other required approvals and clearances under applicable antitrust laws, the adoption of certain resolutions by Wright’s shareholders at the extraordinary general meeting of shareholders and other customary conditions. We currently expect the Acquisition to close during the second half of 2020, but no assurance can be provided that it will close within this time frame, or at all.

We cannot predict whether and when the conditions to the Offer will be satisfied. If one or more of these conditions is not satisfied, and as a result, we do not complete the proposed Acquisition, we would remain liable for significant transaction costs, and the focus of our management would have been diverted from seeking other potential strategic opportunities, in each case without realizing any benefits of the proposed Acquisition. Certain costs associated with the proposed Acquisition have already been incurred or may be payable even if the proposed Acquisition is not consummated. Finally, any disruptions to our business resulting from the announcement and pendency of the proposed Acquisition, including any adverse changes in our relationships with our customers, partners, suppliers and employees, could continue or accelerate in the event that we fail to consummate the proposed Acquisition.

Our share price may also fluctuate significantly based on announcements by Stryker and other third parties or us regarding the Acquisition or based on market perceptions of the likelihood of the satisfaction of the Minimum Condition or other conditions to the consummation of the Acquisition. Such announcements may lead to perceptions in the market that the Acquisition may not be completed, which could cause our share price to fluctuate or decline. If we do not consummate the Acquisition, the price of our ordinary shares may decline significantly from the current market price, which may reflect a market assumption that the proposed Acquisition will be consummated. Any of these events could have a material adverse effect on our business, operating results and financial condition and could cause a decline in the price of our ordinary shares.

The Offer consideration payable to holders of our ordinary shares will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations, or in the event of any change in our share price.

The Offer consideration payable to holders of our ordinary shares will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations, or changes in the market price of, analyst estimates of, or projections relating to, our ordinary shares. For example, if we experienced an improvement in our business, assets, liabilities, prospects, outlook, financial condition or results of operations prior to the consummation of the proposed Acquisition, there would be no adjustment to the amount of the proposed Offer consideration.

The Purchase Agreement contains provisions that could discourage a potential competing acquirer.

Under the terms of the Purchase Agreement, we have agreed not to solicit or initiate discussions with third parties regarding other proposals to acquire Wright and are subject to restrictions on our ability to respond to any such proposal, except as permitted under the terms of the Purchase Agreement. In the event that we receive an acquisition proposal from a third party, we must notify Stryker of such proposal and negotiate in good faith with Stryker prior to terminating the Purchase Agreement or effecting a change in the recommendation of our Board of Directors to our shareholders with respect to the proposed Acquisition. The Purchase Agreement also contains certain termination rights for both Stryker and us and further provides that, upon termination of the Purchase Agreement under specified circumstances, including certain terminations in connection with an alternative business combination transaction as permitted by the terms of the Purchase Agreement, we will be required to pay Stryker a termination fee of $150 million.

These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of us from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the Acquisition. These provisions also might result in a potential third-party acquirer proposing to pay a lower price to our shareholders than it might otherwise have proposed to pay due to the added expense of the $150 million termination fee that may become payable in certain circumstances.

If the Purchase Agreement is terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the proposed Acquisition.

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Shareholder litigation could prevent or delay the closing of the proposed Acquisition or otherwise negatively impact our business, operating results and financial condition.

We may incur additional costs in connection with the defense or settlement of existing and any future shareholder litigation in connection with the proposed Acquisition, including the two shareholder lawsuits to date that have been brought against us in connection with the Acquisition. See Legal Proceedings for additional information regarding these lawsuits. These lawsuits or other future litigation may adversely affect our ability to complete the proposed Acquisition. We could incur significant costs in connection with any such litigation lawsuits, including costs associated with the indemnification of obligations to our directors. Furthermore, one of the conditions to the closing of the proposed Acquisition is the absence of any governmental order or law preventing the Acquisition or making the consummation of the proposed Acquisition illegal. Consequently, if a plaintiff were to secure injunctive or other relief prohibiting, delaying or otherwise adversely affecting our ability to complete the proposed Acquisition, then such injunctive or other relief may prevent the proposed Acquisition from becoming effective within the expected time frame or at all.

We may be unable to obtain the regulatory approvals required to complete the proposed Acquisition.

One of the conditions to consummation of the proposed Acquisition is receipt of certain regulatory approvals, including the expiration or termination of the applicable waiting periods (and any extension thereof) under the HSR Act and antitrust notification and approvals in certain European and other jurisdictions. On December 31, 2019, Wright and Stryker each received a request for additional information and documentary materials with respect to the Offer (a Second Request) from the U.S. Federal Trade Commission. As a result of the Second Requests, the waiting period under the HSR Act applicable to the Offer has been extended until 11:59 p.m., Eastern Time, on the 10th calendar day following the date on which Stryker substantially complies with the Second Request it received, unless such waiting period is earlier terminated. Thereafter, the waiting period may be extended only by court order or with Stryker’s consent. There can be no assurance that such regulatory approvals, or any other regulatory approvals that might be required to consummate the proposed Acquisition, will be obtained. If such regulatory approvals are obtained, there can be no assurance as to the timing of such approvals, our ability to obtain the approvals on satisfactory terms or the absence of any litigation challenging such approvals.

At any time before or after the consummation of the proposed Acquisition (and notwithstanding the termination of the waiting period under the HSR Act), the U.S. Department of Justice, Federal Trade Commission or any state or non-U.S. governmental entity could take such action, under antitrust laws or otherwise, as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the consummation of the proposed Acquisition or seeking the divestiture of substantial assets. Private parties may also seek to take legal action under antitrust laws under certain circumstances. If the proposed Acquisition does not receive, or timely receive, the required regulatory approvals and clearances, or if another event occurs delaying or preventing the proposed Acquisition, such delay or failure to complete the proposed Acquisition may create uncertainty or otherwise have negative consequences that may materially and adversely affect our financial condition and results of operations, as well as the price per share for our ordinary shares.

While the proposed Acquisition is pending, we are subject to business uncertainties and contractual restrictions that could disrupt our business, and the proposed Acquisition may impair our ability to attract and retain qualified employees or retain and maintain relationships with our customers, suppliers and other business partners.

Whether or not the proposed Acquisition is consummated, the proposed Acquisition may disrupt our current plans and operations, which could have an adverse effect on our business and financial results. The pendency of the Acquisition may also divert management’s attention and our resources from ongoing business and operations and our employees and other key personnel may have uncertainties about the effect of the proposed Acquisition, and the uncertainties may impact our ability to retain, recruit and hire key personnel while the proposed Acquisition is pending or if it fails to close. Furthermore, if key personnel depart because of such uncertainties, or because they do not wish to remain with the combined company after closing, our business and results of operations may be adversely affected. In addition, we cannot predict how our suppliers, customers and other business partners will view or react to the proposed Acquisition upon consummation. If we are unable to reassure our customers, suppliers and other business partners to continue transacting business with us, our sales, financial condition and results of operations may be adversely affected.

In addition, the Purchase Agreement generally requires us to operate in the ordinary course of business consistent with past practice, pending consummation of the Acquisition, and restricts us from taking certain actions with respect to our business and financial affairs without Stryker’s consent. Such restrictions will be in place until either the Acquisition is consummated or the Purchase Agreement is terminated. These restrictions could restrict our ability to, or prevent us from, pursuing attractive business opportunities (if any) that arise prior to the consummation of the Acquisition. For these and other reasons, the pendency of the Acquisition could adversely affect our business, operating results and financial condition.

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We have incurred, and will continue to incur, direct and indirect costs as a result of the proposed Acquisition.

We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the Acquisition, including costs that we may not currently expect. We must pay substantially all of these costs and expenses whether or not the transaction is completed. If the Purchase Agreement is terminated under specified circumstances, we would be required to pay to Stryker a termination fee equal to $150 million. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses.

Risks Related to Our Business

We have a history of operating losses and may never achieve or sustain profitability.

We have a history of operating losses, and at December 29, 2019, we had an accumulated deficit of $1.7 billion. Our ability to achieve profitability will be influenced by many factors, including, among others, the success of prior acquisitions; the level and timing of future net sales and expenditures; development, commercialization and market acceptance of new products; the results and scope of ongoing research and development projects; competing technologies and market developments; regulatory requirements and delays; and pending litigation. As a result, we may continue to incur operating losses for the foreseeable future. These losses will continue to have an adverse impact on our shareholders’ equity, and we may never achieve or sustain profitability.

Our strategy to become a profitable, high-growth, pure-play medical technology company and command the market valuation typically accorded such companies may not be successful.

The divestiture of the OrthoRecon business, the Wright/Tornier merger, the divestiture of legacy Tornier’s large joints business and our acquisitions of IMASCAP and Cartiva are part of our 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 other sections of this report, or due to other events, we will not be successful in transforming our business and will not be accorded the market valuation we seek.

Our digital strategy to develop new platforms, accelerate surgical solutions and drive software technology innovation across our business may not be successful and, even if successful, may increase or accentuate certain existing risks or add new risks and complications to our business.

In May 2019, we announced the creation of a new digital organization intended to execute on our strategy to develop new platforms, accelerate surgical solutions and drive software technology innovation across our business organization headed by a new Chief Digital Officer. Our digital strategy is to build upon our highly differentiated, market-leading BLUEPRINT™ software by leveraging emerging technologies, such as artificial intelligence and augmented reality, to provide innovative and transformative software-enabled surgery platforms and solutions for the extremities markets. While we believe the opportunities for Wright in further developing and deploying our digital technology, including our BLUEPRINT platform into other areas, are significant, we can provide no assurance that our digital strategy, and the investments we intend to make in furtherance thereof, will be successful due to factors, including, among others, competition, lack of acceptance, failure to gain regulatory approvals, or other risks as described in this section or other sections of this report, or due to other events. Even if we are successful in implementing our digital strategy, this strategy may increase or accentuate certain existing risks or add new risks and complications to our business, including, among others, risks involving intellectual property; data acquisition, maintenance, privacy and security; regulatory requirements; clinical effectiveness; physician training; product and software errors and defects; product recall and safety; changing industry standards and customer preferences; competition; technology obsolescence; need to hire and retain qualified personnel; and market acceptance. If these or any other risks materialize with respect to our digital strategy, our business, operating results and reputation could be harmed.

We may never realize the expected benefits of our strategic business combinations or acquisition transactions.

In addition to developing new products and growing our business internally, we have sought to grow through business combinations and acquisitions of complementary businesses, technologies and products. Examples include our acquisition of Cartiva in October 2018, our acquisition of IMASCAP in December 2017, the Wright/Tornier merger in October 2015, legacy Wright’s acquisition of BioMimetic in early 2013, as well as its acquisitions of Biotech International in November 2013, Solana Surgical, LLC in January 2014, and OrthoPro, L.L.C. in February 2014. Business combinations and acquiring new businesses involve a myriad of risks. Whenever new businesses are combined or acquired, there is a risk we may fail to realize some or all of the anticipated benefits, financial or otherwise, of the transaction. This failure could be a result of clinical issues with acquired products, introduction of competitive products with superior attributes than the acquired products, the failure to achieve wide market acceptance of the acquired products due to regulatory, cost, reimbursement or other issues, or a delay or failure to drive sales of the acquired products to anticipated levels.

We may fail to realize the expected benefits of our business combinations or acquisitions if the combined or acquired business fails to meet our net sales projections, exposes us to unexpected liabilities, or if our pre-acquisition due diligence fails to uncover

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issues that negatively affect the value or cost structure of the acquired enterprise. Additionally, if integration of the businesses proves to be more complicated than planned, we may fail to realize operational synergies and/or fail to mitigate operational dis-synergies resulting in diversion of management attention and/or loss of key personnel. Any difficulties in the integration of acquired businesses or unexpected penalties or liabilities in connection with such businesses could have a material adverse effect on our business, operating results and financial condition, including decreasing or delaying an anticipated accretive effect of a transaction, or result in a decrease in our share price or new litigation.

Although we carefully plan our business combinations and acquisitions, there can be no assurances that these and other risks will not prevent us from realizing the expected benefits of these transactions. If we do not achieve the anticipated benefits of an acquisition as rapidly as expected, or at all, investors or analysts may not perceive the same benefits of the acquisition as we do. If these risks materialize, our ordinary share price could be materially adversely affected. Finally, future acquisitions may require equity or debt financing, the dilutive or other effects of which could negatively impact the anticipated benefits of the transaction or restrict our business.

We anticipate significant future sales from our AUGMENT^® Bone Graft products. If we are wrong, our future operating results, cash flows, and prospects could be adversely affected.

We obtained FDA approval of AUGMENT^® Bone Graft in the United States for ankle and/or hindfoot fusion indications during the third quarter of 2015 and FDA approval of AUGMENT^® Injectable Bone Graft (AUGMENT^® Injectable), which combines rhPDGF-BB with an injectable bone matrix, in June 2018. We expect significant future sales from our AUGMENT^® Bone Graft products. If these sales expectations are not met, our future operating results, cash flows and prospects could be adversely affected.

We may not achieve our financial guidance or projected goals and objectives in the time periods that we anticipate or announce publicly, which could have an adverse effect on our business and could cause the market price of our ordinary shares to decline.

Prior to the public announcement of the proposed Acquisition, we typically provided projected financial information, such as our anticipated annual net sales, adjusted earnings and adjusted earnings before interest, taxes, depreciation, and amortization. These financial projections were based on management’s then current expectations and typically did not contain any significant margin of error or cushion for any specific uncertainties or for the uncertainties inherent in all financial forecasting. The failure to achieve any future financial projections we may provide or the projections of analysts and investors could have an adverse effect on our business, disappoint analysts and investors, and cause the market price of our ordinary shares to decline. Our net sales performance has been outside of our guidance range in certain quarters, which negatively impacted the market price of our ordinary shares, and could do so in the future should our results fall below our guidance range and the expectations of analysts and investors.

We also set goals and objectives for, and make public statements regarding, the timing of certain accomplishments and milestones regarding our business or operating results, such as the anticipated timing of the proposed Acquisition, long-term financial targets, the timing of financial objectives, new products, regulatory actions, pending litigation, and anticipated distributor and sales representative transitions. The achievement of these goals and objectives and the actual timing of these events can vary dramatically due to a number of factors, including the risk factors described in this report. As a result, there can be no assurance that we will succeed in achieving our projected goals and objectives in the time periods that we anticipate or announce publicly. The failure to achieve such projected goals and objectives in the time periods that we anticipate or announce publicly could have an adverse effect on our business, disappoint investors and analysts, and cause the market price of our ordinary shares to decline.

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;

• the level of 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;

• the timing of or failure to obtain regulatory clearances or approvals for products;

• 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;

• the number and mix of products sold in the quarter and the geographies in which they are sold;

• the number of selling days;

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• the availability and cost of components and materials;

• prevailing interest rates on our excess cash investments;

• fluctuations in foreign currency exchange rates;

• the timing of significant orders and shipments;

• ability to obtain reimbursement for our products and the timing of patients’ use of their calendar year medical insurance deductibles;

• work stoppages or strikes in the healthcare industry;

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

• changes in accounting standards, policies, estimates, and treatments;

• restructuring, impairment, and other special charges, costs associated with our pending litigation and 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 changes in tax rules;

• general economic factors; and

• increases of interest rates, which can increase the cost of borrowings under our Credit Agreement, and generally affect the level of economic activity.

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 ordinary shares in any given period.

Although legacy Wright divested the OrthoRecon business, legacy Wright remains responsible, as between it and MicroPort, 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 our discontinued operations, the agreement between WMG and MicroPort requires that legacy Wright, as between it and MicroPort, 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, as between it and legacy Wright, 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 legacy Wright from any resulting expenses or liabilities.

Product liability lawsuits could harm our business and adversely affect our operating results or results from discontinued operations and financial condition if adverse outcomes exceed our product liability insurance coverage.

The manufacture and sale of medical devices expose us to significant risk of product liability claims. We are currently defendants in a number of product liability matters, including those relating to the OrthoRecon business, which legacy Wright divested to MicroPort in 2014. Legacy Wright remains responsible, as between it and MicroPort, for claims associated with products sold before divesting the OrthoRecon business to MicroPort.

We have been named as a defendant, in some cases with multiple other defendants, in lawsuits in which it is alleged that certain defects in the design, manufacture, or labeling of certain metal-on-metal and other hip replacement products rendered the products defective. The pre-trial management of certain of the metal-on-metal claims was consolidated in the federal court system, in the United States District Court for the Northern District of Georgia under multi-district litigation (MDL) and certain other claims by the Judicial Counsel Coordinated Proceedings in state court in Los Angeles County, California (JCCP). Pursuant to previously disclosed settlement agreements with the Court-appointed attorneys representing plaintiffs in the MDL and JCCP, the MDL and JCCP were closed to new cases effective October 18, 2017 and October 31, 2017, respectively. Excluding claims resolved in the settlement agreements, as of December 29, 2019, there were approximately 205 unresolved metal-on-metal hip cases pending in the U.S. This number includes cases ineligible for settlement, cases which opted out of settlement, post-settlement cases, tolled cases, and existing state court cases that were not part of the MDL or JCCP. As of December 29, 2019, we estimate there also were pending approximately 27 non-U.S. metal-on metal cases, 9 unresolved U.S. modular neck cases alleging claims related to the release of metal ions and zero non-U.S. modular neck cases with such metal ion allegations, 22 unresolved U.S. titanium modular neck fracture cases, 50 unresolved non-U.S. titanium modular neck fracture cases, seven U.S. cobalt chrome modular neck fracture cases, and seven non-U.S. cobalt chrome modular neck fracture cases. We also estimate that as of December 29, 2019 there were approximately 514 non-revision claims either dismissed or awaiting dismissal from the MDL and JCCP pursuant to the terms of the settlement agreements. Although there is a limited time period during which dismissed non-revision claims may be refiled, it is presently unclear how many non-revision claimants will elect to do so. As of December 29, 2019, no dismissed non-revision case has been refiled. We believe we have data that supports the efficacy and safety of these hip products and have been vigorously defending these cases.

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Our material product liability litigation is discussed in Note 17 to our consolidated financial statements. These matters are subject to many uncertainties, and outcomes are not predictable. Regardless of the outcome of these matters, legal defenses are costly. We have incurred and expect to continue to incur substantial legal expenses in connection with the defense of these matters. We could incur significant liabilities associated with adverse outcomes that exceed our products liability insurance coverage, which could adversely affect our operating results or results from discontinued operations and financial condition. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, operating results or results from discontinued operations, and cash flows.

In the future, we may be subject to additional product liability claims. We also 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 result in decreased demand for our products, injury to our reputation, significant litigation and other costs, substantial monetary awards to or costly settlements with patients, product recalls, loss of revenue, and the inability to commercialize new products or product candidates, and otherwise have a material adverse effect on our business and reputation and on our ability to attract and retain customers.

Our settlement agreements with insurance carriers include broad releases of coverage for present and future claims of personal injury alleged to be caused by metal-on-metal hip components or the release of metal ions, which could result in inadequate insurance coverage to defend and resolve these claims.

On October 28, 2016, our WMT and WMG subsidiaries entered into a Settlement Agreement with a subgroup of three insurance carriers, Columbia Casualty Company (Columbia), St. Paul Surplus Lines Insurance Company and AXIS Surplus Lines Insurance Company (Three Settling Insurers), pursuant to which the Three Settling Insurers paid $60 million (in addition to $10 million previously paid) in full settlement of all potential liability of the Three Settling Insurers for metal ion and metal-on-metal hip claims, including but not limited to all claims in the MDL and the JCCP. As part of the settlement, the Three Settling Insurers repurchased their policies in the five policy years beginning with the 2007-2008 policy year.

On February 22, 2018, we and certain of our subsidiaries entered into a Settlement and Release Agreement (Second Insurance Settlement Agreement) with Federal Insurance Company, a subsidiary of Chubb Insurance (Federal), pursuant to which Federal has paid us a single lump sum payment of $15 million (in addition to $5 million previously paid by Federal). This amount is in full satisfaction of all potential liability of Federal relating to designated metal-on-metal hip claims, including but not limited to all claims asserted by our subsidiary, WMT, against Federal in the previously disclosed insurance coverage litigation.

On April 19, 2018, we and certain of our subsidiaries entered into a Settlement and Release Agreement (Third Insurance Settlement Agreement) with Catlin Underwriting Agencies Limited for and on behalf of Syndicate 2003 at Lloyd’s of London (Lloyd’s Syndicate 2003), pursuant to which Lloyd’s Syndicate 2003 has paid us a single lump sum payment of $1.9 million (in addition to $5 million previously paid by Lloyd’s Syndicate 2003). This amount is in full satisfaction of all potential liability of Lloyd’s Syndicate 2003 relating to designated metal-on-metal hip claims, including but not limited to all claims asserted by our subsidiary WMT against Lloyd’s Syndicate 2003 in the previously disclosed insurance coverage litigation.

On October 7, 2019, we entered into a settlement agreement with Lexington Insurance Company (Lexington) to settle all presently remaining disputes between us, pursuant to which, among other things, Lexington bought back the subject insurance policies for an aggregate of $15.5 million (in addition to $5 million previously paid by Lexington). This settlement is in full satisfaction of all potential liability of Lexington relating to metal-on-metal hip claims, including but not limited to all claims asserted by our subsidiary, WMT, against Lexington.

As a result of the above-mentioned settlement agreements, we have no further coverage from the Three Settling Insurers for present or future metal-on-metal or metal ion claims, and we have no further coverage from Federal, Lloyd’s Syndicate 2003 or Lexington for present or future metal-on-metal claims (as defined in the settlement agreements).

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 operating results 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.

MicroPort’s recall of a certain size of its cobalt chrome modular neck device due to alleged fractures could result in additional product liability claims against us. Although we have contested these claims, adverse outcomes could harm our business and adversely affect our results from discontinued operations and financial condition.

In August 2015, MicroPort announced the voluntary recall of a certain size of its PROFEMUR^® Long Cobalt Chrome Modular Neck devices manufactured from June 15, 2009 to July 22, 2015. Because MicroPort did not acquire the OrthoRecon business

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until January 2014, many of the recalled devices were sold by legacy Wright prior to the acquisition by MicroPort. Under the asset purchase agreement with MicroPort, legacy Wright retained responsibility, as between it and MicroPort, for claims for personal injury relating to sales of these products prior to the acquisition. We were not consulted by MicroPort in connection with its recall, and we were aware of only 14 lawsuits alleging personal injury related to cobalt chrome neck fractures (seven in the United States and seven outside the United States) as of December 29, 2019. However, if the number of product liability claims alleging personal injury from fractures of cobalt chrome modular necks we sold prior to the MicroPort transaction were to become significant, this could have an adverse effect on our results from discontinued operations and financial condition.

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 legacy Wright 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 legacy Wright sold before divestiture of the 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 the OrthoRecon business could increase, which could have an adverse effect on our financial condition and results from discontinued operations since legacy Wright retained responsibility, as between it and MicroPort, for these claims. Since the 2012 Stryker recall, we have from time to time been subject to product liability claims alleging corrosion of cobalt chrome modular necks. We presently have approximately nine such unresolved lawsuits pending in various U.S. courts and zero non-U.S. cases with such allegations.

Although we believe the use of corporate entities in our corporate structure will preclude creditors of any one particular entity within our corporate structure from reaching the assets of the other entities within our corporate structure not liable for the underlying claims of the one particular entity, there is a risk that, despite our corporate structure, creditors could be successful in piercing the corporate veil and reaching the assets of such other entities, which could have an adverse effect on us and our operating results, results from discontinued operations, and financial condition.

We maintain separate legal entities within our overall corporate structure. We believe our ring-fenced structure with separate legal entities should preclude any corporate veil-piercing, alter ego, control person, or other similar claims by creditors of any one particular entity within our corporate structure from reaching the assets of the other entities within our corporate structure to satisfy claims of the one particular entity. However, if a court were to disagree and allow a creditor to pierce the corporate veil and reach the assets of such other entities within our corporate structure, despite such entities not being liable for the underlying claims, it could have a material adverse effect on us and our operating results, results from discontinued operations, and financial condition.

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 claims and lawsuits involving patents or other intellectual property. Legal proceedings, 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 U.S. Patent and Trademark Office 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

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commercial protection. We could incur substantial costs in proceedings before the U.S. Patent and Trademark Office. 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. If we, or the other parties from whom we would license intellectual property, fail to obtain and maintain adequate patent or other intellectual property protection for intellectual property used in our products, or if any protection is reduced or eliminated, others could use the intellectual property used in our products, resulting in harm to our competitive business position.

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.

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 operating results.

We have a significant amount of indebtedness including, as of December 29, 2019, $814.6 million in aggregate principal with additional accrued interest under WMG’s 1.625% cash convertible senior notes due 2023 (2023 Notes), $395.0 million in aggregate principal with additional accrued interest under our 2.25% cash convertible senior notes due 2021 (2021 Notes) and $56.5 million in aggregate principal with additional accrued interest under WMG’s 2.00% cash convertible senior notes due 2020 (2020 Notes, together with the 2023 Notes and 2021 Notes, the Notes). The 2023 Notes and 2020 Notes are guaranteed by Wright Medical Group N.V. In addition, under our amended and restated credit, security and guaranty agreement (as amended, Credit Agreement) with Midcap Funding IV Trust and the additional lenders from time to time party thereto (Lenders), WMG and certain of our other wholly-owned U.S. subsidiaries have access to a $175 million senior secured asset based line of credit, subject to the satisfaction of a borrowing base requirement, and which may be increased by up to $75 million upon our request, subject to the consent of the Lenders (ABL Facility), as well as a $55 million term loan facility (Term Loan Facility), an initial $20 million of which was funded at closing of this facility in May 2018 and the remaining $35 million of which is available to be borrowed until May 7, 2021. As of December 29, 2019, $20.7 million in aggregate principal plus additional accrued interest was outstanding under the ABL Facility and $20.0 million in aggregate principal plus additional accrued interest was outstanding under the Term Loan Facility. As of December 29, 2019, our total indebtedness under the Notes and Credit Agreement was $1.3 billion, excluding accrued interest, unamortized debt discount, and unamortized deferred financing fees.

Our ability to make payments on, and to refinance, our indebtedness, including the Notes and amounts borrowed under the ABL Facility and Term Loan Facility, and our ability to fund planned capital expenditures, contractual cash obligations, 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 Notes, on their respective maturity dates, on the maturity date of the Credit Agreement or in connection with a transaction involving us that constitutes a fundamental change under the respective indenture governing the Notes or under the Credit Agreement, or to fund our liquidity needs, we may be forced to refinance all or a portion of our indebtedness on or before the maturity dates 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 Notes or under the Credit Agreement, the holders and/or the trustee under the indentures governing the Notes or the Lenders may accelerate payment obligations under the Notes and/or the amounts borrowed under the Credit Agreement, respectfully, which could have a material adverse effect on our business, financial condition, and operating results. In addition, the Notes and Credit Agreement contain cross default provisions. 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 operating results.

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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;

• restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;

• 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, contractual obligations, research and development efforts, acquisitions, debt service requirements, execution of our business strategy, or other purposes.

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

In addition, under our Notes, we are required to offer to repurchase the Notes upon the occurrence of a fundamental change, which would include consummation of the Offer. We also expect that the Offer will trigger certain conversion rights under each of the indentures governing the Notes prior to the closing of the proposed Acquisition.

With respect to the 2021 Notes which have been issued by Wright Medical Group N.V., we are dependent on the cash flow of, and dividends and distributions to us from, our subsidiaries in order to service our indebtedness under these Notes. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to any indebtedness of ours or to make any funds available therefor, except for those subsidiaries that have guaranteed our obligations under our outstanding indebtedness. The ability of our subsidiaries to pay any dividends and distributions will be subject to, among other things, the terms of any debt instruments of our subsidiaries then in effect as well as among other things, the availability of profits or funds and requirements of applicable laws, including surplus, solvency and other limits imposed on the ability of companies to pay dividends. There can be no assurance that our subsidiaries will generate cash flow sufficient to pay dividends or distributions to us that enable us to pay interest or principal on our existing indebtedness.

A failure to comply with the covenants and other provisions of the indentures governing the Notes or the Credit Agreement could result in events of default under such indentures or Credit Agreement, especially in light of the cross default provisions, which could require the immediate repayment of our outstanding indebtedness. If we are at any time unable to generate sufficient cash flows from operations to service our indebtedness when payment is due, we may be required to attempt to renegotiate the terms of the indentures, the Credit Agreement and other agreements relating to the indebtedness, seek to refinance all or a portion of the indebtedness, or obtain additional financing. There can be no assurance that we will be able to successfully renegotiate such terms, that any such refinancing would be possible, or that any additional financing could be obtained on terms that are favorable or acceptable to us.

The terms of the Credit Agreement could limit our ability to conduct our business, take advantage of business opportunities and respond to changing business, market, and economic conditions.

Our Credit Agreement includes a number of significant financial and operating restrictions. For example, the Credit Agreement contains financial covenants that, among other things, require us to maintain minimum liquidity and achieve certain revenue thresholds and contains provisions that restrict our ability, subject to specified exceptions, to, among other things:

• make loans and investments, including acquisitions and transactions with affiliates;

• create liens or other encumbrances on our assets;

• dispose of assets;

• enter into contingent obligations;

• engage in mergers or consolidations; and

• pay dividends.

A breach of any of these covenants could result in a default under the Credit Agreement, which could trigger acceleration of indebtedness under the ABL Facility and the Term Loan Facility. In addition, these provisions may limit our ability to conduct our business, take advantage of business opportunities, and respond to changing business, market, and economic conditions. In addition, they may place us at a competitive disadvantage relative to other companies that may be subject to fewer, if any, restrictions or may otherwise adversely affect our business. Certain transactions that we may view as important opportunities, such as significant acquisitions, may be subject to the consent of the Lenders, which consent may be withheld or granted subject to conditions specified at the time that may affect the attractiveness or viability of the transaction. The Lenders may accelerate payment of the amounts borrowed under the Credit Agreement upon the occurrence of a fundamental change, which would include consummation of the Offer. Under the terms of the Purchase Agreement with Stryker, we must obtain a waiver from the Lenders of any default under

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the Credit Agreement in connection with the proposed Acquisition or repay all amounts owed under the Credit Agreement and terminate the Credit Agreement.

The Credit Agreement involves additional risks that may adversely affect our liquidity, results of operations, and financial condition.

Availability under the ABL Facility is based on the amount of certain eligible receivables, eligible equipment, eligible inventory and eligible surgical instrumentation less specified reserves as described in Note 10 to our consolidated financial statements. As a result, our access to credit under the ABL Facility is potentially subject to fluctuations depending on the value of the eligible assets in the borrowing base as of any valuation date. Our inability to borrow additional amounts under the ABL Facility may adversely affect our liquidity, results of operations, and financial condition. In addition, all payments on our accounts receivable are required under the Credit Agreement to be directed to deposit accounts under the control of the ABL Facility agent for application to amounts outstanding under the ABL Facility. The Lenders may exercise control over such amounts when they are entitled to exercise default remedies, which may adversely affect our ability to fund our operations.

Our outstanding indebtedness under the ABL Facility and Term Loan Facility bears interest at variable rates, which subjects us to interest rate risk and could increase the cost of servicing our indebtedness. The impact of increases in interest rates could be more significant for us than it would be for some other companies because of our indebtedness, thereby affecting our profitability. In the event of a default under any of our other material debt instruments, the lenders under the ABL Facility and Term Loan Facility may terminate their commitments to lend additional money and declare all amounts outstanding thereunder to be immediately due and payable. Additionally, a default under the Credit Agreement could result in a cross-default under the Notes. While an event of default is continuing under the Credit Agreement, the lenders thereunder may elect to increase the rates at which interest accrues. Subject to certain exceptions, amounts outstanding under the Credit Agreement are secured by a senior first priority security interest in substantially all existing and after-acquired assets of our company and borrower. Accordingly, under certain circumstances, the Lenders under the Credit Agreement could seek to enforce security interests in our assets securing our indebtedness under the Credit Agreement, including restricting our access to collections on our accounts receivable. Any acceleration of amounts due under our Credit Agreement or the exercise by the lenders thereto of their rights under the security documents, would have a material adverse effect on us. In addition, the ABL Facility is subject to market deterioration or other factors that could jeopardize the counterparty obligations of one or more of the Lenders, which could have an adverse effect on our business if we are not able to replace such ABL Facility and Term Loan Facility or find other sources of liquidity on acceptable terms.

Hedge and warrant transactions entered into in connection with the issuance of our Notes may affect the value of our ordinary shares.

In connection with the issuance of the Notes, we entered into hedge transactions with various financial institutions with the objective of reducing the potential dilutive effect of issuing our ordinary shares upon conversion of the Notes and the potential cash outlay from the cash conversion of the Notes. We also entered into separate warrant transactions with the same financial institutions.

In connection with the hedge and warrant transactions associated with the Notes, these financial institutions purchased our ordinary shares in secondary market transactions and entered into various over-the-counter derivative transactions with respect to our ordinary shares. These entities or their affiliates are likely to modify their hedge positions from time to time prior to conversion or maturity of the Notes by purchasing and selling our ordinary shares, 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 ordinary shares and, as a result, the number and value of the ordinary shares holders will receive upon conversion of the Notes. In addition, subject to movement in the price of our ordinary shares, 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. The strike prices of the Notes hedges and exercise prices of the warrants are subject to adjustment upon the occurrence of certain events, including in connection with the Offer. 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 the Notes or the Credit Agreement that could reduce the market value or liquidity of our ordinary shares.

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

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We may need additional financing to satisfy our anticipated future liquidity requirements or to make opportunistic acquisitions, which financing may not be available on favorable terms at the time it is needed and which could reduce our operational and strategic flexibility.

Although it is difficult for us to predict our future liquidity requirements, we believe that our cash and cash equivalents balance of approximately $166.9 million, the $154.3 million in availability under the ABL Facility and the $35 million available under the Term Loan Facility, as of December 29, 2019, will be sufficient for the next 12 months to fund our working capital requirements and operations, permit anticipated capital expenditures in 2020 of approximately $80.0 million, pay retained metal-on-metal product and other liabilities of the OrthoRecon business, including without limitation amounts under the MSA and Second Settlement Agreements, net of insurance recoveries, fund contingent consideration, and meet our other anticipated contractual cash obligations in 2020.

In the event that we would require additional working capital to fund future operations, we could seek to acquire that through increasing the revolving line of credit under the ABL Facility by up to an additional $75.0 million, borrowing the remaining $35.0 million under the Term Loan Facility or additional equity or debt financing arrangements which may or may not be available on favorable terms at such time. If we raise additional funds by issuing equity securities, our shareholders may experience dilution. Additional debt financing, if available, may involve additional covenants restricting our operations or our ability to incur additional debt, in addition to those under our existing indentures and the Credit Agreement. Any additional debt financing or additional equity that we raise may contain terms that are not favorable to us or our shareholders. If we do not have, or are not able to obtain, sufficient funds, we may not be able to develop or enhance our products, execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements, or we may have to delay development or commercialization of our products or scale back our operations.

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, which could adversely affect our sales and operating results.

We rely on a limited number of suppliers for certain of the components and materials 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 rely 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 extremities products, one supplier for our pyrocarbon 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 April 2016, we entered into a commercial supply agreement with FUJIFILM Diosynth Biotechnologies U.S.A., Inc. pursuant to which Fujifilm agreed to manufacture and sell to us and we agreed to purchase recombinant human platelet-derived growth factor (rhPDGF-BB) for use in AUGMENT^® Bone Graft. The agreement reflects the culmination of a technology transfer from our former supplier to Fujifilm which began in December 2013 when we were notified that our former supplier was exiting the rhPDGF-BB business. Pursuant to our supply agreement with Fujifilm, commercial production of rhPDGF-BB is expected to begin in 2020. Although we believe that our current supply of rhPDGF-BB from our former supplier should be sufficient to last until after rhPDGF-BB becomes available under the new agreement, no assurance can be provided that it will be sufficient. In addition, since Fujifilm has not previously manufactured rhPDGF-BB, its ability to do so and perform its obligations under the agreement are not yet fully proven.

Our biologic product line includes one current supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products. We had previously contracted with two suppliers for this product, but ended our relationship with one of the suppliers at the end of 2019. We can continue selling the remaining inventory from this supplier until the inventory is depleted. In addition, certain biologic products depend upon a single supplier as our source for demineralized bone matrix (DBM) and cancellous bone matrix (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. We rely on 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 and a single supplier for the calcium sulfate used in our PRO-DENSE™ Injectable Regenerative Graft (PRO-DENSE™). We cannot be sure that our supply of these single source materials will continue to be available at current levels or will be sufficient to meet our needs, or that future suppliers of such materials will be free from FDA regulatory action impacting their sale of such materials. As there are a small number of suppliers, if we cannot continue to obtain such materials from our current sources in volumes sufficient to meet our needs, we may not be able to locate replacement sources of such materials 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

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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 incur significant expenditures of resources to maintain relatively high levels of instruments, and we historically have had a high level of inventory, which can adversely affect our operating results and reduce our cash flows.

The nature of our business requires us to maintain a certain level of instruments since in order to market effectively we often must maintain and bring our customers instrument kits. In addition, we historically have maintained extra inventory in the form of back-up products and products of different sizes in order to ensure that our customers have the right products when they need them. This practice has resulted in us maintaining a relatively high level of inventory, which can adversely affect our operating results and reduce our cash flows. In addition, to the extent that a substantial portion of our inventory becomes obsolete, it could have a material adverse effect on our earnings and cash flows due to the resulting costs associated with inventory impairment charges and costs required to replace such inventory.

From time to time, we may experience inventory shortages of some of our higher demand products, which could adversely affect our net sales and operating results.

From time to time, internal or external supply constraints may create temporary shortages of certain of our higher demand products. While these shortages are likely to be temporary and are usually resolved, no assurance can be provided that such inventory shortages will not occur in the future, and if they occur, would not adversely affect our future net sales and operating results.

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 and subject to rapid and profound technological change. Our success depends, in part, on our ability to maintain a competitive position in the development of technologies and products for use by our customers. Many of the companies developing or marketing competitive products enjoy several competitive advantages over us, including greater financial and human resources for product development and sales and marketing; greater name recognition; established relationships with surgeons, hospitals and third-party payors; broader product lines and the ability to offer rebates or bundle products to offer greater discounts or incentives to gain a competitive advantage; and established sales and marketing and distribution networks. Some of our competitors have indicated an increased focus on the extremities and biologics markets, which are our primary strategic focus. Our competitors may develop and patent processes or products earlier than us, obtain regulatory clearances or approvals for competing products more rapidly than us, develop more effective or less expensive products or technologies that render our technology or products obsolete or non-competitive or acquire technologies and technology licenses complementary to our products or advantageous to our business, which could adversely affect our business and operating results. Not all of our sales and other personnel have non-compete agreements. We also compete with other organizations in recruiting and retaining qualified scientific, sales, and management personnel. If our competitors are more successful than us in these matters, we may be unable to compete successfully against our existing or future competitors. In addition, the orthopaedic industry has been subject to increasing consolidation recently and over the last few years. Consolidation in our industry not involving our company could result in existing competitors increasing their market share through business combinations and result in stronger competitors, which could have a material adverse effect on our business, financial condition, and operating results. We may be unable to compete successfully in an increasingly consolidated industry and cannot predict with certainty how industry consolidation will affect our competitors or us.

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 sales 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. Moreover, research and development efforts may require a substantial investment of time and resources before we are adequately able to determine the commercial viability of a new product, technology, material, or innovation. Demand for our products also could change in ways we may not anticipate due to evolving customer needs, changing demographics, slow industry growth rates, declines in the extremities and biologics market, the introduction of new products and technologies, evolving surgical philosophies, and evolving industry standards, among others. 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. Our new products and technologies also could reduce demand for our existing products or render them obsolete and thus adversely affect sales of our existing products and lead to increased expense for excess and obsolete inventory.

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Our business plan relies on certain assumptions about the markets for our products, which, if incorrect, may adversely affect our business and operating results.

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 extremities and biologics 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.

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 our 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 United States and abroad. U.S. and foreign regulations govern the testing, marketing, registration and sale of 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 expense 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 governmental authorities:

• imposing fines and penalties on us;

• preventing us from manufacturing or selling our products;

• bringing civil or criminal charges against us and our officers and employees;

• 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, such 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 and our directors, officers and employees, 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 United States, exclusion from participation in government healthcare programs. Greater scrutiny of marketing practices in our 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 U.S. 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. Our failure to comply with the European Medical Devices Directive could result in our loss of CE mark certification which would harm our business. In 2017, the European Commission adopted the Medical Devices Regulation, which will replace the European Medical Devices Directive and will be implemented beginning in May 2020. The Medical Devices Regulation will impose additional and/or more stringent approval requirements on medical device manufacturers. These new rules and procedures may result in increased regulatory oversight of any future devices that we may develop and may increase the costs, time and requirements that need to be met in order to maintain or place devices in the member countries of the European Union. In addition, we anticipate having to expend significant time, costs and resources to comply with the new European Medical Devices Directive.

Failure to comply with the U.S. Foreign Corrupt Practices Act or other anticorruption laws could subject us to, among other things, penalties and legal expenses that could harm our reputation and have a material adverse effect on our business, operating results and financial condition.

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 laws, including the U.S. Foreign Corrupt Practices Act (FCPA). Our U.S. operations, including those of our U.S. operating subsidiaries, are subject to the FCPA, which generally prohibits covered entities and their intermediaries from engaging in bribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business or other benefits. In addition, the FCPA imposes accounting standards and requirements on publicly-

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traded U.S. corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made. We also are subject to similar anti-corruption legislation implemented in Europe under the Organization for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. We either operate or plan to operate in a number of jurisdictions that pose a high risk of potential violations of the FCPA and other anti-corruption laws, and we utilize a number of third-party sales representatives for whose actions we could be held liable under the FCPA. We inform our personnel and third-party sales representatives of the requirements of the FCPA and other anti-corruption laws, including, but not limited to their reporting requirements. We also have developed and will continue to develop and implement systems for formalizing contracting processes, performing due diligence on agents, and improving our recordkeeping and auditing practices regarding these regulations. However, there is no guarantee that our employees, third-party sales representatives, or other agents have not or will not engage in conduct undetected by our processes and for which we might be held responsible under the FCPA or other anti-corruption laws. Failure to comply with the FCPA or other anti-corruption laws could subject us to, among other things, penalties and legal expenses that could harm our reputation and have a material adverse effect on our business, financial condition, and operating results.

If our employees, third-party sales representatives, or other agents are found to have engaged in such practices, we could suffer severe penalties, including criminal and civil penalties, disgorgement, and other remedial measures, including further changes or enhancements to our procedures, policies and controls, as well as potential personnel changes and disciplinary actions. 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 that 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. Any investigation of any potential violations of the FCPA or other anti-corruption laws by U.S. or foreign authorities could have a material adverse effect on our business, operating results, and financial condition.

Certain foreign companies, including some of our competitors, are not subject to prohibitions as strict as those under the FCPA or, even if subjected to strict prohibitions, such prohibitions may be laxly enforced in practice. If our competitors engage in corruption, extortion, bribery, pay-offs, theft, or other fraudulent practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business, or from government officials, who might give them priority in obtaining new licenses, which would put us at a disadvantage.

Allegations of wrongdoing by the United States Department of Justice and Office of the Inspector General of the United States Department of Health and Human Services 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 United States Attorney’s Office for the District of New Jersey and the publicity surrounding legacy Wright’s settlement with the United States Department of Justice and OIG-HHS, and amendments to the Deferred Prosecution Agreement and Corporate Integrity Agreement (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 Deferred Prosecution Agreement and the CIA. In August 2012, legacy Wright received a subpoena from the United States Attorney’s Office for the Western District of Tennessee requesting records and documentation relating to the 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 U.S. Federal False Claims Act, based on new theories or allegations arising from the allegations made by the United States Attorney’s Office for the District of New Jersey. The costs of defending or resolving any such investigations or proceedings could have a material adverse effect on our financial condition, operating results and cash flows.

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 PMA 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

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products and we fail to obtain such approvals or clearances or fail 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.

The European Union and many of its world markets rely on the CE Mark as the path to market our products. Our loss of the CE Mark would adversely affect our business and operating results.

In order to market our devices in the member countries of the European Union (EU), we are required to comply with the European Medical Devices Directive, which requires our devices to meet specific quality program criteria and technical documentation standards, before obtaining the CE Mark certification that is required to market our products in the EU. Additionally, 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 healthcare provider 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. Our failure to comply with the European Medical Devices Directive could result in our failure to obtain CE Mark certification for new devices or our loss of existing device CE mark certification, either of which could have a material adverse effect on us and our business.

In March 2017, the European Commission adopted the Medical Devices Regulation, which will replace the European Medical Devices Directive and will be implemented beginning in May 2020. The Medical Devices Regulation will impose additional and/or more stringent approval requirements on medical device manufacturers. These new rules and procedures may result in increased regulatory oversight of any future devices that we may develop and may increase the costs, time and requirements that need to be met in order to maintain or place devices in the member countries of the European Union. Additionally, we anticipate having to expend significant time, costs and resources to comply with the Medical Devices Regulation.

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 a 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 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.

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 also will 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.

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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.

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

We rely extensively on information technology (IT) 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, and providing data security and other processes necessary to manage our business. In addition, we continue to grow in part through strategic business combinations and acquisitions. As a result of these transactions, we may face risks due to implementation, modification, or remediation of the IT controls, procedures, and policies at the acquired businesses. We continue to consolidate and integrate the number of systems we operate into one enterprise resource planning (ERP) system and plan to continue to otherwise upgrade and expand our IT system capabilities. We may experience difficulties in our business operations, or difficulties in operating our business under the ERP, either of which could disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain, and otherwise adequately service our customers, and lead to increased costs and other difficulties. In the event we experience significant disruptions as a result of the ERP implementation or otherwise, we may not be able to fix our systems in an efficient and timely manner. Accordingly, such events may disrupt or reduce the efficiency of our entire operations and have a material adverse effect on our operating results and cash flows.

In addition, 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. Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cybersecurity attacks pose a risk to the security of our systems and networks and those of our customers, suppliers and third-party service providers, and the confidentiality, availability and integrity of any underlying information and data. We have programs, processes and technologies in place to prevent, detect, contain, respond to and mitigate security related threats and potential incidents. We regularly undertake improvements to our IT systems in order to minimize vulnerabilities, in accordance with industry and regulatory standards. Because the techniques used to obtain unauthorized access change frequently and can be difficult to detect, anticipating, identifying or preventing these intrusions or mitigating them if and when they occur, may be challenging. Our IT systems require an ongoing commitment of significant resources to maintain, protect and enhance existing systems and develop new systems to keep pace with continuing changes in technology and regulatory standards. We also outsource certain elements of our IT systems to third parties that, as a result of this outsourcing, could have access to certain confidential information and whose systems may also be vulnerable to these types of attacks or disruptions. There can be no assurance that our protective measures or those of these third parties will prevent or detect security breaches that could have a significant impact on our business, reputation, operating results and financial condition. The failure of these systems to operate or integrate effectively with other internal, customer, supplier or third-party service provider systems and to protect the underlying IT system and data integrity, including from cyber-attacks, intrusions or other breaches or unauthorized access of these systems, or any failure by us to remediate any such attacks or breaches, may also result in damage to our reputation or competitiveness, delays in product fulfillment and reduced efficiency of our operations, and could require significant capital investments to remediate any such failure, problem or breach, all of which could adversely affect our business, operating results and financial condition. We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems.

Our inability to maintain effective internal controls could cause investors to lose confidence in our reported financial information.

Effective internal controls are necessary for us to provide reliable and accurate financial reports and to effectively prevent fraud. The integration of combined or acquired businesses is likely to result in our systems and controls becoming increasingly complex and more difficult to manage. We devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002. However, we cannot be certain that these measures will ensure that we design, implement, and maintain adequate control over our financial processes and reporting in the future, especially in light of anticipated changes in accounting standards and in the context of acquisitions of other businesses.

If we fail to maintain the adequacy of our internal control over financial reporting or our disclosure controls and procedures, we could be subjected to regulatory scrutiny, civil or criminal penalties or shareholder litigation, the defense of any of which could cause the diversion of management’s attention and resources, we could incur significant legal and other expenses, and we could be required to pay damages to settle such actions if any such actions were not resolved in our favor. Continued or future failure to maintain adequate internal control over financial reporting could also result in financial statements that do not accurately reflect our financial condition or results of operations. There can be no assurance that we will not identify any significant deficiencies or material weaknesses that will impair our ability to report our financial condition and results of operations accurately or on a

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timely basis. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary shares and our access to capital.

We operate in markets outside the United States that are subject to political, economic, and social instability and expose us to additional risks.

Operations in countries outside of the United States accounted for approximately 23% of our net sales for our fiscal year ended December 29, 2019. Our operations outside of the United States are accompanied by certain financial and other risks. We intend to continue to pursue growth opportunities in sales outside the United States, especially in emerging markets, which could expose us to greater risks associated with international sales operations. 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 U.S. and foreign governmental controls or regulations on orthopaedic implants and biologic products;

• withdrawal from or revision to international trade policies or agreements and the imposition or increases in import and export licensing and other compliance requirements, customs duties and tariffs, import and export quotas and other trade restrictions, license obligations, and other non-tariff barriers to trade;

• unexpected changes in tariffs, trade barriers and regulatory requirements;

• the imposition of U.S. or international sanctions against a country, company, person, or entity with whom we do business that would restrict or prohibit continued business with that country, company, person, or entity;

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

• economic weakness, including inflation, or political instability in particular foreign economies and markets;

• the imposition of restrictions on the activities of foreign agents, representatives, and distributors;

• scrutiny of foreign tax authorities, which could result in significant fines, penalties, and additional taxes being imposed upon us;

• difficulties in managing and staffing international operations and increases in infrastructure costs including legal, tax, accounting, and information technology;

• 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 products to directly absorb medical costs or that may necessitate our reducing selling prices for our products;

• unexpected changes in foreign regulatory requirements;

• differing local product preferences and product requirements;

• changes in tariffs and other trade restrictions, particularly related to the exportation of our biologic products, and including the current U.S. trade dispute with China;

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

• difficulties in protecting, enforcing and defending intellectual property rights;

• foreign currency exchange controls that might prevent us from repatriating cash earned in countries outside the Netherlands;

• longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;

• transportation delays and interruptions;

• national and international conflicts, including foreign policy changes, acts of war or terrorist acts;

• complex data privacy requirements and labor relations laws; and

• exposure to different legal and political standards due to our conducting business in approximately 50 countries.

In addition, in June 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union, commonly referred to as “Brexit.” In March 2017, the United Kingdom formally gave notice of its intent to withdraw from the European Union. Serving this notice began a more than two-year period during which the United Kingdom and the European Union negotiated the terms of the United Kingdom’s withdrawal from the European Union and future terms of the United Kingdom’s relationship with the European Union, including the terms of trade between the United Kingdom and the European Union. Unable to reach an agreement or further extend the deadline for withdrawal, on January 31, 2020, the United Kingdom withdrew from the European Union without an agreement in place. It is possible that, following this withdrawal, there will be greater restrictions on the movement of goods and people between the United Kingdom and European Union countries and increased regulatory complexities, which could affect our ability to sell our products in certain European Union countries. The withdrawal could also adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign exchange markets, including volatility in the value of the British pound and Euro. We do not know to what extent these changes will impact our business, especially considering we have a sales office in the United Kingdom and in 2019, approximately 90% of our net sales denominated in foreign currencies were derived from European Union countries. Any of these

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effects of Brexit, and others that we cannot anticipate, could adversely affect our business, operations and financial results. In addition, other European countries may seek to conduct referenda with respect to continuing membership with the European Union. At this time, it is not certain what steps may be taken to facilitate the United Kingdom’s exit from the European Union, which has created significant uncertainty about the future relationship between the United Kingdom and the European Union. This development has had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets. Given the lack of comparable precedent, it is unclear how the withdrawal of the United Kingdom from the European Union will impact our business, financial condition and operating results.

Since we conduct operations through U.S. operating subsidiaries, not only are we subject to the laws of non-U.S. jurisdictions, but we also are 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.

The costs of complying with the requirements of the EU-wide General Data Protection Regulation and the potential liability associated with failure to do so could materially adversely affect our business and results of operations.

In May 2018, the EU-wide General Data Protection Regulation (GDPR) became effective, replacing the data protection laws of each EU member state. The GDPR implemented more stringent operational requirements for personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, increased requirements pertaining to health data and pseudonymised (i.e., key-coded) data, mandatory data breach notification requirements and higher standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities. Any failure or perceived failure by us to comply with privacy or security laws, policies, legal obligations or industry standards or any security incident that results in the unauthorized release or transfer of personally identifiable information may result in governmental enforcement actions and investigations including by European Data Protection Authorities, fines and penalties, litigation and/or adverse publicity, and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business. Such failures could have a material adverse effect on our operating results and financial condition. If the third parties we work with violate applicable laws, contractual obligations or suffer a security breach, such violations may also put us in breach of our obligations under privacy laws and regulations and/or could in turn have a material adverse effect on our business. In addition, we have spent and expect to continue to expend significant time, costs and resources to comply with the GDPR.

Worldwide economic instability could adversely affect our net sales, financial condition, or results of operations.

The health of the global economy, and the credit markets and the financial services industry in particular, affects our business and operating results. While the health of the credit markets and the financial services industry appears to have stabilized, there is no assurance that it will remain stable, and there can be no assurance that there will not be deterioration in the global economy. If the credit markets are not favorable, we may be unable to raise additional financing when needed or on favorable terms. Our customers may experience financial difficulties or be unable to borrow money to fund their operations which may adversely impact their ability to purchase our products or to pay for our products on a timely basis, if at all. In addition, any economic crisis could also adversely impact our suppliers’ ability to provide us with materials and components, either of which may negatively impact our business. As with our customers and vendors, these economic conditions make it more difficult for us to accurately forecast and plan our future business activities. Further, there are concerns for the overall stability and suitability of the Euro as a single currency, given the economic and political challenges facing individual Eurozone countries and Brexit. Continuing deterioration in the creditworthiness of the Eurozone countries, the withdrawal of one or more member countries from the European Union, or the failure of the Euro as a common European currency could adversely affect our sales, financial condition, or operating results.

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. In addition, some of our trade receivables are with national health care systems in many countries (including, but not limited to, Greece, Ireland, Portugal, and Spain). Repayment of these receivables is dependent upon the financial stability of the economies of those countries. In light of these global economic fluctuations, we continue to monitor the creditworthiness of customers located outside of the United States. Failure to receive payment of all or a significant portion of these receivables could adversely affect our operating results.

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 United States, the regulatory relationship), there is a risk that if our relationship with the distributor ends, our relationship with the customer

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will be lost (and, in certain countries outside the United States, 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. Changes to or turnover within our independent distributor organization or transitions to direct selling models also could adversely affect our business if these transitions are not managed effectively. Additionally, the terms of our distributor agreements or local laws could make it difficult for us to exit a distribution arrangement we no longer find favorable. Further, the legacy independent distributors and sales agents of companies we have acquired may decide not to renew or may decide to seek to terminate, change and/or renegotiate their relationships with us. A loss of a significant number of our distributors or agents could have a material adverse effect on our business and results of operations.

In addition, our success is partially dependent upon our ability to retain and motivate our distributors, independent sales agencies, and their representatives to sell our products in certain territories. They may not be successful in implementing our marketing plans. Some of our distributors and independent sales agencies do not sell our products exclusively and may offer similar products from other orthopaedic companies. Our distributors and independent sales agencies may terminate their contracts with us, may devote insufficient sales efforts to our products, or may focus their sales efforts on other products that produce greater commissions for them, which could have an adverse effect on our operations and operating results.

The results of our clinical trials may not support our product claims or may result in the discovery of adverse side effects.

Our 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 United States and abroad. We are currently conducting post-market clinical studies of some of our products to gather additional information about these products’ safety, efficacy, or optimal use. In the future, we may conduct additional clinical trials to support approval of new products. Clinical studies must be conducted in compliance with FDA regulations or the FDA may take enforcement action. The data collected from these clinical trials may ultimately be used to support market approval or clearance for these products or gather additional information about approved or cleared products. Even if our clinical trials are completed as planned, we cannot be certain that their results will support our product claims or that the FDA or foreign authorities will agree with our conclusions regarding them. Success in pre-clinical testing and early clinical trials does not always ensure that later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials and studies. The clinical trial process may fail to demonstrate that our products are safe and effective for the proposed indicated uses, which could cause us to abandon a product and may delay development of others. Any delay or termination of our clinical trials will delay the filing of our product submissions and, ultimately, our ability to commercialize our products and generate revenue. It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product’s profile.

If the third parties on which we rely to conduct our clinical trials and to assist us with clinical development do not perform as contractually required or expected, we may not be able to obtain, or in some cases, maintain regulatory clearance or approval for or commercialize our products.

We often must rely on third parties, such as contract research organizations, medical institutions, clinical investigators, and contract laboratories to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to their failure to adhere to our clinical protocols or regulatory requirements, or for other reasons, our pre-clinical and clinical development activities or clinical trials may be extended, delayed, suspended, or terminated, and we may not be able to obtain or, in some cases maintain, regulatory clearance or approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results, and prospects may be adversely affected. Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.

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 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.

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 surgeons 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

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product lines as well as providing high quality training on those products. If we are unable to enter into and maintain these relationships, our ability to develop and market new and improved products and train on the use of those products could decrease, and our future operating results could be unfavorably affected. In addition, it is possible that U.S. federal and state and international laws requiring us to disclose payments or other transfers of value, such as free gifts or meals, to surgeons and other healthcare providers could have a chilling effect on these relationships with individuals or entities that may, among other things, want to avoid public scrutiny of their financial relationships with us.

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 U.S. 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 elect not to purchase our products if they do not receive adequate reimbursement from third-party payors for procedures using our products. In light of healthcare reform measures, payors continue to review their coverage policies for existing and new therapies and may deny or restrict coverage for treatments that include the use of our products.

In addition, some healthcare providers in the United States have adopted or are considering new payment models such as bundled payment methodologies and/or managed care systems in which the providers contract to provide comprehensive healthcare on a fixed cost per person basis or on other “pay-for-performance” bases where reimbursement may depend on cost savings achieved. Healthcare providers and/or payors 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 methodologies, policies or healthcare cost containment initiatives that limit or restrict reimbursement for our products may cause our sales to decline or could impact the prices we are able to charge for our products.

If adequate levels of reimbursement from third-party payors outside of the United States are not obtained, international sales of our products may decline. Outside of the United States, 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 South 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 healthcare reform legislation.

Comprehensive healthcare reform legislation has significantly and adversely impacted our business, and uncertainty regarding future healthcare reform legislation could further adversely impact our business. For example, the Affordable Care Act (ACA) imposed a 2.3% excise tax on U.S. sales of medical devices, which tax was repealed effective as of December 31, 2019 following the end of the moratorium that had been imposed. On December 14, 2018, the United States District Court for the Northern District of Texas issued a ruling declaring that, because the individual mandate is an essential and inseverable feature of the ACA and was repealed by Congress as part of the Tax Cuts and Jobs Act of 2017, the ACA is unconstitutional in its entirety. The ruling is subject to appeal, and the ACA will remain in effect pending the appeal. It is unclear how this decision, subsequent appeals, and other efforts to repeal and replace the ACA will impact the ACA and our business. The ACA 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 would be able to share savings that result from cost control efforts. Many of these provisions were not yet fully implemented at the time of the District Court’s ruling, and their impact on our business cannot be fully known until and unless they are implemented. If the ACA is ultimately upheld, these and other provisions of the law could adversely impact our business. In addition, the constitutionality of the ACA may not be affirmed on appeal or it could be replaced by new healthcare reform legislation. A repeal of the ACA or any replacement or material modification of the ACA could cause significant uncertainty in the U.S. healthcare market, could increase our costs, decrease our sales or inhibit our ability to sell our products. Various healthcare reform proposals have also emerged at the state level. We cannot predict with certainty the impact that these U.S. 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 products, reduce medical procedure volumes, and adversely affect our business and operating results, possibly materially.

We are also subject to certain data privacy and security regulation by both the U.S. federal government and the states in which we conduct our business. There is an increasing trend for more criminal prosecutions and compliance enforcement activities for noncompliance with HIPAA as well as for data breaches involving protected health information (PHI). In the ordinary course of

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our business, we may receive PHI. If we are unable to comply with HIPAA or experience a data breach involving PHI, we could be subject to criminal and civil sanctions.

If we cannot retain our key personnel, we may be unable to manage and operate our business successfully and meet our strategic objectives.

Our future success depends, in part, upon our ability to retain and motivate 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. Key personnel may depart because of difficulties with change or a desire not to remain with our company, especially in the case of employees of acquired companies. Any unanticipated loss or interruption of services of our management team and our key personnel could significantly reduce our ability to meet our strategic objectives because it may not be possible for us to find appropriate replacement personnel should the need arise. 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 or non-solicitation 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 adversely affects our manufacturing facilities or distribution channels, we could be unable to manufacture or distribute our products for a substantial amount of time, and our sales could be disrupted.

We principally rely on five manufacturing facilities, one of which is in France, one of which is in Ireland, two of which are in Tennessee, and one of which is in Georgia. The facilities 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. For example, the machinery associated with our manufacturing of pyrocarbon in one of our French facilities is highly specialized and would take substantial lead-time and resources to replace. We also maintain a facility in Bloomington, Minnesota, a facility in Arlington, Tennessee, and a warehouse in Montbonnot, France, which contain large amounts of our inventory. Our facilities, warehouses, or distribution channels may be affected by natural or man-made disasters. For example, in the event of a natural or man-made disaster at one of our warehouses, we may lose substantial amounts of inventory that would be difficult to replace. Our manufacturing facility in Arlington, Tennessee is located near the New Madrid fault line. In the event our facilities, warehouses, or distribution channels are affected by a disaster, we would be forced to rely on, among others, third-party manufacturers and alternative warehouse space and distribution channels, which may or may not be available, and our sales could decline. Although we believe we have adequate disaster recovery plans in place and possess adequate insurance for damage to our property and the disruption of our business from casualties, such plans and insurance may not cover such disasters or be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms or at all.

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

Because a majority of our international sales are denominated in local currencies and not in U.S. dollars, our reported net sales and earnings are subject to fluctuations in foreign currency exchange rates. Foreign currency exchange rate fluctuations unfavorably impacted our net sales by $9.0 million during 2019. 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 declines.

Although we address currency risk management through regular operating and financing activities, and in the past through hedging activities, these actions may not prove to be fully effective, and hedging activities, if we choose to engage in them, involve additional risks.

We may be unable to maintain competitive global cash management and a competitive effective corporate tax rate.

We cannot give any assurance as to our future effective tax rate because of, among other things, uncertainty regarding the tax policies of the jurisdictions where we operate and uncertainty regarding the level of net income that we will earn in those jurisdictions in the future. Additionally, the tax laws of the Netherlands, the United States, France and other jurisdictions in which we operate could change in the future, and such changes could cause a material change in our effective tax rate.

Our provision for income taxes will be based on certain estimates and assumptions made by management in consultation with our tax and other advisors. Our group income tax rate will be affected by, among other factors, the amount of net income earned in our various operating jurisdictions, the continued availability of benefits under tax treaties, the rates of taxes payable in respect of that income, and withholding taxes on payments from one jurisdiction to the next. We will enter into many transactions and arrangements in the ordinary course of business in respect of which the tax treatment is not entirely certain. We will, therefore, make estimates and judgments based on our knowledge and understanding of applicable tax laws and tax treaties, and the application of those tax laws and tax treaties to our business, in determining our consolidated tax provision. For example, certain countries could seek to tax a greater share of income than will be provided for by us. The final outcome of any audits by taxation authorities

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may differ from the estimates and assumptions we may use in determining our consolidated tax provisions and accruals. This could result in a material adverse effect on our consolidated income tax provision, financial condition, and the net income for the period in which such determinations are made.

In particular, dividends, distributions, and other intra-group payments from our U.S. affiliates to certain of our non-U.S. subsidiaries may be subject to U.S. withholding tax at a rate of 30% unless the entity receiving such payments can demonstrate that it qualifies for reduction or elimination of the U.S. withholding tax under the income tax treaty (if any) between the United States and the jurisdiction in which the entity is organized or is a tax resident. In certain cases, treaty qualification may depend on whether at least 50% of our ultimate beneficial owners are qualified residents of the United States or the treaty jurisdiction within the meaning of the applicable treaty. There can be no assurance that we will satisfy this beneficial ownership requirement at the time when such dividends, distributions, or other payments are made. Moreover, the U.S. Internal Revenue Service (IRS) may challenge our determination that the beneficial ownership requirement is satisfied. If we do not satisfy the beneficial ownership requirement, such dividends, distributions, or other payments may be subject to 30% U.S. withholding tax.

We may face potential limitations on the utilization of our U.S. tax attributes.

Following the acquisition of a U.S. corporation by a non-U.S. corporation, Section 7874 of the Internal Revenue Code of 1986, as amended (Code) can limit the ability of the acquired U.S. corporation and its U.S. affiliates to utilize U.S. tax attributes such as net operating losses and certain tax credits to offset U.S. taxable income resulting from certain transactions. Based on the limited guidance available, we currently expect that this limitation likely will not apply to us and as a result, our U.S. affiliates likely will not be limited by Section 7874 of the Code in their ability to utilize their U.S. tax attributes to offset their U.S. taxable income, if any, resulting from certain specified taxable transactions. However, no assurances can be given in this regard. If, however, Section 7874 of the Code were to apply to the Wright/Tornier merger and if our U.S. affiliates engage in transactions that would generate U.S. taxable income subject to this limitation in the future, it could take us longer to use our net operating losses and tax credits and, thus, we could pay U.S. federal income tax sooner than we otherwise would have. Additionally, if the limitation were to apply and if we do not generate taxable income consistent with our expectations, it is possible that the limitation under Section 7874 on the utilization of U.S. tax attributes could prevent our U.S. affiliates from fully utilizing their U.S. tax attributes prior to their expiration.

Future changes to U.S. tax laws could materially affect us, including our status as a non-U.S. corporation.

Under current U.S. federal income tax law, a corporation generally will be considered to be resident for U.S. federal income tax purposes in its place of organization or incorporation. Accordingly, under the generally applicable U.S. federal income tax rules, we, as a Netherlands incorporated entity, would be classified as a non-U.S. corporation (and, therefore, not a U.S. tax resident). Section 7874 of Code, however, contains specific rules (more fully discussed below) that can cause a non-U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes. These rules are complex and there is little or no guidance as to their application.

We currently expect we should continue to be treated as a foreign corporation for U.S. federal tax purposes, however, it is possible that the IRS could disagree with that position and assert that Section 7874 applies to treat us as a U.S. corporation. In addition, new statutory or regulatory provisions under Section 7874 or otherwise could be enacted or promulgated that adversely affect our status as a foreign corporation for U.S. federal tax purposes, and any such provisions could have retroactive application. If we were to be treated as a U.S. corporation for federal tax purposes, we would be subject to U.S. corporate income tax on our worldwide income, and the income of our foreign subsidiaries would be subject to U.S. tax when repatriated or when deemed recognized under the U.S. tax rules for controlled foreign subsidiaries. In such a case, we would be subject to substantially greater U.S. tax liability than currently contemplated. Moreover, in such a case, a non-U.S. shareholder of our company would be subject to U.S. withholding tax on the gross amount of any dividends paid by us to such shareholder.

Any such U.S. corporate income or withholding tax could be imposed in addition to, rather than in lieu of, any Dutch corporate income tax or withholding tax that may apply.

Our tax position may be adversely affected by changes in tax law relating to multinational corporations, or by increased scrutiny by tax authorities.

Recent legislative proposals have aimed to expand the scope of U.S. corporate tax residence, limit the ability of foreign-owned corporations to deduct interest expense, and make other changes in the taxation of multinational corporations.

On December 22, 2017, the United States enacted the statute commonly called the “Tax Cuts and Jobs Act” (the 2017 Tax Act) which enacts a broad range of changes to the Code. The 2017 Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of U.S. interest and U.S. net operating losses, allows for the expensing of certain U.S. capital expenditures, and puts into effect a number of changes impacting applicable operations outside of the United States including, but not limited to, the imposition of a onetime tax on accumulated post-1986 deferred foreign income that has not previously been subject to tax, and modifications to the treatment of certain intercompany transactions. We are continuing to evaluate the overall impact of this tax legislation on our U.S. and non-U.S. operations. There can be no assurance

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that changes in tax laws or regulations, both within the U.S. and the other jurisdictions in which we operate, will not materially and adversely affect our effective tax rate, tax payments, financial condition and results of operations. Similarly, changes in tax laws and regulations that impact our customers and counterparties or the economy generally may also impact our financial condition and results of operations.

Additionally, the U.S. Congress, government agencies in jurisdictions where we and our affiliates do business, and the Organization for Economic Co-operation and Development have focused on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States, the Netherlands and other countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could impact the expected tax treatment for us and adversely affect our financial results.

Moreover, U.S. and non-U.S. tax authorities may carefully scrutinize companies involved or recently involved in cross-border business combinations, such as us, which may lead such authorities to assert that we owe additional taxes.

Our exposure to several tax jurisdictions may have an adverse effect on us, and this may increase the aggregate tax burden on us and our shareholders.

We are subject to a large number of different tax laws and regulations in the various jurisdictions in which we operate. These laws and regulations are often complex and are subject to varying interpretations. The combined effect of the application of tax laws, including the application or disapplication of tax treaties of one or more of these jurisdictions and their interpretation by the relevant tax authorities could, under certain circumstances, produce contradictory results. We often rely on generally available interpretations of tax laws and regulations to determine the existence, scope, and level of our liability to tax in the jurisdictions in which we operate. In addition, we take positions in the course of our business with respect to various tax matters, including the compliance with the arm’s length principles in respect of transactions with related parties, the tax deductibility of interest and other costs, and the amount of depreciation or write-down of our assets that we can recognize for tax purposes. There is no assurance that the tax authorities in the relevant jurisdictions will agree with such interpretation of these laws and regulations or with the positions taken by us. If such tax positions are challenged by relevant tax authorities, the imposition of additional taxes could increase our effective tax rate and cost of operations.

Furthermore, because we are incorporated under Dutch law, we are treated for Dutch corporate income tax purposes as a resident of the Netherlands. Based on our management structure and the current tax laws of the United States and the Netherlands, as well as applicable income tax treaties and current interpretations thereof, we expect to remain a tax resident solely of the Netherlands. If we were to be treated as a tax resident of a jurisdiction other than or in addition to the Netherlands, we could be subject to corporate income tax in that other jurisdiction, and could be required to withhold tax on any dividends paid by us to our shareholders under the applicable laws of that jurisdiction.

Our future results will suffer if we do not effectively manage our expanded operations as a result of our business combination and acquisition transactions.

As a result of our prior business combinations and acquisition transactions, the size of our business has increased significantly. Our future success depends, in part, upon our ability to manage this expanded business, which may pose substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances that we will be successful or that we will realize the expected operating efficiencies, cost savings, and other benefits anticipated from these transactions.

Our Corporate Compliance Program requires the cooperation of many individuals, involves substantial investment and diverts a significant amount of time and resources from our other business activities. Our failure to maintain an effective Corporate Compliance Program could adversely affect our business, reputation and financial results.

We are committed to a robust Corporate Compliance Program. Accordingly, we have devoted and continue to devote a significant amount of time and resources from our financial, human resources, and compliance personnel, as well as all of our employees in furtherance of this strategic objective. Our failure to maintain an effective Corporate Compliance Program could result in significant legal and regulatory problems and could adversely affect our business, reputation and financial results.

We have a significant amount of goodwill and other intangible assets on our consolidated balance sheet as a result of our prior business combinations and acquisitions, which if these acquired businesses do not perform as anticipated, may be subject to future impairment, which would harm our operating results.

As of December 29, 2019, we had $1.3 billion in goodwill and $257.4 million in intangible assets primarily as a result of our prior business combinations and acquisitions. Under U.S. generally accepted accounting principles (US GAAP), we must assess, at least annually and potentially more frequently, whether the value of our goodwill and other indefinite-lived intangible assets have been impaired. Amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. A decrease in the long-term economic outlook and future cash flows of our acquired businesses and technologies could significantly impact

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asset values and potentially result in the impairment of intangible assets, including goodwill. If the operating performance of our acquired businesses and technologies significantly decreases, if competing or alternative technologies emerge, or if market conditions or future cash flow estimates decline, we could be required, under current US GAAP, to record a non-cash charge to operating earnings for the amount of the impairment. Any write-off of a material portion of our unamortized intangible assets would negatively affect our results of operations.

Risks Relating to Our Ordinary Shares and Jurisdiction of Incorporation

The trading volume and prices of our ordinary shares have been and may continue to be volatile, which could result in substantial losses to our shareholders.

The trading volume and prices of our ordinary shares have been and may continue to be volatile and could fluctuate widely due to factors beyond our control. During 2019, the sale price of our ordinary shares ranged from $19.04 to $32.86. Such volatility may be the result of broad market and industry factors. In addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific to our own operations, including the following:

• the proposed Acquisition and developments in connection therewith affecting the likelihood of completion of the transaction and timing thereof;

• variations in our net sales, earnings, and cash flow, and in particular variations that deviate from projected financial information;

• announcements of new investments, acquisitions, strategic partnerships, or joint ventures;

• announcements of new products by us or our competitors;

• announcements of divestitures or discontinuance of products or assets;

• changes in financial estimates by securities analysts;

• additions or departures of key personnel;

• sales of our equity securities by our significant shareholders or management or sales of additional equity securities by our company;

• pending and potential litigation or regulatory investigations; and

• fluctuations in market prices for our products.

Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares trade. Shareholders of a public company sometimes bring securities class action suits against the company following periods of instability in the market price of that company’s securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations, which could harm our operating results and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and operating results.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.

The trading market for our ordinary shares is influenced by research or reports that industry or securities analysts publish about us or our business. If one or more analysts who cover us downgrade our ordinary shares, the market price for our ordinary shares likely would decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our ordinary shares to decline.

The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.

Sales of substantial amounts of our ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ordinary shares.

Rights of a holder of ordinary shares are governed by Dutch law and differ from the rights of shareholders under U.S. law.

We are a Dutch public company with limited liability (naamloze vennootschap). Our corporate affairs and the rights of holders of our ordinary shares are governed by Dutch law and our articles of association. The rights of our shareholders and the responsibilities of members of our board of directors may be different from those in companies governed by the laws of U.S. jurisdictions. For example, Dutch law does not provide for a shareholder derivative action. In addition, in the performance of its duties, our board of directors is required by Dutch law to act in the interest of our company and our affiliated business, and to consider the interests of our company, our shareholders, our employees, and other stakeholders, in all cases with reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, interests of our shareholders.

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As a result of different shareholder voting requirements in the Netherlands relative to laws in effect in certain states in the United States, we may have less flexibility with respect to the issuance of our ordinary shares than companies organized in the United States.

Currently, our articles of association provide for an authorized share capital consisting of one class of shares, being 320,000,000 ordinary shares, each with a nominal value of €0.03. Under Dutch law, our authorized share capital can be increased by an amendment to our articles of association. Our articles of association can be amended upon a proposal of our board of directors by the general meeting of shareholders, which resolution can be adopted with a simple majority in a meeting where at least one-third of the outstanding shares are represented. New ordinary shares may be issued pursuant to a resolution of shareholders, or pursuant to such resolution of the board of directors if designated thereto by shareholders. Additionally, subject to specified exceptions, Dutch law grants statutory preemption rights to existing shareholders where shares are being issued for cash consideration. The right of our shareholders to subscribe for ordinary shares pursuant to preemptive rights may be limited or restricted by our shareholders, and our shareholders may delegate such authority to the board of directors. Such designations of authority to our board of directors may remain in effect for up to five years and may be renewed for additional periods of up to five years.

Currently, our board of directors is authorized to issue until June 28, 2021 up to 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions and to limit or exclude pre-emptive rights in respect of such issue of shares, without further shareholder approval. We cannot provide any assurance that these authorizations will always be approved on a timely basis. The failure to renew these authorizations on a timely basis could limit our ability to issue equity and thereby adversely affect our ability to run our business and the holders of our securities.

U.S. investors may not be able to enforce judgments obtained in U.S. courts in civil and commercial matters against us or members of our board of directors or officers.

We are organized under the laws of the Netherlands, and, as such, the rights of holders of our ordinary shares and the civil liability of our directors are governed by the laws of the Netherlands and our articles of association. The rights of shareholders under the laws of the Netherlands may differ from the rights of shareholders of companies incorporated in other jurisdictions. A substantial portion of our assets are located outside of the United States. As a result, it may be difficult for investors to effect service of process within the United States on us, or to enforce outside the United States any judgments obtained against us in U.S. courts in any action, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. In addition, it may be difficult for investors to enforce rights predicated upon the U.S. federal securities laws in original actions brought in courts in jurisdictions located outside the United States (including the Netherlands) or enforce claims for punitive damages.

The United States and the Netherlands currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters (other than arbitral awards). A final judgment for the payment of money rendered by any federal or state court in the United States which is enforceable in the United States, whether or not predicated solely upon U.S. federal securities laws, would not automatically be recognized or enforceable in the Netherlands. In order to obtain a judgment which is enforceable in the Netherlands, the party in whose favor a final and conclusive judgment of the U.S. court has been rendered will be required to file its claim with a court of competent jurisdiction in the Netherlands. Such party may submit to a Dutch court the final judgment rendered by the U.S. court. If and to the extent that the Dutch court finds that the jurisdiction of the U.S. court has been based on grounds which are internationally acceptable and that proper legal procedures have been observed, the Dutch court will generally tend to give binding effect to the judgment of the court of the United States without substantive re-examination or re-litigation on the merits of the subject matter, unless the judgment contravenes principles of public policy of the Netherlands.

There can be no assurance that U.S. investors will be able to enforce against us or members of our board of directors or officers who are residents of the Netherlands or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.

We do not anticipate paying dividends on our ordinary shares.

Our articles of association prescribe that profits or reserves appearing from our annual accounts adopted by the general meeting shall be at the disposal of the general meeting. We have power to make distributions to shareholders and other persons entitled to distributable profits only to the extent that our equity exceeds the sum of the paid and called-up portion of the ordinary share capital and the reserves that must be maintained in accordance with provisions of Dutch law or our articles of association. The profits must first be used to set up and maintain reserves required by law and must then be set off against certain financial losses. We may not make any distribution of profits on ordinary shares that we hold. The general meeting, whether or not upon the proposal of our board of directors, determines whether and how much of the remaining profit they will reserve and the manner and date of such distribution. All calculations to determine the amounts available for dividends will be based on our Dutch annual accounts, which may be different from our consolidated financial statements prepared in accordance with US GAAP. Beginning with our fiscal year 2015, our statutory accounts have been prepared and we expect will continue to be prepared under International Financial Reporting Standards and are deposited with the Trade Register in Amsterdam, the Netherlands. We have not previously

43

declared or paid cash dividends, and we have no plan to declare or pay any dividends in the near future on our ordinary shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our global corporate headquarters are located in Amsterdam, the Netherlands.

Our U.S. headquarters are located in Memphis, Tennessee, where we conduct our principal executive, research and development, sales and marketing, and administrative activities. We lease 121,000 square feet of office space with research and development facilities under a lease agreement that is renewable through 2034. Our upper extremities sales and marketing, U.S. distribution and customer service operations are located in a 54,000 square foot facility in Bloomington, Minnesota that we lease through 2022. Our U.S. manufacturing operations consist of a 140,000 square foot 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 produce primarily orthopaedic implants and some related surgical instrumentation while utilizing lean manufacturing philosophies. We also lease a 31,000 square foot manufacturing and warehousing facility in Franklin, Tennessee, a 11,400 square foot manufacturing and warehousing facility in Alpharetta, Georgia, and conduct research and development operations in a 16,000 square foot leased facility in Columbia City, Indiana.

Outside the United States, our primary manufacturing facilities are located in Montbonnot, France and Macroom, Ireland. In the 92,000 square foot Montbonnot campus, we conduct manufacturing and manufacturing support activities, sales and marketing, research and development, quality and regulatory assurance, distribution and administrative functions. In our 73,000 square foot Macroom facility, we conduct manufacturing operations and manufacturing support, such as purchasing, engineering, and quality assurance functions. In addition, we maintain subsidiary sales offices and distribution warehouses in various countries, including France, Germany, Italy, the Netherlands, Switzerland, United Kingdom, Belgium, Japan, Canada, and Australia. We have international research and development facilities in Costa Rica and Plouzané, France.

We believe that our facilities are adequate and suitable for their use.

Below is a summary of our material facilities. All of our reportable segments use the facilities described below except as otherwise indicated:

City	State/Country	Owned or Leased	Occupancy
Memphis	Tennessee, United States	Leased	Offices/R&D
Arlington	Tennessee, United States	Leased	U.S. Lower Extremities & Biologics Manufacturing/Warehouse/Distribution
Bloomington	Minnesota, United States	Leased	U.S. Upper Extremities Offices/Warehouse/Distribution
Columbia City	Indiana, United States	Leased	Offices/R&D
Alpharetta	Georgia	Leased	U.S. Lower Extremities Offices/Manufacturing/Warehouse
Franklin	Tennessee, United States	Leased	U.S. Lower Extremities & Biologics Offices/Manufacturing/Warehouse
Montbonnot	France	Leased	International Extremities & Biologics; U.S. Upper Extremities Warehouse/Distribution/Offices/R&D
Montbonnot	France	Owned 51%	International Extremities & Biologics; U.S. Upper Extremities Manufacturing/Offices
Plouzané	France	Leased	Upper Extremities R&D
Macroom	Ireland	Leased	International Extremities & Biologics Manufacturing/Offices

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ITEM 3. LEGAL PROCEEDINGS.

From time to time, we or our subsidiaries are subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of our business and some of which involve claims for damages that are substantial in amount. These actions and proceedings may relate to, among other things, product liability, intellectual property, distributor, commercial, and other matters. These actions and proceedings 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.

The actions and proceedings described in this section relate primarily to WMT, an indirect subsidiary of Wright Medical Group N.V., and are not necessarily applicable to Wright Medical Group N.V. or other affiliated entities. Maintaining separate legal entities within our corporate structure is intended to ring-fence liabilities. We believe our ring-fenced structure should preclude corporate veil-piercing efforts against entities whose assets are not associated with particular claims.

Patent Litigation

On March 23, 2018, WMT filed suit against Paragon 28, Inc. (Paragon 28) in the United States District Court for the District of Colorado, alleging infringement of ten patents concerning orthopaedic plates, plating systems and instruments, and related methods of use. Our complaint seeks damages, injunctive relief and attorneys’ fees. On June 4, 2018, Paragon 28 filed an amended answer and counterclaim seeking declaratory judgment of non-infringement and invalidity of the patent-in-suit, and attorneys’ fees. On September 28, 2018, WMT filed an amended complaint adding claims against Paragon 28 for misappropriation of trade secrets and related wrongdoing. Paragon 28 filed a motion to dismiss those trade secret-related claims, which WMT opposed.  On September 30, 2019, the Court issued an order granting in part and denying in part the motion to dismiss, leaving intact the majority of the trade secret-related claims.  A motion for clarification of the order remains pending. In March 2019, Paragon 28 filed four petitions with the Patent Trial and Appeal Board seeking Inter Partes Reviews of the patents in question, which WMT opposed.  On September 25, 2019 and October 4, 2019, the Patent Trial and Appeal Board granted Paragon 28’s petitions.  Oral arguments are expected to be held in June 2020; after which time, the Patent Trial and Appeal Board will render a substantive decision on the merits of the petitions.

Product Liability

We have 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 (collectively, the CONSERVE^® Claims) and generally seek monetary damages. 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 on February 8, 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, we have 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 pre-trial handling on May 14, 2012 pursuant to procedures of California State Judicial Counsel Coordinated Proceedings (the JCCP). The consolidated matter is known as In re: Wright Hip Systems Cases, Judicial Counsel Coordination Proceeding No. 4710. Pursuant to previously disclosed settlement agreements with the Court-appointed attorneys representing plaintiffs in the MDL and JCCP described below (the MoM Settlement Agreements), the MDL and JCCP were closed to new cases effective October 18, 2017 and October 31, 2017, respectively.

Every hip implant case, including metal-on-metal hip cases, involves fundamental issues of law, 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, statutes of

45

limitation, and the existence of actual, provable injury. We believe we have data that supports the efficacy and safety of these hip products.

Excluding claims resolved in the MoM Settlement Agreements, as of December 29, 2019, there were approximately 205 unresolved metal-on-metal hip cases pending in the U.S. This number includes cases ineligible for settlement under the MoM Settlement Agreements, cases which opted out of such settlements, post-settlement cases, tolled cases, and existing state court cases that were not part of the MDL or JCCP. As of December 29, 2019, we estimate there also were pending approximately 27 unresolved non-U.S. metal-on metal hip cases, 9 unresolved U.S. modular neck cases alleging claims related to the release of metal ions, and zero non-U.S. modular neck cases with metal ion allegations. We also estimate that as of December 29, 2019, there were approximately 514 non-revision claims either dismissed or awaiting dismissal from the MDL and JCCP, which dismissal is a condition of the MoM Settlement Agreements. Although there is a limited time period during which dismissed non-revision claims may be refiled, it is presently unclear how many non-revision claimants will elect to do so. As of December 29, 2019, no dismissed non-revision cases have been refiled.

As previously disclosed, between November 2016 and October 2017, WMT entered into three MoM Settlement Agreements with Court-appointed attorneys representing plaintiffs in the MDL and JCCP to settle a total of 1,974 cases that met the eligibility requirements of the MoM Settlement Agreements and were either pending in the MDL or JCCP, or subject to court-approved tolling agreements in the MDL or JCCP, for an aggregate sum of $339.2 million. See Note 17 to our consolidated financial statements for additional information regarding the MoM Settlement Agreements.

We have received claims for personal injury against us associated with fractures of the PROFEMUR^® titanium modular neck product (Titanium Modular Neck Claims). As of December 29, 2019, there were approximately 22 unresolved pending U.S. lawsuits and approximately 50 unresolved pending non-U.S. lawsuits alleging such claims (44 of which are part of a single consolidated class action lawsuit in Canada). These lawsuits generally seek monetary damages.

We are aware that MicroPort has recalled a certain size of its cobalt chrome modular neck product as a result of alleged fractures. As of December 29, 2019, there were seven pending U.S. lawsuits and seven pending non-U.S. lawsuits against us alleging personal injury resulting from the fracture of a cobalt chrome modular neck. These lawsuits generally seek monetary damages.

Insurance Litigation

We have maintained product liability insurance coverage on a claims-made basis. During the fiscal quarter ended September 30, 2012, we received a customary reservation of rights from Federal, our then primary product liability insurance carrier, asserting that certain present and future claims which allege certain types of injury related to the 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 have been 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. We notified Federal that we disputed its characterization of the CONSERVE^® Claims as a single occurrence, which resulted in multi-year insurance coverage litigation (the Tennessee Coverage Litigation) that has recently been resolved as discussed below.

As previously disclosed, we entered into confidential settlement agreements with all seven insurance carriers with whom metal on metal hip coverage was in dispute - Columbia Casualty Company, Travelers, AXIS Surplus Lines Insurance Company, Federal, Catlin Specialty Insurance Company, Catlin Underwriting Agencies Limited for and on behalf of Syndicate 2003 at Lloyd’s of London and Lexington Insurance Company (Lexington), thus resolving in full the Tennessee Coverage Litigation and the separate litigation and arbitration proceedings with Lexington.

Stryker Acquisition Related Litigation

On January 15, 2020, John Thompson, a purported shareholder of our company, filed a putative class action lawsuit against us, members of our board of directors, Stryker B.V. and Stryker Corporation in the United States District Court for the District of Delaware, captioned Thompson v. Wright Medical Group N.V., et al., Case No. 1:20-cv-00061 (Thompson Complaint). The Thompson Complaint alleges that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which they allege rendered the Schedule 14D-9 false and misleading. In addition, the Thompson Complaint alleges that members of our board of directors and Stryker acted as controlling persons of the company within the meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Solicitation/Recommendation Statement. The Thompson Complaint seeks, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; an order directing our board of directors to file a Solicitation/Recommendation Statement that does not contain any untrue statements of material fact and that states all material facts required in it or necessary to make the statements contained therein not misleading; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including reasonable allowance for attorneys’ fees and experts’ fees.

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On January 31, 2020, William Grubb, a purported shareholder of our company, filed a putative class action lawsuit against us and members of our board of directors in the United States District Court for the Eastern District of New York, captioned Grubb v. Wright Medical Group N.V., et al., Case No. 1:20-cv-00553 (Grubb Complaint). The Grubb Complaint alleges that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the Grubb Complaint alleges rendered the Schedule 14D-9 false and misleading. In addition, the Grubb Complaint alleges that members of our board of directors acted as controlling persons of the company within the meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The Grubb Complaint seeks, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including counsel fees and expenses and expert fees.

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.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

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

Market Information

Our ordinary shares are traded on the Nasdaq Global Select Market under the symbol “WMGI.”

Holders

As of February 20, 2020, there were 299 holders of record of our ordinary shares.

Dividends

We have not previously declared or paid cash dividends on our ordinary shares. 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 ordinary shares in the foreseeable future. Any payment of cash dividends on our ordinary shares 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. Additionally, our Credit, Security and Guaranty Agreement dated December 23, 2016 with Midcap Financial Trust, as administrative agent and a lender and the additional lenders from time to time party thereto, as subsequently amended, restricts our ability to pay dividends.

Purchases of Equity Securities by the Company

We did not purchase any ordinary shares or other equity securities of our company during the fourth fiscal quarter ended December 29, 2019.

Recent Sales of Unregistered Securities

We did not issue any ordinary shares or other equity securities of our company that were not registered under the Securities Act of 1933, as amended, during the fourth fiscal quarter ended December 29, 2019.

Comparison of Total Shareholder Returns

The graph below compares the cumulative total shareholder returns for legacy Tornier ordinary shares from the period from December 31, 2014 to October 1, 2015, the date of the Wright/Tornier merger, and our combined company ordinary shares from October 1, 2015 to December 29, 2019 (our fiscal year-end). The graph also reflects cumulative total shareholder returns from an index composed of U.S. companies whose stock is listed on the Nasdaq Global Select Market (Nasdaq U.S. Composite Index) and an index consisting of Nasdaq-listed companies in the surgical, medical and dental instruments and supplies industry (Nasdaq Medical Equipment Subsector), as well as an index of companies with the SIC Code 384 - Surgical, Medical, and Dental Instruments Supplies (Surgical, Medical, and Dental Instruments Index). Total returns for the indices are weighted based on the market capitalization of the companies included therein. In addition, due to the “reverse acquisition” nature of the Wright/Tornier merger and the fact that the historical financial statements of legacy Wright have replaced the historical financial statements of legacy Tornier, the graph below also includes the cumulative total shareholder returns for WMG common stock from December 31, 2014 to October 1, 2015, the date of the Wright/Tornier merger.

The graph assumes that $100.00 was invested on December 31, 2014, in legacy Tornier/Wright Medical Group N.V. ordinary shares, legacy Wright common stock, the Nasdaq U.S. Composite Index, the Nasdaq Medical Equipment Subsector, and the Surgical, Medical, and Dental Instruments Supplies Index, and that all dividends were reinvested. Total returns for the Nasdaq indices are weighted based on the market capitalization of the companies included therein.

Historical price performance of our ordinary shares is not indicative of future share price performance. We do not make or endorse any prediction as to future share price performance.

	2014		2015		2016		2017		2018		2019
Legacy Tornier / Wright Medical Group N.V.	$	100.00	$	92.54	$	91.56	$	87.20	$	104.12	$	120.09
Legacy Wright	100.00		79.11		—		—		—		—
Nasdaq Stock Market (US Companies)	100.00		106.96		118.23		150.66		147.04		202.43
Nasdaq Medical Equipment Index	100.00		117.38		129.66		184.44		209.14		266.78
SIC Code 384 - Surgical, Medical, and Dental Instruments and Supplies	100.00		106.12		116.63		148.17		148.45		188.11

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Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2020.

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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. Due to the “reverse acquisition” nature of the Wright/Tornier merger, the historical financial statements of legacy Wright replaced the historical financial statements of legacy Tornier on October 1, 2015. You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this report. 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.

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017			December 25, 2016			December 27, 2015 1
Consolidated Statement of Operations:
Net sales	$	920,900		$	836,190		$	744,989		$	690,362		$	405,326
Cost of sales 2	188,641			180,153			160,947			192,407			113,622
Gross profit	732,259			656,037			584,042			497,955			291,704
Operating expenses:
Selling, general and administrative 2	614,666			577,961			525,222			541,558			424,377
Research and development 2	74,085			59,142			50,115			50,514			39,339
Amortization of intangible assets	31,921			26,730			28,396			28,841			16,754
Total operating expenses	720,672			663,833			603,733			620,913			480,470
Operating income (loss) 3	11,587			(7,796		)	(19,691		)	(122,958		)	(188,766		)
Interest expense, net 4	80,849			80,247			74,644			58,530			41,358
Other expense (income), net 5	9,904			81,797			5,570			(3,148		)	10,884
Loss before income taxes	(79,166		)	(169,840		)	(99,905		)	(178,340		)	(241,008		)
Provision (benefit) for income taxes 6	12,968			(536		)	(34,968		)	(13,406		)	(3,652		)
Net loss from continuing operations	(92,134		)	(169,304		)	(64,937		)	(164,934		)	(237,356		)
Loss from discontinued operations, net of tax	(22,091		)	(201		)	(137,661		)	(267,439		)	(61,345		)
Net loss	$	(114,225	)	$	(169,505	)	$	(202,598	)	$	(432,373	)	$	(298,701	)
Net loss from continuing operations per share — basic and diluted:	$	(0.73	)	$	(1.50	)	$	(0.62	)	$	(1.60	)	$	(3.66	)
Weighted-average number of ordinary shares outstanding — basic and diluted	126,601			112,592			104,531			102,968			64,808

	December 29, 2019			December 30, 2018		December 31, 2017		December 25, 2016		December 27, 2015
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	166,856		$	191,351	$	167,740	$	262,265	$	139,804
Restricted cash	—			—		—		150,000		—
Working capital (deficit)	(106,350		)	136,106		151,599		285,107		352,946
Total assets	2,585,640			2,694,401		2,128,724		2,290,586		2,073,494
Long-term liabilities	843,839			1,294,816		1,124,733		1,129,204		811,530
Shareholders’ equity	891,793			932,459		588,696		686,864		1,055,026

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	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017			December 25, 2016			December 27, 2015
Other Data:
Cash flow provided by (used in) operating activities	$	41,607		$	(63,729	)	$	(184,810	)	$	37,824		$	(195,870	)
Cash flow used in investing activities	(103,246		)	(510,239		)	(109,421		)	(34,241		)	(15,970		)
Cash flow provided by financing activities	37,406			598,140			46,816			270,417			126,862
Depreciation 1	64,149			59,497			56,832			55,830			28,390
Share-based compensation expense	32,567			26,120			19,393			14,416			24,964
Capital expenditures	99,286			71,467			63,474			50,099			43,666

______________________________________

¹  The 2015 results were restated for the divestiture of our Large Joints business.

²  These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017		December 25, 2016		December 27, 2015
Cost of sales	$	600	$	585	$	565	$	414	$	287
Selling, general and administrative	29,185		23,608		17,705		13,216		22,777
Research and development	2,782		1,927		1,123		786		1,900

³  During the fiscal year ended December 29, 2019, we recognized: (a) $6.3 million of transaction and transition costs related to both the Cartiva acquisition and the pending Stryker acquisition, (b) $1.0 million of inventory step-up amortization and (c) a non-cash asset impairment associated with the technology transfer of $5.6 million. During the fiscal year ended December 30, 2018, we recognized: (a) $12.0 million of transaction and transition costs related to both the Cartiva acquisition and Wright/Tornier merger and (b) $0.4 million of inventory step-up amortization. During the fiscal year ended December 31, 2017, we recognized: (a) $12.4 million of transaction and transition costs related to the Wright/Tornier merger and (b) a benefit of $9.0 million from incentive and indirect tax projects. During the fiscal year ended December 25, 2016, we recognized: (a) $37.7 million of inventory step-up amortization; (b) $36.4 million of transaction and transition costs related to the Wright/Tornier merger; (c) $1.8 million of costs related to a legal settlement; (d) $1.3 million of costs associated with executive management changes; and (e) $0.2 million of costs associated with debt refinancing. During the fiscal year ended December 27, 2015, we recognized: (a) $82.2 million of due diligence, transaction, and transition costs related to the Wright/Tornier merger; (b) $14.2 million of share-based compensation acceleration; and (c) $10.3 million of inventory step-up amortization.

⁴  During the fiscal year ended December 29, 2019, we recognized: (a) $49.3 million of non-cash interest expense related to the amortization of the debt discount on our 2020, 2021, and 2023 convertible notes. During the fiscal year ended December 30, 2018, we recognized: (a) $49.2 million of non-cash interest expense related to the amortization of the debt discount on our 2020, 2021, and 2023 convertible notes. During the fiscal year ended December 31, 2017, we recognized: (a) $45.5 million of non-cash interest expense related to the amortization of the debt discount on our 2017, 2020 and 2021 convertible notes and (b) $0.2 million of interest income from incentive and indirect tax projects. During the fiscal year ended December 25, 2016, we recognized: (a) $36.6 million of non-cash interest expense related to the amortization of the debt discount on our 2017, 2020 and 2021 convertible notes and (b) a $0.8 million of interest income related to the settlement of an IRS audit.

⁵  During the fiscal year ended December 29, 2019, we recognized: (a) $14.3 million loss on a debt modification; (b) $11.0 million gain for the mark-to-market adjustment of our derivative instruments; (c) $0.1 million gain from foreign currency translation; (d) $9.5 million of charges due to the fair value adjustment to contingent consideration; (e) $3.3 million net gain on investments and (f) a $0.4 million gain from mark-to-market adjustments on the Contingent Value Rights (CVRs) issued in connection with the BioMimetic acquisition. During the fiscal year ended December 30, 2018, we recognized: (a) a $39.9 million non-cash loss on extinguishment of debt to write-off unamortized debt discount and deferred financing fees associated with the extinguishment of $400.0 million of the 2020 Notes; (b) a $35.9 million loss for the mark-to-market adjustment of our derivative instruments; (c) a $3.2 million loss from foreign currency translation; (d) $1.8 million of charges due to the fair value adjustment to contingent consideration; and (e) a $0.1 million loss from mark-to-market adjustments on the former CVRs issued in connection with the BioMimetic acquisition. During the fiscal year ended December 31, 2017, we recognized: (a) a $5.3 million loss from mark-to-market adjustments on the CVRs issued in connection with the BioMimetic acquisition; (b) $4.8 million gain for the mark-to-market adjustment of our derivative instruments; (c) a benefit of $0.6 million from incentive and indirect tax projects; and (d) $0.1 million of charges due to the fair value adjustment to contingent consideration. During the fiscal year ended December 25, 2016, we recognized: (a) $28.3 million gain for the mark-to-market adjustment of our derivative instruments; (b) a $12.3 million non-cash loss on extinguishment of debt to write-off unamortized debt

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discount and deferred financing fees associated with the partial settlement of 2017 and 2020 convertible notes; (c) a $8.7 million loss from mark-to-market adjustments on the CVRs issued in connection with the BioMimetic acquisition; and (d) $0.5 million of charges due to the fair value adjustment to contingent consideration. During the fiscal year ended December 27, 2015, we recognized: (a) $9.8 million gain for the mark-to-market adjustment of our derivative instruments and (b) a $7.6 million gain from mark-to-market adjustments on the CVRs issued in connection with the BioMimetic acquisition.

⁶  During the fiscal year ended December 29, 2019, we recognized a $10.0 million income tax provision due to a change in tax rates on income from deferred intercompany transactions. During the fiscal year ended December 30, 2018, we recognized: (a) a $3.6 million tax benefit related to the realizability of deferred tax assets as result of the Cartiva acquisition; (b) a tax provision of $2.7 million due to a change in judgment regarding our ability to realize certain deferred tax assets; and (c) a $0.2 million U.S. tax benefit within continuing operations recorded as a result of the year to date pre-tax gain recognized within discontinued operations due to a $30.75 million insurance settlement. During the fiscal year ended December 31, 2017, we recognized: (a) a $25.0 million tax benefit related to the realizability of net operating losses and (b) tax law reform changes in the U.S. and France resulting in an $8.3 million tax benefit. During the fiscal year ended December 25, 2016, we recognized a $2.3 million income tax benefit related to the settlement of an IRS audit.

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 November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the purchase agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The offer is currently scheduled to expire at 9:00 a.m., Eastern Time, on February 27, 2020, but may be extended in accordance with the terms of the purchase agreement between Stryker and Wright. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright's shareholders, completion of the tender offer, and other customary closing conditions.

On August 24, 2018, we entered into a definitive agreement to acquire 100% of the outstanding equity on a fully diluted basis of Cartiva, an orthopaedic medical device company focused on treatment of osteoarthritis of the great toe, for a total price of $435.0 million in cash, subject to certain adjustments as set forth in the agreement. On October 10, 2018, we completed the acquisition, which added a differentiated PMA approved technology for a high-volume foot and ankle procedure and further accelerated growth opportunities in our global extremities business. See Note 3 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for additional details related to the Cartiva acquisition. We funded the Cartiva acquisition with the proceeds from a registered underwritten public offering of 18.2 million ordinary shares which resulted in net proceeds of $423.0 million. See Note 14 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for additional details related to the public offering.

On January 9, 2014, legacy Wright completed the sale of its former OrthoRecon business to MicroPort. The financial results of the OrthoRecon business are reflected within discontinued operations for all periods presented, unless otherwise noted.

All current and historical operating results for the OrthoRecon business is reflected within discontinued operations in the consolidated financial statements.

Other than the discontinued operations discussed in Note 4 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data”, unless otherwise stated, all discussion of assets and liabilities in the notes to the consolidated financial statements and in this section, reflects the assets and liabilities held and used in our continuing operations, and all discussion of revenues and expenses reflects those associated with our continuing operations.

References in this section to “we,” “our” and “us” refer to Wright Medical Group N.V. and its subsidiaries after the Wright/Tornier merger and Wright Medical Group, Inc. and its subsidiaries before the merger. Our fiscal year-end is generally determined on a 52-week basis and runs from the Monday nearest to the 31st of December of a year, and ends on the Sunday nearest to the 31st of December of the following year. Every few years, it is necessary to add an extra week to the year making it a 53-week period. The fiscal years ended December 29, 2019 and December 30, 2018 were 52-week periods. The fiscal year ended December 31, 2017 was a 53-week period. References in this report to a particular year generally refer to the applicable fiscal year. Accordingly, references to “2019” or “the year ended December 29, 2019” mean the fiscal year ended December 29, 2019.

Executive Overview

Company Description. We are a global medical device company focused on extremities and biologics products. We are committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and are a recognized leader of

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surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics.

Our global corporate headquarters are located in Amsterdam, the Netherlands. We also have significant operations located in Memphis, Tennessee (U.S. headquarters, research and development, sales and marketing administration, and administrative activities); Bloomington, Minnesota (upper extremities sales and marketing and warehousing operations); Arlington, Tennessee (manufacturing and warehousing operations); Franklin, Tennessee (manufacturing and warehousing operations); Columbia City, Indiana (research and development); Alpharetta, Georgia (manufacturing and warehousing operations); Montbonnot, France (manufacturing and warehousing operations); Plouzané, France (research and development); and Macroom, Ireland (manufacturing). In addition, we have local sales and distribution offices in Canada, Australia, Asia, Latin America, and throughout Europe.

We offer a broad product portfolio of approximately 150 extremities products and approximately 20 biologics products that are designed to provide solutions to our surgeon customers, with the goal of improving clinical outcomes and the “quality of life” for their patients. Our product portfolio consists of the following product categories:

• Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;

• Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;

• Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and

• Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products.

Our sales and distribution system in the United States currently consists of 80 geographic sales territories that are staffed by over 500 direct sales representatives and 29 independent sales agencies or distributors. These sales representatives and independent sales agencies and distributors are generally aligned to selling either our upper extremities products or lower extremities products, but, in some cases, certain agencies or direct sales representatives sell products from both our upper and lower extremities product portfolios in their territories. Internationally, we utilize several distribution approaches that are tailored to the needs and requirements of each individual market. Our international sales and distribution system currently consists of 13 direct sales offices and approximately 90 distributors that sell our products in approximately 50 countries, with principal markets outside the United States in Europe, Asia, Canada, Australia, and Latin America. Our U.S. sales accounted for 76.7% and 74.6% of total net sales for 2019 and 2018, respectively.

Principal Products. We have focused our efforts into growing our position in the high-growth extremities and biologics markets. We believe a more active and aging patient population with higher expectations regarding “quality of life,” an increasing global awareness of extremities and biologics solutions, improved clinical outcomes as a result of the use of such products, and technological advances resulting in specific designs for such products that simplify procedures and address unmet needs for early interventions, and the growing need for revisions and revision-related solutions will drive the market for extremities and biologics products.

The extremities market is one of the fastest growing market segments within orthopaedics, with annual growth rates of 7-10%. We believe major trends in the extremities market include procedure-specific and anatomy-specific devices, locking plates, and an increase in total ankle replacement or arthroplasty procedures. Upper extremities reconstruction involves implanting devices to replace, reconstruct, or fixate injured or diseased joints and bones in the shoulder, elbow, wrist, and hand. It is estimated that approximately 60% of the upper extremities market is in total shoulder replacement or arthroplasty implants. We believe major trends in the upper extremities market include next-generation joint arthroplasty systems, bone preserving solutions, virtual planning systems, and revision of failed previous shoulder replacements in older patients. Lower extremities reconstruction involves implanting devices to replace, reconstruct, or fixate injured or diseased joints and bones in the foot and ankle. A large segment of the lower extremities market is comprised of plating and screw systems for reconstructing and fusing joints or repairing bones after traumatic injury. We believe major trends in the lower extremities market include the use of external fixation devices in diabetic patients, total ankle arthroplasty, advanced tissue fixation devices, virtual planning systems, and biologics. New technologies have been introduced into the lower extremities market in recent years, including next-generation total ankle replacement systems.

Our principal upper extremities products include the AEQUALIS ASCEND^® FLEX™ convertible shoulder system and SIMPLICITI^® total shoulder replacement system, AEQUALIS^® PERFORM™ Reversed Glenoid System, and the AEQUALIS^® REVERSED II™ reversed shoulder system. SIMPLICITI^® is the first minimally invasive, canal sparing total shoulder available in the United States. We believe SIMPLICITI^® allows us to expand the market to include younger patients that historically have deferred these procedures. Our BLUEPRINT™ 3D Planning Software can be used with our products to assist surgeons in accurately positioning the glenoid and humeral implants and replicating the pre-operative surgical plan. Other principal upper extremities products include the EVOLVE^® radial head prosthesis for elbow fractures, the EVOLVE^® Elbow Plating System, and the

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RAYHACK^® osteotomy system. FDA 510(k) clearance of the AEQUALIS^® FLEX REVIVE™ revision shoulder system was received in the third quarter of 2018. AEQUALIS^® FLEX REVIVE™ was launched to limited users early in the first quarter of 2019 and was fully launched at the end of the second quarter of 2019.

Our principal lower extremities products include the INBONE^®, INFINITY^®, and INVISION™ Total Ankle Replacement systems, all of which can be used with our PROPHECY^® Preoperative Navigation Guides, which combine computer imaging with a patient’s CT scan, and are designed to provide alignment accuracy while reducing surgical steps. As a result of our October 2018 acquisition of Cartiva, our lower extremities product portfolio includes Cartiva’s Synthetic Cartilage Implant (SCI), the only PMA approved product for treatment of first Metatarsophalangeal (MTP) joint osteoarthritis. Our lower extremities products also include the Salvation external fixation system for the treatment of Charcot diabetic foot, the CLAW^® II Polyaxial Compression Plating System, the ORTHOLOC™ 3Di Reconstruction Plating System, the PHALINX^® system used for hammertoe indications, PRO-TOE^® VO Hammertoe System, the VALOR^® ankle fusion nail system, and the Swanson line of toe joint replacement products. The PROstep™ Minimally Invasive Surgery system for foot and ankle was launched to limited users in the third quarter of 2017, and was fully launched early in the third quarter of 2018. We also launched a number of line extensions to the SALVATION™ limb salvage portfolio in 2018. We expect continued demand for these new products.

The field of biologics employs tissue engineering and regenerative medicine technologies focused on remodeling and regeneration of tendons, ligaments, bone, and cartilage. 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. 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. Biologically or synthetically derived soft tissue grafts and scaffolds are used to treat soft tissue injuries and are complementary to many sports medicine applications, including rotator cuff tendon repair and Achilles tendon repair. Hard tissue biologics products are used in many bone fusion or trauma cases where healing potential may be compromised and additional biologic factors are desired to enhance healing, where the surgeon needs additional bone, or in cases where the surgeon wishes to use materials that are naturally incorporated by the body over time. We estimate that the worldwide orthobiologics market to be over $3.7 billion, and with annual growth rates of 3-4%. Three multinational companies currently dominate the orthobiologics industry.

Our 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. Our principal biologic products include AUGMENT^® Bone Graft and AUGMENT^® Injectable. AUGMENT^® is based on recombinant human platelet-derived growth factor (rhPDGF-BB), a synthetic copy of one of the body’s principal healing agents. Other principal biologics products include the GRAFTJACKET^® and GRAFTJACKET NOW™ lines of soft tissue repair and containment membranes, the ACTISHIELD™ and VIAFLOW™ products which are derived from amniotic and placental tissues, the ALLOMATRIX^® line of injectable tissue-based bone graft substitutes, the PRO-DENSE^® Injectable Graft, the OSTEOSET^® synthetic bone graft substitute, and the PRO-STIM^® Injectable Inductive Graft. Additionally, we introduced BIOSKIN^® Amniotic Wound Matrix in the third quarter of 2019 to address chronic wounds treated by surgical podiatrists.

Significant Business Developments. On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the purchase agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The offer is currently scheduled to expire at 9:00 a.m., Eastern Time, on February 27, 2020, but may be extended in accordance with the terms of the purchase agreement between Stryker and Wright. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright's shareholders, completion of the tender offer, and other customary closing conditions.

On February 25, 2019, we amended the Credit, Security and Guaranty Agreement dated December 23, 2016 with Midcap Financial Trust, as administrative agent and a lender and the additional lenders from time to time party thereto, to, among other things, increase the amount of commitments under the line of credit from $150 million to $175 million and under the second tranche of the term loan facility from $20 million to $35 million.

During February 2019, we issued $139.6 million of additional 2023 Notes and settled $130.1 million of 2020 Notes. We paid approximately $30.1 million for additional 2023 Notes Hedges, and received approximately $21.2 million for additional 2023 warrants, resulting in a net cost to us of approximately $8.9 million. In connection with the above described exchange, we also settled a pro rata share of the 2020 Notes Conversion Derivatives, 2020 Notes Hedges, and warrants corresponding to the amount of 2020 Notes exchanged pursuant to this exchange. We received proceeds of approximately $16.8 million related to the 2020 Notes Hedges and paid $11.0 million related to the 2020 Warrants, generating net proceeds of $5.8 million.

Supplemental Non-GAAP Pro Forma Information. Due to the significance of the Cartiva business that is not included in our results of operations for the year ended December 30, 2018 and to supplement our consolidated financial statements prepared in accordance with US GAAP, we use certain non-GAAP financial measures, including organic and combined pro forma net sales.

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Our non-GAAP financial measures are not in accordance with, or an alternative for, GAAP measures and may be different from non-GAAP financial measures used by other companies. In addition, our non-GAAP financial measures are not based on any comprehensive or standard set of accounting rules or principles. Accordingly, the calculation of our non-GAAP financial measures may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes. We believe that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. See tables below for a reconciliation of our non-GAAP organic and combined pro forma net sales for the years ended December 29, 2019 and December 30, 2018 to our net sales for such periods as calculated in accordance with US GAAP.

The “Results of Operations” discussion that appears below has been presented utilizing a combination of historical unaudited and, where relevant, non-GAAP organic and combined pro forma unaudited information to include the effects on our consolidated financial statements of our acquisition of Cartiva, as if the Cartiva acquisition had been completed as of December 26, 2016, the beginning of Wright’s fiscal year 2017. The organic net sales reflect net sales by the legacy Wright business, which do not include net sales of products obtained through the Cartiva acquisition. The pro forma net sales have been adjusted to reflect the effect on our combined net sales of incremental revenues that would have been recognized had Cartiva been acquired on December 26, 2016. The Cartiva acquisition only affected the U.S. and international lower extremities product lines net sales. The non-GAAP organic and combined pro forma net sales have been developed based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of the Cartiva acquisition.

The non-GAAP organic and pro forma financial data is not necessarily indicative of results of operations that would have occurred had the Cartiva acquisition been consummated on December 26, 2016, the first day of the 2017 fiscal year, or which might be attained in the future.

Financial Highlights. Net sales increased 10.1% totaling $920.9 million in 2019, compared to $836.2 million in 2018, driven primarily by 13.3% growth in our U.S. net sales.

Our U.S. net sales increased $82.8 million, or 13.3%, in 2019 as compared to 2018. The ongoing launch of our AEQUALIS™ FLEX REVIVE™ revision shoulder system and continued success of the combination of our BLUEPRINT™ enabling technology, AEQUALIS™ PERFORM™ Reversed Glenoid System and SIMPLICITI^® shoulder system contributed to non-GAAP, legacy Wright U.S. organic growth of 10.8%. The impact to our U.S. net sales from the Cartiva SCI was approximately $25.7 million. Our combined non-GAAP pro forma growth was 9.1% due to a reduction in Cartiva sales as the U.S. Cartiva business was transitioned to our direct U.S. lower extremities sales force during the third quarter of 2019.

Our international net sales increased $2.0 million, or 0.9%, in 2019 as compared to 2018, driven by Cartiva net sales of $4.1 million and an increase in our direct markets in our international upper extremities business. This increase was offset by a $9.0 million unfavorable impact from foreign currency exchange rates.

In 2019, our net loss from continuing operations totaled $92.1 million, compared to a net loss from continuing operations of $169.3 million for 2018. This decrease in net loss from continuing operations was primarily driven by a decrease in other expense, net as 2018 included a $39.9 million charge for the write-off of unamortized deferred financing fees and debt discount associated with the extinguishment of $400.0 million of the 2020 Notes and a $35.9 million loss for the net mark-to-market adjustments on our derivative assets and liabilities.

Opportunities and Challenges. On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. pursuant to which, and upon the terms and subject to the conditions thereof, Stryker B.V. commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash.

We intend to continue to focus on leveraging the global strengths of our product brands as a pure-play extremities and biologics business. Additionally, we believe the highly complementary nature of our businesses gives us significant diversity and scale across a range of geographies and product categories. We were delighted to add Cartiva’s SCI, the first and only PMA product for the treatment of great toe osteoarthritis, to our market-leading lower extremities portfolio in October 2018. Supported by compelling clinical performance and backed by Level I clinical evidence, we believe Cartiva is well positioned for future growth as it addresses large markets with significant unmet needs and strong patient demand. As of August 1, 2019, the U.S. Cartiva business was transitioned to our direct U.S. lower extremities sales force.

Further, we believe our December 2017 acquisition of IMASCAP, a leader in the development of software-based solutions for preoperative planning of shoulder replacement surgery, ensures exclusive access to breakthrough software enabling technology and patents, including BLUEPRINT™, to further differentiate our product portfolio and to further accelerate growth opportunities in our global extremities business. BLUEPRINT™ is proving to be integral to our ability to convert competitive surgeons, and we believe that impact will increase as we execute our plans to make the system easier to use and release additional enhancements. As of December 29, 2019, approximately 40% of our U.S. shoulder customers are using BLUEPRINT™.

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We believe we have significant opportunity to increase sales with the recent and anticipated launch of new products, including our AEQUALIS™ PERFORM™ Reversed Glenoid System, AEQUALIS™ FLEX REVIVE™ revision shoulder system, our PROstep™ Minimally Invasive Surgery system, AUGMENT^® Injectable, and through driving BLUEPRINT™ adoption and by focusing on implementing initiatives to help us better compete at ambulatory surgery centers.

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 maintain compliance for our products, protect the proprietary technology of our products and our manufacturing processes, manufacture our products cost-effectively and on a timely basis to meet demand, 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. Failure to comply with regulatory requirements could have a material adverse effect on our business, operating results, and financial condition. We, as well as other participants in our industry, are subject to product liability claims, which could have a material adverse effect on our business, operating results, and financial condition.

Results of Operations

The discussion below is on a continuing operations basis, unless otherwise noted.

Comparison of the fiscal year ended December 29, 2019 to the fiscal year ended December 30, 2018

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:

	Fiscal year ended
	December 29, 2019					December 30, 2018
	Amount			% of net sales		Amount			% of net sales
Net sales	$	920,900		100.0	%	$	836,190		100.0	%
Cost of sales 1	188,641			20.5	%	180,153			21.5	%
Gross profit	732,259			79.5	%	656,037			78.5	%
Operating expenses:
Selling, general and administrative 1	614,666			66.7	%	577,961			69.1	%
Research and development 1	74,085			8.0	%	59,142			7.1	%
Amortization of intangible assets	31,921			3.5	%	26,730			3.2	%
Total operating expenses	720,672			78.3	%	663,833			79.4	%
Operating income (loss)	11,587			1.3	%	(7,796		)	(0.9	)%
Interest expense, net	80,849			8.8	%	80,247			9.6	%
Other expense, net	9,904			1.1	%	81,797			9.8	%
Loss from continuing operations before income taxes	(79,166		)	(8.6	)%	(169,840		)	(20.3	)%
Provision (benefit) for income taxes	12,968			1.4	%	(536		)	(0.1	)%
Net loss from continuing operations	$	(92,134	)	(10.0	)%	$	(169,304	)	(20.2	)%
Loss from discontinued operations, net of tax	(22,091		)			(201		)
Net loss	$	(114,225	)			$	(169,505	)

___________________________

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

	Fiscal year ended
	December 29, 2019		% of net sales		December 30, 2018		% of net sales
Cost of sales	$	600	0.1	%	$	585	0.1	%
Selling, general and administrative	29,185		3.2	%	23,608		2.8	%
Research and development	2,782		0.3	%	1,927		0.2	%

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

	Fiscal year ended
	December 29, 2019		December 30, 2018		% change
U.S.
Lower extremities	$	276,821	$	250,735	10.4	%
Upper extremities	329,787		281,314		17.2	%
Biologics	91,450		83,077		10.1	%
Sports med & other	8,231		8,412		(2.2	)%
Total U.S.	$	706,289	$	623,538	13.3	%
International
Lower extremities	$	63,636	$	60,749	4.8	%
Upper extremities	118,404		114,460		3.4	%
Biologics	22,021		25,757		(14.5	)%
Sports med & other	10,550		11,686		(9.7	)%
Total International	$	214,611	$	212,652	0.9	%
Total net sales	$	920,900	$	836,190	10.1	%

The following table reconciles our non-GAAP organic and combined pro forma net sales by product line for the fiscal year ended December 29, 2019 and December 30, 2018 (in thousands):

	Fiscal year ended December 29, 2019
	Legacy Wright (organic)		Standalone Cartiva		Wright Medical Group N.V.
U.S.
Lower extremities	$	251,101	$	25,720	$	276,821
Upper extremities	329,787		—		329,787
Biologics	91,450		—		91,450
Sports med & other	8,231		—		8,231
Total U.S.	$	680,569	$	25,720	$	706,289
International
Lower extremities	$	59,519	$	4,117	$	63,636
Upper extremities	118,404		—		118,404
Biologics	22,021		—		22,021
Sports med & other	10,550		—		10,550
Total International	$	210,494	$	4,117	$	214,611
Global
Lower extremities	$	310,620	$	29,837	$	340,457
Upper extremities	448,191		—		448,191
Biologics	113,471		—		113,471
Sports med & other	18,781		—		18,781
Total net sales	$	891,063	$	29,837	$	920,900

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	Fiscal year ended December 30, 2018
	Legacy Wright (organic)		Standalone Cartiva, post-acquisition		Standalone Cartiva, pre-acquisition		Non-GAAP combined pro forma
U.S.
Lower extremities	$	241,568	$	9,167	$	24,030	$	274,765
Upper extremities	281,314		—		—		281,314
Biologics	83,077		—		—		83,077
Sports med & other	8,412		—		—		8,412
Total U.S.	$	614,371	$	9,167	$	24,030	$	647,568
International
Lower extremities	$	60,430	$	319	$	1,254	$	62,003
Upper extremities	114,460		—		—		114,460
Biologics	25,757		—		—		25,757
Sports med & other	11,686		—		—		11,686
Total International	$	212,333	$	319	$	1,254	$	213,906
Global
Lower extremities	$	301,998	$	9,486	$	25,284	$	336,768
Upper extremities	395,774		—		—		395,774
Biologics	108,834		—		—		108,834
Sports med & other	20,098		—		—		20,098
Total net sales	$	826,704	$	9,486	$	25,284	$	861,474
			Fiscal year ended December 29, 2019
			Non-GAAP organic and combined pro forma net sales growth/(decline)
			Legacy Wright (organic)		Standalone Cartiva		Non-GAAP combined pro forma
U.S.
Lower extremities			3.9%		N/A		0.7%
Upper extremities			17.2%		N/A		17.2%
Biologics			10.1%		N/A		10.1%
Sports med & other			(2.2)%		N/A		(2.2)%
Total U.S.			10.8%		N/A		9.1%
International
Lower extremities			(1.5)%		N/A		2.6%
Upper extremities			3.4%		N/A		3.4%
Biologics			(14.5)%		N/A		(14.5)%
Sports med & other			(9.7)%		N/A		(9.7)%
Total International			(0.9)%		N/A		0.3%
Global
Lower extremities			2.9%		N/A		1.1%
Upper extremities			13.2%		N/A		13.2%
Biologics			4.3%		N/A		4.3%
Sports med & other			(6.6)%		N/A		(6.6)%
Total net sales			7.8%		N/A		6.9%

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Net sales

U.S. net sales. U.S. net sales totaled $706.3 million in 2019, a 13.3% increase from $623.5 million in 2018, primarily due to continued growth in our U.S. upper extremities business. Additionally, we had $25.7 million of net sales from Cartiva. We had non-GAAP organic growth of 10.8% along with non-GAAP combined pro forma growth of 9.1%.

U.S. sales represented approximately 76.7% of total net sales in 2019, compared to 74.6% of total net sales in 2018.

Our U.S. lower extremities net sales increased to $276.8 million in 2019 compared to $250.7 million in 2018, representing growth of 10.4%. This growth was primarily driven by Cartiva net sales of approximately $25.7 million. Our non-GAAP organic net sales of U.S. lower extremities increased 3.9%, which was in line with our expectations and primarily driven by 11% net sales growth in our total ankle replacement products, partially offset by flat performance in our core foot products. We believe our U.S. lower extremities business made good progress in bringing the U.S. lower extremities sales force back to full strength in the second half of 2019, filling our open territories with experienced foot and ankle reps, and we noted an improved growth rate in the fourth quarter for our total ankle products and our core foot and ankle products. We expect it will continue to take some time for the full benefits of these actions to be evident in our sales results.

Our U.S. upper extremities net sales increased to $329.8 million in 2019 from $281.3 million in 2018, representing growth of 17.2%. This growth was driven by the ongoing launch of our AEQUALIS™ FLEX REVIVE™ revision shoulder system and continued success of the combination of our BLUEPRINT™ enabling technology, AEQUALIS™ PERFORM™ Reversed Glenoid System and SIMPLICITI^® shoulder system.

Our U.S. biologics net sales totaled $91.5 million in 2019, up from $83.1 million in 2018, representing a 10.1% increase over 2018. This increase was driven by net sales volume growth of AUGMENT^® Injectable, which launched at the end of the second quarter of 2018 after receiving FDA approval, and in our core biologics products.

International net sales. Net sales in our international regions totaled $214.6 million in 2019, compared to $212.7 million in 2018. This 0.9% increase was primarily driven by incremental Cartiva net sales and an increase in our direct markets in our international upper extremities business. These increases were offset by a $9.0 million unfavorable impact from foreign currency exchange rates (a 4 percentage point unfavorable impact to international sales growth rate).

Our international lower extremities net sales increased 4.8% to $63.6 million in 2019 from $60.7 million in 2018. Sales increased primarily due to $4.1 million in Cartiva net sales. Non-GAAP organic international lower extremities sales decreased 1.5%, mostly due to a $2.4 million unfavorable impact from foreign currency exchange rates (a 4 percentage point unfavorable impact to international lower extremities sales growth rate). This unfavorable impact was partially offset by increased sales volumes to our distributor markets.

Our international upper extremities net sales increased 3.4% to $118.4 million in 2019 from $114.5 million in 2018. Sales increased by a combined 8.5% in our direct markets. These increases were partially offset by a $5.5 million unfavorable impact from foreign currency exchange rates (a 5 percentage point unfavorable impact to international upper extremities sales growth rate).

Our international biologics net sales decreased 14.5% to $22.0 million in 2019 from $25.8 million in 2018, due to timing of sales to stocking distributors and a $0.7 million unfavorable impact from foreign currency exchange rates (a 3 percentage point unfavorable impact to international biologics sales growth rate).

Cost of sales

Our cost of sales totaled $188.6 million, or 20.5% of net sales, in 2019, compared to $180.2 million, or 21.5% of net sales, in 2018. Our 2019 cost of sales included a $5.2 million favorable adjustment as a result of our change in accounting estimate of reserves for excess and obsolete inventory, as such inventory was sold (see Note 2 to the consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for further discussion of change in our estimate). Cost of sales as a percentage of net sales further decreased as a percentage of sales due to favorable manufacturing expenses and increased gross margins from Cartiva net sales, partially offset by inventory step-up amortization.

Our cost of sales and corresponding gross profit percentages can be expected to fluctuate in future periods depending upon, among other factors, 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 totaled $614.7 million, or 66.7% of net sales, in 2019, compared to $578.0 million, or 69.1% of net sales, in 2018. In 2019, selling, general and administrative expenses included transaction and transition costs of $5.8 million, or 0.6% of net sales, and a non-cash asset impairment associated with the technology transfer of $5.6 million, or 0.6% of net sales. In 2018, selling, general and administrative expenses included transaction and transition cost of $7.6 million, or 0.9% of net sales. The remaining selling, general and administrative expenses as a percentage of net sales decreased 3 percentage points primarily due to leveraging certain general and administrative expenses over increased net sales.

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Our selling, general and administrative expenses are expected to decrease as a percentage of net sales in 2020 through opportunities to continue to improve efficiency and leverage our fixed expenses as we expect net sales to continue to increase at a higher rate than expenses.

Research and development

Our investment in research and development expense totaled $74.1 million, or 8.0% of net sales, in 2019 compared to $59.1 million, or 7.1% of net sales, in 2018. Research and development costs increased 1 percentage point primarily due to investments in our new product pipeline.

Our research and development expenses are estimated to range from 7% to 8% as a percentage of net sales in 2020.

Amortization of intangible assets

Charges associated with amortization of intangible assets totaled $31.9 million in 2019 compared to $26.7 million in 2018. Based on intangible assets held at December 29, 2019, we expect amortization expense to be between $27 million and $31 million per year for the years 2020 through 2024.

Interest expense, net

Interest expense, net, totaled $80.8 million in 2019 and $80.2 million in 2018. Increased interest expense in 2019 related primarily to non-cash interest expense associated with the amortization of the discount on the 2023 Notes, 2021 Notes, and 2020 Notes of $23.5 million, $22.0 million, and $3.8 million, respectively; amortization of deferred financing charges on our borrowings totaling $5.2 million; and cash interest expense totaling $29.0 million primarily associated with the 2023 Notes, 2021 Notes, 2020 Notes, and borrowings under our ABL Facility and the Term Loan Facility, partially offset by interest income of $2.6 million.

Our interest expense in 2018 related primarily to non-cash interest expense associated with the amortization of the discount on the 2023 Notes, 2021 Notes, and 2020 Notes of $10.1 million, $20.0 million, and $19.1 million, respectively; amortization of deferred financing charges totaling $5.4 million; and cash interest expense totaling $28.3 million primarily associated with the 2023 Notes, 2021 Notes, 2020 Notes, and borrowings under our ABL Facility and the 2021 Term Loan Facility. Our interest expense was partially offset by interest income of $2.7 million as result of the investment of the net proceeds from the 2023 Notes issued in the second quarter of 2018.

Other expense, net

Other expense, net totaled $9.9 million in 2019, compared to $81.8 million of other expense, net in 2018. In 2019, other expense, net, consisted primarily of a loss of $14.3 million on the exchange of the cash convertible notes, primarily due to settlement of related conversion derivative liabilities; and a $9.5 million loss related to fair value adjustments to contingent consideration; partially offset by a $11.0 million gain related to mark-to-market adjustments on derivative assets and liabilities; and a net gain on investments of $3.3 million. In 2018, other expense, net, consisted primarily of a $39.9 million charge for the write-off of unamortized deferred financing fees and debt discount associated with the extinguishment of $400.0 million of the 2020 Notes; a $35.9 million loss for the net mark-to-market adjustments on our derivative assets and liabilities; a $3.2 million loss from foreign currency translation; and a $1.8 million loss on fair value adjustments to contingent consideration, including mark-to-market adjustments on CVRs issued in connection with the BioMimetic acquisition.

Provision (benefit) for income taxes

We recorded a tax provision of $13.0 million in 2019 and a tax benefit of $0.5 million in 2018. During 2019, our effective tax rate was approximately (16.4)%, as compared to 0.3% in 2018. Our 2019 net tax provision includes an approximately $10.0 million tax provision due to a change in tax rates on income from deferred intercompany transactions and tax provision on net earnings in jurisdictions where we do not have a valuation allowance offset by a tax benefit for foreign currency losses. Our 2018 tax benefit included an approximately $3.6 million tax benefit recorded due to a change in our valuation allowance as a result of the Cartiva acquisition, a tax provision of $2.7 million due to a change in judgment regarding our ability to realize certain foreign deferred tax assets, and a $0.2 million U.S. tax benefit within continuing operations as a result of the pre-tax gain within discontinued operations. These amounts were offset by income tax provision for net income earned in jurisdictions where we do not have a valuation allowance.

Loss from discontinued operations, net of tax

Loss from discontinued operations, net of tax, consists primarily of the costs associated with legal defense, income/loss associated with product liability insurance recoveries/denials, and changes to any contingent liabilities associated with the OrthoRecon business that was sold to MicroPort. Our loss from discontinued operations for the fiscal years ended 2019 and 2018 was net of $18.5 million in insurance recoveries recognized in 2019 and a $30.75 million insurance recovery recognized in 2018. See Note 4 and Note 17 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for further discussion regarding our discontinued operations and our retained contingent liabilities associated with the OrthoRecon business.

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Reportable segments

The following tables set forth, for the periods indicated, net sales and operating income (loss) of our reportable segments expressed as dollar amounts (in thousands) and as a percentage of net sales:

	Fiscal year ended December 29, 2019
	U.S. Lower Extremities & Biologics			U.S. Upper Extremities			International Extremities & Biologics
Net sales	$	371,791		$	334,498		$	214,611
Operating income (loss)	$	103,883		$	123,539		$	(1,895	)
Operating income (loss) as a percent of net sales	27.9		%	36.9		%	(0.9		)%

	Fiscal year ended December 30, 2018
	U.S. Lower Extremities & Biologics			U.S. Upper Extremities			International Extremities & Biologics
Net sales	$	337,433		$	286,105		$	212,652
Operating income	$	96,153		$	97,644		$	1,492
Operating income as a percent of net sales	28.5		%	34.1		%	0.7		%

Net sales of our U.S. lower extremities and biologics segment increased $34.4 million in 2019 over the prior year. Operating income of our U.S. lower extremities and biologics segment increased $7.7 million in 2019 over the prior year. These increases to both net sales and operating income were driven primarily by net sales from Cartiva, as well as net sales growth from our INFINITY^® total ankle replacement products, our core lower extremities and biologics businesses, and AUGMENT^® Injectable, which received FDA approval in the second quarter of 2018. The increase in operating income was partially offset by investments in our lower extremities sales force. The Cartiva acquisition had an impact of approximately $16.6 million on net sales for our U.S. lower extremities and biologics segment in 2019 over the prior year. The Cartiva acquisition had an impact of approximately $15.5 million for the fiscal year ended December 29, 2019 on operating income for our U.S. lower extremities and biologics segment.

Net sales of our U.S. upper extremities segment increased $48.4 million in 2019 over the prior year. Operating income of our U.S. upper extremities segment increased $25.9 million in 2019 over the prior year. These increases to both net sales and operating income were primarily driven by continued net sales growth within our innovative shoulder product portfolio, including the combination of our AEQUALIS™ PERFORM™ Reversed Glenoid System, SIMPLICITI^® shoulder system, and BLUEPRINT™ enabling technology, the ongoing launch of our AEQUALIS™ FLEX REVIVE™ revision shoulder system, and leveraging certain selling, general and administrative expenses over increased net sales.

Net sales of our International extremities and biologics segment increased $2.0 million in 2019 over the prior year. This increase to net sales was primarily due to incremental Cartiva net sales in our international lower extremities business and growth in direct market sales in our international upper extremities business. The Cartiva acquisition had an impact of approximately $3.8 million on net sales for our International extremities and biologics segment in 2019 over the prior year. This increase was mostly offset by unfavorable impacts from foreign currency exchange rates. International extremities and biologics segment had an operating loss of $1.9 million during the fiscal year ended December 29, 2019 compared to $1.5 million of operating income for the fiscal year ended December 30, 2018, resulting in a $3.4 million decrease in operating income (loss). This decrease was primarily due to spending associated with the new European Medical Device Regulation (MDR). These impacts were partially offset by the operating income from the Cartiva acquisition which totaled $3.5 million for the fiscal year ended December 29, 2019.

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Comparison of the fiscal year ended December 30, 2018 to the fiscal year ended December 31, 2017

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:

	Fiscal year ended
	December 30, 2018					December 31, 2017
	Amount			% of net sales		Amount			% of net sales
Net sales	$	836,190		100.0	%	$	744,989		100.0	%
Cost of sales 1	180,153			21.5	%	160,947			21.6	%
Gross profit	656,037			78.5	%	584,042			78.4	%
Operating expenses:
Selling, general and administrative 1	577,961			69.1	%	525,222			70.5	%
Research and development 1	59,142			7.1	%	50,115			6.7	%
Amortization of intangible assets	26,730			3.2	%	28,396			3.8	%
Total operating expenses	663,833			79.4	%	603,733			81.0	%
Operating loss	(7,796		)	(0.9	)%	(19,691		)	(2.6	)%
Interest expense, net	80,247			9.6	%	74,644			10.0	%
Other expense, net	81,797			9.8	%	5,570			0.7	%
Loss from continuing operations before income taxes	(169,840		)	(20.3	)%	(99,905		)	(13.4	)%
Benefit for income taxes	(536		)	(0.1	)%	(34,968		)	(4.7	)%
Net loss from continuing operations	(169,304		)	(20.2	)%	(64,937		)	(8.7	)%
Loss from discontinued operations, net of tax	(201		)			(137,661		)
Net loss	$	(169,505	)			$	(202,598	)

___________________________

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

	Fiscal year ended
	December 30, 2018		% of net sales		December 31, 2017		% of net sales
Cost of sales	$	585	0.1	%	$	565	0.1	%
Selling, general and administrative	23,608		2.8	%	17,705		2.4	%
Research and development	1,927		0.2	%	1,123		0.2	%

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

	Fiscal year ended
U.S.	December 30, 2018		December 31, 2017		% change
Lower extremities	$	250,735	$	228,044	10.0	%
Upper extremities	281,314		239,965		17.2	%
Biologics	83,077		78,361		6.0	%
Sports med & other	8,412		8,141		3.3	%
Total U.S.	$	623,538	$	554,511	12.4	%
International
Lower extremities	$	60,749	$	58,473	3.9	%
Upper extremities	114,460		94,699		20.9	%
Biologics	25,757		22,276		15.6	%
Sports med & other	11,686		15,030		(22.2	)%
Total International	$	212,652	$	190,478	11.6	%
Total net sales	$	836,190	$	744,989	12.2	%

Net sales

U.S. net sales. U.S. net sales totaled $623.5 million in 2018, a 12.4% increase from $554.5 million in 2017, primarily due to continued growth in our U.S. upper extremities business. Additionally, our U.S. lower extremities business had strong sales growth due to continued growth in both our core products and total ankle as well as $9.2 million of net sales from Cartiva. These increases were partially offset by four fewer selling days in 2018, the impact of which we estimate to be approximately $9.0 million. U.S. sales represented approximately 74.6% of total net sales in 2018, compared to 74.4% of total net sales in 2017.

Our U.S. lower extremities net sales increased to $250.7 million in 2018 compared to $228.0 million in 2017, representing growth of 10.0%. This growth was driven by a 15% growth in our INFINITY^® total ankle replacement products and net sales growth in our core lower extremities business primarily due to increased contributions from our expanded sales organization. Additionally, the impact from Cartiva revenue was approximately $9.2 million. These increases were partially offset by the impact of four fewer selling days in 2018.

Our U.S. upper extremities net sales increased to $281.3 million in 2018 from $240.0 million in 2017, representing growth of 17.2%. This growth was driven by our innovative shoulder product portfolio, including the ongoing launch of our AEQUALIS^® PERFORM™ Reversed Glenoid System, continued contributions from our SIMPLICITI^® shoulder system, and accelerating adoption of our BLUEPRINT™ enabling technology. These increases were partially offset by the impact of four fewer selling days in 2018.

Our U.S. biologics net sales totaled $83.1 million in 2018, up from $78.4 million in 2017, representing a 6.0% increase over 2017. This increase was driven by net sales volume growth in our core biologics products and AUGMENT^® Injectable, which launched at the end of the second quarter of 2018 after receiving FDA approval. These increases were partially offset by the impact of four fewer selling days in 2018.

International net sales. Net sales in our international regions totaled $212.7 million in 2018, compared to $190.5 million in 2017. This 11.6% increase was primarily due to continued growth in our upper extremities business in both our direct and indirect markets. We also had a $4.8 million favorable impact from foreign currency exchange rates (a 3 percentage point favorable impact international sales growth rate).

Our international lower extremities net sales increased 3.9% to $60.7 million in 2018 from $58.5 million in 2017 primarily due to increased sales volumes to our distributor markets and a $1.3 million favorable impact from foreign currency exchange rates (a 2 percentage point favorable impact to international lower extremities sales growth rate).

Our international upper extremities net sales increased 20.9% to $114.5 million in 2018 from $94.7 million in 2017 due to a 12.9% increase in sales in our direct markets and significant increased sales volume to our distributor markets. The majority of our direct

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markets experienced significant growth during 2018. We also had a $3.1 million favorable impact from foreign currency exchange rates (a 3 percentage point favorable impact to international upper extremities sales growth rate).

Our international biologics net sales increased 15.6% to $25.8 million in 2018 from $22.3 million in 2017. This increase was primarily attributable to increased sales volumes to our distributor markets. The net impact from foreign currency exchange rates was immaterial.

Cost of sales

Our cost of sales totaled $180.2 million, or 21.5% of net sales, in 2018, compared to $160.9 million, or 21.6% of net sales, in 2017. Our cost of sales as a percentage of net sales remained relatively constant as favorable manufacturing expenses were offset by unfavorable changes in customer and geographical mix.

Selling, general and administrative

Our selling, general and administrative expenses totaled $578.0 million, or 69.1% of net sales, in 2018, compared to $525.2 million, or 70.5% of net sales, in 2017. In 2018, selling, general and administrative expenses included transaction and transition costs of $7.6 million, or 0.9% of net sales. In 2017, selling, general and administrative expenses included transaction and transition cost of $9.0 million, or 1.2% of net sales, offset by a benefit from incentive and indirect tax projects of $9.0 million, or 1.2% of net sales. The remaining selling, general and administrative expenses as a percentage of net sales decreased 2.3 percentage points due to leveraging corporate and certain U.S. selling, general and administrative expenses over increased net sales, partially offset by higher levels of cash incentive compensation expense and non-cash share-based compensation expense.

Research and development

Our investment in research and development expense totaled $59.1 million in 2018 compared to $50.1 million in 2017. Research and development costs remained constant at approximately 7% of net sales.

Amortization of intangible assets

Charges associated with amortization of intangible assets totaled $26.7 million in 2018 compared to $28.4 million in 2017.

Interest expense, net

Interest expense, net, totaled $80.2 million in 2018 and $74.6 million in 2017. Increased interest expense was driven by the increase in debt outstanding following the issuance of the 2023 Notes in the second quarter of 2018 and the 2021 Term Loan Facility that was established during the second quarter of 2018 (see Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for further discussion of changes in our outstanding debt).

Our interest expense in 2018 related primarily to non-cash interest expense associated with the amortization of the discount on the 2023 Notes, 2021 Notes, and 2020 Notes of $10.1 million, $20.0 million, and $19.1 million, respectively; amortization of deferred financing charges totaling $5.4 million; and cash interest expense totaling $28.3 million primarily associated with the 2023 Notes, 2021 Notes, 2020 Notes, and borrowings under our ABL Facility and the 2021 Term Loan Facility. Our interest expense was partially offset by interest income of $2.7 million as result of the investment of the net proceeds from the 2023 Notes issued in the second quarter of 2018. Our interest expense in 2017 related primarily to non-cash interest expense associated with the amortization of the discount on the 2021 Notes and 2020 Notes of $18.1 million and $27.3 million, respectively; amortization of deferred financing charges totaling $4.9 million; and cash interest expense primarily associated with the coupon on the 2021 Notes, 2020 Notes, 2017 Notes, and our ABL Facility totaling $23.5 million. An insignificant amount of interest income was recorded during 2017.

Other expense, net

Other expense, net was $81.8 million of expense in 2018, compared to $5.6 million of expense in 2017.

In 2018, other expense, net, primarily consisted of:

• a $39.9 million charge for the write-off of unamortized deferred financing fees and debt discount associated with the extinguishment of $400.0 million of the 2020 Notes;

• a $35.9 million loss for the net mark-to-market adjustments on our derivative assets and liabilities;

• a $3.2 million loss from foreign currency translation; and

• a $1.8 million loss on fair value adjustments to contingent consideration, including mark-to-market adjustments on CVRs issued in connection with the BioMimetic acquisition.

In 2017, other income, net, primarily consisted of:

• a $4.5 million loss on currency translation, including hedging activities;

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• a $5.3 million loss for the mark-to-market adjustment on CVRs; partially offset by

• a $4.8 million gain for the net mark-to-market adjustments on our derivative assets and liabilities; and

• a benefit of $0.6 million related to incentive and indirect tax projects.

Benefit for income taxes

We recorded a tax benefit of $0.5 million in 2018 and $35.0 million in 2017. During 2018, our effective tax rate was approximately 0.3%, as compared to 35.0% in 2017. Our 2018 net tax benefit included an approximately $3.6 million tax benefit recorded due to a change in our valuation allowance as a result of the Cartiva acquisition, a tax provision of $2.7 million due to a change in judgment regarding our ability to realize certain foreign deferred tax assets, and a $0.2 million U.S. tax benefit within continuing operations as a result of the pre-tax gain within discontinued operations. These amounts were offset by income tax provision for net income earned in jurisdictions where we do not have a valuation allowance. Our 2017 tax benefit included approximately $25.0 million recorded due to a change in our valuation allowance with respect to certain deferred tax assets that we had previously determined were not more-likely-than-not to be realized and a $8.3 million benefit resulting primarily from the effects of lower statutory tax rates and provisions regarding certain tax attributes resulting from tax reform legislation enacted in the United States and France.  The remaining tax benefit in 2017 was primarily related to losses, including amortization of intangible assets, in jurisdictions where we do not have a valuation allowance.

Loss from discontinued operations, net of tax

For the fiscal years ended December 30, 2018 and December 31, 2017, our loss from discontinued operations, net of tax, totaled $0.2 million and $137.7 million, respectively. Loss from discontinued operations, net of tax, consists primarily of costs associated with legal defense, income/loss associated with product liability insurance recoveries/denials, and changes to any contingent liabilities associated with the OrthoRecon business that was sold to MicroPort.

In 2018, charges associated with product liability claims from the OrthoRecon business were fully offset by insurance recoveries. During the fiscal year ended 2017, the majority of our loss from discontinued operations was the result of our retained metal-on-metal product liability claims.

See Note 4 and Note 17 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for further discussion regarding our discontinued operations and our retained contingent liabilities associated with the OrthoRecon business.

Reportable segments

The following tables set forth, for the periods indicated, net sales and operating income of our reportable segments expressed as dollar amounts (in thousands) and as a percentage of net sales:

	Fiscal year ended December 30, 2018
	U.S. Lower Extremities & Biologics			U.S. Upper Extremities			International Extremities & Biologics
Net sales	$	337,433		$	286,105		$	212,652
Operating income	96,153			97,644			1,492
Operating income as a percent of net sales	28.5		%	34.1		%	0.7		%

	Fiscal year ended December 31, 2017
	U.S. Lower Extremities & Biologics			U.S. Upper Extremities			International Extremities & Biologics
Net sales	$	309,713		$	244,798		$	190,478
Operating income	79,889			78,866			3,631
Operating income as a percent of net sales	25.8		%	32.2		%	1.9		%

Net sales of our U.S. lower extremities and biologics segment increased $27.7 million in 2018 over the prior year. Operating income of our U.S. lower extremities and biologics segment increased $16.3 million in 2018 over the prior year. These increases to both net sales and operating income were driven primarily by net sales growth from our total ankle replacement products, our core lower extremities and biologics businesses, AUGMENT^® Injectable, which received FDA approval in the second quarter of 2018, and leveraging certain selling, general and administrative expenses over increased net sales. Additionally, the impact from the Cartiva acquisition had an impact of approximately $9.2 million and $4.3 million on sales and operating income, respectively, for our U.S. lower extremities and biologics segment.

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Net sales of our U.S. upper extremities segment increased $41.3 million in 2018 over the prior year. Operating income of our U.S. upper extremities segment increased $18.8 million in 2018 over the prior year. These increases to both net sales and operating income were primarily driven by net sales growth within our innovative shoulder product portfolio, including continued success of our AEQUALIS™ PERFORM™ Reversed Glenoid System and our SIMPLICITI^® shoulder system, and leveraging certain selling, general and administrative expenses over increased net sales.

Net sales of our International extremities and biologics segment increased $22.2 million in 2018 over the prior year. This increase was primarily due to increased sales in our direct markets in Europe and Canada, with continued growth in our international upper extremities business. Operating income of our International extremities and biologics segment decreased $2.1 million in 2018 over the prior year, primarily due to investments made in sales and marketing in our direct markets, as well as spending associated with the new European MDR.

Seasonality and Quarterly Fluctuations

We traditionally experience lower sales volumes in the third quarter than throughout the rest of the year as many of our products are used in elective procedures, which generally decline during the summer months. This typically results in selling, general and administrative expenses and research and development expenses as a percentage of net sales that are higher during this period than throughout the rest of the year.

We have experienced and expect to continue to experience meaningful variability in our net sales and cost of sales as a percentage of net sales among quarters, as well as within each quarter, as a result of a number of factors including, among other things, the number and mix of products sold in the quarter and the geographies in which they are sold; the demand for, and pricing of our products and the products of our competitors; the timing of or failure to obtain regulatory clearances or approvals for products; costs, benefits, and timing of new product introductions; the level of competition; the timing and extent of promotional pricing or volume discounts; changes in average selling prices; the availability and cost of components and materials; number of selling days; fluctuations in foreign currency exchange rates; the timing of patients’ use of their calendar year medical insurance deductibles; and impairment and other special charges.

Liquidity and Capital Resources

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

	December 29, 2019			December 30, 2018
Cash and cash equivalents	$	166,856		$	191,351
Working capital (deficit) 1, 2	(106,350		)	136,106

_____________________

¹  As of December 29, 2019, the sale price condition (as defined within Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data”) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018.

²  The holders of the 2020 Notes may convert their notes at any time on or after August 15, 2019. Due to the ability of the holders of the 2020 Notes to convert their notes within the next year, the carrying value of the 2020 Notes was classified as a current liability as of December 30, 2018. The 2020 Notes were classified as a current liability as of December 29, 2019 as they matured on February 15, 2020.

Operating activities. Cash provided by (used in) operating activities totaled $41.6 million, $(63.7) million, and $(184.8) million in 2019, 2018, and 2017, respectively. The increase in cash provided by operating activities in 2019 as compared to 2018 was primarily driven by improved cash profitability of continuing operations and lower levels of cash paid on contingent consideration and product liabilities associated with discontinued operations. During 2018, we paid $42.0 million upon reaching the CVR product sales milestone payment associated with sales for AUGMENT^® Bone Graft and $88.6 million for discontinued operations as compared to $52.6 million for discontinued operations in 2019 (see Note 17 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for further discussion of product liability claims and insurance recoveries).

The decrease in cash used in operating activities in 2018 as compared to 2017 was primarily due to lower levels of cash settlements for product liability claims associated with discontinued operations. Cash used in discontinued operations totaled $88.6 million and $228.1 million in 2018 and 2017, respectively (see Note 17 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for further discussion of product liability settlement liabilities and insurance

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recoveries), as well as improved cash profitability of continuing operations, partially offset by the 2018 payment of $42.0 million upon reaching the CVR product sales milestone payment associated with sales for AUGMENT^® Bone Graft.

Investing activities. Our capital expenditures totaled $99.3 million in 2019, $71.5 million in 2018, and $63.5 million in 2017. This increase is primarily due to increased investments in surgical instrumentation to support the continued rollouts and upcoming product launches in our upper extremities business, as well as increased investments in computer systems. In 2019, we also incurred approximately $14 million for the purchase and set up of a 40,000 square foot state of the art manufacturing and distribution facility in Arlington, Tennessee.

In addition to capital expenditures, during 2018, the majority of our cash used in investing activities was associated with the acquisition of Cartiva for $434.3 million, net of cash acquired. Additionally, during 2017, we paid $44.1 million in conjunction with the IMASCAP acquisition, net of cash acquired. See Note 3 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” for additional information regarding these acquisitions.

Financing activities. Cash provided by financing activities totaled $37.4 million, $598.1 million, and $46.8 million in 2019, 2018 and 2017, respectively.

Cash provided by financing activities in 2019 was primarily attributable to $52.1 million in cash received from the issuance of ordinary shares in connection with option exercises. These proceeds were partially offset by $6.4 million of net payments related to the exchange of 2023 Notes for 2020 Notes (as further described below) and the associated issuance of additional 2023 Notes Hedges and warrants and settlement of pro rata portions of the 2020 Notes Hedges and warrants.

On February 7, 2019, WMG issued $139.6 million of additional 2023 Notes in exchange for $130.1 million aggregate principal amount of 2020 Notes. As this was a debt modification, a pro rata share of the 2020 Notes deferred financing costs and discount was transferred to the 2023 Notes deferred financing costs and discount. Additionally, the 2023 Notes discount was adjusted in order for net debt to remain the same subsequent to the exchange. While the debt modification was a non-cash transaction, we paid approximately $3.0 million of debt modification costs.

Additionally, on January 30, 2019 and January 31, 2019, we, along with WMG, entered into cash-settled convertible note hedge transactions with certain option counterparties. WMG paid approximately $30.1 million in the aggregate to the option counterparties for the note hedge transactions, and received approximately $21.2 million in the aggregate from the option counterparties for the warrants, resulting in a net cost to us of approximately $8.9 million. In connection with the above described exchange, WMG also settled a pro rata share of the 2020 Notes Hedges and warrants corresponding to the amount of 2020 Notes exchanged pursuant to this transaction. We received proceeds of approximately $16.8 million related to the 2020 Notes Hedges and paid $11.0 million related to the 2020 Warrants, generating net proceeds of $5.8 million.

Cash provided by financing activities in 2018 was primarily attributable to the net cash proceeds received from the registered equity offering and 2023 Notes issuance. During August 2018, we entered into an underwriting agreement with J.P. Morgan, relating to a registered public offering of our ordinary shares. The discounted proceeds to Wright for the equity offering to fund the Cartiva acquisition were $448.9 million. Payments of equity offering costs were $25.9 million during 2018. Proceeds were subsequently used in October 2018 to fund the $435.0 million purchase price of Cartiva.

During June 2018, we issued $675.0 million of 2023 Notes, settled $400.9 million of 2020 Notes, and paid a premium of $55.6 million on the 2020 Notes. We also paid $141.3 million for hedges associated with the 2023 Notes and received approximately $102.1 million for the issuance of warrants associated with the 2023 Notes. As part of the 2023 Notes issuance, Term Loan Facility and 2023 warrants, we paid $14.7 million for deferred financing costs. Other debt proceeds were primarily made up of the Term Loan Facility which were used to pay down a portion of the asset-based line of credit under the ABL Facility. In July 2018, we settled a pro rata share of the 2020 Notes hedges and 2020 warrants which resulted in net proceeds of $10.6 million.

During 2018, we also received $21.6 million of cash from the issuance of ordinary shares in connection with option exercises under our share-based compensation plans.

Cash provided by financing activities in 2017 was primarily attributable to $34.9 million of debt proceeds largely from additional borrowings from the ABL Facility and $27.6 million of cash from the issuance of ordinary shares in connection with option exercises under our share-based compensation plans. This was partially offset by $11.5 million of debt payments including a $2.0 million payment of the 2017 Notes and net payments due to the weekly lockbox repayment/re-borrowing arrangement underlying the ABL Facility.

Repatriation. As of December 29, 2019, approximately $0.5 million of our cash and cash equivalents was held by certain U.S.-controlled non-U.S. subsidiaries which may not represent available liquidity for general corporate purposes. Our current plans do not foresee a need to repatriate funds that are designated as permanently reinvested in order to fund our operations or meet currently anticipated liquidity and capital investment needs.

Discontinued operations. Cash flows from discontinued operations are combined with cash flows from continuing operations in the consolidated statements of cash flows. Cash used in discontinued operations totaled $52.6 million, $88.6 million, and $228.1

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million for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively, and primarily related to payments of retained product liability claims from the OrthoRecon business. We do not expect that the future cash outflows from discontinued operations, including the payment of these retained liabilities of the OrthoRecon business, will have an impact on our ability to meet contractual cash obligations and fund our working capital requirements, operations, and anticipated capital expenditures.

Contractual cash obligations. At December 29, 2019, we had contractual cash obligations and commercial commitments as follows (in thousands):

	Payments due by periods
Contractual obligations	Total		Less than 1 year 4, 5		1-3 years		3-5 years		More than 5 years
Amounts reflected in consolidated balance sheet:
Finance lease obligations 1	$	27,515	$	7,912	$	11,322	$	4,951	$	3,330
Operating leases obligations 1	24,561		7,420		9,510		3,595		4,036
Notes payable 2	1,313,278		474,702		22,934		814,637		1,005
Amounts not reflected in consolidated balance sheet:
Minimum supply obligations	44,204		7,766		14,619		14,619		7,200
Interest on notes payable 3	70,788		23,309		35,258		12,221		—
Total contractual cash obligations	$	1,480,346	$	521,109	$	93,643	$	850,023	$	15,571

_______________________________

¹  Payments include amounts representing interest.

²  Our notes payable include 2020 Notes, 2021 Notes, 2023 Notes, ABL Facility, ABL Term Loan Facility, and other debt. See further discussion in Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data.”

³  Represents interest on 2020 Notes, 2021 Notes, 2023 Notes, ABL Term Loan Facility, and other debt. See further discussion in Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data.”

⁴  The 2021 Notes will mature on November 15, 2021 unless earlier converted or repurchased. As of December 29, 2019, the sale price condition (as defined in Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data”) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019 and the gross amount of $395.0 million is included in the less than 1 year total above.

⁵  All outstanding loans under the ABL Facility and Term Loan Facility will be due and payable in full on December 23, 2021 or earlier under certain specified circumstances as described in Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data.” The less than 1 year total above includes $20.7 million in borrowings outstanding under the ABL Facility as this debt is reflected as a current liability on our consolidated balance sheet as of December 29, 2019 due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances.

The amounts reflected in the table above exclude the following:

• product liabilities described in Note 17 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data”

• 2023, 2021, and 2020 Notes Conversion Derivatives (see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for quantitative analysis on possible cash obligations upon maturity at various assumed stock prices)

• contingent consideration related to the IMASCAP acquisition of approximately €25.1 million or $28.0 million that may be required in potential sales earnouts and milestone payments for new software modules and a potential future implant system as described in Note 6 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data”

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• unrecognized tax benefits of approximately $4.5 million, as certain of these matters may not require cash settlement due to the existence of net operating loss carryforwards as described in Note 12 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data”

• commissions and royalties on future product sales.

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 29, 2019. These future payments are subject to foreign currency exchange rate risk.

The amounts reflected in the table above for finance lease obligations represent future minimum lease payments under our finance lease agreements, which are primarily for certain property and equipment. The present value of the minimum lease payments is recorded in our consolidated balance sheet at December 29, 2019. The minimum lease payments related to these leases are discussed further in Note 9 to our consolidated financial statements contained in “Item 8. 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. The present value of the minimum lease payments is recorded in our consolidated balance sheet at December 29, 2019. The minimum lease payments related to these leases are discussed further in Note 9 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data.”

Other liquidity information. We have funded our cash needs through borrowings under credit facilities, including most recently our ABL Facility, various equity and debt issuances and through cash flow from operations.

In August 2018, we entered into an underwriting agreement with J.P. Morgan, relating to a registered public offering. The net proceeds to Wright were $423.0 million. The proceeds were subsequently used to fund the $435.0 million purchase of Cartiva in October 2018 as well as costs and expenses related thereto.

On December 23, 2016, we, together with WMG and certain of our other wholly-owned U.S. subsidiaries (collectively, Borrowers), entered into a Credit, Security and Guaranty Agreement with Midcap Financial Trust, as administrative agent (Agent) and a lender and the additional lenders from time to time party thereto, which agreement was subsequently amended in May 2018 and February 2019 (as amended, the Credit Agreement). The Credit Agreement provides for a $175.0 million senior secured asset-based line of credit, subject to the satisfaction of a borrowing base requirement (ABL Facility) and a $55.0 million term loan facility (Term Loan Facility). The ABL Facility may be increased by up to $75.0 million upon the Borrowers’ request, subject to the consent of the Agent and each of the other lenders providing such increase. We are required to maintain net revenue at or above specified minimum levels, to maintain liquidity in the United States above a specified level and to comply with other covenants under the Credit Agreement. We are in compliance with all covenants as of December 29, 2019. As of December 29, 2019, we had $20.7 million in borrowings outstanding under the ABL Facility and $154.3 million in unused availability under the ABL Facility. As of December 30, 2018, we had $17.8 million in borrowings outstanding under the ABL Facility and $132.2 million in unused availability under the ABL Facility. As of December 29, 2019 and December 30, 2018, we had $20.0 million outstanding under the Term Loan Facility. See Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data.”

As of December 29, 2019, our accrual for metal-on-metal claims totaled $40.5 million, of which $33.0 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $7.5 million is included within “Other liabilities.”  As of December 30, 2018, our accrual for metal-on-metal claims totaled $74.5 million, of which $51.9 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $22.6 million is included within “Other liabilities.” See Note 17 to our consolidated financial statements for additional discussion regarding our accrual methodologies for the metal-on-metal hip replacement product liability claims.

In June 2018, WMG issued $675 million aggregate principal amount of the 2023 Notes, which, after consideration of the exchange of approximately $400.9 million principal amount of the 2020 Notes, generated proceeds of approximately $215.5 million net of premium and interest paid. We also paid $141.3 million for hedges associated with the 2023 Notes and received approximately $102.1 million for the issuance of warrants associated with the 2023 Notes. In July 2018, we settled a pro rata share of the 2020 Notes hedges and 2020 warrants which resulted in net proceeds of $10.6 million.

In February 2019, we issued $139.6 million additional aggregate principal amount of the 2023 Notes in exchange for $130.1 million aggregate principal amount of the 2020 Notes and settled a pro rata share of the 2020 Notes Conversion Derivatives, 2020 Notes Hedges and warrants corresponding to the amount of 2020 Notes exchanged pursuant to this exchange. We also entered into additional agreements for 2023 Notes Conversion Derivatives, 2023 Notes Hedges, and warrants. See Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data.”

Although it is difficult for us to predict our future liquidity requirements, we believe that our cash and cash equivalents balance of approximately $166.9 million, the $154.3 million availability under the ABL Facility and the $35 million availability under the Term Loan Facility, as of December 29, 2019, will be sufficient for the next 12 months to fund our working capital requirements and operations, permit anticipated capital expenditures in 2020 of approximately $80 million, pay retained metal-on-metal product

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and other liabilities of the OrthoRecon business, net of insurance recoveries, fund contingent consideration, and meet our other anticipated contractual cash obligations in 2020. As described above, as of December 29, 2019, the sale price condition (as defined in Note 10 to our consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data”) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. We currently do not expect significant conversions because the 2021 Notes currently trade at a premium to the as-converted value, and a converting holder would forego future interest payments. However, any conversions would reduce our cash resources.

In-process research and development. In connection with the IMASCAP acquisition, we acquired in-process research and development (IPRD) technology related to a next generation reverse shoulder implant system that had not yet reached technological feasibility as of the acquisition date. This project was assigned a fair value of $5.3 million on the acquisition date.

In connection with the Cartiva acquisition, we acquired IPRD technology related to a thumb implant (CMC) that is in development. This project was assigned a fair value of $1.0 million on the acquisition date.

More information regarding the current IPRD projects we acquired in our IMASCAP and Cartiva acquisitions is as follows:

• The next generation reverse shoulder implant system is a reverse shoulder replacement implant having glenoid or glenoid and humeral implant components. We have an anticipated first clinical use in 2020 and launch in the second half of 2021; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA and CE mark clearance. We have incurred expenses of approximately $0.2 million in the fiscal year ended December 29, 2019. Project cost to complete is estimated to be less than $2 million.

• The CMC thumb implant is an arthroplasty device designed to resurface the CMC joint for the treatment of osteoarthritis. We anticipate the launch of the CMC thumb implant no earlier than 2021; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA PMA approval. We have incurred expenses of approximately $0.5 million in the fiscal year ended December 29, 2019. Project cost to complete is estimated to be less than $3 million.

Critical Accounting Estimates

All of our significant accounting policies and estimates are described in Note 2 to our consolidated financial statements contained in “Item 8. 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 our 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 our financial statements. Those financial estimates include:

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. Historically, our excess and obsolete inventory reserve was based on both the current age of kit inventory as compared to its estimated life cycle and our forecasted product demand and production requirements for other inventory items for the next 36 months. During the quarter ended September 29, 2019, we changed our estimate of excess and obsolete inventory reserves to better reflect the future usage for inventory in excess of estimated three-year demand. The impact of this change in estimate was approximately $26 million. We reduce our inventory reserve and recognize an offset to cost of sales as the related inventory is sold based on an estimated inventory turnover period of 2.5 years. 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.

Total charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $13.1 million, $20.9 million, and $19.2 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. Our 2019 excess and obsolete charges included a $5.2 million favorable adjustment as a

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result of our change in accounting estimate of reserves for excess and obsolete inventory, as such inventory was sold. During the fiscal years ended December 30, 2018 and December 31, 2017, our excess and obsolete charges included product rationalization initiative adjustments of $4.4 million and $3.1 million, respectively.

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.

Business combinations, goodwill and long-lived assets. We account for acquired businesses using the purchase method of accounting. Under the purchase method, our consolidated financial statements include the financial results of an acquired business starting from the date the acquisition is completed. In addition, the assets acquired, liabilities assumed, and any contingent consideration must be recorded at the date of acquisition at their respective estimated fair values, with any excess of the purchase price over the estimated fair values of the net assets acquired recorded as goodwill. Significant judgment is required in estimating the fair value of contingent consideration and intangible assets and in assigning their respective useful lives. Accordingly, we typically obtain the assistance of third-party valuation specialists for significant acquisitions. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management, but are inherently uncertain.

We use a discounted cash flow analysis given probability and estimated timing of payout to determine the fair value of contingent consideration on the date of acquisition. Significant changes in the discount rate used could affect the accuracy of the fair value calculation. Contingent consideration is adjusted based on experience in subsequent periods and the impact of changes related to assumptions are recorded in operating expenses as incurred.

We typically use an income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability), the underlying product or technology life cycles, the economic barriers to entry, and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may result in a triggering event for which we would test for impairment.

Determining the useful life of an intangible asset also requires judgment. Our assessment as to trademarks and brands that have a finite life is based on a number of factors including competitive environment, market share, trademark and/or brand history, underlying product life cycles, operating plans, and the macroeconomic environment of the countries in which the trademarks or brands are sold. All of our acquired technology and customer-related intangibles are expected to have finite useful lives.

We estimate fair value attributed to IPRD acquired as part of acquisitions that has not reached technological feasibility but that has advanced to a stage of development where management reasonably believes net future cash flow forecasts could be prepared and where there is a reasonable possibility of technical success.

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.

As of December 29, 2019, we had approximately $1.3 billion of goodwill recorded as a result of our acquisition of businesses, including the Cartiva and IMASCAP acquisitions and the Wright/Tornier merger. 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 on October 1 each year.

We performed a qualitative analysis of goodwill for impairment as of October 1, 2019 for our reporting units and determined that it is not more likely than not that the respective carrying values of our reporting units exceeded their fair value, indicating that goodwill was not impaired.

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 FASB ASC Section 360, Property, Plant and Equipment.

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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.

Product liability claims and related 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.

The legal contingencies described in this section relate primarily to WMT, an indirect subsidiary of Wright Medical Group N.V., and are not necessarily applicable to Wright Medical Group N.V. or other affiliated entities. Maintaining separate legal entities within our corporate structure is intended to ring-fence liabilities. We believe our ring-fenced structure should preclude corporate veil-piercing efforts against entities whose assets are not associated with particular claims.

We have received claims for personal injury against us associated with fractures of the PROFEMUR^® titanium modular neck product (PROFEMUR^® Claims). As of December 29, 2019, there were approximately 22 unresolved pending U.S. lawsuits and approximately 50 unresolved pending non-U.S. lawsuits alleging such claims (44 of which are part of a single consolidated class action lawsuit in Canada). The overall fracture rate for the product is low and the fractures appear, at least in part, to relate to patient demographics. In 2009, we began offering a cobalt-chrome version of the PROFEMUR® modular neck, which has greater strength characteristics than the alternative titanium version. However, during the fiscal 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 the United States and Canada who have previously required a revision following a fracture of a PROFEMUR^® titanium modular neck, or who may require a revision in the future. As of December 29, 2019, our accrual for PROFEMUR^® Claims totaled $12.1 million, of which $8.8 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $3.3 million is included within “Other liabilities.” As of December 30, 2018, our accrual for PROFEMUR® Claims totaled $17.5 million, of which $12.3 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $5.2 million is included within “Other liabilities.” We expect to pay the majority of these claims within the next two years. Any claims associated with this product outside of the United States and Canada, or for any other products, will be managed as part of our standard product liability accrual methodology on a case-by-case basis.

We are aware that MicroPort has recalled a certain size of its cobalt chrome modular neck product as a result of alleged fractures. As of December 29, 2019, there were seven pending U.S. lawsuits and seven pending non-U.S. lawsuits against us alleging personal injury resulting from the fracture of a cobalt chrome modular neck. These claims will be managed as part of our standard product liability accrual methodology on a case-by-case basis.

Claims for personal injury have also been made against us associated with metal-on-metal hip products (primarily the CONSERVE^® product line). The pre-trial management of certain of these claims was consolidated in the federal court system, in the United States District Court for the Northern District of Georgia under multi-district litigation (MDL) and certain other claims by the Judicial Counsel Coordinated Proceedings in state court in Los Angeles County, California (JCCP and, together with the MDL, the Consolidated Metal-on-Metal Claims). Pursuant to previously disclosed settlement agreements with the Court-appointed attorneys representing plaintiffs in the MDL and JCCP (the MoM Settlement Agreements), the MDL and JCCP were closed to new cases effective October 18, 2017 and October 31, 2017, respectively.

Excluding claims resolved in the MoM Settlement Agreements, as of December 29, 2019, there were approximately 205 unresolved metal-on-metal hip cases pending in the U.S. This number includes cases ineligible for settlement under the MoM Settlement Agreements, cases which opted out of such settlements, post-settlement cases, tolled cases, and existing state court cases that were not part of the MDL or JCCP. As of December 29, 2019, we estimate there also were pending approximately 27 unresolved non-U.S. metal-on metal hip cases, 9 unresolved U.S. modular neck cases alleging claims related to the release of metal ions, and zero non-U.S. modular neck cases with metal ion allegations. We also estimate that as of December 29, 2019, there were approximately 514 non-revision claims either dismissed or awaiting dismissal from the MDL and JCCP, which dismissal is a condition of the MoM Settlement Agreements. Although there is a limited time period during which dismissed non-revision claims may be refiled, it is presently unclear how many non-revision claimants will elect to do so. As of December 29, 2019, no dismissed non-revision cases have been refiled.

We believe we have data that supports the efficacy and safety of these hip products. Every hip implant case, including metal-on-metal hip cases, involves fundamental issues of law, 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, statutes of limitation, and the existence of actual, provable injury.

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As of December 29, 2019, our accrual for metal-on-metal claims totaled $40.5 million, of which $33.0 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $7.5 million is included within “Other liabilities.” As of December 30, 2018, our accrual for metal-on-metal claims totaled $74.5 million, of which $51.9 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $22.6 million is included within “Other liabilities.” Our accrual is based on (i) case by case accruals for specific cases where facts and circumstances warrant, and (ii) the implied settlement values for eligible claims under the MoM Settlement Agreements. We are unable to reasonably estimate the high-end of a possible range of loss for claims which elected to opt-out of the MoM Settlement Agreements. Claims we can confirm would meet the eligibility criteria set forth in the MoM Settlement Agreements but are excluded from the settlements due to the maximum settlement cap, or because they are cases not part of the MDL or JCCP, have been accrued as of the respective settlement rates. Due to the general uncertainties surrounding all metal-on metal claims as noted above, as well as insufficient information about individual claims, we are presently unable to reasonably estimate a range of loss for future claims; hence we have not accrued for these claims at the present time.

We continue to believe the high-end of a possible range of loss for existing revision claims that do not meet eligibility criteria of the MoM Settlement Agreements will not, on an average per case basis, exceed the average per case accrual we take for revision claims we can confirm do meet eligibility criteria of the applicable settlement agreement. Future claims will be evaluated for accrual on a case by case basis using the accrual methodologies described above (which could change if future facts and circumstances warrant).

Given the substantial or indeterminate amounts sought in these matters, and the inherent unpredictability of such matters, an adverse outcome in these matters in excess of the amounts included in our accrual for contingencies could have a material adverse effect on our financial condition, results of operations and cash flow. Future revisions to our estimates of these provisions could materially impact our results of operations and financial position. We use the best information available to determine the level of accrued product liabilities, and believe our accruals are adequate.

Accounting for income taxes. We account for income taxes in accordance with provisions which set forth an asset and liability approach that requires the recognition of deferred tax assets and deferred tax liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. 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 $423.0 million and $400.2 million as of December 29, 2019 and December 30, 2018, 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.

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. In accordance with ASC 740 Income Taxes, we recognize the tax effects of an income tax position only if they are “more-likely-than-not” to be sustained based solely on the technical merits as of the reporting date. If we ultimately determine that the payment of these liabilities will be unnecessary, we will reverse 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 unrecognized tax benefits totaled $4.5 million and $4.6 million as of December 29, 2019 and December 30, 2018, respectively.

In December 2017, the United States enacted new legislation under the 2017 Tax Act. We recognized the income tax effects of the 2017 Tax Act in our 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts under a one-year measurement period. We finalized our accounting for the provisions of the 2017 Tax Act in the fourth-quarter 2018 with no material impact on our financial statements.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is included in Note 2 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data”.

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

Interest Rate Risk

Our exposure to interest rate risk arises principally from variable interest rates applicable to borrowings under our Credit Agreement and the interest rates associated with our invested cash balances.

Borrowings under our Credit Agreement, including our ABL Facility and Term Loan Facility, bear interest at variable rates. The interest rate margin applicable to borrowings under the ABL Facility is, at the option of the Borrowers, equal to either (a) 3.25% for base rate loans or (b) 4.25% for LIBOR rate loans, subject to a 0.75% LIBOR floor. The interest rate applicable to borrowings

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under the Term Loan Facility is equal to one-month LIBOR plus 7.85%, subject to a 1.00% LIBOR floor. As of December 29, 2019, we had $20.7 million of borrowings under our ABL Facility and $20.0 million principal outstanding under our Term Loan Facility. Based upon this debt level, and the LIBOR floor on our interest rate, a 100 basis point increase in the annual interest rate on such borrowings would have an immaterial impact on our interest expense on an annual basis.

On December 29, 2019, we had invested cash and cash equivalents of approximately $166.9 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 $0.2 million to our interest income.

As of December 29, 2019, we had outstanding an aggregate of $56.5 million, $395.0 million, and $814.6 million, principal amount of our 2020 Notes, 2021 Notes, and 2023 Notes, respectively. We carry these instruments at face value less unamortized discount and unamortized debt issuance costs on our consolidated balance sheets. Since these instruments bear interest at a fixed rate, we have no financial statement risk associated with changes in interest rates. However, the fair value of the 2020 Notes, 2021 Notes, and 2023 Notes fluctuates when interest rates change and when the market price of our ordinary shares fluctuates. We do not carry the 2020 Notes, 2021 Notes, or 2023 Notes at fair value, but present the fair value of the principal amount of our 2020 Notes, 2021 Notes, and 2023 Notes for disclosure purposes.

Equity Price Risk

On June 28, 2018, we issued $675 million aggregate principal amount of the 2023 Notes. Additional 2023 Notes were issued in exchange for a portion of 2020 Notes in February 2019. As of December 29, 2019, $814.6 million aggregate principal amount was outstanding on the 2023 Notes. The holders of the 2023 Notes may convert their 2023 Notes into cash upon the satisfaction of certain circumstances as described in Note 10. The conversion and settlement provisions of the 2023 Notes are based on the price of our ordinary shares 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 ordinary shares. 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 ordinary shares. 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 ordinary shares.

Upon the expiration of our warrants issued in connection with the 2023 Notes, we will issue ordinary shares to the purchasers of the warrants to the extent the price of our ordinary shares exceeds the warrant strike price of $40.86 at that time. The following table shows the number of shares that we would issue to warrant counterparties at expiration of the warrants based on the warrants outstanding as of December 29, 2019 assuming various closing prices of our ordinary shares on the date of warrant expiration:

Share price		Shares (in thousands)
$44.95	(10% greater than strike price)	2,219
$49.03	(20% greater than strike price)	4,068
$53.12	(30% greater than strike price)	5,633
$57.20	(40% greater than strike price)	6,974
$61.29	(50% greater than strike price)	8,137

The fair value of the 2023 Notes Conversion Derivative and the 2023 Notes Hedge is directly impacted by the price of our ordinary shares. We entered into the 2023 Notes Hedges in connection with the issuance of the 2023 Notes with the option counterparties. The 2023 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments we are required to make upon conversion of the 2023 Notes in excess of the principal amount of converted notes if our ordinary share price exceeds the conversion price. The following table presents the fair values of the 2023 Notes Conversion Derivative and 2023 Notes Hedge as a result of a hypothetical 10% increase and decrease in the price of our ordinary shares. We believe that a 10% change in our share price is reasonably possible in the near term:

(in thousands)
	Fair value of security given a 10% decrease in share price	Fair value of security as of December 29, 2019	Fair value of security given a 10% increase in share price
2023 Notes Hedges (Asset)	$15,133	$39,240	$78,372
2023 Notes Conversion Derivative (Liability)	$8,867	$31,555	$71,597

On May 20, 2016, we issued $395.0 million aggregate principal amount of the 2021 Notes. The holders of the 2021 Notes may convert their 2021 Notes into cash upon the satisfaction of certain circumstances as described in Note 10. At December 29, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30

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consecutive trading days preceding the quarter-end; and, therefore, the holders of the 2021 Notes may convert the notes during the succeeding calendar quarter period. Due to the ability of the holders of the 2021 Notes to convert the notes during this period, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivative were classified as current liabilities, and the fair value of the 2021 Notes Hedges was classified as current assets as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018. We currently do not expect significant conversions because the 2021 Notes currently trade at a premium to the as-converted value, and a converting holder would forego future interest payments. However, any conversions would reduce our cash resources.

The conversion and settlement provisions of the 2021 Notes are based on the price of our ordinary shares 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 ordinary shares. 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 ordinary shares. 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 ordinary shares.

Upon the expiration of our warrants issued in connection with the 2021 Notes, we will issue ordinary shares to the purchasers of the warrants to the extent the price of our ordinary shares exceeds the warrant strike price of $30.00 at that time. The following table shows the number of shares that we would issue to warrant counterparties at expiration of the warrants based on the warrants outstanding as of December 29, 2019 assuming various closing prices of our ordinary shares on the date of warrant expiration:

Share price		Shares (in thousands)
$33.00	(10% greater than strike price)	1,681
$36.00	(20% greater than strike price)	3,082
$39.00	(30% greater than strike price)	4,268
$42.00	(40% greater than strike price)	5,284
$45.00	(50% greater than strike price)	6,164

The fair value of the 2021 Notes Conversion Derivative and the 2021 Notes Hedge is directly impacted by the price of our ordinary shares. We entered into the 2021 Notes Hedges in connection with the issuance of the 2021 Notes with the option counterparties. The 2021 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments we are required to make upon conversion of the 2021 Notes in excess of the principal amount of converted notes if our ordinary share price exceeds the conversion price. The following table presents the fair values of the 2021 Notes Conversion Derivative and 2021 Notes Hedge as a result of a hypothetical 10% increase and decrease in the price of our ordinary shares. We believe that a 10% change in our share price is reasonably possible in the near term:

(in thousands)
	Fair value of security given a 10% decrease in share price	Fair value of security as of December 29, 2019	Fair value of security given a 10% increase in share price
2021 Notes Hedges (Asset)	$133,619	$183,437	$209,733
2021 Notes Conversion Derivative (Liability)	$125,327	$179,478	$235,068

On February 13, 2015, WMG issued $632.5 million aggregate principal amount of the 2020 Notes. A portion of the 2020 Notes was exchanged in conjunction with both the 2021 Notes and the 2023 Notes. As of December 29, 2019, $56.5 million aggregate principal amount was outstanding on the 2020 Notes. On or after August 15, 2019, holders may convert their 2020 Notes solely into cash. Due to the ability of the holders of the 2020 Notes to convert their notes within the next year, the carrying value of the 2020 Notes was classified as a current liability as of December 30, 2018. The 2020 Notes were classified as a current liability as of December 29, 2019 as they matured and were repaid in full on February 15, 2020.

The conversion and settlement provisions of the 2020 Notes are based on the price of our ordinary shares 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 ordinary shares. 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 ordinary shares. 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 ordinary shares.

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Upon the expiration of our warrants associated with the 2020 Notes, we will issue ordinary shares to the purchasers of the warrants to the extent the price of our ordinary shares exceeds the warrant strike price at that time. On November 24, 2015, Wright Medical Group N.V. assumed WMG’s obligations pursuant to the warrants, and the strike price of the warrants was adjusted from $40.00 to $38.8010 per ordinary share. The following table shows the number of shares that we would issue to warrant counterparties at expiration of the warrants based on the warrants outstanding as of December 29, 2019 assuming various closing prices of our ordinary shares on the date of warrant expiration:

Share price		Shares (in thousands)
$42.68	(10% greater than strike price)	171
$46.56	(20% greater than strike price)	314
$50.44	(30% greater than strike price)	435
$54.32	(40% greater than strike price)	539
$58.20	(50% greater than strike price)	628

The fair value of the 2020 Notes Conversion Derivative and the 2020 Notes Hedge is directly impacted by the price of our ordinary shares. We entered into the 2020 Notes Hedges in connection with the issuance of the 2020 Notes with the option counterparties. In conjunction with the issuance of the 2021 Notes, a portion of the 2020 Notes Conversion Derivative and the 2020 Notes Hedges were settled. In conjunction with the issuance of the 2023 Notes and the Additional 2023 Notes, a portion of the 2020 Notes Conversion Derivative and the 2020 Notes Hedges were settled as described in Note 6. The remaining 2020 Notes Hedges, which are cash-settled, are intended to reduce our exposure to potential cash payments we are required to make upon conversion of the 2020 Notes in excess of the principal amount of converted notes if our ordinary share price exceeds the conversion price. The following table presents the fair values of the 2020 Notes Conversion Derivative and 2020 Notes Hedges as a result of a hypothetical 10% increase and decrease in the price of our ordinary shares. We believe that a 10% change in our share price is reasonably possible in the near term:

(in thousands)
	Fair value of security given a 10% decrease in share price	Fair value of security as of December 29, 2019	Fair value of security given a 10% increase in share price
2020 Notes Hedges (Asset)	$76	$1,969	$7,071
2020 Notes Conversion Derivative (Liability)	$51	$1,666	$6,601

In February 2019, we issued $139.6 million additional aggregate principal amount of the 2023 Notes in exchange for $130.1 million aggregate principal amount of the 2020 Notes and settled a pro rata share of the 2020 Notes Conversion Derivatives, 2020 Notes Hedges and warrants corresponding to the amount of 2020 Notes exchanged pursuant to this exchange. We also entered into additional agreements for 2023 Notes Conversion Derivatives, 2023 Notes Hedges, and warrants. See Note 6 to our consolidated financial statements contained in “Part II. Financial Statements.”

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 21% of our net sales from continuing operations were denominated in foreign currencies during the fiscal year ended December 29, 2019 and we expect that foreign currencies will continue to represent a similarly significant percentage of our net sales in the future. The cost of sales related to these sales is 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.

For the fiscal year ended December 29, 2019, approximately 90% of our net sales denominated in foreign currencies were derived from European Union countries, which are denominated in the euro; from the United Kingdom, which are denominated in the British pound; from Australia which are denominated in the Australian dollar; and from Canada, which are denominated in the Canadian dollar. Additionally, we have significant intercompany receivables, payables, and debt from our foreign subsidiaries that are denominated in foreign currencies, principally the euro, the Japanese yen, the British pound, the Australian dollar, and the Canadian dollar. Our principal exchange rate risk, therefore, exists between the U.S. dollar and the euro, the Japanese yen, the British pound, the Australian dollar, and the Canadian dollar. Fluctuations from the beginning to the end of any given reporting

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period result in the revaluation of our foreign currency-denominated intercompany receivables, payables, and debt generating currency translation gains or losses that impact our non-operating income and expense levels in the respective 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 an increase in operating income of approximately $3.2 million for the fiscal year ended December 29, 2019, respectively. 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 also be affected by the change in exchange rates.

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Item 8. Financial Statements and Supplementary Data.

Wright Medical Group N.V. Consolidated Financial Statements for the Fiscal Years Ended December 29, 2019, December 30, 2018, and December 31, 2017  Index to Financial Statements
	Page
Reports of Independent Registered Public Accounting Firm	79
Consolidated Financial Statements:
Consolidated Balance Sheets	82
Consolidated Statements of Operations	83
Consolidated Statements of Comprehensive Loss	84
Consolidated Statements of Cash Flows	85
Consolidated Statements of Changes in Shareholders’ Equity	87
Notes to Consolidated Financial Statements	88

78

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Wright Medical Group N.V.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Wright Medical Group N.V. and subsidiaries (the Company) as of December 29, 2019 and December 30, 2018, the related consolidated statements of operations, comprehensive loss, cash flows, and changes in shareholders’ equity for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, and the related notes and financial statement schedule (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 29, 2019 and December 30, 2018, and the results of its operations and its cash flows for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, 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) (PCAOB), the Company’s internal control over financial reporting as of December 29, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of product liability legal contingencies and disclosures

As discussed in Notes 2 and 17 to the consolidated financial statements, the Company is involved in personal injury claims relating to products sold by the Company.

We identified the evaluation of the accrued liability and related disclosure for these claims and legal proceedings as a critical audit matter because it required challenging auditor judgment, due to the nature of the estimates and assumptions, including judgments about future events and uncertainties.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s product liability exposures, including controls related to the evaluation of information from external and internal legal counsel, evaluation of underlying assumptions involving prior legal settlements or settlement agreements, and determination of the accrued liability or related disclosure. We read letters received directly from the Company’s external legal counsel that evaluated and quantified the Company’s probable or reasonably possible monetary exposure to product-related claims and legal proceedings. We evaluated the Company’s ability to estimate its monetary exposure to product-related claims and legal proceedings by comparing historically recorded liabilities to actual amounts incurred upon resolution of prior claims and legal matters. In addition, we also considered relevant publicly available information about the Company, its competitors, and the industry with respect to product-related claims and litigation.

79

Assessment of the fair values of notes hedges and notes conversion derivatives

As discussed in Notes 2 and 6 to the consolidated financial statements, the Company measures at fair value the derivative assets and liabilities associated with its cash convertible notes. As of December 29, 2019, the derivative assets totaled approximately $224.6 million and the derivative liabilities totaled approximately $212.7 million. These derivative assets and liabilities are measured at fair value using option pricing models that use observable and unobservable market data for inputs, including the Company’s stock price, implied volatility of the Company’s shares, credit spreads, and the risk-free interest rate. Some of these inputs are unobservable Level 3 inputs.

We identified the assessment of the fair values of these notes hedge derivative assets and notes conversion derivative liabilities as a critical audit matter, because of the significance of the account balances, the nature of the option pricing models, including that the calculated fair values were sensitive to possible changes in the key assumptions, including the implied volatility assumption, and that some of the inputs to the fair values were based on unobservable data.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the valuation process used to estimate the fair values of the derivative assets and liabilities, including controls over the underlying data used in the valuations and the implied volatility assumption that was the most sensitive to determining the fair values. In addition, we tested the Company’s internal controls over assessing the competence and objectivity of the third-party valuation specialist engaged to calculate the fair values, as well as independently assessing the professional competence, experience, and objectivity of the Company’s third-party valuation specialist.

For each series of cash convertible notes, we compared the fair values of each derivative asset to the related derivative liability for correlation. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the fair values of each derivative asset and liability by developing independent valuation estimates using market data sources, models and key assumptions determined to be relevant and reliable. We also compared the result of the number of options outstanding multiplied by the option strike prices to the outstanding debt balances for each series of cash convertible notes.

/s/ KPMG LLP

We have served as the Company’s auditor since 2002.

Memphis, Tennessee

February 24, 2020

80

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Wright Medical Group N.V.:

Opinion on Internal Control Over Financial Reporting

We have audited Wright Medical Group N.V. and subsidiaries’ (the Company) internal control over financial reporting as of December 29, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 29, 2019 and December 30, 2018, the related consolidated statements of operations, comprehensive loss, cash flows and changes in shareholders’ equity for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, and the related notes and financial statement schedule (collectively, the consolidated financial statements), and our report dated February 24, 2020 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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 Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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 of internal control over financial reporting 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.

Definition and Limitations of Internal Control Over Financial Reporting

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 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 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.

/s/ KPMG LLP

Memphis, Tennessee

February 24, 2020

81

Wright Medical Group N.V. Consolidated Balance Sheets (In thousands, except share data)
	December 29, 2019			December 30, 2018
Assets:
Current assets:
Cash and cash equivalents	$	166,856		$	191,351
Accounts receivable, net	147,400			141,019
Inventories (Note 5)	198,374			180,690
Prepaid expenses	16,031			11,823
Other current assets 1	214,997			78,349
Total current assets	743,658			603,232
Property, plant and equipment, net (Note 7)	251,922			224,929
Goodwill (Note 8)	1,260,967			1,268,954
Intangible assets, net (Note 8)	257,382			282,332
Deferred income taxes (Note 12)	1,012			942
Other assets 1	70,699			314,012
Total assets	$	2,585,640		$	2,694,401
Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	32,121		$	48,359
Accrued expenses and other current liabilities (Note 13) 1	387,025			217,081
Current portion of long-term obligations (Note 10) 1	430,862			201,686
Total current liabilities	850,008			467,126
Long-term debt and finance lease obligations (Note 10) 1	737,167			913,441
Deferred income taxes (Note 12)	10,384			13,146
Other liabilities 1	96,288			368,229
Total liabilities	1,693,847			1,761,942
Commitments and contingencies (Note 17)
Shareholders’ equity:
Ordinary shares, €0.03 par value, authorized: 320,000,000 shares; issued and outstanding: 128,614,026 shares at December 29, 2019 and 125,555,751 shares at December 30, 2018	4,691			4,589
Additional paid-in capital	2,608,939			2,514,295
Accumulated other comprehensive loss	(29,499		)	(8,083		)
Accumulated deficit	(1,692,338		)	(1,578,342		)
Total shareholders’ equity	891,793			932,459
Total liabilities and shareholders’ equity	$	2,585,640		$	2,694,401

___________________________

¹  As of December 29, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end; and, therefore, the holders of the 2021 Notes may convert the notes during the succeeding quarterly period. Due to the ability of the holders of the 2021 Notes to convert the notes during this period, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivative were classified as current liabilities, and the fair value of the 2021 Notes Hedges were classified as current assets as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018. See Note 6 and Note 10.

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

82

Wright Medical Group N.V. Consolidated Statements of Operations (In thousands, except per share data)
	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net sales	$	920,900		$	836,190		$	744,989
Cost of sales 1	188,641			180,153			160,947
Gross profit	732,259			656,037			584,042
Operating expenses:
Selling, general and administrative 1	614,666			577,961			525,222
Research and development 1	74,085			59,142			50,115
Amortization of intangible assets	31,921			26,730			28,396
Total operating expenses	720,672			663,833			603,733
Operating income (loss)	11,587			(7,796		)	(19,691		)
Interest expense, net	80,849			80,247			74,644
Other expense, net	9,904			81,797			5,570
Loss from continuing operations before income taxes	(79,166		)	(169,840		)	(99,905		)
Provision (benefit) for income taxes (Note 12)	12,968			(536		)	(34,968		)
Net loss from continuing operations	(92,134		)	(169,304		)	(64,937		)
Loss from discontinued operations, net of tax (Note 4)	(22,091		)	(201		)	(137,661		)
Net loss	$	(114,225	)	$	(169,505	)	$	(202,598	)
Net loss from continuing operations per share-basic and diluted (Note 14):	$	(0.73	)	$	(1.50	)	$	(0.62	)
Net loss from discontinued operations per share-basic and diluted (Note 14):	$	(0.17	)	$	0.00		$	(1.32	)
Net loss per share-basic and diluted (Note 14):	$	(0.90	)	$	(1.51	)	$	(1.94	)
Weighted-average number of ordinary shares outstanding-basic and diluted	126,601			112,592			104,531

___________________________

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

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Cost of sales	$	600	$	585	$	565
Selling, general and administrative	29,185		23,608		17,705
Research and development	2,782		1,927		1,123

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

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Wright Medical Group N.V.

Consolidated Statements of Comprehensive Loss

(In thousands)

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net loss	$	(114,225	)	$	(169,505	)	$	(202,598	)
Other comprehensive (loss) income, net of tax:
Changes in foreign currency translation	(21,416		)	(30,373		)	41,751
Other comprehensive (loss) income	(21,416		)	(30,373		)	41,751
Comprehensive loss	$	(135,641	)	$	(199,878	)	$	(160,847	)

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

84

Wright Medical Group N.V. Consolidated Statements of Cash Flows (In thousands)
	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Operating activities:
Net loss	$	(114,225	)	$	(169,505	)	$	(202,598	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	64,149			59,497			56,832
Share-based compensation expense (Note 15)	32,567			26,120			19,393
Amortization of intangible assets	31,921			26,730			28,396
Amortization of deferred financing costs and debt discount	54,461			54,630			50,379
Deferred income taxes (Note 12)	(2,464		)	(4,543		)	(13,791		)
Provision for excess and obsolete inventory	13,126			20,913			19,171
Net loss on exchange or extinguishment of debt	14,274			39,935			—
Amortization of inventory step-up adjustment	1,057			352			—
Non-cash adjustment to derivative fair value	(10,962		)	35,934			(4,797		)
Non-cash asset impairment	5,597			—			—
Mark-to-market adjustment for CVRs (Note 6)	(420		)	140			5,320
Other	7,322			(1,617		)	1,385
Changes in assets and liabilities (net of acquisitions):
Accounts receivable	(6,989		)	(8,223		)	2,483
Inventories	(32,866		)	(35,887		)	(29,526		)
Prepaid expenses and other assets	7,106			45,712			(22,744		)
Accounts payable	(15,866		)	6,022			6,260
Accrued expenses and other liabilities	27,822			(14,839		)	(21,834		)
CVR product sales milestone payment	—			(42,044		)	—
Metal on metal product liabilities (Note 17)	(34,003		)	(103,056		)	(79,139		)
Net cash provided by (used in) operating activities	41,607			(63,729		)	(184,810		)
Investing activities:
Capital expenditures	(99,286		)	(71,467		)	(63,474		)
Acquisition of businesses, net of cash acquired (Note 3)	722			(434,289		)	(44,128		)
Purchase of intangible assets	(8,448		)	(2,483		)	(2,099		)
Other investing	3,766			(2,000		)	280
Net cash used in investing activities	(103,246		)	(510,239		)	(109,421		)
Financing activities:
Issuance of ordinary shares	52,076			21,618			27,551
Proceeds from equity offering	—			448,924			—
Payment of equity offering costs	—			(25,896		)	—
Issuance of stock warrants	21,210			102,137			—
Payment of notes hedge options	(30,144		)	(141,278		)	—
Repurchase of stock warrants	(11,026		)	(23,972		)	—
Payment of notes premium	—			(55,643		)	—
Proceeds from notes hedge options	16,849			34,553			—
Proceeds from exchangeable senior notes	—			675,000			—
Proceeds from other debt	4,511			25,243			34,901
Payments of debt	(4,695		)	(38,637		)	(11,517		)
Redemption of convertible senior notes	—			(400,911		)	—
Payments of financing costs	(2,981		)	(14,701		)	—
Payment of equity issuance costs	(350		)	(1,870		)	—
Payment of contingent consideration	(207		)	(919		)	(1,429		)
Payments of finance lease obligations	(7,837		)	(5,508		)	(2,690		)
Net cash provided by financing activities	37,406			598,140			46,816
Effect of exchange rates on cash and cash equivalents	(262		)	(561		)	2,890

85

Wright Medical Group N.V. Consolidated Statements of Cash Flows (Continued) (In thousands)
	Fiscal year ended
	December 29, 2019			December 30, 2018		December 31, 2017
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(24,495	)	$	23,611	$	(244,525	)
Cash, cash equivalents, and restricted cash, beginning of year 1	191,351			167,740		412,265
Cash and cash equivalents, end of year	$	166,856		$	191,351	$	167,740

___________________________

¹  As of December 25, 2016, we had $150.0 million in restricted cash to secure our obligations under a Master Settlement Agreement (MSA) that WMT entered into in connection with the metal-on-metal hip litigation as described in Note 17.

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

86

Wright Medical Group N.V. Consolidated Statements of Changes in Shareholders’ Equity For the fiscal years ended December 31, 2017, December 30, 2018, and December 29, 2019 (In thousands, except share data)
	Ordinary shares			Additional paid-in capital			Accumulated other comprehensive (loss) income			Accumulated deficit			Total shareholders’ equity
	Number of shares	Amount
Balance at December 25, 2016	103,400,995	$	3,815	$	1,908,749		$	(19,461	)	$	(1,206,239	)	$	686,864
2017 Activity:
Net loss	—	—		—			—			(202,598		)	(202,598		)
Foreign currency translation	—	—		—			41,751			—			41,751
Issuances of ordinary shares	1,352,549	45		27,506			—			—			27,551
Shares issued in connection with IMASCAP acquisition	661,753	23		15,620			—			—			15,643
Vesting of restricted stock units	392,127	13		(13		)	—			—			—
Stock-based compensation	—	—		19,485			—			—			19,485
Balance at December 31, 2017	105,807,424	$	3,896	$	1,971,347		$	22,290		$	(1,408,837	)	$	588,696
2018 Activity:
Net loss	—	—		—			—			(169,505		)	(169,505		)
Foreign currency translation	—	—		—			(30,373		)	—			(30,373		)
Issuances of ordinary shares	1,043,685	36		21,582			—			—			21,618
Shares issued for public offering (Note 14)	18,248,932	641		422,387			—			—			423,028
Vesting of restricted stock units	455,710	16		(16		)	—			—			—
Stock-based compensation	—	—		26,039			—			—			26,039
Issuance of stock warrants, net of repurchases and equity issuance costs	—	—		72,956			—			—			72,956
Balance at December 30, 2018	125,555,751	$	4,589	$	2,514,295		$	(8,083	)	$	(1,578,342	)	$	932,459
2019 Activity:
Net loss	—	—		—			—			(114,225		)	(114,225		)
Cumulative impact of lease accounting adoption (Note 9)	—	—		—			—			229			229
Foreign currency translation	—	—		—			(21,416		)	—			(21,416		)
Issuances of ordinary shares	2,469,729	82		51,994			—			—			52,076
Vesting of restricted stock units	588,546	20		(20		)	—			—			—
Stock-based compensation	—	—		32,836			—			—			32,836
Issuance of stock warrants, net of repurchases and equity issuance costs	—	—		9,834			—			—			9,834
Balance at December 29, 2019	128,614,026	$	4,691	$	2,608,939		$	(29,499	)	$	(1,692,338	)	$	891,793

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

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WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Wright Medical Group N.V. is a global medical device company focused on extremities and biologics products. We are committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and are a recognized leader of surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics. We market our products in approximately 50 countries worldwide.

Our global corporate headquarters are located in Amsterdam, the Netherlands. We also have significant operations located in Memphis, Tennessee (U.S. headquarters, research and development, sales and marketing administration, and administrative activities); Bloomington, Minnesota (upper extremities sales and marketing and warehousing operations); Arlington, Tennessee (manufacturing and warehousing operations); Franklin, Tennessee (manufacturing and warehousing operations); Columbia City, Indiana (research and development); Alpharetta, Georgia (manufacturing and warehousing operations); Montbonnot, France (manufacturing and warehousing operations); Plouzané, France (research and development); and Macroom, Ireland (manufacturing). In addition, we have local sales and distribution offices in Canada, Australia, Asia, Latin America, and throughout Europe. For purposes of this report, references to “international” or “foreign” relate to non-U.S. matters while references to “domestic” relate to U.S. matters. Our common stock is traded on the Nasdaq Global Select Market under the symbol “WMGI.”

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the purchase agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash (the Offer). The Offer is currently scheduled to expire at 9:00 a.m., Eastern Time, on February 27, 2020, but may be extended in accordance with the terms of the purchase agreement between Stryker and Wright. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, completion of the tender offer, and other customary closing conditions.

Our fiscal year-end is generally determined on a 52-week basis and runs from the Monday nearest to the 31st of December of a year, and ends on the Sunday nearest to the 31st of December of the following year. Every few years, it is necessary to add an extra week to the year making it a 53-week period. The fiscal years ended December 29, 2019 and December 30, 2018 were 52-week periods. The fiscal year ended December 31, 2017 was a 53-week period. References in this report to a particular year generally refer to the applicable fiscal year. Accordingly, references to “2019” or “the year ended December 29, 2019” mean the fiscal year ended December 29, 2019.

The consolidated financial statements and accompanying notes present our consolidated results for each of the fiscal years in the three-year period ended December 29, 2019, December 30, 2018, and December 31, 2017.

All amounts are presented in U.S. dollars ($), except where expressly stated as being in other currencies, e.g., Euros (€).

References in these notes to consolidated financial statements to “we,” “our” and “us” refer to Wright Medical Group N.V. and its subsidiaries after the Wright/Tornier merger and Wright Medical Group, Inc. and its subsidiaries before the Wright/Tornier merger.

2. Summary of Significant Accounting Policies

Principles of consolidation. The accompanying consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with US GAAP 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 revenue recognition, the determination of allowances for doubtful accounts and excess and obsolete inventories, accounting for business combinations and the evaluation of goodwill and long-lived assets, valuation of in-process research and development, product liability claims, product liability insurance recoveries and other litigation, income taxes, and share-based compensation.

Discontinued operations. On January 9, 2014, pursuant to an Asset Purchase Agreement, dated as of June 18, 2013 (the MicroPort Agreement), by and among us and MicroPort, we completed the divestiture and sale of our business operations operating under our prior OrthoRecon operating segment (the OrthoRecon Business) to MicroPort. Pursuant to the terms of the MicroPort Agreement, the purchase price (as defined in the agreement) for the OrthoRecon Business was approximately $283.0 million (including a working capital adjustment), which MicroPort paid in cash.

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(continued)

All historical operating results for the OrthoRecon business are reflected within discontinued operations in the consolidated statements of operations. 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 Consolidated 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. Any such investments are readily convertible into known amounts of cash, and are so near their maturity that they present insignificant risk of changes in value because of interest rate variation.

Inventories. Our inventories are valued at the lower of cost or market on a 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. Historically, our excess and obsolete inventory reserve was based on both the current age of kit inventory as compared to its estimated life cycle and our forecasted product demand and production requirements for other inventory items for the next 36 months. During the quarter ended September 29, 2019, we changed our estimate of excess and obsolete inventory reserves to better reflect the future usage for inventory in excess of estimated three-year demand. The impact of this change in estimate was approximately $26 million. We reduce our inventory reserve and recognize an offset to cost of sales as the related inventory is sold based on an estimated inventory turnover period of 2.5 years.

Total charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $13.1 million, $20.9 million, and $19.2 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. Our 2019 excess and obsolete charges included a $5.2 million favorable adjustment as a result of our change in accounting estimate of reserves for excess and obsolete inventory, as such inventory was sold. During the fiscal years ended December 30, 2018 and December 31, 2017, our excess and obsolete charges included product rationalization initiative adjustments of $4.4 million and $3.1 million, respectively.

Product liability claims and related insurance recoveries and other litigation. We are involved in legal proceedings involving product liability claims as well as contract, patent protection, and other matters. See Note 17 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. These expenses are reflected in either continuing or discontinued operations depending on the product associated with the claim.

We record insurance recoveries from product liability insurance that is in force when they are realized or realizable, when we believe it is probable that the insurance carrier will settle the claim.

Property, plant and equipment. Our property, plant and equipment is stated at cost. Depreciation, which includes amortization of assets under finance 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 and building improvements	10	to	40	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	3	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

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WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

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.

Valuation of long-lived assets. Management periodically evaluates carrying values of long-lived assets, including property, plant and equipment and finite-lived 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 long-lived assets 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.

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 on October 1 each year. See Note 8 for discussion of our 2019 goodwill impairment analysis.

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 FASB ASC Section 360, Property, Plant and Equipment (FASB ASC 360). The weighted average amortization periods for our intangible assets are as follows:

Completed technology	10	years
Trademarks	5	years
Licenses	10	years
Customer relationships	17	years
Non-compete agreements	4	years
Other intangible assets	6	years

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 and surgery centers. Our collection history has been favorable with minimal bad debts from these customers. 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. Our allowance for doubtful accounts totaled $3.4 million and $3.0 million at December 29, 2019 and December 30, 2018, respectively.

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. 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 certain components and materials 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 rely 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 extremities products, one supplier for our pyrocarbon products, and one supplier to provide a key ingredient of AUGMENT^® Bone Graft.

In April 2016, we entered into a commercial supply agreement with FUJIFILM Diosynth Biotechnologies U.S.A., Inc. pursuant to which Fujifilm agreed to manufacture and sell to us and we agreed to purchase recombinant human platelet-derived growth factor (rhPDGF-BB) for use in AUGMENT^® Bone Graft. The agreement reflects the culmination of a technology transfer from our former supplier to Fujifilm which began in December 2013 when we were notified that our former supplier was exiting the rhPDGF-BB business. Pursuant to our supply agreement with Fujifilm, commercial production of rhPDGF-BB is expected to begin in 2020. Although we believe that our current supply of rhPDGF-BB from our former supplier should be sufficient to last until after rhPDGF-BB becomes available under the new agreement, no assurance can be provided that it will be sufficient. In

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

addition, since Fujifilm has not previously manufactured rhPDGF-BB, its ability to do so and perform its obligations under the agreement are not yet fully proven.

Our biologic product line includes one current supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products. We had previously contracted with two suppliers for this product, but ended our relationship with one of the suppliers at the end of 2019. We can continue selling the remaining inventory from this supplier until the inventory is depleted. In addition, certain biologic products depend upon a single supplier as our source for demineralized bone matrix (DBM) and cancellous bone matrix (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. In addition, we rely on a single supplier of soft tissue graft for BIOTAPE^® XM and a single supplier for the calcium sulfate used in our PRO-DENSE™ Injectable Regenerative Graft (PRO-DENSE™). We cannot be sure that our supply of these single source materials will continue to be available at current levels or will be sufficient to meet our needs, or that future suppliers of such materials will be free from FDA regulatory action impacting their sale of such materials.

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. See Note 12 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.

In December 2017, the United States enacted new legislation under the 2017 Tax Act. We recognized the income tax effects of the 2017 Tax Act in our 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts under a one-year measurement period. We finalized our accounting for the provisions of the 2017 Tax Act in the fourth quarter 2018 with no material impact on our financial statements.

During 2018, we have adopted ASU 2018-02, Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Income, issued in February 2018, allowing the reclassification of income tax effects of the 2017 Tax Act, referred to as “stranded tax effects” by FASB, from accumulated other comprehensive income (AOCI) to retained earnings. This adoption did not have a material impact on our financial statements.

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 statements 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 and surgery centers. Our products are sold through a network of employee and independent sales representatives in the United States and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the United States. We record revenues from sales to hospitals and surgery centers upon transfer of control of promised products in an amount that reflects the consideration we expect to receive in exchange for those products, which is generally when the product is surgically implanted in a patient.

We record revenues from sales to our stocking distributors at a point in time upon transfer of control of promised products to the distributor. Our stocking distributors, who sell the products to their customers, take control of the products and assume all risks of ownership upon transfer. Our stocking distributors are obligated to pay us within specified terms regardless of when, if ever, they sell the products. In general, our stocking 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 was deferred and not yet recognized as revenue as of December 29, 2019 and December 30, 2018.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Costs incurred related to shipping and handling of products to customers are included in selling, general and administrative expenses. Shipping and handling costs within selling, general and administrative expenses totaled $53.1 million, $52.0 million, and $49.4 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. These amounts include instrument depreciation which totaled $30.6 million, $28.4 million, and $27.1 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. 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 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 loss in shareholders’ 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 statements 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 loss and our comprehensive loss is attributable to foreign currency translation.

Share-based compensation. We account for share-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, share-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 share-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. The determination of the fair value of performance-based share-based payment awards, such as performance share units, is based on the estimated achievement of the established performance criteria on the date of grant and updated at the end of each reporting period until the performance period ends. Share-based compensation expense is only recognized for performance share units that we expect to vest, which we estimate based upon an assessment of the probability that the performance criteria will be achieved.

We recorded share-based compensation expense of $32.6 million, $26.1 million, and $19.4 million during the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively, within our results of continuing operations. See Note 15 for further information regarding our share-based compensation assumptions and expenses.

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.

During 2017, we employed a derivative program using foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that were denominated in foreign currencies. These forward contracts were expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts were not designated as hedging instruments under FASB ASC 815. Accordingly, the changes in the fair value and the settlement of the contracts were recognized in the period incurred in the accompanying consolidated statements of operations. We discontinued our foreign currency forward contracts derivative program in 2018.

We recorded a net loss of approximately $4.6 million on our foreign currency contracts for the fiscal year ended December 31, 2017. These losses substantially offset translation gains recorded on our intercompany receivable and payable balances, and are also included in “Other expense, net.”

On February 13, 2015, May 20, 2016, and June 28, 2018, we issued the 2020 Notes, 2021 Notes, and 2023 Notes (collectively, the Notes), respectively, as defined and described in Note 10. The 2020 Notes Conversion Derivatives, 2021 Notes Conversion Derivatives, and 2023 Notes Conversion Derivatives each as defined and described in Note 6, require bifurcation from the 2020 Notes, 2021 Notes, and 2023 Notes in accordance with ASC Topic 815, and are accounted for as derivative liabilities. We also entered into 2020, 2021, and 2023 Notes Hedges, as defined and described in Note 6, in connection with the issuance of the 2020, 2021, and 2023 Notes.  The 2020, 2021, and 2023 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 2020, 2021, and 2023 Notes in excess of the principal

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

amount of converted notes if our ordinary share price exceeds the conversion price. The 2020, 2021, and 2023 Notes Hedges are accounted for as derivative assets in accordance with ASC Topic 815.

Supplemental cash flow information. Cash paid for interest and income taxes was as follows (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Interest	$	28,523	$	30,552	$	24,641
Income taxes	$	6,084	$	6,254	$	7,359

Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 606). Accounting Standards Codification (ASC) 606 prescribes a single common revenue standard that replaces most existing US GAAP revenue recognition guidance. ASC 606 outlines a five-step model, under which we recognize revenue as performance obligations within a customer contract are satisfied. ASC 606 is intended to provide more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. We adopted ASC 606 during 2018. Revenue is recognized at a point in time, generally upon surgical implantation or shipment of products to distributors. Therefore, adoption of ASC 606 did not have a material effect on our consolidated financial statements except for the additional disclosures included within Note 19.

On February 25, 2016, the FASB issued ASU 2016-02, Leases, and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 842). ASC 842 introduced a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in FASB ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). Furthermore, ASC 842 addresses other concerns related to the current leases model. We adopted ASC 842 during 2019 using the hindsight practical expedient, the practical expedient for short-term leases, and the practical expedient package which primarily limited the need for reassessing lease classification on existing leases and allowed us to issue our financial statements showing comparative lease disclosures under previous GAAP. See additional details related to the impact of this adoption in Note 9.

On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments and has subsequently issued several supplemental and/or clarifying ASUs. The new standard adds an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU will be effective for us beginning in fiscal year 2020. We do not believe this guidance will have a significant impact on our consolidated financial statements.

On August 29, 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) to provide guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40, Internal Use Software, to determine which implementation costs should be capitalized in such a CCA. The ASU will be effective for us beginning in fiscal year 2020. We do not believe this guidance will have a significant impact on our consolidated financial statements.

3. Acquisitions

Cartiva

On October 10, 2018, we completed the acquisition of Cartiva, an orthopaedic medical device company focused on treatment of osteoarthritis of the great toe. Under the terms of the agreement with Cartiva, we acquired 100% of the outstanding equity on a fully diluted basis of Cartiva for a total price of $435.0 million in cash, subject to certain adjustments which totaled $1.1 million, as set forth in the purchase agreement, $0.7 million of which was refunded in 2019. We funded the acquisition with the proceeds from a registered underwritten public offering of 18.2 million ordinary shares which resulted in net proceeds of $423.0 million. See Note 14 for additional details related to the public offering. This acquisition added a differentiated PMA approved technology for a high-volume foot and ankle procedure and further accelerated growth opportunities in our global extremities business. The results of operations of Cartiva is included in our consolidated financial statements for all periods after completion of the acquisition.

The acquired business contributed net sales of $29.8 million and operating income of $5.8 million to our consolidated results of operations for the fiscal year ended December 29, 2019, which included $1.0 million of inventory step-up amortization, $2.6

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WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

million of transition costs, and $9.1 million of intangible asset amortization. The acquired business contributed net sales of $9.5 million and operating income of $2.4 million to our consolidated results of operations for the fiscal year ended December 30, 2018, which included $0.4 million of inventory step-up amortization and $1.9 million of intangible asset amortization but excluded the acquisition-related transaction costs discussed below.

Cartiva Transaction Related Costs

In conjunction with the Cartiva transaction, we incurred approximately $6.5 million of acquisition-related transaction costs during the fiscal year ended December 30, 2018, which was recognized within selling, general and administrative expense in our consolidated statements of operations. These expenses primarily related to advisory fees, legal fees, and accounting and tax professional fees.

Purchase Consideration and Net Assets Acquired

The following presents the allocation of the purchase consideration to the assets acquired and liabilities assumed on October 10, 2018 (in thousands):

Cash and cash equivalents	$	309
Accounts receivable	4,352
Inventories	2,686
Other current assets	486
Property, plant and equipment	1,446
Intangible assets	81,000
Total assets acquired	90,279
Current liabilities	(4,226		)
Deferred income taxes	(3,622		)
Total liabilities assumed	(7,848		)
Net assets acquired	$	82,431
Goodwill	351,445
Total purchase consideration	$	433,876

The purchase consideration was allocated to the net assets acquired based on their estimated fair values at the acquisition date. The fair values were based on management’s analysis, including work performed by third-party valuation specialists.

Trade receivables and payables, as well as certain other current assets and property, plant and equipment, were valued at the existing carrying values as they approximated the fair value of those items at the acquisition date, based on management’s judgments and estimates. Trade receivables included gross contractual amounts of $5.8 million and our best estimate of $1.4 million which represented contractual cash flows not expected to be collected at the acquisition date. Inventory was recorded at estimated selling price less costs of disposal and a reasonable selling profit. The resulting inventory step-up adjustment was recognized in cost of sales as the related inventory was sold.

In determining the fair value of intangibles, we used an income method which was based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations included a consideration of other marketplace participants, the amount and timing of future cash flows (including expected growth rates and profitability), technology life cycles, customer attrition rates, and the discount rate applied to the cash flows.

Of the $81.0 million of acquired intangible assets, $52.0 million was assigned to customer relationships (15 year life), $28.0 million was assigned to developed technology (7 year life), and $1.0 million was assigned to in-process research and development.

The excess of the cost of the acquisition over the fair value of the net assets acquired was recorded as goodwill. The goodwill was primarily attributable to strategic opportunities that arose from the acquisition of Cartiva. The goodwill was not deductible for tax purposes.

94

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Pro Forma Condensed Combined Financial Information (Unaudited)

The following unaudited pro forma combined financial information summarizes the results of operations for the periods indicated as if the Cartiva acquisition had been completed as of December 26, 2016, the first day of the 2017 fiscal year.

Pro forma information reflects adjustments that are expected to have a continuing impact on our results of operations and are directly attributable to the acquisition. The unaudited pro forma results include adjustments to reflect the amortization of the inventory step-up and the incremental intangible asset amortization to be incurred based on the values of each identifiable intangible asset. The pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred as of December 26, 2016 or that may be obtained in the future, and do not reflect future synergies, integration costs, or other such costs or savings.

(in thousands)	Fiscal year ended
	December 30, 2018			December 31, 2017
Net sales	$	861,475		$	769,111
Net loss from continuing operations	(179,800		)	(68,722		)

IMASCAP

On December 14, 2017, we completed the acquisition of IMASCAP, a leader in the development of software-based solutions for preoperative planning of shoulder replacement surgery. The intent of this transaction was to ensure exclusive access to breakthrough software enabling technology and patents to further differentiate our product portfolio and to further accelerate growth opportunities in our global extremities business. Under the terms of the agreement with IMASCAP, we acquired 100% of IMASCAP’s outstanding equity on a fully diluted basis for an initial payment of €52.9 million, or approximately $62.3 million, consisting of approximately €39.7 million, or approximately $46.7 million, in cash and approximately €13.2 million, or approximately $15.6 million, representing 661,753 Wright ordinary shares, payable at closing. Additionally, the purchase price included an estimated €15.1 million, or approximately $17.8 million, of contingent consideration related to the achievement of certain technical milestones and sales earnouts. The technical milestones involve the development and approval of a next generation reverse shoulder implant system and new software modules. The sales earnouts relate to certain guides and the next generation reverse shoulder implant system.

Purchase Consideration and Net Assets Acquired

The following presents the allocation of the purchase consideration to the assets acquired and liabilities assumed on December 14, 2017 (in thousands):

Cash and cash equivalents	$	2,559
Accounts receivable	102
Other current assets	925
Property, plant and equipment	20
Intangible assets	10,865
Total assets acquired	14,471
Current liabilities	(2,173		)
Long-term debt	(886		)
Deferred income taxes	(2,343		)
Total liabilities assumed	(5,402		)
Net assets acquired	$	9,069
Goodwill	71,064
Total purchase consideration	$	80,133

The purchase consideration was allocated to the net assets acquired based on their estimated fair values at the acquisition date. The fair values were based on management’s analysis, including work performed by third-party valuation specialists.

95

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Operating assets and liabilities were valued at their existing carrying values as they approximated the fair value of those items at the acquisition date, based on management’s judgments and estimates.

In determining the fair value of intangibles, we used an income method which was based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations included a consideration of other marketplace participants, the amount and timing of future cash flows (including expected growth rates and profitability), technology life cycles, and the discount rate applied to the cash flows.

Of the $10.9 million of acquired intangible assets, $5.6 million was assigned to developed technology (6 year life) and $5.3 million was assigned to in-process research and development.

The excess of the cost of the acquisition over the fair value of the net assets acquired was recorded as goodwill. The goodwill was primarily attributable to strategic opportunities that arose from the acquisition of IMASCAP. The goodwill was not deductible for tax purposes.

During 2018, we revised opening balances acquired as a result of the IMASCAP acquisition, primarily for accounts receivable; other current assets; accrued expenses and other current liabilities; and deferred tax liabilities which resulted in a $0.9 million decrease in the preliminary value of goodwill determined as of December 14, 2017.

4. Discontinued Operations

For the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, our loss from discontinued operations, net of tax, totaled $22.1 million, $0.2 million, and $137.7 million, respectively. Cash used in discontinued operations totaled $52.6 million, $88.6 million, and $228.1 million for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. Our operating results from discontinued operations and cash used in discontinued operations during 2019, 2018 and 2017 were attributable primarily to litigation and claims expenses, net of insurance recoveries, associated with legacy Wright’s former OrthoRecon business as described in Note 17.

OrthoRecon Business

On January 9, 2014, legacy Wright completed the divestiture and sale of its OrthoRecon business to MicroPort. Pursuant to the terms of the agreement, the purchase price (as defined in the agreement) was approximately $283.0 million (including a working capital adjustment), which MicroPort paid in cash.

Certain liabilities associated with the OrthoRecon business, including product liability claims associated with hip and knee products sold by legacy Wright prior to the closing, were not assumed by MicroPort. Charges associated with these product liability claims, including legal defense, settlements and judgments, income associated with product liability insurance recoveries, and changes to any contingent liabilities associated with 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.

All current and historical operating results for the OrthoRecon business are reflected within discontinued operations in the consolidated financial statements. The following table summarizes the results of discontinued operations for the OrthoRecon business (in thousands):

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net sales	$	—		$	—		$	—
Selling, general and administrative	22,091			(746		)	135,235
(Loss) income from discontinued operations before income taxes	(22,091		)	746			(135,235		)
Provision (benefit) for income taxes	—			221			(1,707		)
Total (loss) income from discontinued operations, net of tax	$	(22,091	)	$	525		$	(133,528	)

Our loss from discontinued operations for the year ended December 29, 2019 and December 30, 2018 was net of $18.5 million in insurance recoveries recognized in 2019 and a $30.75 million insurance recovery recognized in 2018. See Note 17 for further discussion regarding our retained contingent liabilities associated with the OrthoRecon business.

During the fiscal year ended 2017, the majority of our loss from discontinued operations was the result of our retained metal-on-metal product liability claims. During the fiscal year ended December 31, 2017, we recognized charges, net of insurance proceeds, of $94.0 million within discontinued operations related to the retained metal-on-metal product liability claims associated with the OrthoRecon business (see Note 17 for additional discussion).

96

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

We will incur continuing cash outflows associated with legal defense costs and the ultimate resolution of these contingent liabilities, net of insurance proceeds, until these liabilities are resolved.

5. Inventories

Inventories consist of the following (in thousands):

	December 29, 2019		December 30, 2018
Raw materials	$	12,681	$	9,612
Work-in-process	27,528		26,839
Finished goods	158,165		144,239
	$	198,374	$	180,690

Finished goods inventories held as of December 30, 2018 included an inventory fair value step-up of $1.0 million related to the acquisition of Cartiva, which was fully amortized in 2019. Total step-up related to the Cartiva acquisition was $1.4 million, of which $0.4 million was amortized in the fourth quarter of 2018.

6. Fair Value of Financial Instruments and Derivatives

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 derivatives’ fair value shall be recognized currently in earnings unless specific hedge accounting criteria are met.

FASB ASC Section 820, Fair Value Measurement 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.

As of December 29, 2019, we have convertible notes outstanding that are due in 2020, 2021, and 2023. See Note 10 of the consolidated financial statements for additional information about the convertible notes. These notes are cash settled upon conversion for the principal amount of the notes plus a conversion premium (valued at the amount our ordinary share price exceeds the respective conversion price of the notes). The conversion premium is a conversion derivative feature that requires bifurcation from the notes in accordance with ASC Topic 815 and is accounted for as a derivative liability (Notes Conversion Derivative).

At the time of issuance of the notes, we entered into hedges with certain option counterparties to reduce our exposure to potential cash payments required for these conversion premiums (Notes Hedges). Upon conversion of the notes, the option counterparties would settle these hedges with us in cash, valued in the same manner as the conversion premiums. The Notes Hedges are accounted for as a derivative asset in accordance with ASC Topic 815. In connection with certain events, including in connection with the Offer as further described in Note 1, our option counterparties have the discretion to make certain adjustments to the Note Hedges, which may reduce the effectiveness of the Note Hedges.

97

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The Notes Hedges and Notes Conversion Derivatives are classified consistently with the corresponding Notes as described in Note 10. The following table summarizes the fair values and the presentation in our consolidated balance sheets (in thousands) of our Notes Hedges and our Notes Conversion Derivatives:

	December 29, 2019			December 30, 2018
	Location on consolidated balance sheet	Amount		Location on consolidated balance sheet	Amount
2023 Notes Hedges	Other assets	$	39,240	Other assets	$	115,923
2023 Notes Conversion Derivative	Other liabilities	$	31,555	Other liabilities	$	116,833
2021 Notes Hedges	Other current assets	$	183,437	Other assets	$	188,301
2021 Notes Conversion Derivative	Accrued expenses and other current liabilities	$	179,478	Other liabilities	$	187,539
2020 Notes Hedges	Other current assets	$	1,969	Other current assets	$	17,822
2020 Notes Conversion Derivative	Accrued expenses and other current liabilities	$	1,666	Accrued expenses and other current liabilities	$	17,386

Neither the Notes Conversion Derivatives nor the Notes Hedges qualify for hedge accounting; thus, any changes in the fair value of the derivatives are recognized immediately in other expense, net on our consolidated statements of operations. The following table summarizes the net gain (loss) on changes in fair value (in thousands) related to the Notes Hedges and Notes Conversion Derivatives:

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
2023 Notes Hedges	$	(106,827	)	$	(25,355	)	$	—
2023 Notes Conversion Derivative	114,153			7,792			—
2021 Notes Hedges	(4,864		)	61,238			(32,032		)
2021 Notes Conversion Derivative	8,061			(61,391		)	35,453
2020 Notes Hedges	996			7,342			(32,199		)
2020 Notes Conversion Derivative	(557		)	(28,897		)	33,626
Net gain (loss) on changes in fair value	$	10,962		$	(39,271	)	$	4,848

In addition to the above net gain (loss) on changes in fair value, we also recognized a $12.6 million net loss on the Notes Conversion Derivatives during the year ended December 29, 2019 as part of the additional 2023 Notes exchange as described in Note 10.

The Notes Hedges and the 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 2020, 2021, and 2023 Notes Conversion Derivatives, a trinomial lattice model was used. A trinomial stock price lattice generates three possible outcomes of stock price - one up, one down, and one stable. This lattice generates a distribution of stock prices at the maturity date and throughout the life of the 2020, 2021, and 2023 Notes. Using this stock price lattice, a convertible note lattice was created where the value of the embedded conversion option was estimated by comparing the value produced in a convertible note lattice with the option to convert against the value without the ability to convert. In each case, the convertible note lattice first calculates the possible convertible note values at the maturity date, using the distribution of stock prices, which equals the maximum of (x) the remaining bond cash flows and (y) stock price times the conversion price. The values of the 2020, 2021, and 2023 Notes Conversion Derivatives at the valuation date were estimated using the values at the maturity date and moving back in time on the lattices (both for the lattice with the conversion option and without the conversion option). Specifically, at each node, if the 2020, 2021, or 2023 Notes are eligible for early conversion, the value at this node is the maximum of (i) converting to stock, which is the stock price times the conversion price, and (ii) holding onto the 2020, 2021, and 2023 Notes, which is the discounted and probability-weighted value from the three possible outcomes at the future nodes plus any accrued but unpaid coupons that are not considered at the future nodes. If the 2020, 2021, or 2023 Notes are not eligible for early conversion, the value of the conversion option at this node equals to (ii). In the lattice,

98

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

a credit adjustment was applied to the discount for each cash flow in the model as the embedded conversion option, as well as the coupon and notional payments, is settled with cash instead of shares.

To estimate the fair value of the 2020, 2021 and 2023 Notes Hedges, we used the Black-Scholes formula combined with credit adjustments, as the option counterparties have credit risk and the call options are cash settled. We assumed that the call options will be exercised at maturity since our ordinary shares do 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 as of December 29, 2019:

	2020 Notes Conversion Derivative	2020 Notes Hedge	2021 Notes Conversion Derivative	2021 Notes Hedge	2023 Notes Conversion Derivative	2023 Notes Hedge
Black Stock Volatility (1)	14.92%	14.92%	21.89%	21.89%	9.99%	9.99%
Credit Spread for Wright (2)	0.83%	N/A	0.83%	N/A	0.42%	N/A
Credit Spread for Deutsche Bank AG (3)	N/A	0.27%	N/A	N/A	N/A	0.49%
Credit Spread for Wells Fargo Securities, LLC (3)	N/A	0.12%	N/A	N/A	N/A	N/A
Credit Spread for JPMorgan Chase Bank (3)	N/A	0.13%	N/A	0.19%	N/A	0.22%
Credit Spread for Bank of America (3)	N/A	N/A	N/A	0.19%	N/A	0.21%

(1) Volatility selected based on historical and implied volatility of ordinary shares of Wright Medical Group N.V.

(2) Credit spread implied from traded price.

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

The black stock volatility rates used in the valuations for our Notes Hedges and Notes Conversion Derivatives is one of the most significant assumptions. The change in the fair value of Notes Conversion Derivatives resulting from a change in the black stock volatility would have a direct impact on net profit, with an increase in volatility resulting in an increase in the net loss and a decrease in volatility resulting in a decrease in the net loss for the period. The change in the fair value of Notes Hedges resulting from a change in the black stock volatility would have an indirect impact on net profit, with an increase in volatility resulting in a decrease in the net loss and a decrease in volatility resulting in an increase in the net loss for the period. The impact on profit due to volatility of Notes Hedges would be offset by a similar change in volatility of the Notes Conversion Derivatives.

Derivatives not Designated as Hedging Instruments

As a result of the acquired business of IMASCAP in 2017, we have recorded the estimated fair value of future contingent consideration of approximately €25.1 million or approximately $28.0 million, related to the achievement of certain technical milestones and sales earnouts as of December 29, 2019. The contingent consideration liability related to technical milestones totaled $20.8 million and $12.7 million as of December 29, 2019 and December 30, 2018, respectively, and is contingent upon the development and approval of a next generation reverse shoulder implant system and new software modules. The contingent consideration liability related to sales earnouts totaled $7.2 million and $6.5 million as of December 29, 2019 and December 30, 2018, respectively, and is contingent upon the sale of certain guides and the next generation reverse shoulder implant system. Changes in the fair value of contingent consideration is recorded within other expense, net on our consolidated statements of operations.

The fair values of the sales earn out contingent consideration as of December 29, 2019 and December 30, 2018 were determined using a discounted cash flow model and probability adjusted estimates of the future earnings and are classified in Level 3. The discount rate is 12% for the sales earnout contingent consideration.

The contingent consideration related to technical milestones is based on meeting certain developmental milestones for new software modules and for the FDA and CE approval for the next generation reverse shoulder implant system. The fair value of this contingent consideration as of December 29, 2019 and December 30, 2018 was determined using probability adjusted estimates of the future payments and is classified in Level 3. The discount rate is approximately 6% for the contingent consideration related to technical milestones. A change in the discount rate would have limited impact on our profits or the fair value of this contingent consideration.

99

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

On March 1, 2013, as part of our acquisition of BioMimetic Therapeutics, Inc. (BioMimetic), we issued Contingent Value Rights (CVRs) as part of the merger consideration. Among other things, the CVR agreement provided for a revenue milestone payment equal to $1.50 per share, or $42 million, to be paid if, prior to March 1, 2019, sales of AUGMENT^® Bone Graft reached $40 million over 12 consecutive months. Sales for AUGMENT^® Bone Graft reached $40 million for the 12 months ended October 28, 2018, and this milestone payment was paid during the fourth quarter of 2018. The CVR agreement also provided for a second revenue milestone equal to $1.50 per share, or $42 million, if, prior to March 1, 2019, sales of AUGMENT^® Bone Graft reach $70 million over 12 consecutive months. This milestone was not met before the termination of the CVRs. There were no CVRs outstanding as of December 29, 2019, as the agreement terminated on March 1, 2019. The fair value of the CVRs outstanding at December 30, 2018 was $0.4 million and was determined using the closing price of the security in the active market (Level 1), and is reflected within “Accrued expenses and other current liabilities” on our consolidated balance sheet.

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates the fair value of these financial instruments at December 29, 2019 and December 30, 2018 due to their short maturities and variable rates.

The following tables summarize 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)
December 29, 2019
Assets
Cash and cash equivalents	$	166,856	$	166,856	$	—	$	—
2020 Notes Hedges	1,969		—		—		1,969
2021 Notes Hedges	183,437		—		—		183,437
2023 Notes Hedges	39,240		—		—		39,240
Total	$	391,502	$	166,856	$	—	$	224,646
Liabilities
2020 Notes Conversion Derivative	$	1,666	$	—	$	—	$	1,666
2021 Notes Conversion Derivative	179,478		—		—		179,478
2023 Notes Conversion Derivative	31,555		—		—		31,555
Contingent consideration	28,077		—		—		28,077
Total	$	240,776	$	—	$	—	$	240,776

	Total		Quoted prices in active markets (Level 1)		Prices with other observable inputs (Level 2)		Prices with unobservable inputs (Level 3)
December 30, 2018
Assets
Cash and cash equivalents	$	191,351	$	191,351	$	—	$	—
2020 Notes Hedges	17,822		—		—		17,822
2021 Notes Hedges	188,301		—		—		188,301
2023 Notes Hedges	115,923		—		—		115,923
Total	$	513,397	$	191,351	$	—	$	322,046
Liabilities
2020 Notes Conversion Derivative	$	17,386	$	—	$	—	$	17,386
2021 Notes Conversion Derivative	187,539		—		—		187,539
2023 Notes Conversion Derivative	116,833		—		—		116,833
Contingent consideration	19,248		—		—		19,248
Contingent consideration (CVRs)	420		420		—		—
Total	$	341,426	$	420	$	—	$	341,006

100

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

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

	Balance at December 30, 2018			Additions	Transfers into Level 3	Gain/(loss) on fair value adjustments included in earnings		Gain/(loss) on issuance/settlement included in earnings		Settlements		Currency	Balance at December 29, 2019
2020 Notes Hedges	$	17,822		—	—	996		—		(16,849	)	—	$	1,969
2020 Notes Conversion Derivative	$	(17,386	)	—	—	(557	)	16,277		—		—	$	(1,666	)
2021 Notes Hedges	$	188,301		—	—	(4,864	)	—		—		—	$	183,437
2021 Notes Conversion Derivative	$	(187,539	)	—	—	8,061		—		—		—	$	(179,478	)
2023 Notes Hedges	$	115,923		30,144	—	(106,827	)	—		—		—	$	39,240
2023 Notes Conversion Derivative	$	(116,833	)	—	—	114,153		(28,875	)	—		—	$	(31,555	)
Contingent consideration	$	(19,248	)	—	—	(9,532	)	—		207		496	$	(28,077	)

7. Property, Plant and Equipment

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

	December 29, 2019			December 30, 2018
Land and land improvements	$	2,154		$	2,127
Buildings	60,205			43,087
Machinery and equipment	102,014			82,445
Furniture, fixtures and office equipment	185,145			161,614
Construction in progress	17,259			14,113
Surgical instruments	281,541			230,980
	648,318			534,366
Less: Accumulated depreciation	(396,396		)	(309,437		)
	$	251,922		$	224,929

8. Goodwill and Intangible Assets

Changes in the carrying amount of goodwill occurring during the fiscal years ended December 29, 2019 and December 30, 2018 are as follows (in thousands):

	U.S. Lower Extremities & Biologics		U.S. Upper Extremities			International Extremities & Biologics			Total
Balance at December 31, 2017	$	218,525	$	630,650		$	84,487		$	933,662
Goodwill associated with Cartiva acquisition	351,445		—			—			351,445
Goodwill adjustment associated with IMASCAP acquisition	—		(917		)	—			(917		)
Foreign currency translation	—		(1,883		)	(13,353		)	(15,236		)
Balance at December 30, 2018	$	569,970	$	627,850		$	71,134		$	1,268,954
Foreign currency translation	—		(1,924		)	(6,063		)	(7,987		)
Balance at December 29, 2019	$	569,970	$	625,926		$	65,071		$	1,260,967

Goodwill is recognized for the excess of the purchase price over the fair value of net assets of businesses acquired. Goodwill is required to be tested for impairment at least annually. As of October 1, 2019, we performed a qualitative analysis to test goodwill for impairment and determined that it is not more likely than not that the carrying value of our U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics reporting units exceeded their respective fair values, indicating that goodwill was not impaired.

101

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

On October 10, 2018, we completed the acquisition of Cartiva. As part of the purchase price allocation, we acquired $81.0 million of intangible assets related to completed technology, in-process research and development, and customer relationships and $351.4 million of goodwill. Of the $81.0 million of acquired intangible assets, $52.0 million was assigned to customer relationships (15 year life), $28.0 million was assigned to developed technology (7 year life), and $1.0 million was assigned to in-process research and development.

On December 14, 2017, we completed the acquisition of IMASCAP. As part of the preliminary purchase price allocation, we acquired $10.9 million of intangible assets related to completed technology and in-process research and development and $72.0 million of goodwill. Of the $10.9 million of acquired intangible assets, $5.6 million was assigned to developed technology (6 year life) and $5.3 million was assigned to in-process research and development. During 2018, we revised opening balances acquired as a result of the IMASCAP acquisition, primarily for accounts receivable; other current assets; accrued expenses and other current liabilities; and deferred tax liabilities which resulted in a $0.9 million decrease in the preliminary value of goodwill determined as of December 14, 2017. See Note 3 for additional discussion of these adjustments.

Following the December 2017 IMASCAP acquisition, foreign currency translation has been reported within the U.S. Upper Extremities segment. While the IMASCAP offices are located in France and the majority of their operations have a functional currency of the euro, the results of the IMASCAP business are managed by the U.S. Upper Extremities segment.

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

	December 29, 2019					December 30, 2018
	Cost			Accumulated amortization		Cost			Accumulated amortization
Indefinite life intangibles:
IPRD technology	$	6,238		$	—	$	6,262		$	—
Finite life intangibles:
Completed technology	172,111			72,140		174,596			55,114
Licenses	9,247			2,835		6,547			1,851
Customer relationships	181,094			41,389		179,605			30,935
Trademarks	14,002			11,834		14,048			11,564
Non-compete agreements	5,713			4,090		3,252			2,514
Other	2,022			757		764			764
Total finite life intangibles	384,189			$	133,045	378,812			$	102,742
Total intangibles	390,427					385,074
Less: Accumulated amortization	(133,045		)			(102,742		)
Intangible assets, net	$	257,382				$	282,332

Based on the total finite life intangible assets held at December 29, 2019, we expect amortization expense of approximately $31 million in 2020, $30 million in 2021, $30 million in 2022, $30 million in 2023, and $27 million in 2024.

9. Leases

We lease various manufacturing, warehousing and distribution facilities, administrative and sales offices as well as equipment under operating leases. We evaluate our contracts to identify leases, which are generally deemed to exist if there is an identified asset over which we have the right to direct its use and from which we obtain substantially all of the economic benefit from its use. Certain of our lease agreements contain rent escalation clauses, rent holidays, and other lease concessions. We recognize our minimum rental expense on a straight-line basis over the term of the lease beginning with the date of initial control of the asset. With the adoption of ASC 842, we recognized all operating leases with terms greater than twelve months in duration on our consolidated balance sheet as of December 31, 2018 as right-of-use assets and lease liabilities which totaled approximately $20 million. Additionally, we recorded a cumulative adjustment of $0.2 million to our accumulated deficit upon adoption. We adopted the standard using the prospective approach and did not retrospectively apply it to prior periods.

102

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

We have made certain assumptions and judgments when applying ASC 842, the most significant of which are:

• We elected the package of practical expedients available for transition which allows us to not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases and whether previously capitalized initial direct costs would qualify for capitalization under ASC 842.

• We elected to use hindsight when considering judgments and estimates such as assessments of lessee options to extend or terminate a lease or purchase the underlying asset.

• For all asset classes, we elected to not recognize a right-of-use asset and lease liability for short-term leases.

• For all asset classes, we elected to not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component.

• The determination of the discount rate used in a lease is our incremental borrowing rate which is based on what we would normally pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.

Our net ROU assets under operating leases are included within Other Assets on our consolidated balance sheet and include the following (in thousands):

	December 29, 2019
Buildings	$	17,331
Machinery and equipment	1,720
Furniture, fixtures and office equipment	943
	$	19,994

At December 29, 2019, the present value of the future minimum lease payments under operating lease obligations are included within Accrued expenses and other current liabilities and Other liabilities as follows (in thousands):

2020	$	7,420
2021	5,632
2022	3,878
2023	2,239
2024	1,356
Thereafter	4,036
Total minimum payments	24,561
Less amount representing interest	(3,806		)
Present value of minimum lease payments	20,755
Current portion	(6,608		)
Long-term portion	$	14,147

103

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Prior to the adoption of ASC 842, operating leases were expensed ratably over the lease period and were not reflected within our consolidated balance sheet as of December 30, 2018. Rental expense under operating leases approximated $11.1 million and $8.9 million for the fiscal years ended December 30, 2018 and December 31, 2017, respectively. Future minimum lease payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining lease terms of one year or more, were reported in our Annual Report on Form 10-K for the fiscal year ended December 30, 2018 as follows (in thousands), and included a total of $7.8 million for future lease payments to our 51%-owned subsidiary:

2019	$	9,606
2020	7,498
2021	6,019
2022	4,433
2023	2,678
Thereafter	10,998
Total minimum payments	$	41,232

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

	December 29, 2019			December 30, 2018
Buildings	$	12,017		$	12,017
Machinery and equipment	30,733			24,331
Furniture, fixtures and office equipment	671			559
	43,421			36,907
Less: Accumulated depreciation	(16,726		)	(11,906		)
	$	26,695		$	25,001

Future minimum lease payments under finance lease obligations, together with the present value of the net minimum lease payments, are as follows (in thousands):

	December 29, 2019
2020	$	7,912
2021	6,166
2022	5,156
2023	3,337
2024	1,614
Thereafter	3,330
Total minimum payments	27,515
Less amount representing interest	(2,429		)
Present value of minimum lease payments	25,086
Current portion	(7,011		)
Long-term portion	$	18,075

104

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Amounts recorded within our consolidated statement of operations for the fiscal year ended December 29, 2019 related to leased assets are as follows (in thousands):

	Fiscal year ended
	December 29, 2019
Lease cost
Finance lease cost:
Depreciation	$	5,688
Interest on lease liabilities	1,104
Operating lease cost	9,843
Short-term lease cost	128
Variable lease cost	500
Total lease cost	$	17,263
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	1,104
Operating cash flows from operating leases	$	9,247
Financing cash flows from finance leases	$	7,837
Weighted-average remaining lease term - finance leases	4.56
Weighted-average remaining lease term - operating leases	4.87
Weighted-average discount rate - finance leases	4.63		%
Weighted-average discount rate - operating leases	7.06		%

105

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

10. Debt and Finance Lease Obligations

Debt and finance lease obligations consist of the following (in thousands):

	Maturity by fiscal year	December 29, 2019			December 30, 2018
Finance lease obligations (Note 9)	2020-2026	$	25,086		$	25,539
Convertible Notes
1.625% Notes	2023	695,748			548,076
2.25% Notes 1	2021	344,635			321,286
2.0% Notes 2	2020	55,997			173,533
Term loan facility	2021	19,296			18,979
Asset-based line of credit 3	2021	20,652			17,761
Other debt	2020-2024	6,615			9,953
		1,168,029			1,115,127
Less: Current portion 1, 2, 3		(430,862		)	(201,686		)
Long-term debt and finance lease obligations (Note 9)		$	737,167		$	913,441

_______________________

¹  As of December 29, 2019, the sale price condition (as defined below) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018.

²  The holders of the 2020 Notes may convert their notes at any time on or after August 15, 2019. Due to the ability of the holders of the 2020 Notes to convert their notes within the next year, the carrying value of the 2020 Notes was classified as a current liability as of December 30, 2018. The 2020 Notes were classified as a current liability as of December 29, 2019 as they matured on February 15, 2020.

³  We have reflected this debt as a current liability on our consolidated balance sheets as of December 29, 2019 and December 30, 2018, as required by US GAAP due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances as described below.

Convertible Notes

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

	December 29, 2019			December 30, 2018
Principal amount of 2023 Notes	$	814,556		$	675,000
Unamortized debt discount	(107,916		)	(114,554		)
Unamortized debt issuance costs	(10,892		)	(12,370		)
Net carrying amount of 2023 Notes	$	695,748		$	548,076
Principal amount of 2021 Notes	$	395,000		$	395,000
Unamortized debt discount	(47,405		)	(69,382		)
Unamortized debt issuance costs	(2,960		)	(4,332		)
Net carrying amount of 2021 Notes	$	344,635		$	321,286
Principal amount of 2020 Notes	$	56,455		$	186,589
Unamortized debt discount	(408		)	(11,642		)
Unamortized debt issuance costs	(50		)	(1,414		)
Net carrying amount of 2020 Notes	$	55,997		$	173,533

106

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The 2021 Notes were issued by us and the 2020 Notes and the 2023 Notes were issued by Wright Medical Group, Inc. (WMG) and are fully and unconditionally guaranteed by Wright Medical Group N.V.

The holders of the Notes may convert their notes solely into cash at their option at any time prior to the Early Conversion date (as defined below) only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our ordinary shares 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 (the sale price condition); (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 ordinary shares and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including in connection with the Offer as further described below and within Note 1. The terms of conversion are set forth below:

	2020 Notes		2021 Notes		2023 Notes
Conversion rate	33.39487		46.8165		29.9679
Conversion price	$	29.94	$	21.36	$	33.37
Early Conversion date	August 15, 2019		May 15, 2021		December 15, 2022
Maturity date	February 15, 2020		November 15, 2021		June 15, 2023

On or after the Early Conversion date until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 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 Notes, equal to the settlement amount as calculated under the Notes Indenture. If a fundamental change, as defined in the applicable Notes Indenture, occurs, subject to certain conditions, holders of the applicable series of Notes will have the option to require us to repurchase for cash all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date, as defined in the applicable Notes Indenture. In addition, if a make-whole fundamental change, as defined in the applicable Notes Indenture, occurs prior to the maturity date, we are required to increase the applicable conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change. The Notes may not be redeemed prior to the maturity date, and no “sinking fund” is available, which means that WMG is not required to redeem or retire the Notes periodically.

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. will commence a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, receipt of applicable regulatory approvals and other customary conditions. If these conditions are satisfied and the Offer closes, Stryker may acquire any remaining shares through a post-offer reorganization. Wright expects that a fundamental change and a make-whole fundamental change will occur at the time Stryker B.V. accepts for purchase and pays for all shares validly tendered pursuant to the Offer. Wright also expects that the Offer will trigger certain conversion rights under each of the Notes Indentures prior to the closing of the proposed acquisition by Stryker.

The 2021 Notes and our guarantee of the 2020 and 2023 Notes is our senior unsecured obligation that ranks: (i) senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the guarantee; (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 of our 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. Because the 2020 Notes and the 2023 Notes were issued by WMG, they are structurally senior to all indebtedness and other liabilities of Wright Medical Group N.V.

The estimated fair value of the 2020, 2021 and 2023 Notes was approximately $57.3 million, $575.5 million, and $864.0 million, respectively, at December 29, 2019, based on a quoted price in an active market (Level 1).

The Notes Conversion Derivatives require bifurcation from the Notes in accordance with ASC Topic 815, Derivatives and Hedging, and are accounted for as a derivative liability. See Note 6 for additional information regarding the Notes Conversion Derivative. The fair value of the Notes Conversion Derivative at the time of issuance is also recorded as the original debt discount for purposes of accounting for the debt component of the Convertible Notes. This discount is amortized as interest expense using the effective interest method over the term of the Convertible Notes.

107

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

As of December 29, 2019, our effective interest rates for the 2020, 2021, and 2023 Notes were 8.54%, 9.72%, and 5.76%, respectively. The following table summarizes the interest expense related to the amortization of the debt discount (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
2023 Notes	$	23,522	$	10,071	$	—
2021 Notes	21,977		19,950		18,110
2020 Notes	3,804		19,165		27,331

The following table summarizes the interest expense related to the amortization of the deferred financing costs (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
2023 Notes	$	2,381	$	1,148	$	—
2021 Notes	1,372		1,284		1,131
2020 Notes	462		2,333		3,320

As further described below, during 2019, we exchanged 2023 Notes for 2020 Notes which was recognized as a debt modification and resulted in us recognizing a net loss of approximately $14.3 million, primarily due to the Notes Conversion Derivatives and debt modification costs, within “Other expense, net” in our consolidated statements of operations. As further described below, during 2018, we had a notes exchange recognized as a debt extinguishment which resulted in us recognizing approximately $39.9 million for the write-off of related pro-rata unamortized deferred financing fees and debt discount within “Other expense, net” in our consolidated statements of operations.

In connection with the issuance of each series of Convertible Notes, we and WMG entered in cash-settled convertible note hedge transactions with certain option counterparties (the Note Hedges), which are generally intended to reduce exposure to potential cash payments that we or WMG, as applicable, would be required to make if holders elect to convert the Convertible Notes at a time when our ordinary share price exceeds the conversion price. We also entered into warrant transactions (the Warrants) in connection with the issuance of each series of Convertible Notes in which we sold warrants that are initially exercisable in the same number of shares as are issuable upon conversion of the applicable series of Convertible Notes at the initial conversion rate. The strike price of the Note Hedge for each series of Convertible Notes is equal to the conversion price of the applicable series of Convertible Notes and the exercise prices for the Warrants issued with the 2020, 2021 and 2023 Notes are $38.80, $30.00, and $40.86, respectively. The strike prices of the Notes Hedges and exercise prices of the Warrants are subject to adjustment upon the occurrence of certain events including in connection with the Offer as further described above and within Note 1.

In connection with certain events, including, among others, (i) a merger or other make-whole fundamental change, including in connection with the Offer as further described above and within Note 1; (ii) certain hedging disruption events, which may include changes in tax laws, an increase in the cost of borrowing our ordinary shares in the market or other material increases in the cost to the option counterparties of hedging the Note Hedges; (iii) our failure to perform certain obligations under the Notes Indenture or under the Notes Hedges; (iv) certain defaults on our, or any of our other subsidiary’s indebtedness in excess of $25 million; (v) if we, or any of our significant subsidiaries become insolvent or otherwise become subject to bankruptcy proceedings or (vi) if we repurchase Convertible Notes in the open market, through a tender or exchange offer or in individually negotiated transactions, the option counterparties have the discretion to terminate the Notes Hedges, which may reduce the effectiveness of the Notes Hedges. In addition, the option counterparties have broad discretion to make certain adjustments to the Notes Hedges and Warrants upon the occurrence of certain other events, including, among others, (i) upon the announcement of certain significant corporate events, including events that may give rise to a termination event as described above, such as the announcement of a third-party tender offer, including in connection with the Offer as further described above and within Note 1; or (ii) solely with respect to the Notes Hedges, any adjustment to the conversion rate of the Notes. Any such adjustment may also reduce the effectiveness of the Note Hedges and further the dilutive effect of the Warrants.

Aside from the initial premiums paid to the option counterparties and subject to the right of the option counterparties to terminate the Notes Hedges and Warrants in certain circumstances, we do not generally expect to be required to make any cash payments to the option counterparties under the Notes Hedges and Warrants and expect to be entitled to receive from the option counterparties

108

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

cash, generally equal to the amount by which the market price per ordinary share exceeds the strike price of the applicable Note Hedge during the relevant valuation period.

The Warrants are expected to be net-share settled and exercisable over a certain trading period after the Convertible Notes mature as detailed below:

	2020 Notes	2021 Notes	2023 Notes
Exercisable period	200 trading day period beginning on May 15, 2020	100 trading day period beginning on February 15, 2022	120 trading day period beginning on September 15, 2023

If the market value per ordinary share exceeds the strike price on any settlement date under the applicable Warrant, we will generally be obligated to issue to the Warrant holders in the aggregate, a number of shares equal in value to the amount by which the then-current market value of one ordinary share exceeds the then-effective strike price of each Warrant, multiplied by the number of Warrants exercised. As a result, the Warrants will have a dilutive effect on our ordinary shares to the extent that the market value per ordinary share during such period exceeds the applicable strike price of the Warrants.

As of December 29, 2019, we had warrants outstanding related to the 2020 Notes, 2021 Notes and 2023 Notes which were exercisable for 1.9 million ordinary shares, 18.5 million ordinary shares, and 24.4 million ordinary shares, respectively. As of December 30, 2018, we had warrants outstanding related to the 2020 Notes, 2021 Notes and 2023 Notes which were exercisable for 6.2 million ordinary shares, 18.5 million ordinary shares, and 20.2 million ordinary shares, respectively. As of December 31, 2017, we had warrants outstanding related to the 2020 Notes and 2021 Notes which were exercisable for 19.6 million ordinary shares and 18.5 million ordinary shares, respectively.

2023 Notes

On June 28, 2018, WMG issued $675 million aggregate principal amount of the 2023 Notes pursuant to an indenture (2023 Notes Indenture), dated as of June 28, 2018, with The Bank of New York Mellon Trust Company, N.A., as trustee. The 2023 Notes require interest to be paid at an annual rate of 1.625% semi-annually in arrears on each June 15 and December 15 and will mature on June 15, 2023 unless earlier converted or repurchased. As a result of the issuance of the 2023 Notes, we recorded deferred financing charges of approximately $13.5 million. The fair value of the 2023 Notes Conversion Derivative at the time of issuance of the 2023 Notes was $124.6 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2023 Notes. We and WMG entered into 2023 Notes Hedges in connection with the issuance of the 2023 Notes which had an aggregate cost of $141.3 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 6 of the consolidated financial statements for additional information regarding the 2023 Notes Hedges and the 2023 Notes Conversion Derivative. We also entered into warrant transactions in which we sold warrants that are initially exercisable into 20.2 million ordinary shares to the option counterparties, subject to adjustment upon the occurrence of certain events, for an aggregate of $102.1 million.

As described in more detail below, concurrently with the issuance and sale of the 2023 Notes, certain holders of the 2020 Notes exchanged their 2020 Notes for the 2023 Notes, a pro rata portion of the 2020 Notes Hedges were settled and a pro rata portion of the Warrants associated with the 2020 Notes were repurchased.

On February 7, 2019, WMG issued an additional $139.6 million aggregate principal amount of 2023 Notes in exchange for $130.1 million aggregate principal amount of 2020 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $1,072.40 principal amount of 2023 Notes to the exchanging investor (subject, in each case, to rounding to the nearest $1,000 aggregate principal amount for each such exchanging investor). This debt modification resulted in a pro rata share of the 2020 Notes discount and deferred financing costs, which totaled $7.4 million and $0.9 million, respectively, being transferred to the 2023 Notes discount and deferred financing costs. Additionally, the 2023 Notes discount was adjusted in order for net debt to remain the same subsequent to the exchange. The discount and deferred financing costs will be amortized over the remaining term of the 2023 Notes using the effective interest method.

The fair value of the 2023 Notes Conversion Derivative associated with the additional $139.6 million of 2023 Notes was $28.9 million at the time of issuance, and the pro rata share of the 2020 Notes Conversion Derivative that was settled as part of the additional 2023 Notes exchange had a fair value of $16.3 million immediately prior to issuance of the additional 2023 Notes. As the exchange was accounted for as a debt modification, the net amount of $12.6 million was recognized as a loss during 2019.

On January 30, 2019 and January 31, 2019, we entered into additional Note Hedge and Warrant transactions with the same strike and exercise prices as set forth above for the 2023 Notes. We paid approximately $30.1 million in the aggregate to the option counterparties for the additional Note Hedge, and received approximately $21.2 million in the aggregate from the option

109

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

counterparties for the Warrants, resulting in a net cost to us of approximately $8.9 million. In addition, we settled a pro rata share of the 2020 Notes Hedges corresponding to the amount of the 2020 Notes exchanged pursuant to the above-described exchange. We received proceeds of approximately $16.8 million related to the 2020 Notes Hedges and paid $11.0 million related to the 2020 Warrants, generating net proceeds of $5.8 million.

2021 Notes

On May 20, 2016, we issued $395 million aggregate principal amount of the 2021 Notes pursuant to an indenture (2021 Notes Indenture), dated as of May 20, 2016 between us and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2021 Notes require interest to be paid at an annual rate of 2.25% semi-annually in arrears on each May 15 and November 15, and will mature on November 15, 2021 unless earlier converted or repurchased. As a result of the issuance of the 2021 Notes, we recorded deferred financing charges of approximately $7.3 million. The fair value of the 2021 Notes Conversion Derivative at the time of issuance of the 2021 Notes was $117.2 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2021 Notes. This discount is amortized as interest expense using the effective interest method over the term of the 2021 Notes. We entered into 2021 Notes Hedges in connection with the issuance of the 2021 Notes which had an aggregate cost of $99.8 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 6 of the consolidated financial statements for additional information regarding the 2021 Notes Hedges and the 2021 Notes Conversion Derivative. We also entered into warrant transactions in which we sold warrants for an aggregate of 18.5 million ordinary shares to the option counterparties, subject to adjustment, for an aggregate of $54.6 million.

As described in more detail below, concurrently with the issuance and sale of the 2021 Notes, certain holders of the 2020 Notes exchanged their 2020 Notes for the 2021 Notes, a pro rata portion of the 2020 Notes Hedges were settled and a pro rata portion of the Warrants associated with the 2020 Notes were repurchased.

In the first quarter of 2017, third calendar quarter of 2018, second calendar quarter of 2019, and the fourth calendar quarter of 2019, the sale price condition (as defined above) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. There were no conversions during the second quarter of 2017, fourth quarter of 2018 or the third quarter of 2019.

2020 Notes

On February 13, 2015, WMG issued $632.5 million aggregate principal amount of the 2020 Notes pursuant to an indenture (2020 Notes Indenture), dated as of February 13, 2015 between WMG and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2020 Notes required interest to be paid semi-annually on each February 15 and August 15 at an annual rate of 2.00%, and matured and were repaid in full on February 15, 2020. The 2020 Notes were initially issued whereby they were convertible at the option of the holder, during certain periods and subject to certain conditions described below, solely into cash at an initial conversion rate of 32.3939 shares of WMG common stock per $1,000 principal amount of the 2020 Notes, subject to adjustment upon the occurrence of certain events, which represented an initial conversion price of approximately $30.87 per share of WMG common stock. In conjunction with the issuance of the 2020 Notes, we recorded deferred financing charges of approximately $18.1 million. The fair value of the 2020 Notes Conversion Derivative at the time of issuance of the 2020 Notes was $117.2 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2020 Notes. We entered into 2020 Notes Hedges in connection with the issuance of the 2020 Notes which had an aggregate cost of $144.8 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 6 of the consolidated financial statements for additional information regarding the 2020 Notes Hedges and the 2020 Notes Conversion Derivative. WMG also entered into warrant transactions in which it sold warrants for an aggregate of 20.5 million shares of WMG common stock to the option counterparties, subject to adjustment. The strike price of the warrants was initially $40 per share of WMG common stock.

On November 24, 2015, Wright Medical Group N.V. executed a supplemental indenture, fully and unconditionally guaranteeing, on a senior unsecured basis, WMG’s obligations relating to the 2020 Notes, changing the underlying reference securities from WMG common stock to Wright Medical Group N.V. ordinary shares and making a corresponding adjustment to the conversion price. From and after the effective time of the Wright/Tornier merger, (i) all calculations and other determinations with respect to the 2020 Notes previously based on references to WMG common stock were calculated or determined by reference to our ordinary shares, and (ii) the conversion rate (as defined in the 2020 Notes Indenture) for the 2020 Notes was adjusted to a conversion rate of 33.39487 ordinary shares (subject to adjustment as provided in the 2020 Notes Indenture) per $1,000 principal amount of the 2020 Notes, which represents a conversion price of approximately $29.94 per ordinary share (subject to, and in accordance with, the settlement provisions of the 2020 Notes Indenture). On November 24, 2015, Wright Medical Group N.V. assumed WMG’s obligations pursuant to the warrants. Following the assumption, the warrants became exercisable for 21.1 million Wright Medical Group N.V. ordinary shares and the strike price of the warrants was adjusted to $38.8010 per ordinary share.

110

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Concurrently with the issuance and sale of the 2021 Notes, in 2016, certain holders of the 2020 Notes exchanged approximately $45.0 million aggregate principal amount of their 2020 Notes for the 2021 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $990.00 principal amount of the 2021 Notes (subject to rounding down to the nearest $1,000 principal amount of the 2021 Notes, the difference being referred as the rounded amount) to the investor plus an amount of cash equal to the unpaid interest on the 2020 Notes and the rounded amount. During the second quarter of 2016, we also settled a pro rata portion of the 2020 Notes Hedges and repurchased a pro rata portion of the warrants associated with the 2020 Notes, generating net proceeds of approximately $0.6 million. Subsequent to this partial settlement, we had warrants which were exercisable for 19.6 million ordinary shares and the strike price of the warrants remained $38.8010 per ordinary share as of December 31, 2017.

Concurrently with the issuance and sale of the 2023 Notes, in 2018, certain holders of the 2020 Notes exchanged approximately $400.9 million aggregate principal amount of their 2020 Notes for the 2023 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $1,138.70 principal amount of the 2023 Notes (subject to rounding down to the nearest $1,000 principal amount of the 2023 Notes for each exchanging investor, the difference being referred as the rounded amount) to the investor. As a result of this note exchange and retirement of $400.9 million aggregate principal amount of the 2020 Notes, we recognized approximately $39.9 million for the write-off of related unamortized deferred financing fees and debt discount within “Other expense, net” in our consolidated statements of operations during the fiscal year ended December 30, 2018. During the second quarter of 2018, we also agreed to settle a pro rata portion of the 2020 Notes Hedges and agreed to repurchase a pro rata portion of the warrants associated with the 2020 Notes. The pricing of these 2020 Notes Hedges and warrants associated with the 2020 Notes were based on pricing between July 9, 2018 and July 27, 2018 and were settled on July 30, 2018. As a result of these settlements, we received net proceeds of approximately $10.6 million on July 30, 2018. We had warrants which were exercisable for 6.2 million ordinary shares with a strike price of $38.8010 per ordinary share as of December 30, 2018.

Concurrently with the issuance and sale of the additional 2023 Notes, on February 7, 2019, certain holders of the 2020 Notes exchanged approximately $130.1 million aggregate principal amount of 2020 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $1,072.40 principal amount of 2023 Notes to the exchanging investor (subject, in each case, to rounding to the nearest $1,000 aggregate principal amount for each such exchanging investor). As this was a debt modification, a pro rata share of the 2020 Notes discount and deferred financing costs which totaled $7.4 million and $0.9 million, respectively, was transferred to the 2023 Notes discount and deferred financing costs. Additionally, the 2023 Notes discount was adjusted in order for net debt to remain the same subsequent to the exchange. The remaining discount and deferred financing costs will be amortized over the remaining term of the 2020 Notes using the effective interest method. We recognized a $12.6 million net loss on the Notes Conversion Derivatives during the year ended December 29, 2019 as part of the additional 2023 Notes exchange. In 2019, we also settled a pro rata share of the 2020 Notes Hedges corresponding to the amount of the 2020 Notes exchanged pursuant to the above-described exchange. We received proceeds of approximately $16.8 million related to the 2020 Notes Hedges and paid $11 million related to the 2020 Warrants, generating net proceeds of $5.8 million. Subsequent to the 2019 partial settlement, we had warrants which were exercisable for 1.9 million ordinary shares and the strike price of the warrants remained $38.8010 per ordinary share as of December 29, 2019.

Credit Agreement

On December 23, 2016, we, together with WMG and certain of our other wholly-owned U.S. subsidiaries (collectively, Borrowers), entered into a Credit, Security and Guaranty Agreement with Midcap Financial Trust, as administrative agent (Agent) and a lender and the additional lenders from time to time party thereto, which agreement was subsequently amended in May 2018 and February 2019 (as amended, the Credit Agreement). On May 7, 2018, we amended and restated the Credit Agreement to add a $40 million term loan facility (Term Loan Facility). In February 2019, we amended the Credit Agreement to, among other things, increase the second tranche of the Term Loan Facility from $20 million to $35 million and to increase the line of credit from $150 million to $175 million.

The Credit Agreement provides for a $175.0 million senior secured asset-based line of credit, subject to the satisfaction of a borrowing base requirement (ABL Facility) and a $55 million term loan facility (Term Loan Facility). The ABL Facility may be increased by up to $75.0 million upon the Borrowers’ request, subject to the consent of the Agent and each of the other lenders providing such increase. All borrowings under the ABL Facility are subject to the satisfaction of customary conditions, including the absence of default, the accuracy of representations and warranties in all material respects and the delivery of an updated borrowing base certificate. The initial $20 million term loan tranche was funded at closing in May 2018. The Borrowers may at any time borrow the second $35.0 million term loan tranche, but are required to do so no later than May 7, 2021. All borrowings under the Term Loan Facility are subject to the satisfaction of customary conditions, including the absence of default and the accuracy of representations and warranties in all material respects.

111

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The interest rate margin applicable to borrowings under the ABL Facility is, at the option of the Borrowers, equal to either (a) 3.25% for base rate loans or (b) 4.25% for LIBOR rate loans, subject to a 0.75% LIBOR floor. In addition to paying interest on the outstanding loans under the ABL Facility, the Borrowers also are required to pay a customary unused line fee equal to .50% per annum in respect of unutilized commitments and certain other customary fees related to Agent’s administration of the ABL Facility. Beginning January 1, 2017, the Borrowers were required to maintain a minimum drawn balance on the ABL Facility equal to 20% of the average borrowing base for each month. To the extent the actual drawn balance is less than 20%, the Borrowers must pay a fee equal to the amount the lenders under the ABL Facility would have earned had the Borrowers maintained a minimum drawn balance equal to 20% of the average borrowing base for such month.

The Credit Agreement requires that the Borrowers calculate the borrowing base for the ABL Facility on at least a monthly basis and each time the Borrowers make a draw on the ABL Facility in accordance with the formula set forth in the Credit Agreement. The borrowing base is subject to adjustment and the implementation of reserves by the Agent in its permitted discretion, as further described in the Credit Agreement. If at any time the outstanding drawn balance under the ABL Facility exceeds the borrowing base as in effect at such time, Borrowers will be required to prepay loans under the ABL Facility in an amount equal to such excess. Certain accounts receivables and proceeds of collateral of the Borrowers will be applied to reduce the outstanding principal amount of the ABL Facility on a periodic basis.

There is no scheduled amortization under the ABL Facility and (subject to borrowing base requirements and applicable conditions to borrowing) the available revolving commitment may be borrowed, repaid, and reborrowed without restriction. All outstanding loans under the ABL Facility will be due and payable in full on the date that is the earliest to occur of (x) December 23, 2021; (y) the date that is 91 days prior to the maturity date of the 2020 Notes or (z) the date that is 91 days prior to the maturity date of the 2021 Notes; provided if we refinance, extend, renew or replace at least 85% of the 2020 Notes and/or the 2021 Notes, as applicable, outstanding as of the closing date of the ABL Facility pursuant to the terms of the Credit Agreement, the maturity date will be deemed extended with respect to clause (y) and (z) above. Due to the additional exchange of 2020 Notes for additional 2023 Notes in February 2019 as described above, the maturity date was deemed extended for the purposes of clause (y) as long as we maintained unrestricted cash in an amount equal to the aggregate outstanding principal amount of the 2020 Notes.

Any voluntary or mandatory permanent reduction or termination of the revolving commitments under the ABL Facility is subject to a prepayment premium equal to 0.75% of such reduced or terminated amount.

The interest rate applicable to borrowings under the Term Loan Facility is equal to one-month LIBOR plus 7.85%, subject to a 1.00% LIBOR floor. Amortization payments under the Term Loan Facility are due in equal monthly installments beginning on May 1, 2019 unless we meet certain adjusted EBITDA targets; in which case, the amortization payments would not commence until May 1, 2021. To date we have met these targets. In addition to paying interest on the outstanding loans under the Term Loan Facility, the Borrowers are also required to pay certain other customary fees related to Agent’s administration of the Term Loan Facility.

The Term Loan Facility requires mandatory prepayments, subject to the right of reinvestment and certain other exceptions, in amounts equal to 100% of the net cash proceeds from certain asset sales and casualty and condemnation events in excess of $10 million in any fiscal year. Any voluntary or mandatory prepayment under the Term Loan Facility, subject to certain exceptions, is subject to a 1.00% prepayment premium. The advances under the Term Loan Facility are due and payable in full at the same time as the outstanding loans under the ABL Facility.

All of the obligations under the ABL Facility and the Term Loan Facility are guaranteed jointly and severally by us and each of the Borrowers and are secured by a senior first priority security interest in substantially all existing and after-acquired assets of us and each Borrower on the terms set forth in the Credit Agreement.

The Credit Agreement contains certain negative covenants that restrict our ability to take certain actions as specified in the Credit Agreement and an affirmative covenant that we maintain net revenue at or above minimum levels and maintain liquidity in the United States at a level specified in the Credit Agreement, subject to certain exceptions. In addition to financial and liquidity covenants consistent with those in the Credit Agreement, while the Term Loan Facility is outstanding, the Company is required to maintain a minimum adjusted EBITDA, as described in the Credit Agreement. The Credit Agreement will not affect our ability to meet our existing contractual obligations, except in circumstances where an event of default (subject to certain exceptions) has occurred and is continuing. The Credit Agreement also contains negative covenants, representations and warranties, affirmative covenants and events of default, in each case subject to grace periods, thresholds, and materiality qualifiers consistent with the Credit Agreement.

112

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Other Debt

Other debt primarily includes government loans, mortgages, loans acquired as a result of the IMASCAP acquisition and miscellaneous international bank loans.

Maturities

Aggregate annual maturities of our current and long-term obligations at December 29, 2019, excluding finance lease obligations, are as follows (in thousands):

2020 1, 2	$	474,702
2021	21,423
2022	1,511
2023	814,637
2024	—
Thereafter	1,005
	$	1,313,278

_______________________

¹  The 2021 Notes will mature on November 15, 2021 unless earlier converted or repurchased. As of December 29, 2019, the sale price condition (as defined above) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019 and the gross amount of $395.0 million is included in the 2020 maturity total above.

²  All outstanding loans under the ABL Facility will be due and payable in full on December 23, 2021 or earlier under certain specified circumstances as previously described. The 2020 total above includes $20.7 million in borrowings outstanding under the ABL Facility as this debt is reflected as a current liability on our consolidated balance sheet as of December 29, 2019 due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances.

11. Accumulated Other Comprehensive Income (AOCI)

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

Our 2017, 2018, and 2019 OCI was comprised solely of foreign currency translation adjustments.

Changes in AOCI for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 were as follows (in thousands):

	Currency translation adjustment
Balance at December 25, 2016	$	(19,461	)
Other comprehensive income	41,751
Balance at December 31, 2017	$	22,290
Other comprehensive loss	(30,373		)
Balance at December 30, 2018	$	(8,083	)
Other comprehensive loss	(21,416		)
Balance at December 29, 2019	$	(29,499	)

113

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

12. Income Taxes

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

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
U.S.	$	(69,903	)	$	(144,987	)	$	(56,808	)
Foreign	(9,263		)	(24,853		)	(43,097		)
Loss from continuing operations before income taxes	$	(79,166	)	$	(169,840	)	$	(99,905	)

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

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Current (benefit) provision:
U.S.:
Federal	$	(13	)	$	449		$	(23,781	)
State	232			251			390
Foreign	15,213			3,307			2,214
Total current provision (benefit)	15,432			4,007			(21,177		)
Deferred provision (benefit):
U.S.:
Federal	154			(2,841		)	(5,098		)
State	143			(663		)	(93		)
Foreign	(2,761		)	(1,039		)	(8,600		)
Total deferred benefit	(2,464		)	(4,543		)	(13,791		)
Total provision (benefit) for income taxes	$	12,968		$	(536	)	$	(34,968	)

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

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Income tax benefit at statutory rate	21.0	%	21.0	%	35.0	%
State income taxes	2.2	%	3.8	%	1.5	%
Change in valuation allowance	(18.3	)%	(22.9	)%	(3.5	)%
CVR fair market value adjustment	0.1	%	—	%	(1.9	)%
Foreign income tax rate differential	(17.9	)%	(0.6	)%	(6.1	)%
Changes in tax reserves	(0.3	)%	0.4	%	2.9	%
Effects of U.S. tax reform	—	%	—	%	6.5	%
Foreign rate changes	—	%	—	%	1.7	%
U.S. R&D tax credit	2.0	%	0.7	%	0.6	%
Nondeductible compensation	(3.2	)%	(0.7	)%	(1.0	)%
Other, net	(2.0	)%	(1.4	)%	(0.7	)%
Total	(16.4	)%	0.3	%	35.0	%

114

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

The significant components of our deferred income taxes as of December 29, 2019 and December 30, 2018 are as follows (in thousands):

	December 29, 2019			December 30, 2018
Deferred tax assets:
Net operating loss carryforwards	$	340,451		$	330,589
General business credit carryforwards	16,131			14,598
Reserves and allowances	50,278			56,675
Deferred interest	42,016			27,322
Share-based compensation expense	12,638			14,934
Convertible debt notes and conversion options	15,272			38,368
Other	3,857			3,616
Valuation allowance	(423,037		)	(400,171		)
Total deferred tax assets	57,606			85,931
Deferred tax liabilities:
Depreciation	5,025			5,095
Intangible assets	50,156			58,221
Convertible notes bond hedges	11,493			34,653
Other	304			166
Total deferred tax liabilities	66,978			98,135
Net deferred tax liabilities	$	(9,372	)	$	(12,204	)

The 2017 Tax Act was enacted on December 22, 2017. The law included significant changes to the United States corporate income tax system, including a federal corporate rate reduction, limitations on the deductibility of certain expenses and the transition of United States international taxation from a worldwide tax system to a territorial tax system. The 2017 Tax Act imposed a tax on global intangible low-taxed income (GILTI) earned by U.S. controlled foreign subsidiaries. In accordance with FASB Staff Q&A, Topic 740, No. 5, we have elected to account for GILTI as a period expense in the year it is incurred.

At December 29, 2019, we had net operating loss carryforwards for U.S. federal income tax purposes of approximately $1.1 billion, $172.5 million of which do not expire and $964.8 million which are subject to expiration. Of the U.S. net operating loss carryforwards subject to expiration, approximately $38.7 million will expire over the next 5 years and the remaining between 2025 and 2037, with the majority expiring after 2033. State net operating loss carryforwards at December 29, 2019 totaled approximately $1.1 billion, $21.5 million of which do not expire and $1.1 billion which begin to expire in 2020 and extend through 2039. Additionally, we had general business credit carryforwards of approximately $16.1 million, which begin to expire in 2022 and extend through 2039. At December 29, 2019, we had foreign net operating loss carryforwards of approximately $187.8 million, $90.8 million of which do not expire and $97.0 million which begin to expire in 2020 and extend through 2028.

At December 29, 2019 and December 30, 2018, we had a valuation allowance of $423.0 million and $400.2 million, respectively, related to certain U.S. and foreign deferred tax assets. We realized a net increase in the valuation allowance of $22.8 million during the fiscal year ended December 29, 2019. The net increase was primarily due to the valuation allowance on projected U.S., French and Dutch current year taxable losses. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. Based upon the levels of historical taxable income, projections of future taxable income and the reversal of deferred tax liabilities over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences, net of the existing valuation allowance.

It is our current practice and intention to reinvest the earnings of our 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 subsidiaries that are essentially permanent in duration. We would recognize a deferred income tax liability if we were to determine that such earnings are no longer indefinitely reinvested. Due to the number of tax jurisdictions involved, the complexity of our legal entity structure, and

115

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

the complexity of the tax laws in the relevant jurisdictions, we believe it is not practicable to estimate the amount of additional taxes which may be payable upon distribution of these earnings, however it is not expected to be significant. Further, the 2017 Tax Act imposed a mandatory transition tax on accumulated foreign earnings of our U.S. controlled foreign subsidiaries and eliminated U.S. income taxes on distributions from U.S. controlled foreign subsidiaries.

As of December 29, 2019, our unrecognized tax benefits totaled approximately $4.5 million. The total amount of net unrecognized tax benefits that, if recognized, would affect the tax rate was approximately $1.3 million at December 29, 2019. While we are currently not under audit in significant tax jurisdictions, it is reasonably possible that our unrecognized tax benefits could change in the next twelve months as a result of tax periods still open for examination and expirations of the statutes of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	Fiscal year ended
	December 29, 2019			December 30, 2018
Balance at beginning of fiscal year	$	4,610		$	6,025
Additions from acquisitions	—			109
Additions for tax positions related to current year	473			385
Additions for tax positions of prior years	172			718
Reductions for tax positions of prior years	(290		)	(490		)
Settlements	(406		)	(1,983		)
Foreign currency translation	(48		)	(154		)
Balance at end of fiscal year	$	4,511		$	4,610

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 and penalties, that if incurred, would be recognized as penalty expense within “Other expense (income)” on our consolidated statements of operations. As of December 29, 2019, accrued interest and penalties related to our unrecognized tax benefits totaled approximately $0.1 million.

We file numerous consolidated and separate company income tax returns in the United States and in many foreign jurisdictions. With few exceptions, we are subject to U.S. federal, state, and local income tax examinations for years 2016 through 2018. We are no longer subject to foreign income tax examinations by tax authorities in significant jurisdictions for years before 2015. However, U.S. and foreign 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.

13. Other Balance Sheet Information

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

	December 29, 2019		December 30, 2018
Employee bonuses	$	25,383	$	28,953
Other employee benefits	25,194		22,841
Royalties	13,441		12,330
Taxes other than income	13,826		7,897
Notes Conversion Derivatives (Note 6)	181,144		17,386
Commissions	18,025		19,356
Professional and legal fees	14,941		10,848
Contingent consideration (Note 6)	11,982		3,427
Product liability and other legal accruals (Note 17)	54,107		66,918
Other	28,982		27,125
	$	387,025	$	217,081

14. Capital Stock and Earnings Per Share

Our articles of association provide an authorized capital of €9.6 million divided into 320 million ordinary shares, each with a par value of three Euro cents (€0.03). We had 128.6 million and 125.6 million ordinary shares issued and outstanding as of December 29, 2019 and December 30, 2018, respectively.

116

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, receipt of applicable regulatory approvals and other customary conditions.

At our 2019 annual general meeting of shareholders, our shareholders authorized our board of directors until June 28, 2021 to issue, or grant rights to purchase or subscribe for, our unissued ordinary shares up to 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions.

On August 27, 2018, we entered into an underwriting agreement with J.P. Morgan, relating to the registered public offering of 18.2 million ordinary shares, at an initial price to the public of $24.60 per share, for a total price of $448.9 million. The net proceeds to us were $423.0 million, after deducting underwriting discounts and commissions of $25.4 million and offering costs of $0.5 million. The offering closed on August 30, 2018. The proceeds were used to fund the purchase price of the Cartiva acquisition which closed on October 10, 2018, as well as costs and expenses related thereto. See Note 3 for additional details related to the Cartiva acquisition.

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 ordinary shares outstanding during the period. Diluted earnings per share is calculated to include any dilutive effect of our ordinary share equivalents. For the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, our ordinary share equivalents consisted of stock options, restricted stock units, performance share units, and warrants. The dilutive effect of the stock options, restricted stock units, performance share units, and warrants is calculated using the treasury-stock method.

We had outstanding options to purchase 8.9 million ordinary shares, 1.2 million restricted stock units, and 0.8 million performance share units, assuming maximum performance, at December 29, 2019; outstanding options to purchase 9.9 million ordinary shares, 1.3 million restricted stock units, and 0.5 million performance share units, assuming maximum performance, at December 30, 2018; and outstanding options to purchase $10.0 million ordinary shares, $1.3 million restricted stock units, and 0.2 million performance share units, assuming maximum performance, at December 31, 2017.

We had outstanding net-share settled warrants on the 2020 Notes of 1.9 million, 6.2 million, 19.6 million ordinary shares at December 29, 2019, December 30, 2018, and December 31, 2017, respectively. We also had net-share settled warrants on the 2021 Notes of 18.5 million ordinary shares at December 29, 2019, December 30, 2018, and December 31, 2017. Finally, we had net-share settled warrants on the 2023 Notes of 24.4 million and 20.2 million ordinary shares at December 29, 2019 and December 30, 2018, respectively.

None of the options, restricted stock units, performance share units, or warrants were included in the calculation of diluted net loss from continuing operations per share, diluted loss from discontinued operations per share, and diluted net loss per share for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, because we recorded a net loss from continuing operations for all periods. Including these instruments would be anti-dilutive as the net loss from continuing operations is the control number in determining whether those potential common shares are dilutive or anti-dilutive.

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

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Weighted-average number of ordinary shares outstanding-basic and diluted	126,601	112,592	104,531

15. Share-Based Compensation

We currently have two share-based compensation plans under which share-based awards may be granted - the Wright Medical Group N.V. Amended and Restated 2017 Equity and Incentive Plan and the Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan, which are described below. In addition, we have the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan and several legacy Wright and legacy Tornier share-based compensation plans and non-plan agreements under which stock options and restricted stock units are outstanding, but no future share-based awards may be granted.

117

WRIGHT MEDICAL GROUP N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Amounts recognized in the consolidated financial statements with respect to share-based compensation are as follows:

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Total cost of share-based arrangements	$	32,836		$	26,039		$	19,485
Amounts capitalized into inventory	(870		)	(507		)	(669		)
Amortization of capitalized amounts	601			588			577
Impact to net loss	$	32,567		$	26,120		$	19,393
Impact to basic and diluted loss per share	$	0.26		$	0.23		$	0.19
Weighted-average number of shares outstanding - basic and diluted	126,601			112,592			104,531

The compensation costs related to share-based awards were as follows:

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Stock options	$	13,116	$	11,177	$	8,988
Restricted stock units	12,651		11,514		9,373
Performance share units	6,166		2,538		441
Employee stock purchase plan	903		810		683
Total compensation cost for share-based awards	$	32,836	$	26,039	$	19,485

As of December 29, 2019, we had $56.4 million of total unrecognized share-based compensation cost related to unvested share-based compensation arrangements.

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, receipt of applicable regulatory approvals and other customary conditions.

Until the proposed transaction with Stryker closes, equity awards will continue to vest according to their terms. Unexercised options that are in-the-money, both vested and unvested, will fully vest at close and will be cancelled in exchange for a cash payment. All unvested restricted stock units and performance share units will vest at close and be cancelled in exchange for a cash payment as well.

Equity Incentive Plans and Non-Plan Inducement Agreement

The Wright Medical Group N.V. Amended and Restated 2017 Equity and Incentive Plan (the 2017 Plan), which is an amended and restated version of the Wright Medical Group N.V. 2017 Equity and Incentive Plan, was approved by our shareholders on June 28, 2019. The 2017 Plan authorizes us to grant a wide variety of share-based and cash-based awards, including incentive and non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards, cash-based awards, and other share-based awards. To date, only stock options, restricted stock units (RSUs), and performance share units (PSUs) have been granted.

The options and RSUs granted to our employees generally have graded vesting periods of 4 years. The options and RSUs granted to our non-executive directors cliff vest on the one-year anniversary of the date of grant. All options are granted with exercise prices equal to the closing price of our ordinary shares on the date of grant, as reported by the Nasdaq Global Select Market, and expire 10 years after the grant date. The PSUs granted to our executive officers cliff vest after a three-year performance period only if certain minimum pre-established performance criteria are achieved and the number shares issued upon vesting depends upon the level of achievement of the performance criteria, with a cap of 200% of target levels. In recognition of the changed circumstances created by the Stryker acquisition and to encourage retention during the pendency of the acquisition, the compensation committee determined that all outstanding PSU awards will be deemed to have achieved the maximum performance criteria at 200% of target.

The 2017 Plan reserves for issuance a number of ordinary shares equal to the sum of (i) 11,200,000 shares; (ii) 1,329,648 shares, which was the number of shares available for grant under the Wright Medical Group N.V. Amended and Restated 2010 Incentive

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(continued)

Plan (the 2010 Plan) as of June 23, 2017, the date of shareholder approval of the Wright Medical Group N.V. 2017 Equity and Incentive Plan, but not subject to outstanding awards; and (iii) up to 6,405,992 shares subject to awards outstanding under the 2010 Plan as of June 23, 2017 that are subsequently forfeited or cancelled or expire or otherwise terminate without the issuance of such shares (the Carryover Shares). As of June 28, 2019, 520,656 of the 6,405,992 Carryover Shares under the 2010 Plan were carried over to the 2017 Plan. As of December 29, 2019, 6,735,115 ordinary shares remained available for future grant of equity awards under the 2017 Plan, assuming maximum PSU payouts.

As of December 29, 2019, there were 10,444,606 ordinary shares covering awards outstanding under all of our equity incentive plans, including the 2017 Plan, the 2010 Plan and legacy Wright and legacy Tornier plans and one legacy Wright non-plan agreement, assuming maximum PSU payouts. The legacy Wright and legacy Tornier plans and the non-plan agreement include the Wright Medical Group, Inc. 2009 Equity Incentive Plan, as amended and restated, the Wright Medical Group, Inc. 1999 Equity Incentive Plan, as amended and restated, the Tornier N.V. Stock Option Plan, as amended and restated, and one legacy Wright non-plan inducement option agreement. All of these plans and the non-plan agreement were terminated with respect to future awards, and thus, no future share-based awards may be granted under any of these legacy plans and the non-plan agreement.

All of the options issued under the legacy Wright plans and the non-plan agreement expire after 10 years from the date of grant. All outstanding awards under the legacy Wright plans and the non-plan agreement automatically vested on October 1, 2015 as a result of the Wright/Tornier merger; therefore, there are no restricted stock awards or RSUs outstanding at December 29, 2019 under these plans. However, there were 1,891,240 stock options outstanding as of December 29, 2019 under the legacy Wright plans and the non-plan agreement.

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 was estimated based on historical option exercise and employee termination data. The expected stock price volatility assumption was estimated based upon historical volatility of our ordinary shares for the combined company after the Wright/Tornier merger. 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 share-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 2019, 2018, and 2017 was $9.33 per share, $9.32 per share, and $9.80 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:

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Risk-free interest rate	1.5% - 2.4%	2.6% - 2.9%	1.9% - 2.0%
Expected option life	6 years	7 years	6 years
Expected price volatility	31%	32%	33%

During 2019, 2018, and 2017, we did not grant any stock options to non-employees (other than our non-executive directors who received such grants in consideration of their director service).

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(continued)

A summary of our stock option activity during 2019 is as follows:

	Shares (000’s)	Weighted-average exercise price		Weighted-average remaining contractual life	Aggregate intrinsic value* ($000’s)
Outstanding at December 30, 2018	9,203	$	22.89
Granted	1,593	27.77
Exercised	(2,152)	21.52
Forfeited or expired	(236)	25.29
Outstanding at December 29, 2019	8,408	$	24.10	6.52	$	54,473
Exercisable at December 29, 2019	5,426	$	22.86	5.24	$	41,885

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of December 29, 2019 and the respective exercise prices of the options. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

The total intrinsic value of options exercised during 2019, 2018, and 2017 was $17.9 million, $4.9 million, and $9.1 million, respectively.

A summary of our stock options outstanding and exercisable at December 29, 2019 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 - $20.00	609	3.60	$	17.89	556	$	17.73
$20.01 - $21.00	1,708	5.36	20.63		1,675	20.64
$21.01 - $25.00	2,850	6.46	23.01		1,905	22.59
$25.01 - $32.00	3,241	7.72	28.06		1,290	28.36
	8,408	6.52	$	24.10	5,426	$	22.86

Restricted stock units

We calculate the grant date fair value of RSUs using the closing sale price of our ordinary shares on the grant date, as reported by the Nasdaq Global Select Market. 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 share-based compensation expense only for those awards that are expected to vest. The fair value of the unvested restricted stock units is recognized on a straight-line basis over the respective requisite service period, which is generally the vesting period.

During 2019, 2018, and 2017, we granted 0.6 million, 0.6 million, 0.5 million RSUs to employees with weighted-average grant-date fair values of $27.90, $24.05, and $27.83 per share, respectively.

During 2019, 2018, and 2017, we did not grant any RSUs to non-employees (other than our non-executive directors who received such grants in consideration of their director service).

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(continued)

A summary of our RSU activity during 2019 is as follows:

	Shares (000’s)		Weighted-average grant-date fair value		Aggregate intrinsic value* ($000’s)
Unvested at December 30, 2018	1,322		$	23.90
Granted	598		27.90
Vested	(589	)	22.97
Forfeited	(82	)	25.51
Unvested at December 29, 2019	1,249		$	26.16	$	38,196

___________________

* The aggregate intrinsic value is calculated as the market value of our ordinary shares as of December 29, 2019. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

The total fair value of shares underlying RSUs vested during 2019, 2018, and 2017 was $18.0 million, $12.2 million, and $9.0 million, respectively.

Performance share units

We calculate the grant date fair value of PSUs as the closing sale price of our ordinary shares on the grant date, as reported by the Nasdaq Global Select Market. Share-based compensation expense associated with outstanding PSUs is measured using the grant date fair value and is based on the estimated achievement of the established performance criteria at the end of each reporting period until the performance period ends, recognized on a straight-line basis over the performance period. Share-based compensation expense is only recognized for PSUs that we expect to vest, which we estimate based upon an assessment of the probability that the performance criteria will be achieved. The PSUs granted during the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 have a three-year performance-based metric measured over a performance period from July 1, 2019 to June 26, 2022, July 2, 2018 to June 25, 2021, and June 26, 2017 to June 28, 2020, respectively. Share-based compensation expense associated with outstanding PSUs is updated for actual forfeitures. In recognition of the changed circumstances created by the Stryker acquisition and to encourage retention during the pendency of the acquisition, the compensation committee determined that all outstanding PSU awards will be deemed to have achieved the maximum performance criteria at 200% of target.

During 2019, 2018, and 2017, we granted 0.3 million, 0.3 million, and 0.2 million PSUs (based on an assumed maximum level of performance) to employees with a weighted-average grant-date fair value of $27.84, $24.49, and $27.86 per share, respectively.

During 2019, 2018, and 2017, we did not grant any PSUs to non-employees.

A summary of our PSU activity (based on an assumed maximum level of performance) during 2019 is as follows:

	Shares (000’s)	Weighted-average grant-date fair value		Aggregate intrinsic value* ($000’s)
Unvested at December 30, 2018	466	$	26.00
Granted	321	27.84
Vested	—	—
Forfeited	—	—
Unvested at December 29, 2019	787	$	26.75	$	24,076

___________________

* The aggregate intrinsic value is calculated as the market value of our ordinary shares as of December 29, 2019. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

Non-plan inducement stock options

On occasion, legacy Wright granted stock options under a non-plan inducement stock option agreement, in order to induce a candidate to commence employment with legacy Wright as a member of the executive management team. These options, which

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(continued)

are fully vested, vested over a service period ranging from 3 to 4 years. All of the options granted under these non-plan agreements will expire 10 years from the date of grant.

A summary of our non-plan inducement stock option activity during 2019 is as follows:

	Shares (000’s)		Weighted-average exercise price		Weighted-average remaining contractual life	Aggregate intrinsic value* ($000’s)
Outstanding at December 30, 2018	693		$	15.66
Granted	—		—
Exercised	(209	)	15.91
Forfeited or expired	—		—
Outstanding at December 29, 2019	484		$	15.55	1.72	$	7,272
Exercisable at December 29, 2019	484		$	15.55	1.72	$	7,272

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of December 29, 2019 and the respective exercise prices of the options. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

The total intrinsic value of options exercised during 2019, 2018, and 2017 was $2.9 million, $1.6 million, and $0.3 million, respectively.

A summary of our non-plan inducement stock options outstanding and exercisable at December 29, 2019 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
$15.00 - $18.00	484	1.72	$	15.55	484	$	15.55

Employee Stock Purchase Plan

The Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan (the ESPP), which is an amended and restated version of the Tornier N.V. 2010 Employee Stock Purchase Plan, was approved by our shareholders on June 28, 2016. Under the ESPP, we are authorized to issue and sell up to the sum of (i) 333,333 ordinary shares registered previously under the Tornier N.V. 2010 Employee Stock Purchase Plan and (ii) 216,667 additional ordinary shares approved under the ESPP. The total of 550,000 ordinary shares are authorized to be issued to employees of our company and certain designated subsidiaries who work at least 20 hours per week. Under the ESPP, there are two six-month offering 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, each eligible employee can choose each offering period to have up to 20% of his or her eligible earnings withheld to purchase up to 1,000 ordinary shares. The purchase price of the shares is 85% of the market price on the first or last trading day of the offering period, whichever is lower. As a result of the then pending Stryker acquisition, we suspended the operation of the ESPP effective as of December 31, 2019, which was the last day of the offering period that was in effect as of the date of the Stryker purchase agreement. As of December 29, 2019, there were 214,225 ordinary shares available for future issuance under the ESPP.

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

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Risk-free interest rate	1.5% - 2.3%	2.3% - 2.8%	1.3% - 1.9%
Expected life	6 months	6 months	6 months
Expected price volatility	30%	31%	24%

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(continued)

16. Retirement Benefit Plans

During the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, we offered a defined contribution retirement benefit plan for our U.S. based employees. Our defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (Code), covers U.S. employees who are 18 years of age and over. Under this plan, we have elected to make matching contributions to all eligible participants in an amount equal to 100% of the first three percent of eligible compensation, and 50% of the next two percent of eligible compensation, contributed to the Plan as deferral contributions.  Employees are 100% vested in their rollover contributions, employer non-elective contributions, employer matching contributions, qualified non-elective contributions, deferral contributions, safe harbor matching employer contributions and any earnings thereon. The expense related to this plan recognized within our results from continuing operations was $7.2 million in 2019, $6.2 million in 2018, and $5.5 million in 2017.

17. Commitments and Contingencies

Purchase Obligations

We have entered into eight supply agreements for our products which include minimum purchase obligations. As of December 29, 2019, we have minimum purchase obligations of $7.8 million for 2020, $7.3 million for each year 2021 through 2024, and $3.6 million for 2025 and 2026.

Legal Contingencies

The legal contingencies described in this footnote relate primarily to WMT, an indirect subsidiary of Wright Medical Group N.V., and are not necessarily applicable to Wright Medical Group N.V. or other affiliated entities. Maintaining separate legal entities within our corporate structure is intended to ring-fence liabilities. We believe our ring-fenced structure should preclude corporate veil-piercing efforts against entities whose assets are not associated with particular claims.

As described below, our business is subject to various contingencies, including patent and other litigation and product liability claims. These contingencies could result in losses, including damages, fines, or penalties, any of which could be substantial. Although such matters are inherently unpredictable, and negative outcomes or verdicts can occur, we believe we have significant defenses in all of them and are vigorously defending all of them. 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, however, unless otherwise indicated, we do not believe any of them will have a material adverse effect on our financial position.

Our legal 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.

Patent Litigation

On March 23, 2018, WMT filed suit against Paragon 28, Inc. (Paragon 28) in the United States District Court for the District of Colorado, alleging infringement of ten patents concerning orthopaedic plates, plating systems and instruments, and related methods of use. Our complaint seeks damages, injunctive relief and attorneys’ fees. On June 4, 2018, Paragon 28 filed an amended answer and counterclaim seeking declaratory judgment of non-infringement and invalidity of the patent-in-suit, and attorneys’ fees. On September 28, 2018, WMT filed an amended complaint adding claims against Paragon 28 for misappropriation of trade secrets and related wrongdoing. Paragon 28 filed a motion to dismiss those trade secret-related claims, which WMT opposed. On September 30, 2019, the Court issued an order granting in part and denying in part the motion to dismiss, leaving intact the majority of the trade secret-related claims. A motion for clarification of the order remains pending. In March 2019, Paragon 28 filed four petitions with the Patent Trial and Appeal Board seeking Inter Partes Reviews of the patents in question, which WMT opposed. On September 25, 2019 and October 4, 2019, the Patent Trial and Appeal Board granted Paragon 28’s petitions. Oral arguments are expected to be held in June 2020; after which time, the Patent Trial and Appeal Board will render a substantive decision on the merits of the petitions.

Product Liability

We have received claims for personal injury against us associated with fractures of the PROFEMUR^® titanium modular neck product (PROFEMUR^® Claims). As of December 29, 2019, there were approximately 22 unresolved pending U.S. lawsuits and

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(continued)

approximately 50 unresolved pending non-U.S. lawsuits alleging such claims (44 of which are part of a single consolidated class action lawsuit in Canada). The overall fracture rate for the product is low and the fractures appear, at least in part, to relate to patient demographics. In 2009, we began offering a cobalt-chrome version of the PROFEMUR^® modular neck, which has greater strength characteristics than the alternative titanium version. However, during the fiscal 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 the United States and Canada who have previously required a revision following a fracture of a PROFEMUR^® titanium modular neck, or who may require a revision in the future. As of December 29, 2019, our accrual for PROFEMUR^® Claims totaled $12.1 million, of which $8.8 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $3.3 million is included within “Other liabilities.” As of December 30, 2018, our accrual for PROFEMUR^® Claims totaled $17.5 million, of which $12.3 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $5.2 million is included within “Other liabilities.” We expect to pay the majority of these claims within the next two years. Any claims associated with this product outside of the United States and Canada, or for any other products, will be managed as part of our standard product liability accrual methodology on a case-by-case basis.

We are aware that MicroPort has recalled a certain size of its cobalt chrome modular neck product as a result of alleged fractures. As of December 29, 2019, there were seven pending U.S. lawsuits and seven pending non-U.S. lawsuits against us alleging personal injury resulting from the fracture of a cobalt chrome modular neck. These claims will be managed as part of our standard product liability accrual methodology on a case-by-case basis.

Claims for personal injury have also been made against us associated with metal-on-metal hip products (primarily the CONSERVE^® product line). The pre-trial management of certain of these claims was consolidated in the federal court system, in the United States District Court for the Northern District of Georgia under multi-district litigation (MDL) and certain other claims by the Judicial Counsel Coordinated Proceedings in state court in Los Angeles County, California (JCCP and, together with the MDL, the Consolidated Metal-on-Metal Claims). Pursuant to previously disclosed settlement agreements with the Court-appointed attorneys representing plaintiffs in the MDL and JCCP described below (the MoM Settlement Agreements), the MDL and JCCP were closed to new cases effective October 18, 2017 and October 31, 2017, respectively.

Excluding claims resolved in the MoM Settlement Agreements, as of December 29, 2019, there were approximately 205 unresolved metal-on-metal hip cases pending in the U.S. This number includes cases ineligible for settlement under the MoM Settlement Agreements, cases which opted out of such settlements, post-settlement cases, tolled cases, and existing state court cases that were not part of the MDL or JCCP. As of December 29, 2019, we estimate there also were pending approximately 27 unresolved non-U.S. metal-on metal hip cases, 9 unresolved U.S. modular neck cases alleging claims related to the release of metal ions, and zero non-U.S. modular neck cases with metal ion allegations. We also estimate that as of December 29, 2019, there were approximately 514 non-revision claims either dismissed or awaiting dismissal from the MDL and JCCP, which dismissal is a condition of the MoM Settlement Agreements. Although there is a limited time period during which dismissed non-revision claims may be refiled, it is presently unclear how many non-revision claimants will elect to do so. As of December 29, 2019, no dismissed non-revision cases have been refiled.

We believe we have data that supports the efficacy and safety of these hip products. Every hip implant case, including metal-on-metal hip cases, involves fundamental issues of law, 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, statutes of limitation, and the existence of actual, provable injury.

As previously disclosed, between November 2016 and October 2017, WMT entered into three MoM Settlement Agreements with Court-appointed attorneys representing plaintiffs in the MDL and JCCP to settle a total of 1,974 cases that met the eligibility requirements of the MoM Settlement Agreements and were either pending in the MDL or JCCP, or subject to court-approved tolling agreements in the MDL or JCCP, for an aggregate sum of $339.2 million. As of December 29, 2019, we had funded $333.4 million under the MoM Settlement Agreements. We, the indirect parent company of WMT, have guaranteed WMT’s obligations under the MoM Settlement Agreements.

The MoM Settlement Agreements contain specific eligibility requirements and establish procedures for proof and administration of claims, negotiation, and execution of individual settlement agreements, determination of the final total settlement amount, and funding of individual settlement amounts by WMT. Eligibility requirements include, without limitation, that the claimant has a claim pending or tolled in the MDL or JCCP, that, with limited exceptions, the claimant has undergone a revision surgery within eight years of the original implantation surgery, and that the claim has not been identified by WMT as having possible statute of limitation issues. Claimants who have had bilateral revision surgeries will be counted as two claims but only to the extent both claims separately satisfy all eligibility criteria.

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(continued)

The MoM Settlement Agreements were entered into solely as a compromise of the disputed claims being settled and are not evidence that any claim has merit nor are they an admission of wrongdoing or liability by WMT. WMT will continue to vigorously defend metal-on-metal hip claims not settled pursuant to the MoM Settlement Agreements.

As of December 29, 2019, our accrual for metal-on-metal claims totaled $40.5 million, of which $33.0 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $7.5 million is included within “Other liabilities.” As of December 30, 2018, our accrual for metal-on-metal claims totaled $74.5 million, of which $51.9 million was included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $22.6 million was included within “Other liabilities.” Our accrual is based on (i) case by case accruals for specific cases where facts and circumstances warrant, and (ii) the implied settlement values for eligible claims under the MoM Settlement Agreements. We are unable to reasonably estimate the high-end of a possible range of loss for claims which elected to opt out of the MoM Settlement Agreements. Claims we can confirm would meet the eligibility criteria set forth in the MoM Settlement Agreements but are excluded from the settlements due to the maximum settlement cap, or because they are cases not part of the MDL or JCCP, have been accrued consistent with the respective settlement rates. Due to the general uncertainties surrounding all metal-on metal claims as noted above, as well as insufficient information about individual claims, we are presently unable to reasonably estimate a range of loss for future claims; hence we have not accrued for these claims at the present time.

We continue to believe the high-end of a possible range of loss for existing revision claims that do not meet eligibility criteria of the MoM Settlement Agreements will not, on an average per case basis, exceed the average per case accrual we take for revision claims we can confirm do meet eligibility criteria of the applicable settlement agreement. Future claims will be evaluated for accrual on a case by case basis using the accrual methodologies described above (which could change if future facts and circumstances warrant).

We have maintained product liability insurance coverage on a claims-made basis. During the fiscal quarter ended September 30, 2012, we received a customary reservation of rights from Federal, our then primary product liability insurance carrier, asserting that certain present and future claims which allege certain types of injury related to the 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 have been 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. We notified Federal that we disputed its characterization of the CONSERVE^® Claims as a single occurrence, which resulted in multi-year insurance coverage litigation (the Tennessee Coverage Litigation) that has recently been resolved as discussed below.

As previously disclosed, we entered into settlement agreements with all seven insurance carriers with whom metal-on-metal hip coverage was in dispute - Columbia Casualty Company, Travelers, AXIS Surplus Lines Insurance Company, Federal, Catlin Specialty Insurance Company, Catlin Underwriting Agencies Limited for and on behalf of Syndicate 2003 at Lloyd’s of London, and Lexington Insurance Company (Lexington), thus resolving in full the Tennessee Coverage Litigation and the separate litigation and arbitration proceedings with Lexington.

As of December 29, 2019, our insurance carriers have paid an aggregate of $120.4 million of insurance proceeds related to the metal-on-metal claims, including amounts received under the above referenced settlement agreements, of which $113.7 million has been paid directly to us and $6.7 million has been paid directly to claimants. Except as provided in such settlement agreements, our acceptance of the insurance proceeds was not a waiver of any other claim we may have against the insurance carriers unrelated to metal-on-metal coverage and our disputes with carriers relating thereto.

Given the substantial or indeterminate amounts sought in these matters, and the inherent unpredictability of such matters, an adverse outcome in these matters in excess of the amounts included in our accrual for contingencies could have a material adverse effect on our financial condition, results of operations and cash flow. Future revisions to our estimates of these provisions could materially impact our results of operations and financial position. We use the best information available to determine the level of accrued product liabilities, and believe our accruals are adequate.

Stryker Acquisition Related Litigation

On January 15, 2020, John Thompson, a purported shareholder of our company, filed a putative class action lawsuit against us, members of our board of directors, Stryker B.V. and Stryker Corporation in the United States District Court for the District of Delaware, captioned Thompson v. Wright Medical Group N.V., et al., Case No. 1:20-cv-00061 (Thompson Complaint). The Thompson Complaint alleges that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which they allege rendered the Schedule 14D-9 false and misleading. In addition, the Thompson Complaint alleges that members of our board of directors and Stryker acted as controlling persons of the company within the

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(continued)

meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Solicitation/Recommendation Statement. The Thompson Complaint seeks, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; an order directing our board of directors to file a Solicitation/Recommendation Statement that does not contain any untrue statements of material fact and that states all material facts required in it or necessary to make the statements contained therein not misleading; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including reasonable allowance for attorneys’ fees and experts’ fees.

On January 31, 2020, William Grubb, a purported shareholder of our company, filed a putative class action lawsuit against us and members of our board of directors in the United States District Court for the Eastern District of New York, captioned Grubb v. Wright Medical Group N.V., et al., Case No. 1:20-cv-00553 (Grubb Complaint). The Grubb Complaint alleges that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the Grubb Complaint alleges rendered the Schedule 14D-9 false and misleading. In addition, the Grubb Complaint alleges that members of our board of directors acted as controlling persons of the company within the meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The Grubb Complaint seeks, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including counsel fees and expenses and expert fees.

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.

18. Quarterly Results of Operations (unaudited):

The following tables present a summary of our unaudited quarterly operating results for each of the four quarters in 2019 and 2018, 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 report 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.

	2019
	First quarter			Second quarter			Third quarter			Fourth quarter
Net sales	$	230,127		$	229,734		$	212,434		$	248,605
Cost of sales	46,317			48,338			44,441			49,545
Gross profit	183,810			181,396			167,993			199,060
Operating expenses:
Selling, general and administrative	153,306			152,112			152,780			156,468
Research and development	16,972			18,756			18,045			20,312
Amortization of intangible assets	7,587			7,862			8,308			8,164
Total operating expenses	177,865			178,730			179,133			184,944
Operating income (loss)	5,945			2,666			(11,140		)	14,116
Net loss from continuing operations, net of tax	(30,256		)	(18,932		)	(36,200		)	(6,746		)
(Loss) income from discontinued operations, net of tax	(6,345		)	1,120			(7,589		)	(9,277		)
Net loss	$	(36,601	)	$	(17,812	)	$	(43,789	)	$	(16,023	)
Net loss, continuing operations per share, basic and diluted	$	(0.24	)	$	(0.15	)	$	(0.29	)	$	(0.05	)
Net loss income per share, basic and diluted	$	(0.29	)	$	(0.14	)	$	(0.35	)	$	(0.13	)
Weighted-average number of shares outstanding-basic and diluted	125,812			126,267			126,767			127,557

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(continued)

Our 2019 operating income (loss) included the following:

• transaction and transition costs totaling $0.4 million, $0.6 million, $0.6 million, and $4.7 million during the first, second, third, and fourth quarters of 2019, respectively, associated with the Cartiva acquisition and, during the fourth quarter, the proposed acquisition by Stryker;

• a non-cash asset impairment associated with the technology transfer of $5.6 million during the third quarter of 2019; and

• amortization of inventory step-up of $0.4 million in the first, second, and third quarter of 2019 associated with inventory acquired from the Cartiva acquisition.

Our 2019 net loss from continuing operations included the following:

• the after-tax effect of the above amounts within operating income (loss);

• the after-tax effects of non-cash interest expense related to the amortization of the debt discount on our 2020 Notes, 2021 Notes and 2023 Notes totaling $12.3 million, $12.1 million, $12.3 million, and $12.6 million during the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of a $14.3 million loss on the exchange of the cash convertible notes, primarily due to settlement of related conversion derivative liabilities, recognized in the first quarter of 2019;

• the after-tax effects of our mark-to-market adjustments on derivative assets and liabilities totaling a $1.0 million gain, $0.8 million gain, $0.9 million loss, and $10.1 million gain recognized in the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of non-cash foreign currency translation charges of $0.3 million gain, $0.0 million loss, $0.7 million gain, and $0.8 million loss during the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of our fair value adjustments to contingent consideration totaling a $0.4 million loss, $1.7 million loss, $0.9 million loss, and $6.6 million loss in the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of our CVR mark-to-market adjustments of $0.4 million gain recognized in the first quarter of 2019. The CVR agreement expired on March 1, 2019;

• a tax provision of $2.6 million, $2.6 million, $2.6 million, and $2.3 million due to a change in tax rates on income from deferred intercompany transactions in the first, second, third, and fourth quarter of 2019, respectively; and

	2018
	First quarter			Second quarter			Third quarter			Fourth quarter
Net sales	$	198,537		$	205,400		$	194,106		$	238,147
Cost of sales	41,139			45,558			44,307			49,149
Gross profit	157,398			159,842			149,799			188,998
Operating expenses:
Selling, general and administrative	137,248			140,826			139,223			160,664
Research and development	13,899			14,665			13,829			16,749
Amortization of intangible assets	7,141			6,009			5,881			7,699
Total operating expenses	158,288			161,500			158,933			185,112
Operating (loss) income	(890		)	(1,658		)	(9,134		)	3,886
Net loss from continuing operations, net of tax	(19,907		)	(90,621		)	(35,829		)	(22,947		)
(Loss) income from discontinued operations, net of tax	(5,607		)	22,923			(6,696		)	(10,821		)
Net loss	$	(25,514	)	$	(67,698	)	$	(42,525	)	$	(33,768	)
Net loss, continuing operations per share, basic and diluted	$	(0.19	)	$	(0.85	)	$	(0.32	)	$	(0.18	)
Net loss income per share, basic and diluted	$	(0.24	)	$	(0.64	)	$	(0.38	)	$	(0.27	)
Weighted-average number of shares outstanding-basic and diluted	105,904			106,095			113,043			125,323

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(continued)

Our 2018 operating (loss) income included the following:

• transaction and transition costs totaling $0.9 million, $1.3 million, $2.0 million, and $7.8 million during the first, second, third, and fourth quarters of 2018, respectively; and

• amortization of inventory step-up of $0.4 million in the fourth quarter of 2018 associated with inventory acquired from the Cartiva acquisition.

Our 2018 net loss from continuing operations included the following:

• the after-tax effect of the above amounts within operating (loss) income;

• the after-tax effects of non-cash interest expense related to the amortization of the debt discount on our 2020 Notes, 2021 Notes and 2023 Notes totaling $12.0 million, $12.3 million, $12.3 million, and $12.6 million during the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of a $39.9 million non-cash loss on extinguishment of debt to write-off unamortized debt discount and deferred financing fees associated with the partial settlement of the 2020 Notes during the second quarter of 2018;

• the after-tax effects of our mark-to-market adjustments on derivative assets and liabilities totaling a $1.7 million loss, $32.9 million loss, $0.2 million gain, and $1.6 million loss recognized in the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of non-cash foreign currency translation charges of $0.8 million, $1.9 million, $0.2 million, and $0.3 million during the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of our fair value adjustments to contingent consideration totaling a $0.4 million loss, $0.4 million loss, $0.3 million loss, and $0.7 million loss in the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of our CVR mark-to-market adjustments of $3.9 million gain, $2.5 million gain, $3.4 million loss, and $3.2 million loss recognized in the first, second, third, and fourth quarters of 2018, respectively;

• a tax benefit related to the realizability of deferred tax assets as result of the Cartiva acquisition of $3.6 million in the fourth quarter of 2018;

• a tax provision of $2.7 million due to a change in judgment regarding our ability to realize certain deferred tax assets in the fourth quarter of 2018; and

• a U.S. tax (benefit) provision within continuing operations recorded as a result of the pre-tax gain recognized within discontinued operations due to the $30.75 million insurance settlement totaling $(6.2) million, $2.2 million, and $3.8 million in the second, third, and fourth quarters of 2018, respectively.

19. Segment Information

Our management, including our Chief Executive Officer, who is our chief operating decision maker, manages our operations as three operating business segments: U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics. We determined that each of these operating segments represented a reportable segment. Our Chief Executive Officer reviews financial information at the operating segment level to allocate resources and to assess the operating results and performance of each segment.  

Our U.S. Lower Extremities & Biologics segment consists of our operations focused on the sale in the United States of our lower extremities products, such as joint implants and bone fixation devices for the foot and ankle, and our biologics products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth. Our U.S. Upper Extremities segment consists of our operations focused on the sale primarily in the United States of our upper extremities products, such as joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand, and products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products. As the IMASCAP operations are managed by the U.S. Upper Extremities management team, results of operations and assets related to IMASCAP are included within the U.S. Upper Extremities segment. Our International Extremities and Biologics segment consists of our operations focused on the sale outside the United States of all lower and upper extremities products, including associated biologics products.

Management measures segment profitability using an internal operating performance measure that excludes the impact of inventory step-up amortization and transaction and transition costs associated with acquisitions, as such items are not considered representative of segment results. We have determined that each reportable segment represents a reporting unit and, in accordance with ASC 350, each reporting unit requires an allocation of goodwill. As of December 29, 2019, we have allocated $570.0 million, $625.9 million,

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(continued)

and $65.1 million of goodwill to the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics reportable segments, respectively.

Our principal geographic regions consist of the United States, EMEAC (which includes Europe, the Middle East, Africa, and Canada), and Other (which principally represents Asia, Australia, and Latin America). Net sales attributed to each geographic region are based on the location in which the products were sold.

Net sales by geographic region by product line are as follows (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
United States
Lower extremities	$	276,821	$	250,735	$	228,044
Upper extremities	329,787		281,314		239,965
Biologics	91,450		83,077		78,361
Sports med & other	8,231		8,412		8,141
Total United States	$	706,289	$	623,538	$	554,511
EMEAC
Lower extremities	$	46,787	$	46,342	$	42,333
Upper extremities	90,420		87,647		73,243
Biologics	7,921		8,312		8,445
Sports med & other	9,761		11,074		13,751
Total EMEAC	$	154,889	$	153,375	$	137,772
Other
Lower extremities	$	16,849	$	14,407	$	16,140
Upper extremities	27,984		26,813		21,456
Biologics	14,100		17,445		13,831
Sports med & other	789		612		1,279
Total other	$	59,722	$	59,277	$	52,706
Total net sales	$	920,900	$	836,190	$	744,989

No single foreign country accounted for more than 10% of our total net sales during 2019, 2018, and 2017.

Assets in the U.S. Upper Extremities, U.S. Lower Extremities & Biologics, and International Extremities & Biologics segments are those assets used exclusively in the operations of each business segment or allocated when used jointly. Assets in the Corporate category are principally cash and cash equivalents, derivative assets, property, plant and equipment associated with our corporate headquarters, assets associated with discontinued operations, product liability insurance receivables, and assets associated with income taxes. Total assets by business segment as of December 29, 2019 and December 30, 2018 are as follows (in thousands):

	December 29, 2019
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate		Total
Total assets	$	952,187	$	914,317	$	292,929	$	426,207	$	2,585,640

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(continued)

	December 30, 2018
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate		Total
Total assets	$	940,075	$	923,036	$	272,127	$	559,163	$	2,694,401

Selected financial information related to our segments is presented below for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 (in thousands):

	Fiscal year ended December 29, 2019
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics			Corporate 1			Total
Net sales from external customers	$	371,791	$	334,498	$	214,611		$	—		$	920,900
Depreciation expense	10,950		12,728		14,939			25,532			64,149
Amortization expense	—		—		—			31,921			31,921
Segment operating income (loss)	$	103,883	$	123,539	$	(1,895	)	$	(200,974	)	$	24,553
Other:
Inventory step-up amortization											1,057
Transaction and transition costs											6,312
Non-cash asset impairment											5,597
Operating income											11,587
Interest expense, net											80,849
Other expense, net											9,904
Loss before income taxes											$	(79,166	)
Capital expenditures	$	41,585	$	20,395	$	25,723		$	11,583		$	99,286

	Fiscal year ended December 30, 2018
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate 1			Total
Net sales from external customers	$	337,433	$	286,105	$	212,652	$	—		$	836,190
Depreciation expense	11,131		12,439		13,004		22,923			59,497
Amortization expense	—		—		—		26,730			26,730
Segment operating income (loss)	$	96,153	$	97,644	$	1,492	$	(190,720	)	$	4,569
Other:
Inventory step-up amortization										352
Transaction and transition costs										12,013
Operating loss										(7,796		)
Interest expense, net										80,247
Other expense, net										81,797
Loss before income taxes										$	(169,840	)
Capital expenditures	$	21,153	$	26,346	$	17,566	$	6,402		$	71,467

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

	Fiscal year ended December 31, 2017
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate 1			Total
Net sales from external customers	$	309,713	$	244,798	$	190,478	$	—		$	744,989
Depreciation expense	12,532		10,211		12,366		21,723			56,832
Amortization expense	—		—		—		28,396			28,396
Segment operating income (loss)	$	79,889	$	78,866	$	3,631	$	(178,642	)	$	(16,256	)
Other:
Transaction and transition costs										12,400
Incentive and indirect tax projects										(8,965		)
Operating loss										(19,691		)
Interest expense, net										74,644
Other expense, net										5,570
Loss before income taxes										$	(99,905	)
Capital expenditures	$	19,355	$	22,897	$	19,555	$	1,667		$	63,474

__________________________

¹  The Corporate category primarily reflects general and administrative expenses not specifically associated with the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics segments. These non-allocated corporate expenses relate to global administrative expenses that support all segments, including salaries and benefits of certain executive officers and expenses such as: information technology administration and support; corporate headquarters; legal, compliance, and corporate finance functions; insurance; and all share-based compensation.

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

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding disclosure.  The CEO and the CFO, with assistance from other members of management, have reviewed the design and effectiveness of our disclosure controls and procedures as of December 29, 2019 and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of December 29, 2019.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act.

Management assessed the effectiveness of our internal control over financial reporting as of December 29, 2019, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 29, 2019. Our internal control over financial reporting as of December 29, 2019 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

There were no changes in our internal control over financial reporting during the fiscal quarter ended December 29, 2019, that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

131

Item 9B. Other Information.

Not applicable.

132

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this item is incorporated herein by reference to the information contained under the headings “The Extraordinary General Meeting - Item 3 Appointment of Directors to the Wright Board,” “Directors and Executive Officers,” “Board Structure and Composition,” and “Stock Ownership - Delinquent Section 16(a) Reports” in a definitive proxy statement anticipated to be filed within 120 days after the end of the fiscal year covered by this report, pursuant to Regulation 14A under the Exchange Act in connection with an Extraordinary General Meeting of Shareholders (Proxy Statement).

We have adopted a code of business conduct, which applies to all of our directors, officers, and employees. The code of business conduct is available on the Investor Relations-Corporate Governance-Governance Documents & Charters section of our corporate website at www.wright.com. Any person may request a copy free of charge by writing to James A. Lightman, Senior Vice President, General Counsel and Secretary, Wright Medical Group N.V., Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands. We intend to disclose on our corporate website any amendment to, or waiver from, a provision of our code of business conduct that applies to directors and executive officers that is required to be disclosed pursuant to the rules of the SEC and the Nasdaq Stock Market.

Item 11. Executive Compensation.

The information required by this item is incorporated herein by reference to the information contained under the headings “Compensation Discussion and Analysis,” “Executive Compensation” and “Director Compensation” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated herein by reference to the information contained under the headings “Share Ownership of Certain Beneficial Owners and Management,” and “Securities Authorized for Issuance Under Equity Compensation Plans” in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated herein by reference to the information contained under the headings “Certain Relationships and Related Transactions” and “Board Structure and Composition” in the Proxy Statement.

Item 14. Exhibits, Financial Statement Schedules.

The information required by this item is incorporated herein by reference to the information contained under the headings “Appointment of Independent Registered Public Accounting Firms,” “Audit, Audit-Related, Tax, and All Other Fees” and “Pre-Approval Policies and Procedures” in the Proxy Statement.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

Financial Statements

See Index to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.”

Financial Statement Schedules

See Schedule II — Valuation and Qualifying Accounts on page S-1 of this report.

Exhibits

The exhibits to this report are listed below. A copy of any of the exhibits will be furnished at a reasonable cost, upon receipt of a written request for any such exhibit. Such request should be sent to James A. Lightman, Senior Vice President, General Counsel and Secretary, Wright Medical Group N.V., Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands.

Exhibit No.	Exhibit	Method of Filing
2.1	Purchase Agreement, dated November 4, 2019, among Wright Medical Group N.V., Stryker Corporation and Stryker B.V.*	Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 4, 2019 (File No. 001-35065)
2.2	Agreement and Plan of Merger dated as of August 24, 2018 among Wright Medical Group, Inc., Braves WMS, Inc., Wright Medical Group N.V., Cartiva, Inc. and Fortis Advisors LLC, as representative*	Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on August 27, 2018 (File No. 001-35065)
2.3	Business Sale Agreement dated October 21, 2016 between Tornier SAS, Corin France SAS, Corin Orthopaedics Holdings Limited and Certain Related Entities Party Thereto*	Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 24, 2016 (File No. 001-35065)
2.4	Agreement and Plan of Merger dated as of October 27, 2014 among Tornier N.V., Trooper Holdings Inc., Trooper Merger Sub Inc. and Wright Medical Group, Inc.*	Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 27, 2014 (File No. 001-35065)
2.5	Asset Purchase Agreement dated as of June 18, 2013 among MicroPort Medical B.V., MicroPort Scientific Corporation and Wright Medical Group, Inc.*	Incorporated by reference to Exhibit 2.1 to Wright Medical Group, Inc.’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on June 21, 2013 (File No. 001-35823)
2.6	Agreement and Plan of Merger dated as of November 19, 2012 among BioMimetic Therapeutics, Inc., Wright Medical Group, Inc., Achilles Merger Subsidiary, Inc. and Achilles Acquisition Subsidiary, LLC*	Incorporated by reference to Exhibit 2.1 to Wright Medical Group, Inc.’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 19, 2012 (File No. 001-32883)
3.1	Articles of Association of Wright Medical Group N.V.	Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 1, 2016 (File No. 001-35065)
4.1	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934	Filed herewith
4.2	Indenture dated as of June 28, 2018 among Wright Medical Group, Inc., Wright Medical Group N.V. and The Bank of New York Mellon Trust Company, N.A. (including the Form of the 1.625% Cash Convertible Senior Note due 2023)	Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 3, 2018 (File No. 001-35065)
4.3	Indenture dated as of May 20, 2016 between Wright Medical Group N.V. and The Bank of New York Mellon Trust Company, N.A. (including the Form of the 2.25% Cash Convertible Senior Note due 2021)	Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 25, 2016 (File No. 001-35065)

134

Exhibit No.	Exhibit	Method of Filing
4.4	Form of Note Representing $139,556,000 Aggregate Principal Amount of Wright Medical Group, Inc.’s 1.625% Cash Convertible Senior Notes Due 2023	Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on February 8, 2019 (File No. 001-35065)
10.1	Wright Medical Group N.V. Amended and Restated 2017 Equity and Incentive Plan**	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on June 28, 2019 (File No. 001-35065)
10.2	Form of Option Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Stock Options Granted to Executive Officers**	Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.3	Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Executive Officers**	Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.4	Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to New Executive Officers**	Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.5	Form of Performance Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Performance Awards Granted to Executive Officers**	Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.6	Form of Option Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Stock Options Granted to Robert J. Palmisano**	Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.7	Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Robert J. Palmisano**	Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.8	Form of Performance Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Performance Awards Granted to Robert J. Palmisano**	Incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.9	Form of Option Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Stock Options Granted to Non-Executive Directors**	Incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 (File No. 001-35065)
10.10	Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Non-Executive Directors**	Incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.11	Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Non-Executive Directors in Lieu of Cash Retainers**	Incorporated by reference to Exhibit 10.11 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2017 (File No. 001-35065)
10.12	Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan**	Incorporated by reference to Exhibit 10.2 to Tornier N.V.’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on June 19, 2015 (File No. 001-35065)
10.13	Form of Option Certificate under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Stock Options Granted to Executive Officers**	Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)

135

Exhibit No.	Exhibit	Method of Filing
10.14	Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to Executive Officers**	Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.15	Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to New Executive Officers**	Incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.16	Form of Option Certificate under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Stock Options Granted to Robert J. Palmisano**	Incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.17	Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to Robert J. Palmisano**	Incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.18	Form of Option Certificate under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Stock Options Granted to Non-Executive Directors**	Incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.19	Tornier N.V. Amended and Restated 2010 Incentive Plan**	Incorporated by reference to Exhibit 10.1 to Tornier N.V.’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on June 19, 2015 (File No. 001-35065)
10.20	Form of Option Certificate under the Tornier N.V. 2010 Incentive Plan**	Incorporated by reference to Exhibit 10.9 to Tornier N.V.’s Annual Report on Form 10-K for the fiscal year ended December 29, 2013 (File No. 001-35065)
10.21	Tornier N.V. Amended and Restated Stock Option Plan**	Incorporated by reference to Exhibit 10.9 to Tornier N.V.’s Amendment No. 9 to Registration Statement on Form S-1 as filed with the Securities and Exchange Commission on January 18, 2011 (Registration No. 333-167370)
10.22	Form of Option Agreement under the Tornier N.V. Stock Option Plan for Directors and Officers**	Incorporated by reference to Exhibit 10.9 to Tornier N.V.’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission on June 8, 2010 (Registration No. 333-167370)
10.23	Wright Medical Group, Inc. Second Amended and Restated 2009 Equity Incentive Plan**	Incorporated by reference to Appendix D to Wright Medical Group, Inc.’s Definitive Proxy Statement as filed with the Securities and Exchange Commission on April 4, 2013 (File No. 001-35823)
10.24	Form of Executive Stock Option Agreement under the Wright Medical Group, Inc. Second Amended and Restated 2009 Equity Incentive Plan**	Incorporated by reference to Exhibit 10.4 to Wright Medical Group, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (File No. 001-32883)
10.25	Form of Non-Employee Director Stock Option Agreement under the Wright Medical Group, Inc. Second Amended and Restated 2009 Equity Incentive Plan**	Incorporated by reference to Exhibit 10.6 to Wright Medical Group, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (File No. 001-32883)
10.26	Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**	Incorporated by reference to Appendix A to Wright Medical Group, Inc.’s Definitive Proxy Statement as filed with the Securities and Exchange Commission on April 14, 2008 (File No. 001-32883)
10.27	First Amendment to the Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**	Incorporated by reference to Exhibit 10.2 to Wright Medical Group, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2008 (File No. 001-32883)

136

Exhibit No.	Exhibit	Method of Filing
10.28	Form of Executive Stock Option Agreement under the Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**	Incorporated by reference to Exhibit 10.13 to Wright Medical Group, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009 (File No. 001-32883)
10.29	Form of Non-Employee Director Stock Option Agreement under the Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**	Incorporated by reference to Exhibit 10.15 to Wright Medical Group, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009 (File No. 001-32883)
10.30	Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan**	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 1, 2016 (File No. 001-35065)
10.31	Wright Medical Group N.V. Performance Incentive Plan**	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.32	Form of Indemnification Agreement**	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 1, 2015 (File No. 001-35065)
10.33	Service Agreement effective as of October 1, 2015 between Wright Medical Group N.V. and Robert J. Palmisano**	Incorporated by reference to Exhibit 10.10 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.34	Employment Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Robert J. Palmisano**	Incorporated by reference to Exhibit 10.11 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.35	Guaranty by Wright Medical Group N.V. effective as of October 1, 2015 with respect to Wright Medical Group, Inc. Obligations under Employment Agreement with Robert J. Palmisano**	Incorporated by reference to Exhibit 10.12 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.36	Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Robert J. Palmisano**	Incorporated by reference to Exhibit 10.13 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.37	Inducement Stock Option Grant Agreement dated as of September 17, 2011 between Wright Medical Group, Inc. and Robert J. Palmisano**	Incorporated by reference to Exhibit 10.2 to Wright Medical Group, Inc.’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on September 22, 2011 (File No. 001-32883)
10.38	Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Lance A. Berry**	Incorporated by reference to Exhibit 10.16 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.39	Separation Pay Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Lance A. Berry**	Incorporated by reference to Exhibit 10.20 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.40	Offer Letter dated December 7, 2018 between Wright Medical Group, Inc. and Lance A. Berry**	Incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 (File No. 001-35065)
10.41	Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Kevin D. Cordell**	Incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 25, 2016 (File No. 001-35065)

137

Exhibit No.	Exhibit	Method of Filing
10.42	Separation Pay Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Kevin D. Cordell**	Incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 25, 2016 (File No. 001-35065)
10.43	Offer Letter dated December 7, 2018 between Wright Medical Group, Inc. and Kevin D. Cordell**	Incorporated by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 (File No. 001-35065)
10.44	Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and James A. Lightman**	Incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 27, 2015 (File No. 001-35065)
10.45	Separation Pay Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and James A. Lightman**	Incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 27, 2015 (File No. 001-35065)
10.46	Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of July 9, 2018 between Wright Medical Group, Inc. and Barry J. Regan**	Filed herewith
10.47	Separation Pay Agreement effective as of July 9, 2018 between Wright Medical Group, Inc. and Barry J. Regan**	Filed herewith
10.48	Form of Guaranty by Wright Medical Group N.V. with respect to Wright Medical Group, Inc. Obligations under Separation Pay Agreements with Executive Officers**	Incorporated by reference to Exhibit 10.23 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 16, 2015 (File No. 001-35065)
10.49	Amended and Restated Credit, Security and Guaranty Agreement dated as of May 7, 2018 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), MidCap Funding IV Trust (as Lender and Agent) and the Financial Institutions or Other Entities Parties Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2018 (File No. 001-35065)
10.50	Limited Consent and Amendment No. 1 to Amended and Restated Credit, Security and Guaranty Agreement dated as of August 24, 2018 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), MidCap Funding IV Trust (as Lender and Agent) and the Financial Institutions or Other Entities Parties Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018 (File No. 001-35065)
10.51	Omnibus Limited Consent and Amendment No. 2 to Amended and Restated Credit, Security and Guaranty Agreement and Amendment No. 5 to Pledge Agreement dated as of December 10, 2018 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), MidCap Funding IV Trust (as Lender and Agent) and the Financial Institutions or Other Entities Parties Thereto	Incorporated by reference to Exhibit 10.58 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 (File No. 001-35065)

138

Exhibit No.	Exhibit	Method of Filing
10.52	Amendment No. 3 to Amended and Restated Credit, Security and Guaranty Agreement dated as of February 25, 2019 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), Midcap Funding IV Trust (as Lender and Agent) and the Financial Institutions or other Entities Parties Thereto	Incorporated by reference to Exhibit 10.59 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 (File No. 001-35065)
10.53	Form of Exchange Agreement, dated as of January 30, 2019, among Wright Medical Group, Inc., Wright Medical Group N.V. and Each Investor Party Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on January 31, 2019 (File No. 001-35065)
10.54	Bond Hedge Confirmation, dated as of January 31, 2019 among Wright Medical Group N.V., Wright Medical Group, Inc. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.55	Bond Hedge Confirmation, dated as of January 31, 2019 among Wright Medical Group N.V., Wright Medical Group, Inc. and Deutsche Bank AG, London Branch	Incorporated by reference to Exhibit 10.11 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.56	Warrant Confirmation, dated as of January 31, 2019, between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.12 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.57	Warrant Confirmation, dated as of January 31, 2019, between Wright Medical Group N.V. and Deutsche Bank AG, London Branch	Incorporated by reference to Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.58	Call Spread Unwind Agreement, dated as of January 31, 2019, among Wright Medical Group N.V., Wright Medical Group, Inc. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.14 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.59	Call Spread Unwind Agreement, dated as of January 31, 2019, among Wright Medical Group N.V., Wright Medical Group, Inc. and Deutsche Bank AG, London Branch	Incorporated by reference to Exhibit 10.15 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.60	Call Spread Unwind Agreement, dated as of January 31, 2019, among Wright Medical Group N.V., Wright Medical Group, Inc. and Wells Fargo Bank, National Association	Incorporated by reference to Exhibit 10.16 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.61	Bond Hedge Confirmation dated as of January 30, 2019 among Wright Medical Group N.V., Wright Medical Group, Inc. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.62	Bond Hedge Confirmation, dated as of January 30, 2019, among Wright Medical Group N.V., Wright Medical Group Inc. and Deutsche Bank AG, London Branch	Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.63	Warrant Confirmation, dated as of January 30, 2019, between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.64	Warrant Confirmation, dated as of January 30, 2019, between Wright Medical Group N.V. and Deutsche Bank AG, London Branch	Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.65	Call Spread Unwind Agreement, dated as of January 30, 2019, among Wright Medical Group N.V., Wright Medical Group, Inc. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)

139

Exhibit No.	Exhibit	Method of Filing
10.66	Call Spread Unwind Agreement, dated as of January 30, 2019, among Wright Medical Group N.V., Wright Medical Group, Inc. and Deutsche Bank AG, London Branch	Incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.67	Call Spread Unwind Agreement, dated as of January 30, 2019, among Wright Medical Group N.V., Wright Medical Group, Inc. and Wells Fargo Bank, National Association	Incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.68	Form of Exchange/Subscription Agreement dated as of June 20, 2018 among Wright Medical Group, Inc., Wright Medical Group N.V. and Each Investor Party Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on June 21, 2018 (File No. 001-35065)
10.69	Form of Subscription Agreement dated as of June 20, 2018 among Wright Medical Group, Inc., Wright Medical Group N.V. and Each Investor Party Thereto	Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on June 21, 2018 (File No. 001-35065)
10.70	Bond Hedge Confirmation dated as of June 20, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc. and Bank of America, N.A.	Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2018 (File No. 001-35065)
10.71	Warrant Confirmation dated as of June 20, 2018 between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2018 (File No. 001-35065)
10.72	Warrant Confirmation dated as of June 20, 2018 between Wright Medical Group N.V. and Bank of America, N.A.	Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2018 (File No. 001-35065)
10.73	Call Spread Unwind Agreement dated as of June 21, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2018 (File No. 001-35065)
10.74	Call Spread Unwind Agreement dated as of June 21, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc., Deutsche Bank AG, London Branch and Deutsche Bank Securities, Inc.	Incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2018 (File No. 001-35065)
10.75	Call Spread Unwind Agreement dated as of June 21, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc. and Wells Fargo Bank, National Association	Incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2018 (File No. 001-35065)
10.76	Call Option Transaction Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2016 (File No. 001-35065)
10.77	Call Option Transaction Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and Bank of America, N.A.	Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2016 (File No. 001-35065)
10.78	Warrants Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association	Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2016 (File No. 001-35065)
10.79	Warrants Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and Bank of America, N.A.	Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2016 (File No. 001-35065)
10.80	Agreement of Lease dated as of December 31, 2013 between RBM Cherry Road Partners and Wright Medical Technology, Inc.	Incorporated by reference to Exhibit 10.94 to Wright Medical Group Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-35823)
10.81	First Amendment to Agreement of Lease dated as of January 1, 2014 between RBM Cherry Road Partners and Wright Medical Technology, Inc.	Incorporated by reference to Exhibit 10.67 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 25, 2016 (File No. 001-35065)

140

Exhibit No.	Exhibit	Method of Filing
10.82	Second Amendment to Agreement of Lease dated as of January 1, 2014 between RBM Cherry Road Partners and Wright Medical Technology, Inc.	Incorporated by reference to Exhibit 10.68 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 25, 2016 (File No. 001-35065)
10.83	Third Amendment to Agreement of Lease dated as of May 1, 2015 between RBM Cherry Road Partners and Wright Medical Technology, Inc.	Incorporated by reference to Exhibit 10.69 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 25, 2016 (File No. 001-35065)
10.84	Lease Agreement dated as of May 14, 2012 between Liberty Property Limited Partnership, as Landlord, and Tornier, Inc., as Tenant	Incorporated by reference to Exhibit 10.1 to Tornier N.V.’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 15, 2012 (File No. 001-35065)
10.85	Commercial Lease dated December 23, 2008 between Seamus Geaney and Tornier Orthopedics Ireland Limited	Incorporated by reference to Exhibit 10.27 to Tornier N.V.’s Amendment No. 1 to Registration Statement on Form S-1 as filed with the Securities and Exchange Commission on July 15, 2010 (Registration No. 333-167370)
10.86	Commercial Supply Agreement dated March 29, 2016 between BioMimetic Therapeutics, LLC and FUJIFILM Diosynth Biotechnologies U.S.A., Inc. (1)	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on April 7, 2016 (File No. 001-35065)
10.87	Amendment No. 1 to Commercial Supply Agreement dated January 31, 2019 between BioMimetic Therapeutics, LLC and FUJIFILM Diosynth Biotechnologies U.S.A., Inc. (2)	Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019 (File No. 001-35065)
10.88	Settlement Agreement dated as of November 1, 2016 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 25, 2016 (File No. 001-35065)
10.89	Second Settlement Agreement dated as of October 3, 2017 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 4, 2017 (File No. 001-35065)
10.90	Third Settlement Agreement dated as of October 3, 2017 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto	Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on October 4, 2017 (File No. 001-35065)
10.91	First Amendment to the Third Settlement Agreement dated as of December 29, 2017 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on January 5, 2018 (File No. 001-35065)
10.92	Second Amendment to the Third Settlement Agreement dated as of February 23, 2018 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto	Incorporated by reference to Exhibit 10.90 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (File No. 001-35065)
10.93	Third Amendment to the Third Settlement Agreement dated as of March 29, 2018 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto	Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on April 4, 2018 (File No. 001-35065)
21.1	Subsidiaries of Wright Medical Group N.V.	Filed herewith
23.1	Consent of KPMG LLP, an Independent Registered Public Accounting Firm	Filed herewith
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

141

Exhibit No.	Exhibit	Method of Filing
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101	The following materials from Wright Medical Group N.V.’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 29, 2019 and December 30, 2018, (ii) the Consolidated Statements of Operations for each of the fiscal years in the three-year period ended December 29, 2019, (iii) the Consolidated Statements of Comprehensive Loss for each of the fiscal years in the three-year period ended December 29, 2019, (iv) the Consolidated Statements of Cash Flows for each of the fiscal years in the three-year period ended December 29, 2019, (v) Consolidated Statements of Shareholders’ Equity for each of the fiscal years in the three-year period ended December 29, 2019, and (vi) Notes to Consolidated Financial Statements	Filed herewith
104	The cover page from Wright Medical Group N.V.’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019 is formatted in Inline XBRL (eXtensible Business Reporting Language)	Included in Exhibit 101

__________________________

* All exhibits and schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish the omitted exhibits and schedules to the Securities and Exchange Commission upon request by the Securities and Exchange Commission.

** A management contract or compensatory plan or arrangement.

(1) Portions of this exhibit have been redacted and are subject to an order granting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended (File No. 001-35065, CF #33696). The redacted material was filed separately with the Securities and Exchange Commission.

(2) Confidential portions of this exhibit have been redacted in compliance with Item 601(b)(10) of SEC Regulation S-K.

Note: Certain instruments defining the rights of holders of long-term debt securities of the Registrant or its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of SEC Regulation S-K. The Registrant hereby undertakes to furnish to the Securities and Exchange Commission, upon request, copies of any such instruments.

Item 16. Form 10-K Summary.

None.

142

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 24, 2020    

WRIGHT MEDICAL GROUP N.V.
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 capacities and on the dates indicated.

Signature	Title	Date
/s/ Robert J. Palmisano Robert J. Palmisano	President, Chief Executive Officer and Executive Director (Principal Executive Officer)	February 24, 2020
/s/ Lance A. Berry Lance A. Berry	Executive Vice President, Chief Financial and Operations Officer (Principal Financial Officer)	February 24, 2020
/s/ Julie B. Andrews Julie B. Andrews	Senior Vice President, Global Finance (Principal Accounting Officer)	February 24, 2020
/s/ David D. Stevens David D. Stevens	Chairman	February 24, 2020
/s/ Gary D. Blackford Gary D. Blackford	Non-Executive Director	February 24, 2020
/s/ J. Patrick Mackin J. Patrick Mackin	Non-Executive Director	February 24, 2020
/s/ John L. Miclot John L. Miclot	Non-Executive Director	February 24, 2020
/s/ Kevin C. O’Boyle Kevin C. O’Boyle	Non-Executive Director	February 24, 2020
/s/ Amy S. Paul Amy S. Paul	Non-Executive Director	February 24, 2020
/s/ Richard F. Wallman Richard F. Wallman	Non-Executive Director	February 24, 2020
/s/ Elizabeth H. Weatherman Elizabeth H. Weatherman	Non-Executive Director	February 24, 2020

143

Wright Medical Group N.V. 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 29, 2019	$	3,045	$	490	$	(90	)	$	3,445
December 30, 2018	$	4,328	$	189	$	(1,472	)	$	3,045
December 31, 2017	$	4,469	$	1,243	$	(1,384	)	$	4,328

144

EX-4.1

Exhibit 4.1

WRIGHT MEDICAL GROUP N.V.

DESCRIPTION OF SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

Wright Medical Group N.V., a public company with limited liability (naamloze vennootschap) organized under the laws of the Netherlands (Wright, we, us, and our), has only one class of securities registered under Section 12 of the United States Securities Exchange Act of 1934, as amended: our ordinary shares, par value €0.03 per share (ordinary shares).

The following description of our ordinary shares is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the provisions of our articles of association, which are filed as an exhibit to our annual report on Form 10-K for the fiscal year ended December 29, 2019 and are incorporated by reference herein. We encourage you to read our articles of association for additional information.

Authorized Ordinary Shares

Our articles of association provide an authorized capital of €9,600,000 divided into 320,000,000 ordinary shares, each with a nominal value of €0.03.

Form of Ordinary Shares

We issue our ordinary shares in registered form and such shares are not certificated.

Issuance of Ordinary Shares

Our articles of association provide for an authorized capital consisting of one class of shares, being 320,000,000 ordinary shares, each with a nominal value of €0.03. A designation of authority to the board of directors to issue ordinary shares remains effective for the period specified by the general meeting and may be granted up to a maximum of five years from the date of designation. The general meeting may renew this designation annually. Without this designation, only the general meeting has the power to resolve to issue ordinary shares.

At our 2019 annual general meeting of shareholders, our shareholders authorized our board of directors until June 28, 2021 to issue, or grant rights to purchase or subscribe for, our unissued ordinary shares (but not different classes of ordinary shares) up to 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions.

In connection with the issuance of ordinary shares, at least the nominal value must be paid for such shares. No obligation other than to pay the nominal amount of and any premium agreed upon a share may be imposed upon a shareholder against the shareholder’s will, by amendment of the articles of association or otherwise. Subject to Dutch law, payment for shares must be in cash to the extent no other contribution has been agreed and may be made in the currency approved by us.

Any increase in the number of authorized ordinary shares and the introduction of different classes of shares would require an amendment to our articles of association in order to effect such increase. Such amendment would need to be made by a proposal of our board of directors and adopted by our shareholders at a general meeting by simple majority of votes cast in a meeting in which at least one-third of our outstanding ordinary shares are represented.

Preemptive Rights

Shareholders have a pro-rata preemptive right to subscribe for ordinary shares that we issue for cash unless the general meeting, or the relevant other corporate body which has been designated as the authorized corporate body to issue shares, which in our case is our board of directors, limits or eliminates this right. Our shareholders have no pro-rata preemptive subscription right with respect to ordinary shares issued (1) for consideration other than cash, (2) to our employees or the employees of our group of companies or (3) to a party exercising a previously obtained right to acquire shares.

The right of our shareholders to subscribe for ordinary shares pursuant to this preemptive right may be eliminated or limited by the general meeting. If the general meeting delegates its authority to the board of directors for this purpose, then the board of directors will have the power to limit or eliminate the preemptive rights of holders of ordinary shares. Such a proposal requires the approval of at least two-thirds of the votes cast by shareholders at a general meeting where less than half of the issued share capital is represented or a majority of the votes cast at the general meeting where more than half of the share capital is represented. Designations of authority to the board of directors may remain in effect for up to five years and may be renewed for additional periods of up to five years.

At our 2019 annual general meeting of shareholders, our shareholders authorized our board of directors until June 28, 2021 to exclude or restrict pre-emptive rights on the issue of, or grant of rights to purchase or subscribe for, up to an aggregate of 20% of our issued and outstanding shares at the time of issue, as described above.

Repurchases of Our Ordinary Shares

We may acquire ordinary shares, subject to applicable provisions of Dutch law and of our articles of association, to the extent:

• our shareholders’ equity, less the amount to be paid for the ordinary shares to be acquired, exceeds the sum of (i) our share capital account plus (ii) any reserves required to be maintained by Dutch law or our articles of association; and

• after the acquisition of ordinary shares, we and our subsidiaries would not hold, or hold as pledgees, ordinary shares having an aggregate nominal value that exceeds 50% of our issued share capital.

Our board of directors may repurchase ordinary shares only if our shareholders have authorized the board of directors to do so. Our board of directors is authorized to repurchase up

to 10% of our issued share capital until December 28, 2020, at prices between an amount equal to the nominal value of the ordinary shares and an amount equal to 110% of the market price of the ordinary shares on the Nasdaq Global Select Market at the time of the transaction. The authorization is not required for the acquisition of our ordinary shares listed on the Nasdaq Global Select Market for the purpose of transferring the shares to employees under our equity incentive plans.

Capital Reductions; Cancellation

Upon a proposal of the board of directors, at a general meeting, our shareholders may vote to reduce our issued share capital by canceling shares held by us in treasury or by reducing the nominal value of the shares by amendment to our articles of association. In either case, this reduction would be subject to applicable statutory provisions. In order to be approved, a resolution to reduce the capital requires approval of a majority of the votes cast at a meeting if at least half the issued capital is represented at the meeting or at least two-thirds of the votes cast at the meeting if less than half of the issued capital is represented at the meeting.

A resolution that would result in the reduction of capital requires prior or simultaneous approval of the meeting of each group of holders of shares of the same class whose rights are prejudiced by the reduction. A resolution to reduce capital requires notice to our creditors who have the right to object to the reduction in capital under specified circumstances.

General Meetings of Shareholders

Each shareholder has a right to attend general meetings, either in person or by proxy, and to exercise voting rights in accordance with the provisions of our articles of association. We must hold at least one general meeting each year. This meeting must be convened at one of three specified locations in the Netherlands (Amsterdam, Haarlemmermeer (Schiphol airport) and Schiedam) within six months after the end of our fiscal year. Our board of directors may convene additional general meetings as often as they deem necessary. Pursuant to Dutch law, one or more shareholders representing at least 10% of our issued share capital may request the Dutch courts to order that a general meeting be held. Dutch law does not restrict the rights of holders of ordinary shares who do not reside in the Netherlands from holding or voting their shares.

We will give notice of each general meeting by publication on our website, in a Dutch newspaper with national circulation and in any other manner that we may be required to follow in order to comply with applicable stock exchange and United States Securities and Exchange Commission requirements. We will give notice no later than the 15^th day prior to the day of the meeting. The notice will include or be accompanied by an agenda identifying the business to be considered at the meeting. Shareholders representing at least 3% of the issued share capital have the right to request the inclusion of additional items on the agenda of shareholder meetings, provided that such request is received by us no later than 60 days before the day the relevant shareholder meeting is held. Our board of directors may decide that shareholders are entitled to participate in, to address and to vote in the general meeting by way of an electronic means of communication, in person or by proxy, provided the shareholder may by the electronic means of communication be identified, directly take notice of the discussion in the meeting and participate

in the deliberations. Our board of directors may adopt a resolution containing conditions for the use of electronic means of communication in writing. If our board of directors has adopted such regulations, they will be disclosed with the notice of the meeting as provided to shareholders.

Board Seats

We maintain a single-tiered board of directors comprised of both executive directors and non-executive directors. Currently, our board of directors consists of one executive director and eight non-executive directors.

The general meeting appoints the members of our board of directors, subject to a binding nomination of our board of directors in accordance with the relevant provisions of the Dutch Civil Code and our articles of association. Our board of directors makes the binding nomination based on a recommendation of our nominating, corporate governance and compliance committee. If the list of candidates contains one candidate for each open position to be filled, such candidate shall be appointed by the general meeting unless the binding nature of the nominations by our board of directors is set aside. The binding nature of nominations by our board of directors can only be set aside by a vote of at least two-thirds of the votes cast at an annual or extraordinary general meeting, provided such two-thirds vote constitutes more than half of our issued share capital. In such case, a new meeting is to be called at which the resolution for appointment of a member of our board of directors shall require a majority of two-thirds of the votes cast, representing more than half of our issued share capital.

Under applicable Dutch law, a vacancy can only be filled by a resolution of the general meeting from a binding nomination drawn up by the board of directors.

A resolution of the general meeting to suspend a member of our board of directors requires the affirmative vote of an absolute majority of the votes cast. A resolution of the general meeting to suspend or dismiss members of our board of directors, other than pursuant to a proposal by our board of directors, requires a majority of at least two-thirds of the votes cast, representing more than half of our issued share capital.

Under Dutch law and our articles of association, our board of directors is collectively responsible for our policy and general affairs of our company. The executive directors are responsible for the day-to-day affairs. The non-executive directors supervise and provide guidance to the executive directors. In performing their duties, our directors are guided by the interests of the company and, within the boundaries set by relevant Dutch law, are required to take into account the relevant interests of our stakeholders. The internal affairs of our board of directors are also governed by internal rules for the board of directors. Each director owes a duty to our company to properly perform the duties assigned to such director and to act in our corporate interest.

Voting Rights

Each ordinary share is entitled to one vote. Voting rights may be exercised by shareholders registered in our share register or by a duly appointed proxy of a registered

shareholder, which proxy need not be a shareholder. Our articles of association do not limit the number of registered shares that may be voted by a single shareholder. Treasury shares, whether owned by us or one of our majority-owned subsidiaries, will not be entitled to vote at general meetings. Resolutions of the general meeting are adopted by a simple majority of votes cast at a meeting where at least one-third of the issued share capital is represented, except as described in the following two paragraphs.

Matters requiring a majority of at least two-thirds of the votes cast, which votes also represent more than half of our issued share capital include, among others:

• a resolution to cancel a binding nomination for the appointment of members of the board of directors;

• a resolution to appoint members of the board of directors, if the board of directors fails to use its right to submit a binding nomination, or if the binding nomination is set aside; and

• a resolution to dismiss or suspend members of the board of directors other than pursuant to a proposal by the board of directors.

Matters requiring a majority of at least two-thirds of the votes cast, if less than half of our issued share capital is represented include, among others:

• a resolution of the general meeting regarding restricting and excluding preemptive rights, or decisions to designate the board of directors as the body authorized to exclude or restrict preemptive rights;

• a resolution of the general meeting to reduce our outstanding share capital; and

• a resolution of the general meeting to have us merge or demerge.

Quorum for General Meetings

Apart from the resolutions referred to in the first three bullet points under “-Voting Rights,” under our articles of association, holders of at least one-third of the outstanding ordinary shares must be represented at a meeting to constitute a quorum. If a quorum was not represented at the meeting, a new meeting may be convened at which the resolution may, other than for the resolutions referred to under “-Voting Rights,” be passed, irrespective of the part of the capital represented at such meeting. In the notice convening the new meeting it must be stated, giving the reason therefor, that a resolution may be passed, irrespective of the part of the capital represented at the meeting.

Adoptions of Annual Accounts and Discharge of Management Liability

Our board of directors must prepare statutory annual accounts within five months after the end of our financial year, unless the shareholders have approved an extension of this period

for up to five additional months due to certain special circumstances. Our statutory accounts are prepared under international financial reporting standards (IFRS) and are deposited with the Trade Register in Amsterdam, the Netherlands. Our statutory accounts prepared under IFRS are different from our consolidated financial statements prepared under generally accepted accounting practices in the United States. Our statutory annual accounts must be accompanied by an auditor’s certificate, a report of the board of directors and certain other mandatory information and must be made available for inspection by the general meeting at our offices within the five-month period referenced above. Under Dutch law, our general meeting is in first instance authorized to approve the appointment and removal of our independent auditors, as referred to in Article 2:393 of the Dutch Civil Code, to audit the annual accounts. The annual accounts are adopted by our shareholders at the general meeting and prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The adoption of the annual accounts by the general meeting does not release the members of our board of directors from liability for acts reflected in those documents. Any such release from liability requires a separate shareholders’ resolution to be voted on in the general meeting.

Our financial reporting is subject to the supervision of the Netherlands Authority for the Financial Markets (AFM). The AFM has an independent right to (i) request an explanation from us regarding our application of the applicable financial reporting standards if, based on publicly known facts or circumstances, it has reason to doubt our financial reporting meets such standards and (ii) recommend us to make available further explanations. If we do not comply with such a request or recommendation, the AFM may request that the Enterprise Chamber of the Amsterdam Court of Appeal (Ondernemingskamer) (Enterprise Chamber) order us to (i) provide an explanation of the way the applicable financial reporting standards have been applied to our financial reports or (ii) prepare our financial reports in accordance with the Enterprise Chamber’s instructions.

Dividends

Our articles of association prescribe that profits or reserves appearing in our annual accounts adopted by the general meeting will be at the disposal of the general meeting. We will have power to make distributions to our shareholders and other persons entitled to distributable profits only to the extent that our equity exceeds the sum of the paid and called-up portion of the ordinary share capital and the reserves that must be maintained in accordance with provisions of Dutch law or our articles of association. We may not make any distribution of profits on our ordinary shares that we hold. The general meeting, whether or not upon the proposal of our board of directors, determines whether and how much of the remaining profit they will reserve and the manner and date of such distribution. All calculations to determine the amounts available for dividends are based on our statutory annual accounts prepared under IFRS and deposited with the Trade Register in Amsterdam, the Netherlands, which may be different from our consolidated financial statements included in our annual report on Form 10-K each year.

For certain Dutch tax aspects of dividend distributions, please refer to paragraph “Certain Dutch Tax Consequences-Dividend Withholding Tax” below.

Liquidation Rights

In the event of a dissolution and liquidation, the assets remaining after payment of all debts and liquidation expenses are to be distributed to the holders of our ordinary shares in proportion to their nominal possession of such shares. All distributions referred to in this paragraph shall be made in accordance with the relevant provisions of Dutch law.

For certain Dutch tax aspects of distributions made in the event of a dissolution and liquidation, please refer to paragraph “Certain Dutch Tax Consequences-Dividend Withholding Tax” below.

Redemption, Conversion and Sinking Fund Rights

Holders of ordinary shares have no redemption, conversion or sinking fund rights.

Limitations on Non-Residents and Exchange Controls

There are no limits under the laws of the Netherlands or in our articles of association on non-residents of the Netherlands holding or voting our ordinary shares. Currently, there are no exchange controls under the laws of the Netherlands on the conduct of our operations or affecting the remittance of dividends.

Market Abuse

The Dutch Financial Supervision Act (Wet op het financieel toezicht) (FSA) provides for specific rules intended to prevent market abuse which include prohibitions on insider trading, divulging inside information and tipping, and market manipulation. We are subject to the rules under the FSA which prohibit insider trading prohibition (in particular, if we trade in our ordinary shares or in financial instruments the value of which is determined or co-determined by the value of our ordinary shares), divulging insider information, and tipping and market manipulation. The prohibition on market manipulation under the FSA may mean that certain restrictions apply to our ability to buy-back our ordinary shares. In certain circumstances, our shareholders can also be subject to the market abuse rules under the FSA.

Pursuant to the FSA, we have adopted a code of conduct on insider trading and confidentiality in respect of holding of and carrying out of transactions by our board members and employees in our ordinary shares or in financial instruments the value of which is determined or co-determined by the value of our ordinary shares.

Netherlands Squeeze-out Proceedings

Pursuant to Section 2:92a of the Dutch Civil Code, a shareholder who for his, her or its own account contributes at least 95% of our issued capital may institute proceedings against our other shareholders jointly for the transfer of their shares to the claimant. The proceedings are held before the Enterprise Chamber of the Amsterdam Court of Appeal (Ondernemingskamer), and can be instituted by means of a writ of summons served upon each of the minority shareholders in accordance with the provisions of the Dutch Code of Civil Procedure (Wetboek

van Burgerlijke Rechtsvordering). The Enterprise Chamber may grant the claim for squeeze out in relation to all minority shareholders and will determine the price to be paid for the shares, if necessary after appointment of one or three experts who will offer an opinion to the Enterprise Chamber on the value to be paid for the shares of the minority shareholders. Once the order to transfer becomes final before the Enterprise Chamber, the person acquiring the shares shall give written notice of the date and place of payment and the price to the holders of the shares to be acquired whose addresses are known to such person. Unless the addresses of all of them are known to such person, such person shall also publish the same in a newspaper with a national circulation in the Netherlands.

Registrar and Transfer Agent

A register of holders of the ordinary shares is maintained by American Stock Transfer & Trust Company, LLC in the United States, which also serves as our transfer agent. You may contact American Stock Transfer & Trust Company at 6201 15th Avenue, Brooklyn, NY 11219 or by telephone at (800) 937-5449.

Exchange Listing

Our ordinary shares are listed and trade in the United States on The Nasdaq Global Select Market under the trading symbol “WMGI.”

Certain Dutch Tax Consequences

The information set out below is a general summary of certain material Dutch tax consequences in connection with the acquisition, ownership and transfer of ordinary shares. This summary is not a comprehensive or complete description of all the Dutch tax considerations that may be relevant for a particular holder of ordinary shares and it does not address the tax consequences that may arise in any jurisdiction other than the Netherlands in connection with the acquisition, ownership and transfer of ordinary shares.

This summary is based upon the tax laws of the Netherlands as in effect February 21, 2020, as applied and interpreted in case law of the courts of the Netherlands and in administrative guidance, rulings and decisions of the relevant authorities of the Netherlands, in each case as available in printed form on or before such date, without prejudice to any developments or amendments introduced at a later date and implemented with or without retroactive effect.

Any reference in this summary to the Netherlands and Netherlands or Dutch law are to the European part of the Kingdom of the Netherlands and its law, respectively, only.

As this summary is intended as general information only, investors and shareholders should consult their own tax advisors as to the Dutch or other tax consequences of the acquisition, ownership and transfer of ordinary shares, including, in particular, the application of their particular situations of the tax considerations discussed below. Holders of ordinary shares

may be subject to a special tax treatment under any applicable law and this summary is not intended to be applicable in respect of all categories of holders of our ordinary shares.

For Dutch tax purposes, a holder of ordinary shares may include an individual who or an entity that does not have the legal title of the ordinary shares, but to whom nevertheless the ordinary shares are attributed based either on such individual or entity holding a beneficial interest in the ordinary shares or based on specific statutory provisions, including statutory provisions pursuant to which the ordinary shares are attributed to an individual who is, or who has directly or indirectly inherited from a person who was, the settlor, grantor or similar originator of a trust, foundation or similar entity that holds the ordinary shares.

Dividend Withholding Tax

General

We do not currently anticipate paying any dividends. If we were to pay dividends currently, the following discussion summarizes the principal Dutch tax consequences thereof for a holder of ordinary shares. Dividends paid on ordinary shares to a holder of such ordinary shares are generally subject to a withholding tax of 15% imposed by the Netherlands. Generally, the dividend withholding tax will not be borne by us, but will be withheld by us from the gross dividends paid on the ordinary shares. The term “dividends” for this purpose includes, but is not limited to:

• distributions in cash or in kind, deemed and constructive distributions and repayments of paid-in capital not recognized for Dutch dividend withholding tax purposes;

• liquidation proceeds, proceeds of redemption of shares or, generally, consideration for the repurchase of shares in excess of the average paid-in capital recognized for Dutch dividend withholding tax purposes;

• the nominal value of shares issued to a shareholder or an increase of the nominal value of shares, as the case may be, to the extent that it does not appear that a contribution to the capital recognized for Dutch dividend withholding tax purposes was made or will be made; and

• partial repayment of paid-in capital, recognized for Dutch dividend withholding tax purposes, if and to the extent that there are net profits (zuivere winst), within the meaning of the Dutch Dividend Withholding Tax Act 1965 (Wet op de dividendbelasting 1965), unless the general meeting of Wright has resolved in advance to make such a repayment and provided that the nominal value of the shares concerned has been reduced by a corresponding amount by way of an amendment of our articles of association.

The term “net profits” includes anticipated profits that have yet to be realized.

Dutch Residents

A holder of ordinary shares who is, or who is deemed to be, a resident of the Netherlands can generally credit the withholding tax against his Dutch income tax or Dutch corporate income tax liability and is generally entitled to a refund of dividend withholding taxes exceeding his aggregate Dutch income tax or Dutch corporate income tax liability, provided that certain conditions are met, unless such holder of ordinary shares is not considered to be the beneficial owner (uiteindelijk gerechtigde) of the dividends.

A holder of ordinary shares who is the recipient of dividends (the “Recipient”), will in any case not be considered the beneficial owner of these dividends for Dutch dividend withholding tax purposes if:

• as a consequence of a combination of transactions, a person or legal entity other than the Recipient wholly or partly, directly or indirectly, benefits from the dividends;

• such other person or legal entity would:

◦ as opposed to the Recipient, not be entitled to an exemption from Dutch dividend withholding tax; or

◦ in comparison to the Recipient, to a lesser extent be entitled to a credit, reduction or refund of Dutch dividend withholding tax; and

• such other person or legal entity has, directly or indirectly, retained or acquired a similar interest in the ordinary shares (“Dividend Stripping”).

Non-Dutch Residents

With respect to a holder of ordinary shares, who is not, and is not deemed to be, a resident of the Netherlands for purposes of Dutch taxation and who is considered to be a resident of (a) Aruba, Curacao or St. Maarten under the provisions of the Tax Arrangement for the Kingdom of the Netherlands (Belastingregeling voor het Koninkrijk); (b) Curacao under the provisions of the Tax Arrangement The Netherlands-Curacao (Belastingregeling Nederland-Curaçao) (c) St. Maarten under the provisions of the Tax Arrangement The Netherlands-St. Maarten (Belastingregeling Nederland-Sint Maarten); (d) Bonaire, St. Eustatius or Saba under the provisions of the Tax Regulation for the country of the Netherlands (Belastingregeling voor het land Nederland); or (e) a country other than the Netherlands under the provisions of a double taxation convention the Netherlands has concluded with such country, the following may apply. Such holder of ordinary shares may, depending on his specific circumstances and on the terms of and subject to compliance with the procedures for claiming benefits under the Tax Arrangement for the Kingdom of the Netherlands, the Tax Arrangement The Netherlands-Curacao, the Tax Arrangement The Netherlands-St. Maarten, the Tax Regulation for the country of the Netherlands or such double taxation convention, be eligible for a full or partial exemption from or a reduction or refund of Dutch dividend withholding tax.

In addition, an exemption from Dutch dividend withholding tax will generally apply to dividends distributed to an entity that is resident of another EU member state, a designated state that is a party to the Agreement on the European Economic Area (currently Liechtenstein,

Iceland and Norway) or a state with which the Netherlands has concluded a treaty for the avoidance of double taxation that provides for an arrangement for dividends, in each case according to the tax laws of such state, provided that:

(i) the entity at the time of the distribution has an interest in us to which the participation exemption as meant in Article 13 of the Dutch Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969, “CITA”) or to which the participation credit as meant in Article 13aa of the CITA would have been applicable, had such entity been a tax resident of the Netherlands;

(ii) the entity does not perform a similar function as an exempt investment institution (vrijgestelde beleggingsinstelling) or fiscal investment institution (fiscale beleggingsinstelling), as meant in Article 6a and Article 28 CITA, respectively;

(iii) the entity is, in its state of residence, not considered to be resident outside the European Union, Iceland, Liechtenstein or Norway under the terms of a treaty for the avoidance of double taxation concluded with a third state with which the Netherlands has not concluded a treaty for the avoidance of double taxation that provides for an arrangement for dividends; and

(iv) the entity does not hold the ordinary shares (a) with the main purpose or one of the main purposes to avoid Dutch dividend withholding tax of another person or entity and (b) there is no arrangement or series of arrangements that is not genuine. An arrangement or series of arrangements shall be regarded as not genuine to the extent that it is not put into place for valid commercial reasons which reflect economic reality.

Moreover, the exemption from Dutch dividend withholding tax will only be available to the beneficial owner of the dividend.

Furthermore, a refund of Dutch dividend withholding tax may be available for certain entities that are resident in (a) another EU member state; (b) in a designated state that is a party to the Agreement on the European Economic Area (currently Liechtenstein, Iceland and Norway); or (c) a designated jurisdiction which has an arrangement for the exchange of tax information with the Netherlands, provided that:

i) such entity if resident in a designated jurisdiction holds our ordinary shares as portfolio investment,

ii) such entity is not subject to taxation levied by reference to profits in its state of residence:

iii) such entity, had it been a resident in the Netherlands, would not be subject to corporate income tax in the Netherlands;

iv) such entity can be considered to be the beneficial owner of the dividends;

iii) such entity does not perform a similar function to that of a fiscal investment institution or an exempt investment institution as meant in Article 6a and Article 28 CITA, respectively; and

iv) certain administrative conditions are met.

Additionally, a refund of Dutch dividend withholding tax may be available for certain holders of ordinary shares who are resident in (a) another EU member state; (b) a designated state that is a party to the Agreement on the European Economic Area (currently Liechtenstein, Iceland and Norway); or (c) a designated jurisdiction which has an arrangement for the exchange of tax information with the Netherlands, provided that such entity under (c) holds our ordinary shares as portfolio investment, if and to the extent:

i) the dividend payment relates to dividends in respect of which the holder of ordinary shares is not subject to Dutch income tax or Dutch corporate income tax, as the case may be;

ii) the withheld Dutch dividend withholding tax exceeds, after any reductions resulting from a refund pursuant to Dutch domestic law or a double taxation convention concluded by the Netherlands, the amount of Dutch income tax or Dutch corporate income tax, as the case may be, due by the holder of ordinary shares had he been resident in the Netherlands;

iii) such holder of ordinary shares can be considered to be the beneficial owner of the dividends;

iv) if such holder of ordinary shares is an entity, such holder of ordinary shares does not perform a similar function to that of a fiscal investment institution or an exempt investment institution as meant in Article 6a and Article 28 CITA, respectively;

v)    such holder of ordinary shares is not entitled to a full credit in its jurisdiction of residence pursuant to a treaty for the avoidance of double taxation concluded between the Netherlands and that jurisdiction; and

vi)    certain administrative conditions are met.

Dividend distributions to U.S. holder of ordinary shares with an interest of less than 10% of the voting rights in us are subject to 15% dividend withholding tax, which is equal to the rate such U.S. holder may be entitled to under the Convention between the Kingdom of the Netherlands and the United States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, executed in Washington on December 18, 1992, as amended from time to time (Netherlands-US Convention). As such, there is no need to claim a refund of the excess of the amount withheld over the applicable tax treaty rate.

On the basis of Article 35 of the Netherlands-US Convention, qualifying U.S. pension trusts are under certain conditions entitled to a full exemption from Dutch dividend withholding

tax. Such qualifying exempt U.S. pension trusts must provide us form IB 96 USA, along with a valid certificate, for the application of relief at source from dividend withholding tax. If we receive the required documentation prior to the relevant dividend payment date, then we may apply such relief at source. If a qualifying exempt U.S. pension trust fails to satisfy these requirements prior to the payment of a dividend, then such qualifying exempt pension trust may claim a refund of Dutch dividend withholding tax by filing form IB 96 USA with the Dutch tax authorities. On the basis of Article 36 of the Netherlands-US Convention, qualifying exempt U.S. organizations are under certain conditions entitled to a full exemption from Dutch dividend withholding tax. Such qualifying exempt U.S. organizations are not entitled to claim relief at source, and instead must claim a refund of Dutch dividend withholding tax by filing form IB 95 USA with the Dutch tax authorities.

The concept of Dividend Stripping, described above, will also be applied to determine whether a holder of ordinary shares may be eligible for a full or partial exemption from, or reduction or refund of, Dutch dividend withholding tax, as described in the preceding paragraphs.

In general, we will be required to remit all amounts withheld as Dutch dividend withholding tax to the Dutch tax authorities. However, in connection with distributions received by us from our foreign subsidiaries, we are allowed, subject to certain conditions, to reduce the amount to be remitted to Dutch tax authorities by the lesser of:

(i) 3% of the portion of the distribution paid by us that is subject to Dutch dividend withholding tax; and

(ii) 3% of the dividends and profit distributions, before deduction of foreign withholding taxes, received by us from qualifying foreign subsidiaries in the current calendar year (up to the date of the distribution by us) and the two preceding calendar years, insofar as such dividends and profit distributions have not yet been taken into account for purposes of establishing the above-mentioned deductions.

For purposes of determining the 3% threshold under (i) above, a distribution by us is not taken into account in case the Dutch dividend withholding tax withheld in respect thereof may be fully refunded, unless the recipient of such distribution is a qualifying entity that is not subject to corporate income tax.

Although this reduction reduces the amount of Dutch dividend withholding tax that we are required to pay to Dutch tax authorities, it does not reduce the amount of tax that we are required to withhold from dividends.

Taxes on Income and Capital Gains

The description of taxation set out in this document is not intended for any holder of ordinary shares:

• who is an individual and for whom the income or capital gains derived from ordinary shares are attributable to employment activities, the income from which is taxable in the Netherlands;

• who holds, or that holds, a Substantial Interest or a deemed Substantial Interest in us (as defined below);

• that is an entity that is a resident or deemed to be a resident of the Netherlands and that is not subject to or is exempt, in whole or in part, from Dutch corporate income tax;

• that is an entity for which the income and/or capital gains derived in respect of ordinary shares are exempt under the participation exemption (deelnemingsvrijstelling) as set out in the CITA; or

• that is a fiscal investment institution or an exempt investment institution as defined in the CITA.

Generally a holder of ordinary shares will have a Substantial Interest in us if he holds, alone or, in case the holder is an individual, together with his partner (statutorily defined term), whether directly or indirectly, the ownership of, or certain other rights over, shares representing 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of shares), or rights to acquire shares, whether or not already issued, that represent at any time 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of shares) or the ownership of certain profit participating certificates that relate to 5% or more of the annual profit or to 5% or more of our liquidation proceeds.

A holder of ordinary shares will also have a Substantial Interest in us if one of certain relatives of that holder or of his partner has a Substantial Interest in us. If a holder of ordinary shares does not have a Substantial Interest, a deemed Substantial Interest will be present if (part of) a Substantial Interest has been disposed of, or is deemed to have been disposed of, without recognizing a taxable gain.

Dutch Resident Individuals

An individual who is resident or deemed to be resident in the Netherlands (a “Dutch Resident Individual”) and who holds ordinary shares is generally subject to Dutch income tax on income or capital gains derived or deemed to be derived from the ordinary shares at progressive rates of up to 49.50% (maximum rate for 2020) if:

(i)    the holder derives profits from an enterprise or deemed enterprise, whether as an entrepreneur (ondernemer) or pursuant to a co-entitlement to the net worth of such enterprise (other than as an entrepreneur or a shareholder), to which enterprise the ordinary shares are attributable or deemed to be attributable; or

(ii)    the holder derives income or capital gains from the ordinary shares that are taxable as benefits from “miscellaneous activities” (resultaat uit overige werkzaamheden, as defined in the Dutch Income Tax Act 2001; Wet inkomstenbelasting 2001), which include the performance of activities with respect to the ordinary shares that exceed regular, active portfolio management (normaal, actief vermogensbeheer) and also include benefits resulting from a lucrative interest (lucratief belang).

If neither condition (i) nor (ii) mentioned above applies, a holder of ordinary shares who is a Dutch Resident Individual will generally be subject to Netherlands income tax on a deemed return, regardless of the actual income or capital gains benefits derived from the ordinary shares. This deemed return is calculated by applying the applicable deemed return percentage(s) to the individual’s yield basis (rendementsgrondslag), insofar as this exceeds a certain threshold (heffingvrij vermogen). The individual’s yield basis is determined as the fair market value of certain qualifying assets (including, as the case may be, the ordinary shares) held by the Dutch Resident Individual less the fair market value of certain qualifying liabilities, both determined on January 1st of the relevant year. The deemed return percentage to be applied to the yield basis increases progressively form 1.7991 per cent. to 5.33 per cent. (2020 deemed return percentages), depending on such individual’s yield basis. The deemed return percentages will be adjusted annually. The deemed return will be taxed at a rate of 30 per cent. (rate for 2020).

Dutch Resident Entities

An entity that is resident, or deemed to be resident, in the Netherlands (a “Dutch Resident Entity”) will generally be subject to Dutch corporate income tax with respect to income and capital gains derived from the ordinary shares. The Dutch corporate income tax rate is 16.5% for the first €200,000 of taxable income and 25% for taxable income exceeding €200,000 (rates for 2020).

Non-Dutch Residents

A holder of ordinary shares who is not, nor deemed to be, a Dutch Resident Individual or Dutch Resident Entity (a “Non-Dutch Resident”) is generally not subject to Dutch income tax or Dutch corporate income tax (other than Dutch dividend withholding tax described above) on the income and capital gains derived from the ordinary shares, provided that:

• such Non-Dutch Resident does not derive profits from an enterprise or deemed enterprise, whether as an entrepreneur or pursuant to a co-entitlement to the net worth of such enterprise (other than as an entrepreneur or a shareholder), which enterprise is, in whole or in part, carried on through a permanent establishment (vaste inrichting) or a permanent representative (vaste vertegenwoordiger) in the Netherlands and to which enterprise or part of an enterprise, as the case may be, the ordinary shares are attributable or deemed attributable;

• in the case of a Non-Dutch Resident who is an individual, such individual does not derive income or capital gains from the ordinary shares that are taxable as benefits from “miscellaneous activities” in the Netherlands as defined the Dutch Income Tax Act 2001, which include the performance of activities with respect to the ordinary shares that exceed regular, active portfolio management and also includes benefits resulting from a lucrative interest;

• in case of a Non-Dutch Resident who is an individual, such Non-Dutch Resident is neither entitled to a share in the profits of an enterprise effectively managed in the Netherlands, other than by way of the holding of securities or through an employment contract, to which enterprise the ordinary shares or payments in respect of the ordinary shares are attributable; and

• in case of a Non-Dutch Resident that is an entity, such entity is neither entitled to a share in the profits of an enterprise nor co-entitled to the net worth of such enterprise effectively managed in the Netherlands, other than by way of the holding of securities, to which enterprise the ordinary shares or payments in respect of such ordinary shares are attributable.

Gift or Inheritance Taxes

No Dutch gift or inheritance taxes will be levied on the transfer of ordinary shares by way of gift by or on the death of a holder, who is neither a resident nor deemed to be a resident of the Netherlands for the purpose of the relevant provisions, unless:

(i) the transfer is construed as an inheritance or bequest or as a gift made by or on behalf of a person who, at the time of the gift or death, is or is deemed to be a resident of the Netherlands for the purpose of the relevant provisions; or

(ii) such holder dies while being a resident or deemed resident of the Netherlands within 180 days after the date of a gift of the ordinary shares; or

(iii) the gift is made under a condition precedent and such holder is or is deemed to be resident in the Netherlands at the time the condition is fulfilled.

For purposes of Dutch gift and inheritance tax, an individual who is of Dutch nationality will be deemed to be a resident of the Netherlands if he has been a resident in the Netherlands at any time during the ten years preceding the date of the gift or his death. For purposes of Dutch gift tax, an individual will, irrespective of his nationality, be deemed to be a resident of the Netherlands if he has been a resident in the Netherlands at any time during the 12 months preceding the date of the gift.

Value Added Tax

There is no Dutch value added tax (omzetbelasting) payable by a holder of ordinary shares in respect of payments in consideration for the offer of the ordinary shares (other than value added tax payable in respect of services not exempt from Dutch value added tax).

Other Taxes and Duties

No Dutch registration tax, capital tax, customs duty, stamp duty or any other similar tax or duty, other than court fees, is payable in the Netherlands by a holder of ordinary shares in connection with the acquisition, ownership and transfer of ordinary shares.

Residence

A holder of ordinary shares will not become or be deemed to become a resident of the Netherlands for tax purposes solely by reason of holding these ordinary shares.

EX-10.46

Exhibit 10.46

CONFIDENTIALITY, NON-COMPETITION, NON-SOLICITATION AND INTELLECTUAL PROPERTY RIGHTS AGREEMENT

THIS CONFIDENTIALITY, NON‑COMPETITION, NON-SOLICITATION, AND INTELLECTUAL PROPERTY RIGHTS AGREEMENT (this “Agreement”) is entered into as of July 9, 2018 by and between Wright Medical Group, Inc., a Delaware corporation (together with all its subsidiaries and affiliates owned or controlled, directly or indirectly, now or in the future, the “Company”), and Barry J. Regan(“Employee”).

I N T R O D U C T I O N:

A.The Company designs, manufactures and markets orthopaedic medical devices and biologics. The Company conducts business in a highly competitive market and has invested significant time and resources in developing its products, business, customer, and employee relationships.

B.The Company must protect its confidential and proprietary information, and its relationships with customers, prospective customers, and other entities doing business with the Company, which constitute valuable assets of the Company and which the Company would not otherwise make accessible to Employee.

C.The Company must protect critical relationships with the Company’s customers and prospective customers that the Company has developed on the Company’s behalf and at the Company’s expense.

D.As a condition of Employee’s employment and access to confidential and proprietary Company information, and of allowing Employee to develop knowledge regarding relationships with the Company’s customers and prospective customers, and in consideration of employment and the Company’s compensation of the Employee, including without limitation wages, salary, potential bonuses, and other benefits, the Employee and the Company agree to enter into and comply with this Agreement.

A G R E E M E N T:

In consideration of the Company’s offer of employment, compensation, benefits, and the mutual promises and covenants set forth in this Agreement, and other valuable consideration, the sufficiency of which are hereby acknowledged, the Employee and the Company agree to be bound by and comply with this Agreement:

1.Confidentiality.

1.1Except as required by Employee’s duties to the Company, Employee shall not, at any time during employment by Employer or thereafter, directly or indirectly disclose, furnish, make use of, or make accessible to any person, firm, corporation, or other entity, any Confidential Information (as defined below) developed or obtained while Employee was in the employ of the Company.

1.2As used in this Agreement, “Confidential Information” means all information of the Company, whether or not developed by Employee, and all information of its customers and suppliers, including without limitation any formula, pattern, compilation, program, device, method, technique or process, that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can derive economic value from its disclosure or use. Confidential Information includes but is not limited to trade secrets, and it may relate to such matters as research and development, manufacturing processes, management systems and techniques, the identity and requirements of customers, the identity of suppliers, strategic or financial data or plans, and sales and marketing plans and information. Confidential Information does not lose its confidential status merely because it was known by a limited number of persons or entities or because it did not originate entirely with the Company.

1.3Employee acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, that the Company would not grant Employee access to such knowledge and information in the absence of this Agreement, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Employee shall refrain from intentionally committing any acts that would materially reduce the value of such knowledge or information to the Company.

2.Conduct During Employment; Conflicts and Loyalty. Employee understands that Employee owes a duty of loyalty to the Company during the term of Employee’s employment. While employed by the Company, (i) Employee will in good faith devote Employee’s best efforts and entire working time to the performance of services for the Company under the direction of managers and officers of the Company, and (ii) Employee will not serve as an independent contractor, employee, consultant, or in any other business capacity for any other person, firm, corporation or other business entity.

3.Noncompetition and Nonsolicitation Covenants.

3.1Agreement Not to Compete. During the term of Employee’s employment with the Company and for a period of one year from and after the termination of Employee’s employment with the Company, whether such termination is with or without cause, or whether such termination is at the instance of Employee or the Company (the “Restricted Period”), Employee shall not, for himself or herself or on behalf of or in conjunction with any third party, engage or participate, either individually or as an employee, consultant or principal, partner, agent, trustee, officer, director, investor or shareholder of a corporation, partnership, limited liability company, or other business entity that engages in the Protected Business anywhere in the World. “Protected Business” means the design, development, manufacture, servicing, sale, solicitation, promotion, marketing or distribution of any medical products or services competitive with products manufactured, marketed or sold by the Company or any of its subsidiaries or any medical products or services intended to be manufactured, marketed or sold by the Company of the same type or

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general function. Notwithstanding the foregoing, if during the last twelve (12) months of Employee’s employment with the Company, Employee had no management duties or responsibilities and was engaged exclusively in sales activities, including selling, soliciting the sale of or supporting the sale of the Company’s products through direct contact with the Company’s customers, then the restrictions of this Section 3.1 will be limited to all geographic territories and account assignments to which Employee was assigned or for which Employee had supervisory and/or management responsibility during the last twenty four (24) months of Employee’s employment with the Company. Notwithstanding the foregoing, nothing in this Section 3.1 shall be deemed to preclude Employee from holding less than 1% of the outstanding capital stock of any corporation required to file periodic reports with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and the securities of which are listed on any national securities exchange or traded on the over-the-counter market.

3.2Agreement Not to Solicit Employees. During the Restricted Period, Employee shall not, directly or indirectly, alone or on behalf of any person or business entity, aid, encourage, advise, solicit, induce or attempt to induce any employee of the Company to leave his or her employment with the Company in order to accept employment with Employee or with any other person or entity with which Employee is or may become associated, affiliated or connected.

3.3Agreement Not to Solicit Customers and Suppliers.

(a)During the Restricted Period, Employee shall not, directly or indirectly, alone or on behalf of any person or business entity, cause or attempt to cause any customer, prospective customer, vendor, supplier, or other business contact of the Company (i) to terminate, limit, or in any manner adversely modify or fail to enter into any actual or potential business relationship with the Company or (ii) to enter into or expand any actual or potential business relationship with any competitor of the Company.

(b)If during the last twelve (12) months of Employee’s employment with the Company, Employee had no management duties or responsibilities and was engaged principally in sales activities, including selling, soliciting the sale of or supporting the sale of the Company’s products through direct contact with the Company’s customers, then for a period of two (2) years from and after the termination of Employee’s employment with the Company, whether such termination is with or without cause, or whether such termination is at the instance of Employee or the Company, Employee shall not, directly or indirectly, alone or on behalf of any person or business entity, solicit any person or entity (i) whom Employee or any of Employee’s Subordinates (as defined below), if any, called on or serviced on behalf of the Company at any time during the three (3) years preceding the termination of Employee’s employment with the Company or (ii) from whom Employee or any of Employee’s Subordinates, if any, directly or indirectly solicited business or to whom Employee or any of Employee’s Subordinates, if any, submitted proposals to perform services on behalf of the Company at any time during the three years preceding the termination of Employee’s employment, with respect to any product or service competitive with or similar to any products or services of the Company. For purposes of this Section 3.3(b), “Subordinates” shall include any of the Company’s employees reporting to Employee at any time during the three years preceding the termination of Employee’s employment.

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3.4Judicial Modification. If the duration of, the scope of, or any business activity covered by any provision of this Section 3 is in excess of what a court of competent jurisdiction under this Agreement determines to be valid and enforceable under applicable law, such provision shall be construed to cover only that duration, scope or activity that such court determines to be valid and enforceable, and the Company and Employee consent to the judicial modification of the scope and duration of the restrictions in this Section 3 in any proceeding brought to enforce such restrictions so as to make them valid, reasonable and enforceable. Employee hereby acknowledges that this Section 3 shall be given the construction which renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.

4.Patents, Copyrights and Related Matters.

4.1Inventions. As used in this Agreement, the term “Invention” means discoveries, inventions, innovations, materials, suggestions, mask works, works of authorship, know-how, ideas (whether or not shown or described in writing or reduced to practice), conceived, reduced to practice, authored, or developed by Employee or jointly with others, whether or not patentable, copyrightable or registerable. “Company Inventions” means any Inventions which (a) relate directly to the business of the Company; (b) relate to the Company’s actual or anticipated research or development; (c) result from any work performed by Employee for the Company, for which equipment, supplies, facility or Company Confidential Information is used; or (d) is developed on any Company time.

4.2Disclosure of Prior Inventions. Employee has identified on Exhibit A to this Agreement all Inventions relating in any way to the Company’s business or demonstrably anticipated research and development that were made by Employee prior to employment with the Company, and Employee represents that such list is complete. Employee represents that Employee has no rights in any such Inventions other than those specified in Exhibit A. If there is no such list on Exhibit A, Employee represents that Employee has made no such Inventions at the time of signing this Agreement.

4.3Obligations Regarding Company Inventions. Employee understands that the Company is continually developing new products, processes, systems and machines of which Employee may have knowledge. Employee agrees that during Employment, to the extent Employee is involved with Company Inventions, Employee will (a) keep accurate, complete and timely records of all Company Inventions, which records shall be the Company’s property and be retained on the Company’s premises; (b) promptly and fully disclose and describe all Company Inventions in writing; (c) assign (and Employee does hereby assign) to the Company all of Employee’s rights to all Company Inventions, and to applications for letters patent, copyright registrations and/or mask work registrations in all countries and to letters patent, copyright registrations and/or mask work registrations granted upon such Company Inventions in all countries; and (d) acknowledge and deliver promptly to the Company (without charge to the Company but at the Company’s expense) such written instruments and to do such other acts as may be necessary in the opinion of the Company to preserve Company Inventions against forfeiture, abandonment, or loss, and to obtain, defend or maintain such letters patent, copyright registrations and/or mask work registrations, and to vest the

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entire right and title thereto in the Company. Notwithstanding anything to the contrary set forth herein, in some circumstances, the provisions of this Section 4 may not apply to inventions for which no equipment, supplies, facility or trade secret information of the Company was used and which were developed entirely on Employee’s own time, and (a) which do not relate directly to the business of the Company or to the Company’s actual or demonstrably anticipated research or development, and (b) which do not result from any work performed by Employee for the Company.

4.4Future Inventions. Employee recognizes that Company Inventions or Confidential Information relating to Employee’s activities while working for the Company and conceived or made by Employee, alone or with others, within one (1) year after termination of employment may have been conceived in significant part while employed by the Company. Accordingly, Employee agrees that such post-employment Inventions and proprietary information will be presumed to have been conceived during employment with the Company and are to be assigned and are hereby assigned to the Company unless and until Employee has established the contrary.

4.5Appointment of Company as Agent/Attorney-in-Fact. In the event that the Company is unable for any reason to secure Employee’s signature to any document required to apply for or execute any patent, copyright, maskwork or other applications with respect to any Inventions (including improvements, renewals, extensions, continuations, divisions or continuations in part thereof), Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agents and attorneys-in-fact to act for and on my behalf and instead of Employee, to execute and file any such application and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, maskworks or other rights thereon with the same legal force and effect as if executed by Employee.

5.Return of Records and Property; Cooperation.

5.1Upon termination of Employee’s employment, upon Employee’s resignation, or at any time immediately upon the Company’s request, Employee shall promptly deliver to the Company any and all loaners, tool kits, Company records and any and all Company property in Employee’s possession or under Employee’s control and all copies thereof (whether in hard copy or stored in electronic or magnetic media, whether furnished by the Company or compiled by Employee, and whether or not containing Confidential Information), including without limitation products, formulae, technology, processes, marketing plans, price lists, customer lists, prospect lists, manuals, books, blank forms, documents, correspondence, memoranda, notes, notebooks, reports, printouts, computer disks, computer tapes, source codes, data, tables, calculations, and all other materials or information relating to the business of the Company, and keys, access cards, access codes or other access information, passwords, credit cards, personal computers, telephones and other electronic equipment belonging to the Company.

5.2Upon termination of Employee’s employment or at any time as requested by the Company, Employee agrees to make available to any person designated by the Company all information that Employee has concerning work Employee performed for the Company and any pending, reasonably anticipated or past transactions that may affect operation of the Company.

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6.At-Will Employment. Unless Employee has entered into an express written agreement signed by an officer of the Company which explicitly alters the at-will relationship, Employee’s employment relationship with the Company is at will and it is not for any fixed term or duration. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause or notice. Employee may terminate Employee’s employment with the Company for any reason at any time. Nothing in this Agreement is intended to alter this at-will employment relationship, and such at-will employment relationship may not be modified except by an express written agreement signed by an officer of the Company and Employee.

7.No Conflicting Obligations. Employee represents and warrants to the Company that Employee is not contractually prohibited from executing and abiding by this Agreement, and that Employee’s employment with the Company, and the performance of any duties as an Employee of the Company, will not breach or conflict with any non-competition, confidentiality, or other obligations to another employer. Employee further represents and warrants that Employee has not brought and will not bring to this employment by the Company any confidential or proprietary information, including trade secrets, of prior employers and agrees not to make use of or disclose such confidential or proprietary information in carrying out Employee’s duties.

8.Subsequent Engagement; Mandatory Notice. Employee agrees that during the Restricted Period, Employee will give the Company written notice delivered to the Chief Executive Officer of the Company, before accepting employment or any other type of engagement with any person(s) or entity that provides or plans to provide products or services similar to any products or services of the Company or for the benefit of similar clients to those of the Company. Such written notice will identify the new employer or contracting party, describe the nature of its business, and describe the Employee’s proposed job duties and Employee’s geographic territory or responsibilities.

9.Remedies. Employee hereby acknowledges that the provisions of this Agreement are reasonable and necessary to protect the legitimate interests of the Company and that any violation of the provisions of this Agreement by Employee would cause substantial and irreparable harm to the Company. Employee further acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by Employee of the provisions hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, such relief may be granted without the necessity of proving actual monetary damages. Employee agrees that in the event Employee is found to have breached (or threatened to breach) any provision of this Agreement, Employee will be liable to Employer for reasonable attorneys’ fees and costs which the Employer incurred in enforcing this Agreement.

10.Miscellaneous.

10.1Governing Law. In order to provide the Employee and Company with certainty and predictability, the Employee and Company agree that all matters relating to the interpretation, construction, application, validity and enforcement of this Agreement shall be

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governed by the laws of the State of Tennessee without giving effect to any choice or conflict of law provision or rule, whether of the State of Tennessee or any other jurisdiction, that would cause the application of laws of any jurisdiction other than the State of Tennessee.

10.2Mandatory Jurisdiction and Venue. In order to facilitate efficient litigation and to provide the Employee and Company with certainty and predictability, the Employee and Company agree that the courts of the State of Tennessee and/or the federal district courts, Western District of Tennessee, shall have exclusive jurisdiction for the purpose of interpreting, enforcing, and resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement, and all other claims and disputes related to the Employee’s employment with and/or separation from employment with the Employer. Any action involving such claims or disputes shall be brought in such courts. Each party consents to personal jurisdiction over such party in the State and/or federal courts of Tennessee and hereby waives any defense of lack of personal jurisdiction. Venue, for the purpose of all such suits shall be in the State or federal courts located in Shelby County, Tennessee.

10.3Entire Agreement. This Agreement, and any employment agreement signed by an officer of the Company between the Company and Employee contain the entire agreement of the parties relating to the subject matter addressed therein and supersede all prior agreements and understandings with respect to such subject matter, and the parties hereto have made no other agreements, representations or warranties relating to the subject matter of this Agreement.

10.4Amendments. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by an authorized officer of the Company, and the Employee.

10.5No Waiver. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. Failure of the Company to require strict compliance with this Agreement or to enforce or seek to enforce this Agreement in response to a breach by Employee does not constitute a waiver of the Company’s right subsequently to seek enforcement as to that breach or any other breach of this Agreement.

10.6Assignment. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Employee, assign its rights and obligations under this Agreement (1) to any entity affiliated with the Company, (2) in connection with a merger or consolidation involving the Company, or (3) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets or the assets of any division. After any such assignment by the Company, the assignee shall thereafter be deemed to be “the Company” for purposes of all terms and conditions of this Agreement, including this Section 10.

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10.7Counterparts. This Agreement may be executed in any number of counterparts, and such executed counterparts shall constitute one Agreement.

10.8Severability. Subject to Section 3.4, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

10.9Captions and Headings. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.

10.10Tolling. Employee understands and agrees that in the event of any breach of his or her obligations under Section 3 of this Agreement, the period of restraint applicable to such obligations shall be automatically tolled for the amount of time the violation continues.

[Signature page follows]

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By signing below, the Employee acknowledges that he/she has read, understands, agrees to comply with, and agrees to be bound by the foregoing Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement.

EMPLOYEE:

Signature:	/s/ Barry J. Regan
Name:	Barry J. Regan
Date:	6/28/2018

COMPANY:

Wright Medical Group, Inc.

Signature:	/s/ Lance Berry
Name:	Lance Berry
Title	SVP, CFO
Date:	7/9/2018

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Exhibit A

Prior Inventions

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EX-10.47

Exhibit 10.47

SEPARATION PAY AGREEMENT

THIS SEPARATION PAY AGREEMENT (“Agreement”), dated as of July 9, 2018 (the “Effective Date”) is made by and between WRIGHT MEDICAL GROUP, INC., a Delaware corporation (the “Company”), on behalf of itself and one or more of its Affiliates, and Barry J. Regan (the “Executive”).

WHEREAS, the Company or one of its Affiliates employs the Executive as Senior Vice President, Operations and recognizes the Executive as performing key functions for the success of the Company and its Affiliates; and

WHEREAS, the Company has determined that it is in the best interests of the Company and its Affiliates to institute formalized separation arrangements for certain executives of the Company, including the Executive, in the event of a separation of employment; and

WHEREAS, the Executive desires to enter into this Agreement.

NOW, THEREFORE, based on the foregoing, and for and in consideration of the mutual covenants contained in this Agreement, the parties hereby agree as follows:

1. Definitions. For the purposes of this Agreement, the following capitalized terms have the meanings set forth below:

1.1“Affiliate” has the meaning set forth in Rule 12b-2 promulgated under the United States Securities Exchange Act of 1934, as amended.

1.2“Board” means the board of directors of Parent Corporation.

1.3“Cause” means:

1.3.1(i) the willful failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness), as determined by the Board in its sole discretion, which failure amounts to an intentional and extended neglect of the Executive’s duties; (ii) the determination in the sole discretion of the Board that the Executive has engaged or is about to engage in conduct materially injurious to the Company; (iii) the determination by the Board that the Executive has engaged in or is about to engage in conduct that is materially inconsistent with the Company’s legal and healthcare compliance policies, programs or obligations; (iv) the Executive’s bar from participation in programs administered by the United States Department of Health and Human Services or the

United States Food and Drug Administration or any succeeding agencies; (v) the Executive’s conviction of or entering of a guilty or no contest plea to a felony charge (or equivalent thereof) in any jurisdiction; and/or (vii) the Executive’s participation in activities proscribed in Sections 1 and 3 of the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement (as defined below) or the material breach by the Executive of any other material covenants contained herein and therein. For the purposes of clause (i) of this definition, no act, or failure to act, on the Executive’s part shall be deemed to be “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interests of the Company and its Affiliates.

1.3.2Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause for the reasons in clauses (i) or (ii) of Section 1.3.1 unless and until the Executive shall have been provided with reasonable notice of and, if possible, a reasonable opportunity to cure the facts and circumstances claimed to provide a basis for termination of the Executive’s employment for Cause.

1.4“Change in Control” shall be deemed to have occurred on or immediately before the effective date on which any of the following occurs with regard to the Parent Corporation:

1.4.1the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (for purposes of this Section 1.4, 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 ordinary shares of the Parent Corporation, taking into account as outstanding for this purpose all ordinary shares issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, the vesting of restricted stock units and the exercise of any similar right to acquire such ordinary shares (the “Outstanding Parent Corporation Ordinary Shares”) or (B) the combined voting power of the then outstanding voting securities of the Parent Corporation entitled to vote generally in the election of directors (the “Outstanding Parent Corporation Voting Securities”); provided, however, that for purposes of this Section 1.4.1, the following acquisitions shall not constitute a Change in Control: (x) any acquisition by the Parent Corporation or any of its Affiliates; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent Corporation or any of its Affiliates; or (z) any acquisition by any corporation or business entity pursuant to a transaction which complies with clauses (A), (B), and (C) of Section 1.4.2 of this definition (persons and entities described in clauses (x), (y) and (z) being referred to herein as “Permitted Holders”);

1.4.2the consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Parent Corporation (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 Parent Corporation Ordinary Shares and Outstanding Parent Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding ordinary shares or shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the

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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 Parent Corporation or all or substantially all of the Parent Corporation’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 Parent Corporation Ordinary Shares and Outstanding Parent Corporation Voting Securities, as the case may be; (B) no Person (excluding any Permitted Holder referred to in clause (x) or (y) of Section 1.4.1) beneficially owns, directly or indirectly, 50% or more (on a fully diluted basis) of, respectively, the then outstanding ordinary shares or shares of common stock of the corporation resulting from such Business Combination, taking into account as outstanding for this purpose all ordinary shares or shares of common stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, the vesting of restricted stock units and the exercise of any similar right to acquire such ordinary shares or shares of 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;

1.4.3the approval by the shareholders of the Parent Corporation of a complete liquidation or dissolution of the Parent Corporation;

1.4.4the sale of at least 80% of the assets of the Parent Corporation; or

1.4.5the individuals who on the date of this Agreement constitute the Board thereafter cease to constitute at least a majority thereof; provided, however, that any person becoming a member of the Board subsequent to the date of this Agreement and whose election or nomination was approved by a vote of at least two-thirds of the directors who then comprised the Board immediately prior to such vote shall be considered a member of the Board on the date of this Agreement.

1.5“Code” means the United States Internal Revenue Code of 1986, as amended, and the U.S. Treasury Regulations promulgated thereunder, as in effect from time to time.

1.6“Compensation Committee” means the compensation committee of the Board.

1.7“Disability,” strictly for the purpose of the parties’ rights and obligations under this Agreement, means the Executive’s inability, due to physical or mental impairment, to perform the essential functions of the Executive’s position, with reasonable accommodation, for a period of one hundred and twenty (120) consecutive days or such other period of time as to which the parties may agree, as determined by a medical doctor selected by the Executive and the Company. If the parties cannot agree on a medical doctor, each party shall select a medical doctor and the two (2) doctors shall select a third (3^rd) who shall be the approved medical doctor for this purpose.

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1.8“Good Reason” means:

1.8.1The occurrence of any of the following without the prior written consent of the Executive, unless such act or failure to act is corrected by the Company prior to the Date of Termination specified in the Notice of Termination (as discussed in Section 3.1 hereof):

1.8.1.1the assignment to the Executive of any duties materially inconsistent with the range of duties and responsibilities appropriate to a senior Executive within the Company, such range to be determined by reference to past, current, and reasonable practices within the Company;

1.8.1.2a material reduction in the Executive’s responsibilities within the Company, but not including a mere title change or a transfer within the Company which does not singly or together adversely affect the Executive’s overall status within the Company, provided however, that no change in reporting relationship resulting from organizational realignment due to the addition of a Chief Operating Officer or Chief Commercial Officer shall be included in this definition of Good Reason;

1.8.1.3a material reduction (i.e., more than ten percent (10%)) by the Company in the Executive’s aggregate annualized compensation target (including bonus opportunity as a percentage of base salary) and benefits opportunities, except for an across the board reduction or modification to any benefit plan affecting all executives of the Company;

1.8.1.4the failure by the Company to pay to the Executive any portion of the Executive’s current compensation and benefits, under any plan, program or policy of, or other contract or agreement with, the Company or any of its Affiliates, within thirty (30) days of the date such compensation and/or benefits are due;

1.8.1.5the failure by the Company to obtain a satisfactory agreement from any successor of the Company, requiring such successor to assume and agree to perform the Company’s obligations under this Agreement;

1.8.1.6the failure of the Company or the Parent Corporation to provide indemnification and director and officer liability insurance protection as required in Section 9 of this Agreement;

1.8.1.7the relocation of the Executive’s principal place of employment immediately prior to such move (the “Principal Location”) to a location which is more than forty (40) miles from the Principal Location; or

1.8.1.8the material breach by the Company or any Affiliate of any of the other provisions of this Agreement which is not cured following notice and a reasonable period of time to cure such breach.

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1.8.2Notwithstanding any of the foregoing, placing the Executive on a paid leave for up to ninety (90) days pending a determination by the Company of whether there is a basis to terminate the Executive for Cause shall not constitute a Good Reason.

1.8.3Following a Change in Control and during the CIC Protection Period (as defined in Section 6), the Executive’s determination that an act or failure to act constitutes Good Reason shall be presumed to be valid. The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. In all events, if the Executive fails to deliver Notice of Termination with respect to a termination of the Executive’s employment for Good Reason within ninety (90) days after the Executive becomes aware of the event giving rise to such right to terminate, the Executive shall be deemed to waive the Executive’s right to terminate for Good Reason with respect to such event.

1.9“Involuntary Termination” means a termination of the Executive’s employment with the Company and its Affiliates (a) by the Company or an Affiliate other than for Cause, death or Disability, or (b) upon the Executive’s resignation of employment for Good Reason.

1.10“Incentive Compensation Awards” means awards granted under the Incentive Compensation Plan(s) providing the Executive with the opportunity to earn, on a year-by-year or multi-year basis, annual and long-term compensation.

1.11“Incentive Compensation Plans” means incentive compensation plans and long-term compensation plans of the Company which may include plans offering stock options, restricted stock, restricted stock units and other forms of long-term compensation.

1.12“Parent Corporation” means Wright Medical Group N.V., a public limited company (naamloze vennootschap) incorporated under the laws of the Netherlands, and any successors and assigns.

1.13“Person,” unless otherwise defined, has the meaning set forth in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that the term shall not include (i) the Parent Corporation or any of its Affiliates; (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Parent Corporation or any of its Affiliates; (iii) an underwriter temporarily holding securities pursuant to an offering of such securities; (iv) a corporation owned, directly or indirectly, by the shareholders of the Parent Corporation in substantially the same proportions as their ownership of the shares in the Parent Corporation or (v) a person or group as used in Rule 13d-1(b) promulgated under the Exchange Act.

2.Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any provision of this Agreement is likely to be interpreted as a personal loan prohibited by the United States Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the “Sarbanes-Oxley Act”), then such provision shall be modified as necessary or appropriate so as to not violate the Sarbanes-Oxley Act; and if

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this cannot be accomplished, then the Company shall use its best efforts to provide the Executive with similar, but lawful, substitute benefit(s) at a cost to the Company not to significantly exceed the amount the Company would have otherwise paid to provide such benefit(s) to the Executive. In addition, if the Executive is required to forfeit or to make any repayment of any compensation or benefit(s) to the Company under the Sarbanes-Oxley Act, any other applicable law, stock exchange requirement or policy of the Company, such forfeiture or repayment shall not constitute Good Reason.

3.Notice and Date of Termination.

3.1Notice. Any termination of the Executive’s employment by the Company or by the Executive during the term of this Agreement shall be communicated by a written notice of termination to the other party (the “Notice of Termination”). Where applicable, the Notice of Termination shall indicate the specific termination provision in this Agreement relied upon for termination of the Executive’s employment under the provision so indicated.

3.2Date. The date of the Executive’s termination of employment (“Date of Termination”) shall be determined as follows:

3.2.1If due to the Company terminating the Executive’s employment, either with or without Cause, the Date of Termination shall be the date specified in the Notice of Termination; if other than for Cause, the Date of Termination shall not be less than two (2) weeks from the date such Notice of Termination is given, unless the Company elects to pay the Executive for that period in lieu of notice. Any such payment in lieu of notice would be in addition to any payments provided pursuant to Section 5 or 6, as applicable.

3.2.2If due to death, the Date of Termination is the date of death.

3.2.3If due to Disability, the Date of Termination is the date the party terminating the Executive’s employment for Disability provides written notice of termination due to Disability.

3.2.4If the basis of the Executive’s Involuntary Termination is the Executive’s resignation for Good Reason, the Date of Termination shall be determined by the Company, but shall not be less than two (2) weeks nor more than eight (8) weeks from the date Notice of Termination is given.

3.2.5If due to the Executive’s resignation for a reason other than Good Reason or if the Executive gives notice of retirement, the Date of Termination shall be determined by the Company after the Company receives Notice of Termination or retirement, but shall not be less than two (2) weeks or more than twelve (12) weeks from the date Notice of Termination is given.

3.2.6Notwithstanding the foregoing, for any compensation that qualifies as non-qualified deferred compensation under Code Section 409A (taking into account amounts that are exempt from the requirements of Code Section 409A by reason of the “separation pay” or “short-

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term deferral” exclusions), the Date of Termination shall be the date the Executive experiences a “separation from service” within the meaning of Code Section 409A.

4.Termination from the Board and any Offices Held. Upon termination of the Executive’s employment with the Company for any reason, the Executive agrees that the Executive’s membership on the Board, if any, the board of directors of any of the Company’s Affiliates, any committees of the Board, any committees of the board of directors of any of the Company’s Affiliates, and any and all offices held, if applicable, shall be automatically terminated. The Executive hereby agrees to cooperate with the Company and execute any documents reasonably required by the Company or competent authorities to effect this provision.

5.Severance Benefits upon Involuntary Termination Prior to Change in Control or After the CIC Protection Period Expires. In the event of the Involuntary Termination of the Executive’s employment prior to a Change in Control or after the expiration of the CIC Protection Period (as defined in Section 6), subject to Section 19.9, the Company shall, following receipt of the Release required in Section 13 that has not been revoked, pay to the Executive the following “Pre-Change in Control Severance Payment” in the following amounts and manner:

5.1The total severance payment will be equal to the sum of: (i) the Executive’s then current annual base salary, plus (ii) an amount equal to the Executive’s then current annual target bonus; provided that if the Executive’s annual base salary or target bonus has been reduced during the sixty (60) day period prior to the Date of Termination, then for purposes of severance payment calculation the higher figure will be used; and provided, further that the use of the term “annual target bonus” as used in this Section 5.1 is intended merely as a method to computing the amount of the severance payment herein and is not intended to pay the Executive an annual target bonus for the fiscal year that includes the Date of Termination, which will be paid to the Executive, if earned on a pro rata basis, pursuant to Section 5.3.2.

5.2The payment will be made as follows: (i) half in a lump sum payable at or within a reasonable period of time after the Date of Termination and subject to receipt of an executed Release that has not been revoked, and (ii) the remaining half in six (6) equal consecutive monthly installments starting six (6) months after the Date of Termination with a final installment of all remaining amounts to be paid on or before March 15 of the calendar year following the year in which the Date of Termination occurred. The final installment will be equal to the total payment reduced by all the amounts previously paid (i.e., the lump sum payment and the sum of all the installment payments previously paid). Notwithstanding the provisions of clause (ii) to the contrary, if the six-month period would cause the installments to begin to be paid after the March 15 date described in the first sentence of this Section 5.2, then no installments will be paid, and the second payment will be a lump sum equal to half the total payment and that payment will be paid on or before March 15 of the calendar year following the year in which the Date of Termination occurred. The installment payments (or the second lump sum payment, if applicable) are specifically designated as consideration for execution of the Release required in Section 13 and compliance with Sections 12, 13 and 14 and the terms of the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement. All payments will have applicable taxes withheld and

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any installment payments will be paid at such times during the month as the Company may reasonably determine.

5.3In addition to the Pre-Change in Control Severance Payment, the Executive shall be entitled to receive the following additional benefits:

5.3.1Accrued Obligations. The Company shall pay to the Executive a lump sum cash amount equal to the sum of (i) the Executive’s annual base salary through the Date of Termination to the extent not theretofore paid; (ii) an amount equal to any annual cash Incentive Compensation Awards earned (based on the most recently completed performance period, whether that period is the prior quarter or the prior year) but not yet paid; (iii) an amount equal to the value of any accrued and/or untaken vacation, if any; and (iv) reimbursement for unreimbursed business expenses, if any, properly incurred by the Executive in the performance of the Executive’s duties in accordance with the policies established from time to time by the Board. (The amounts specified in clauses (i), (ii), (iii) and (iv) shall be hereinafter referred to as the “Accrued Obligations”).

5.3.2Current Fiscal Year Bonus. The Company shall pay to the Executive a pro rata portion of the Executive’s annual cash Incentive Compensation Award for the fiscal year that includes the Termination Date, if earned pursuant to the terms thereof and at such time and in such manner as determined pursuant to the terms thereof, less any payments thereof already made during such fiscal year.

5.3.3Equity-Based Compensation. All equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards or other related awards) held by the Executive shall be governed by the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and this Agreement shall have no effect upon them.

5.3.4Welfare Benefits. The Executive shall be eligible for health and dental coverage as provided for under the United States Consolidated Omnibus Budget Reconciliation Act (“COBRA”), using the normal COBRA administration process of the Company. The Company will pay or reimburse the Executive for all costs of these benefits for a period equal to twelve (12) months, after which the Executive will be responsible for paying the full COBRA costs of benefits. If the Executive accepts employment with another employer and is no longer eligible for COBRA coverage, these welfare benefits will cease to be provided.

5.3.5Outplacement Benefits. The Executive may, if the Executive so elects, receive outplacement assistance and services at the Company’s expense for a period of one (1) year following the Date of Termination. These services will be provided by a national firm selected by the Company whose primary business is outplacement assistance. Notwithstanding the above, if the Executive accepts employment with another employer, these outplacement benefits shall cease on the date of such acceptance.

5.3.6Financial Planning Services. The Executive may, if the Executive so elects, receive financial planning services at the Company’s expense for a period of one (1) year following

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the Date of Termination, at a level consistent with the benefits provided under the Company’s financial planning program for the Executive as in effect immediately prior to the Date of Termination; provided, however, that the total amount of such services may not exceed the amount in effect under Code Section 402(g)(1)(B) for the calendar year that includes the Date of Termination.

5.3.7Annual Physical. The Executive may, if the Executive so elects, within the twelve (12) months following the Date of Termination, receive an annual physical at the Company’s expense consistent with the physical provided under, and subject to the requirements of, the Company’s annual physical program as in effect immediately prior to the Date of Termination.

5.3.8General Insurance Benefit. No later than March 15 of the calendar year following the year in which the Date of Termination occurred, provided the Executive has made a request for the payment described in this Section 5.3.8 on such form as the Company may require, the Executive shall receive a payment for use in the payment of the cost of continuation of insurance coverage, such payment to be equal to the annual supplemental executive insurance premium benefit provided to the Executive prior to the Executive’s Date of Termination; provided, however, that such benefit does not include reimbursement for insurance coverage that pays for medical, prescription drug, dental, vision or other medical care expenses. The Company will use its reasonable best efforts to make this payment at the time requested.

6.Severance Benefits upon Involuntary Termination in Connection with and after a Change in Control. Notwithstanding the provisions of Section 5 above, in the event of the Involuntary Termination of the Executive within twelve (12) months following a Change in Control (the “CIC Protection Period”), subject to Section 19.9, the Company shall, following receipt of the Release required in Section 13 that has not been revoked, pay to the Executive the following “Post-Change in Control Severance Payment” in the following amounts and manner:

6.1The total severance payment will be equal to two times (2x) the sum of (i) the Executive’s then current annual base salary plus (ii) the Executive’s then current annual target bonus; provided that if the Executive’s annual base salary or target bonus has been reduced during the sixty (60) day period prior to the Date of Termination, then, for purposes of this severance payment calculation, the higher figure will be used.

6.2.1The payment will be made as follows: (i) half in a lump sum payable at or within a reasonable period of time after the Date of Termination and subject to receipt of an executed Release that has not been revoked, (ii) the remaining half in six (6) equal consecutive monthly installments starting six (6) months after the Date of Termination with a final installment of all remaining amounts to be paid on March 15 of the calendar year following the year in which the Date of Termination occurred. The final installment will be equal to the total payment reduced by all the amounts previously paid (i.e., the lump sum payment and the sum of all the installment payments previously paid). Notwithstanding the provisions of clause (ii) to the contrary, if the six-month period would cause the installments to begin to be paid after the March 15 date described in the first sentence of this Section 6.1.1, then no installments will be paid, and the second payment will be a lump sum equal to half the total payment and that payment will be paid on or before March 15 of the calendar year following the year in which the Date of Termination occurred. The installment

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payments (or the second lump sum payment, if applicable) are specifically designated as consideration for execution of the Release required in Section 13 and compliance with Sections 12, 13 and 14 and the terms of the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement. All payments will have applicable taxes withheld and any installment payments will be paid at such times during the month as the Company may reasonably determine.

6.2In addition to the Post-Change in Control Severance Payment, the Executive shall be entitled to receive the following additional benefits:

6.2.1Accrued Obligations. The Company shall pay to the Executive a lump sum cash amount equal to the sum of the Accrued Obligations.

6.2.2Current Fiscal Year Bonus. The Company shall pay to the Executive a pro rata portion of the Executive’s target annual cash Incentive Compensation Award for the fiscal year that includes the Termination Date, less any payments thereof already made during such fiscal year.

6.2.3Equity-Based Compensation. All equity-based Incentive Compensation Awards (including, without limitation, stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards or other related awards) held by the Executive shall be governed by the terms of the applicable Incentive Compensation Plan and Incentive Compensation Award agreement, and this Agreement shall have no effect upon them.

6.2.4Welfare Benefits. The Executive shall be eligible for health and dental continuation coverage as provided for under COBRA, using the normal COBRA administration process of the Company. The Company will pay or reimburse the Executive for all costs of these benefits for eighteen (18) months after which the Executive will be responsible for paying the full COBRA costs of benefits. If the Executive accepts employment with another employer and is no longer eligible for COBRA coverage, these welfare benefits will cease to be provided.

6.2.5Outplacement Benefits. The Executive may, if the Executive so elects, receive outplacement assistance and services at the Company’s expense for a period of two (2) years following the Date of Termination. These services will be provided by a national firm selected by the Company whose primary business is outplacement assistance. Notwithstanding the above, if the Executive accepts employment with another employer, these outplacement benefits shall cease on the date of such acceptance.

6.2.6Financial Planning Services. The Executive may, if the Executive so elects, receive financial planning services at the Company’s expense for a period of two (2) years following the Date of Termination, at a level consistent with the benefits provided under the Company’s financial planning program for the Executive as in effect immediately prior to the Date of Termination; provided, however, that the total amount of such services may not exceed the amount in effect under Code Section 402(g)(1)(B) for the calendar year that includes the Date of Termination.

6.2.7Annual Physical. The Executive may, if the Executive so elects, within the twelve (12) months following the Date of Termination, receive an annual physical at the Company’s

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expense consistent with, and subject to the requirements of, the physical provided under the Company’s annual physical program as in effect immediately prior to the Date of Termination.

6.2.8General Insurance Benefit. No later than March 15 of the calendar year following the year in which the Date of Termination occurred, provided the Executive has made a request for the payment described in this Section 6.2.8 on such form as the Company may require, the Executive shall receive a payment for use in the payment of the cost of continuation of insurance coverage, such payment to be equal to two times (2x) the annual supplemental executive insurance premium benefit provided to the Executive prior to the Executive’s Date of Termination; provided, however, that such benefit does not include reimbursement for insurance coverage that pays for medical, prescription drug, dental, vision or other medical care expenses. The Company will use its reasonable best efforts to make this payment at the time requested.

6.3Notwithstanding anything contained herein to the contrary, if a Change in Control occurs and the Executive’s employment with the Company is terminated by reason of Involuntary Termination (including as a result of an event giving rise to Good Reason) prior to the occurrence of the Change in Control, and if such termination of employment (or the event giving rise to Good Reason) (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or (ii) otherwise arose in connection with or in anticipation of the Change in Control, then the Executive shall, in lieu of the payments described in Section 5 hereof, be entitled to the Post-Change in Control Severance Payment and the additional benefits described in this Section 6 as if such Involuntary Termination had occurred within twelve (12) months following the Change in Control.

7.Severance Benefits upon Termination by the Company for Cause or by the Executive Other than for Good Reason. If the Executive’s employment shall be terminated for Cause or if the Executive terminates employment other than for Good Reason, the Company will have no further obligations to the Executive under this Agreement other than the Accrued Obligations.

8.Severance Benefits upon Termination due to Death or Disability. If the Executive’s employment shall terminate by reason of death or Disability, the Company shall pay the Executive’s estate in the case of death or to the Executive in the case of Disability, the Accrued Obligations, plus a pro rata portion of the Executive’s target annual cash Incentive Compensation Award for the fiscal year that includes the Termination Date, less any payments thereof already made during such fiscal year. Such payments shall be in addition to those rights and benefits to which the Executive’s estate or the Executive may be entitled under the relevant Company plans or programs.

9.Non-exclusivity of Rights and Indemnification. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit plan, program, policy or practice provided by the Company or any Affiliate and for which the Executive may qualify (except with respect to any benefit to which the Executive has waived the Executive’s rights in writing), including, without limitation, any and all indemnification arrangements in favor of the Executive (whether under agreements or under the Company’s or any Affiliate’s charter documents or otherwise), and insurance policies covering the Executive, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement entered

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into after the Effective Date with the Company or any Affiliate. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any contract or agreement entered into with, the Company or any Affiliate shall be payable in accordance with such benefit, plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. At all times during the Executive’s employment with the Company or any Affiliate and thereafter, the Company or any such Affiliate shall provide the Executive with indemnification and director and officer insurance insuring the Executive against insurable events which occur or have occurred while the Executive was a director or executive officer of the Company or any Affiliate, on terms and conditions that are at least as favorable as that then provided to any other current or former director or executive officer of the Company or any its Affiliates.

10.Mitigation. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.

11.Representations. The Executive hereby represents to the Company that the Executive is legally entitled to enter into this Agreement and to perform the Executive’s obligations hereunder, and that the Executive has the full right, power, and authority, subject to no rights of any third parties, to grant to the Company the rights herein.

12.Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement. Concurrently with the execution of this Agreement, the Executive hereby agrees to execute the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement, in substantially the form as attached to this Agreement as Exhibit A, which is incorporated by reference into this Agreement in its entirety (the “Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement”).

13.Release. The Executive agrees that if the Executive’s employment is terminated by the Company for any reason other than Cause, Disability or death, the Executive will be required to execute a release of all claims, substantially in the form attached hereto as Exhibit B, within thirty (30) days after the applicable Date of Termination to be eligible to receive any post-employment payments of any kind under this Agreement other than the Accrued Obligations. In the event that the Executive is covered under the United States Age Discrimination in Employment Act, as amended (“ADEA”), as of the date of the termination of the Executive’s employment, the Executive also will be required to execute the ADEA Release of all ADEA claims, substantially in the form attached hereto as Exhibit C, within thirty (30)days after the applicable Date of Termination to be eligible to receive any post-employment payments of any kind under this Agreement other than the Accrued Obligations. These two documents are collectively referred to in this Agreement as the “Release.” The Executive recognizes and agrees that, notwithstanding any other Section to the contrary, the Release must be executed and not revoked within the time provided prior to the commencement of any post-employment payments of any kind under this Agreement other than the Accrued Obligations set forth in Section 5.3.1 and 6.2.1.

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14.Cooperation with Legal Matters. The Executive agrees to cooperate with the Company and its Affiliates and their designated attorneys, representatives, and agents in connection with any actual or threatened judicial, administrative or other legal or equitable proceeding in which the Company or any of its Affiliates is or may become involved. Upon reasonable notice, the Executive agrees to meet with and provide to the Company and its Affiliates or their designated attorneys, representatives or agents all information and knowledge the Executive may have relating to the subject matter of any such proceeding. The Company agrees to reimburse the Executive for any reasonable costs incurred by the Executive in providing such cooperation.

15.Specific Remedies for Executive Breach of Certain Covenants. Without limiting the rights and remedies available to the Company, in the event of any breach by the Executive of the covenants set forth in Sections 12, 13 or 14 above or the terms of the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement or the Release, the following actions may be taken by the Company:

15.1If the Company believes a breach has occurred, it will deliver to the Executive a summary of the breach and a demand for explanation or agreement that such breach has occurred; the Executive shall have ten (10) business days to respond in writing to this demand, whereupon the Company will make a decision as to whether the breach has, in fact, occurred; if it is determined such a breach has occurred, then

15.1.1the Company’s obligation to make any payment or provide any benefits to the Executive under Sections 5, 6, 7 or 8 of this Agreement shall cease immediately and permanently, which shall not have any impact whatsoever on the Executive’s continuing obligations under the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement; and

15.1.2the Executive shall repay to the Company, within ten (10) days after the Executive receives written demand therefore, an amount equal to ninety percent (90%) of the payments and benefits previously received by the Executive under this Agreement, plus interest on such amount at an annual rate equal to the lesser of ten percent (10%) or the maximum non-usurious rate under applicable law, from the dates on which such payments and benefits were received to the date of repayment to the Company.

15.2It is the desire and intent of the parties that the provisions of Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement be enforced to the fullest extent permissible under the applicable laws in each jurisdiction in which enforcement is sought. Accordingly, if any portion of Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement is adjudicated to be invalid or unenforceable, Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement shall be deemed curtailed, whether as to time or location, to the minimum extent required for its validity under applicable law and shall be binding and enforceable with respect to the Executive as so curtailed, such curtailment to apply only with respect to the operation of Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement in the jurisdiction in which such adjudication is made. If

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a court in any jurisdiction, in adjudicating the validity of Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement, imposes any additional terms or restrictions with respect to Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement, Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement shall be deemed amended to incorporate such additional terms or restrictions.

15.3The Executive agrees and acknowledges that the Executive has received good and adequate consideration for the covenants set forth in Section 12 and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement in the form of employment, compensation, and benefits separate and independent of any payments or potential payments in this Agreement.

16.Potential Impact of Accounting Restatements on Certain Bonuses and Profits.

16.1If the Parent Corporation or any of its Affiliates is required to prepare an accounting restatement of its consolidated balance sheet or statement of operations affecting any reporting period that transpires during the term of employment (the “Term”) due to the material noncompliance of the Parent Corporation or any of its Affiliates with any financial requirements under the U.S. Federal securities laws and if such material non-compliance is a direct result of the Executive’s knowing, intentional, fraudulent or illegal conduct, then the Board can require the Executive to reimburse the Company or the Parent Corporation for (i) any bonus or other incentive-based or equity-based compensation received by the Executive from the Company or the Parent Corporation during the Term and (ii) any profits realized from the sale of securities of the Parent Corporation by the Executive during the Term.

16.2In making the determination whether to seek recovery from the Executive and in making the determination of what portion of the Executive’s compensation and/or profits should be returned to the Company or the Parent Corporation under Section 16.1, the Board will seek to achieve a result that is fair to the Executive and the Company and the Parent Corporation and, in that connection, the Board will consider whether any bonus, incentive payment, equity award or other compensation has been awarded or received by the Executive during the Term, whether the Executive realized any profits from the sale of securities of the Parent Corporation during the Term, whether and the extent to which such compensation and/or profits were based on financial results and operating metrics that were satisfied as a result of the Executive’s knowing, intentional, fraudulent or illegal conduct, and what the Executive’s compensation and/or profits would have been in the absence of the reporting issue. The Board has the sole discretion in determining whether the Executive’s conduct has or has not met the standard for such forfeiture and the amount of the forfeiture.

16.3Notwithstanding the foregoing, to the extent required or permitted by applicable laws, rules or regulations, securities exchange listing requirements applicable to the Parent Corporation and any of its Affiliates and the Executive or any Company policy applicable to the Executive, the Company shall have the right to recover any amounts paid to the Executive under this Agreement. Any such recoupment of a payment to the Executive under this Agreement may be

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in addition to any other remedies that may be available to the Company under applicable law or Company policy applicable to the Executive.

16.4If the Board determines that recovery is appropriate or required as set forth in Section 16.1 or 16.3, such amounts shall be withheld from any future amounts owed to the Executive as compensation. The Company may also commence legal action to collect such recovery as the Board determines is owed to the Company.

16.5The parties agree that this Section 16 shall be amended as necessary to comply with any new applicable laws, rules or regulations issued by the United States Securities and Exchange Commission, the national stock exchange on which the ordinary shares of the Parent Corporation are listed or any others applicable to the Company which are or may become mandatorily applicable to this Agreement.

17.Successors.

17.1Assignment by the Executive. This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

17.2Successors and Assigns of the Company. This Agreement shall inure to the benefit of and be binding upon the Company and its successors, and assigns. The Company may not assign this Agreement to any person or entity (except for a successor described in Section 17.3 below) without the Executive’s written consent.

17.3Assumption. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company or its Affiliates to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it as if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

18.Administration Prior to Change in Control. Prior to a Change in Control, the Compensation Committee shall have full and complete authority to construe and interpret the provisions of this Agreement, to determine an individual’s entitlement to benefits under this Agreement, to make in its sole and absolute discretion all determinations contemplated under this Agreement, to investigate and make factual determinations necessary or advisable to administer or implement this Agreement. All determinations made under this Agreement by the Compensation Committee shall be final and binding on all interested persons. Prior to a Change in Control, the Compensation Committee may delegate responsibilities for the operation and administration of this Agreement to one or more officers or employees of the Company. The provisions of this Section 18 shall terminate and be of no further force and effect upon the occurrence of a Change in Control.

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19.Miscellaneous.

19.1Governing Law. This Agreement shall be governed by, construed under and enforced in accordance with the laws of the State of Tennessee without regard to conflicts-of-laws principles that would require the application of any other law. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

19.2Mandatory Jurisdiction and Venue. Any action to enforce the terms of this Agreement, and/or claims or disputes regarding the Executive’s employment with and/or separation from employment with the Company, shall be brought in the state or federal courts located in Shelby County, Tennessee and the parties hereto shall submit to and not contest such mandatory jurisdiction and venue in such courts.

19.3Amendment. This Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing executed by all parties hereto. No person, other than pursuant to a resolution of the Board or the Compensation Committee, shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto.

19.4Insurance. The Company may, at its election and for its benefit, insure the Executive against accidental loss or death, and the Executive shall submit to such physical examination and supply such information to the insurance company as may be required in connection therewith; provided, however, that no specific information concerning the Executive’s physical examination will be provided to the Company or made available to the Company by the insurance company.

19.5Waiver of Breach. A waiver by the Company or the Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of the other party.

19.6Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

19.7Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if sent by personal delivery, by a nationally recognized overnight courier (provided a written acknowledgement of receipt is obtained) or by certified or express mail to the Executive at 10020 Bentwood Creek Drive, Collierville, Tennessee 38017 or to the Company at Wright Medical Group, Inc., Attention: General Counsel, 1023 Cherry Road, Memphis, Tennessee 38117, or to such other address as a party shall notify the other parties. Notices and communications shall be effective when actually received by the addressee.

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19.8Taxes.

19.8.1General. The Company and its Affiliates may withhold from any amounts payable under this Agreement such foreign, U.S. federal, state or local taxes as the Company or its Affiliates reasonably determine is required to be withheld pursuant to any applicable law or regulation.

19.8.2Code Section 409A.

19.8.2.1Notwithstanding anything else to the contrary herein, to the maximum extent permitted, this Agreement shall be interpreted to provide payments that are exempt from Code Section 409A or in compliance therewith, as applicable. In furtherance thereof, if payment or provision of any amount or benefit hereunder at the time specified in this Agreement would subject such amount or benefit to any additional tax under Code Section 409A (taking into account the amounts that are treated as exempt from the requirements of Code Section 409A by reason of the “separation pay” or “short-term deferral” exclusions), the payment or provision of such amount or benefit shall be postponed to the earliest commencement date on which the payment or the provision of such amount or benefit could be made without incurring such additional tax (including paying any severance that is delayed in a lump sum upon the earliest possible payment date which is consistent with Code Section 409A). In addition, to the extent that any regulations or guidance issued under Code Section 409A (after application of the previous provision of this paragraph) would result in the Executive being subject to the payment of interest or any additional tax under Code Section 409A, the Company and the Executive agree, to the extent reasonably possible, to amend this Agreement in order to avoid the imposition of any such interest or additional tax under Code Section 409A, which amendment shall have the least possible economic effect on the Executive as reasonably determined in good faith by the Company and the Executive; provided however, that the Company and the Executive shall not be required to substitute a cash payment for any non-cash benefit herein.

19.8.2.2A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Code Section 409A (taking into account the amounts that are treated as exempt from the requirements of Code Section 409A by reason of the “separation pay” or “short-term deferral” exclusions) upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Code Section 409A and the payment thereof prior to a “separation from service” would violate Code Section 409A or any exclusion from the requirements of Code Section 409A, as applicable. For purposes of any such provision of this Agreement relating to any such payments or benefits, references to the “Date of Termination” shall mean the date the “separation from service” occurs and references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

19.8.2.3 For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a

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payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company, as the case may be.

19.8.2.4With respect to any payment constituting nonqualified deferred compensation subject to Code Section 409A: (A) all expenses or other reimbursements provided herein shall be payable in accordance with the Company’s policies in effect from time to time, but in any event shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive; (B) no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year; and (C) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit.

19.8.2.5If the Executive is deemed on the Date of Termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall be made or provided on the first business day following the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death (the “DelayPeriod”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 19 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum on the first business day following the Delay Period, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

19.8.3Code Section 280G. The provisions set forth in Exhibit D hereto are hereby incorporated into this Agreement by this reference, and the Executive shall be entitled to the benefit of those provisions. This Section 19.8.3 and the provisions set forth in Exhibit D hereto shall be expressly assumed by any successor to the Company.

19.9Entire Agreement. This Agreement, and the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement (Exhibit A) and other exhibits hereto, contain the entire agreement of the parties with respect to the subject matter referred to herein and supersedes any and all prior negotiations, understandings, arrangements, letters of intent, and agreements, whether written or oral, between the Executive and the Company and its Affiliates, or any of its or their directors, officers, employees or representatives with respect thereto. In the event of any conflict between any provisions of this Agreement (including its Exhibits) and the provisions of any plan, program or policy of the Company or any of its Affiliates, the Agreement and its Exhibits shall govern.

19.10Survivability. Except as otherwise expressly set forth in this Agreement, upon the termination of this Agreement or the expiration of the Term, the respective rights and obligations of the parties that accrued prior to such termination or expiration shall survive such termination or

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expiration to the extent necessary to carry out the intentions of the parties hereto. The Agreement shall continue in effect until there are no further rights or obligations of the parties hereto that accrued prior to such termination or expiration outstanding hereunder and shall not be terminated by any party without the express written consent of all parties.

19.11No Right of Employment. Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executive’s employment at any time, with or without Cause.

19.12Unfunded Obligation. The obligations under this Agreement shall be unfunded. Benefits payable under this Agreement shall be paid from the general assets of the Company and its Affiliates. The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement. With respect to all payment and performance obligations of the Company under this Agreement, the term the “Company” shall include all of its Affiliates.

19.13Attorneys’ Fees. In any legal action by the Company to enforce Sections 12, 13 and 14 of this Agreement and the terms of the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement, and in any other legal action by any party prior to a Change in Control to enforce any term of this Agreement, the prevailing party shall be entitled to recover all reasonable attorney’s fees and litigation costs.  Following a Change in Control, should a party file any action to enforce any term of this Agreement other than an action by the Company to enforce Sections 12, 13 and 14 of this Agreement and the terms of the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement, the Company shall pay all reasonable attorney’s fees and litigation costs incurred by the Executive. Following a Change in Control, the payment of fees and litigation costs will be made on a quarterly basis following the commencement of the action upon presentation of fee statements from legal counsel of the Executive without regard to which party may ultimately be the prevailing party.

19.14Execution. This Agreement and its Exhibits may be executed in several counterparts each of which will be deemed an original, but all of which together will constitute one and the same instrument. This Agreement and its Exhibits may be executed by signatures delivered by facsimile or in pdf or other electronic format, which shall be deemed to be an original.

20.Term. The term of this Agreement shall commence from the Effective Date and shall continue until the close of business of the day preceding the third (3^rd) anniversary of the Effective Date; provided, however, that commencing on the second (2^nd) anniversary of the Effective Date (and each anniversary of the Effective Date thereafter), the term of this Agreement shall automatically be extended for one (1) additional year, unless at least ninety (90) days prior to such date, the Company or the Executive shall give written notice to the other party that the Company or the Executive, as the case may be, does not wish to so extend this Agreement. Notwithstanding the foregoing, if the Company gives such written notice to the Executive less than one (1) year after a Change in Control, the term of this Agreement shall be automatically extended until the later of (a) the date that is one (1) year after the anniversary of

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the Effective Date that follows such written notice or (b) the second (2^nd) anniversary of the Change in Control.

[Remainder of page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

AGREED AND ACCEPTED

WRIGHT MEDICAL GROUP, INC.
By:	/s/ Lance Berry	/s/ Barry J. Regan
Name:	Lance Berry	Barry J. Regan
Title:	SVP, CFO

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EXHIBIT A

CONFIDENTIALITY, NON-COMPETITION, NON-SOLICITATION AND INTELLECTUAL PROPERTY RIGHTS AGREEMENT

THIS CONFIDENTIALITY, NON‑COMPETITION, NON-SOLICITATION, AND INTELLECTUAL PROPERTY RIGHTS AGREEMENT (this “Agreement”) is entered into as of July 9, 2018 by and between Wright Medical Group, Inc., a Delaware corporation (together with all its subsidiaries and affiliates owned or controlled, directly or indirectly, now or in the future, the “Company”), and Barry J. Regan(“Employee”).

I N T R O D U C T I O N:

A.The Company designs, manufactures and markets orthopaedic medical devices and biologics. The Company conducts business in a highly competitive market and has invested significant time and resources in developing its products, business, customer, and employee relationships.

B.The Company must protect its confidential and proprietary information, and its relationships with customers, prospective customers, and other entities doing business with the Company, which constitute valuable assets of the Company and which the Company would not otherwise make accessible to Employee.

C.The Company must protect critical relationships with the Company’s customers and prospective customers that the Company has developed on the Company’s behalf and at the Company’s expense.

D.As a condition of Employee’s employment and access to confidential and proprietary Company information, and of allowing Employee to develop knowledge regarding relationships with the Company’s customers and prospective customers, and in consideration of employment and the Company’s compensation of the Employee, including without limitation wages, salary, potential bonuses, and other benefits, the Employee and the Company agree to enter into and comply with this Agreement.

A G R E E M E N T:

In consideration of the Company’s offer of employment, compensation, benefits, and the mutual promises and covenants set forth in this Agreement, and other valuable consideration, the

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sufficiency of which are hereby acknowledged, the Employee and the Company agree to be bound by and comply with this Agreement:

1.Confidentiality.

1.1Except as required by Employee’s duties to the Company, Employee shall not, at any time during employment by Employer or thereafter, directly or indirectly disclose, furnish, make use of, or make accessible to any person, firm, corporation, or other entity, any Confidential Information (as defined below) developed or obtained while Employee was in the employ of the Company.

1.2As used in this Agreement, “Confidential Information” means all information of the Company, whether or not developed by Employee, and all information of its customers and suppliers, including without limitation any formula, pattern, compilation, program, device, method, technique or process, that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can derive economic value from its disclosure or use. Confidential Information includes but is not limited to trade secrets, and it may relate to such matters as research and development, manufacturing processes, management systems and techniques, the identity and requirements of customers, the identity of suppliers, strategic or financial data or plans, and sales and marketing plans and information. Confidential Information does not lose its confidential status merely because it was known by a limited number of persons or entities or because it did not originate entirely with the Company.

1.3Employee acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, that the Company would not grant Employee access to such knowledge and information in the absence of this Agreement, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Employee shall refrain from intentionally committing any acts that would materially reduce the value of such knowledge or information to the Company.

2.Conduct During Employment; Conflicts and Loyalty. Employee understands that Employee owes a duty of loyalty to the Company during the term of Employee’s employment. While employed by the Company, (i) Employee will in good faith devote Employee’s best efforts and entire working time to the performance of services for the Company under the direction of managers and officers of the Company, and (ii) Employee will not serve as an independent contractor, employee, consultant, or in any other business capacity for any other person, firm, corporation or other business entity.

3.Noncompetition and Nonsolicitation Covenants.

3.1Agreement Not to Compete. During the term of Employee’s employment with the Company and for a period of one year from and after the termination of Employee’s

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employment with the Company, whether such termination is with or without cause, or whether such termination is at the instance of Employee or the Company (the “Restricted Period”), Employee shall not, for himself or herself or on behalf of or in conjunction with any third party, engage or participate, either individually or as an employee, consultant or principal, partner, agent, trustee, officer, director, investor or shareholder of a corporation, partnership, limited liability company, or other business entity that engages in the Protected Business anywhere in the World. “Protected Business” means the design, development, manufacture, servicing, sale, solicitation, promotion, marketing or distribution of any medical products or services competitive with products manufactured, marketed or sold by the Company or any of its subsidiaries or any medical products or services intended to be manufactured, marketed or sold by the Company of the same type or general function. Notwithstanding the foregoing, if during the last twelve (12) months of Employee’s employment with the Company, Employee had no management duties or responsibilities and was engaged exclusively in sales activities, including selling, soliciting the sale of or supporting the sale of the Company’s products through direct contact with the Company’s customers, then the restrictions of this Section 3.1 will be limited to all geographic territories and account assignments to which Employee was assigned or for which Employee had supervisory and/or management responsibility during the last twenty four (24) months of Employee’s employment with the Company. Notwithstanding the foregoing, nothing in this Section 3.1 shall be deemed to preclude Employee from holding less than 1% of the outstanding capital stock of any corporation required to file periodic reports with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and the securities of which are listed on any national securities exchange or traded on the over-the-counter market.

3.2Agreement Not to Solicit Employees. During the Restricted Period, Employee shall not, directly or indirectly, alone or on behalf of any person or business entity, aid, encourage, advise, solicit, induce or attempt to induce any employee of the Company to leave his or her employment with the Company in order to accept employment with Employee or with any other person or entity with which Employee is or may become associated, affiliated or connected.

3.3Agreement Not to Solicit Customers and Suppliers.

(a)During the Restricted Period, Employee shall not, directly or indirectly, alone or on behalf of any person or business entity, cause or attempt to cause any customer, prospective customer, vendor, supplier, or other business contact of the Company (i) to terminate, limit, or in any manner adversely modify or fail to enter into any actual or potential business relationship with the Company or (ii) to enter into or expand any actual or potential business relationship with any competitor of the Company.

(b)If during the last twelve (12) months of Employee’s employment with the Company, Employee had no management duties or responsibilities and was engaged principally in sales activities, including selling, soliciting the sale of or supporting the sale of the Company’s products through direct contact with the Company’s customers, then for a period of two (2) years from and after the termination of Employee’s employment with the Company, whether such termination is with or without cause, or whether such termination is at the instance of Employee or the Company, Employee shall not, directly or indirectly, alone or on behalf of any person or business entity, solicit any person or entity (i) whom Employee or any of Employee’s Subordinates (as defined

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below), if any, called on or serviced on behalf of the Company at any time during the three (3) years preceding the termination of Employee’s employment with the Company or (ii) from whom Employee or any of Employee’s Subordinates, if any, directly or indirectly solicited business or to whom Employee or any of Employee’s Subordinates, if any, submitted proposals to perform services on behalf of the Company at any time during the three years preceding the termination of Employee’s employment, with respect to any product or service competitive with or similar to any products or services of the Company. For purposes of this Section 3.3(b), “Subordinates” shall include any of the Company’s employees reporting to Employee at any time during the three years preceding the termination of Employee’s employment.

3.4Judicial Modification. If the duration of, the scope of, or any business activity covered by any provision of this Section 3 is in excess of what a court of competent jurisdiction under this Agreement determines to be valid and enforceable under applicable law, such provision shall be construed to cover only that duration, scope or activity that such court determines to be valid and enforceable, and the Company and Employee consent to the judicial modification of the scope and duration of the restrictions in this Section 3 in any proceeding brought to enforce such restrictions so as to make them valid, reasonable and enforceable. Employee hereby acknowledges that this Section 3 shall be given the construction which renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.

4.Patents, Copyrights and Related Matters.

4.1Inventions. As used in this Agreement, the term “Invention” means discoveries, inventions, innovations, materials, suggestions, mask works, works of authorship, know-how, ideas (whether or not shown or described in writing or reduced to practice), conceived, reduced to practice, authored, or developed by Employee or jointly with others, whether or not patentable, copyrightable or registerable. “Company Inventions” means any Inventions which (a) relate directly to the business of the Company; (b) relate to the Company’s actual or anticipated research or development; (c) result from any work performed by Employee for the Company, for which equipment, supplies, facility or Company Confidential Information is used; or (d) is developed on any Company time.

4.2Disclosure of Prior Inventions. Employee has identified on Exhibit A to this Agreement all Inventions relating in any way to the Company’s business or demonstrably anticipated research and development that were made by Employee prior to employment with the Company, and Employee represents that such list is complete. Employee represents that Employee has no rights in any such Inventions other than those specified in Exhibit A. If there is no such list on Exhibit A, Employee represents that Employee has made no such Inventions at the time of signing this Agreement.

4.3Obligations Regarding Company Inventions. Employee understands that the Company is continually developing new products, processes, systems and machines of which Employee may have knowledge. Employee agrees that during Employment, to the extent Employee is involved with Company Inventions, Employee will (a) keep accurate, complete and timely records of all Company Inventions, which records shall be the Company’s property and be retained on the

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Company’s premises; (b) promptly and fully disclose and describe all Company Inventions in writing; (c) assign (and Employee does hereby assign) to the Company all of Employee’s rights to all Company Inventions, and to applications for letters patent, copyright registrations and/or mask work registrations in all countries and to letters patent, copyright registrations and/or mask work registrations granted upon such Company Inventions in all countries; and (d) acknowledge and deliver promptly to the Company (without charge to the Company but at the Company’s expense) such written instruments and to do such other acts as may be necessary in the opinion of the Company to preserve Company Inventions against forfeiture, abandonment, or loss, and to obtain, defend or maintain such letters patent, copyright registrations and/or mask work registrations, and to vest the entire right and title thereto in the Company. Notwithstanding anything to the contrary set forth herein, in some circumstances, the provisions of this Section 4 may not apply to inventions for which no equipment, supplies, facility or trade secret information of the Company was used and which were developed entirely on Employee’s own time, and (a) which do not relate directly to the business of the Company or to the Company’s actual or demonstrably anticipated research or development, and (b) which do not result from any work performed by Employee for the Company.

4.4Future Inventions. Employee recognizes that Company Inventions or Confidential Information relating to Employee’s activities while working for the Company and conceived or made by Employee, alone or with others, within one (1) year after termination of employment may have been conceived in significant part while employed by the Company. Accordingly, Employee agrees that such post-employment Inventions and proprietary information will be presumed to have been conceived during employment with the Company and are to be assigned and are hereby assigned to the Company unless and until Employee has established the contrary.

4.5Appointment of Company as Agent/Attorney-in-Fact. In the event that the Company is unable for any reason to secure Employee’s signature to any document required to apply for or execute any patent, copyright, maskwork or other applications with respect to any Inventions (including improvements, renewals, extensions, continuations, divisions or continuations in part thereof), Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agents and attorneys-in-fact to act for and on my behalf and instead of Employee, to execute and file any such application and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, maskworks or other rights thereon with the same legal force and effect as if executed by Employee.

5.Return of Records and Property; Cooperation.

5.1Upon termination of Employee’s employment, upon Employee’s resignation, or at any time immediately upon the Company’s request, Employee shall promptly deliver to the Company any and all loaners, tool kits, Company records and any and all Company property in Employee’s possession or under Employee’s control and all copies thereof (whether in hard copy or stored in electronic or magnetic media, whether furnished by the Company or compiled by Employee, and whether or not containing Confidential Information), including without limitation products, formulae, technology, processes, marketing plans, price lists, customer lists, prospect lists, manuals, books, blank forms, documents, correspondence, memoranda, notes, notebooks, reports,

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printouts, computer disks, computer tapes, source codes, data, tables, calculations, and all other materials or information relating to the business of the Company, and keys, access cards, access codes or other access information, passwords, credit cards, personal computers, telephones and other electronic equipment belonging to the Company.

5.2Upon termination of Employee’s employment or at any time as requested by the Company, Employee agrees to make available to any person designated by the Company all information that Employee has concerning work Employee performed for the Company and any pending, reasonably anticipated or past transactions that may affect operation of the Company.

6.At-Will Employment. Unless Employee has entered into an express written agreement signed by an officer of the Company which explicitly alters the at-will relationship, Employee’s employment relationship with the Company is at will and it is not for any fixed term or duration. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause or notice. Employee may terminate Employee’s employment with the Company for any reason at any time. Nothing in this Agreement is intended to alter this at-will employment relationship, and such at-will employment relationship may not be modified except by an express written agreement signed by an officer of the Company and Employee.

7.No Conflicting Obligations. Employee represents and warrants to the Company that Employee is not contractually prohibited from executing and abiding by this Agreement, and that Employee’s employment with the Company, and the performance of any duties as an Employee of the Company, will not breach or conflict with any non-competition, confidentiality, or other obligations to another employer. Employee further represents and warrants that Employee has not brought and will not bring to this employment by the Company any confidential or proprietary information, including trade secrets, of prior employers and agrees not to make use of or disclose such confidential or proprietary information in carrying out Employee’s duties.

8.Subsequent Engagement; Mandatory Notice. Employee agrees that during the Restricted Period, Employee will give the Company written notice delivered to the Chief Executive Officer of the Company, before accepting employment or any other type of engagement with any person(s) or entity that provides or plans to provide products or services similar to any products or services of the Company or for the benefit of similar clients to those of the Company. Such written notice will identify the new employer or contracting party, describe the nature of its business, and describe the Employee’s proposed job duties and Employee’s geographic territory or responsibilities.

9.Remedies. Employee hereby acknowledges that the provisions of this Agreement are reasonable and necessary to protect the legitimate interests of the Company and that any violation of the provisions of this Agreement by Employee would cause substantial and irreparable harm to the Company. Employee further acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by Employee of the provisions hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, such relief may be granted without the necessity of proving actual

27

monetary damages. Employee agrees that in the event Employee is found to have breached (or threatened to breach) any provision of this Agreement, Employee will be liable to Employer for reasonable attorneys’ fees and costs which the Employer incurred in enforcing this Agreement.

10.Miscellaneous.

10.1Governing Law. In order to provide the Employee and Company with certainty and predictability, the Employee and Company agree that all matters relating to the interpretation, construction, application, validity and enforcement of this Agreement shall be governed by the laws of the State of Tennessee without giving effect to any choice or conflict of law provision or rule, whether of the State of Tennessee or any other jurisdiction, that would cause the application of laws of any jurisdiction other than the State of Tennessee.

10.2Mandatory Jurisdiction and Venue. In order to facilitate efficient litigation and to provide the Employee and Company with certainty and predictability, the Employee and Company agree that the courts of the State of Tennessee and/or the federal district courts, Western District of Tennessee, shall have exclusive jurisdiction for the purpose of interpreting, enforcing, and resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement, and all other claims and disputes related to the Employee’s employment with and/or separation from employment with the Employer. Any action involving such claims or disputes shall be brought in such courts. Each party consents to personal jurisdiction over such party in the State and/or federal courts of Tennessee and hereby waives any defense of lack of personal jurisdiction. Venue, for the purpose of all such suits shall be in the State or federal courts located in Shelby County, Tennessee.

10.3Entire Agreement. This Agreement, and any employment agreement signed by an officer of the Company between the Company and Employee contain the entire agreement of the parties relating to the subject matter addressed therein and supersede all prior agreements and understandings with respect to such subject matter, and the parties hereto have made no other agreements, representations or warranties relating to the subject matter of this Agreement.

10.4Amendments. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by an authorized officer of the Company, and the Employee.

10.5No Waiver. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. Failure of the Company to require strict compliance with this Agreement or to enforce or seek to enforce this Agreement in response to a breach by Employee does not constitute a waiver of the Company’s right subsequently to seek enforcement as to that breach or any other breach of this Agreement.

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10.6Assignment. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Employee, assign its rights and obligations under this Agreement (1) to any entity affiliated with the Company, (2) in connection with a merger or consolidation involving the Company, or (3) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets or the assets of any division. After any such assignment by the Company, the assignee shall thereafter be deemed to be “the Company” for purposes of all terms and conditions of this Agreement, including this Section 10.

10.7Counterparts. This Agreement may be executed in any number of counterparts, and such executed counterparts shall constitute one Agreement.

10.8Severability. Subject to Section 3.4, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

10.9Captions and Headings. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.

10.10Tolling. Employee understands and agrees that in the event of any breach of his or her obligations under Section 3 of this Agreement, the period of restraint applicable to such obligations shall be automatically tolled for the amount of time the violation continues.

[Signature page follows]

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By signing below, the Employee acknowledges that he/she has read, understands, agrees to comply with, and agrees to be bound by the foregoing Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement.

EMPLOYEE:

Signature:_________________________________

Name:____________________________________

Date:_____________________________________

COMPANY:

Wright Medical Group, Inc.

Signature:_________________________________

Name:____________________________________

Title:_____________________________________

Date:_____________________________________

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Exhibit A

Prior Inventions

31

EXHIBIT B

GENERAL RELEASE

Barry J. Regan (the “Executive”), on behalf of the Executive and the Executive’s heirs, executors, administrators, successors and assigns, whether named or referred to below or not, releases, acquits and forever discharges Wright Medical Group, Inc. (the “Company”), its parent(s), successors and assigns, their agents, servants, and employees, its subsidiaries, divisions, subdivisions, and affiliates (“Released Party”), of and from any and all past, present, and future claims, counterclaims, demands, actions, causes of action, liabilities, damages, costs, loss of services, expenses, compensation, third-party actions, of every nature and description, whether known or unknown, suspected or unsuspected, foreseen, or unforeseen, real or imaginary, actual or potential, and whether arising at law or in equity, under the common law, state, federal or foreign law, or any other law, or otherwise, arising out of or relating to the Executive’s employment with the Company or the termination thereof (collectively “Claims”). The Executive intends to affect a full and final general release of all such Claims. It is expressly understood and agreed that this Release is intended to cover, and does cover, not only all now known injuries, losses, and damages, including injuries, losses, and damages not now known or anticipated, but which may later be discovered after the Effective Date (as hereinafter defined as the date when the Executive signs this Release), including all the effects and consequences thereof.

More specifically, by signing this Release, the Executive agrees to release any actual and potential Claims that the Executive has or may potentially have, either as an individual or standing in the shoes of the government, under any foreign, federal, state or local law, administrative regulation or legal principle (except as provided below in this Release) against the Company or any and all other Released Parties. The following listing of laws and types of Claims is not meant to, and shall not be interpreted to, exclude any particular law or type of Claim, law, regulation or legal principle not listed. The Executive understands that the Executive is releasing all Claims against the Company and all Released Parties including, but not limited to, any Claims for expense reimbursement or expenses, Claims for invasion of privacy; breach of written or oral, express or implied, contract; fraud or misrepresentation; Claims for assault, battery, defamation, intentional or negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, promissory estoppel, negligence, negligent hiring, retention or supervision, retaliation, constructive discharge, violation of whistleblower protection laws, unjust enrichment, violation of public policy, and any Claims under Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e, etseq., the Americans with Disabilities Act (“ADA”), as amended by the ADA Amendments Act of 2008 (“ADAAA”), 29 U.S.C. § 12101, etseq., the Employee Retirement Income Security Act

32

of 1974 (“ERISA”), as amended, 29 U.S.C. §§ 1001, etseq., the Equal Pay Act (“EPA”), 29 U.S.C. § 206(d), the Family and Medical Leave Act (“FMLA”), 29 U.S.C. § 2601, etseq., the Genetic Information Nondiscrimination Act of 2008 (“GINA”), the Minnesota Human Rights Act (“MHRA”), Minn. Stat. § 363A.01, etseq., Minnesota Statutes § 181, etseq., the Minnesota Whistleblower Act, Minn. Stat. § 181.931, etseq., Tennessee Human Rights Act and the Tennessee Disability Act, and any and all other Tennessee statutes, regulations, and ordinances related to fair employment practices or employment more generally, the False Claims Act, 31 U.S.C. § 3729, etseq. or any other state human rights or fair employment practices act. This includes, but is not limited to, Claims for violation of any civil rights laws based on protected class status and all other Claims for unlawful employment practices, and all other common law or statutory Claims.

The Executive is not releasing and “Claims” shall not include any rights or Claims the Executive has (1) pursuant to the Separation Pay Agreement between the Company and the Executive, any equity award granted to the Executive by Wright Medical Group N.V. or the Indemnification Agreement between the Company or its affiliates and the Executive; (2) to be indemnified and advanced expenses in accordance with applicable law, or the Company’s and its affiliates’ corporate documents or be covered under any applicable directors’ and officers’ liability insurance policies; (3) with respect to any rights which have accrued or become vested as of the date of this Release, including any rights to any outstanding equity awards; and (4) with respect to any Claims which arise after the date this Release is executed by the Executive.

The Executive declares that the Executive understands, covenants, and agrees that the Executive will not make any Claims or demands, or file any legal proceedings against the Company or join the Company as a party with respect to any Claims released by the Executive, nor shall the Executive proceed against any other Released Party, person, firm, or corporation on the Claims released above except as is necessary to enforce the terms and conditions of this Release and the Separation Pay Agreement between the Executive and the Company. The Executive further declares that the Executive is voluntarily forfeiting any right to recover or receive compensation in any form resulting from a legal action or demand against the Company by any other person or persons with respect to the Claims released by the Executive herein.

The filing of any claim, demand or any and all other legal proceedings by the Executive against the Company with respect to Claims released by the Executive shall be deemed to be a material breach of the terms of this Release. Such breach shall immediately terminate Company’s duty to pay any further sums to the Executive. Additionally, the Executive shall indemnify and hold harmless the Company from any and all judgments, costs, expenses, or attorneys’ fees whatsoever arising on account of the filing of any such claim, demand, or other legal proceedings by the Executive with respect to the Claims the Executive has released.

It is further understood and agreed that the Company will pay and the Executive is accepting severance payments and benefits more fully described in the Separation Pay Agreement between the parties in full accord and satisfaction of any obligations, Claims, and/or disputes that the Executive may have with the Company with respect to the Executive’s Released Claims.

The Executive declares, understands, covenants, and agrees that the terms of the Separation Pay Agreement, and the severance payments and benefits stated therein, are the sole consideration

33

for this Release and that the Executive voluntarily accepts that consideration for the purpose of making a full and final compromise, adjustment, and release of all Claims.

The Executive understands and agrees that this is the full and complete understanding of the parties, that it is the integrated memorial of their agreement, and that there are no other written or oral understandings, agreements, covenants, promises or arrangements, directly or indirectly connected with this Release, that are not incorporated herein. The terms of this Release are contractual and are not mere recitals.

Notwithstanding the foregoing, nothing in this Release shall release any party from obligations resulting from the Separation Pay Agreement nor prohibit any party from seeking the enforcement of the Separation Pay Agreement.

The Executive understands that the consideration the Executive is receiving for settling and releasing the Executive’s Claims is contingent upon the Executive’s agreement to be bound by the terms of this Release. Accordingly, if the Executive attempts to revoke this Release as provided above, the Executive understands that the Executive is not entitled to the post-termination payments and benefits, other than the Accrued Obligations, offered in the Separation Pay Agreement. The Executive further understands that if the Executive attempts to revoke the Executive’s release of the Executive’s Claims, the Executive must immediately return to Company the post-termination payments and benefits, other than the Accrued Obligations, that the Executive may have received under the Executive’s Separation Pay Agreement.

AGREED AND ACCEPTED

The Company has advised the Executive of the Executive’s right to review this Release with the Executive’s own attorney. The Executive has had the opportunity to carefully read this Release and understands all its terms. In agreeing to sign this Release, the Executive has not relied on any oral statements or explanations made by the Company or any other Released Party, including their employees or attorneys. The Executive understands and agrees to be bound by this Release. This Release shall be effective as of the date signed by the Executive (“Effective Date”).

				EXECUTIVE:
Dated:		,	20
	(Effective Date)			Signature
				Name:

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EXHIBIT C

GENERAL RELEASE,

INCLUDING RELEASE OF POTENTIAL ADEA CLAIMS

In further consideration for the payment of severance payments and benefits provided under the Separation Pay Agreement between (i) Barry J. Regan (the “Executive”) and (ii) Wright Medical Group, Inc.(the “Company”), the Executive, for himself or herself and the Executive’s heirs, executors, administrators, and assigns, hereby unconditionally releases and forever discharges the Company and each of the Company’s stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, divisions, subsidiaries, affiliates, and all persons acting by, through, under, or in concert with any of them (collectively, the “Released Party”) from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts, and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected arising out of or relating to the Executive’s employment with the Company or termination of such employment, including, but not limited to, claims under the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended from time to time, and other federal, state, or local laws prohibiting discrimination, any claims the Executive may have with regard to the Executive’s hiring, employment, and separation from employment, and any claims growing out of any legal restrictions on the Company’s right to terminate its employees (“Claim(s)”), which the Executive now has, owns or holds, or claims to have owned or held, or which the Executive at any time may have had or claimed to have had against the Company.

More specifically, by signing this Release, the Executive agrees to release any actual and potential Claim that the Executive has or may potentially have, either as an individual or standing in the shoes of the government, under any federal, state or local law, administrative regulation or legal principle (except as provided below in this Release) against the Company or any other Released Parties. The following listing of laws and types of Claims is not meant to, and shall not be interpreted to, exclude any particular law or type of Claim, law, regulation or legal principle not listed. The Executive understands that the Executive is releasing all the Executive’s Claims against the Company and all Released Parties including, but not limited to any Claims for expense reimbursement or expenses, relocation assistance Claims for invasion of privacy; breach of written or oral, express or implied, contract; fraud or misrepresentation; Claims for assault, battery, defamation, intentional or negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, promissory estoppel, negligence, negligent hiring, retention or supervision, retaliation, constructive discharge, violation of whistleblower protection laws, unjust enrichment, violation of public policy, and any Claims under ADEA, 29 U.S.C. § 626, as amended, the Older Workers Benefit Protection Act of 1990 (“OWBPA”), 29 U.S.C. § 626(f), Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e, etseq., the Americans with Disabilities Act (“ADA”), as amended by the ADA Amendments Act of 2008 (“ADAAA”), 29 U.S.C. § 12101, etseq., the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C.

35

§§ 1001, etseq., the Equal Pay Act (“EPA”), 29 U.S.C. § 206(d), the Family and Medical Leave Act (“FMLA”), 29 U.S.C. § 2601, etseq., the Genetic Information Nondiscrimination Act of 2008 (“GINA”), the Minnesota Human Rights Act (“MHRA”), Minn. Stat. § 363A.01, etseq., Minnesota Statutes § 181, etseq., the Minnesota Whistleblower Act, Minn. Stat. § 181.931, etseq., Tennessee Human Rights Act and the Tennessee Disability Act, and any and all other Tennessee statutes, regulations, and ordinances related to fair employment practices or employment more generally, the False Claims Act, 31 U.S.C. § 3729, etseq., or any other state human rights or fair employment practices act, and any other federal, state, local or foreign statute, law, rule, regulation, ordinance or order. This includes, but is not limited to, Claims for violation of any civil rights laws based on protected class status and all other Claims for unlawful employment practices, and all other common law or statutory Claims.

The Executive is not releasing and Claims shall not include any rights or Claims the Executive has (1) pursuant to the Separation Pay Agreement between the Executive and the Company, any equity award granted to the Executive by Wright Medical Group N.V. or the Indemnification Agreement between the Company or its affiliates and the Executive; (2) to be indemnified and advanced expenses in accordance with applicable law, or the Company’s and its affiliates’ corporate documents or to be covered under any applicable directors’ and officers’ liability insurance policies; (3) with respect to any rights which have accrued or become vested as of the date of this Release, including any rights to any outstanding equity awards; and (4) with respect to any Claims which arise after the Effective Date of this Release.

This Release complies with the Older Workers Benefit Protection Act of 1990, as amended from time to time.

a. This Release is written in terms which the Executive understands;

b. The Executive is advised of the Executive’s rights to consult an attorney to review and for advice regarding whether to sign this Release;

c. The Executive does not waive any rights or claims that may arise after the date the Release is executed;

d. The Executive is receiving consideration beyond anything of value to which the Executive already is entitled; and

e. The Executive has been given a reasonable period of time to consider this Release (at least 21 days).

RIGHT TO RESCIND OR REVOKE

The Executive understands that insofar as this Release relates to the Executive’s rights under the ADEA, it shall not become effective or enforceable until seven (7) days after the Executive signs it. The Executive also has the right to rescind (revoke) this Release only insofar as it extends to potential Claims under the ADEA by written notice to Company within seven (7) calendar days following the Executive’s signing this Release (the “Rescission Period”). Any such rescission

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(revocation) must be in writing, must explain that the revocation is applicable to the Executive’s ADEA Claims, and must be either hand-delivered to the Company or, if sent by mail, postmarked within the applicable time period (below), sent by certified mail, return receipt requested, and addressed as follows:

(a) post-marked within the seven (7) day period;

(b) properly addressed to:

General Counsel

Wright Medical Group, Inc.

1023 Cherry Road

Memphis, TN 38117; and

(c) sent by certified mail, return receipt requested.

The Executive understands that the consideration the Executive is receiving for settling and releasing the Executive’s Claims is contingent upon the Executive’s agreement to be bound by the terms of this Release. Accordingly, if the Executive attempts to revoke this Release, the Executive understands that the Executive is not entitled to the post-termination payments and benefits, other than the Accrued Obligations, offered in the Separation Pay Agreement. The Executive further understands that if the Executive attempts to revoke the Executive’s release of the Executive’s ADEA Claims, the Executive must immediately return to Company any post-termination payments and benefits, other than the Accrued Obligations, that the Executive may have received under the Executive’s Separation Pay Agreement; provided however, that if the Executive decides to challenge the knowing and voluntary nature of this Release under the ADEA and/or the OWBPA, the Executive is not required to return to Company any consideration that the Executive received under the Executive’s Separation Pay Agreement.

AGREED AND ACCEPTED

The Company has advised the Executive of the Executive’s right to review this Release with the Executive’s own attorney. The Executive has had the opportunity to carefully read this Release and understands all its terms. In agreeing to sign this Release, the Executive has not relied on any oral statements or explanations made by the Company or any other Released Party, including their employees or attorneys. The Executive understands, accepts, and agrees to be bound by this Release. This Release shall be effective as of the date signed by the Executive (“Effective Date”).

				EXECUTIVE:
Dated:		,	20
	(Effective Date)			Signature
				Name:

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EXHIBIT D

MODIFIED 280G CUTBACK

Notwithstanding anything to the contrary in this Agreement, in any other agreement between or among the Executive, the Company or any of its Affiliates or in any plan maintained by the Company or any Affiliate, if there is a 280G Change in Control (as defined in Section (g)(i) below), the following rules shall apply:

(a)Except as otherwise provided in Section (b) below, if it is determined in accordance with Section (d) below that any portion of the Payments (as defined in Section (g)(ii) below) that otherwise would be paid or provided to the Executive or for the Executive’s benefit in connection with the 280G Change in Control would be subject to the excise tax imposed under Section 4999 of the Code (“Excise Tax”), then such Payments shall be reduced by the smallest total amount necessary in order for the aggregate present value of all such Payments after such reduction, as determined in accordance with the applicable provisions of Section 280G of the Code and the regulations issued thereunder, not to exceed the Excise Tax Threshold Amount (as defined in Section (g)(iii) below).

(b)No reduction in any of the Executive’s Payments shall be made pursuant to Section (a) above if it is determined in accordance with Section (d) below that the After Tax Amount of the Payments payable to the Executive without such reduction would exceed the After Tax Amount of the reduced Payments payable to the Executive in accordance with Section (a) above. For purposes of the foregoing, (i) the “After Tax Amount” of the Payments, as computed with, and as computed without, the reduction provided for under Section (a) above, shall mean the amount of the Payments, as so computed, that the Executive would retain after payment of all taxes (including without limitation any federal, state or local income taxes, the Excise Tax or any other excise taxes, any medicare or other employment taxes, and any other taxes) imposed on such Payments in the year or years in which payable; and (ii) the amount of such taxes shall be computed at the rates in effect under the applicable tax laws in the year in which the 280G Change in Control occurs, or if then ascertainable, the rates in effect in any later year in which any Payment is expected to be paid following the 280G Change in Control, and in the case of any income taxes, by using the maximum combined federal, state and (if applicable) local income tax rates then in effect under such laws.

(c)Any reduction in the Executive’s Payments required to be made pursuant to Section (a) above (the “Required Reduction”) shall be made as follows: first, any Payments that became fully vested prior to the 280G Change in Control and that pursuant to paragraph (b) of Treas. Reg.

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§1.280G-1, Q/A 24 are treated as Payments solely by reason of the acceleration of their originally scheduled dates of payment shall be reduced, by cancellation of the acceleration of their dates of payment; second, any severance payments or benefits, performance-based cash or performance-based equity incentive awards, or other Payments, in all cases the full amounts of which are treated as contingent on the 280G Change in Control pursuant to paragraph (a) of Treas. Reg. §1.280G-1, Q/A 24, shall be reduced; and third, any cash or equity incentive awards, or non-qualified deferred compensation amounts, that vest solely based on the Executive’s continued service with the Company or any of its Affiliates, and that pursuant to paragraph (c) of Treas. Reg. §1.280G-1, Q/A 24 are treated as contingent on the 280G Change in Control because they become vested as a result of the 280G Change in Control, shall be reduced, first by cancellation of any acceleration of their originally scheduled dates of payment (if payment with respect to such items is not treated as automatically occurring upon the vesting of such items for purposes of Section 280G) and then, if necessary, by canceling the acceleration of their vesting. In each case, the amounts of the Payments shall be reduced in the inverse order of their originally scheduled dates of payment or vesting, as applicable, and shall be so reduced only to the extent necessary to achieve the Required Reduction.

(d)A determination as to whether any Excise Tax is payable with respect to the Executive’s Payments and if so, as to the amount thereof, and a determination as to whether any reduction in the Executive’s Payments is required pursuant to the provisions of Sections (a) and (b) above, and if so, as to the amount of the reduction so required, shall be made by no later than fifteen (15) days prior to the closing of the transaction or the occurrence of the event that constitutes the 280G Change in Control, or as soon thereafter as administratively practicable. Such determinations, and the assumptions to be utilized in arriving at such determinations, shall be made by an independent auditor (the “Auditor”) jointly selected by the Executive and the Company, all of whose fees and expenses shall be borne and directly paid solely by the Company. The Auditor shall be a nationally recognized public accounting firm which has not, during the two (2) years preceding the date of its selection, acted in any way on behalf of the Company or any of its Affiliates or for any entity effecting the 280G Change in Control. If the Executive and the Company cannot agree on the firm to serve as Auditor, then the Executive and the Company shall each select one (1) accounting firm and those two (2) firms shall jointly select the accounting firm to serve as the Auditor. The Auditor shall provide a written report of its determinations, including detailed supporting calculations, both to the Executive and to the Company. If the Auditor determines that no Excise Tax is payable with respect to the Executive’s Payments, either as a result of any Required Reduction the Auditor has determined should be made thereto or because the Auditor has determined that no Required Reduction must be made thereto, the written report which the auditor furnishes to the Executive and to the Company pursuant to the preceding sentence shall be accompanied by an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to the Executive’s Payments. Except as otherwise provided in Section (e) or Section (f) below, the determinations made by the Auditor pursuant to this Section (d) shall be binding upon the Executive and the Company and its Affiliates.

(e)If, notwithstanding (1) any determination made pursuant to Section (d) above that a reduction in the Executive’s Payments is not required pursuant to Section (a) above or (2) any reduction in the Executive’s Payments made pursuant to Section (a) above, the United States Internal Revenue Service (the “IRS”) subsequently asserts that the Executive is liable for Excise Tax with

39

respect to such Payments, the Payments then remaining to be paid or provided to the Executive shall be reduced as provided in Sections (a) and (b) above or shall be further reduced as provided in Section (a) above, and (if still necessary after such reduction or further reduction) any Payments already made to the Executive shall be repaid to the Company or its Affiliates, to the extent necessary to eliminate the Excise Tax asserted by the IRS to be payable by the Executive. Any such reduction or further reduction or repayment (i) shall be made only if the IRS agrees that such reduction or further reduction or repayment will be effective to avoid the imposition of any Excise Tax with respect to the Executive’s Payments as so reduced or repaid and agrees not to impose such Excise Tax against the Executive if such reduction or further reduction or repayment is made, and (ii) shall be made in the manner described in Section (c) above,

(f)Notwithstanding anything to the contrary in the foregoing provisions of this Exhibit D, if (i) the Executive’s Payments have been reduced pursuant to Section (a) above and the IRS nevertheless subsequently determines that Excise Tax is payable with respect to the Executive’s Payments, and (ii) if the After Tax Amount of the Payments payable to the Executive, determined without any further reduction or repayment as provided in Section (e) above, and without any initial reduction as provided in Section (a) above, would exceed the After Tax Amount of the Payments payable to the Executive as reduced in accordance with Section (a), then (A) no such further reduction or repayment shall be made with respect to the Executive’s Payments pursuant to Section (e) above, and (B) the Company or its Affiliate shall pay to the Executive an amount equal to the reduction in the Executive’s Payments that was initially made pursuant to Section (a). Such amount shall be paid to the Executive in a cash lump sum by no later than the fifteenth (15^th) day of the third (3^rd) month following the close of the calendar year in which the IRS makes its final determination that Excise Tax is due with respect to the Executive’s Payments, provided that by such day the Executive has paid the Excise Tax so determined to be due.

(g)For purposes of the foregoing, the following terms shall have the following respective meanings:

(i)“280G Change in Control” shall mean a change in the ownership or effective control of the Parent Corporation or in the ownership of a substantial portion of the assets of the Parent Corporation, as determined in accordance with Section 280G(b)(2) of the Code and the regulations issued thereunder.

(ii)“Payment” shall mean any payment or benefit in the nature of compensation that is to be paid or provided to the Executive or for the Executive’s benefit in connection with a 280G Change in Control, to the extent that such payment or benefit is “contingent” on the 280G Change in Control within the meaning of Section 280G(b)(2)(A)(i) of the Code and the regulations issued thereunder.

(iii)“Excise Tax Threshold Amount” shall mean an amount equal to (x) three (3) times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations issued thereunder, less (y) $1,000.

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EX-21.1

Exhibit 21.1

WRIGHT MEDICAL GROUP N.V.

Subsidiaries

		Entity Name	Country of Incorporation
1	.	2Hip Holdings SAS	France
2	.	BioMimetic Therapeutics Canada, Inc.	Delaware, USA
3	.	BioMimetic Therapeutics Limited	United Kingdom
4	.	BioMimetic Therapeutics LLC	Delaware, USA
5	.	BioMimetic Therapeutics Pty Ltd	Australia
6	.	BioMimetic Therapeutics USA, Inc.	Delaware, USA
7	.	Biotech Benelux SPRL	Belgium
8	.	Biotech CH	Switzerland
9	.	Cartiva, Inc.	Delaware, USA
10	.	Felding Finance B.V.	The Netherlands
11	.	IMASCAP SAS	France
12	.	Imascap LLC	Delaware, USA
13	.	KHC-WDM, LLC	Delaware, USA
14	.	OrthoHelix Surgical Designs, Inc.	Delaware, USA
15	.	PTH West, LLC	Delaware, USA
16	.	SCI Calyx	France
17	.	TMG France SAS	France
18	.	Tornier AG	Switzerland
19	.	Tornier Belgium N.V.	Belgium
20	.	Tornier do Brasil Produtos Médicos Ltda	Brazil
21	.	Tornier Espana S.A.	Spain
22	.	Tornier Orthopedics Ireland, Ltd.	Ireland
23	.	Tornier Orthopedics, Inc.	Canada
24	.	Tornier Pty Ltd.	Australia
25	.	Tornier SAS	France
26	.	Tornier Scandinavia A/S	Denmark
27	.	Tornier UK Limited	England
28	.	Tornier US Holdings, Inc.	Delaware, USA
29	.	Tornier GmbH	Germany
30	.	Tornier, Inc.	Delaware, USA
31	.	Trooper Holdings, Inc.	Delaware, USA
32	.	WG Healthcare UK Limited	United Kingdom
33	.	WM Netherlands C.V.	The Netherlands
34	.	WMG Holding, LLC	Delaware, USA
35	.	Wright Japan K.K.	Japan
36	.	Wright Medical Australia Pty Limited	Australia
37	.	Wright Medical Belgium NV	Belgium
38	.	Wright Medical Brasil Ltda	Brazil
39	.	Wright Medical Costa Rica, SA	Costa Rica
40	.	Wright Medical Deutschland GmbH	Germany

		Entity Name	Country of Incorporation
41	.	Wright Medical Device (Shanghai) Co., Ltd.	China
42	.	Wright Medical EMEA, B.V.	The Netherlands
43	.	Wright Medical Europe Manufacturing SA	France
44	.	Wright Medical Europe SAS	France
45	.	Wright Medical France SAS	France
46	.	Wright Medical Group, Inc.	Delaware, USA
47	.	Wright Medical Instruments Limited	United Kingdom
48	.	Wright Medical Italy SRL	Italy
49	.	Wright Medical Japan K.K.	Japan
50	.	Wright Medical Netherlands, B.V.	The Netherlands
51	.	Wright Medical Singapore Pte Ltd	Singapore
52	.	Wright Medical Technology Canada Co.	Canada
53	.	Wright Medical Technology, Inc.	Delaware, USA
54	.	Wright Medical UK Limited	United Kingdom
55	.	Wright PacRim, Inc.	Delaware, USA

EX-23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Wright Medical Group N.V.:

We consent to the incorporation by reference in the registration statements (Nos. 333-222057 and 333-211115) on Form S-3 and the registration statements (Nos. 333-212381, 333-207230, 333-207231, 333-182452, 333-172553, 333-219112, and 333-232494) on Form S-8 of Wright Medical Group N.V. and subsidiaries of our reports dated February 24, 2020, with respect to the consolidated balance sheets of Wright Medical Group N.V. as of December 29, 2019 and December 30, 2018, and the related consolidated statements of operations, comprehensive loss, cash flows, and changes in shareholders’ equity for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, and the related notes and financial statement schedule, and the effectiveness of internal control over financial reporting as of December 29, 2019, which reports appear in the December 29, 2019 annual report on Form 10‑K of Wright Medical Group N.V.

/s/ KPMG LLP

Memphis, Tennessee

February 24, 2020

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 29, 2019 of Wright Medical Group N.V.;

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 24, 2020

/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 29, 2019 of Wright Medical Group N.V.;

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 24, 2020

/s/ Lance A. Berry  

Lance A. Berry 

Executive Vice President, Chief Financial and Operations Officer 

EX-32.1

Exhibit 32.1

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 (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 29, 2019 (Report) of Wright Medical Group N.V. (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 24, 2020

/s/ Robert J. Palmisano

Robert J. Palmisano

President and Chief Executive Officer 

(Principal Executive Officer)

/s/ Lance A. Berry  

Lance A. Berry 

Executive Vice President, Chief Financial and Operations Officer 

(Principal Financial Officer)

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the United States Securities Act of 1933 or the Exchange Act regardless of any general incorporation language in such filing.

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Income Taxes

12 Months Ended

Dec. 29, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
U.S.	$	(69,903	)	$	(144,987	)	$	(56,808	)
Foreign	(9,263		)	(24,853		)	(43,097		)
Loss from continuing operations before income taxes	$	(79,166	)	$	(169,840	)	$	(99,905	)

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

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Current (benefit) provision:
U.S.:
Federal	$	(13	)	$	449		$	(23,781	)
State	232			251			390
Foreign	15,213			3,307			2,214
Total current provision (benefit)	15,432			4,007			(21,177		)
Deferred provision (benefit):
U.S.:
Federal	154			(2,841		)	(5,098		)
State	143			(663		)	(93		)
Foreign	(2,761		)	(1,039		)	(8,600		)
Total deferred benefit	(2,464		)	(4,543		)	(13,791		)
Total provision (benefit) for income taxes	$	12,968		$	(536	)	$	(34,968	)

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

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Income tax benefit at statutory rate	21.0	%	21.0	%	35.0	%
State income taxes	2.2	%	3.8	%	1.5	%
Change in valuation allowance	(18.3	)%	(22.9	)%	(3.5	)%
CVR fair market value adjustment	0.1	%	—	%	(1.9	)%
Foreign income tax rate differential	(17.9	)%	(0.6	)%	(6.1	)%
Changes in tax reserves	(0.3	)%	0.4	%	2.9	%
Effects of U.S. tax reform	—	%	—	%	6.5	%
Foreign rate changes	—	%	—	%	1.7	%
U.S. R&D tax credit	2.0	%	0.7	%	0.6	%
Nondeductible compensation	(3.2	)%	(0.7	)%	(1.0	)%
Other, net	(2.0	)%	(1.4	)%	(0.7	)%
Total	(16.4	)%	0.3	%	35.0	%

The significant components of our deferred income taxes as of December 29, 2019 and December 30, 2018 are as follows (in thousands):

	December 29, 2019			December 30, 2018
Deferred tax assets:
Net operating loss carryforwards	$	340,451		$	330,589
General business credit carryforwards	16,131			14,598
Reserves and allowances	50,278			56,675
Deferred interest	42,016			27,322
Share-based compensation expense	12,638			14,934
Convertible debt notes and conversion options	15,272			38,368
Other	3,857			3,616
Valuation allowance	(423,037		)	(400,171		)
Total deferred tax assets	57,606			85,931
Deferred tax liabilities:
Depreciation	5,025			5,095
Intangible assets	50,156			58,221
Convertible notes bond hedges	11,493			34,653
Other	304			166
Total deferred tax liabilities	66,978			98,135
Net deferred tax liabilities	$	(9,372	)	$	(12,204	)

The 2017 Tax Act was enacted on December 22, 2017. The law included significant changes to the United States corporate income tax system, including a federal corporate rate reduction, limitations on the deductibility of certain expenses and the transition of United States international taxation from a worldwide tax system to a territorial tax system. The 2017 Tax Act imposed a tax on global intangible low-taxed income (GILTI) earned by U.S. controlled foreign subsidiaries. In accordance with FASB Staff Q&A, Topic 740, No. 5, we have elected to account for GILTI as a period expense in the year it is incurred.

At December 29, 2019, we had net operating loss carryforwards for U.S. federal income tax purposes of approximately $1.1 billion, $172.5 million of which do not expire and $964.8 million which are subject to expiration. Of the U.S. net operating loss carryforwards subject to expiration, approximately $38.7 million will expire over the next 5 years and the remaining between 2025 and 2037, with the majority expiring after 2033. State net operating loss carryforwards at December 29, 2019 totaled approximately $1.1 billion, $21.5 million of which do not expire and $1.1 billion which begin to expire in 2020 and extend through 2039. Additionally, we had general business credit carryforwards of approximately $16.1 million, which begin to expire in 2022 and extend through 2039. At December 29, 2019, we had foreign net operating loss carryforwards of approximately $187.8 million, $90.8 million of which do not expire and $97.0 million which begin to expire in 2020 and extend through 2028.

At December 29, 2019 and December 30, 2018, we had a valuation allowance of $423.0 million and $400.2 million, respectively, related to certain U.S. and foreign deferred tax assets. We realized a net increase in the valuation allowance of $22.8 million during the fiscal year ended December 29, 2019. The net increase was primarily due to the valuation allowance on projected U.S., French and Dutch current year taxable losses. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. Based upon the levels of historical taxable income, projections of future taxable income and the reversal of deferred tax liabilities over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences, net of the existing valuation allowance.

It is our current practice and intention to reinvest the earnings of our 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 subsidiaries that are essentially permanent in duration. We would recognize a deferred income tax liability if we were to determine that such earnings are no longer indefinitely reinvested. Due to the number of tax jurisdictions involved, the complexity of our legal entity structure, and

the complexity of the tax laws in the relevant jurisdictions, we believe it is not practicable to estimate the amount of additional taxes which may be payable upon distribution of these earnings, however it is not expected to be significant. Further, the 2017 Tax Act imposed a mandatory transition tax on accumulated foreign earnings of our U.S. controlled foreign subsidiaries and eliminated U.S. income taxes on distributions from U.S. controlled foreign subsidiaries.

As of December 29, 2019, our unrecognized tax benefits totaled approximately $4.5 million. The total amount of net unrecognized tax benefits that, if recognized, would affect the tax rate was approximately $1.3 million at December 29, 2019. While we are currently not under audit in significant tax jurisdictions, it is reasonably possible that our unrecognized tax benefits could change in the next twelve months as a result of tax periods still open for examination and expirations of the statutes of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	Fiscal year ended
	December 29, 2019			December 30, 2018
Balance at beginning of fiscal year	$	4,610		$	6,025
Additions from acquisitions	—			109
Additions for tax positions related to current year	473			385
Additions for tax positions of prior years	172			718
Reductions for tax positions of prior years	(290		)	(490		)
Settlements	(406		)	(1,983		)
Foreign currency translation	(48		)	(154		)
Balance at end of fiscal year	$	4,511		$	4,610

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 and penalties, that if incurred, would be recognized as penalty expense within “Other expense (income)” on our consolidated statements of operations. As of December 29, 2019, accrued interest and penalties related to our unrecognized tax benefits totaled approximately $0.1 million.

We file numerous consolidated and separate company income tax returns in the United States and in many foreign jurisdictions. With few exceptions, we are subject to U.S. federal, state, and local income tax examinations for years 2016 through 2018. We are no longer subject to foreign income tax examinations by tax authorities in significant jurisdictions for years before 2015. However, U.S. and foreign 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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Retirement Plan Benefits

12 Months Ended

Dec. 29, 2019

Postemployment Benefits [Abstract]

Retirement Benefit Plans

Retirement Benefit Plans

During the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, we offered a defined contribution retirement benefit plan for our U.S. based employees. Our defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (Code), covers U.S. employees who are 18 years of age and over. Under this plan, we have elected to make matching contributions to all eligible participants in an amount equal to 100% of the first three percent of eligible compensation, and 50% of the next two percent of eligible compensation, contributed to the Plan as deferral contributions.  Employees are 100% vested in their rollover contributions, employer non-elective contributions, employer matching contributions, qualified non-elective contributions, deferral contributions, safe harbor matching employer contributions and any earnings thereon. The expense related to this plan recognized within our results from continuing operations was $7.2 million in 2019, $6.2 million in 2018, and $5.5 million in 2017.

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Commitments and Contingencies - Product Liability Contingency (Details) $ in Thousands	12 Months Ended
	Dec. 29, 2019 USD ($) hours lawsuit agreement insurer	Oct. 31, 2017 lawsuit settlement	Dec. 30, 2018 USD ($)
Product Liability Contingency [Line Items]
Number of supply agreements | agreement	8
Purchase obligation due in 2020	$ 7,800
Purchase obligation due in 2021	7,300
Purchase obligation due in 2022	7,300,000
Purchase obligation due in 2023	7,300,000
Purchase obligation due in 2024	7,300,000
Purchase obligation due in 2025	3,600
Purchase obligation due in 2026	$ 3,600,000
Claims payment period	2 years
Number of insurance carriers | insurer	7
CONSERVE (R) DYNASTY (R) AND LINEAGE (R)
Product Liability Contingency [Line Items]
Loss contingency accrual	$ 40,500		$ 74,500
PROFEMUR Titanium Modular Neck Product
Product Liability Contingency [Line Items]
Loss contingency accrual	12,100		17,500
Accrued Liabilities, Current | CONSERVE (R) DYNASTY (R) AND LINEAGE (R)
Product Liability Contingency [Line Items]
Loss contingency accrual	33,000		51,900
Accrued Liabilities, Current | PROFEMUR Titanium Modular Neck Product
Product Liability Contingency [Line Items]
Loss contingency accrual	8,800		12,300
Other Noncurrent Liabilities | CONSERVE (R) DYNASTY (R) AND LINEAGE (R)
Product Liability Contingency [Line Items]
Loss contingency accrual	7,500		22,600
Other Noncurrent Liabilities | PROFEMUR Titanium Modular Neck Product
Product Liability Contingency [Line Items]
Loss contingency accrual	3,300		$ 5,200
Metal-On-Metal Claims
Product Liability Contingency [Line Items]
Proceeds from insurance policies	120,400
Proceeds from insurance policies, paid directly to entity	113,700
Proceeds from insurance policies, paid to third party claimants	6,700
Master Settlement Agreement - MDL & JCCP
Product Liability Contingency [Line Items]
Number of settlement agreements | settlement		3
Master Settlement Agreement - MDL & JCCP | CONSERVE (R) DYNASTY (R) AND LINEAGE (R)
Product Liability Contingency [Line Items]
Loss contingency, estimated loss	339,200
Loss contingency, damages paid	$ 333,400
Pending Litigation | MicroPort | United States
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	7
Pending Litigation | MicroPort | Non-US
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	7
Pending Litigation | Modular Neck Cases Related to Release of Metal Ions | United States
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	9
Pending Litigation | Modular Neck Cases Related to Release of Metal Ions | Non-US
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	0
Pending Litigation | Metal-On-Metal Claims | United States
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	205
Pending Litigation | Metal-On-Metal Claims | Non-US
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	27
Pending Litigation | PROFEMUR Titanium Modular Neck Product | United States
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	22
Pending Litigation | PROFEMUR Titanium Modular Neck Product | Non-US
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	50
Pending Litigation | PROFEMUR Titanium Modular Neck Product | CANADA
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit	44
Pending Litigation | Non-revision claims
Product Liability Contingency [Line Items]
Number of lawsuits | hours	514
Settled Litigation | Master Settlement Agreement - MDL & JCCP
Product Liability Contingency [Line Items]
Number of lawsuits | lawsuit		1,974

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 29, 2019

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure

Wright Medical Group N.V. 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 29, 2019	$	3,045	$	490	$	(90	)	$	3,445
December 30, 2018	$	4,328	$	189	$	(1,472	)	$	3,045
December 31, 2017	$	4,469	$	1,243	$	(1,384	)	$	4,328

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Segment Information Total Assets by Business Segment (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Segment Reporting Information [Line Items]
Assets	$ 2,585,640	$ 2,694,401
Corporate Segment
Segment Reporting Information [Line Items]
Assets	426,207	559,163
Lower Extremities & Biologics | United States
Segment Reporting Information [Line Items]
Assets	952,187	940,075
Upper Extremities | United States
Segment Reporting Information [Line Items]
Assets	914,317	923,036
International Segment | Extremities & Biologics
Segment Reporting Information [Line Items]
Assets	$ 292,929	$ 272,127

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Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands		3 Months Ended								12 Months Ended
	Jan. 09, 2014 USD ($)	Dec. 29, 2019 USD ($)	Sep. 29, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jul. 01, 2018 USD ($)	Apr. 01, 2018 USD ($)	Dec. 29, 2019 USD ($) customer		Dec. 30, 2018 USD ($)		Dec. 31, 2017 USD ($)		Dec. 25, 2016 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Excess and obsolete inventory reserve, estimated life cycle and forecasted product demand period			36 months
Impact of change in estimate, excess and obsolete inventory reserve			$ 26,000
Estimated inventory turnover period			2 years 6 months
Inventory write-down										$ 13,126		$ 20,913		$ 19,171
Types of customers | customer										2
Selling, general and administrative		$ 156,468	$ 152,780	$ 152,112	$ 153,306	$ 160,664	$ 139,223	$ 140,826	$ 137,248	$ 614,666	[1]	577,961	[1]	525,222	[2]
Instrument depreciation expense										30,600		28,400		27,100
Share-based compensation expense										32,600		26,100		19,400
Loss on foreign currency derivative														4,600
Shipping and Handling
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Selling, general and administrative										53,100		52,000		49,400
OrthoRecon Business
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Purchase price discontinued operations	$ 283,000
Continuing Operations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Inventory write-down										13,100		20,900		19,200
Inventory Valuation and Obsolescence | Continuing Operations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Inventory write-down												4,400		3,100
SEC Schedule, 12-09, Allowance, Credit Loss
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Allowance for doubtful accounts		$ 3,445				$ 3,045				3,445		$ 3,045		$ 4,328		$ 4,469
Inventory Valuation and Obsolescence | Continuing Operations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Inventory write-down										$ 5,200

[1] 1 These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated: Three months ended Fiscal year ended December 29, 2019 December 30, 2018 December 29, 2019 December 30, 2018Cost of sales$186 $133 $600 $585Selling, general and administrative8,079 7,112 29,185 23,608Research and development822 539 2,782 1,927

[2] These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:   Fiscal year ended   December 29, 2019   December 30, 2018   December 31, 2017 Cost of sales $ 600
  $ 585
  $ 565
Selling, general and administrative 29,185
  23,608
  17,705
Research and development 2,782
  1,927
  1,123

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 29, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

Amounts recognized in the consolidated financial statements with respect to share-based compensation are as follows:

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Total cost of share-based arrangements	$	32,836		$	26,039		$	19,485
Amounts capitalized into inventory	(870		)	(507		)	(669		)
Amortization of capitalized amounts	601			588			577
Impact to net loss	$	32,567		$	26,120		$	19,393
Impact to basic and diluted loss per share	$	0.26		$	0.23		$	0.19
Weighted-average number of shares outstanding - basic and diluted	126,601			112,592			104,531

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan

The compensation costs related to share-based awards were as follows:

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Stock options	$	13,116	$	11,177	$	8,988
Restricted stock units	12,651		11,514		9,373
Performance share units	6,166		2,538		441
Employee stock purchase plan	903		810		683
Total compensation cost for share-based awards	$	32,836	$	26,039	$	19,485

Schedule of Share-based Payment Award, Stock Options, 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:

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Risk-free interest rate	1.5% - 2.4%	2.6% - 2.9%	1.9% - 2.0%
Expected option life	6 years	7 years	6 years
Expected price volatility	31%	32%	33%

Share-based Compensation, Stock Options, Activity

A summary of our stock option activity during 2019 is as follows:

	Shares (000’s)	Weighted-average exercise price		Weighted-average remaining contractual life	Aggregate intrinsic value* ($000’s)
Outstanding at December 30, 2018	9,203	$	22.89
Granted	1,593	27.77
Exercised	(2,152)	21.52
Forfeited or expired	(236)	25.29
Outstanding at December 29, 2019	8,408	$	24.10	6.52	$	54,473
Exercisable at December 29, 2019	5,426	$	22.86	5.24	$	41,885

________________________________

*

The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of December 29, 2019 and the respective exercise prices of the options. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

A summary of our non-plan inducement stock option activity during 2019 is as follows:

	Shares (000’s)		Weighted-average exercise price		Weighted-average remaining contractual life	Aggregate intrinsic value* ($000’s)
Outstanding at December 30, 2018	693		$	15.66
Granted	—		—
Exercised	(209	)	15.91
Forfeited or expired	—		—
Outstanding at December 29, 2019	484		$	15.55	1.72	$	7,272
Exercisable at December 29, 2019	484		$	15.55	1.72	$	7,272

________________________________

*

The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of December 29, 2019 and the respective exercise prices of the options. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range

A summary of our stock options outstanding and exercisable at December 29, 2019 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 - $20.00	609	3.60	$	17.89	556	$	17.73
$20.01 - $21.00	1,708	5.36	20.63		1,675	20.64
$21.01 - $25.00	2,850	6.46	23.01		1,905	22.59
$25.01 - $32.00	3,241	7.72	28.06		1,290	28.36
	8,408	6.52	$	24.10	5,426	$	22.86

A summary of our non-plan inducement stock options outstanding and exercisable at December 29, 2019 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
$15.00 - $18.00	484	1.72	$	15.55	484	$	15.55

Schedule of Other Share-based Compensation, Activity

A summary of our PSU activity (based on an assumed maximum level of performance) during 2019 is as follows:

	Shares (000’s)	Weighted-average grant-date fair value		Aggregate intrinsic value* ($000’s)
Unvested at December 30, 2018	466	$	26.00
Granted	321	27.84
Vested	—	—
Forfeited	—	—
Unvested at December 29, 2019	787	$	26.75	$	24,076

___________________

*

The aggregate intrinsic value is calculated as the market value of our ordinary shares as of December 29, 2019. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

A summary of our RSU activity during 2019 is as follows:

	Shares (000’s)		Weighted-average grant-date fair value		Aggregate intrinsic value* ($000’s)
Unvested at December 30, 2018	1,322		$	23.90
Granted	598		27.90
Vested	(589	)	22.97
Forfeited	(82	)	25.51
Unvested at December 29, 2019	1,249		$	26.16	$	38,196

___________________

*

The aggregate intrinsic value is calculated as the market value of our ordinary shares as of December 29, 2019. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions

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

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Risk-free interest rate	1.5% - 2.3%	2.3% - 2.8%	1.3% - 1.9%
Expected life	6 months	6 months	6 months
Expected price volatility	30%	31%	24%

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 29, 2019

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

Changes in AOCI for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 were as follows (in thousands):

	Currency translation adjustment
Balance at December 25, 2016	$	(19,461	)
Other comprehensive income	41,751
Balance at December 31, 2017	$	22,290
Other comprehensive loss	(30,373		)
Balance at December 30, 2018	$	(8,083	)
Other comprehensive loss	(21,416		)
Balance at December 29, 2019	$	(29,499	)

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Share-Based Compensation Compensation Related Costs, Share-based Awards (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total cost of share-based arrangements	$ 32,836	$ 26,039	$ 19,485
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total cost of share-based arrangements	13,116	11,177	8,988
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total cost of share-based arrangements	12,651	11,514	9,373
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total cost of share-based arrangements	6,166	2,538	441
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total cost of share-based arrangements	$ 903	$ 810	$ 683

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Derivatives and Fair Value of Financial Instruments Valuation of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018		Dec. 31, 2017	[1]	Dec. 25, 2016	[1]
Derivative [Line Items]
Cash and cash equivalents	$ 166,856	$ 191,351	[1]	$ 167,740		$ 412,265
Fair Value, Measurements, Recurring
Derivative [Line Items]
Cash and cash equivalents	166,856	191,351
Total assets	391,502	513,397
Total liabilities	240,776	341,426
Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Cash and cash equivalents	166,856	191,351
Total assets	166,856	191,351
Total liabilities	0	420
Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Cash and cash equivalents	0	0
Total assets	0	0
Total liabilities	0	0
Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Cash and cash equivalents	0	0
Total assets	224,646	322,046
Total liabilities	240,776	341,006
Contingent consideration | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value	28,077	19,248
Contingent consideration | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value	0	0
Contingent consideration | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value	0	0
Contingent consideration | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value	28,077	19,248
Contingent Value Rights | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value		420
Contingent Value Rights | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value		420
Contingent Value Rights | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value		0
Contingent Value Rights | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Contingent consideration fair value		0
2020 Notes Hedges | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value		17,822
2020 Notes Hedges | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	0	0
2020 Notes Hedges | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	0	0
2020 Notes Hedges | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	1,969	17,822
2021 Notes Hedges | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	183,437	188,301
2021 Notes Hedges | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	0	0
2021 Notes Hedges | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	0	0
2021 Notes Hedges | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	183,437	188,301
2023 Notes Hedges | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	39,240	115,923
2023 Notes Hedges | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	0	0
2023 Notes Hedges | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	0	0
2023 Notes Hedges | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative asset, fair value	39,240	115,923
2020 Notes Conversion Derivative | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	1,666	17,386
2020 Notes Conversion Derivative | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	0	0
2020 Notes Conversion Derivative | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	0	0
2020 Notes Conversion Derivative | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	1,666	17,386
2021 Notes Conversion Derivative | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	179,478	187,539
2021 Notes Conversion Derivative | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	0	0
2021 Notes Conversion Derivative | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	0	0
2021 Notes Conversion Derivative | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	179,478	187,539
2023 Notes Conversion Derivative | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	31,555	116,833
2023 Notes Conversion Derivative | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	0	0
2023 Notes Conversion Derivative | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	0	0
2023 Notes Conversion Derivative | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring
Derivative [Line Items]
Derivative liability, fair value	$ 31,555	$ 116,833

[1] ¹  As of December 25, 2016, we had $150.0 million in restricted cash to secure our obligations under a Master Settlement Agreement (MSA) that WMT entered into in connection with the metal-on-metal hip litigation as described in Note 17. The accompanying notes are an integral part of these consolidated financial statements.

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Goodwill and Intangibles Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands			12 Months Ended
	Oct. 10, 2018	Dec. 14, 2017	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Goodwill [Roll Forward]
Goodwill, beginning balance			$ 1,268,954	$ 933,662
Goodwill adjustment associated with IMASCAP acquisition				(900)
Foreign currency translation			(7,987)	(15,236)
Goodwill, ending balance			1,260,967	1,268,954	$ 933,662
Lower Extremities & Biologics
Goodwill [Roll Forward]
Goodwill, beginning balance			569,970	218,525
Foreign currency translation			0	0
Goodwill, ending balance			569,970	569,970	218,525
Upper Extremities
Goodwill [Roll Forward]
Goodwill, beginning balance			627,850	630,650
Foreign currency translation			(1,924)	(1,883)
Goodwill, ending balance			625,926	627,850	630,650
Extremities & Biologics
Goodwill [Roll Forward]
Goodwill, beginning balance			71,134	84,487
Foreign currency translation			(6,063)	(13,353)
Goodwill, ending balance			$ 65,071	71,134	84,487
Cartiva, Inc.
Goodwill [Roll Forward]
Goodwill associated with Cartiva acquisition	$ 351,445			351,445
Cartiva, Inc. | Lower Extremities & Biologics
Goodwill [Roll Forward]
Goodwill associated with Cartiva acquisition				351,445
Cartiva, Inc. | Upper Extremities
Goodwill [Roll Forward]
Goodwill associated with Cartiva acquisition				0
Cartiva, Inc. | Extremities & Biologics
Goodwill [Roll Forward]
Goodwill associated with Cartiva acquisition				0
IMASCAP SAS
Goodwill [Roll Forward]
Goodwill associated with Cartiva acquisition		$ 71,064			$ 72,000
Goodwill adjustment associated with IMASCAP acquisition				(917)
IMASCAP SAS | Lower Extremities & Biologics
Goodwill [Roll Forward]
Goodwill adjustment associated with IMASCAP acquisition				0
IMASCAP SAS | Upper Extremities
Goodwill [Roll Forward]
Goodwill adjustment associated with IMASCAP acquisition				(917)
IMASCAP SAS | Extremities & Biologics
Goodwill [Roll Forward]
Goodwill adjustment associated with IMASCAP acquisition				$ 0

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Share-Based Compensation Summary of Stock Options (Details) shares in Thousands	12 Months Ended
	Dec. 29, 2019 $ / shares shares
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares) | shares	8,408
Weighted-average remaining contractual life	6 years 6 months 7 days
Weighted average exercise price, options outstanding (in usd per share)	$ 24.10
Number of options exercisable (in shares) | shares	5,426
Weighted average exercise price, options exercisable (in usd per share)	$ 22.86
Exercise Price Range $2.00 - $20.00 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares) | shares	609
Weighted-average remaining contractual life	3 years 7 months 6 days
Weighted average exercise price, options outstanding (in usd per share)	$ 17.89
Number of options exercisable (in shares) | shares	556
Weighted average exercise price, options exercisable (in usd per share)	$ 17.73
Exercise price range, lower limit (in usd per share)	2.00
Exercise price range, upper limit (in usd per share)	$ 20.00
Exercise Price Range $2.00 - $20.00 | Inducement Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares) | shares	484
Weighted-average remaining contractual life	1 year 8 months 19 days
Weighted average exercise price, options outstanding (in usd per share)	$ 15.55
Number of options exercisable (in shares) | shares	484
Weighted average exercise price, options exercisable (in usd per share)	$ 15.55
Exercise Price Range $20.01 - $21.00 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares) | shares	1,708
Weighted-average remaining contractual life	5 years 4 months 9 days
Weighted average exercise price, options outstanding (in usd per share)	$ 20.63
Number of options exercisable (in shares) | shares	1,675
Weighted average exercise price, options exercisable (in usd per share)	$ 20.64
Exercise price range, lower limit (in usd per share)	20.01
Exercise price range, upper limit (in usd per share)	$ 21.00
Exercise Price Range $21.01 - $25.00 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares) | shares	2,850
Weighted-average remaining contractual life	6 years 5 months 15 days
Weighted average exercise price, options outstanding (in usd per share)	$ 23.01
Number of options exercisable (in shares) | shares	1,905
Weighted average exercise price, options exercisable (in usd per share)	$ 22.59
Exercise price range, lower limit (in usd per share)	21.01
Exercise price range, upper limit (in usd per share)	$ 25.00
Exercise Price Range $25.01 - $32.00 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (in shares) | shares	3,241
Weighted-average remaining contractual life	7 years 8 months 19 days
Weighted average exercise price, options outstanding (in usd per share)	$ 28.06
Number of options exercisable (in shares) | shares	1,290
Weighted average exercise price, options exercisable (in usd per share)	$ 28.36
Exercise price range, lower limit (in usd per share)	25.01
Exercise price range, upper limit (in usd per share)	32.00
Exercise Price Range $15.00 - $18.00 | Inducement Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price range, lower limit (in usd per share)	15.00
Exercise price range, upper limit (in usd per share)	$ 18.00

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Summary of Significant Accounting Policies Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Interest	$ 28,523	$ 30,552	$ 24,641
Income taxes	$ 6,084	$ 6,254	$ 7,359

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Consolidated Statements of Cash Flows (Paranthetical) $ in Millions	Dec. 25, 2016 USD ($)
Statement of Cash Flows [Abstract]
Restricted cash	$ 150.0

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Acquisitions Purchase Consideration and Net Assets Acquired, IMASCAP (Details) - IMASCAP SAS - USD ($) $ in Thousands		12 Months Ended
	Dec. 14, 2017	Dec. 31, 2017
Business Acquisition [Line Items]
Cash and cash equivalents	$ 2,559
Accounts receivable	102
Other current assets	925
Property, plant and equipment	20
Intangible assets	10,865
Total assets acquired	14,471
Current liabilities	(2,173)
Long-term debt	(886)
Deferred income taxes	(2,343)
Total liabilities assumed	(5,402)
Net assets acquired	9,069
Goodwill	71,064	$ 72,000
Total purchase consideration	$ 80,133

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Derivatives and Fair Value of Financial Instruments Derivative Assets at Fair Value (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Other assets | 2023 Notes Hedges
Derivative [Line Items]
Derivative asset, fair value	$ 39,240	$ 115,923
Other assets | 2021 Notes Hedges
Derivative [Line Items]
Derivative asset, fair value		188,301
Accrued expenses and other current liabilities | 2021 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, fair value	179,478
Accrued expenses and other current liabilities | 2020 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, fair value	1,666	17,386
Other liabilities | 2023 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, fair value	31,555	116,833
Other liabilities | 2021 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, fair value		187,539
Other current assets | 2021 Notes Hedges
Derivative [Line Items]
Derivative asset, fair value	183,437
Other current assets | 2020 Notes Hedges
Derivative [Line Items]
Derivative asset, fair value	$ 1,969	$ 17,822

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Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 29, 2019		Dec. 30, 2018		Dec. 31, 2017
Income Statement [Abstract]
Net sales	$ 920,900		$ 836,190		$ 744,989
Cost of sales	188,641	[1]	180,153	[1]	160,947	[2]
Gross profit	732,259		656,037		584,042
Operating expenses:
Selling, general and administrative	614,666	[1]	577,961	[1]	525,222	[2]
Research and development	74,085	[1]	59,142	[1]	50,115	[2]
Amortization of intangible assets	31,921		26,730		28,396
Total operating expenses	720,672		663,833		603,733
Operating income (loss)	11,587		(7,796)		(19,691)
Interest expense, net	80,849		80,247		74,644
Other expense, net	9,904		81,797		5,570
Loss from continuing operations before income taxes	(79,166)		(169,840)		(99,905)
Total provision (benefit) for income taxes	12,968		(536)		(34,968)
Net loss from continuing operations	(92,134)		(169,304)		(64,937)
Loss from discontinued operations	(22,091)		(201)		(137,661)
Net loss	$ (114,225)		$ (169,505)		$ (202,598)
Net income (loss) per share:
Net loss from continuing operations per share - basic and diluted (in usd per share)	$ (0.73)		$ (1.50)		$ (0.62)
Net (loss) income from discontinued operations per share - basic and diluted (in usd per share)	(0.17)		0.00		(1.32)
Net loss per share - basic and diluted (in usd per share)	$ (0.90)		$ (1.51)		$ (1.94)
Weighted-average number of ordinary shares outstanding - basic and diluted (in shares)	126,601		112,592		104,531

[1] 1 These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated: Three months ended Fiscal year ended December 29, 2019 December 30, 2018 December 29, 2019 December 30, 2018Cost of sales$186 $133 $600 $585Selling, general and administrative8,079 7,112 29,185 23,608Research and development822 539 2,782 1,927

[2] These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:   Fiscal year ended   December 29, 2019   December 30, 2018   December 31, 2017 Cost of sales $ 600
  $ 585
  $ 565
Selling, general and administrative 29,185
  23,608
  17,705
Research and development 2,782
  1,927
  1,123

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Income Taxes Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Income Tax Disclosure [Abstract]
Net operating loss carryforwards	$ 340,451	$ 330,589
General business credit carryforwards	16,131	14,598
Reserves and allowances	50,278	56,675
Deferred interest	42,016	27,322
Share-based compensation expense	12,638	14,934
Convertible debt notes and conversion options	15,272	38,368
Other	3,857	3,616
Valuation allowance	(423,037)	(400,171)
Total deferred tax assets	57,606	85,931
Depreciation	5,025	5,095
Intangible assets	50,156	58,221
Convertible notes bond hedges	11,493	34,653
Other	304	166
Total deferred tax liabilities	66,978	98,135
Total deferred tax liabilities	$ (9,372)	$ (12,204)

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Debt and Finance Lease Obligations Debt and Finance Lease Obligations (Details) - USD ($) $ in Thousands		Feb. 07, 2019	Dec. 29, 2019	Dec. 30, 2018
Debt Instrument [Line Items]
Derivative settlement gain or loss		$ (12,600)
Debt and finance lease obligations			$ 1,168,029	$ 1,115,127
Current portion of long-term obligations	[1]		(430,862)	(201,686)
Long-term debt and finance lease obligations	[1]		737,167	913,441
Finance Lease Obligation
Debt Instrument [Line Items]
Debt and finance lease obligations			25,086	25,539
2023 Convertible Debt
Debt Instrument [Line Items]
Debt and finance lease obligations			695,748	548,076
2021 Convertible Debt
Debt Instrument [Line Items]
Debt and finance lease obligations			344,635	321,286
2020 Convertible Debt
Debt Instrument [Line Items]
Debt and finance lease obligations			55,997	173,533
Term Loan
Debt Instrument [Line Items]
Debt and finance lease obligations			19,296	18,979
Other Debt Obligations
Debt Instrument [Line Items]
Debt and finance lease obligations			6,615	9,953
Secured Debt
Debt Instrument [Line Items]
Asset based line of credit			$ 20,652	$ 17,761

[1] As of December 29, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end; and, therefore, the holders of the 2021 Notes may convert the notes during the succeeding quarterly period. Due to the ability of the holders of the 2021 Notes to convert the notes during this period, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivative were classified as current liabilities, and the fair value of the 2021 Notes Hedges were classified as current assets as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018. See Note 6 and Note 10.

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Leases Future Minimum Lease Payments - Prior to Adoption of ASC 842 (Details) $ in Thousands	Dec. 30, 2018 USD ($)
Leases [Abstract]
2019	$ 9,606
2020	7,498
2021	6,019
2022	4,433
2023	2,678
Thereafter	10,998
Total minimum payments	$ 41,232

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent, beginning balance	$ 932,459	$ 588,696	$ 686,864
Changes in foreign currency translation	(21,416)	(30,373)	41,751
Accumulated other comprehensive loss	(29,499)	(8,083)
Accumulated other comprehensive (loss) income
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent, beginning balance	(8,083)	22,290
Accumulated other comprehensive (loss) income | Accumulated Foreign Currency Adjustment Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stockholders' equity attributable to parent, beginning balance			(19,461)
Changes in foreign currency translation	(21,416)	(30,373)	41,751
Accumulated other comprehensive loss	$ (29,499)	$ (8,083)	$ 22,290

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Discontinued Operations

12 Months Ended

Dec. 29, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

For the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, our loss from discontinued operations, net of tax, totaled $22.1 million, $0.2 million, and $137.7 million, respectively. Cash used in discontinued operations totaled $52.6 million, $88.6 million, and $228.1 million for the years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. Our operating results from discontinued operations and cash used in discontinued operations during 2019, 2018 and 2017 were attributable primarily to litigation and claims expenses, net of insurance recoveries, associated with legacy Wright’s former OrthoRecon business as described in Note 17.

OrthoRecon Business

On January 9, 2014, legacy Wright completed the divestiture and sale of its OrthoRecon business to MicroPort. Pursuant to the terms of the agreement, the purchase price (as defined in the agreement) was approximately $283.0 million (including a working capital adjustment), which MicroPort paid in cash.

Certain liabilities associated with the OrthoRecon business, including product liability claims associated with hip and knee products sold by legacy Wright prior to the closing, were not assumed by MicroPort. Charges associated with these product liability claims, including legal defense, settlements and judgments, income associated with product liability insurance recoveries, and changes to any contingent liabilities associated with 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.

All current and historical operating results for the OrthoRecon business are reflected within discontinued operations in the consolidated financial statements. The following table summarizes the results of discontinued operations for the OrthoRecon business (in thousands):

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net sales	$	—		$	—		$	—
Selling, general and administrative	22,091			(746		)	135,235
(Loss) income from discontinued operations before income taxes	(22,091		)	746			(135,235		)
Provision (benefit) for income taxes	—			221			(1,707		)
Total (loss) income from discontinued operations, net of tax	$	(22,091	)	$	525		$	(133,528	)

Our loss from discontinued operations for the year ended December 29, 2019 and December 30, 2018 was net of $18.5 million in insurance recoveries recognized in 2019 and a $30.75 million insurance recovery recognized in 2018. See Note 17 for further discussion regarding our retained contingent liabilities associated with the OrthoRecon business.

During the fiscal year ended 2017, the majority of our loss from discontinued operations was the result of our retained metal-on-metal product liability claims. During the fiscal year ended December 31, 2017, we recognized charges, net of insurance proceeds, of $94.0 million within discontinued operations related to the retained metal-on-metal product liability claims associated with the OrthoRecon business (see Note 17 for additional discussion).

We will incur continuing cash outflows associated with legal defense costs and the ultimate resolution of these contingent liabilities, net of insurance proceeds, until these liabilities are resolved.

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Goodwill and Intangibles

12 Months Ended

Dec. 29, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles Assets

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill occurring during the fiscal years ended December 29, 2019 and December 30, 2018 are as follows (in thousands):

	U.S. Lower Extremities & Biologics		U.S. Upper Extremities			International Extremities & Biologics			Total
Balance at December 31, 2017	$	218,525	$	630,650		$	84,487		$	933,662
Goodwill associated with Cartiva acquisition	351,445		—			—			351,445
Goodwill adjustment associated with IMASCAP acquisition	—		(917		)	—			(917		)
Foreign currency translation	—		(1,883		)	(13,353		)	(15,236		)
Balance at December 30, 2018	$	569,970	$	627,850		$	71,134		$	1,268,954
Foreign currency translation	—		(1,924		)	(6,063		)	(7,987		)
Balance at December 29, 2019	$	569,970	$	625,926		$	65,071		$	1,260,967

Goodwill is recognized for the excess of the purchase price over the fair value of net assets of businesses acquired. Goodwill is required to be tested for impairment at least annually. As of October 1, 2019, we performed a qualitative analysis to test goodwill for impairment and determined that it is not more likely than not that the carrying value of our U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics reporting units exceeded their respective fair values, indicating that goodwill was not impaired.

On October 10, 2018, we completed the acquisition of Cartiva. As part of the purchase price allocation, we acquired $81.0 million of intangible assets related to completed technology, in-process research and development, and customer relationships and $351.4 million of goodwill. Of the $81.0 million of acquired intangible assets, $52.0 million was assigned to customer relationships (15 year life), $28.0 million was assigned to developed technology (7 year life), and $1.0 million was assigned to in-process research and development.

On December 14, 2017, we completed the acquisition of IMASCAP. As part of the preliminary purchase price allocation, we acquired $10.9 million of intangible assets related to completed technology and in-process research and development and $72.0 million of goodwill. Of the $10.9 million of acquired intangible assets, $5.6 million was assigned to developed technology (6 year life) and $5.3 million was assigned to in-process research and development. During 2018, we revised opening balances acquired as a result of the IMASCAP acquisition, primarily for accounts receivable; other current assets; accrued expenses and other current liabilities; and deferred tax liabilities which resulted in a $0.9 million decrease in the preliminary value of goodwill determined as of December 14, 2017. See Note 3 for additional discussion of these adjustments.

Following the December 2017 IMASCAP acquisition, foreign currency translation has been reported within the U.S. Upper Extremities segment. While the IMASCAP offices are located in France and the majority of their operations have a functional currency of the euro, the results of the IMASCAP business are managed by the U.S. Upper Extremities segment.

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

	December 29, 2019					December 30, 2018
	Cost			Accumulated amortization		Cost			Accumulated amortization
Indefinite life intangibles:
IPRD technology	$	6,238		$	—	$	6,262		$	—
Finite life intangibles:
Completed technology	172,111			72,140		174,596			55,114
Licenses	9,247			2,835		6,547			1,851
Customer relationships	181,094			41,389		179,605			30,935
Trademarks	14,002			11,834		14,048			11,564
Non-compete agreements	5,713			4,090		3,252			2,514
Other	2,022			757		764			764
Total finite life intangibles	384,189			$	133,045	378,812			$	102,742
Total intangibles	390,427					385,074
Less: Accumulated amortization	(133,045		)			(102,742		)
Intangible assets, net	$	257,382				$	282,332

Based on the total finite life intangible assets held at December 29, 2019, we expect amortization expense of approximately $31 million in 2020, $30 million in 2021, $30 million in 2022, $30 million in 2023, and $27 million in 2024.

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Leases (Tables)

12 Months Ended

Dec. 29, 2019

Leases [Abstract]

Schedule of Operating Lease Right-of-Use Assets

Our net ROU assets under operating leases are included within Other Assets on our consolidated balance sheet and include the following (in thousands):

	December 29, 2019
Buildings	$	17,331
Machinery and equipment	1,720
Furniture, fixtures and office equipment	943
	$	19,994

Schedule of Operating Lease Liabilities, Maturities

At December 29, 2019, the present value of the future minimum lease payments under operating lease obligations are included within Accrued expenses and other current liabilities and Other liabilities as follows (in thousands):

2020	$	7,420
2021	5,632
2022	3,878
2023	2,239
2024	1,356
Thereafter	4,036
Total minimum payments	24,561
Less amount representing interest	(3,806		)
Present value of minimum lease payments	20,755
Current portion	(6,608		)
Long-term portion	$	14,147

Schedule of Future Minimum Rental Payments for Operating Leases

Future minimum lease payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining lease terms of one year or more, were reported in our Annual Report on Form 10-K for the fiscal year ended December 30, 2018 as follows (in thousands), and included a total of $7.8 million for future lease payments to our 51%-owned subsidiary:

2019	$	9,606
2020	7,498
2021	6,019
2022	4,433
2023	2,678
Thereafter	10,998
Total minimum payments	$	41,232

Schedule of Finance Lease Assets

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

	December 29, 2019			December 30, 2018
Buildings	$	12,017		$	12,017
Machinery and equipment	30,733			24,331
Furniture, fixtures and office equipment	671			559
	43,421			36,907
Less: Accumulated depreciation	(16,726		)	(11,906		)
	$	26,695		$	25,001

Schedule of Finance Lease Liabilities, Maturities

Future minimum lease payments under finance lease obligations, together with the present value of the net minimum lease payments, are as follows (in thousands):

	December 29, 2019
2020	$	7,912
2021	6,166
2022	5,156
2023	3,337
2024	1,614
Thereafter	3,330
Total minimum payments	27,515
Less amount representing interest	(2,429		)
Present value of minimum lease payments	25,086
Current portion	(7,011		)
Long-term portion	$	18,075

Schedule of Lease Cost

Amounts recorded within our consolidated statement of operations for the fiscal year ended December 29, 2019 related to leased assets are as follows (in thousands):

	Fiscal year ended
	December 29, 2019
Lease cost
Finance lease cost:
Depreciation	$	5,688
Interest on lease liabilities	1,104
Operating lease cost	9,843
Short-term lease cost	128
Variable lease cost	500
Total lease cost	$	17,263
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	1,104
Operating cash flows from operating leases	$	9,247
Financing cash flows from finance leases	$	7,837
Weighted-average remaining lease term - finance leases	4.56
Weighted-average remaining lease term - operating leases	4.87
Weighted-average discount rate - finance leases	4.63		%
Weighted-average discount rate - operating leases	7.06		%

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Inventories (Tables)

12 Months Ended

Dec. 29, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following (in thousands):

	December 29, 2019		December 30, 2018
Raw materials	$	12,681	$	9,612
Work-in-process	27,528		26,839
Finished goods	158,165		144,239
	$	198,374	$	180,690

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 29, 2019

Accounting Policies [Abstract]

Principles of Consolidation

Principles of consolidation. The accompanying consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of estimates. The preparation of financial statements in conformity with US GAAP 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 revenue recognition, the determination of allowances for doubtful accounts and excess and obsolete inventories, accounting for business combinations and the evaluation of goodwill and long-lived assets, valuation of in-process research and development, product liability claims, product liability insurance recoveries and other litigation, income taxes, and share-based compensation.

Discontinued Operations

Discontinued operations. On January 9, 2014, pursuant to an Asset Purchase Agreement, dated as of June 18, 2013 (the MicroPort Agreement), by and among us and MicroPort, we completed the divestiture and sale of our business operations operating under our prior OrthoRecon operating segment (the OrthoRecon Business) to MicroPort. Pursuant to the terms of the MicroPort Agreement, the purchase price (as defined in the agreement) for the OrthoRecon Business was approximately $283.0 million (including a working capital adjustment), which MicroPort paid in cash.

All historical operating results for the OrthoRecon business are reflected within discontinued operations in the consolidated statements of operations. 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 Consolidated 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. Cash and cash equivalents include all cash balances and short-term investments with original maturities of three months or less. Any such investments are readily convertible into known amounts of cash, and are so near their maturity that they present insignificant risk of changes in value because of interest rate variation.

Inventory

Inventories. Our inventories are valued at the lower of cost or market on a 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. Historically, our excess and obsolete inventory reserve was based on both the current age of kit inventory as compared to its estimated life cycle and our forecasted product demand and production requirements for other inventory items for the next 36 months. During the quarter ended September 29, 2019, we changed our estimate of excess and obsolete inventory reserves to better reflect the future usage for inventory in excess of estimated three-year demand. The impact of this change in estimate was approximately $26 million. We reduce our inventory reserve and recognize an offset to cost of sales as the related inventory is sold based on an estimated inventory turnover period of 2.5 years.

Commitments and Contingencies

Product liability claims and related insurance recoveries and other litigation. We are involved in legal proceedings involving product liability claims as well as contract, patent protection, and other matters. See Note 17 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. These expenses are reflected in either continuing or discontinued operations depending on the product associated with the claim.

We record insurance recoveries from product liability insurance that is in force when they are realized or realizable, when we believe it is probable that the insurance carrier will settle the claim.

Property, Plant and Equipment

Property, plant and equipment. Our property, plant and equipment is stated at cost. Depreciation, which includes amortization of assets under finance 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 and building improvements	10	to	40	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	3	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.

Impairment or Disposal of Long-Lived Assets

Valuation of long-lived assets. Management periodically evaluates carrying values of long-lived assets, including property, plant and equipment and finite-lived 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 long-lived assets 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.

Goodwill and Intangible Assets

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 on October 1 each year. See Note 8 for discussion of our 2019 goodwill impairment analysis.

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 FASB ASC Section 360, Property, Plant and Equipment (FASB ASC 360). The weighted average amortization periods for our intangible assets are as follows:

Completed technology	10	years
Trademarks	5	years
Licenses	10	years
Customer relationships	17	years
Non-compete agreements	4	years
Other intangible assets	6	years

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts

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 and surgery centers. Our collection history has been favorable with minimal bad debts from these customers. 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.

Concentration Risk, Credit Risk

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. Collateral or other security is generally not required for accounts receivable.

Income Tax

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. See Note 12 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.

In December 2017, the United States enacted new legislation under the 2017 Tax Act. We recognized the income tax effects of the 2017 Tax Act in our 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts under a one-year measurement period. We finalized our accounting for the provisions of the 2017 Tax Act in the fourth quarter 2018 with no material impact on our financial statements.

During 2018, we have adopted ASU 2018-02, Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Income, issued in February 2018, allowing the reclassification of income tax effects of the 2017 Tax Act, referred to as “stranded tax effects” by FASB, from accumulated other comprehensive income (AOCI) to retained earnings. This adoption did not have a material impact on our financial statements.

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 statements of operations.

Revenue from Contract with Customer

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 United States and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the United States. We record revenues from sales to hospitals and surgery centers upon transfer of control of promised products in an amount that reflects the consideration we expect to receive in exchange for those products, which is generally when the product is surgically implanted in a patient.

We record revenues from sales to our stocking distributors at a point in time upon transfer of control of promised products to the distributor. Our stocking distributors, who sell the products to their customers, take control of the products and assume all risks of ownership upon transfer. Our stocking distributors are obligated to pay us within specified terms regardless of when, if ever, they sell the products. In general, our stocking 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 was deferred and not yet recognized as revenue as of December 29, 2019 and December 30, 2018.

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. Shipping and handling costs within selling, general and administrative expenses totaled $53.1 million, $52.0 million, and $49.4 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. These amounts include instrument depreciation which totaled $30.6 million, $28.4 million, and $27.1 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. All other shipping and handling costs are included in cost of sales.

Research and Development Expense

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

Foreign Currency Transactions and Translations

Foreign currency translation. The financial statements of our 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 loss in shareholders’ 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 statements of operations.

Comprehensive Income

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 loss and our comprehensive loss is attributable to foreign currency translation.

Share-based Compensation

Share-based compensation. We account for share-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, share-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 share-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. The determination of the fair value of performance-based share-based payment awards, such as performance share units, is based on the estimated achievement of the established performance criteria on the date of grant and updated at the end of each reporting period until the performance period ends. Share-based compensation expense is only recognized for performance share units that we expect to vest, which we estimate based upon an assessment of the probability that the performance criteria will be achieved.

Derivatives

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.

During 2017, we employed a derivative program using foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that were denominated in foreign currencies. These forward contracts were expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts were not designated as hedging instruments under FASB ASC 815. Accordingly, the changes in the fair value and the settlement of the contracts were recognized in the period incurred in the accompanying consolidated statements of operations. We discontinued our foreign currency forward contracts derivative program in 2018.

We recorded a net loss of approximately $4.6 million on our foreign currency contracts for the fiscal year ended December 31, 2017. These losses substantially offset translation gains recorded on our intercompany receivable and payable balances, and are also included in “Other expense, net.”

On February 13, 2015, May 20, 2016, and June 28, 2018, we issued the 2020 Notes, 2021 Notes, and 2023 Notes (collectively, the Notes), respectively, as defined and described in Note 10. The 2020 Notes Conversion Derivatives, 2021 Notes Conversion Derivatives, and 2023 Notes Conversion Derivatives each as defined and described in Note 6, require bifurcation from the 2020 Notes, 2021 Notes, and 2023 Notes in accordance with ASC Topic 815, and are accounted for as derivative liabilities. We also entered into 2020, 2021, and 2023 Notes Hedges, as defined and described in Note 6, in connection with the issuance of the 2020, 2021, and 2023 Notes.  The 2020, 2021, and 2023 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 2020, 2021, and 2023 Notes in excess of the principal

amount of converted notes if our ordinary share price exceeds the conversion price. The 2020, 2021, and 2023 Notes Hedges are accounted for as derivative assets in accordance with ASC Topic 815.

New Accounting Pronouncements

Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 606). Accounting Standards Codification (ASC) 606 prescribes a single common revenue standard that replaces most existing US GAAP revenue recognition guidance. ASC 606 outlines a five-step model, under which we recognize revenue as performance obligations within a customer contract are satisfied. ASC 606 is intended to provide more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. We adopted ASC 606 during 2018. Revenue is recognized at a point in time, generally upon surgical implantation or shipment of products to distributors. Therefore, adoption of ASC 606 did not have a material effect on our consolidated financial statements except for the additional disclosures included within Note 19.

On February 25, 2016, the FASB issued ASU 2016-02, Leases, and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 842). ASC 842 introduced a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in FASB ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). Furthermore, ASC 842 addresses other concerns related to the current leases model. We adopted ASC 842 during 2019 using the hindsight practical expedient, the practical expedient for short-term leases, and the practical expedient package which primarily limited the need for reassessing lease classification on existing leases and allowed us to issue our financial statements showing comparative lease disclosures under previous GAAP. See additional details related to the impact of this adoption in Note 9.

On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments and has subsequently issued several supplemental and/or clarifying ASUs. The new standard adds an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU will be effective for us beginning in fiscal year 2020. We do not believe this guidance will have a significant impact on our consolidated financial statements.

On August 29, 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) to provide guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40, Internal Use Software, to determine which implementation costs should be capitalized in such a CCA. The ASU will be effective for us beginning in fiscal year 2020. We do not believe this guidance will have a significant impact on our consolidated financial statements.

XML

Document and Entity Information Document - USD ($)
$ in Billions

12 Months Ended

Dec. 29, 2019

Feb. 20, 2020

Jun. 30, 2019

Cover page.

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 29, 2019

Document Transition Report

false

Entity File Number

001-35065

Entity Registrant Name

WRIGHT MEDICAL GROUP N.V.

Entity Incorporation, State or Country Code

P7

Entity Tax Identification Number

98-0509600

Entity Address, Address Line One

Prins Bernhardplein 200

Entity Address, Address Line Two

1097 JB

Entity Address, City or Town

Amsterdam,

Entity Address, Country

NL

Entity Address, Postal Zip Code

None

City Area Code

20

Local Phone Number

521 4777

Title of 12(b) Security

Ordinary shares, par value €0.03 per share

Trading Symbol

WMGI

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Large Accelerated Filer

Entity Small Business

false

Entity Emerging Growth Company

false

Entity Shell Company

false

Entity Public Float

$ 3.7

Entity Common Stock, Shares Outstanding

128,733,780

Documents Incorporated by Reference

Part III of this Annual Report on Form 10-K incorporates by reference certain portions of the registrant’s definitive proxy statement for its Extraordinary General Meeting of Shareholders (“Proxy Statement”) anticipated to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this report. Except as expressly incorporated by reference, the registrant’s Proxy Statement shall not be deemed to be part of this report.

Entity Central Index Key

0001492658

Current Fiscal Year End Date

--12-29

Document Fiscal Year Focus

2019

Document Fiscal Period Focus

FY

Amendment Flag

false

XML

Inventories (Details) - USD ($) $ in Thousands	3 Months Ended				12 Months Ended
	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Dec. 29, 2019	Dec. 30, 2018	Oct. 10, 2018
Inventory Disclosure [Abstract]
Raw materials				$ 9,612	$ 12,681	$ 9,612
Work-in-process				26,839	27,528	26,839
Finished goods				144,239	158,165	144,239
Total Inventory				180,690	198,374	180,690
Cartiva, Inc.
Business Acquisition [Line Items]
Inventory fair value step up				1,000		1,000	$ 1,400
Inventory step up amortization expense	$ 400	$ 400	$ 400	$ 400	$ 1,000	$ 400

XML

Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Share-based compensation expense	$ 32,600	$ 26,100	$ 19,400
Cost of sales
Share-based compensation expense	600	585	565
Selling, general and administrative
Share-based compensation expense	29,185	23,608	17,705
Research and development
Share-based compensation expense	$ 2,782	$ 1,927	$ 1,123

XML

Summary of Significant Accounting Policies Amortization Period (Details)	12 Months Ended
	Dec. 29, 2019
Completed technology
Finite-Lived Intangible Assets [Line Items]
Useful life of intangible assets	10 years
Trademarks
Finite-Lived Intangible Assets [Line Items]
Useful life of intangible assets	5 years
Licenses
Finite-Lived Intangible Assets [Line Items]
Useful life of intangible assets	10 years
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Useful life of intangible assets	17 years
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Useful life of intangible assets	4 years
Other intangible assets
Finite-Lived Intangible Assets [Line Items]
Useful life of intangible assets	6 years

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional paid-in capital	Accumulated other comprehensive (loss) income	Accumulated deficit	IMASCAP SAS	IMASCAP SAS Common Stock	IMASCAP SAS Additional paid-in capital
Common stock, shares outstanding, beginning balance (in shares) at Dec. 25, 2016		103,400,995
Stockholders' equity attributable to parent, beginning balance at Dec. 25, 2016	$ 686,864	$ 3,815	$ 1,908,749		$ (1,206,239)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(202,598)				(202,598)
Foreign currency translation	41,751
Issuances of ordinary shares (in shares)		1,352,549					661,753
Issuances of ordinary shares	27,551	$ 45	27,506			$ 15,643	$ 23	$ 15,620
Vesting of restricted stock units (in shares)		392,127
Vesting of restricted stock units		$ 13	(13)
Stock-based compensation	19,485		19,485
Common stock, shares outstanding, ending balance (in shares) at Dec. 31, 2017		105,807,424
Stockholders' equity attributable to parent, ending balance at Dec. 31, 2017	588,696	$ 3,896	1,971,347	$ 22,290	(1,408,837)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(169,505)				(169,505)
Foreign currency translation	(30,373)
Issuances of ordinary shares (in shares)		1,043,685
Issuances of ordinary shares	21,618	$ 36	21,582
Vesting of restricted stock units (in shares)		455,710
Vesting of restricted stock units		$ 16	(16)
Stock-based compensation	26,039		26,039
Stock issued during period (in shares)		18,248,932
Stock issued during period	423,028	$ 641	422,387
Issuance of stock warrants, net of repurchases and equity issuance costs	$ 72,956		72,956
Common stock, shares outstanding, ending balance (in shares) at Dec. 30, 2018	125,555,751	125,555,751
Stockholders' equity attributable to parent, ending balance at Dec. 30, 2018	$ 932,459	$ 4,589	2,514,295	(8,083)	(1,578,342)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(114,225)				(114,225)
Foreign currency translation	(21,416)
Issuances of ordinary shares (in shares)		2,469,729
Issuances of ordinary shares	52,076	$ 82	51,994
Vesting of restricted stock units (in shares)		588,546
Vesting of restricted stock units		$ 20	(20)
Stock-based compensation	32,836		32,836
Cumulative impact of lease accounting adoption (Note 9)	229				229
Issuance of stock warrants, net of repurchases and equity issuance costs	$ 9,834		9,834
Common stock, shares outstanding, ending balance (in shares) at Dec. 29, 2019	128,614,026	128,614,026
Stockholders' equity attributable to parent, ending balance at Dec. 29, 2019	$ 891,793	$ 4,691	$ 2,608,939	$ (29,499)	$ (1,692,338)

XML

Acquisitions Pro Forma (Details) - Cartiva, Inc. - USD ($) $ in Thousands	12 Months Ended
	Dec. 30, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Net sales	$ 861,475	$ 769,111
Net loss from continuing operations	$ (179,800)	$ (68,722)

XML

Income Taxes Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards, expiration period	5 years
Valuation allowance	$ (423,037)	$ (400,171)
Valuation allowance, deferred tax asset, increase (decrease), amount	22,800
Unrecognized tax benefits	4,511	$ 4,610	$ 6,025
Unrecognized tax benefits that would impact effective tax rate	1,300
Unrecognized tax benefits, income tax penalties and interest accrued	100
US Federal Operating Loss
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	1,100,000
US Federal Operating Loss - do not expire
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	172,500
US Federal Operating Loss -expiring
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	964,800
US Federal Operating Loss -expiring in 5 years
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	38,700
US State Operating loss
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	1,100,000
US State Operating loss - do not expire
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	21,500
US State Operating loss - expiring
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	1,100,000
General Business Tax Credit Carryforward
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	16,100
Foreign Operating Loss
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	187,800
Foreign operating loss - do not expire
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	90,800
Foreign operating losses that will expire
Tax Credit Carryforward [Line Items]
Operating loss carryforwards	$ 97,000

XML

Components of Convertible Notes (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018	May 20, 2016	Feb. 13, 2015
Debt Instrument [Line Items]
Debt and finance lease obligations	$ 1,168,029	$ 1,115,127
2023 Convertible Debt
Debt Instrument [Line Items]
Long-term debt, gross	814,556	675,000
Unamortized debt discount	(107,916)	(114,554)
Unamortized debt issuance costs	(10,892)	(12,370)
Debt and finance lease obligations	695,748	548,076
2021 Convertible Debt
Debt Instrument [Line Items]
Long-term debt, gross	395,000	395,000	$ 395,000
Unamortized debt discount	(47,405)	(69,382)	(117,200)
Unamortized debt issuance costs	(2,960)	(4,332)	$ (7,300)
Debt and finance lease obligations	344,635	321,286
2020 Convertible Debt
Debt Instrument [Line Items]
Long-term debt, gross	56,455	186,589
Unamortized debt discount	(408)	(11,642)		$ (117,200)
Unamortized debt issuance costs	(50)	(1,414)
Debt and finance lease obligations	$ 55,997	$ 173,533

XML

Leases ROU Assets - Finance Leases (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Lessee, Lease, Description [Line Items]
Finance lease, right-of-use asset, before accumulated amortization	$ 43,421
Capital leased assets, gross		$ 36,907
Less: Accumulated depreciation	(16,726)
Less: Accumulated depreciation		(11,906)
Finance lease, right-of-use asset, after accumulated amortization	26,695
Capital leased assets, net		25,001
Buildings
Lessee, Lease, Description [Line Items]
Finance lease, right-of-use asset, before accumulated amortization	12,017
Capital leased assets, gross		12,017
Machinery and equipment
Lessee, Lease, Description [Line Items]
Finance lease, right-of-use asset, before accumulated amortization	30,733
Capital leased assets, gross		24,331
Furniture, fixtures and office equipment
Lessee, Lease, Description [Line Items]
Finance lease, right-of-use asset, before accumulated amortization	$ 671
Capital leased assets, gross		$ 559

XML

Income Taxes Income Before Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
U.S.	$ (69,903)	$ (144,987)	$ (56,808)
Foreign	(9,263)	(24,853)	(43,097)
Loss from continuing operations before income taxes	$ (79,166)	$ (169,840)	$ (99,905)

XML

Acquisitions

12 Months Ended

Dec. 29, 2019

Business Combinations [Abstract]

Acquisitions

Acquisitions

Cartiva

On October 10, 2018, we completed the acquisition of Cartiva, an orthopaedic medical device company focused on treatment of osteoarthritis of the great toe. Under the terms of the agreement with Cartiva, we acquired 100% of the outstanding equity on a fully diluted basis of Cartiva for a total price of $435.0 million in cash, subject to certain adjustments which totaled $1.1 million, as set forth in the purchase agreement, $0.7 million of which was refunded in 2019. We funded the acquisition with the proceeds from a registered underwritten public offering of 18.2 million ordinary shares which resulted in net proceeds of $423.0 million. See Note 14 for additional details related to the public offering. This acquisition added a differentiated PMA approved technology for a high-volume foot and ankle procedure and further accelerated growth opportunities in our global extremities business. The results of operations of Cartiva is included in our consolidated financial statements for all periods after completion of the acquisition.

The acquired business contributed net sales of $29.8 million and operating income of $5.8 million to our consolidated results of operations for the fiscal year ended December 29, 2019, which included $1.0 million of inventory step-up amortization, $2.6

million of transition costs, and $9.1 million of intangible asset amortization. The acquired business contributed net sales of $9.5 million and operating income of $2.4 million to our consolidated results of operations for the fiscal year ended December 30, 2018, which included $0.4 million of inventory step-up amortization and $1.9 million of intangible asset amortization but excluded the acquisition-related transaction costs discussed below.

Cartiva Transaction Related Costs

In conjunction with the Cartiva transaction, we incurred approximately $6.5 million of acquisition-related transaction costs during the fiscal year ended December 30, 2018, which was recognized within selling, general and administrative expense in our consolidated statements of operations. These expenses primarily related to advisory fees, legal fees, and accounting and tax professional fees.

Purchase Consideration and Net Assets Acquired

The following presents the allocation of the purchase consideration to the assets acquired and liabilities assumed on October 10, 2018 (in thousands):

Cash and cash equivalents	$	309
Accounts receivable	4,352
Inventories	2,686
Other current assets	486
Property, plant and equipment	1,446
Intangible assets	81,000
Total assets acquired	90,279
Current liabilities	(4,226		)
Deferred income taxes	(3,622		)
Total liabilities assumed	(7,848		)
Net assets acquired	$	82,431
Goodwill	351,445
Total purchase consideration	$	433,876

The purchase consideration was allocated to the net assets acquired based on their estimated fair values at the acquisition date. The fair values were based on management’s analysis, including work performed by third-party valuation specialists.

Trade receivables and payables, as well as certain other current assets and property, plant and equipment, were valued at the existing carrying values as they approximated the fair value of those items at the acquisition date, based on management’s judgments and estimates. Trade receivables included gross contractual amounts of $5.8 million and our best estimate of $1.4 million which represented contractual cash flows not expected to be collected at the acquisition date. Inventory was recorded at estimated selling price less costs of disposal and a reasonable selling profit. The resulting inventory step-up adjustment was recognized in cost of sales as the related inventory was sold.

In determining the fair value of intangibles, we used an income method which was based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations included a consideration of other marketplace participants, the amount and timing of future cash flows (including expected growth rates and profitability), technology life cycles, customer attrition rates, and the discount rate applied to the cash flows.

Of the $81.0 million of acquired intangible assets, $52.0 million was assigned to customer relationships (15 year life), $28.0 million was assigned to developed technology (7 year life), and $1.0 million was assigned to in-process research and development.

The excess of the cost of the acquisition over the fair value of the net assets acquired was recorded as goodwill. The goodwill was primarily attributable to strategic opportunities that arose from the acquisition of Cartiva. The goodwill was not deductible for tax purposes.

Pro Forma Condensed Combined Financial Information (Unaudited)

The following unaudited pro forma combined financial information summarizes the results of operations for the periods indicated as if the Cartiva acquisition had been completed as of December 26, 2016, the first day of the 2017 fiscal year.

Pro forma information reflects adjustments that are expected to have a continuing impact on our results of operations and are directly attributable to the acquisition. The unaudited pro forma results include adjustments to reflect the amortization of the inventory step-up and the incremental intangible asset amortization to be incurred based on the values of each identifiable intangible asset. The pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred as of December 26, 2016 or that may be obtained in the future, and do not reflect future synergies, integration costs, or other such costs or savings.

(in thousands)	Fiscal year ended
	December 30, 2018			December 31, 2017
Net sales	$	861,475		$	769,111
Net loss from continuing operations	(179,800		)	(68,722		)

IMASCAP

On December 14, 2017, we completed the acquisition of IMASCAP, a leader in the development of software-based solutions for preoperative planning of shoulder replacement surgery. The intent of this transaction was to ensure exclusive access to breakthrough software enabling technology and patents to further differentiate our product portfolio and to further accelerate growth opportunities in our global extremities business. Under the terms of the agreement with IMASCAP, we acquired 100% of IMASCAP’s outstanding equity on a fully diluted basis for an initial payment of €52.9 million, or approximately $62.3 million, consisting of approximately €39.7 million, or approximately $46.7 million, in cash and approximately €13.2 million, or approximately $15.6 million, representing 661,753 Wright ordinary shares, payable at closing. Additionally, the purchase price included an estimated €15.1 million, or approximately $17.8 million, of contingent consideration related to the achievement of certain technical milestones and sales earnouts. The technical milestones involve the development and approval of a next generation reverse shoulder implant system and new software modules. The sales earnouts relate to certain guides and the next generation reverse shoulder implant system.

Purchase Consideration and Net Assets Acquired

The following presents the allocation of the purchase consideration to the assets acquired and liabilities assumed on December 14, 2017 (in thousands):

Cash and cash equivalents	$	2,559
Accounts receivable	102
Other current assets	925
Property, plant and equipment	20
Intangible assets	10,865
Total assets acquired	14,471
Current liabilities	(2,173		)
Long-term debt	(886		)
Deferred income taxes	(2,343		)
Total liabilities assumed	(5,402		)
Net assets acquired	$	9,069
Goodwill	71,064
Total purchase consideration	$	80,133

The purchase consideration was allocated to the net assets acquired based on their estimated fair values at the acquisition date. The fair values were based on management’s analysis, including work performed by third-party valuation specialists.

Operating assets and liabilities were valued at their existing carrying values as they approximated the fair value of those items at the acquisition date, based on management’s judgments and estimates.

In determining the fair value of intangibles, we used an income method which was based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations included a consideration of other marketplace participants, the amount and timing of future cash flows (including expected growth rates and profitability), technology life cycles, and the discount rate applied to the cash flows.

Of the $10.9 million of acquired intangible assets, $5.6 million was assigned to developed technology (6 year life) and $5.3 million was assigned to in-process research and development.

The excess of the cost of the acquisition over the fair value of the net assets acquired was recorded as goodwill. The goodwill was primarily attributable to strategic opportunities that arose from the acquisition of IMASCAP. The goodwill was not deductible for tax purposes.

During 2018, we revised opening balances acquired as a result of the IMASCAP acquisition, primarily for accounts receivable; other current assets; accrued expenses and other current liabilities; and deferred tax liabilities which resulted in a $0.9 million decrease in the preliminary value of goodwill determined as of December 14, 2017.

XML

Property, Plant and Equipment

12 Months Ended

Dec. 29, 2019

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 29, 2019			December 30, 2018
Land and land improvements	$	2,154		$	2,127
Buildings	60,205			43,087
Machinery and equipment	102,014			82,445
Furniture, fixtures and office equipment	185,145			161,614
Construction in progress	17,259			14,113
Surgical instruments	281,541			230,980
	648,318			534,366
Less: Accumulated depreciation	(396,396		)	(309,437		)
	$	251,922		$	224,929

XML

Derivatives and Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 29, 2019

Fair Value Disclosures [Abstract]

Schedule of Derivative Assets at Fair Value

The following table summarizes the fair values and the presentation in our consolidated balance sheets (in thousands) of our Notes Hedges and our Notes Conversion Derivatives:

	December 29, 2019			December 30, 2018
	Location on consolidated balance sheet	Amount		Location on consolidated balance sheet	Amount
2023 Notes Hedges	Other assets	$	39,240	Other assets	$	115,923
2023 Notes Conversion Derivative	Other liabilities	$	31,555	Other liabilities	$	116,833
2021 Notes Hedges	Other current assets	$	183,437	Other assets	$	188,301
2021 Notes Conversion Derivative	Accrued expenses and other current liabilities	$	179,478	Other liabilities	$	187,539
2020 Notes Hedges	Other current assets	$	1,969	Other current assets	$	17,822
2020 Notes Conversion Derivative	Accrued expenses and other current liabilities	$	1,666	Accrued expenses and other current liabilities	$	17,386

Derivative Instruments, Gain (Loss)

The following table summarizes the net gain (loss) on changes in fair value (in thousands) related to the Notes Hedges and Notes Conversion Derivatives:

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
2023 Notes Hedges	$	(106,827	)	$	(25,355	)	$	—
2023 Notes Conversion Derivative	114,153			7,792			—
2021 Notes Hedges	(4,864		)	61,238			(32,032		)
2021 Notes Conversion Derivative	8,061			(61,391		)	35,453
2020 Notes Hedges	996			7,342			(32,199		)
2020 Notes Conversion Derivative	(557		)	(28,897		)	33,626
Net gain (loss) on changes in fair value	$	10,962		$	(39,271	)	$	4,848

Fair Value Measurement Inputs and Valuation Techniques

The following assumptions were used in the fair market valuations as of December 29, 2019:

	2020 Notes Conversion Derivative	2020 Notes Hedge	2021 Notes Conversion Derivative	2021 Notes Hedge	2023 Notes Conversion Derivative	2023 Notes Hedge
Black Stock Volatility (1)	14.92%	14.92%	21.89%	21.89%	9.99%	9.99%
Credit Spread for Wright (2)	0.83%	N/A	0.83%	N/A	0.42%	N/A
Credit Spread for Deutsche Bank AG (3)	N/A	0.27%	N/A	N/A	N/A	0.49%
Credit Spread for Wells Fargo Securities, LLC (3)	N/A	0.12%	N/A	N/A	N/A	N/A
Credit Spread for JPMorgan Chase Bank (3)	N/A	0.13%	N/A	0.19%	N/A	0.22%
Credit Spread for Bank of America (3)	N/A	N/A	N/A	0.19%	N/A	0.21%

(1) Volatility selected based on historical and implied volatility of ordinary shares of Wright Medical Group N.V.

(2) Credit spread implied from traded price.

(3)

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

Fair Value Financial Instruments

The following tables summarize 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)
December 29, 2019
Assets
Cash and cash equivalents	$	166,856	$	166,856	$	—	$	—
2020 Notes Hedges	1,969		—		—		1,969
2021 Notes Hedges	183,437		—		—		183,437
2023 Notes Hedges	39,240		—		—		39,240
Total	$	391,502	$	166,856	$	—	$	224,646
Liabilities
2020 Notes Conversion Derivative	$	1,666	$	—	$	—	$	1,666
2021 Notes Conversion Derivative	179,478		—		—		179,478
2023 Notes Conversion Derivative	31,555		—		—		31,555
Contingent consideration	28,077		—		—		28,077
Total	$	240,776	$	—	$	—	$	240,776

	Total		Quoted prices in active markets (Level 1)		Prices with other observable inputs (Level 2)		Prices with unobservable inputs (Level 3)
December 30, 2018
Assets
Cash and cash equivalents	$	191,351	$	191,351	$	—	$	—
2020 Notes Hedges	17,822		—		—		17,822
2021 Notes Hedges	188,301		—		—		188,301
2023 Notes Hedges	115,923		—		—		115,923
Total	$	513,397	$	191,351	$	—	$	322,046
Liabilities
2020 Notes Conversion Derivative	$	17,386	$	—	$	—	$	17,386
2021 Notes Conversion Derivative	187,539		—		—		187,539
2023 Notes Conversion Derivative	116,833		—		—		116,833
Contingent consideration	19,248		—		—		19,248
Contingent consideration (CVRs)	420		420		—		—
Total	$	341,426	$	420	$	—	$	341,006

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

	Balance at December 30, 2018			Additions	Transfers into Level 3	Gain/(loss) on fair value adjustments included in earnings		Gain/(loss) on issuance/settlement included in earnings		Settlements		Currency	Balance at December 29, 2019
2020 Notes Hedges	$	17,822		—	—	996		—		(16,849	)	—	$	1,969
2020 Notes Conversion Derivative	$	(17,386	)	—	—	(557	)	16,277		—		—	$	(1,666	)
2021 Notes Hedges	$	188,301		—	—	(4,864	)	—		—		—	$	183,437
2021 Notes Conversion Derivative	$	(187,539	)	—	—	8,061		—		—		—	$	(179,478	)
2023 Notes Hedges	$	115,923		30,144	—	(106,827	)	—		—		—	$	39,240
2023 Notes Conversion Derivative	$	(116,833	)	—	—	114,153		(28,875	)	—		—	$	(31,555	)
Contingent consideration	$	(19,248	)	—	—	(9,532	)	—		207		496	$	(28,077	)

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 29, 2019

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives of Property, Plant and Equipment

Property, plant and equipment. Our property, plant and equipment is stated at cost. Depreciation, which includes amortization of assets under finance 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 and building improvements	10	to	40	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	3	to	14	years
Surgical instruments			6	years

Weighted Average Amortization Periods of Intangible Assets

The weighted average amortization periods for our intangible assets are as follows:

Completed technology	10	years
Trademarks	5	years
Licenses	10	years
Customer relationships	17	years
Non-compete agreements	4	years
Other intangible assets	6	years

Schedule of Cash Flow, Supplemental Disclosures

Supplemental cash flow information. Cash paid for interest and income taxes was as follows (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Interest	$	28,523	$	30,552	$	24,641
Income taxes	$	6,084	$	6,254	$	7,359

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Debt and Finance Lease Obligations (Tables)

12 Months Ended

Dec. 29, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Debt and finance lease obligations consist of the following (in thousands):

	Maturity by fiscal year	December 29, 2019			December 30, 2018
Finance lease obligations (Note 9)	2020-2026	$	25,086		$	25,539
Convertible Notes
1.625% Notes	2023	695,748			548,076
2.25% Notes 1	2021	344,635			321,286
2.0% Notes 2	2020	55,997			173,533
Term loan facility	2021	19,296			18,979
Asset-based line of credit 3	2021	20,652			17,761
Other debt	2020-2024	6,615			9,953
		1,168,029			1,115,127
Less: Current portion 1, 2, 3		(430,862		)	(201,686		)
Long-term debt and finance lease obligations (Note 9)		$	737,167		$	913,441

_______________________

¹  As of December 29, 2019, the sale price condition (as defined below) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018.

²  The holders of the 2020 Notes may convert their notes at any time on or after August 15, 2019. Due to the ability of the holders of the 2020 Notes to convert their notes within the next year, the carrying value of the 2020 Notes was classified as a current liability as of December 30, 2018. The 2020 Notes were classified as a current liability as of December 29, 2019 as they matured on February 15, 2020.

³ 

We have reflected this debt as a current liability on our consolidated balance sheets as of December 29, 2019 and December 30, 2018, as required by US GAAP due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances as described below.

Convertible Debt

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

	December 29, 2019			December 30, 2018
Principal amount of 2023 Notes	$	814,556		$	675,000
Unamortized debt discount	(107,916		)	(114,554		)
Unamortized debt issuance costs	(10,892		)	(12,370		)
Net carrying amount of 2023 Notes	$	695,748		$	548,076
Principal amount of 2021 Notes	$	395,000		$	395,000
Unamortized debt discount	(47,405		)	(69,382		)
Unamortized debt issuance costs	(2,960		)	(4,332		)
Net carrying amount of 2021 Notes	$	344,635		$	321,286
Principal amount of 2020 Notes	$	56,455		$	186,589
Unamortized debt discount	(408		)	(11,642		)
Unamortized debt issuance costs	(50		)	(1,414		)
Net carrying amount of 2020 Notes	$	55,997		$	173,533

Components of 2020 Convertible Debt

The terms of conversion are set forth below:

	2020 Notes		2021 Notes		2023 Notes
Conversion rate	33.39487		46.8165		29.9679
Conversion price	$	29.94	$	21.36	$	33.37
Early Conversion date	August 15, 2019		May 15, 2021		December 15, 2022
Maturity date	February 15, 2020		November 15, 2021		June 15, 2023

The Warrants are expected to be net-share settled and exercisable over a certain trading period after the Convertible Notes mature as detailed below:

	2020 Notes	2021 Notes	2023 Notes
Exercisable period	200 trading day period beginning on May 15, 2020	100 trading day period beginning on February 15, 2022	120 trading day period beginning on September 15, 2023

Interest Income and Interest Expense Disclosure

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
2023 Notes	$	23,522	$	10,071	$	—
2021 Notes	21,977		19,950		18,110
2020 Notes	3,804		19,165		27,331

The following table summarizes the interest expense related to the amortization of the deferred financing costs (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
2023 Notes	$	2,381	$	1,148	$	—
2021 Notes	1,372		1,284		1,131
2020 Notes	462		2,333		3,320

Schedule of Maturities of Long-term Debt

Aggregate annual maturities of our current and long-term obligations at December 29, 2019, excluding finance lease obligations, are as follows (in thousands):

2020 1, 2	$	474,702
2021	21,423
2022	1,511
2023	814,637
2024	—
Thereafter	1,005
	$	1,313,278

_______________________

¹  The 2021 Notes will mature on November 15, 2021 unless earlier converted or repurchased. As of December 29, 2019, the sale price condition (as defined above) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019 and the gross amount of $395.0 million is included in the 2020 maturity total above.

² 

All outstanding loans under the ABL Facility will be due and payable in full on December 23, 2021 or earlier under certain specified circumstances as previously described. The 2020 total above includes $20.7 million in borrowings outstanding under the ABL Facility as this debt is reflected as a current liability on our consolidated balance sheet as of December 29, 2019 due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances.

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Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands			3 Months Ended								12 Months Ended
	Jun. 28, 2018	May 08, 2018	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019		Dec. 30, 2018		Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]
Net sales			$ 248,605	$ 212,434	$ 229,734	$ 230,127	$ 238,147	$ 194,106	$ 205,400	$ 198,537	$ 920,900		$ 836,190		$ 744,989
Cost of sales			49,545	44,441	48,338	46,317	49,149	44,307	45,558	41,139	188,641	[1]	180,153	[1]	160,947	[2]
Gross profit			199,060	167,993	181,396	183,810	188,998	149,799	159,842	157,398	732,259		656,037		584,042
Selling, general and administrative			156,468	152,780	152,112	153,306	160,664	139,223	140,826	137,248	614,666	[1]	577,961	[1]	525,222	[2]
Research and development			20,312	18,045	18,756	16,972	16,749	13,829	14,665	13,899	74,085	[1]	59,142	[1]	50,115	[2]
Amortization of intangible assets			8,164	8,308	7,862	7,587	7,699	5,881	6,009	7,141	31,921		26,730		28,396
Total operating expenses			184,944	179,133	178,730	177,865	185,112	158,933	161,500	158,288	720,672		663,833		603,733
Operating income (loss)			14,116	(11,140)	2,666	5,945	3,886	(9,134)	(1,658)	(890)	11,587		(7,796)		(19,691)
Net loss from continuing operations, net of tax			(6,746)	(36,200)	(18,932)	(30,256)	(22,947)	(35,829)	(90,621)	(19,907)	(92,134)		(169,304)		(64,937)
(Loss) income from discontinued operations, net of tax			(9,277)	(7,589)	1,120	(6,345)	(10,821)	(6,696)	22,923	(5,607)	(22,091)		(201)		(137,661)
Net loss			$ (16,023)	$ (43,789)	$ (17,812)	$ (36,601)	$ (33,768)	$ (42,525)	$ (67,698)	$ (25,514)	$ (114,225)		$ (169,505)		$ (202,598)
Net loss from continuing operations per share - basic and diluted (in usd per share)			$ (0.05)	$ (0.29)	$ (0.15)	$ (0.24)	$ (0.18)	$ (0.32)	$ (0.85)	$ (0.19)	$ (0.73)		$ (1.50)		$ (0.62)
Net loss per share - basic and diluted (in usd per share)			$ (0.13)	$ (0.35)	$ (0.14)	$ (0.29)	$ (0.27)	$ (0.38)	$ (0.64)	$ (0.24)	$ (0.90)		$ (1.51)		$ (1.94)
Weighted-average number of ordinary shares outstanding - basic and diluted (in shares)			127,557	126,767	126,267	125,812	125,323	113,043	106,095	105,904	126,601		112,592		104,531
Quarterly Financial Information [Line Items]
Transaction costs			$ 4,700	$ 600	$ 600	$ 400	$ 7,800	$ 2,000	$ 1,300	$ 900
Non-cash asset impairment				5,600							$ 5,597		$ 0		$ 0
Amortization of debt discount			12,600	12,300	12,100	12,300	12,600	12,300	12,300	12,000
Non-cash adjustment to derivative fair value			(10,100)	900	(800)	(1,000)	1,600	200	32,900	1,700	(10,962)		35,934		(4,797)
Non-cash foreign currency translation charges			800	(700)	0	(300)	300	200	1,900	800
Fair value, liability, gain (loss)			6,600	900	1,700	400	700	300	400	400
Mark-to-market adjustment for CVRs											(420)		140		5,320
Tax provision, change in tax rates, deferred intercompany transaction			2,300	2,600	2,600	2,600
Valuation allowance			$ 423,037				400,171				423,037		400,171
Proceeds from legal settlements													30,750
Provision (benefit) for income taxes							3,800	2,200	(6,200)
Cartiva, Inc.
Quarterly Financial Information Disclosure [Abstract]
Net sales											29,800		9,500
Amortization of intangible assets											9,100		1,900
Operating income (loss)											5,800		2,400
Quarterly Financial Information [Line Items]
Inventory step up amortization expense				$ 400	$ 400	400	400				1,000		400
Valuation allowance							3,600						3,600
Insurance Carrier
Quarterly Financial Information [Line Items]
Proceeds from legal settlements		$ 30,750
SEC Schedule, 12-09, Valuation Allowance, Deferred Tax Asset
Quarterly Financial Information [Line Items]
Valuation allowance							2,700						2,700
Contingent Value Rights | Continuing Operations
Quarterly Financial Information [Line Items]
Mark-to-market adjustment for CVRs						(400)	$ 3,200	$ 3,400	2,500	$ 3,900
2020 Convertible Debt
Quarterly Financial Information [Line Items]
Amortization of debt discount											$ 3,804		19,165		$ 27,331
Write off, deferred debt issuance costs	$ 39,900					$ 14,300			$ 39,900				$ 39,900

[1] 1 These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated: Three months ended Fiscal year ended December 29, 2019 December 30, 2018 December 29, 2019 December 30, 2018Cost of sales$186 $133 $600 $585Selling, general and administrative8,079 7,112 29,185 23,608Research and development822 539 2,782 1,927

[2] These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:   Fiscal year ended   December 29, 2019   December 30, 2018   December 31, 2017 Cost of sales $ 600
  $ 585
  $ 565
Selling, general and administrative 29,185
  23,608
  17,705
Research and development 2,782
  1,927
  1,123

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Segment Information Segment Financial Data (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Net sales	$ 248,605	$ 212,434	$ 229,734	$ 230,127	$ 238,147	$ 194,106	$ 205,400	$ 198,537	$ 920,900	$ 836,190	$ 744,989
Depreciation									64,149	59,497	56,832
Amortization of inventory step-up adjustment									1,057	352	0
Transaction and transition costs									6,312	12,013
Non-cash asset impairment		5,600							5,597	0	0
Transaction and transition costs											12,400
Incentive and indirect tax projects									12,968	(536)	(34,968)
Operating income (loss)	$ 14,116	$ (11,140)	$ 2,666	$ 5,945	$ 3,886	$ (9,134)	$ (1,658)	$ (890)	11,587	(7,796)	(19,691)
Interest expense, net									80,849	80,247	74,644
Other expense, net									9,904	81,797	5,570
Loss from continuing operations before income taxes									(79,166)	(169,840)	(99,905)
Corporate Segment
Segment Reporting Information [Line Items]
Net sales									0	0	0
Depreciation									25,532	22,923	21,723
Amortization expense									31,921	26,730	28,396
Segment operating income (loss)									(200,974)	(190,720)	(178,642)
Capital expenditures									11,583	6,402	1,667
Segment
Segment Reporting Information [Line Items]
Depreciation									64,149	59,497	56,832
Amortization expense									31,921	26,730	28,396
Segment operating income (loss)									24,553	4,569	(16,256)
Capital expenditures									99,286	71,467	63,474
Lower Extremities & Biologics | United States
Segment Reporting Information [Line Items]
Net sales									371,791	337,433	309,713
Depreciation									10,950	11,131	12,532
Amortization expense									0	0	0
Segment operating income (loss)									103,883	96,153	79,889
Capital expenditures									41,585	21,153	19,355
Upper Extremities | United States
Segment Reporting Information [Line Items]
Net sales									334,498	286,105	244,798
Depreciation									12,728	12,439	10,211
Amortization expense									0	0	0
Segment operating income (loss)									123,539	97,644	78,866
Capital expenditures									20,395	26,346	22,897
International Segment | Extremities & Biologics
Segment Reporting Information [Line Items]
Net sales									214,611	212,652	190,478
Depreciation									14,939	13,004	12,366
Amortization expense									0	0	0
Segment operating income (loss)									(1,895)	1,492	3,631
Capital expenditures									$ 25,723	$ 17,566	19,555
incentive and indirect
Segment Reporting Information [Line Items]
Incentive and indirect tax projects											$ (8,965)

XML

Segment Information

12 Months Ended

Dec. 29, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

Our management, including our Chief Executive Officer, who is our chief operating decision maker, manages our operations as three operating business segments: U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics. We determined that each of these operating segments represented a reportable segment. Our Chief Executive Officer reviews financial information at the operating segment level to allocate resources and to assess the operating results and performance of each segment.  

Our U.S. Lower Extremities & Biologics segment consists of our operations focused on the sale in the United States of our lower extremities products, such as joint implants and bone fixation devices for the foot and ankle, and our biologics products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth. Our U.S. Upper Extremities segment consists of our operations focused on the sale primarily in the United States of our upper extremities products, such as joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand, and products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products. As the IMASCAP operations are managed by the U.S. Upper Extremities management team, results of operations and assets related to IMASCAP are included within the U.S. Upper Extremities segment. Our International Extremities and Biologics segment consists of our operations focused on the sale outside the United States of all lower and upper extremities products, including associated biologics products.

Management measures segment profitability using an internal operating performance measure that excludes the impact of inventory step-up amortization and transaction and transition costs associated with acquisitions, as such items are not considered representative of segment results. We have determined that each reportable segment represents a reporting unit and, in accordance with ASC 350, each reporting unit requires an allocation of goodwill. As of December 29, 2019, we have allocated $570.0 million, $625.9 million,

and $65.1 million of goodwill to the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics reportable segments, respectively.

Our principal geographic regions consist of the United States, EMEAC (which includes Europe, the Middle East, Africa, and Canada), and Other (which principally represents Asia, Australia, and Latin America). Net sales attributed to each geographic region are based on the location in which the products were sold.

Net sales by geographic region by product line are as follows (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
United States
Lower extremities	$	276,821	$	250,735	$	228,044
Upper extremities	329,787		281,314		239,965
Biologics	91,450		83,077		78,361
Sports med & other	8,231		8,412		8,141
Total United States	$	706,289	$	623,538	$	554,511
EMEAC
Lower extremities	$	46,787	$	46,342	$	42,333
Upper extremities	90,420		87,647		73,243
Biologics	7,921		8,312		8,445
Sports med & other	9,761		11,074		13,751
Total EMEAC	$	154,889	$	153,375	$	137,772
Other
Lower extremities	$	16,849	$	14,407	$	16,140
Upper extremities	27,984		26,813		21,456
Biologics	14,100		17,445		13,831
Sports med & other	789		612		1,279
Total other	$	59,722	$	59,277	$	52,706
Total net sales	$	920,900	$	836,190	$	744,989

No single foreign country accounted for more than 10% of our total net sales during 2019, 2018, and 2017.

Assets in the U.S. Upper Extremities, U.S. Lower Extremities & Biologics, and International Extremities & Biologics segments are those assets used exclusively in the operations of each business segment or allocated when used jointly. Assets in the Corporate category are principally cash and cash equivalents, derivative assets, property, plant and equipment associated with our corporate headquarters, assets associated with discontinued operations, product liability insurance receivables, and assets associated with income taxes. Total assets by business segment as of December 29, 2019 and December 30, 2018 are as follows (in thousands):

	December 29, 2019
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate		Total
Total assets	$	952,187	$	914,317	$	292,929	$	426,207	$	2,585,640

	December 30, 2018
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate		Total
Total assets	$	940,075	$	923,036	$	272,127	$	559,163	$	2,694,401

Selected financial information related to our segments is presented below for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 (in thousands):

	Fiscal year ended December 29, 2019
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics			Corporate 1			Total
Net sales from external customers	$	371,791	$	334,498	$	214,611		$	—		$	920,900
Depreciation expense	10,950		12,728		14,939			25,532			64,149
Amortization expense	—		—		—			31,921			31,921
Segment operating income (loss)	$	103,883	$	123,539	$	(1,895	)	$	(200,974	)	$	24,553
Other:
Inventory step-up amortization											1,057
Transaction and transition costs											6,312
Non-cash asset impairment											5,597
Operating income											11,587
Interest expense, net											80,849
Other expense, net											9,904
Loss before income taxes											$	(79,166	)
Capital expenditures	$	41,585	$	20,395	$	25,723		$	11,583		$	99,286

	Fiscal year ended December 30, 2018
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate 1			Total
Net sales from external customers	$	337,433	$	286,105	$	212,652	$	—		$	836,190
Depreciation expense	11,131		12,439		13,004		22,923			59,497
Amortization expense	—		—		—		26,730			26,730
Segment operating income (loss)	$	96,153	$	97,644	$	1,492	$	(190,720	)	$	4,569
Other:
Inventory step-up amortization										352
Transaction and transition costs										12,013
Operating loss										(7,796		)
Interest expense, net										80,247
Other expense, net										81,797
Loss before income taxes										$	(169,840	)
Capital expenditures	$	21,153	$	26,346	$	17,566	$	6,402		$	71,467

	Fiscal year ended December 31, 2017
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate 1			Total
Net sales from external customers	$	309,713	$	244,798	$	190,478	$	—		$	744,989
Depreciation expense	12,532		10,211		12,366		21,723			56,832
Amortization expense	—		—		—		28,396			28,396
Segment operating income (loss)	$	79,889	$	78,866	$	3,631	$	(178,642	)	$	(16,256	)
Other:
Transaction and transition costs										12,400
Incentive and indirect tax projects										(8,965		)
Operating loss										(19,691		)
Interest expense, net										74,644
Other expense, net										5,570
Loss before income taxes										$	(99,905	)
Capital expenditures	$	19,355	$	22,897	$	19,555	$	1,667		$	63,474

__________________________

¹ 

The Corporate category primarily reflects general and administrative expenses not specifically associated with the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics segments. These non-allocated corporate expenses relate to global administrative expenses that support all segments, including salaries and benefits of certain executive officers and expenses such as: information technology administration and support; corporate headquarters; legal, compliance, and corporate finance functions; insurance; and all share-based compensation.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 29, 2019

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income (AOCI)

Accumulated Other Comprehensive Income (AOCI)

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

Our 2017, 2018, and 2019 OCI was comprised solely of foreign currency translation adjustments.

Changes in AOCI for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 were as follows (in thousands):

	Currency translation adjustment
Balance at December 25, 2016	$	(19,461	)
Other comprehensive income	41,751
Balance at December 31, 2017	$	22,290
Other comprehensive loss	(30,373		)
Balance at December 30, 2018	$	(8,083	)
Other comprehensive loss	(21,416		)
Balance at December 29, 2019	$	(29,499	)

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Share-Based Compensation

12 Months Ended

Dec. 29, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation

Share-Based Compensation

We currently have two share-based compensation plans under which share-based awards may be granted - the Wright Medical Group N.V. Amended and Restated 2017 Equity and Incentive Plan and the Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan, which are described below. In addition, we have the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan and several legacy Wright and legacy Tornier share-based compensation plans and non-plan agreements under which stock options and restricted stock units are outstanding, but no future share-based awards may be granted.

Amounts recognized in the consolidated financial statements with respect to share-based compensation are as follows:

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Total cost of share-based arrangements	$	32,836		$	26,039		$	19,485
Amounts capitalized into inventory	(870		)	(507		)	(669		)
Amortization of capitalized amounts	601			588			577
Impact to net loss	$	32,567		$	26,120		$	19,393
Impact to basic and diluted loss per share	$	0.26		$	0.23		$	0.19
Weighted-average number of shares outstanding - basic and diluted	126,601			112,592			104,531

The compensation costs related to share-based awards were as follows:

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Stock options	$	13,116	$	11,177	$	8,988
Restricted stock units	12,651		11,514		9,373
Performance share units	6,166		2,538		441
Employee stock purchase plan	903		810		683
Total compensation cost for share-based awards	$	32,836	$	26,039	$	19,485

As of December 29, 2019, we had $56.4 million of total unrecognized share-based compensation cost related to unvested share-based compensation arrangements.

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, receipt of applicable regulatory approvals and other customary conditions.

Until the proposed transaction with Stryker closes, equity awards will continue to vest according to their terms. Unexercised options that are in-the-money, both vested and unvested, will fully vest at close and will be cancelled in exchange for a cash payment. All unvested restricted stock units and performance share units will vest at close and be cancelled in exchange for a cash payment as well.

Equity Incentive Plans and Non-Plan Inducement Agreement

The Wright Medical Group N.V. Amended and Restated 2017 Equity and Incentive Plan (the 2017 Plan), which is an amended and restated version of the Wright Medical Group N.V. 2017 Equity and Incentive Plan, was approved by our shareholders on June 28, 2019. The 2017 Plan authorizes us to grant a wide variety of share-based and cash-based awards, including incentive and non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards, cash-based awards, and other share-based awards. To date, only stock options, restricted stock units (RSUs), and performance share units (PSUs) have been granted.

The options and RSUs granted to our employees generally have graded vesting periods of 4 years. The options and RSUs granted to our non-executive directors cliff vest on the one-year anniversary of the date of grant. All options are granted with exercise prices equal to the closing price of our ordinary shares on the date of grant, as reported by the Nasdaq Global Select Market, and expire 10 years after the grant date. The PSUs granted to our executive officers cliff vest after a three-year performance period only if certain minimum pre-established performance criteria are achieved and the number shares issued upon vesting depends upon the level of achievement of the performance criteria, with a cap of 200% of target levels. In recognition of the changed circumstances created by the Stryker acquisition and to encourage retention during the pendency of the acquisition, the compensation committee determined that all outstanding PSU awards will be deemed to have achieved the maximum performance criteria at 200% of target.

The 2017 Plan reserves for issuance a number of ordinary shares equal to the sum of (i) 11,200,000 shares; (ii) 1,329,648 shares, which was the number of shares available for grant under the Wright Medical Group N.V. Amended and Restated 2010 Incentive

Plan (the 2010 Plan) as of June 23, 2017, the date of shareholder approval of the Wright Medical Group N.V. 2017 Equity and Incentive Plan, but not subject to outstanding awards; and (iii) up to 6,405,992 shares subject to awards outstanding under the 2010 Plan as of June 23, 2017 that are subsequently forfeited or cancelled or expire or otherwise terminate without the issuance of such shares (the Carryover Shares). As of June 28, 2019, 520,656 of the 6,405,992 Carryover Shares under the 2010 Plan were carried over to the 2017 Plan. As of December 29, 2019, 6,735,115 ordinary shares remained available for future grant of equity awards under the 2017 Plan, assuming maximum PSU payouts.

As of December 29, 2019, there were 10,444,606 ordinary shares covering awards outstanding under all of our equity incentive plans, including the 2017 Plan, the 2010 Plan and legacy Wright and legacy Tornier plans and one legacy Wright non-plan agreement, assuming maximum PSU payouts. The legacy Wright and legacy Tornier plans and the non-plan agreement include the Wright Medical Group, Inc. 2009 Equity Incentive Plan, as amended and restated, the Wright Medical Group, Inc. 1999 Equity Incentive Plan, as amended and restated, the Tornier N.V. Stock Option Plan, as amended and restated, and one legacy Wright non-plan inducement option agreement. All of these plans and the non-plan agreement were terminated with respect to future awards, and thus, no future share-based awards may be granted under any of these legacy plans and the non-plan agreement.

All of the options issued under the legacy Wright plans and the non-plan agreement expire after 10 years from the date of grant. All outstanding awards under the legacy Wright plans and the non-plan agreement automatically vested on October 1, 2015 as a result of the Wright/Tornier merger; therefore, there are no restricted stock awards or RSUs outstanding at December 29, 2019 under these plans. However, there were 1,891,240 stock options outstanding as of December 29, 2019 under the legacy Wright plans and the non-plan agreement.

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 was estimated based on historical option exercise and employee termination data. The expected stock price volatility assumption was estimated based upon historical volatility of our ordinary shares for the combined company after the Wright/Tornier merger. 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 share-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 2019, 2018, and 2017 was $9.33 per share, $9.32 per share, and $9.80 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:

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Risk-free interest rate	1.5% - 2.4%	2.6% - 2.9%	1.9% - 2.0%
Expected option life	6 years	7 years	6 years
Expected price volatility	31%	32%	33%

During 2019, 2018, and 2017, we did not grant any stock options to non-employees (other than our non-executive directors who received such grants in consideration of their director service).

A summary of our stock option activity during 2019 is as follows:

	Shares (000’s)	Weighted-average exercise price		Weighted-average remaining contractual life	Aggregate intrinsic value* ($000’s)
Outstanding at December 30, 2018	9,203	$	22.89
Granted	1,593	27.77
Exercised	(2,152)	21.52
Forfeited or expired	(236)	25.29
Outstanding at December 29, 2019	8,408	$	24.10	6.52	$	54,473
Exercisable at December 29, 2019	5,426	$	22.86	5.24	$	41,885

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of December 29, 2019 and the respective exercise prices of the options. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

The total intrinsic value of options exercised during 2019, 2018, and 2017 was $17.9 million, $4.9 million, and $9.1 million, respectively.

A summary of our stock options outstanding and exercisable at December 29, 2019 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 - $20.00	609	3.60	$	17.89	556	$	17.73
$20.01 - $21.00	1,708	5.36	20.63		1,675	20.64
$21.01 - $25.00	2,850	6.46	23.01		1,905	22.59
$25.01 - $32.00	3,241	7.72	28.06		1,290	28.36
	8,408	6.52	$	24.10	5,426	$	22.86

Restricted stock units

We calculate the grant date fair value of RSUs using the closing sale price of our ordinary shares on the grant date, as reported by the Nasdaq Global Select Market. 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 share-based compensation expense only for those awards that are expected to vest. The fair value of the unvested restricted stock units is recognized on a straight-line basis over the respective requisite service period, which is generally the vesting period.

During 2019, 2018, and 2017, we granted 0.6 million, 0.6 million, 0.5 million RSUs to employees with weighted-average grant-date fair values of $27.90, $24.05, and $27.83 per share, respectively.

During 2019, 2018, and 2017, we did not grant any RSUs to non-employees (other than our non-executive directors who received such grants in consideration of their director service).

A summary of our RSU activity during 2019 is as follows:

	Shares (000’s)		Weighted-average grant-date fair value		Aggregate intrinsic value* ($000’s)
Unvested at December 30, 2018	1,322		$	23.90
Granted	598		27.90
Vested	(589	)	22.97
Forfeited	(82	)	25.51
Unvested at December 29, 2019	1,249		$	26.16	$	38,196

___________________

* The aggregate intrinsic value is calculated as the market value of our ordinary shares as of December 29, 2019. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

The total fair value of shares underlying RSUs vested during 2019, 2018, and 2017 was $18.0 million, $12.2 million, and $9.0 million, respectively.

Performance share units

We calculate the grant date fair value of PSUs as the closing sale price of our ordinary shares on the grant date, as reported by the Nasdaq Global Select Market. Share-based compensation expense associated with outstanding PSUs is measured using the grant date fair value and is based on the estimated achievement of the established performance criteria at the end of each reporting period until the performance period ends, recognized on a straight-line basis over the performance period. Share-based compensation expense is only recognized for PSUs that we expect to vest, which we estimate based upon an assessment of the probability that the performance criteria will be achieved. The PSUs granted during the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 have a three-year performance-based metric measured over a performance period from July 1, 2019 to June 26, 2022, July 2, 2018 to June 25, 2021, and June 26, 2017 to June 28, 2020, respectively. Share-based compensation expense associated with outstanding PSUs is updated for actual forfeitures. In recognition of the changed circumstances created by the Stryker acquisition and to encourage retention during the pendency of the acquisition, the compensation committee determined that all outstanding PSU awards will be deemed to have achieved the maximum performance criteria at 200% of target.

During 2019, 2018, and 2017, we granted 0.3 million, 0.3 million, and 0.2 million PSUs (based on an assumed maximum level of performance) to employees with a weighted-average grant-date fair value of $27.84, $24.49, and $27.86 per share, respectively.

During 2019, 2018, and 2017, we did not grant any PSUs to non-employees.

A summary of our PSU activity (based on an assumed maximum level of performance) during 2019 is as follows:

	Shares (000’s)	Weighted-average grant-date fair value		Aggregate intrinsic value* ($000’s)
Unvested at December 30, 2018	466	$	26.00
Granted	321	27.84
Vested	—	—
Forfeited	—	—
Unvested at December 29, 2019	787	$	26.75	$	24,076

___________________

* The aggregate intrinsic value is calculated as the market value of our ordinary shares as of December 29, 2019. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

Non-plan inducement stock options

On occasion, legacy Wright granted stock options under a non-plan inducement stock option agreement, in order to induce a candidate to commence employment with legacy Wright as a member of the executive management team. These options, which

are fully vested, vested over a service period ranging from 3 to 4 years. All of the options granted under these non-plan agreements will expire 10 years from the date of grant.

A summary of our non-plan inducement stock option activity during 2019 is as follows:

	Shares (000’s)		Weighted-average exercise price		Weighted-average remaining contractual life	Aggregate intrinsic value* ($000’s)
Outstanding at December 30, 2018	693		$	15.66
Granted	—		—
Exercised	(209	)	15.91
Forfeited or expired	—		—
Outstanding at December 29, 2019	484		$	15.55	1.72	$	7,272
Exercisable at December 29, 2019	484		$	15.55	1.72	$	7,272

________________________________

* The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of December 29, 2019 and the respective exercise prices of the options. The market value as of December 29, 2019 was $30.58 per share, which is the closing sale price of our ordinary shares on December 27, 2019, the last trading day prior to December 29, 2019, as reported by the Nasdaq Global Select Market.

The total intrinsic value of options exercised during 2019, 2018, and 2017 was $2.9 million, $1.6 million, and $0.3 million, respectively.

A summary of our non-plan inducement stock options outstanding and exercisable at December 29, 2019 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
$15.00 - $18.00	484	1.72	$	15.55	484	$	15.55

Employee Stock Purchase Plan

The Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan (the ESPP), which is an amended and restated version of the Tornier N.V. 2010 Employee Stock Purchase Plan, was approved by our shareholders on June 28, 2016. Under the ESPP, we are authorized to issue and sell up to the sum of (i) 333,333 ordinary shares registered previously under the Tornier N.V. 2010 Employee Stock Purchase Plan and (ii) 216,667 additional ordinary shares approved under the ESPP. The total of 550,000 ordinary shares are authorized to be issued to employees of our company and certain designated subsidiaries who work at least 20 hours per week. Under the ESPP, there are two six-month offering 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, each eligible employee can choose each offering period to have up to 20% of his or her eligible earnings withheld to purchase up to 1,000 ordinary shares. The purchase price of the shares is 85% of the market price on the first or last trading day of the offering period, whichever is lower. As a result of the then pending Stryker acquisition, we suspended the operation of the ESPP effective as of December 31, 2019, which was the last day of the offering period that was in effect as of the date of the Stryker purchase agreement. As of December 29, 2019, there were 214,225 ordinary shares available for future issuance under the ESPP.

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

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Risk-free interest rate	1.5% - 2.3%	2.3% - 2.8%	1.3% - 1.9%
Expected life	6 months	6 months	6 months
Expected price volatility	30%	31%	24%

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Quarterly Results of Operations (Tables)

12 Months Ended

Dec. 29, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information

	2018
	First quarter			Second quarter			Third quarter			Fourth quarter
Net sales	$	198,537		$	205,400		$	194,106		$	238,147
Cost of sales	41,139			45,558			44,307			49,149
Gross profit	157,398			159,842			149,799			188,998
Operating expenses:
Selling, general and administrative	137,248			140,826			139,223			160,664
Research and development	13,899			14,665			13,829			16,749
Amortization of intangible assets	7,141			6,009			5,881			7,699
Total operating expenses	158,288			161,500			158,933			185,112
Operating (loss) income	(890		)	(1,658		)	(9,134		)	3,886
Net loss from continuing operations, net of tax	(19,907		)	(90,621		)	(35,829		)	(22,947		)
(Loss) income from discontinued operations, net of tax	(5,607		)	22,923			(6,696		)	(10,821		)
Net loss	$	(25,514	)	$	(67,698	)	$	(42,525	)	$	(33,768	)
Net loss, continuing operations per share, basic and diluted	$	(0.19	)	$	(0.85	)	$	(0.32	)	$	(0.18	)
Net loss income per share, basic and diluted	$	(0.24	)	$	(0.64	)	$	(0.38	)	$	(0.27	)
Weighted-average number of shares outstanding-basic and diluted	105,904			106,095			113,043			125,323

The operating results for any quarter are not necessarily indicative of results for any future period.

	2019
	First quarter			Second quarter			Third quarter			Fourth quarter
Net sales	$	230,127		$	229,734		$	212,434		$	248,605
Cost of sales	46,317			48,338			44,441			49,545
Gross profit	183,810			181,396			167,993			199,060
Operating expenses:
Selling, general and administrative	153,306			152,112			152,780			156,468
Research and development	16,972			18,756			18,045			20,312
Amortization of intangible assets	7,587			7,862			8,308			8,164
Total operating expenses	177,865			178,730			179,133			184,944
Operating income (loss)	5,945			2,666			(11,140		)	14,116
Net loss from continuing operations, net of tax	(30,256		)	(18,932		)	(36,200		)	(6,746		)
(Loss) income from discontinued operations, net of tax	(6,345		)	1,120			(7,589		)	(9,277		)
Net loss	$	(36,601	)	$	(17,812	)	$	(43,789	)	$	(16,023	)
Net loss, continuing operations per share, basic and diluted	$	(0.24	)	$	(0.15	)	$	(0.29	)	$	(0.05	)
Net loss income per share, basic and diluted	$	(0.29	)	$	(0.14	)	$	(0.35	)	$	(0.13	)
Weighted-average number of shares outstanding-basic and diluted	125,812			126,267			126,767			127,557

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Income Taxes (Tables)

12 Months Ended

Dec. 29, 2019

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax

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

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
U.S.	$	(69,903	)	$	(144,987	)	$	(56,808	)
Foreign	(9,263		)	(24,853		)	(43,097		)
Loss from continuing operations before income taxes	$	(79,166	)	$	(169,840	)	$	(99,905	)

Schedule of Components of Income Tax Expense (Benefit)

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

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Current (benefit) provision:
U.S.:
Federal	$	(13	)	$	449		$	(23,781	)
State	232			251			390
Foreign	15,213			3,307			2,214
Total current provision (benefit)	15,432			4,007			(21,177		)
Deferred provision (benefit):
U.S.:
Federal	154			(2,841		)	(5,098		)
State	143			(663		)	(93		)
Foreign	(2,761		)	(1,039		)	(8,600		)
Total deferred benefit	(2,464		)	(4,543		)	(13,791		)
Total provision (benefit) for income taxes	$	12,968		$	(536	)	$	(34,968	)

Schedule of Effective Income Tax Rate Reconciliation

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

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Income tax benefit at statutory rate	21.0	%	21.0	%	35.0	%
State income taxes	2.2	%	3.8	%	1.5	%
Change in valuation allowance	(18.3	)%	(22.9	)%	(3.5	)%
CVR fair market value adjustment	0.1	%	—	%	(1.9	)%
Foreign income tax rate differential	(17.9	)%	(0.6	)%	(6.1	)%
Changes in tax reserves	(0.3	)%	0.4	%	2.9	%
Effects of U.S. tax reform	—	%	—	%	6.5	%
Foreign rate changes	—	%	—	%	1.7	%
U.S. R&D tax credit	2.0	%	0.7	%	0.6	%
Nondeductible compensation	(3.2	)%	(0.7	)%	(1.0	)%
Other, net	(2.0	)%	(1.4	)%	(0.7	)%
Total	(16.4	)%	0.3	%	35.0	%

Schedule of Deferred Tax Assets and Liabilities

The significant components of our deferred income taxes as of December 29, 2019 and December 30, 2018 are as follows (in thousands):

	December 29, 2019			December 30, 2018
Deferred tax assets:
Net operating loss carryforwards	$	340,451		$	330,589
General business credit carryforwards	16,131			14,598
Reserves and allowances	50,278			56,675
Deferred interest	42,016			27,322
Share-based compensation expense	12,638			14,934
Convertible debt notes and conversion options	15,272			38,368
Other	3,857			3,616
Valuation allowance	(423,037		)	(400,171		)
Total deferred tax assets	57,606			85,931
Deferred tax liabilities:
Depreciation	5,025			5,095
Intangible assets	50,156			58,221
Convertible notes bond hedges	11,493			34,653
Other	304			166
Total deferred tax liabilities	66,978			98,135
Net deferred tax liabilities	$	(9,372	)	$	(12,204	)

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	Fiscal year ended
	December 29, 2019			December 30, 2018
Balance at beginning of fiscal year	$	4,610		$	6,025
Additions from acquisitions	—			109
Additions for tax positions related to current year	473			385
Additions for tax positions of prior years	172			718
Reductions for tax positions of prior years	(290		)	(490		)
Settlements	(406		)	(1,983		)
Foreign currency translation	(48		)	(154		)
Balance at end of fiscal year	$	4,511		$	4,610

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Summary of Significant Accounting Policies Useful Lives (Details)	12 Months Ended
	Dec. 29, 2019
Land improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful life	15 years
Land improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful life	25 years
Buildings and building improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful life	10 years
Buildings and building improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful life	40 years
Machinery and equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years
Machinery and equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life	14 years
Furniture, fixtures and office equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years
Furniture, fixtures and office equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life	14 years
Surgical instruments
Property, Plant and Equipment [Line Items]
Useful life	6 years

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Share-Based Compensation Share-based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Total cost of share-based arrangements									$ 32,836	$ 26,039	$ 19,485
Amounts capitalized into inventory									(870)	(507)	(669)
Amortization of capitalized amounts									601	588	577
Impact to net loss									$ 32,567	$ 26,120	$ 19,393
Impact to basic and diluted loss per share									$ 0.26	$ 0.23	$ 0.19
Weighted-average number of ordinary shares outstanding - basic and diluted (in shares)	127,557	126,767	126,267	125,812	125,323	113,043	106,095	105,904	126,601	112,592	104,531

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Derivatives and Fair Value of Financial Instruments Fair Market Valuations (Details)	Dec. 29, 2019
2020 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, measurement input	0.1492
2020 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.1492
2021 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, measurement input	0.2189
2021 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.2189
2023 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, measurement input	0.0999
2023 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0999
Wright Medical Group, Inc. | 2020 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, measurement input	0.0083
Wright Medical Group, Inc. | 2021 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, measurement input	0.0083
Wright Medical Group, Inc. | 2023 Notes Conversion Derivative
Derivative [Line Items]
Derivative liability, measurement input	0.0042
DEUTSCHE BANK | 2020 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0027
DEUTSCHE BANK | 2023 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0049
WELLS FARGO | 2020 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0012
JP Morgan Chase | 2020 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0013
JP Morgan Chase | 2021 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0019
JP Morgan Chase | 2023 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0022
Bank of America | 2021 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0019
Bank of America | 2023 Notes Hedges
Derivative [Line Items]
Derivative asset, measurement input	0.0021

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Goodwill and Intangibles (Details) - USD ($) $ in Thousands			12 Months Ended
	Oct. 10, 2018	Dec. 14, 2017	Dec. 30, 2018	Dec. 31, 2017	Dec. 29, 2019
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill, purchase accounting adjustments			$ (900)
Expected amortization expense, 2020					$ 31,000
Expected amortization expense, 2021					30,000
Expected amortization expense, 2022					30,000
Expected amortization expense, 2023					30,000
Expected amortization expense, 2024					$ 27,000
Cartiva, Inc.
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets	$ 81,000
Goodwill	351,445		351,445
IMASCAP SAS
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets		$ 10,865
Goodwill		71,064		$ 72,000
Goodwill, purchase accounting adjustments			$ (917)
Customer relationships | Finite-Lived Intangible Assets | Cartiva, Inc.
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets	52,000
Technology-Based Intangible Assets | Cartiva, Inc.
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets	$ 28,000
Useful life of intangible assets	7 years
Technology-Based Intangible Assets | IMASCAP SAS
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets		$ 5,600
Useful life of intangible assets		6 years
Customer relationships | Cartiva, Inc.
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life of intangible assets	15 years
In Process Research and Development | Cartiva, Inc.
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets	$ 1,000
In Process Research and Development | IMASCAP SAS
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets		$ 5,300

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Share-Based Compensation Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 29, 2019 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Share price	$ 30.58
Inducement Grant
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding, beginning balance (in shares) | shares	693
Options exercised (in shares) | shares	(209)
Options outstanding, ending balance (in shares) | shares	484
Options exercisable, (in shares) | shares	484
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted average exercise price, options outstanding, beginning balance (in usd per share)	$ 15.66
Weighted average exercise price, options forfeited or expired (in usd per share)	15.91
Weighted average exercise price, options outstanding, ending balance (in usd per share)	15.55
Weighted average exercise price, options exercisable (in usd per share)	$ 15.55
Weighted-average remaining contractual life, options outstanding	1 year 8 months 19 days
Aggregate intrinsic value, options outstanding | $	$ 7,272
Weighted-average remaining contractual life, options exercisable	1 year 8 months 19 days
Aggregate intrinsic value, options exercisable | $	$ 7,272
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding, beginning balance (in shares) | shares	9,203
Options granted (in shares) | shares	1,593
Options exercised (in shares) | shares	(2,152)
Options forfeited or expired (in shares) | shares	(236)
Options outstanding, ending balance (in shares) | shares	8,408
Options exercisable, (in shares) | shares	5,426
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted average exercise price, options outstanding, beginning balance (in usd per share)	$ 22.89
Weighted average exercise price, options granted (in usd per share)	27.77
Weighted average exercise price, options forfeited or expired (in usd per share)	21.52
Weighted average exercise price, options exercised (in usd per share)	25.29
Weighted average exercise price, options outstanding, ending balance (in usd per share)	24.10
Weighted average exercise price, options exercisable (in usd per share)	$ 22.86
Weighted-average remaining contractual life, options outstanding	6 years 6 months 7 days
Aggregate intrinsic value, options outstanding | $	$ 54,473
Weighted-average remaining contractual life, options exercisable	5 years 2 months 26 days
Aggregate intrinsic value, options exercisable | $	$ 41,885

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Debt and Finance Lease Obligations Conversion Terms (Details)				12 Months Ended
	Jun. 28, 2018 $ / shares	May 20, 2016 $ / shares	Nov. 24, 2015 $ / shares	Dec. 29, 2019	Feb. 13, 2015 $ / shares
2020 Convertible Debt
Debt Instrument [Line Items]
Conversion rate			33.39487	32.3939
Conversion price			$ 29.94		$ 30.87
Convertible notes trading period				200 days
2021 Convertible Debt
Debt Instrument [Line Items]
Conversion rate		46.8165
Conversion price		$ 21.36
Convertible notes trading period				100 days
2023 Convertible Debt
Debt Instrument [Line Items]
Conversion rate	29.9679
Conversion price	$ 33.37
Convertible notes trading period				120 days

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Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Other Liabilities Disclosure [Abstract]
Employee bonuses	$ 25,383	$ 28,953
Other employee benefits	25,194	22,841
Royalties	13,441	12,330
Taxes other than income	13,826	7,897
Notes conversion derivatives	181,144	17,386
Commissions	18,025	19,356
Professional and legal fees	14,941	10,848
Contingent consideration	11,982	3,427
Product liability and other legal accruals	54,107	66,918
Other	28,982	27,125
Accrued expenses and other current liabilities	$ 387,025	$ 217,081

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Income Taxes Effective Income Tax Reconciliation (Details)	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Income tax benefit at statutory rate	21.00%	21.00%	35.00%
State income taxes	2.20%	3.80%	1.50%
Change in valuation allowance	(18.30%)	(22.90%)	(3.50%)
CVR fair market value adjustment	0.10%	0.00%	(1.90%)
Foreign income tax rate differential	(17.90%)	(0.60%)	(6.10%)
Changes in tax reserves	(0.30%)	0.40%	2.90%
Effects of U.S. tax reform	0.00%	0.00%	6.50%
Foreign rate changes	0.00%	0.00%	1.70%
U.S. R&D tax credit	2.00%	0.70%	0.60%
Nondeductible compensation	(3.20%)	(0.70%)	(1.00%)
Other, net	(2.00%)	(1.40%)	(0.70%)
Total	(16.40%)	0.30%	35.00%

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Leases Lease Cost (Details) $ in Thousands	12 Months Ended
	Dec. 29, 2019 USD ($)
Leases [Abstract]
Depreciation	$ 5,688
Interest on lease liabilities	1,104
Operating lease cost	9,843
Short-term lease cost	128
Variable lease cost	500
Total lease cost	17,263
Operating cash flows from finance leases	1,104
Operating cash flows from operating leases	9,247
Financing cash flows from finance leases	$ 7,837
Weighted-average remaining lease term - finance leases	4 years 6 months 21 days
Weighted-average remaining lease term - operating leases	4 years 10 months 13 days
Weighted-average discount rate - finance leases	4.63%
Weighted-average discount rate - operating leases	7.06%

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Leases Future Minimum Lease Payments - Operating Leases, Post Adoption of ASC 842 (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Leases [Abstract]
2020	$ 7,420
2021	5,632
2022	3,878
2023	2,239
2024	1,356
Thereafter	4,036
Total minimum payments	24,561
Less amount representing interest	(3,806)
Present value of minimum lease payments	20,755	$ 20,000
Current portion	(6,608)
Long-term portion	$ 14,147

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Debt and Finance Lease Obligations Maturities (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018	May 20, 2016
Debt Disclosure [Abstract]
2020	$ 474,702
2021	21,423
2022	1,511
2023	814,637
2024	0
Thereafter	1,005
Long-term debt	1,313,278
Secured Debt
Debt Instrument [Line Items]
Long-term line of credit	20,652	$ 17,761
2021 Convertible Debt
Debt Instrument [Line Items]
Long-term debt, gross	$ 395,000	$ 395,000	$ 395,000

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Consolidated Balance Sheet (Parenthetical) - € / shares	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018
Consolidated Balance Sheet Parenthetical [Abstract]
Threshold for conversion, conversion price, ordinary shares	130.00%
Debt instrument, convertible, minimum consecutive period	20 days
Debt instrument, convertible, trading period	30 days
Common stock, par value (in usd per share)	€ 0.03	€ 0.03
Common stock, shares authorized (in shares)	320,000,000	320,000,000
Common stock, shares issued (in shares)	128,614,026	125,555,751
Common stock, shares outstanding (in shares)	128,614,026	125,555,751

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands		12 Months Ended
		Dec. 29, 2019	Dec. 30, 2018		Dec. 31, 2017
Operating activities:
Net loss		$ (114,225)	$ (169,505)		$ (202,598)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		64,149	59,497		56,832
Share-based compensation expense		32,567	26,120		19,393
Amortization of intangible assets		31,921	26,730		28,396
Amortization of deferred financing costs and debt discount		54,461	54,630		50,379
Deferred income taxes		(2,464)	(4,543)		(13,791)
Provision for excess and obsolete inventory		13,126	20,913		19,171
Net loss on exchange or extinguishment of debt		14,274	39,935		0
Amortization of inventory step-up adjustment		1,057	352		0
Non-cash adjustment to derivative fair value		(10,962)	35,934		(4,797)
Non-cash asset impairment		5,597	0		0
Mark-to-market adjustment for CVRs		(420)	140		5,320
Other		7,322	(1,617)		1,385
Changes in assets and liabilities (net of acquisitions):
Accounts receivable		(6,989)	(8,223)		2,483
Inventories		(32,866)	(35,887)		(29,526)
Prepaid expenses and other assets		7,106	45,712		(22,744)
Accounts payable		(15,866)	6,022		6,260
Accrued expenses and other liabilities		27,822	(14,839)		(21,834)
CVR product sales milestone payment		0	(42,044)		0
Metal-on-metal product liabilities		(34,003)	(103,056)		(79,139)
Net cash provided by (used in) operating activities		41,607	(63,729)		(184,810)
Investing activities:
Capital expenditures		(99,286)	(71,467)		(63,474)
Payments to Acquire Businesses, Net of Cash Acquired		722	(434,289)		(44,128)
Purchase of intangible assets		(8,448)	(2,483)		(2,099)
Other investing		3,766	(2,000)		280
Net cash used in investing activities		(103,246)	(510,239)		(109,421)
Financing activities:
Issuance of ordinary shares		52,076	21,618		27,551
Proceeds from equity offering		0	448,924		0
Payment of equity offering costs		0	(25,896)		0
Issuance of stock warrants		21,210	102,137		0
Payment of notes hedge options		(30,144)	(141,278)		0
Repurchase of stock warrants		(11,026)	(23,972)		0
Payment of notes premium		0	(55,643)		0
Proceeds from notes hedge options		16,849	34,553		0
Proceeds from exchangeable senior notes		0	675,000		0
Proceeds from other debt		4,511	25,243		34,901
Payments of debt		(4,695)	(38,637)		(11,517)
Redemption of convertible senior notes		0	(400,911)		0
Payments of financing costs		(2,981)	(14,701)		0
Payment of equity issuance costs		(350)	(1,870)		0
Payment of contingent consideration		(207)	(919)		(1,429)
Payments of finance lease obligations		(7,837)	(5,508)		(2,690)
Net cash provided by financing activities		37,406	598,140		46,816
Effect of exchange rates on cash and cash equivalents		(262)	(561)		2,890
Net (decrease) increase in cash, cash equivalents, and restricted cash		(24,495)	23,611		(244,525)
Cash, cash equivalents, restricted cash, restricted cash equivalents, beginning balance	[1]	191,351	167,740		412,265
Cash, cash equivalents, restricted cash, restricted cash equivalents, ending balance		$ 166,856	$ 191,351	[1]	$ 167,740	[1]

[1] ¹  As of December 25, 2016, we had $150.0 million in restricted cash to secure our obligations under a Master Settlement Agreement (MSA) that WMT entered into in connection with the metal-on-metal hip litigation as described in Note 17. The accompanying notes are an integral part of these consolidated financial statements.

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Acquisitions - Narrative (Details) $ in Thousands, € in Millions				3 Months Ended								12 Months Ended
	Oct. 10, 2018 USD ($)	Aug. 27, 2018 USD ($) shares	Dec. 14, 2017 USD ($) shares	Dec. 29, 2019 USD ($)	Sep. 29, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jul. 01, 2018 USD ($)	Apr. 01, 2018 USD ($)	Dec. 29, 2019 USD ($)	Dec. 30, 2018 USD ($) shares	Dec. 31, 2017 USD ($)	Dec. 14, 2017 EUR (€)
Business Acquisition [Line Items]
Proceeds from equity offering												$ 0	$ 448,924	$ 0
Net sales				$ 248,605	$ 212,434	$ 229,734	$ 230,127	$ 238,147	$ 194,106	$ 205,400	$ 198,537	920,900	836,190	744,989
Operating income (loss)				14,116	(11,140)	2,666	5,945	3,886	(9,134)	(1,658)	(890)	11,587	(7,796)	(19,691)
Transaction and transition expense												6,312	12,013
Amortization of intangible assets				$ 8,164	8,308	7,862	7,587	7,699	$ 5,881	$ 6,009	$ 7,141	31,921	26,730	28,396
Acquisition related costs														$ 12,400
Goodwill, purchase accounting adjustments													(900)
Cartiva, Inc.
Business Acquisition [Line Items]
Business acquisition, transaction costs	$ 435,000
Cash acquired from acquisition	1,100											700
Net sales												29,800	9,500
Operating income (loss)												5,800	2,400
Inventory step up amortization expense					$ 400	$ 400	$ 400	$ 400				1,000	400
Transaction and transition expense												2,600
Amortization of intangible assets												$ 9,100	1,900
Acquisition related costs													6,500
Acquired receivables	5,800
Allowance for doubtful accounts	(1,400)
Intangible assets	81,000
IMASCAP SAS
Business Acquisition [Line Items]
Business acquisition, transaction costs			$ 62,300												€ 52.9
Intangible assets			$ 10,865
Equity ownership acquired			100.00%												100.00%
Business acquisition, shares issued (in shares) | shares			661,753
Contingent consideration fair value			$ 17,800												€ 15.1
Goodwill, purchase accounting adjustments													$ (917)
Common Stock
Business Acquisition [Line Items]
Stock issued during period (in shares) | shares		18,200,000											18,248,932
Proceeds from equity offering		$ 423,000
Finite-Lived Intangible Assets | Customer relationships | Cartiva, Inc.
Business Acquisition [Line Items]
Intangible assets	52,000
Technology-Based Intangible Assets | Cartiva, Inc.
Business Acquisition [Line Items]
Intangible assets	$ 28,000
Useful life of intangible assets	7 years
Technology-Based Intangible Assets | IMASCAP SAS
Business Acquisition [Line Items]
Intangible assets			$ 5,600
Useful life of intangible assets			6 years
Customer relationships | Cartiva, Inc.
Business Acquisition [Line Items]
Useful life of intangible assets	15 years
In Process Research and Development | Cartiva, Inc.
Business Acquisition [Line Items]
Intangible assets	$ 1,000
In Process Research and Development | IMASCAP SAS
Business Acquisition [Line Items]
Intangible assets			$ 5,300
Cash | IMASCAP SAS
Business Acquisition [Line Items]
Business acquisition, transaction costs			46,700												39.7
Common Stock | IMASCAP SAS
Business Acquisition [Line Items]
Business acquisition, transaction costs			$ 15,600												€ 13.2

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Discontinued Operations (Details) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
	Jan. 09, 2014	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss from discontinued operations		$ (9,277)	$ (7,589)	$ 1,120	$ (6,345)	$ (10,821)	$ (6,696)	$ 22,923	$ (5,607)	$ (22,091)	$ (201)	$ (137,661)
Cash used in discontinued operations										52,600	88,600	228,100
Insurance settlements receivable		$ 18,500								18,500
Proceeds from legal settlements											30,750
Metal-on-metal product liabilities										(34,003)	(103,056)	(79,139)
OrthoRecon Business
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss from discontinued operations										$ (22,091)	$ 525	(133,528)
Purchase price discontinued operations	$ 283,000
Metal-on-metal product liabilities												$ 94,000

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Goodwill and Intangibles (Tables)

12 Months Ended

Dec. 29, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the Carrying Amount of Goodwill

Changes in the carrying amount of goodwill occurring during the fiscal years ended December 29, 2019 and December 30, 2018 are as follows (in thousands):

	U.S. Lower Extremities & Biologics		U.S. Upper Extremities			International Extremities & Biologics			Total
Balance at December 31, 2017	$	218,525	$	630,650		$	84,487		$	933,662
Goodwill associated with Cartiva acquisition	351,445		—			—			351,445
Goodwill adjustment associated with IMASCAP acquisition	—		(917		)	—			(917		)
Foreign currency translation	—		(1,883		)	(13,353		)	(15,236		)
Balance at December 30, 2018	$	569,970	$	627,850		$	71,134		$	1,268,954
Foreign currency translation	—		(1,924		)	(6,063		)	(7,987		)
Balance at December 29, 2019	$	569,970	$	625,926		$	65,071		$	1,260,967

Components of Identifiable Assets

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

	December 29, 2019					December 30, 2018
	Cost			Accumulated amortization		Cost			Accumulated amortization
Indefinite life intangibles:
IPRD technology	$	6,238		$	—	$	6,262		$	—
Finite life intangibles:
Completed technology	172,111			72,140		174,596			55,114
Licenses	9,247			2,835		6,547			1,851
Customer relationships	181,094			41,389		179,605			30,935
Trademarks	14,002			11,834		14,048			11,564
Non-compete agreements	5,713			4,090		3,252			2,514
Other	2,022			757		764			764
Total finite life intangibles	384,189			$	133,045	378,812			$	102,742
Total intangibles	390,427					385,074
Less: Accumulated amortization	(133,045		)			(102,742		)
Intangible assets, net	$	257,382				$	282,332

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Discontinued Operations (Tables)

12 Months Ended

Dec. 29, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

The following table summarizes the results of discontinued operations for the OrthoRecon business (in thousands):

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net sales	$	—		$	—		$	—
Selling, general and administrative	22,091			(746		)	135,235
(Loss) income from discontinued operations before income taxes	(22,091		)	746			(135,235		)
Provision (benefit) for income taxes	—			221			(1,707		)
Total (loss) income from discontinued operations, net of tax	$	(22,091	)	$	525		$	(133,528	)

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Organization and Description of Business

12 Months Ended

Dec. 29, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

Organization and Description of Business

Wright Medical Group N.V. is a global medical device company focused on extremities and biologics products. We are committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and are a recognized leader of surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics. We market our products in approximately 50 countries worldwide.

Our global corporate headquarters are located in Amsterdam, the Netherlands. We also have significant operations located in Memphis, Tennessee (U.S. headquarters, research and development, sales and marketing administration, and administrative activities); Bloomington, Minnesota (upper extremities sales and marketing and warehousing operations); Arlington, Tennessee (manufacturing and warehousing operations); Franklin, Tennessee (manufacturing and warehousing operations); Columbia City, Indiana (research and development); Alpharetta, Georgia (manufacturing and warehousing operations); Montbonnot, France (manufacturing and warehousing operations); Plouzané, France (research and development); and Macroom, Ireland (manufacturing). In addition, we have local sales and distribution offices in Canada, Australia, Asia, Latin America, and throughout Europe. For purposes of this report, references to “international” or “foreign” relate to non-U.S. matters while references to “domestic” relate to U.S. matters. Our common stock is traded on the Nasdaq Global Select Market under the symbol “WMGI.”

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the purchase agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash (the Offer). The Offer is currently scheduled to expire at 9:00 a.m., Eastern Time, on February 27, 2020, but may be extended in accordance with the terms of the purchase agreement between Stryker and Wright. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, completion of the tender offer, and other customary closing conditions.

Our fiscal year-end is generally determined on a 52-week basis and runs from the Monday nearest to the 31st of December of a year, and ends on the Sunday nearest to the 31st of December of the following year. Every few years, it is necessary to add an extra week to the year making it a 53-week period. The fiscal years ended December 29, 2019 and December 30, 2018 were 52-week periods. The fiscal year ended December 31, 2017 was a 53-week period. References in this report to a particular year generally refer to the applicable fiscal year. Accordingly, references to “2019” or “the year ended December 29, 2019” mean the fiscal year ended December 29, 2019.

The consolidated financial statements and accompanying notes present our consolidated results for each of the fiscal years in the three-year period ended December 29, 2019, December 30, 2018, and December 31, 2017.

All amounts are presented in U.S. dollars ($), except where expressly stated as being in other currencies, e.g., Euros (€).

References in these notes to consolidated financial statements to “we,” “our” and “us” refer to Wright Medical Group N.V. and its subsidiaries after the Wright/Tornier merger and Wright Medical Group, Inc. and its subsidiaries before the Wright/Tornier merger.

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Inventories

12 Months Ended

Dec. 29, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following (in thousands):

	December 29, 2019		December 30, 2018
Raw materials	$	12,681	$	9,612
Work-in-process	27,528		26,839
Finished goods	158,165		144,239
	$	198,374	$	180,690

Finished goods inventories held as of December 30, 2018 included an inventory fair value step-up of $1.0 million related to the acquisition of Cartiva, which was fully amortized in 2019. Total step-up related to the Cartiva acquisition was $1.4 million, of which $0.4 million was amortized in the fourth quarter of 2018.

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Leases

12 Months Ended

Dec. 29, 2019

Leases [Abstract]

Leases

Leases

We lease various manufacturing, warehousing and distribution facilities, administrative and sales offices as well as equipment under operating leases. We evaluate our contracts to identify leases, which are generally deemed to exist if there is an identified asset over which we have the right to direct its use and from which we obtain substantially all of the economic benefit from its use. Certain of our lease agreements contain rent escalation clauses, rent holidays, and other lease concessions. We recognize our minimum rental expense on a straight-line basis over the term of the lease beginning with the date of initial control of the asset. With the adoption of ASC 842, we recognized all operating leases with terms greater than twelve months in duration on our consolidated balance sheet as of December 31, 2018 as right-of-use assets and lease liabilities which totaled approximately $20 million. Additionally, we recorded a cumulative adjustment of $0.2 million to our accumulated deficit upon adoption. We adopted the standard using the prospective approach and did not retrospectively apply it to prior periods.

We have made certain assumptions and judgments when applying ASC 842, the most significant of which are:

• We elected the package of practical expedients available for transition which allows us to not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases and whether previously capitalized initial direct costs would qualify for capitalization under ASC 842.

• We elected to use hindsight when considering judgments and estimates such as assessments of lessee options to extend or terminate a lease or purchase the underlying asset.

• For all asset classes, we elected to not recognize a right-of-use asset and lease liability for short-term leases.

• For all asset classes, we elected to not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component.

• The determination of the discount rate used in a lease is our incremental borrowing rate which is based on what we would normally pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.

Our net ROU assets under operating leases are included within Other Assets on our consolidated balance sheet and include the following (in thousands):

	December 29, 2019
Buildings	$	17,331
Machinery and equipment	1,720
Furniture, fixtures and office equipment	943
	$	19,994

At December 29, 2019, the present value of the future minimum lease payments under operating lease obligations are included within Accrued expenses and other current liabilities and Other liabilities as follows (in thousands):

2020	$	7,420
2021	5,632
2022	3,878
2023	2,239
2024	1,356
Thereafter	4,036
Total minimum payments	24,561
Less amount representing interest	(3,806		)
Present value of minimum lease payments	20,755
Current portion	(6,608		)
Long-term portion	$	14,147

Prior to the adoption of ASC 842, operating leases were expensed ratably over the lease period and were not reflected within our consolidated balance sheet as of December 30, 2018. Rental expense under operating leases approximated $11.1 million and $8.9 million for the fiscal years ended December 30, 2018 and December 31, 2017, respectively. Future minimum lease payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining lease terms of one year or more, were reported in our Annual Report on Form 10-K for the fiscal year ended December 30, 2018 as follows (in thousands), and included a total of $7.8 million for future lease payments to our 51%-owned subsidiary:

2019	$	9,606
2020	7,498
2021	6,019
2022	4,433
2023	2,678
Thereafter	10,998
Total minimum payments	$	41,232

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

	December 29, 2019			December 30, 2018
Buildings	$	12,017		$	12,017
Machinery and equipment	30,733			24,331
Furniture, fixtures and office equipment	671			559
	43,421			36,907
Less: Accumulated depreciation	(16,726		)	(11,906		)
	$	26,695		$	25,001

Future minimum lease payments under finance lease obligations, together with the present value of the net minimum lease payments, are as follows (in thousands):

	December 29, 2019
2020	$	7,912
2021	6,166
2022	5,156
2023	3,337
2024	1,614
Thereafter	3,330
Total minimum payments	27,515
Less amount representing interest	(2,429		)
Present value of minimum lease payments	25,086
Current portion	(7,011		)
Long-term portion	$	18,075

Amounts recorded within our consolidated statement of operations for the fiscal year ended December 29, 2019 related to leased assets are as follows (in thousands):

	Fiscal year ended
	December 29, 2019
Lease cost
Finance lease cost:
Depreciation	$	5,688
Interest on lease liabilities	1,104
Operating lease cost	9,843
Short-term lease cost	128
Variable lease cost	500
Total lease cost	$	17,263
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	1,104
Operating cash flows from operating leases	$	9,247
Financing cash flows from finance leases	$	7,837
Weighted-average remaining lease term - finance leases	4.56
Weighted-average remaining lease term - operating leases	4.87
Weighted-average discount rate - finance leases	4.63		%
Weighted-average discount rate - operating leases	7.06		%

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Segment Information Revenue by Geographic Area and Product Segment (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Net sales	$ 248,605	$ 212,434	$ 229,734	$ 230,127	$ 238,147	$ 194,106	$ 205,400	$ 198,537	$ 920,900	$ 836,190	$ 744,989
United States
Segment Reporting Information [Line Items]
Net sales									706,289	623,538	554,511
EMEAC
Segment Reporting Information [Line Items]
Net sales									154,889	153,375	137,772
Other
Segment Reporting Information [Line Items]
Net sales									59,722	59,277	52,706
Lower extremities | United States
Segment Reporting Information [Line Items]
Net sales									276,821	250,735	228,044
Lower extremities | EMEAC
Segment Reporting Information [Line Items]
Net sales									46,787	46,342	42,333
Lower extremities | Other
Segment Reporting Information [Line Items]
Net sales									16,849	14,407	16,140
Upper extremities | United States
Segment Reporting Information [Line Items]
Net sales									329,787	281,314	239,965
Upper extremities | EMEAC
Segment Reporting Information [Line Items]
Net sales									90,420	87,647	73,243
Upper extremities | Other
Segment Reporting Information [Line Items]
Net sales									27,984	26,813	21,456
Biologics | United States
Segment Reporting Information [Line Items]
Net sales									91,450	83,077	78,361
Biologics | EMEAC
Segment Reporting Information [Line Items]
Net sales									7,921	8,312	8,445
Biologics | Other
Segment Reporting Information [Line Items]
Net sales									14,100	17,445	13,831
Sports med & other | United States
Segment Reporting Information [Line Items]
Net sales									8,231	8,412	8,141
Sports med & other | EMEAC
Segment Reporting Information [Line Items]
Net sales									9,761	11,074	13,751
Sports med & other | Other
Segment Reporting Information [Line Items]
Net sales									$ 789	$ 612	$ 1,279

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Supplemental Balance Sheet Information

12 Months Ended

Dec. 29, 2019

Other Liabilities Disclosure [Abstract]

Supplemental Balance Sheet Disclosures

Other Balance Sheet Information

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

	December 29, 2019		December 30, 2018
Employee bonuses	$	25,383	$	28,953
Other employee benefits	25,194		22,841
Royalties	13,441		12,330
Taxes other than income	13,826		7,897
Notes Conversion Derivatives (Note 6)	181,144		17,386
Commissions	18,025		19,356
Professional and legal fees	14,941		10,848
Contingent consideration (Note 6)	11,982		3,427
Product liability and other legal accruals (Note 17)	54,107		66,918
Other	28,982		27,125
	$	387,025	$	217,081

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Commitments and Contingencies

12 Months Ended

Dec. 29, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Purchase Obligations

We have entered into eight supply agreements for our products which include minimum purchase obligations. As of December 29, 2019, we have minimum purchase obligations of $7.8 million for 2020, $7.3 million for each year 2021 through 2024, and $3.6 million for 2025 and 2026.

Legal Contingencies

The legal contingencies described in this footnote relate primarily to WMT, an indirect subsidiary of Wright Medical Group N.V., and are not necessarily applicable to Wright Medical Group N.V. or other affiliated entities. Maintaining separate legal entities within our corporate structure is intended to ring-fence liabilities. We believe our ring-fenced structure should preclude corporate veil-piercing efforts against entities whose assets are not associated with particular claims.

As described below, our business is subject to various contingencies, including patent and other litigation and product liability claims. These contingencies could result in losses, including damages, fines, or penalties, any of which could be substantial. Although such matters are inherently unpredictable, and negative outcomes or verdicts can occur, we believe we have significant defenses in all of them and are vigorously defending all of them. 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, however, unless otherwise indicated, we do not believe any of them will have a material adverse effect on our financial position.

Our legal 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.

Patent Litigation

On March 23, 2018, WMT filed suit against Paragon 28, Inc. (Paragon 28) in the United States District Court for the District of Colorado, alleging infringement of ten patents concerning orthopaedic plates, plating systems and instruments, and related methods of use. Our complaint seeks damages, injunctive relief and attorneys’ fees. On June 4, 2018, Paragon 28 filed an amended answer and counterclaim seeking declaratory judgment of non-infringement and invalidity of the patent-in-suit, and attorneys’ fees. On September 28, 2018, WMT filed an amended complaint adding claims against Paragon 28 for misappropriation of trade secrets and related wrongdoing. Paragon 28 filed a motion to dismiss those trade secret-related claims, which WMT opposed. On September 30, 2019, the Court issued an order granting in part and denying in part the motion to dismiss, leaving intact the majority of the trade secret-related claims. A motion for clarification of the order remains pending. In March 2019, Paragon 28 filed four petitions with the Patent Trial and Appeal Board seeking Inter Partes Reviews of the patents in question, which WMT opposed. On September 25, 2019 and October 4, 2019, the Patent Trial and Appeal Board granted Paragon 28’s petitions. Oral arguments are expected to be held in June 2020; after which time, the Patent Trial and Appeal Board will render a substantive decision on the merits of the petitions.

Product Liability

We have received claims for personal injury against us associated with fractures of the PROFEMUR^® titanium modular neck product (PROFEMUR^® Claims). As of December 29, 2019, there were approximately 22 unresolved pending U.S. lawsuits and

approximately 50 unresolved pending non-U.S. lawsuits alleging such claims (44 of which are part of a single consolidated class action lawsuit in Canada). The overall fracture rate for the product is low and the fractures appear, at least in part, to relate to patient demographics. In 2009, we began offering a cobalt-chrome version of the PROFEMUR^® modular neck, which has greater strength characteristics than the alternative titanium version. However, during the fiscal 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 the United States and Canada who have previously required a revision following a fracture of a PROFEMUR^® titanium modular neck, or who may require a revision in the future. As of December 29, 2019, our accrual for PROFEMUR^® Claims totaled $12.1 million, of which $8.8 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $3.3 million is included within “Other liabilities.” As of December 30, 2018, our accrual for PROFEMUR^® Claims totaled $17.5 million, of which $12.3 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $5.2 million is included within “Other liabilities.” We expect to pay the majority of these claims within the next two years. Any claims associated with this product outside of the United States and Canada, or for any other products, will be managed as part of our standard product liability accrual methodology on a case-by-case basis.

We are aware that MicroPort has recalled a certain size of its cobalt chrome modular neck product as a result of alleged fractures. As of December 29, 2019, there were seven pending U.S. lawsuits and seven pending non-U.S. lawsuits against us alleging personal injury resulting from the fracture of a cobalt chrome modular neck. These claims will be managed as part of our standard product liability accrual methodology on a case-by-case basis.

Claims for personal injury have also been made against us associated with metal-on-metal hip products (primarily the CONSERVE^® product line). The pre-trial management of certain of these claims was consolidated in the federal court system, in the United States District Court for the Northern District of Georgia under multi-district litigation (MDL) and certain other claims by the Judicial Counsel Coordinated Proceedings in state court in Los Angeles County, California (JCCP and, together with the MDL, the Consolidated Metal-on-Metal Claims). Pursuant to previously disclosed settlement agreements with the Court-appointed attorneys representing plaintiffs in the MDL and JCCP described below (the MoM Settlement Agreements), the MDL and JCCP were closed to new cases effective October 18, 2017 and October 31, 2017, respectively.

Excluding claims resolved in the MoM Settlement Agreements, as of December 29, 2019, there were approximately 205 unresolved metal-on-metal hip cases pending in the U.S. This number includes cases ineligible for settlement under the MoM Settlement Agreements, cases which opted out of such settlements, post-settlement cases, tolled cases, and existing state court cases that were not part of the MDL or JCCP. As of December 29, 2019, we estimate there also were pending approximately 27 unresolved non-U.S. metal-on metal hip cases, 9 unresolved U.S. modular neck cases alleging claims related to the release of metal ions, and zero non-U.S. modular neck cases with metal ion allegations. We also estimate that as of December 29, 2019, there were approximately 514 non-revision claims either dismissed or awaiting dismissal from the MDL and JCCP, which dismissal is a condition of the MoM Settlement Agreements. Although there is a limited time period during which dismissed non-revision claims may be refiled, it is presently unclear how many non-revision claimants will elect to do so. As of December 29, 2019, no dismissed non-revision cases have been refiled.

We believe we have data that supports the efficacy and safety of these hip products. Every hip implant case, including metal-on-metal hip cases, involves fundamental issues of law, 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, statutes of limitation, and the existence of actual, provable injury.

As previously disclosed, between November 2016 and October 2017, WMT entered into three MoM Settlement Agreements with Court-appointed attorneys representing plaintiffs in the MDL and JCCP to settle a total of 1,974 cases that met the eligibility requirements of the MoM Settlement Agreements and were either pending in the MDL or JCCP, or subject to court-approved tolling agreements in the MDL or JCCP, for an aggregate sum of $339.2 million. As of December 29, 2019, we had funded $333.4 million under the MoM Settlement Agreements. We, the indirect parent company of WMT, have guaranteed WMT’s obligations under the MoM Settlement Agreements.

The MoM Settlement Agreements contain specific eligibility requirements and establish procedures for proof and administration of claims, negotiation, and execution of individual settlement agreements, determination of the final total settlement amount, and funding of individual settlement amounts by WMT. Eligibility requirements include, without limitation, that the claimant has a claim pending or tolled in the MDL or JCCP, that, with limited exceptions, the claimant has undergone a revision surgery within eight years of the original implantation surgery, and that the claim has not been identified by WMT as having possible statute of limitation issues. Claimants who have had bilateral revision surgeries will be counted as two claims but only to the extent both claims separately satisfy all eligibility criteria.

The MoM Settlement Agreements were entered into solely as a compromise of the disputed claims being settled and are not evidence that any claim has merit nor are they an admission of wrongdoing or liability by WMT. WMT will continue to vigorously defend metal-on-metal hip claims not settled pursuant to the MoM Settlement Agreements.

As of December 29, 2019, our accrual for metal-on-metal claims totaled $40.5 million, of which $33.0 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $7.5 million is included within “Other liabilities.” As of December 30, 2018, our accrual for metal-on-metal claims totaled $74.5 million, of which $51.9 million was included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $22.6 million was included within “Other liabilities.” Our accrual is based on (i) case by case accruals for specific cases where facts and circumstances warrant, and (ii) the implied settlement values for eligible claims under the MoM Settlement Agreements. We are unable to reasonably estimate the high-end of a possible range of loss for claims which elected to opt out of the MoM Settlement Agreements. Claims we can confirm would meet the eligibility criteria set forth in the MoM Settlement Agreements but are excluded from the settlements due to the maximum settlement cap, or because they are cases not part of the MDL or JCCP, have been accrued consistent with the respective settlement rates. Due to the general uncertainties surrounding all metal-on metal claims as noted above, as well as insufficient information about individual claims, we are presently unable to reasonably estimate a range of loss for future claims; hence we have not accrued for these claims at the present time.

We continue to believe the high-end of a possible range of loss for existing revision claims that do not meet eligibility criteria of the MoM Settlement Agreements will not, on an average per case basis, exceed the average per case accrual we take for revision claims we can confirm do meet eligibility criteria of the applicable settlement agreement. Future claims will be evaluated for accrual on a case by case basis using the accrual methodologies described above (which could change if future facts and circumstances warrant).

We have maintained product liability insurance coverage on a claims-made basis. During the fiscal quarter ended September 30, 2012, we received a customary reservation of rights from Federal, our then primary product liability insurance carrier, asserting that certain present and future claims which allege certain types of injury related to the 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 have been 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. We notified Federal that we disputed its characterization of the CONSERVE^® Claims as a single occurrence, which resulted in multi-year insurance coverage litigation (the Tennessee Coverage Litigation) that has recently been resolved as discussed below.

As previously disclosed, we entered into settlement agreements with all seven insurance carriers with whom metal-on-metal hip coverage was in dispute - Columbia Casualty Company, Travelers, AXIS Surplus Lines Insurance Company, Federal, Catlin Specialty Insurance Company, Catlin Underwriting Agencies Limited for and on behalf of Syndicate 2003 at Lloyd’s of London, and Lexington Insurance Company (Lexington), thus resolving in full the Tennessee Coverage Litigation and the separate litigation and arbitration proceedings with Lexington.

As of December 29, 2019, our insurance carriers have paid an aggregate of $120.4 million of insurance proceeds related to the metal-on-metal claims, including amounts received under the above referenced settlement agreements, of which $113.7 million has been paid directly to us and $6.7 million has been paid directly to claimants. Except as provided in such settlement agreements, our acceptance of the insurance proceeds was not a waiver of any other claim we may have against the insurance carriers unrelated to metal-on-metal coverage and our disputes with carriers relating thereto.

Given the substantial or indeterminate amounts sought in these matters, and the inherent unpredictability of such matters, an adverse outcome in these matters in excess of the amounts included in our accrual for contingencies could have a material adverse effect on our financial condition, results of operations and cash flow. Future revisions to our estimates of these provisions could materially impact our results of operations and financial position. We use the best information available to determine the level of accrued product liabilities, and believe our accruals are adequate.

Stryker Acquisition Related Litigation

On January 15, 2020, John Thompson, a purported shareholder of our company, filed a putative class action lawsuit against us, members of our board of directors, Stryker B.V. and Stryker Corporation in the United States District Court for the District of Delaware, captioned Thompson v. Wright Medical Group N.V., et al., Case No. 1:20-cv-00061 (Thompson Complaint). The Thompson Complaint alleges that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which they allege rendered the Schedule 14D-9 false and misleading. In addition, the Thompson Complaint alleges that members of our board of directors and Stryker acted as controlling persons of the company within the

meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Solicitation/Recommendation Statement. The Thompson Complaint seeks, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; an order directing our board of directors to file a Solicitation/Recommendation Statement that does not contain any untrue statements of material fact and that states all material facts required in it or necessary to make the statements contained therein not misleading; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including reasonable allowance for attorneys’ fees and experts’ fees.

On January 31, 2020, William Grubb, a purported shareholder of our company, filed a putative class action lawsuit against us and members of our board of directors in the United States District Court for the Eastern District of New York, captioned Grubb v. Wright Medical Group N.V., et al., Case No. 1:20-cv-00553 (Grubb Complaint). The Grubb Complaint alleges that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the Grubb Complaint alleges rendered the Schedule 14D-9 false and misleading. In addition, the Grubb Complaint alleges that members of our board of directors acted as controlling persons of the company within the meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The Grubb Complaint seeks, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including counsel fees and expenses and expert fees.

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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Capital Stock and Earnings per share Narrative (Details) $ / shares in Units, $ in Thousands			12 Months Ended
	Aug. 27, 2018 USD ($) $ / shares shares	Feb. 13, 2015 shares	Dec. 29, 2019 USD ($) shares	Dec. 30, 2018 USD ($) shares	Dec. 31, 2017 USD ($) shares	Dec. 29, 2019 € / shares	Nov. 04, 2019 $ / shares	Dec. 30, 2018 € / shares shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock, value, authorized | $			$ 9,600
Common stock, shares authorized (in shares)			320,000,000					320,000,000
Common stock, par value (in usd per share) | € / shares						€ 0.03		€ 0.03
Common stock, shares issued (in shares)			128,614,026					125,555,751
Common stock, ordinary shares issuable, percent of outstanding stock			20.00%
Shares issued, price per share (in usd per share) | $ / shares	$ 24.60
Proceeds from equity offering | $			$ 0	$ 448,924	$ 0
Payment of equity offering costs | $			$ 0	$ 25,896	$ 0
Antidilutive securities excluded from computation of earnings per share (in shares)			8,900,000	9,900,000	10,000,000.0
Antidilutive securities, non-vested shares, restricted stock units, and stock-settled phantom stock units (in shares)			1,200,000	1,300,000	1,300,000
Antidilutive securities, non-vested shares, performance shares (in shares)			800,000		200,000			500,000
Stryker Corporation
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Sale of stock, price per share (in usd per share) | $ / shares							$ 30.75
General Purpose
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock, ordinary shares issuable, percent of outstanding stock			10.00%
Potential Mergers and Acquisitions
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock, ordinary shares issuable, percent of outstanding stock			10.00%
Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock issued during period (in shares)	18,200,000			18,248,932
Proceeds from equity offering | $	$ 423,000
Underwriting Discount and Commissions
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Payment of equity offering costs | $	25,400
Offering Costs, Other
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Payment of equity offering costs | $	$ 500
2021 Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common shares attributable to dilutive effect of options and warrants (in shares)			18,500,000	18,500,000	18,500,000
2020 Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common shares attributable to dilutive effect of options and warrants (in shares)		20,500,000	1,900,000	6,200,000	19,600,000
2023 Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common shares attributable to dilutive effect of options and warrants (in shares)			24,400,000	20,200,000

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Derivatives and Fair Value of Financial Instruments Derivative Instruments, Gain (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Derivative [Line Items]
Net gain (loss) on changes in fair value	$ 10,962	$ (39,271)	$ 4,848
2023 Notes Hedges
Derivative [Line Items]
Net gain (loss) on changes in fair value	(106,827)	(25,355)	0
2023 Notes Conversion Derivative
Derivative [Line Items]
Net gain (loss) on changes in fair value	114,153	7,792	0
2021 Notes Hedges
Derivative [Line Items]
Net gain (loss) on changes in fair value	(4,864)	61,238	(32,032)
2021 Notes Conversion Derivative
Derivative [Line Items]
Net gain (loss) on changes in fair value	8,061	(61,391)	35,453
2020 Notes Hedges
Derivative [Line Items]
Net gain (loss) on changes in fair value	996	7,342	(32,199)
2020 Notes Conversion Derivative
Derivative [Line Items]
Net gain (loss) on changes in fair value	$ (557)	$ (28,897)	$ 33,626

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Derivatives and Fair Value of Financial Instruments Assets and Liabilities Measured at Fair Value, Rollforward (Details) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
	Feb. 07, 2019	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, liability, gain (loss)		$ 6,600	$ 900	$ 1,700	$ 400	$ 700	$ 300	$ 400	$ 400
Gain/(loss) on issuance/settlement included in earnings	$ (12,600)
2020 Notes Hedges
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, asset, beginning balance					17,822					$ 17,822
Fair value, asset, additions										0
Fair value, asset, gain (loss)										996
Gain/(loss) on issuance/settlement included in earnings										0
Fair value, liability, settlements										(16,849)
Fair value, currency										0
Fair value, asset, ending balance		1,969				17,822				1,969
2020 Notes Conversion Derivative
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, liability, beginning balance					(17,386)					(17,386)
Fair value, liability, purchases										0
Fair value, liability, gain (loss)										(557)
Gain/(loss) on issuance/settlement included in earnings										16,277
Fair value, liability, settlements										0
Fair value, currency										0
Fair value, liability, ending balance		(1,666)				(17,386)				(1,666)
2021 Notes Hedges
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, asset, beginning balance					188,301					188,301
Fair value, asset, additions										0
Fair value, asset, gain (loss)										(4,864)
Gain/(loss) on issuance/settlement included in earnings										0
Fair value, liability, settlements										0
Fair value, currency										0
Fair value, asset, ending balance		183,437				188,301				183,437
2021 Notes Conversion Derivative
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, liability, beginning balance					(187,539)					(187,539)
Fair value, liability, purchases										0
Fair value, liability, gain (loss)										8,061
Gain/(loss) on issuance/settlement included in earnings										0
Fair value, liability, settlements										0
Fair value, currency										0
Fair value, liability, ending balance		(179,478)				(187,539)				(179,478)
2023 Notes Hedges
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, asset, beginning balance					115,923					115,923
Fair value, asset, additions										30,144
Fair value, asset, gain (loss)										(106,827)
Gain/(loss) on issuance/settlement included in earnings										0
Fair value, liability, settlements										0
Fair value, currency										0
Fair value, asset, ending balance		39,240				115,923				39,240
2023 Notes Conversion Derivative
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, liability, beginning balance					(116,833)					(116,833)
Fair value, liability, purchases										0
Fair value, liability, gain (loss)										114,153
Gain/(loss) on issuance/settlement included in earnings										(28,875)
Fair value, liability, settlements										0
Fair value, currency										0
Fair value, liability, ending balance		(31,555)				(116,833)				(31,555)
Contingent consideration
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair value, liability, beginning balance					$ (19,248)					(19,248)
Fair value, liability, purchases										0
Fair value, liability, gain (loss)										(9,532)
Gain/(loss) on issuance/settlement included in earnings										0
Fair value, liability, settlements										207
Fair value, currency										496
Fair value, liability, ending balance		$ (28,077)				$ (19,248)				$ (28,077)

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Share-Based Compensation Narrative (Details) $ / shares in Units, $ in Millions		12 Months Ended
	Jun. 28, 2018 shares	Dec. 29, 2019 USD ($) period hour $ / shares shares	Dec. 30, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Nov. 04, 2019 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation costs | $		$ 56.4
Award service period		4 years
Award expiration term		10 years
Number of shares authorized (in shares)		11,200,000
Number of shares available for grant (in shares)		6,735,115
Shares, outstanding (in shares)		10,444,606
Intrinsic value of options exercised in period | $		$ 17.9	$ 4.9	$ 9.1
Number of shares in ESOP (in shares)		216,667
ESPP, number of plan periods per year | period		2
Maximum annual contributions, percent		20.00%
Number of shares allocated to ESOP (in shares)		1,000
Purchase price discount, ESPP, percent		85.00%
Stryker Corporation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Sale of stock, price per share (in usd per share) | $ / shares					$ 30.75
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options forfeited or expired (in shares)		236,000
Weighted average grant date fair value (in usd per share) | $ / shares		$ 9.33	$ 9.32	$ 9.80
Expected option life		6 years	7 years	6 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested equity instruments, granted (in shares)		598,000	600,000	500,000
Weighted average grant date fair value, unvested equity instruments, granted (in usd per share) | $ / shares		$ 27.90	$ 24.05	$ 27.83
Fair value of equity instruments | $		$ 18.0	$ 12.2	$ 9.0
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award service period		3 years
Unvested equity instruments, granted (in shares)		321,000	300,000	200,000
Weighted average grant date fair value, unvested equity instruments, granted (in usd per share) | $ / shares		$ 27.84	$ 24.49	$ 27.86
Inducement Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of options exercised in period | $		$ 2.9	$ 1.6	$ 0.3
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)		550,000
Number of shares available for grant (in shares)		214,225
ESPP eligibility requirements, minimum hours per week | hour		20
Expected option life		6 months	6 months	6 months
Director | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award service period		1 year
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award service period		4 years
Performance criteria, target level cap		200.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award service period		3 years
2010 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant (in shares)		1,329,648
Options forfeited or expired (in shares)		6,405,992
2017 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options forfeited or expired (in shares)	520,656
Wright Medical Group, Inc.
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expiration term		10 years
Shares, outstanding (in shares)		1,891,240
Tornier N.V.
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares in ESOP (in shares)		333,333

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Share-Based Compensation RSU and PSU Activity (Details) - $ / shares shares in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested equity instruments, beginning balance (in shares)	466
Unvested equity instruments, granted (in shares)	321	300	200
Unvested equity instruments, vested (in shares)	0
Unvested equity instruments, forfeited (in shares)	0
Unvested equity instruments, ending balance (in shares)	787	466
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted average grant date fair value, unvested equity instruments, beginning balance (in usd per share)	$ 26.00
Weighted average grant date fair value, unvested equity instruments, granted (in usd per share)	27.84	$ 24.49	$ 27.86
Weighted average grant date fair value, unvested equity instruments, vested (in usd per share)	0
Weighted average grant date fair value, unvested equity instruments, forefeited (in usd per share)	0
Weighted average grant date fair value, unvested equity instruments, ending balance (in usd per share)	26.75	$ 26.00
Aggregate intrinsic value, unvested equity instruments	$ 24,076,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested equity instruments, beginning balance (in shares)	1,322
Unvested equity instruments, granted (in shares)	598	600	500
Unvested equity instruments, vested (in shares)	(589)
Unvested equity instruments, forfeited (in shares)	(82)
Unvested equity instruments, ending balance (in shares)	1,249	1,322
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted average grant date fair value, unvested equity instruments, beginning balance (in usd per share)	$ 23.90
Weighted average grant date fair value, unvested equity instruments, granted (in usd per share)	27.90	$ 24.05	$ 27.83
Weighted average grant date fair value, unvested equity instruments, vested (in usd per share)	22.97
Weighted average grant date fair value, unvested equity instruments, forefeited (in usd per share)	25.51
Weighted average grant date fair value, unvested equity instruments, ending balance (in usd per share)	26.16	$ 23.90
Aggregate intrinsic value, unvested equity instruments	$ 38,196,000

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Goodwill and Intangibles Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, accumulated amortization (Less)	$ 133,045	$ 102,742
Intangible assets, gross (excluding goodwill)	390,427	385,074
Intangible assets, net	257,382	282,332
Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	384,189	378,812
Finite-lived intangible assets, accumulated amortization (Less)	133,045	102,742
Completed technology | Indefinite-lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets (excluding goodwill)	6,238	6,262
Completed technology | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	172,111	174,596
Finite-lived intangible assets, accumulated amortization (Less)	72,140	55,114
Licenses | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	9,247	6,547
Finite-lived intangible assets, accumulated amortization (Less)	2,835	1,851
Customer relationships | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	181,094	179,605
Finite-lived intangible assets, accumulated amortization (Less)	41,389	30,935
Trademarks | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	14,002	14,048
Finite-lived intangible assets, accumulated amortization (Less)	11,834	11,564
Non-compete agreements | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	5,713	3,252
Finite-lived intangible assets, accumulated amortization (Less)	4,090	2,514
Other | Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	2,022	764
Finite-lived intangible assets, accumulated amortization (Less)	$ 757	$ 764

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Organization and Description of Business (Details)	12 Months Ended
	Dec. 29, 2019 segment	Nov. 04, 2019 $ / shares
Business Acquisition [Line Items]
Number of countries in which entity operates	50
Number of operating segments | segment	3
Stryker Corporation
Business Acquisition [Line Items]
Sale of stock, price per share (in usd per share) | $ / shares		$ 30.75

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Earnings Per Share (Tables)

12 Months Ended

Dec. 29, 2019

Earnings Per Share [Abstract]

Weighted Average Number of Shares Outstanding for Basic and Diluted Earnings Per Share

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

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Weighted-average number of ordinary shares outstanding-basic and diluted	126,601	112,592	104,531

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Capital Stock and Earnings per share

12 Months Ended

Dec. 29, 2019

Earnings Per Share [Abstract]

Capital Stock and Earnings Per Share

Capital Stock and Earnings Per Share

Our articles of association provide an authorized capital of €9.6 million divided into 320 million ordinary shares, each with a par value of three Euro cents (€0.03). We had 128.6 million and 125.6 million ordinary shares issued and outstanding as of December 29, 2019 and December 30, 2018, respectively.

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, receipt of applicable regulatory approvals and other customary conditions.

At our 2019 annual general meeting of shareholders, our shareholders authorized our board of directors until June 28, 2021 to issue, or grant rights to purchase or subscribe for, our unissued ordinary shares up to 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions.

On August 27, 2018, we entered into an underwriting agreement with J.P. Morgan, relating to the registered public offering of 18.2 million ordinary shares, at an initial price to the public of $24.60 per share, for a total price of $448.9 million. The net proceeds to us were $423.0 million, after deducting underwriting discounts and commissions of $25.4 million and offering costs of $0.5 million. The offering closed on August 30, 2018. The proceeds were used to fund the purchase price of the Cartiva acquisition which closed on October 10, 2018, as well as costs and expenses related thereto. See Note 3 for additional details related to the Cartiva acquisition.

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 ordinary shares outstanding during the period. Diluted earnings per share is calculated to include any dilutive effect of our ordinary share equivalents. For the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, our ordinary share equivalents consisted of stock options, restricted stock units, performance share units, and warrants. The dilutive effect of the stock options, restricted stock units, performance share units, and warrants is calculated using the treasury-stock method.

We had outstanding options to purchase 8.9 million ordinary shares, 1.2 million restricted stock units, and 0.8 million performance share units, assuming maximum performance, at December 29, 2019; outstanding options to purchase 9.9 million ordinary shares, 1.3 million restricted stock units, and 0.5 million performance share units, assuming maximum performance, at December 30, 2018; and outstanding options to purchase $10.0 million ordinary shares, $1.3 million restricted stock units, and 0.2 million performance share units, assuming maximum performance, at December 31, 2017.

We had outstanding net-share settled warrants on the 2020 Notes of 1.9 million, 6.2 million, 19.6 million ordinary shares at December 29, 2019, December 30, 2018, and December 31, 2017, respectively. We also had net-share settled warrants on the 2021 Notes of 18.5 million ordinary shares at December 29, 2019, December 30, 2018, and December 31, 2017. Finally, we had net-share settled warrants on the 2023 Notes of 24.4 million and 20.2 million ordinary shares at December 29, 2019 and December 30, 2018, respectively.

None of the options, restricted stock units, performance share units, or warrants were included in the calculation of diluted net loss from continuing operations per share, diluted loss from discontinued operations per share, and diluted net loss per share for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, because we recorded a net loss from continuing operations for all periods. Including these instruments would be anti-dilutive as the net loss from continuing operations is the control number in determining whether those potential common shares are dilutive or anti-dilutive.

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

	Fiscal year ended
	December 29, 2019	December 30, 2018	December 31, 2017
Weighted-average number of ordinary shares outstanding-basic and diluted	126,601	112,592	104,531

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Quarterly Results of Operations

12 Months Ended

Dec. 29, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (unaudited)

Quarterly Results of Operations (unaudited):

The following tables present a summary of our unaudited quarterly operating results for each of the four quarters in 2019 and 2018, 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 report 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.

	2019
	First quarter			Second quarter			Third quarter			Fourth quarter
Net sales	$	230,127		$	229,734		$	212,434		$	248,605
Cost of sales	46,317			48,338			44,441			49,545
Gross profit	183,810			181,396			167,993			199,060
Operating expenses:
Selling, general and administrative	153,306			152,112			152,780			156,468
Research and development	16,972			18,756			18,045			20,312
Amortization of intangible assets	7,587			7,862			8,308			8,164
Total operating expenses	177,865			178,730			179,133			184,944
Operating income (loss)	5,945			2,666			(11,140		)	14,116
Net loss from continuing operations, net of tax	(30,256		)	(18,932		)	(36,200		)	(6,746		)
(Loss) income from discontinued operations, net of tax	(6,345		)	1,120			(7,589		)	(9,277		)
Net loss	$	(36,601	)	$	(17,812	)	$	(43,789	)	$	(16,023	)
Net loss, continuing operations per share, basic and diluted	$	(0.24	)	$	(0.15	)	$	(0.29	)	$	(0.05	)
Net loss income per share, basic and diluted	$	(0.29	)	$	(0.14	)	$	(0.35	)	$	(0.13	)
Weighted-average number of shares outstanding-basic and diluted	125,812			126,267			126,767			127,557

Our 2019 operating income (loss) included the following:

• transaction and transition costs totaling $0.4 million, $0.6 million, $0.6 million, and $4.7 million during the first, second, third, and fourth quarters of 2019, respectively, associated with the Cartiva acquisition and, during the fourth quarter, the proposed acquisition by Stryker;

• a non-cash asset impairment associated with the technology transfer of $5.6 million during the third quarter of 2019; and

• amortization of inventory step-up of $0.4 million in the first, second, and third quarter of 2019 associated with inventory acquired from the Cartiva acquisition.

Our 2019 net loss from continuing operations included the following:

• the after-tax effect of the above amounts within operating income (loss);

• the after-tax effects of non-cash interest expense related to the amortization of the debt discount on our 2020 Notes, 2021 Notes and 2023 Notes totaling $12.3 million, $12.1 million, $12.3 million, and $12.6 million during the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of a $14.3 million loss on the exchange of the cash convertible notes, primarily due to settlement of related conversion derivative liabilities, recognized in the first quarter of 2019;

• the after-tax effects of our mark-to-market adjustments on derivative assets and liabilities totaling a $1.0 million gain, $0.8 million gain, $0.9 million loss, and $10.1 million gain recognized in the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of non-cash foreign currency translation charges of $0.3 million gain, $0.0 million loss, $0.7 million gain, and $0.8 million loss during the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of our fair value adjustments to contingent consideration totaling a $0.4 million loss, $1.7 million loss, $0.9 million loss, and $6.6 million loss in the first, second, third, and fourth quarters of 2019, respectively;

• the after-tax effects of our CVR mark-to-market adjustments of $0.4 million gain recognized in the first quarter of 2019. The CVR agreement expired on March 1, 2019;

• a tax provision of $2.6 million, $2.6 million, $2.6 million, and $2.3 million due to a change in tax rates on income from deferred intercompany transactions in the first, second, third, and fourth quarter of 2019, respectively; and

	2018
	First quarter			Second quarter			Third quarter			Fourth quarter
Net sales	$	198,537		$	205,400		$	194,106		$	238,147
Cost of sales	41,139			45,558			44,307			49,149
Gross profit	157,398			159,842			149,799			188,998
Operating expenses:
Selling, general and administrative	137,248			140,826			139,223			160,664
Research and development	13,899			14,665			13,829			16,749
Amortization of intangible assets	7,141			6,009			5,881			7,699
Total operating expenses	158,288			161,500			158,933			185,112
Operating (loss) income	(890		)	(1,658		)	(9,134		)	3,886
Net loss from continuing operations, net of tax	(19,907		)	(90,621		)	(35,829		)	(22,947		)
(Loss) income from discontinued operations, net of tax	(5,607		)	22,923			(6,696		)	(10,821		)
Net loss	$	(25,514	)	$	(67,698	)	$	(42,525	)	$	(33,768	)
Net loss, continuing operations per share, basic and diluted	$	(0.19	)	$	(0.85	)	$	(0.32	)	$	(0.18	)
Net loss income per share, basic and diluted	$	(0.24	)	$	(0.64	)	$	(0.38	)	$	(0.27	)
Weighted-average number of shares outstanding-basic and diluted	105,904			106,095			113,043			125,323

Our 2018 operating (loss) income included the following:

• transaction and transition costs totaling $0.9 million, $1.3 million, $2.0 million, and $7.8 million during the first, second, third, and fourth quarters of 2018, respectively; and

• amortization of inventory step-up of $0.4 million in the fourth quarter of 2018 associated with inventory acquired from the Cartiva acquisition.

Our 2018 net loss from continuing operations included the following:

• the after-tax effect of the above amounts within operating (loss) income;

• the after-tax effects of non-cash interest expense related to the amortization of the debt discount on our 2020 Notes, 2021 Notes and 2023 Notes totaling $12.0 million, $12.3 million, $12.3 million, and $12.6 million during the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of a $39.9 million non-cash loss on extinguishment of debt to write-off unamortized debt discount and deferred financing fees associated with the partial settlement of the 2020 Notes during the second quarter of 2018;

• the after-tax effects of our mark-to-market adjustments on derivative assets and liabilities totaling a $1.7 million loss, $32.9 million loss, $0.2 million gain, and $1.6 million loss recognized in the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of non-cash foreign currency translation charges of $0.8 million, $1.9 million, $0.2 million, and $0.3 million during the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of our fair value adjustments to contingent consideration totaling a $0.4 million loss, $0.4 million loss, $0.3 million loss, and $0.7 million loss in the first, second, third, and fourth quarters of 2018, respectively;

• the after-tax effects of our CVR mark-to-market adjustments of $3.9 million gain, $2.5 million gain, $3.4 million loss, and $3.2 million loss recognized in the first, second, third, and fourth quarters of 2018, respectively;

• a tax benefit related to the realizability of deferred tax assets as result of the Cartiva acquisition of $3.6 million in the fourth quarter of 2018;

• a tax provision of $2.7 million due to a change in judgment regarding our ability to realize certain deferred tax assets in the fourth quarter of 2018; and

•

a U.S. tax (benefit) provision within continuing operations recorded as a result of the pre-tax gain recognized within discontinued operations due to the $30.75 million insurance settlement totaling $(6.2) million, $2.2 million, and $3.8 million in the second, third, and fourth quarters of 2018, respectively.

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Segment Information Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 29, 2019 USD ($)	Dec. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Segment Reporting Information [Line Items]
Goodwill	$ 1,260,967	$ 1,268,954	$ 933,662
Segment
Segment Reporting Information [Line Items]
Number of reportable segments	3
Lower Extremities & Biologics
Segment Reporting Information [Line Items]
Goodwill	$ 569,970	569,970	218,525
Lower Extremities & Biologics | United States
Segment Reporting Information [Line Items]
Goodwill	570,000
Upper extremities
Segment Reporting Information [Line Items]
Goodwill	625,926	627,850	630,650
Upper extremities | United States
Segment Reporting Information [Line Items]
Goodwill	625,900
Extremities & Biologics
Segment Reporting Information [Line Items]
Goodwill	65,071	$ 71,134	$ 84,487
International Segment | Extremities & Biologics
Segment Reporting Information [Line Items]
Goodwill	$ 65,100

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Schedule II - Valuation and Qualifying Accounts (Details) - SEC Schedule, 12-09, Allowance, Credit Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Valuation allowances and reserves, beginning balance	$ 3,045	$ 4,328	$ 4,469
Charged to Cost and Expenses	490	189	1,243
Deductions and Other	(90)	(1,472)	(1,384)
Valuation allowances and reserves, ending balance	$ 3,445	$ 3,045	$ 4,328

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Retirement Plan Benefits (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Postemployment Benefits [Abstract]
Defined contribution plan, employer matching contribution, 100%	100.00%
Defined contribution plan, employee annual compensation eligible for employer match, 3%	3.00%
Defined contribution plan, employer matching contribution, 50%	50.00%
Defined contribution plan, employee annual compensation eligible for employer match, 2%	2.00%
Defined contribution plan, cost	$ 7.2	$ 6.2	$ 5.5

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Leases Narrative (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 01, 2019	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease, right-of-use asset		$ 19,994			$ 20,000
Operating lease, liability		20,755	$ 20,000
Impact of adoption, new accounting principle, cumulative adjustment		$ 229
Rent expense			11,100	$ 8,900
Future minimum lease payments - inter-company lease			$ 7,800
Ownership percentage		51.00%
Retained Earnings
Lessee, Lease, Description [Line Items]
Impact of adoption, new accounting principle, cumulative adjustment	$ 200	$ 229

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Weighted-average Shares (Details) - shares shares in Thousands	3 Months Ended								12 Months Ended
	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Weighted-average number of ordinary shares outstanding-basic and diluted	127,557	126,767	126,267	125,812	125,323	113,043	106,095	105,904	126,601	112,592	104,531

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Derivatives and Fair Value of Financial Instruments Narrative (Details) $ / shares in Units, $ in Thousands, € in Millions		12 Months Ended			72 Months Ended
	Feb. 07, 2019 USD ($)	Dec. 29, 2019 USD ($)	Dec. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Mar. 01, 2019 USD ($) $ / shares	Dec. 29, 2019 EUR (€)	Oct. 28, 2018 USD ($)	Dec. 14, 2017 USD ($)	Dec. 14, 2017 EUR (€)
Derivative [Line Items]
Derivative settlement gain or loss	$ (12,600)
Cash payment, contingent consideration					$ 42,000
Fair value for CVRs		$ (420)	$ 140	$ 5,320
2023 Notes Conversion Derivative
Derivative [Line Items]
Derivative settlement gain or loss		(28,875)
2020 Notes Conversion Derivative
Derivative [Line Items]
Derivative settlement gain or loss		16,277
IMASCAP SAS
Derivative [Line Items]
Contingent consideration fair value								$ 17,800	€ 15.1
Technical Milestones And Sales Earnouts | IMASCAP SAS
Derivative [Line Items]
Contingent consideration, liability		28,000				€ 25.1
Technical Milestones | IMASCAP SAS
Derivative [Line Items]
Contingent consideration, liability		$ 20,800	12,700
Contingent consideration, liability, measurement input		0.06				0.06
Sales Earnouts | IMASCAP SAS
Derivative [Line Items]
Contingent consideration, liability		$ 7,200	6,500
Contingent consideration, liability, measurement input		0.12				0.12
AUGMENT Bone Graft Payment of Conditional Value Rights, Condition One
Derivative [Line Items]
Price per share of contingent consideration | $ / shares					$ 1.50
Contingent Value Rights
Derivative [Line Items]
Contingent consideration, liability			400
Fair Value, Measurements, Recurring | AUGMENT Bone Graft Payment of Conditional Value Rights, Condition One
Derivative [Line Items]
Contingent consideration fair value		$ 40,000					$ 40,000
Fair Value, Measurements, Recurring | AUGMENT Bone Graft Payment of Conditional Value Rights, Condition Two
Derivative [Line Items]
Contingent consideration fair value		$ 70,000
Fair Value, Measurements, Recurring | Contingent Value Rights
Derivative [Line Items]
Contingent consideration fair value			$ 420

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Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 30, 2018
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	$ 648,318	$ 534,366
Less: Accumulated depreciation	(396,396)	(309,437)
Property, plant and equipment, net	251,922	224,929
Land and land improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	2,154	2,127
Buildings
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	60,205	43,087
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	102,014	82,445
Furniture, fixtures and office equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	185,145	161,614
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	17,259	14,113
Surgical instruments
Property, Plant and Equipment [Line Items]
Property, plant and equipment, at cost	$ 281,541	$ 230,980

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Share-Based Compensation Black-Scholes Valuation Model Assumptions (Details)	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate, minimum	1.50%	2.30%	1.30%
Risk-free interest rate, maximum	2.30%	2.80%	1.90%
Expected option life	6 months	6 months	6 months
Expected price volatility	30.00%	31.00%	24.00%
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate, minimum	1.50%	2.60%	1.90%
Risk-free interest rate, maximum	2.40%	2.90%	2.00%
Expected option life	6 years	7 years	6 years
Expected price volatility	31.00%	32.00%	33.00%

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Segment Information (Tables)

12 Months Ended

Dec. 29, 2019

Segment Reporting [Abstract]

Revenue from External Customers by Products and Services

Net sales by geographic region by product line are as follows (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
United States
Lower extremities	$	276,821	$	250,735	$	228,044
Upper extremities	329,787		281,314		239,965
Biologics	91,450		83,077		78,361
Sports med & other	8,231		8,412		8,141
Total United States	$	706,289	$	623,538	$	554,511
EMEAC
Lower extremities	$	46,787	$	46,342	$	42,333
Upper extremities	90,420		87,647		73,243
Biologics	7,921		8,312		8,445
Sports med & other	9,761		11,074		13,751
Total EMEAC	$	154,889	$	153,375	$	137,772
Other
Lower extremities	$	16,849	$	14,407	$	16,140
Upper extremities	27,984		26,813		21,456
Biologics	14,100		17,445		13,831
Sports med & other	789		612		1,279
Total other	$	59,722	$	59,277	$	52,706
Total net sales	$	920,900	$	836,190	$	744,989

Revenue from External Customers by Geographic Areas

Net sales by geographic region by product line are as follows (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
United States
Lower extremities	$	276,821	$	250,735	$	228,044
Upper extremities	329,787		281,314		239,965
Biologics	91,450		83,077		78,361
Sports med & other	8,231		8,412		8,141
Total United States	$	706,289	$	623,538	$	554,511
EMEAC
Lower extremities	$	46,787	$	46,342	$	42,333
Upper extremities	90,420		87,647		73,243
Biologics	7,921		8,312		8,445
Sports med & other	9,761		11,074		13,751
Total EMEAC	$	154,889	$	153,375	$	137,772
Other
Lower extremities	$	16,849	$	14,407	$	16,140
Upper extremities	27,984		26,813		21,456
Biologics	14,100		17,445		13,831
Sports med & other	789		612		1,279
Total other	$	59,722	$	59,277	$	52,706
Total net sales	$	920,900	$	836,190	$	744,989

Schedule of Segment Reporting Information, by Segment

Total assets by business segment as of December 29, 2019 and December 30, 2018 are as follows (in thousands):

	December 29, 2019
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate		Total
Total assets	$	952,187	$	914,317	$	292,929	$	426,207	$	2,585,640

	December 30, 2018
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate		Total
Total assets	$	940,075	$	923,036	$	272,127	$	559,163	$	2,694,401

Net Sales and Operating Income by Product Line and Information by Geographic Region

Selected financial information related to our segments is presented below for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 (in thousands):

	Fiscal year ended December 29, 2019
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics			Corporate 1			Total
Net sales from external customers	$	371,791	$	334,498	$	214,611		$	—		$	920,900
Depreciation expense	10,950		12,728		14,939			25,532			64,149
Amortization expense	—		—		—			31,921			31,921
Segment operating income (loss)	$	103,883	$	123,539	$	(1,895	)	$	(200,974	)	$	24,553
Other:
Inventory step-up amortization											1,057
Transaction and transition costs											6,312
Non-cash asset impairment											5,597
Operating income											11,587
Interest expense, net											80,849
Other expense, net											9,904
Loss before income taxes											$	(79,166	)
Capital expenditures	$	41,585	$	20,395	$	25,723		$	11,583		$	99,286

	Fiscal year ended December 30, 2018
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate 1			Total
Net sales from external customers	$	337,433	$	286,105	$	212,652	$	—		$	836,190
Depreciation expense	11,131		12,439		13,004		22,923			59,497
Amortization expense	—		—		—		26,730			26,730
Segment operating income (loss)	$	96,153	$	97,644	$	1,492	$	(190,720	)	$	4,569
Other:
Inventory step-up amortization										352
Transaction and transition costs										12,013
Operating loss										(7,796		)
Interest expense, net										80,247
Other expense, net										81,797
Loss before income taxes										$	(169,840	)
Capital expenditures	$	21,153	$	26,346	$	17,566	$	6,402		$	71,467

	Fiscal year ended December 31, 2017
	U.S. Lower Extremities & Biologics		U.S. Upper Extremities		International Extremities & Biologics		Corporate 1			Total
Net sales from external customers	$	309,713	$	244,798	$	190,478	$	—		$	744,989
Depreciation expense	12,532		10,211		12,366		21,723			56,832
Amortization expense	—		—		—		28,396			28,396
Segment operating income (loss)	$	79,889	$	78,866	$	3,631	$	(178,642	)	$	(16,256	)
Other:
Transaction and transition costs										12,400
Incentive and indirect tax projects										(8,965		)
Operating loss										(19,691		)
Interest expense, net										74,644
Other expense, net										5,570
Loss before income taxes										$	(99,905	)
Capital expenditures	$	19,355	$	22,897	$	19,555	$	1,667		$	63,474

__________________________

¹ 

The Corporate category primarily reflects general and administrative expenses not specifically associated with the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics segments. These non-allocated corporate expenses relate to global administrative expenses that support all segments, including salaries and benefits of certain executive officers and expenses such as: information technology administration and support; corporate headquarters; legal, compliance, and corporate finance functions; insurance; and all share-based compensation.

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Supplemental Balance Sheet Information (Tables)

12 Months Ended

Dec. 29, 2019

Other Liabilities Disclosure [Abstract]

Schedule of Accrued Expenses and Other Liabilities

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

	December 29, 2019		December 30, 2018
Employee bonuses	$	25,383	$	28,953
Other employee benefits	25,194		22,841
Royalties	13,441		12,330
Taxes other than income	13,826		7,897
Notes Conversion Derivatives (Note 6)	181,144		17,386
Commissions	18,025		19,356
Professional and legal fees	14,941		10,848
Contingent consideration (Note 6)	11,982		3,427
Product liability and other legal accruals (Note 17)	54,107		66,918
Other	28,982		27,125
	$	387,025	$	217,081

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Income Taxes Components of Income Tax (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Current federal tax expense (benefit)	$ (13)	$ 449	$ (23,781)
Current state and local tax expense (benefit)	232	251	390
Current foreign tax expense (benefit)	15,213	3,307	2,214
Total current provision (benefit)	15,432	4,007	(21,177)
Deferred federal income tax expense (benefit)	154	(2,841)	(5,098)
Deferred state and local income tax expense (benefit)	143	(663)	(93)
Deferred foreign income tax expense (benefit)	(2,761)	(1,039)	(8,600)
Total deferred benefit	(2,464)	(4,543)	(13,791)
Total provision (benefit) for income taxes	$ 12,968	$ (536)	$ (34,968)

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Leases Future Minimum Lease Payments - Finance Leases (Details) $ in Thousands	Dec. 29, 2019 USD ($)
Leases [Abstract]
2020	$ 7,912
2021	6,166
2022	5,156
2023	3,337
2024	1,614
Thereafter	3,330
Total minimum payments	27,515
Less amount representing interest	(2,429)
Present value of minimum lease payments	25,086
Current portion	(7,011)
Long-term portion	$ 18,075

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Leases ROU Assets - Operating Leases (Details) - USD ($) $ in Thousands	Dec. 29, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease, right-of-use asset	$ 19,994	$ 20,000
Buildings
Lessee, Lease, Description [Line Items]
Operating lease, right-of-use asset	17,331
Machinery and equipment
Lessee, Lease, Description [Line Items]
Operating lease, right-of-use asset	1,720
Furniture, fixtures and office equipment
Lessee, Lease, Description [Line Items]
Operating lease, right-of-use asset	$ 943

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Debt and Finance Lease Obligations Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Amortization of debt discount	$ 12,600	$ 12,300	$ 12,100	$ 12,300	$ 12,600	$ 12,300	$ 12,300	$ 12,000
2023 Convertible Debt
Debt Instrument [Line Items]
Amortization of debt discount									$ 23,522	$ 10,071	$ 0
Amortization of deferred financing costs									2,381	1,148	0
2021 Convertible Debt
Debt Instrument [Line Items]
Amortization of debt discount									21,977	19,950	18,110
Amortization of deferred financing costs									1,372	1,284	1,131
2020 Convertible Debt
Debt Instrument [Line Items]
Amortization of debt discount									3,804	19,165	27,331
Amortization of deferred financing costs									$ 462	$ 2,333	$ 3,320

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Debt and Finance Lease Obligations Narrative (Details) $ / shares in Units, shares in Millions							1 Months Ended	3 Months Ended		12 Months Ended
	Feb. 07, 2019 USD ($) shares	Jul. 30, 2018 USD ($)	Jun. 28, 2018 USD ($) $ / shares	May 20, 2016 USD ($) $ / shares shares	Nov. 24, 2015 $ / shares shares	Feb. 13, 2015 USD ($) $ / shares shares	May 31, 2018 USD ($)	Mar. 31, 2019 USD ($)	Jul. 01, 2018 USD ($)	Dec. 29, 2019 USD ($) $ / shares shares	Dec. 30, 2018 USD ($) shares	Dec. 31, 2017 USD ($) shares	Dec. 25, 2016 USD ($)	Nov. 04, 2019 $ / shares	Feb. 28, 2019 USD ($)	May 07, 2018 USD ($)
Debt Instrument [Line Items]
Debt instrument, convertible, trading period										30 days
Threshold for conversion, conversion price, ordinary shares										130.00%
Debt instrument, convertible, minimum consecutive period										20 days
Debt instrument, convertible, trading price multiple per $1000 principle amount										$ 1,000
Debt instrument, convertible, purchase price as a percent of principal amount										100.00%
Proceeds from issuance of warrants										$ 21,210,000	$ 102,137,000	$ 0
Derivative settlement gain or loss	$ 12,600,000
Proceeds from notes hedge options										$ 16,849,000	$ 34,553,000	$ 0
Commitment fee percentage, unused capacity										0.50%
Minimum borrowing capacity as percentage of available borrowing capacity										20.00%
Percent of debt outstanding										85.00%
Prepayment penalty							1.00%
Term loan facility, prepayment conditions, percent of cash proceeds							100.00%
Proceeds from collaborators							$ 10,000,000
Circumstance 1
Debt Instrument [Line Items]
Debt instrument, convertible, minimum consecutive trading period										20 days
Debt instrument, convertible, trading period										30 days
Threshold for conversion, conversion price, ordinary shares										130.00%
Circumstance 2
Debt Instrument [Line Items]
Debt instrument, convertible, minimum consecutive trading period											5 days
Debt instrument, convertible, minimum consecutive period											5 days
Debt instrument, convertible, trading price multiple per $1000 principle amount										$ 1,000
Threshold for conversion										98.00%
Stryker Corporation
Debt Instrument [Line Items]
Sale of stock, price per share (in usd per share) | $ / shares														$ 30.75
Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity, credit agreement										$ 175,000,000.0					$ 175,000,000	$ 150,000,000
2020 Convertible Debt
Debt Instrument [Line Items]
Debt instrument, convertible, trading price multiple per $1000 principle amount										1,000
Conversion price | $ / shares					$ 29.94	$ 30.87
Long-term debt, fair value										$ 57,300,000
Effective interest rate										8.54%
Loss on debt restructuring										$ 14,300,000
Write off, deferred debt issuance costs			$ 39,900,000					$ 14,300,000	$ 39,900,000		$ 39,900,000
Exercise price (in usd per share) | $ / shares					$ 38.8010	$ 40				$ 38.80
Extinguishment of Debt, Amount													$ 45,000,000.0
Common shares attributable to dilutive effect of options and warrants (in shares) | shares						20.5				1.9	6.2	19.6
Stated interest rate						2.00%
Conversion rate					33.39487					32.3939
Number of securities | shares	1.9				21.1						6.2	19.6
Debt conversion, converted instrument, amount	$ 130,100,000		400,900,000
Debt instrument, deferred financing charges						$ 18,100,000
Proceeds from warrant exercises		$ 10,600,000
Proceeds from notes hedge options				$ 600,000
Long-term debt, gross										$ 56,455,000	$ 186,589,000
Unamortized debt issuance costs										50,000	1,414,000
Unamortized debt discount						117,200,000				$ 408,000	$ 11,642,000
Payment terms, days to maturity										91 days
2020 Convertible Debt | Reported Value Measurement
Debt Instrument [Line Items]
Long-term debt, gross						632,500,000
2023 Exchange
Debt Instrument [Line Items]
Debt discount	7,400,000
Debt instrument, deferred financing charges	900,000
2021 Convertible Debt
Debt Instrument [Line Items]
Debt instrument, convertible, trading price multiple per $1000 principle amount													$ 1,000
Conversion price | $ / shares				$ 21.36
Long-term debt, fair value										$ 575,500,000
Effective interest rate										9.72%
Exercise price (in usd per share) | $ / shares										$ 30.00
Common shares attributable to dilutive effect of options and warrants (in shares) | shares										18.5	18.5	18.5
Stated interest rate				2.25%
Conversion rate				46.8165
Derivative, cost of hedge				$ 99,800,000
Number of securities | shares				18.5
Proceeds from issuance of warrants				$ 54,600,000
Long-term debt, gross				395,000,000						$ 395,000,000.0	$ 395,000,000
Unamortized debt issuance costs				7,300,000						2,960,000	4,332,000
Unamortized debt discount				117,200,000						$ 47,405,000	$ 69,382,000
Payment terms, days to maturity										91 days
2021 Convertible Debt | 2020 Convertible Debt
Debt Instrument [Line Items]
Extinguishment of debt, amount delivered				$ 990.00
2023 Convertible Debt
Debt Instrument [Line Items]
Debt instrument, convertible, trading price multiple per $1000 principle amount										$ 1,072.40
Debt conversion, amount delivered			$ 1,138.70
Conversion price | $ / shares			$ 33.37
Effective interest rate										5.76%
Exercise price (in usd per share) | $ / shares										$ 40.86
Common shares attributable to dilutive effect of options and warrants (in shares) | shares										24.4	20.2
Debt instrument, face amount			$ 675,000,000
Stated interest rate			1.625%
Conversion rate			29.9679
Debt issuance costs, net			$ 13,500,000
Number of securities | shares										20.2
Proceeds from issuance of warrants			102,100,000
Proceeds from warrant exercises	8,900,000
Long-term debt, gross										$ 814,556,000	$ 675,000,000
Unamortized debt issuance costs										10,892,000	12,370,000
Unamortized debt discount										107,916,000	$ 114,554,000
2023 Notes Hedges
Debt Instrument [Line Items]
Indebtedness in excess, default										25,000,000
Derivative, cost of hedge			141,300,000
Payments for warrants	30,100,000
Proceeds from derivatives settled	21,200,000
Additional 2023 Convertible Debt
Debt Instrument [Line Items]
Long-term debt, fair value										864,000,000.0
Debt instrument, face amount	139,600,000
2020 Settled Hedges
Debt Instrument [Line Items]
Payments for warrants	11,000,000.0
Net proceeds from hedge	5,800,000
Proceeds from notes hedge options	16,800,000
2023 Notes Conversion Derivative
Debt Instrument [Line Items]
Long-term debt, fair value			$ 124,600,000
Derivative settlement gain or loss	(28,900,000)
2020 Notes Conversion Derivative
Debt Instrument [Line Items]
Derivative settlement gain or loss	$ (16,300,000)
2020 Notes Hedges
Debt Instrument [Line Items]
Derivative, cost of hedge						$ 144,800,000
Line of Credit | Term Loan | Secured Debt
Debt Instrument [Line Items]
Maximum borrowing capacity, credit agreement										55,000,000						40,000,000
Debt Instrument, Tranche 2 | Line of Credit | Term Loan | Secured Debt
Debt Instrument [Line Items]
Maximum borrowing capacity, credit agreement							35,000,000.0								$ 35,000,000	$ 20,000,000
Debt Instrument, Tranche 1 | Line of Credit | Term Loan | Secured Debt
Debt Instrument [Line Items]
Maximum borrowing capacity, credit agreement							$ 20,000,000
Maximum | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity, credit agreement										$ 75,000,000.0
Minimum
Debt Instrument [Line Items]
Prepayment penalty										0.75%
London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Debt instrument, variable rate										0.75%
Base Rate
Debt Instrument [Line Items]
Credit facility, ending interest rate										3.25%
Variable Income Interest Rate
Debt Instrument [Line Items]
Credit facility, ending interest rate										4.25%						7.85%
Interest Rate Floor
Debt Instrument [Line Items]
Credit facility, ending interest rate																1.00%

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Income Taxes Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefits, beginning balance	$ 4,610	$ 6,025
Additions from acquisitions	0	109
Additions for tax positions related to current year	473	385
Additions for tax positions of prior years	172	718
Reductions for tax positions of prior years	(290)	(490)
Settlements	(406)	(1,983)
Foreign currency translation	(48)	(154)
Unrecognized tax benefits, ending balance	$ 4,511	$ 4,610

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Acquisitions Purchase Consideration and Net Assets Acquired, Cartiva (Details) - Cartiva, Inc. - USD ($) $ in Thousands		12 Months Ended
	Oct. 10, 2018	Dec. 30, 2018
Business Acquisition [Line Items]
Cash and cash equivalents	$ 309
Accounts receivable	4,352
Inventories	2,686
Other current assets	486
Property, plant and equipment	1,446
Intangible assets	81,000
Total assets acquired	90,279
Current liabilities	(4,226)
Deferred income taxes	(3,622)
Total liabilities assumed	(7,848)
Net assets acquired	82,431
Goodwill	351,445	$ 351,445
Total purchase consideration	$ 433,876

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Discontinued Operations Discontinued Operations, OrthoRecon (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 29, 2019	Sep. 29, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 30, 2018	Sep. 30, 2018	Jul. 01, 2018	Apr. 01, 2018	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Provision (benefit) for income taxes					$ 3,800	$ 2,200	$ (6,200)
Total (loss) income from discontinued operations, net of tax	$ (9,277)	$ (7,589)	$ 1,120	$ (6,345)	$ (10,821)	$ (6,696)	$ 22,923	$ (5,607)	$ (22,091)	$ (201)	$ (137,661)
OrthoRecon Business
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales									0	0	0
Selling, general and administrative									22,091	(746)	135,235
(Loss) income from discontinued operations before income taxes									(22,091)	746	(135,235)
Provision (benefit) for income taxes									0	221	(1,707)
Total (loss) income from discontinued operations, net of tax									$ (22,091)	$ 525	$ (133,528)

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Consolidated Balance Sheets - USD ($) $ in Thousands		Dec. 29, 2019	Dec. 30, 2018
Current assets:
Cash and cash equivalents		$ 166,856	$ 191,351	[1]
Accounts receivable, net		147,400	141,019
Inventories		198,374	180,690
Prepaid expenses		16,031	11,823
Other current assets	[2]	214,997	78,349
Total current assets		743,658	603,232
Property, plant and equipment, net		251,922	224,929
Goodwill		1,260,967	1,268,954
Intangible assets, net		257,382	282,332
Deferred income taxes		1,012	942
Other assets	[2]	70,699	314,012
Total assets		2,585,640	2,694,401
Current liabilities:
Accounts payable		32,121	48,359
Accrued expenses and other current liabilities	[2]	387,025	217,081
Current portion of long-term obligations	[2]	430,862	201,686
Total current liabilities		850,008	467,126
Long-term debt and finance lease obligations	[2]	737,167	913,441
Deferred income taxes		10,384	13,146
Other liabilities	[2]	96,288	368,229
Total liabilities		1,693,847	1,761,942
Stockholders' equity:
Ordinary shares, €0.03 par value, authorized: 320,000,000 shares; issued and outstanding: 128,614,026 shares at December 29, 2019 and 125,555,751 shares at December 30, 2018		4,691	4,589
Additional paid-in capital		2,608,939	2,514,295
Accumulated other comprehensive loss		(29,499)	(8,083)
Accumulated deficit		(1,692,338)	(1,578,342)
Total shareholders’ equity		891,793	932,459
Total liabilities and shareholders’ equity		$ 2,585,640	$ 2,694,401

[1] ¹  As of December 25, 2016, we had $150.0 million in restricted cash to secure our obligations under a Master Settlement Agreement (MSA) that WMT entered into in connection with the metal-on-metal hip litigation as described in Note 17. The accompanying notes are an integral part of these consolidated financial statements.

[2] As of December 29, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end; and, therefore, the holders of the 2021 Notes may convert the notes during the succeeding quarterly period. Due to the ability of the holders of the 2021 Notes to convert the notes during this period, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivative were classified as current liabilities, and the fair value of the 2021 Notes Hedges were classified as current assets as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018. See Note 6 and Note 10.

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 29, 2019	Dec. 30, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (114,225)	$ (169,505)	$ (202,598)
Changes in foreign currency translation	(21,416)	(30,373)	41,751
Other comprehensive (loss) income	(21,416)	(30,373)	41,751
Comprehensive loss	$ (135,641)	$ (199,878)	$ (160,847)

XML

Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 29, 2019

Property, Plant and Equipment, Net [Abstract]

Schedule of Property, Plant and Equipment

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

	December 29, 2019			December 30, 2018
Land and land improvements	$	2,154		$	2,127
Buildings	60,205			43,087
Machinery and equipment	102,014			82,445
Furniture, fixtures and office equipment	185,145			161,614
Construction in progress	17,259			14,113
Surgical instruments	281,541			230,980
	648,318			534,366
Less: Accumulated depreciation	(396,396		)	(309,437		)
	$	251,922		$	224,929

XML

Acquisitions (Tables)

12 Months Ended

Dec. 29, 2019

Business Combinations [Abstract]

Preliminary Allocation of the Purchase Consideration to the Assets Acquired and Liabilities Assumed

The following presents the allocation of the purchase consideration to the assets acquired and liabilities assumed on October 10, 2018 (in thousands):

Cash and cash equivalents	$	309
Accounts receivable	4,352
Inventories	2,686
Other current assets	486
Property, plant and equipment	1,446
Intangible assets	81,000
Total assets acquired	90,279
Current liabilities	(4,226		)
Deferred income taxes	(3,622		)
Total liabilities assumed	(7,848		)
Net assets acquired	$	82,431
Goodwill	351,445
Total purchase consideration	$	433,876

The following presents the allocation of the purchase consideration to the assets acquired and liabilities assumed on December 14, 2017 (in thousands):

Cash and cash equivalents	$	2,559
Accounts receivable	102
Other current assets	925
Property, plant and equipment	20
Intangible assets	10,865
Total assets acquired	14,471
Current liabilities	(2,173		)
Long-term debt	(886		)
Deferred income taxes	(2,343		)
Total liabilities assumed	(5,402		)
Net assets acquired	$	9,069
Goodwill	71,064
Total purchase consideration	$	80,133

Business Acquisition, Pro Forma Information

The pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred as of December 26, 2016 or that may be obtained in the future, and do not reflect future synergies, integration costs, or other such costs or savings.

(in thousands)	Fiscal year ended
	December 30, 2018			December 31, 2017
Net sales	$	861,475		$	769,111
Net loss from continuing operations	(179,800		)	(68,722		)

XML

Debt and Finance Lease Obligations

12 Months Ended

Dec. 29, 2019

Debt Disclosure [Abstract]

Debt and Finance Lease Obligations

Debt and Finance Lease Obligations

Debt and finance lease obligations consist of the following (in thousands):

	Maturity by fiscal year	December 29, 2019			December 30, 2018
Finance lease obligations (Note 9)	2020-2026	$	25,086		$	25,539
Convertible Notes
1.625% Notes	2023	695,748			548,076
2.25% Notes 1	2021	344,635			321,286
2.0% Notes 2	2020	55,997			173,533
Term loan facility	2021	19,296			18,979
Asset-based line of credit 3	2021	20,652			17,761
Other debt	2020-2024	6,615			9,953
		1,168,029			1,115,127
Less: Current portion 1, 2, 3		(430,862		)	(201,686		)
Long-term debt and finance lease obligations (Note 9)		$	737,167		$	913,441

_______________________

¹  As of December 29, 2019, the sale price condition (as defined below) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019. The respective balances were classified as long-term as of December 30, 2018.

²  The holders of the 2020 Notes may convert their notes at any time on or after August 15, 2019. Due to the ability of the holders of the 2020 Notes to convert their notes within the next year, the carrying value of the 2020 Notes was classified as a current liability as of December 30, 2018. The 2020 Notes were classified as a current liability as of December 29, 2019 as they matured on February 15, 2020.

³  We have reflected this debt as a current liability on our consolidated balance sheets as of December 29, 2019 and December 30, 2018, as required by US GAAP due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances as described below.

Convertible Notes

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

	December 29, 2019			December 30, 2018
Principal amount of 2023 Notes	$	814,556		$	675,000
Unamortized debt discount	(107,916		)	(114,554		)
Unamortized debt issuance costs	(10,892		)	(12,370		)
Net carrying amount of 2023 Notes	$	695,748		$	548,076
Principal amount of 2021 Notes	$	395,000		$	395,000
Unamortized debt discount	(47,405		)	(69,382		)
Unamortized debt issuance costs	(2,960		)	(4,332		)
Net carrying amount of 2021 Notes	$	344,635		$	321,286
Principal amount of 2020 Notes	$	56,455		$	186,589
Unamortized debt discount	(408		)	(11,642		)
Unamortized debt issuance costs	(50		)	(1,414		)
Net carrying amount of 2020 Notes	$	55,997		$	173,533

The 2021 Notes were issued by us and the 2020 Notes and the 2023 Notes were issued by Wright Medical Group, Inc. (WMG) and are fully and unconditionally guaranteed by Wright Medical Group N.V.

The holders of the Notes may convert their notes solely into cash at their option at any time prior to the Early Conversion date (as defined below) only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our ordinary shares 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 (the sale price condition); (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 ordinary shares and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including in connection with the Offer as further described below and within Note 1. The terms of conversion are set forth below:

	2020 Notes		2021 Notes		2023 Notes
Conversion rate	33.39487		46.8165		29.9679
Conversion price	$	29.94	$	21.36	$	33.37
Early Conversion date	August 15, 2019		May 15, 2021		December 15, 2022
Maturity date	February 15, 2020		November 15, 2021		June 15, 2023

On or after the Early Conversion date until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 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 Notes, equal to the settlement amount as calculated under the Notes Indenture. If a fundamental change, as defined in the applicable Notes Indenture, occurs, subject to certain conditions, holders of the applicable series of Notes will have the option to require us to repurchase for cash all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date, as defined in the applicable Notes Indenture. In addition, if a make-whole fundamental change, as defined in the applicable Notes Indenture, occurs prior to the maturity date, we are required to increase the applicable conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change. The Notes may not be redeemed prior to the maturity date, and no “sinking fund” is available, which means that WMG is not required to redeem or retire the Notes periodically.

On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. will commence a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders, receipt of applicable regulatory approvals and other customary conditions. If these conditions are satisfied and the Offer closes, Stryker may acquire any remaining shares through a post-offer reorganization. Wright expects that a fundamental change and a make-whole fundamental change will occur at the time Stryker B.V. accepts for purchase and pays for all shares validly tendered pursuant to the Offer. Wright also expects that the Offer will trigger certain conversion rights under each of the Notes Indentures prior to the closing of the proposed acquisition by Stryker.

The 2021 Notes and our guarantee of the 2020 and 2023 Notes is our senior unsecured obligation that ranks: (i) senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the guarantee; (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 of our 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. Because the 2020 Notes and the 2023 Notes were issued by WMG, they are structurally senior to all indebtedness and other liabilities of Wright Medical Group N.V.

The estimated fair value of the 2020, 2021 and 2023 Notes was approximately $57.3 million, $575.5 million, and $864.0 million, respectively, at December 29, 2019, based on a quoted price in an active market (Level 1).

The Notes Conversion Derivatives require bifurcation from the Notes in accordance with ASC Topic 815, Derivatives and Hedging, and are accounted for as a derivative liability. See Note 6 for additional information regarding the Notes Conversion Derivative. The fair value of the Notes Conversion Derivative at the time of issuance is also recorded as the original debt discount for purposes of accounting for the debt component of the Convertible Notes. This discount is amortized as interest expense using the effective interest method over the term of the Convertible Notes.

As of December 29, 2019, our effective interest rates for the 2020, 2021, and 2023 Notes were 8.54%, 9.72%, and 5.76%, respectively. The following table summarizes the interest expense related to the amortization of the debt discount (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
2023 Notes	$	23,522	$	10,071	$	—
2021 Notes	21,977		19,950		18,110
2020 Notes	3,804		19,165		27,331

The following table summarizes the interest expense related to the amortization of the deferred financing costs (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
2023 Notes	$	2,381	$	1,148	$	—
2021 Notes	1,372		1,284		1,131
2020 Notes	462		2,333		3,320

As further described below, during 2019, we exchanged 2023 Notes for 2020 Notes which was recognized as a debt modification and resulted in us recognizing a net loss of approximately $14.3 million, primarily due to the Notes Conversion Derivatives and debt modification costs, within “Other expense, net” in our consolidated statements of operations. As further described below, during 2018, we had a notes exchange recognized as a debt extinguishment which resulted in us recognizing approximately $39.9 million for the write-off of related pro-rata unamortized deferred financing fees and debt discount within “Other expense, net” in our consolidated statements of operations.

In connection with the issuance of each series of Convertible Notes, we and WMG entered in cash-settled convertible note hedge transactions with certain option counterparties (the Note Hedges), which are generally intended to reduce exposure to potential cash payments that we or WMG, as applicable, would be required to make if holders elect to convert the Convertible Notes at a time when our ordinary share price exceeds the conversion price. We also entered into warrant transactions (the Warrants) in connection with the issuance of each series of Convertible Notes in which we sold warrants that are initially exercisable in the same number of shares as are issuable upon conversion of the applicable series of Convertible Notes at the initial conversion rate. The strike price of the Note Hedge for each series of Convertible Notes is equal to the conversion price of the applicable series of Convertible Notes and the exercise prices for the Warrants issued with the 2020, 2021 and 2023 Notes are $38.80, $30.00, and $40.86, respectively. The strike prices of the Notes Hedges and exercise prices of the Warrants are subject to adjustment upon the occurrence of certain events including in connection with the Offer as further described above and within Note 1.

In connection with certain events, including, among others, (i) a merger or other make-whole fundamental change, including in connection with the Offer as further described above and within Note 1; (ii) certain hedging disruption events, which may include changes in tax laws, an increase in the cost of borrowing our ordinary shares in the market or other material increases in the cost to the option counterparties of hedging the Note Hedges; (iii) our failure to perform certain obligations under the Notes Indenture or under the Notes Hedges; (iv) certain defaults on our, or any of our other subsidiary’s indebtedness in excess of $25 million; (v) if we, or any of our significant subsidiaries become insolvent or otherwise become subject to bankruptcy proceedings or (vi) if we repurchase Convertible Notes in the open market, through a tender or exchange offer or in individually negotiated transactions, the option counterparties have the discretion to terminate the Notes Hedges, which may reduce the effectiveness of the Notes Hedges. In addition, the option counterparties have broad discretion to make certain adjustments to the Notes Hedges and Warrants upon the occurrence of certain other events, including, among others, (i) upon the announcement of certain significant corporate events, including events that may give rise to a termination event as described above, such as the announcement of a third-party tender offer, including in connection with the Offer as further described above and within Note 1; or (ii) solely with respect to the Notes Hedges, any adjustment to the conversion rate of the Notes. Any such adjustment may also reduce the effectiveness of the Note Hedges and further the dilutive effect of the Warrants.

Aside from the initial premiums paid to the option counterparties and subject to the right of the option counterparties to terminate the Notes Hedges and Warrants in certain circumstances, we do not generally expect to be required to make any cash payments to the option counterparties under the Notes Hedges and Warrants and expect to be entitled to receive from the option counterparties

cash, generally equal to the amount by which the market price per ordinary share exceeds the strike price of the applicable Note Hedge during the relevant valuation period.

The Warrants are expected to be net-share settled and exercisable over a certain trading period after the Convertible Notes mature as detailed below:

	2020 Notes	2021 Notes	2023 Notes
Exercisable period	200 trading day period beginning on May 15, 2020	100 trading day period beginning on February 15, 2022	120 trading day period beginning on September 15, 2023

If the market value per ordinary share exceeds the strike price on any settlement date under the applicable Warrant, we will generally be obligated to issue to the Warrant holders in the aggregate, a number of shares equal in value to the amount by which the then-current market value of one ordinary share exceeds the then-effective strike price of each Warrant, multiplied by the number of Warrants exercised. As a result, the Warrants will have a dilutive effect on our ordinary shares to the extent that the market value per ordinary share during such period exceeds the applicable strike price of the Warrants.

As of December 29, 2019, we had warrants outstanding related to the 2020 Notes, 2021 Notes and 2023 Notes which were exercisable for 1.9 million ordinary shares, 18.5 million ordinary shares, and 24.4 million ordinary shares, respectively. As of December 30, 2018, we had warrants outstanding related to the 2020 Notes, 2021 Notes and 2023 Notes which were exercisable for 6.2 million ordinary shares, 18.5 million ordinary shares, and 20.2 million ordinary shares, respectively. As of December 31, 2017, we had warrants outstanding related to the 2020 Notes and 2021 Notes which were exercisable for 19.6 million ordinary shares and 18.5 million ordinary shares, respectively.

2023 Notes

On June 28, 2018, WMG issued $675 million aggregate principal amount of the 2023 Notes pursuant to an indenture (2023 Notes Indenture), dated as of June 28, 2018, with The Bank of New York Mellon Trust Company, N.A., as trustee. The 2023 Notes require interest to be paid at an annual rate of 1.625% semi-annually in arrears on each June 15 and December 15 and will mature on June 15, 2023 unless earlier converted or repurchased. As a result of the issuance of the 2023 Notes, we recorded deferred financing charges of approximately $13.5 million. The fair value of the 2023 Notes Conversion Derivative at the time of issuance of the 2023 Notes was $124.6 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2023 Notes. We and WMG entered into 2023 Notes Hedges in connection with the issuance of the 2023 Notes which had an aggregate cost of $141.3 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 6 of the consolidated financial statements for additional information regarding the 2023 Notes Hedges and the 2023 Notes Conversion Derivative. We also entered into warrant transactions in which we sold warrants that are initially exercisable into 20.2 million ordinary shares to the option counterparties, subject to adjustment upon the occurrence of certain events, for an aggregate of $102.1 million.

As described in more detail below, concurrently with the issuance and sale of the 2023 Notes, certain holders of the 2020 Notes exchanged their 2020 Notes for the 2023 Notes, a pro rata portion of the 2020 Notes Hedges were settled and a pro rata portion of the Warrants associated with the 2020 Notes were repurchased.

On February 7, 2019, WMG issued an additional $139.6 million aggregate principal amount of 2023 Notes in exchange for $130.1 million aggregate principal amount of 2020 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $1,072.40 principal amount of 2023 Notes to the exchanging investor (subject, in each case, to rounding to the nearest $1,000 aggregate principal amount for each such exchanging investor). This debt modification resulted in a pro rata share of the 2020 Notes discount and deferred financing costs, which totaled $7.4 million and $0.9 million, respectively, being transferred to the 2023 Notes discount and deferred financing costs. Additionally, the 2023 Notes discount was adjusted in order for net debt to remain the same subsequent to the exchange. The discount and deferred financing costs will be amortized over the remaining term of the 2023 Notes using the effective interest method.

The fair value of the 2023 Notes Conversion Derivative associated with the additional $139.6 million of 2023 Notes was $28.9 million at the time of issuance, and the pro rata share of the 2020 Notes Conversion Derivative that was settled as part of the additional 2023 Notes exchange had a fair value of $16.3 million immediately prior to issuance of the additional 2023 Notes. As the exchange was accounted for as a debt modification, the net amount of $12.6 million was recognized as a loss during 2019.

On January 30, 2019 and January 31, 2019, we entered into additional Note Hedge and Warrant transactions with the same strike and exercise prices as set forth above for the 2023 Notes. We paid approximately $30.1 million in the aggregate to the option counterparties for the additional Note Hedge, and received approximately $21.2 million in the aggregate from the option

counterparties for the Warrants, resulting in a net cost to us of approximately $8.9 million. In addition, we settled a pro rata share of the 2020 Notes Hedges corresponding to the amount of the 2020 Notes exchanged pursuant to the above-described exchange. We received proceeds of approximately $16.8 million related to the 2020 Notes Hedges and paid $11.0 million related to the 2020 Warrants, generating net proceeds of $5.8 million.

2021 Notes

On May 20, 2016, we issued $395 million aggregate principal amount of the 2021 Notes pursuant to an indenture (2021 Notes Indenture), dated as of May 20, 2016 between us and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2021 Notes require interest to be paid at an annual rate of 2.25% semi-annually in arrears on each May 15 and November 15, and will mature on November 15, 2021 unless earlier converted or repurchased. As a result of the issuance of the 2021 Notes, we recorded deferred financing charges of approximately $7.3 million. The fair value of the 2021 Notes Conversion Derivative at the time of issuance of the 2021 Notes was $117.2 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2021 Notes. This discount is amortized as interest expense using the effective interest method over the term of the 2021 Notes. We entered into 2021 Notes Hedges in connection with the issuance of the 2021 Notes which had an aggregate cost of $99.8 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 6 of the consolidated financial statements for additional information regarding the 2021 Notes Hedges and the 2021 Notes Conversion Derivative. We also entered into warrant transactions in which we sold warrants for an aggregate of 18.5 million ordinary shares to the option counterparties, subject to adjustment, for an aggregate of $54.6 million.

As described in more detail below, concurrently with the issuance and sale of the 2021 Notes, certain holders of the 2020 Notes exchanged their 2020 Notes for the 2021 Notes, a pro rata portion of the 2020 Notes Hedges were settled and a pro rata portion of the Warrants associated with the 2020 Notes were repurchased.

In the first quarter of 2017, third calendar quarter of 2018, second calendar quarter of 2019, and the fourth calendar quarter of 2019, the sale price condition (as defined above) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. There were no conversions during the second quarter of 2017, fourth quarter of 2018 or the third quarter of 2019.

2020 Notes

On February 13, 2015, WMG issued $632.5 million aggregate principal amount of the 2020 Notes pursuant to an indenture (2020 Notes Indenture), dated as of February 13, 2015 between WMG and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2020 Notes required interest to be paid semi-annually on each February 15 and August 15 at an annual rate of 2.00%, and matured and were repaid in full on February 15, 2020. The 2020 Notes were initially issued whereby they were convertible at the option of the holder, during certain periods and subject to certain conditions described below, solely into cash at an initial conversion rate of 32.3939 shares of WMG common stock per $1,000 principal amount of the 2020 Notes, subject to adjustment upon the occurrence of certain events, which represented an initial conversion price of approximately $30.87 per share of WMG common stock. In conjunction with the issuance of the 2020 Notes, we recorded deferred financing charges of approximately $18.1 million. The fair value of the 2020 Notes Conversion Derivative at the time of issuance of the 2020 Notes was $117.2 million and was recorded as original debt discount for purposes of accounting for the debt component of the 2020 Notes. We entered into 2020 Notes Hedges in connection with the issuance of the 2020 Notes which had an aggregate cost of $144.8 million and is accounted for as a derivative asset in accordance with ASC Topic 815. See Note 6 of the consolidated financial statements for additional information regarding the 2020 Notes Hedges and the 2020 Notes Conversion Derivative. WMG also entered into warrant transactions in which it sold warrants for an aggregate of 20.5 million shares of WMG common stock to the option counterparties, subject to adjustment. The strike price of the warrants was initially $40 per share of WMG common stock.

On November 24, 2015, Wright Medical Group N.V. executed a supplemental indenture, fully and unconditionally guaranteeing, on a senior unsecured basis, WMG’s obligations relating to the 2020 Notes, changing the underlying reference securities from WMG common stock to Wright Medical Group N.V. ordinary shares and making a corresponding adjustment to the conversion price. From and after the effective time of the Wright/Tornier merger, (i) all calculations and other determinations with respect to the 2020 Notes previously based on references to WMG common stock were calculated or determined by reference to our ordinary shares, and (ii) the conversion rate (as defined in the 2020 Notes Indenture) for the 2020 Notes was adjusted to a conversion rate of 33.39487 ordinary shares (subject to adjustment as provided in the 2020 Notes Indenture) per $1,000 principal amount of the 2020 Notes, which represents a conversion price of approximately $29.94 per ordinary share (subject to, and in accordance with, the settlement provisions of the 2020 Notes Indenture). On November 24, 2015, Wright Medical Group N.V. assumed WMG’s obligations pursuant to the warrants. Following the assumption, the warrants became exercisable for 21.1 million Wright Medical Group N.V. ordinary shares and the strike price of the warrants was adjusted to $38.8010 per ordinary share.

Concurrently with the issuance and sale of the 2021 Notes, in 2016, certain holders of the 2020 Notes exchanged approximately $45.0 million aggregate principal amount of their 2020 Notes for the 2021 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $990.00 principal amount of the 2021 Notes (subject to rounding down to the nearest $1,000 principal amount of the 2021 Notes, the difference being referred as the rounded amount) to the investor plus an amount of cash equal to the unpaid interest on the 2020 Notes and the rounded amount. During the second quarter of 2016, we also settled a pro rata portion of the 2020 Notes Hedges and repurchased a pro rata portion of the warrants associated with the 2020 Notes, generating net proceeds of approximately $0.6 million. Subsequent to this partial settlement, we had warrants which were exercisable for 19.6 million ordinary shares and the strike price of the warrants remained $38.8010 per ordinary share as of December 31, 2017.

Concurrently with the issuance and sale of the 2023 Notes, in 2018, certain holders of the 2020 Notes exchanged approximately $400.9 million aggregate principal amount of their 2020 Notes for the 2023 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $1,138.70 principal amount of the 2023 Notes (subject to rounding down to the nearest $1,000 principal amount of the 2023 Notes for each exchanging investor, the difference being referred as the rounded amount) to the investor. As a result of this note exchange and retirement of $400.9 million aggregate principal amount of the 2020 Notes, we recognized approximately $39.9 million for the write-off of related unamortized deferred financing fees and debt discount within “Other expense, net” in our consolidated statements of operations during the fiscal year ended December 30, 2018. During the second quarter of 2018, we also agreed to settle a pro rata portion of the 2020 Notes Hedges and agreed to repurchase a pro rata portion of the warrants associated with the 2020 Notes. The pricing of these 2020 Notes Hedges and warrants associated with the 2020 Notes were based on pricing between July 9, 2018 and July 27, 2018 and were settled on July 30, 2018. As a result of these settlements, we received net proceeds of approximately $10.6 million on July 30, 2018. We had warrants which were exercisable for 6.2 million ordinary shares with a strike price of $38.8010 per ordinary share as of December 30, 2018.

Concurrently with the issuance and sale of the additional 2023 Notes, on February 7, 2019, certain holders of the 2020 Notes exchanged approximately $130.1 million aggregate principal amount of 2020 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $1,072.40 principal amount of 2023 Notes to the exchanging investor (subject, in each case, to rounding to the nearest $1,000 aggregate principal amount for each such exchanging investor). As this was a debt modification, a pro rata share of the 2020 Notes discount and deferred financing costs which totaled $7.4 million and $0.9 million, respectively, was transferred to the 2023 Notes discount and deferred financing costs. Additionally, the 2023 Notes discount was adjusted in order for net debt to remain the same subsequent to the exchange. The remaining discount and deferred financing costs will be amortized over the remaining term of the 2020 Notes using the effective interest method. We recognized a $12.6 million net loss on the Notes Conversion Derivatives during the year ended December 29, 2019 as part of the additional 2023 Notes exchange. In 2019, we also settled a pro rata share of the 2020 Notes Hedges corresponding to the amount of the 2020 Notes exchanged pursuant to the above-described exchange. We received proceeds of approximately $16.8 million related to the 2020 Notes Hedges and paid $11 million related to the 2020 Warrants, generating net proceeds of $5.8 million. Subsequent to the 2019 partial settlement, we had warrants which were exercisable for 1.9 million ordinary shares and the strike price of the warrants remained $38.8010 per ordinary share as of December 29, 2019.

Credit Agreement

On December 23, 2016, we, together with WMG and certain of our other wholly-owned U.S. subsidiaries (collectively, Borrowers), entered into a Credit, Security and Guaranty Agreement with Midcap Financial Trust, as administrative agent (Agent) and a lender and the additional lenders from time to time party thereto, which agreement was subsequently amended in May 2018 and February 2019 (as amended, the Credit Agreement). On May 7, 2018, we amended and restated the Credit Agreement to add a $40 million term loan facility (Term Loan Facility). In February 2019, we amended the Credit Agreement to, among other things, increase the second tranche of the Term Loan Facility from $20 million to $35 million and to increase the line of credit from $150 million to $175 million.

The Credit Agreement provides for a $175.0 million senior secured asset-based line of credit, subject to the satisfaction of a borrowing base requirement (ABL Facility) and a $55 million term loan facility (Term Loan Facility). The ABL Facility may be increased by up to $75.0 million upon the Borrowers’ request, subject to the consent of the Agent and each of the other lenders providing such increase. All borrowings under the ABL Facility are subject to the satisfaction of customary conditions, including the absence of default, the accuracy of representations and warranties in all material respects and the delivery of an updated borrowing base certificate. The initial $20 million term loan tranche was funded at closing in May 2018. The Borrowers may at any time borrow the second $35.0 million term loan tranche, but are required to do so no later than May 7, 2021. All borrowings under the Term Loan Facility are subject to the satisfaction of customary conditions, including the absence of default and the accuracy of representations and warranties in all material respects.

The interest rate margin applicable to borrowings under the ABL Facility is, at the option of the Borrowers, equal to either (a) 3.25% for base rate loans or (b) 4.25% for LIBOR rate loans, subject to a 0.75% LIBOR floor. In addition to paying interest on the outstanding loans under the ABL Facility, the Borrowers also are required to pay a customary unused line fee equal to .50% per annum in respect of unutilized commitments and certain other customary fees related to Agent’s administration of the ABL Facility. Beginning January 1, 2017, the Borrowers were required to maintain a minimum drawn balance on the ABL Facility equal to 20% of the average borrowing base for each month. To the extent the actual drawn balance is less than 20%, the Borrowers must pay a fee equal to the amount the lenders under the ABL Facility would have earned had the Borrowers maintained a minimum drawn balance equal to 20% of the average borrowing base for such month.

The Credit Agreement requires that the Borrowers calculate the borrowing base for the ABL Facility on at least a monthly basis and each time the Borrowers make a draw on the ABL Facility in accordance with the formula set forth in the Credit Agreement. The borrowing base is subject to adjustment and the implementation of reserves by the Agent in its permitted discretion, as further described in the Credit Agreement. If at any time the outstanding drawn balance under the ABL Facility exceeds the borrowing base as in effect at such time, Borrowers will be required to prepay loans under the ABL Facility in an amount equal to such excess. Certain accounts receivables and proceeds of collateral of the Borrowers will be applied to reduce the outstanding principal amount of the ABL Facility on a periodic basis.

There is no scheduled amortization under the ABL Facility and (subject to borrowing base requirements and applicable conditions to borrowing) the available revolving commitment may be borrowed, repaid, and reborrowed without restriction. All outstanding loans under the ABL Facility will be due and payable in full on the date that is the earliest to occur of (x) December 23, 2021; (y) the date that is 91 days prior to the maturity date of the 2020 Notes or (z) the date that is 91 days prior to the maturity date of the 2021 Notes; provided if we refinance, extend, renew or replace at least 85% of the 2020 Notes and/or the 2021 Notes, as applicable, outstanding as of the closing date of the ABL Facility pursuant to the terms of the Credit Agreement, the maturity date will be deemed extended with respect to clause (y) and (z) above. Due to the additional exchange of 2020 Notes for additional 2023 Notes in February 2019 as described above, the maturity date was deemed extended for the purposes of clause (y) as long as we maintained unrestricted cash in an amount equal to the aggregate outstanding principal amount of the 2020 Notes.

Any voluntary or mandatory permanent reduction or termination of the revolving commitments under the ABL Facility is subject to a prepayment premium equal to 0.75% of such reduced or terminated amount.

The interest rate applicable to borrowings under the Term Loan Facility is equal to one-month LIBOR plus 7.85%, subject to a 1.00% LIBOR floor. Amortization payments under the Term Loan Facility are due in equal monthly installments beginning on May 1, 2019 unless we meet certain adjusted EBITDA targets; in which case, the amortization payments would not commence until May 1, 2021. To date we have met these targets. In addition to paying interest on the outstanding loans under the Term Loan Facility, the Borrowers are also required to pay certain other customary fees related to Agent’s administration of the Term Loan Facility.

The Term Loan Facility requires mandatory prepayments, subject to the right of reinvestment and certain other exceptions, in amounts equal to 100% of the net cash proceeds from certain asset sales and casualty and condemnation events in excess of $10 million in any fiscal year. Any voluntary or mandatory prepayment under the Term Loan Facility, subject to certain exceptions, is subject to a 1.00% prepayment premium. The advances under the Term Loan Facility are due and payable in full at the same time as the outstanding loans under the ABL Facility.

All of the obligations under the ABL Facility and the Term Loan Facility are guaranteed jointly and severally by us and each of the Borrowers and are secured by a senior first priority security interest in substantially all existing and after-acquired assets of us and each Borrower on the terms set forth in the Credit Agreement.

The Credit Agreement contains certain negative covenants that restrict our ability to take certain actions as specified in the Credit Agreement and an affirmative covenant that we maintain net revenue at or above minimum levels and maintain liquidity in the United States at a level specified in the Credit Agreement, subject to certain exceptions. In addition to financial and liquidity covenants consistent with those in the Credit Agreement, while the Term Loan Facility is outstanding, the Company is required to maintain a minimum adjusted EBITDA, as described in the Credit Agreement. The Credit Agreement will not affect our ability to meet our existing contractual obligations, except in circumstances where an event of default (subject to certain exceptions) has occurred and is continuing. The Credit Agreement also contains negative covenants, representations and warranties, affirmative covenants and events of default, in each case subject to grace periods, thresholds, and materiality qualifiers consistent with the Credit Agreement.

Other Debt

Other debt primarily includes government loans, mortgages, loans acquired as a result of the IMASCAP acquisition and miscellaneous international bank loans.

Maturities

Aggregate annual maturities of our current and long-term obligations at December 29, 2019, excluding finance lease obligations, are as follows (in thousands):

2020 1, 2	$	474,702
2021	21,423
2022	1,511
2023	814,637
2024	—
Thereafter	1,005
	$	1,313,278

_______________________

¹  The 2021 Notes will mature on November 15, 2021 unless earlier converted or repurchased. As of December 29, 2019, the sale price condition (as defined above) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of December 29, 2019 and the gross amount of $395.0 million is included in the 2020 maturity total above.

² 

All outstanding loans under the ABL Facility will be due and payable in full on December 23, 2021 or earlier under certain specified circumstances as previously described. The 2020 total above includes $20.7 million in borrowings outstanding under the ABL Facility as this debt is reflected as a current liability on our consolidated balance sheet as of December 29, 2019 due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 29, 2019

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 controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with US GAAP 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 revenue recognition, the determination of allowances for doubtful accounts and excess and obsolete inventories, accounting for business combinations and the evaluation of goodwill and long-lived assets, valuation of in-process research and development, product liability claims, product liability insurance recoveries and other litigation, income taxes, and share-based compensation.

Discontinued operations. On January 9, 2014, pursuant to an Asset Purchase Agreement, dated as of June 18, 2013 (the MicroPort Agreement), by and among us and MicroPort, we completed the divestiture and sale of our business operations operating under our prior OrthoRecon operating segment (the OrthoRecon Business) to MicroPort. Pursuant to the terms of the MicroPort Agreement, the purchase price (as defined in the agreement) for the OrthoRecon Business was approximately $283.0 million (including a working capital adjustment), which MicroPort paid in cash.

All historical operating results for the OrthoRecon business are reflected within discontinued operations in the consolidated statements of operations. 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 Consolidated 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. Any such investments are readily convertible into known amounts of cash, and are so near their maturity that they present insignificant risk of changes in value because of interest rate variation.

Inventories. Our inventories are valued at the lower of cost or market on a 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. Historically, our excess and obsolete inventory reserve was based on both the current age of kit inventory as compared to its estimated life cycle and our forecasted product demand and production requirements for other inventory items for the next 36 months. During the quarter ended September 29, 2019, we changed our estimate of excess and obsolete inventory reserves to better reflect the future usage for inventory in excess of estimated three-year demand. The impact of this change in estimate was approximately $26 million. We reduce our inventory reserve and recognize an offset to cost of sales as the related inventory is sold based on an estimated inventory turnover period of 2.5 years.

Total charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $13.1 million, $20.9 million, and $19.2 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. Our 2019 excess and obsolete charges included a $5.2 million favorable adjustment as a result of our change in accounting estimate of reserves for excess and obsolete inventory, as such inventory was sold. During the fiscal years ended December 30, 2018 and December 31, 2017, our excess and obsolete charges included product rationalization initiative adjustments of $4.4 million and $3.1 million, respectively.

Product liability claims and related insurance recoveries and other litigation. We are involved in legal proceedings involving product liability claims as well as contract, patent protection, and other matters. See Note 17 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. These expenses are reflected in either continuing or discontinued operations depending on the product associated with the claim.

We record insurance recoveries from product liability insurance that is in force when they are realized or realizable, when we believe it is probable that the insurance carrier will settle the claim.

Property, plant and equipment. Our property, plant and equipment is stated at cost. Depreciation, which includes amortization of assets under finance 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 and building improvements	10	to	40	years
Machinery and equipment	3	to	14	years
Furniture, fixtures and office equipment	3	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.

Valuation of long-lived assets. Management periodically evaluates carrying values of long-lived assets, including property, plant and equipment and finite-lived 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 long-lived assets 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.

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 on October 1 each year. See Note 8 for discussion of our 2019 goodwill impairment analysis.

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 FASB ASC Section 360, Property, Plant and Equipment (FASB ASC 360). The weighted average amortization periods for our intangible assets are as follows:

Completed technology	10	years
Trademarks	5	years
Licenses	10	years
Customer relationships	17	years
Non-compete agreements	4	years
Other intangible assets	6	years

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 and surgery centers. Our collection history has been favorable with minimal bad debts from these customers. 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. Our allowance for doubtful accounts totaled $3.4 million and $3.0 million at December 29, 2019 and December 30, 2018, respectively.

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. 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 certain components and materials 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 rely 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 extremities products, one supplier for our pyrocarbon products, and one supplier to provide a key ingredient of AUGMENT^® Bone Graft.

In April 2016, we entered into a commercial supply agreement with FUJIFILM Diosynth Biotechnologies U.S.A., Inc. pursuant to which Fujifilm agreed to manufacture and sell to us and we agreed to purchase recombinant human platelet-derived growth factor (rhPDGF-BB) for use in AUGMENT^® Bone Graft. The agreement reflects the culmination of a technology transfer from our former supplier to Fujifilm which began in December 2013 when we were notified that our former supplier was exiting the rhPDGF-BB business. Pursuant to our supply agreement with Fujifilm, commercial production of rhPDGF-BB is expected to begin in 2020. Although we believe that our current supply of rhPDGF-BB from our former supplier should be sufficient to last until after rhPDGF-BB becomes available under the new agreement, no assurance can be provided that it will be sufficient. In

addition, since Fujifilm has not previously manufactured rhPDGF-BB, its ability to do so and perform its obligations under the agreement are not yet fully proven.

Our biologic product line includes one current supplier for our GRAFTJACKET^® family of soft tissue repair and graft containment products. We had previously contracted with two suppliers for this product, but ended our relationship with one of the suppliers at the end of 2019. We can continue selling the remaining inventory from this supplier until the inventory is depleted. In addition, certain biologic products depend upon a single supplier as our source for demineralized bone matrix (DBM) and cancellous bone matrix (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. In addition, we rely on a single supplier of soft tissue graft for BIOTAPE^® XM and a single supplier for the calcium sulfate used in our PRO-DENSE™ Injectable Regenerative Graft (PRO-DENSE™). We cannot be sure that our supply of these single source materials will continue to be available at current levels or will be sufficient to meet our needs, or that future suppliers of such materials will be free from FDA regulatory action impacting their sale of such materials.

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. See Note 12 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.

In December 2017, the United States enacted new legislation under the 2017 Tax Act. We recognized the income tax effects of the 2017 Tax Act in our 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts under a one-year measurement period. We finalized our accounting for the provisions of the 2017 Tax Act in the fourth quarter 2018 with no material impact on our financial statements.

During 2018, we have adopted ASU 2018-02, Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Income, issued in February 2018, allowing the reclassification of income tax effects of the 2017 Tax Act, referred to as “stranded tax effects” by FASB, from accumulated other comprehensive income (AOCI) to retained earnings. This adoption did not have a material impact on our financial statements.

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 statements 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 and surgery centers. Our products are sold through a network of employee and independent sales representatives in the United States and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the United States. We record revenues from sales to hospitals and surgery centers upon transfer of control of promised products in an amount that reflects the consideration we expect to receive in exchange for those products, which is generally when the product is surgically implanted in a patient.

We record revenues from sales to our stocking distributors at a point in time upon transfer of control of promised products to the distributor. Our stocking distributors, who sell the products to their customers, take control of the products and assume all risks of ownership upon transfer. Our stocking distributors are obligated to pay us within specified terms regardless of when, if ever, they sell the products. In general, our stocking 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 was deferred and not yet recognized as revenue as of December 29, 2019 and December 30, 2018.

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. Shipping and handling costs within selling, general and administrative expenses totaled $53.1 million, $52.0 million, and $49.4 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. These amounts include instrument depreciation which totaled $30.6 million, $28.4 million, and $27.1 million for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. 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 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 loss in shareholders’ 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 statements 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 loss and our comprehensive loss is attributable to foreign currency translation.

Share-based compensation. We account for share-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, share-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 share-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. The determination of the fair value of performance-based share-based payment awards, such as performance share units, is based on the estimated achievement of the established performance criteria on the date of grant and updated at the end of each reporting period until the performance period ends. Share-based compensation expense is only recognized for performance share units that we expect to vest, which we estimate based upon an assessment of the probability that the performance criteria will be achieved.

We recorded share-based compensation expense of $32.6 million, $26.1 million, and $19.4 million during the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively, within our results of continuing operations. See Note 15 for further information regarding our share-based compensation assumptions and expenses.

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.

During 2017, we employed a derivative program using foreign currency forward contracts to mitigate the risk of currency fluctuations on our intercompany receivable and payable balances that were denominated in foreign currencies. These forward contracts were expected to offset the transactional gains and losses on the related intercompany balances. These forward contracts were not designated as hedging instruments under FASB ASC 815. Accordingly, the changes in the fair value and the settlement of the contracts were recognized in the period incurred in the accompanying consolidated statements of operations. We discontinued our foreign currency forward contracts derivative program in 2018.

We recorded a net loss of approximately $4.6 million on our foreign currency contracts for the fiscal year ended December 31, 2017. These losses substantially offset translation gains recorded on our intercompany receivable and payable balances, and are also included in “Other expense, net.”

On February 13, 2015, May 20, 2016, and June 28, 2018, we issued the 2020 Notes, 2021 Notes, and 2023 Notes (collectively, the Notes), respectively, as defined and described in Note 10. The 2020 Notes Conversion Derivatives, 2021 Notes Conversion Derivatives, and 2023 Notes Conversion Derivatives each as defined and described in Note 6, require bifurcation from the 2020 Notes, 2021 Notes, and 2023 Notes in accordance with ASC Topic 815, and are accounted for as derivative liabilities. We also entered into 2020, 2021, and 2023 Notes Hedges, as defined and described in Note 6, in connection with the issuance of the 2020, 2021, and 2023 Notes.  The 2020, 2021, and 2023 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 2020, 2021, and 2023 Notes in excess of the principal

amount of converted notes if our ordinary share price exceeds the conversion price. The 2020, 2021, and 2023 Notes Hedges are accounted for as derivative assets in accordance with ASC Topic 815.

Supplemental cash flow information. Cash paid for interest and income taxes was as follows (in thousands):

	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Interest	$	28,523	$	30,552	$	24,641
Income taxes	$	6,084	$	6,254	$	7,359

Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 606). Accounting Standards Codification (ASC) 606 prescribes a single common revenue standard that replaces most existing US GAAP revenue recognition guidance. ASC 606 outlines a five-step model, under which we recognize revenue as performance obligations within a customer contract are satisfied. ASC 606 is intended to provide more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. We adopted ASC 606 during 2018. Revenue is recognized at a point in time, generally upon surgical implantation or shipment of products to distributors. Therefore, adoption of ASC 606 did not have a material effect on our consolidated financial statements except for the additional disclosures included within Note 19.

On February 25, 2016, the FASB issued ASU 2016-02, Leases, and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 842). ASC 842 introduced a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in FASB ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). Furthermore, ASC 842 addresses other concerns related to the current leases model. We adopted ASC 842 during 2019 using the hindsight practical expedient, the practical expedient for short-term leases, and the practical expedient package which primarily limited the need for reassessing lease classification on existing leases and allowed us to issue our financial statements showing comparative lease disclosures under previous GAAP. See additional details related to the impact of this adoption in Note 9.

On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments and has subsequently issued several supplemental and/or clarifying ASUs. The new standard adds an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU will be effective for us beginning in fiscal year 2020. We do not believe this guidance will have a significant impact on our consolidated financial statements.

On August 29, 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) to provide guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40, Internal Use Software, to determine which implementation costs should be capitalized in such a CCA. The ASU will be effective for us beginning in fiscal year 2020. We do not believe this guidance will have a significant impact on our consolidated financial statements.

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Derivatives and Fair Value of Financial Instruments

12 Months Ended

Dec. 29, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments and Derivatives

Fair Value of Financial Instruments and Derivatives

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 derivatives’ fair value shall be recognized currently in earnings unless specific hedge accounting criteria are met.

FASB ASC Section 820, Fair Value Measurement 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.

As of December 29, 2019, we have convertible notes outstanding that are due in 2020, 2021, and 2023. See Note 10 of the consolidated financial statements for additional information about the convertible notes. These notes are cash settled upon conversion for the principal amount of the notes plus a conversion premium (valued at the amount our ordinary share price exceeds the respective conversion price of the notes). The conversion premium is a conversion derivative feature that requires bifurcation from the notes in accordance with ASC Topic 815 and is accounted for as a derivative liability (Notes Conversion Derivative).

At the time of issuance of the notes, we entered into hedges with certain option counterparties to reduce our exposure to potential cash payments required for these conversion premiums (Notes Hedges). Upon conversion of the notes, the option counterparties would settle these hedges with us in cash, valued in the same manner as the conversion premiums. The Notes Hedges are accounted for as a derivative asset in accordance with ASC Topic 815. In connection with certain events, including in connection with the Offer as further described in Note 1, our option counterparties have the discretion to make certain adjustments to the Note Hedges, which may reduce the effectiveness of the Note Hedges.

The Notes Hedges and Notes Conversion Derivatives are classified consistently with the corresponding Notes as described in Note 10. The following table summarizes the fair values and the presentation in our consolidated balance sheets (in thousands) of our Notes Hedges and our Notes Conversion Derivatives:

	December 29, 2019			December 30, 2018
	Location on consolidated balance sheet	Amount		Location on consolidated balance sheet	Amount
2023 Notes Hedges	Other assets	$	39,240	Other assets	$	115,923
2023 Notes Conversion Derivative	Other liabilities	$	31,555	Other liabilities	$	116,833
2021 Notes Hedges	Other current assets	$	183,437	Other assets	$	188,301
2021 Notes Conversion Derivative	Accrued expenses and other current liabilities	$	179,478	Other liabilities	$	187,539
2020 Notes Hedges	Other current assets	$	1,969	Other current assets	$	17,822
2020 Notes Conversion Derivative	Accrued expenses and other current liabilities	$	1,666	Accrued expenses and other current liabilities	$	17,386

Neither the Notes Conversion Derivatives nor the Notes Hedges qualify for hedge accounting; thus, any changes in the fair value of the derivatives are recognized immediately in other expense, net on our consolidated statements of operations. The following table summarizes the net gain (loss) on changes in fair value (in thousands) related to the Notes Hedges and Notes Conversion Derivatives:

	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
2023 Notes Hedges	$	(106,827	)	$	(25,355	)	$	—
2023 Notes Conversion Derivative	114,153			7,792			—
2021 Notes Hedges	(4,864		)	61,238			(32,032		)
2021 Notes Conversion Derivative	8,061			(61,391		)	35,453
2020 Notes Hedges	996			7,342			(32,199		)
2020 Notes Conversion Derivative	(557		)	(28,897		)	33,626
Net gain (loss) on changes in fair value	$	10,962		$	(39,271	)	$	4,848

In addition to the above net gain (loss) on changes in fair value, we also recognized a $12.6 million net loss on the Notes Conversion Derivatives during the year ended December 29, 2019 as part of the additional 2023 Notes exchange as described in Note 10.

The Notes Hedges and the 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 2020, 2021, and 2023 Notes Conversion Derivatives, a trinomial lattice model was used. A trinomial stock price lattice generates three possible outcomes of stock price - one up, one down, and one stable. This lattice generates a distribution of stock prices at the maturity date and throughout the life of the 2020, 2021, and 2023 Notes. Using this stock price lattice, a convertible note lattice was created where the value of the embedded conversion option was estimated by comparing the value produced in a convertible note lattice with the option to convert against the value without the ability to convert. In each case, the convertible note lattice first calculates the possible convertible note values at the maturity date, using the distribution of stock prices, which equals the maximum of (x) the remaining bond cash flows and (y) stock price times the conversion price. The values of the 2020, 2021, and 2023 Notes Conversion Derivatives at the valuation date were estimated using the values at the maturity date and moving back in time on the lattices (both for the lattice with the conversion option and without the conversion option). Specifically, at each node, if the 2020, 2021, or 2023 Notes are eligible for early conversion, the value at this node is the maximum of (i) converting to stock, which is the stock price times the conversion price, and (ii) holding onto the 2020, 2021, and 2023 Notes, which is the discounted and probability-weighted value from the three possible outcomes at the future nodes plus any accrued but unpaid coupons that are not considered at the future nodes. If the 2020, 2021, or 2023 Notes are not eligible for early conversion, the value of the conversion option at this node equals to (ii). In the lattice,

a credit adjustment was applied to the discount for each cash flow in the model as the embedded conversion option, as well as the coupon and notional payments, is settled with cash instead of shares.

To estimate the fair value of the 2020, 2021 and 2023 Notes Hedges, we used the Black-Scholes formula combined with credit adjustments, as the option counterparties have credit risk and the call options are cash settled. We assumed that the call options will be exercised at maturity since our ordinary shares do 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 as of December 29, 2019:

	2020 Notes Conversion Derivative	2020 Notes Hedge	2021 Notes Conversion Derivative	2021 Notes Hedge	2023 Notes Conversion Derivative	2023 Notes Hedge
Black Stock Volatility (1)	14.92%	14.92%	21.89%	21.89%	9.99%	9.99%
Credit Spread for Wright (2)	0.83%	N/A	0.83%	N/A	0.42%	N/A
Credit Spread for Deutsche Bank AG (3)	N/A	0.27%	N/A	N/A	N/A	0.49%
Credit Spread for Wells Fargo Securities, LLC (3)	N/A	0.12%	N/A	N/A	N/A	N/A
Credit Spread for JPMorgan Chase Bank (3)	N/A	0.13%	N/A	0.19%	N/A	0.22%
Credit Spread for Bank of America (3)	N/A	N/A	N/A	0.19%	N/A	0.21%

(1) Volatility selected based on historical and implied volatility of ordinary shares of Wright Medical Group N.V.

(2) Credit spread implied from traded price.

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

The black stock volatility rates used in the valuations for our Notes Hedges and Notes Conversion Derivatives is one of the most significant assumptions. The change in the fair value of Notes Conversion Derivatives resulting from a change in the black stock volatility would have a direct impact on net profit, with an increase in volatility resulting in an increase in the net loss and a decrease in volatility resulting in a decrease in the net loss for the period. The change in the fair value of Notes Hedges resulting from a change in the black stock volatility would have an indirect impact on net profit, with an increase in volatility resulting in a decrease in the net loss and a decrease in volatility resulting in an increase in the net loss for the period. The impact on profit due to volatility of Notes Hedges would be offset by a similar change in volatility of the Notes Conversion Derivatives.

Derivatives not Designated as Hedging Instruments

As a result of the acquired business of IMASCAP in 2017, we have recorded the estimated fair value of future contingent consideration of approximately €25.1 million or approximately $28.0 million, related to the achievement of certain technical milestones and sales earnouts as of December 29, 2019. The contingent consideration liability related to technical milestones totaled $20.8 million and $12.7 million as of December 29, 2019 and December 30, 2018, respectively, and is contingent upon the development and approval of a next generation reverse shoulder implant system and new software modules. The contingent consideration liability related to sales earnouts totaled $7.2 million and $6.5 million as of December 29, 2019 and December 30, 2018, respectively, and is contingent upon the sale of certain guides and the next generation reverse shoulder implant system. Changes in the fair value of contingent consideration is recorded within other expense, net on our consolidated statements of operations.

The fair values of the sales earn out contingent consideration as of December 29, 2019 and December 30, 2018 were determined using a discounted cash flow model and probability adjusted estimates of the future earnings and are classified in Level 3. The discount rate is 12% for the sales earnout contingent consideration.

The contingent consideration related to technical milestones is based on meeting certain developmental milestones for new software modules and for the FDA and CE approval for the next generation reverse shoulder implant system. The fair value of this contingent consideration as of December 29, 2019 and December 30, 2018 was determined using probability adjusted estimates of the future payments and is classified in Level 3. The discount rate is approximately 6% for the contingent consideration related to technical milestones. A change in the discount rate would have limited impact on our profits or the fair value of this contingent consideration.

On March 1, 2013, as part of our acquisition of BioMimetic Therapeutics, Inc. (BioMimetic), we issued Contingent Value Rights (CVRs) as part of the merger consideration. Among other things, the CVR agreement provided for a revenue milestone payment equal to $1.50 per share, or $42 million, to be paid if, prior to March 1, 2019, sales of AUGMENT^® Bone Graft reached $40 million over 12 consecutive months. Sales for AUGMENT^® Bone Graft reached $40 million for the 12 months ended October 28, 2018, and this milestone payment was paid during the fourth quarter of 2018. The CVR agreement also provided for a second revenue milestone equal to $1.50 per share, or $42 million, if, prior to March 1, 2019, sales of AUGMENT^® Bone Graft reach $70 million over 12 consecutive months. This milestone was not met before the termination of the CVRs. There were no CVRs outstanding as of December 29, 2019, as the agreement terminated on March 1, 2019. The fair value of the CVRs outstanding at December 30, 2018 was $0.4 million and was determined using the closing price of the security in the active market (Level 1), and is reflected within “Accrued expenses and other current liabilities” on our consolidated balance sheet.

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates the fair value of these financial instruments at December 29, 2019 and December 30, 2018 due to their short maturities and variable rates.

The following tables summarize 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)
December 29, 2019
Assets
Cash and cash equivalents	$	166,856	$	166,856	$	—	$	—
2020 Notes Hedges	1,969		—		—		1,969
2021 Notes Hedges	183,437		—		—		183,437
2023 Notes Hedges	39,240		—		—		39,240
Total	$	391,502	$	166,856	$	—	$	224,646
Liabilities
2020 Notes Conversion Derivative	$	1,666	$	—	$	—	$	1,666
2021 Notes Conversion Derivative	179,478		—		—		179,478
2023 Notes Conversion Derivative	31,555		—		—		31,555
Contingent consideration	28,077		—		—		28,077
Total	$	240,776	$	—	$	—	$	240,776

	Total		Quoted prices in active markets (Level 1)		Prices with other observable inputs (Level 2)		Prices with unobservable inputs (Level 3)
December 30, 2018
Assets
Cash and cash equivalents	$	191,351	$	191,351	$	—	$	—
2020 Notes Hedges	17,822		—		—		17,822
2021 Notes Hedges	188,301		—		—		188,301
2023 Notes Hedges	115,923		—		—		115,923
Total	$	513,397	$	191,351	$	—	$	322,046
Liabilities
2020 Notes Conversion Derivative	$	17,386	$	—	$	—	$	17,386
2021 Notes Conversion Derivative	187,539		—		—		187,539
2023 Notes Conversion Derivative	116,833		—		—		116,833
Contingent consideration	19,248		—		—		19,248
Contingent consideration (CVRs)	420		420		—		—
Total	$	341,426	$	420	$	—	$	341,006

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

	Balance at December 30, 2018			Additions	Transfers into Level 3	Gain/(loss) on fair value adjustments included in earnings		Gain/(loss) on issuance/settlement included in earnings		Settlements		Currency	Balance at December 29, 2019
2020 Notes Hedges	$	17,822		—	—	996		—		(16,849	)	—	$	1,969
2020 Notes Conversion Derivative	$	(17,386	)	—	—	(557	)	16,277		—		—	$	(1,666	)
2021 Notes Hedges	$	188,301		—	—	(4,864	)	—		—		—	$	183,437
2021 Notes Conversion Derivative	$	(187,539	)	—	—	8,061		—		—		—	$	(179,478	)
2023 Notes Hedges	$	115,923		30,144	—	(106,827	)	—		—		—	$	39,240
2023 Notes Conversion Derivative	$	(116,833	)	—	—	114,153		(28,875	)	—		—	$	(31,555	)
Contingent consideration	$	(19,248	)	—	—	(9,532	)	—		207		496	$	(28,077	)