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Business segment information | 12 Months Ended
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Dec. 31, 2011
Business segment information |
Business segment information |
12. Business segment information The Company’s segment information is prepared on the same basis that management reviews the financial information for operational decision making purposes. At this time, the Company’s Chief Operating Decision Maker (the “CODM”) only uses GBU reporting for Sales and Operating Income to assess operating performance. Items below operating income are not considered when measuring the profitability of a segment. In the future, the CODM may decide to review other financial metrics by GBU. Goodwill is also assigned to specific GBUs. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information. Beginning January 1, 2011, the Company began managing its business by its three GBUs, which are comprised of Spine, Orthopedics and Sports Medicine supported by Corporate activities. These GBUs represent the current segments for which the Company’s Chief Operating Decision Maker reviews financial information and makes resource allocation decisions among business units. Accordingly, the Company’s segment information (as provided below) has been prepared based on the Company’s three GBUs reporting segments. Prior year disclosures have been revised to conform to these new GBU reporting segments. These new segments are discussed below. Spine Spine provides a portfolio of repair and regenerative products that allow physicians to successfully treat a variety of spinal conditions. This global business unit specializes in the design, development and marketing of the Company’s spinal repair products along with regenerative stimulation and biologics products used in spine applications. Spine distributes its products through a network of distributors, sales representatives and affiliates. This global business unit uses both direct and distributor sales representatives to sell spine products to hospitals, doctors, and other healthcare providers, globally. Orthopedics Orthopedics provides a comprehensive portfolio of repair and regenerative products that allow physicians to successfully treat a variety of orthopedic conditions unrelated to spine. This global business unit specializes in the design, development and marketing of the Company’s orthopedic repair products along with regenerative stimulation and biologics products used in orthopedic applications. Orthopedics distributes its products through a network of distributors, sales representatives and affiliates. This global business unit uses both direct and distributor sales representatives to sell orthopedics products to hospitals, doctors, and other healthcare providers globally. Sports Medicine Sports Medicine designs, manufactures and distributes a portfolio of non-invasive products that allow physicians and clinicians to treat a variety of sports medicine related conditions in order to minimize pain and restore mobility to their patients. Sports Medicine distributes products through a network of domestic and international distributors, sales representatives, and affiliates to hospitals, doctors and other healthcare providers, primarily in the U.S. Corporate Corporate activities are comprised of the operating expenses of Orthofix International N.V. and its U.S. holding company subsidiary, Orthofix Holdings, Inc., along with activities not necessarily identifiable within the three GBUs. Business Segments by GBU:
|  | Year ended December 31, (US$ in thousands) |
|  | 2011 |  | 2010 |  | 2009 |
|  | Net Sales |  | Percent of Total Net Sales |  | Net Sales |  | Percent of Total Net Sales |  | Net Sales |  | Percent of Total Net Sales |
Spine |  | $ | 304,217 |  | 52 | % | $ | 306,404 |  | 54 | % | $ | 279,425 |  | 51 | %
Orthopedics |  | 165,904 |  | 29 | % | 154,198 |  | 27 | % | 151,054 |  | 28 | %
Sports Medicine |  | 108,867 |  | 19 | % | 103,768 |  | 19 | % | 115,156 |  | 21 | %
Total Net Sales |  | $ | 578,988 |  | 100 | % | $ | 564,370 |  | 100 | % | $ | 545,635 |  | 100 | %
Our market sectors are Spine that includes implants, biologics, and also stimulation products, Orthopedics, and Sports Medicine. Market Sectors:
|  | Year ended December 31, (US$ in thousands) |
|  | 2011 |  | 2010 |  | 2009 |
|  | Net Sales |  | Percent of Total Net Sales |  | Net Sales |  | Percent of Total Net Sales |  | Net Sales |  | Percent of Total Net Sales |
Spine Products |  |  |  |  |  |  |  |  |  |  |  |  |
Implants and Biologics |  | $ | 143,775 |  | 24 | % | $ | 133,831 |  | 23 | % | $ | 120,445 |  | 22 | %
Stimulation |  | 160,442 |  | 28 | % | 172,573 |  | 31 | % | 158,980 |  | 29 | %
Total Spine Products |  | 304,217 |  | 52 | % | 306,404 |  | 54 | % | 279,425 |  | 51 | %
Orthopedics Products |  | 165,904 |  | 29 | % | 149,175 |  | 26 | % | 139,304 |  | 25 | %
Sports Medicine Products |  | 103,040 |  | 18 | % | 95,514 |  | 18 | % | 96,446 |  | 18 | %
Total Strategic Products |  | 573,161 |  | 99 | % | 551,093 |  | 98 | % | 515,175 |  | 94 | %
Divested Products |  | 5,827 |  | 1 | % | 13,277 |  | 2 | % | 30,460 |  | 6 | %
Total Net Sales |  | $ | 578,988 |  | 100 | % | $ | 564,370 |  | 100 | % | $ | 545,635 |  | 100 | %
Operating Income (Loss) |  | Year Ended December 31, |
(US$ in thousands) |  | 2011 |  | 2010 |  | 2009 |
Spine (1) |  | $ | 46,618 |  | $ | 80,688 |  | $ | 60,830 |
Orthopedics (2) |  | 12,368 |  | 5,879 |  | 5,781 |
Sports Medicine (3) |  | 1,166 |  | 22,586 |  | 21,347 |
Corporate (4) |  | (27,633 | ) | (20,163 | ) | (24,083 | )
Total |  | $ | 32,519 |  | $ | 88,990 |  | $ | 63,875 |
(1) | For 2011, the operating income for the Spine GBU included $42.5 million of expenses in connection with charges related to U.S. Government resolutions.
(2) | For 2011, the operating income for the Orthopedics GBU included $6.5 million of expenses in connection with charges related to U.S. Government resolutions.
(3) | For 2011, the operating income for the Sports Medicine GBU included $5 million of litigation and settlement costs for certain product liability matters related to our Sports Medicine GBU. For 2011, the operating income for the Sports Medicine GBU included $2 million of insurance expense to cover additional product liability claims related to our Sports Medicine GBU. For 2010, the operating income for the Sports Medicine GBU included $12 million from the net gain on sale of vascular operations. For 2010, the operating income for the Sports Medicine GBU included $1.7 million of insurance expense to cover new product liability claims from its former pain management operations sold in 2008.
(4) | For 2011, the operating loss for the Corporate GBU included $7.5 million of expenses in connection with charges related to U.S. Government inquiries and $3.2 million of senior management succession charges.
The following table presents depreciation and amortization by segment:
|  | Depreciation and amortization |
(US$ in thousands) |  | 2011 |  | 2010 |  | 2009 |
Spine |  | $ | 11,060 |  | $ | 9,407 |  | $ | 9,154 |
Orthopedics |  | 5,506 |  | 6,282 |  | 5,733 |
Sports Medicine |  | 6,158 |  | 6,706 |  | 7,348 |
Corporate |  | 52 |  | 126 |  | 109 |
Total |  | $ | 22,776 |  | $ | 22,521 |  | $ | 22,344 |
Analysis of property, plant and equipment by geographic area:
(US$ in thousands) |  | 2011 |  | 2010 |
U.S. |  | $ | 39,563 |  | $ | 32,718 |
Italy |  | 7,663 |  | 7,614 |
U.K. |  | 1,449 |  | 1,618 |
Brazil |  | 2,532 |  | 2,400 |
Others |  | 917 |  | 1,185 |
Total |  | $ | 52,124 |  | $ | 45,535 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 131 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 + Details
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