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Business segment information
 6 Months Ended
Jun. 30, 2012
Business segment information  
Business segment information

14.              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 global business units (“GBUs”) 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.  The Company manages its business by its two GBUs, which are comprised of Spine and Orthopedics supported by Corporate activities. These GBUs represent the segments for which the CODM 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 two GBUs reporting segments. These 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 and market 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 and market orthopedics products to hospitals, doctors and other healthcare providers, globally.

 

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 with the two GBUs.

 

The tables below present external net sales for continuing operations by GBU reporting segments:

 

 

 

External Net Sales by GBU

 

 

 

Three Months Ended June 30,

 

(US$ in thousands)

 

2012

 

2011

 

Reported
Growth

 

Constant
Currency
Growth

 

Spine

 

 

 

 

 

 

 

 

 

Spine Repair Implants and Regenerative Biologics

 

$

38,501

 

$

36,882

 

4

%

4

%

Spine Regenerative Stimulation

 

43,294

 

39,660

 

9

%

9

%

 

 

 

 

 

 

 

 

 

 

Total Spine

 

81,795

 

76,542

 

7

%

7

%

 

 

 

 

 

 

 

 

 

 

Orthopedics

 

37,697

 

40,128

 

(6

)%

2

%

 

 

 

 

 

 

 

 

 

 

Total Net Sales

 

$

119,492

 

$

116,670

 

2

%

5

%

 

 

 

External Net Sales by GBU

 

 

 

Six Months Ended June 30,

 

(US$ in thousands)

 

2012

 

2011

 

Reported
Growth

 

Constant
Currency
Growth

 

Spine

 

 

 

 

 

 

 

 

 

Spine Repair Implants and Regenerative Biologics

 

$

74,258

 

$

70,839

 

5

%

5

%

Spine Regenerative Stimulation

 

82,565

 

78,278

 

5

%

5

%

 

 

 

 

 

 

 

 

 

 

Total Spine

 

156,823

 

149,117

 

5

%

5

%

 

 

 

 

 

 

 

 

 

 

Orthopedics

 

78,711

 

80,614

 

(2

)%

3

%

 

 

 

 

 

 

 

 

 

 

Total Net Sales

 

$

235,534

 

$

229,731

 

3

%

4

%

 

The table below presents operating income (loss) for continuing operations by GBU reporting segments:

 

Operating Income (Loss) by GBU

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

(US$ in thousands)

 

2012

 

2011

 

2012

 

2011

 

Spine (1)

 

$

21,029

 

$

22,292

 

$

42,594

 

$

5,866

 

Orthopedics (2)

 

4,093

 

4,972

 

9,073

 

1,340

 

Corporate (3)

 

(4,557

)

(7,868

)

(8,671

)

(15,307

)

 

 

 

 

 

 

 

 

 

 

Total

 

$

20,565

 

$

19,396

 

$

42,996

 

$

(8,101

)

 

 

(1)                 For the six months ended June 30, 2012 and 2011, the operating income for the Spine GBU included $1.2 million and $36.5 million, respectively, of expenses in connection with charges related to U.S. Government resolutions. For the six months ended June 30, 2012, the operating income for the Spine GBU included a $3.1 million charge for an arbitration resolution related to a 2008 co-development agreement.

(2)                 For the six months ended June 30, 2012 and 2011, the operating income for the Orthopedics GBU included $0.2 million and $6.5 million, respectively, of expenses in connection with charges related to U.S. Government resolutions.

(3)                 For the six months ended June 30, 2011, the operating loss for the Corporate GBU included $3 million of expenses in connection with charges related to U.S. Government resolutions. For the three and six months ended June 30, 2011, the operating loss for the Corporate GBU included $3.2 million of senior management succession charges.