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Business segment information
 12 Months Ended
Dec. 31, 2013
Segment Reporting [Abstract]  
Business segment information
13. Business segment information

On July 1, 2013, we began certain organizational and executive leadership changes to align with how our Chief Operating Decision Maker (the “CODM”) reviews performance and makes decisions in managing the Company. We manage our business by our four strategic business units (“SBUs”), which are comprised of BioStim, Biologics, Extremity Fixation, and Spine Fixation supported by Corporate activities. These SBUs represent the segments for which our CODM reviews financial information and makes resource allocation decisions among business units. The primary metric used by the Chief Operating Decision Maker in managing the Company is contribution margin, which is defined as gross profit less sales and marketing expense. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information. Accordingly, our segment information has been prepared based on our four SBUs reporting segments. These four segments are discussed below.

BioStim

The BioStim SBU manufactures, distributes, and provides support services for a portfolio of market leading devices for enhancing bone fusion that utilize Orthofix’s patented pulsed electromagnetic (PEMF) technology. These Food and Drug Administration-approved Class 3 medical devices are indicated as an adjunctive treatment to enhance fusion success in cervical and lumbar spine fusion as well as a therapeutic treatment for non-healing fractures outside of the spine (non-unions). The PEMF technology is supported by a strong clinical background on mechanism of action in the scientific literature and current research and clinical studies are underway to identify potential new clinical indications.

Biologics

The Biologics SBU provides a portfolio of regenerative products that allow physicians to successfully treat a variety of spinal and orthopedic conditions. This SBU specializes in the marketing of the Company’s regeneration tissue forms. Biologics distributes its tissues through a network of distributors, sales, representatives and affiliates to market to hospitals, doctors, and other healthcare providers, primarily in the U.S. Our partnership with MTF allows us to exclusively market our Trinity Evolution® and Trinity Elite® tissue forms for musculoskeletal defects to enhance bony fusion.

Extremity Fixation

The Extremity Fixation SBU offers products that allow physicians to successfully treat a variety of orthopedic conditions unrelated to the spine. This SBU specializes in the design, development, and marketing of the Company’s orthopedic products used in fracture repair, deformity correction and bone reconstruction. Extremity Fixation distributes its products through a network of distributors, sales representatives, and affiliates. This SBU uses both distributors and direct sales representatives to sell orthopedics products to hospitals, doctors, and other health providers, globally.

Spine Fixation

The Spine Fixation SBU specializes in the design, development and marketing of a portfolio of implant products used in surgical procedures of the spine. Spine Fixation distributes its products through a network of distributors and affiliates. This SBU uses distributors and direct sales representatives to sell spine 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 holding company subsidiaries, along with activities not necessarily identifiable within the four SBUs.

External Net Sales by SBU:

The table below presents external net sales for continuing operations by SBU reporting segment. Net sales include product sales and marketing service fees.

 

     External Net Sales by SBU
Year ended December 31,		  
(U.S. Dollars in thousands)    2013     2012     2011  
     Net Sales      Percent of
Total Net
Sales		     Net Sales      Percent of
Total Net
Sales		     Net Sales      Percent of
Total Net
Sales		  
                  (Restated)      (Restated)     (Restated)      (Restated)  

BioStim

    $ 147,910         37 %    $ 181,959         41 %    $ 188,136         43 % 

Biologics

      53,769         13 %      53,730         12 %      42,919         10 % 

Extremity Fixation

      103,385         26 %      112,009         25 %      119,521         27 % 

Spine Fixation

      95,470         24 %      99,883         22 %      91,395         20 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

Total Net Sales

    $ 400,534         100 %    $ 447,581         100 %    $ 441,971         100 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

 

The table below presents net margin, defined as gross profit less sales and marketing expenses from continuing operations by SBU reporting segment:

 

Net Margin by SBU

(U.S. Dollars in thousands)

    Year Ended December 31,  
   2013     2012     2011  
           (Restated)     (Restated)  

Net Margin

       

BioStim

    $ 64,930      $ 86,654      $ 93,056   

Biologics

      24,532        23,559        18,979   

Extremity Fixation

      26,389        34,337        29,530   

Spine Fixation

      7,245        19,142        13,068   

Corporate

      (1,443 )      (1,495 )      (1,700 ) 
  

 

 

    

 

 

    

 

 

  

Total net margin

    $ 121,653      $ 162,197      $ 152,933   

General & administrative

      65,147        53,391        64,481   

Research and development

      26,768        28,577        22,861   

Amortization of intangible assets

      2,687        2,298        2,550   

Costs related to the accounting review and restatement

      12,945        —          —     

Impairment of goodwill

      19,193        —          —     

Charges related to U.S. Government resolutions

      —          1,295        57,141   
  

 

 

    

 

 

    

 

 

  

Operating (loss) income

    $ (5,087 )    $ 76,636      $ 5,900   
  

 

 

    

 

 

    

 

 

  

The following table presents depreciation and amortization for continuing operations by SBU reporting segment:

 

     Depreciation and amortization by SBU
Year Ended December 31,		  

(U.S. Dollars in thousands)

    2013      2012      2011  
            (Restated)      (Restated)  

BioStim

    $ 1,946       $ 1,584       $ 2,033   

Biologics

      628         543         415   

Extremity Fixation

      7,195         5,196         5,148   

Spine Fixation

      12,794         10,752         9,211   

Corporate

      96         70         53   
  

 

 

     

 

 

     

 

 

  

Total

    $ 22,659       $ 18,145       $ 16,860   
  

 

 

     

 

 

     

 

 

  

Geographical information

The following geographic data includes net sales by geographic destination:

 

(U.S. Dollars in thousands)

    2013      2012      2011  
            (Restated)      (Restated)  

U.S.

    $ 295,857       $ 334,624       $ 328,585   

International:

         

U.K.

      10,002         8,431         8,206   

Italy

      16,755         18,742         17,447   

Brazil

      26,786         31,166         34,424   

Other

      51,134         54,618         53,309   
  

 

 

     

 

 

     

 

 

  

Total international

      104,677         112,957         113,386   
  

 

 

     

 

 

     

 

 

  

Total net sales

    $ 400,534       $ 447,581       $ 441,971   
  

 

 

     

 

 

     

 

 

  

 

Analysis of property, plant and equipment by geographic area:

 

(U.S. Dollars in thousands)

    2013      2012  
            (Restated)  

U.S.

    $ 39,858       $ 39,554   

Italy

      7,813         7,617   

U.K.

      1,871         1,402   

Brazil

      3,210         3,421   

Others

      1,854         1,841   
  

 

 

     

 

 

  

Total

    $ 54,606       $ 53,835