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Business segment information | 9 Months Ended
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Sep. 30, 2013
Segment Reporting [Abstract] |
Business segment information |
14. | 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, Spine Fixation, and Extremity 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 net 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 Strategic Business Unit 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 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 Biologics 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. Spine Fixation The Spine Fixation strategic business unit 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 strategic business unit uses distributor sales representatives to sell spine products to hospitals, doctors and other healthcare providers, globally. Extremity Fixation Extremity Fixation offers products that allow physicians to successfully treat a variety of orthopedic conditions unrelated to the spine. This strategic business unit 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 strategic business units uses both direct and distributor sales representatives to sell orthopedics products to hospitals, doctors, and other health 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. The accounting policies of the segments are the same as those described in the business segment information found in Note 13, “Business segment information” to the Consolidated Financial Statements included in the 2012 Form 10-K/A. The table below presents external net sales by SBU reporting segment (amounts reported for prior periods have been reclassified to conform to our new segment reporting structure). Net sales include product sales and marketing service fees. Marketing service fees, which are recorded on a net basis, are comprised of fees earned for the marketing of Trinity Evolution®, Trinity ELITE™ and Versashield® in our Biologics segment.
|  | External Net Sales by SBU |
|  | Three Months Ended September 30, |
(US$ in thousands) |  | 2013 |  |  | 2012 |  |  | Reported Growth |  |  | Constant Currency Growth |
|  |  |  |  | (Restated) |  |  | (Restated) |  |  | (Restated) |
BioStim |  | $ | 31,604 |  |  | $ | 42,310 |  |  |  | (25 | )% |  |  | (28 | )%
Biologics |  |  | 13,212 |  |  |  | 12,951 |  |  |  | 2 | % |  |  | 2 | %
Spine Fixation |  |  | 23,221 |  |  |  | 25,001 |  |  |  | (7 | )% |  |  | (7 | )%
Extremity Fixation |  |  | 24,701 |  |  |  | 27,595 |  |  |  | (10 | )% |  |  | (9 | )%
Total Net Sales |  | $ | 92,738 |  |  | $ | 107,857 |  |  |  | (14 | )% |  |  | (15 | )%
|  | External Net Sales by SBU |
|  | Nine Months Ended September 30, |
(US$ in thousands) |  | 2013 |  |  | 2012 |  |  | Reported Growth |  |  | Constant Currency Growth |
|  |  |  |  | (Restated) |  |  | (Restated) |  |  | (Restated) |
BioStim |  | $ | 108,445 |  |  | $ | 134,741 |  |  |  | (20 | )% |  |  | (20 | )%
Biologics |  |  | 39,827 |  |  |  | 39,792 |  |  |  | — | % |  |  | — | %
Spine Fixation |  |  | 71,994 |  |  |  | 72,972 |  |  |  | (1 | )% |  |  | (1 | )%
Extremity Fixation |  |  | 74,125 |  |  |  | 82,711 |  |  |  | (10 | )% |  |  | (8 | )%
Total Net Sales |  | $ | 294,391 |  |  | $ | 330,216 |  |  |  | (11 | )% |  |  | (11 | )%
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 |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(US$ in thousands) |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  |  |  |  | (Restated) |  |  |  |  |  | (Restated) |
Net margin: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BioStim |  | $ | 10,614 |  |  | $ | 19,367 |  |  | $ | 45,911 |  |  | $ | 66,354 |
Biologics |  |  | 6,743 |  |  |  | 5,664 |  |  |  | 18,472 |  |  |  | 16,524 |
Spine Fixation |  |  | 1,227 |  |  |  | 4,693 |  |  |  | 7,489 |  |  |  | 13,379 |
Extremity Fixation |  |  | 8,321 |  |  |  | 11,145 |  |  |  | 21,766 |  |  |  | 24,508 |
Corporate |  |  | (469 | ) |  |  | (418 | ) |  |  | (1,376 | ) |  |  | (1,083 | )
Total net margin |  |  | 26,436 |  |  |  | 40,451 |  |  |  | 92,262 |  |  |  | 119,682 |
General and administrative |  |  | 13,202 |  |  |  | 13,850 |  |  |  | 46,736 |  |  |  | 42,715 |
Research and development |  |  | 6,361 |  |  |  | 6,858 |  |  |  | 20,653 |  |  |  | 23,160 |
Amortization of intangible assets |  |  | 616 |  |  |  | 565 |  |  |  | 1,725 |  |  |  | 1,725 |
Costs related to the accounting review and restatement |  |  | 2,664 |  |  |  |  |  |  |  | 2,664 |  |  |  |  |
Impairment of goodwill |  |  | 19,193 |  |  |  | — |  |  |  | 19,193 |  |  |  | — |
Charges related to U.S. Government resolutions |  |  | — |  |  |  | 373 |  |  |  | — |  |  |  | 1,059 |
Operating income (loss) |  | $ | (15,600 | ) |  | $ | 18,805 |  |  | $ | 1,291 |  |  | $ | 51,023 |

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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 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 2: 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 3: 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 4: 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 5: 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 6: 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 7: 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 8: 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 9: 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 10: 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 11: 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 Reference 12: 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 13: 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 14: 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 15: 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 + Details
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