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Business segment information | 12 Months Ended
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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 Executive Officer, who is also 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 CODM 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 SBU manufactures, distributes, and provides support services for market leading devices that enhance bone fusion. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in the cervical and lumbar spine as well as a therapeutic treatment for non-spine fractures that have not healed (non-unions). The devices utilize Orthofix’s patented pulsed electromagnetic field (“PEMF”) technology which is supported by strong basic mechanism of action data in the scientific literature as well as strong level one randomized controlled clinical trials in the medical literature. Current research and clinical studies are also 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 markets its tissues through a network of distributors, sales, representatives and affiliates to supply 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 broad 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, including share-based compensation 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) |
BioStim |  | $ | 145,085 |  |  |  | 36 | % |  | $ | 174,562 |  |  |  | 40 | % |  | $ | 181,736 |  |  |  | 42 | %
Biologics |  |  | 53,746 |  |  |  | 14 | % |  |  | 53,731 |  |  |  | 12 | % |  |  | 42,911 |  |  |  | 10 | %
Extremity Fixation |  |  | 103,359 |  |  |  | 26 | % |  |  | 112,011 |  |  |  | 25 | % |  |  | 119,504 |  |  |  | 27 | %
Spine Fixation |  |  | 95,421 |  |  |  | 24 | % |  |  | 99,885 |  |  |  | 23 | % |  |  | 91,368 |  |  |  | 21 | %
Total Net Sales |  | $ | 397,611 |  |  |  | 100 | % |  | $ | 440,189 |  |  |  | 100 | % |  | $ | 435,519 |  |  |  | 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) |  |  | (Restated) |
Net Margin |  |  |  |  |  |  |  |  |  |  |  |
BioStim |  | $ | 63,847 |  |  | $ | 88,788 |  |  | $ | 92,860 |
Biologics |  |  | 24,794 |  |  |  | 23,589 |  |  |  | 18,978 |
Extremity Fixation |  |  | 23,704 |  |  |  | 34,554 |  |  |  | 30,773 |
Spine Fixation |  |  | 4,329 |  |  |  | 15,256 |  |  |  | 13,037 |
Corporate |  |  | (1,443 | ) |  |  | (1,495 | ) |  |  | (1,700 | )
Total net margin |  | $ | 115,231 |  |  | $ | 160,692 |  |  | $ | 153,948 |
General & administrative |  |  | 64,830 |  |  |  | 53,650 |  |  |  | 64,785 |
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 |  | $ | (11,192 | ) |  | $ | 74,872 |  |  | $ | 6,611 |
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) |  |  | (Restated) |
BioStim |  | $ | 1,979 |  |  | $ | 1,659 |  |  | $ | 2,122 |
Biologics |  |  | 648 |  |  |  | 567 |  |  |  | 436 |
Extremity Fixation |  |  | 7,265 |  |  |  | 5,201 |  |  |  | 5,156 |
Spine Fixation |  |  | 12,834 |  |  |  | 10,800 |  |  |  | 9,258 |
Corporate |  |  | 96 |  |  |  | 70 |  |  |  | 53 |
Total |  | $ | 22,822 |  |  | $ | 18,297 |  |  | $ | 17,025 |
Geographical information The following geographic data includes net sales by geographic destination:
(U.S. Dollars in thousands) |  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (Restated) |  |  | (Restated) |  |  | (Restated) |
U.S. |  | $ | 293,032 |  |  | $ | 327,228 |  |  | $ | 322,186 |
Italy |  |  | 16,755 |  |  |  | 18,742 |  |  |  | 17,447 |
U.K. |  |  | 10,002 |  |  |  | 8,431 |  |  |  | 8,206 |
Brazil |  |  | 26,786 |  |  |  | 31,166 |  |  |  | 34,424 |
Others |  |  | 51,036 |  |  |  | 54,622 |  |  |  | 53,256 |
Total net sales |  | $ | 397,611 |  |  | $ | 440,189 |  |  | $ | 435,519 |
Analysis of property, plant and equipment by geographic area:
(U.S. Dollars in thousands) |  | 2013 |  |  | 2012 |
|  | (Restated) |  |  | (Restated) |
U.S. |  | $ | 39,287 |  |  | $ | 38,504 |
Italy |  |  | 8,150 |  |  |  | 7,625 |
U.K. |  |  | 1,871 |  |  |  | 1,402 |
Brazil |  |  | 3,210 |  |  |  | 3,421 |
Others |  |  | 1,854 |  |  |  | 1,841 |
Total |  | $ | 54,372 |  |  | $ | 52,793 |

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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 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: 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 3: 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 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 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: 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 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 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: 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 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 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: 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 14: 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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