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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 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