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Business segment information | 12 Months Ended
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Dec. 31, 2017
Segment Reporting [Abstract] |
Business segment information |
14. | Business segment information
We manage our business by our four SBUs: BioStim, Extremity Fixation, Spine Fixation, and Biologics. These SBUs represent the operating segments for which our Chief Executive Officer, who is also Chief Operating Decision Maker (the “CODM”), reviews financial information and makes resource allocation decisions among business units. The primary metric used by the CODM in managing the Company is non-GAAP net margin, an internal metric that the Company defines 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 reporting segment information has been prepared based on our four SBUs. BioStim The BioStim SBU manufactures, distributes, and provides support services of market leading bone growth stimulator devices that enhance bone fusion. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in cervical and lumbar spine as well as a therapeutic treatment for non-spine fractures that have not healed (non-unions). This SBU uses distributors and sales representatives to sell its devices to hospitals, healthcare providers, and patients, primarily in the U.S. Extremity Fixation The Extremity Fixation SBU offers products and solutions 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 procedures. Extremity Fixation distributes its products through a network of distributors and sales representatives to sell orthopedic products to hospitals, and healthcare providers, globally. Spine Fixation The Spine Fixation SBU designs, develops and markets a broad portfolio of implant products used in surgical procedures of the spine. Spine Fixation distributes its products through a network of distributors and sales representatives to sell spine products to hospitals and healthcare providers, globally. Biologics The Biologics SBU provides a portfolio of regenerative products and tissue forms that allow physicians to successfully treat a variety of spinal and orthopedic conditions. This SBU specializes in the marketing of the Company’s exclusive regeneration tissue forms and distributes its tissues to hospitals and healthcare providers, primarily in the U.S., through a network of employed and independent sales representatives. Our partnership with MTF allows us to exclusively market our Trinity Evolution and Trinity ELITE tissue forms for musculoskeletal defects to enhance bony fusion. 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 table below presents net sales by reporting segment:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
(U.S. Dollars, in thousands) |  | Net Sales |  |  | Percent of Total Net Sales |  |  | Net Sales |  |  | Percent of Total Net Sales |  |  | Net Sales |  |  | Percent of Total Net Sales |
BioStim |  | $ | 185,900 |  |  |  | 42.9 | % |  | $ | 176,561 |  |  |  | 43.1 | % |  | $ | 164,955 |  |  |  | 41.6 | %
Extremity Fixation |  |  | 103,242 |  |  |  | 23.8 | % |  |  | 102,683 |  |  |  | 25.1 | % |  |  | 96,034 |  |  |  | 24.2 | %
Spine Fixation |  |  | 81,957 |  |  |  | 18.9 | % |  |  | 72,632 |  |  |  | 17.7 | % |  |  | 75,668 |  |  |  | 19.1 | %
Biologics |  |  | 62,724 |  |  |  | 14.4 | % |  |  | 57,912 |  |  |  | 14.1 | % |  |  | 59,832 |  |  |  | 15.1 | %
Net sales |  | $ | 433,823 |  |  |  | 100.0 | % |  | $ | 409,788 |  |  |  | 100.0 | % |  | $ | 396,489 |  |  |  | 100.0 | %
The following table presents Non-GAAP net margin, and internal metric that the Company defines as gross profit less sales and marketing expense, by reporting segment:
|  | Year Ended December 31, |
(U.S. Dollars, in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
BioStim |  | $ | 77,369 |  |  | $ | 75,469 |  |  | $ | 67,878 |
Extremity Fixation |  |  | 31,071 |  |  |  | 30,526 |  |  |  | 29,493 |
Spine Fixation |  |  | 8,730 |  |  |  | 8,650 |  |  |  | 8,547 |
Biologics |  |  | 25,692 |  |  |  | 26,891 |  |  |  | 27,226 |
Corporate |  |  | (446 | ) |  |  | (888 | ) |  |  | (1,260 | )
Non-GAAP net margin |  | $ | 142,416 |  |  | $ | 140,648 |  |  | $ | 131,884 |
General and administrative |  |  | 74,388 |  |  |  | 74,404 |  |  |  | 87,157 |
Research and development |  |  | 29,700 |  |  |  | 28,803 |  |  |  | 26,389 |
SEC / FCPA matters and related costs |  |  | (2,483 | ) |  |  | 2,005 |  |  |  | 9,083 |
Charges related to U.S. Government resolutions |  |  | — |  |  |  | 14,369 |  |  |  | — |
Operating income |  | $ | 40,811 |  |  | $ | 21,067 |  |  | $ | 9,255 |
Interest income (expense), net |  |  | (416 | ) |  |  | 763 |  |  |  | (489 | )
Other expense, net |  |  | (4,004 | ) |  |  | (2,806 | ) |  |  | (259 | )
Income before income taxes |  | $ | 36,391 |  |  | $ | 19,024 |  |  | $ | 8,507 |
The following table presents depreciation and amortization by reporting segment:
|  | Year Ended December 31, |
(U.S. Dollars, in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
BioStim |  | $ | 2,133 |  |  | $ | 2,754 |  |  | $ | 2,933 |
Extremity Fixation |  |  | 6,040 |  |  |  | 5,742 |  |  |  | 6,636 |
Spine Fixation |  |  | 6,949 |  |  |  | 8,118 |  |  |  | 10,050 |
Biologics |  |  | 752 |  |  |  | 1,011 |  |  |  | 1,157 |
Corporate |  |  | 4,250 |  |  |  | 3,216 |  |  |  | 147 |
Total |  | $ | 20,124 |  |  | $ | 20,841 |  |  | $ | 20,923 |
Geographical information The following data includes net sales by geographic destination:
(U.S. Dollars, in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
U.S. |  | $ | 345,145 |  |  | $ | 316,873 |  |  | $ | 305,505 |
Italy |  |  | 17,059 |  |  |  | 16,664 |  |  |  | 15,655 |
United Kingdom |  |  | 8,725 |  |  |  | 10,362 |  |  |  | 11,376 |
Brazil |  |  | 10,356 |  |  |  | 11,334 |  |  |  | 13,512 |
Others |  |  | 52,538 |  |  |  | 54,555 |  |  |  | 50,441 |
Net sales |  | $ | 433,823 |  |  | $ | 409,788 |  |  | $ | 396,489 |
The following data includes property, plant and equipment by geographic area:
(U.S. Dollars, in thousands) |  | 2017 |  |  | 2016 |
U.S. |  | $ | 34,008 |  |  | $ | 38,398 |
Italy |  |  | 7,658 |  |  |  | 7,013 |
United Kingdom |  |  | 382 |  |  |  | 617 |
Brazil |  |  | 475 |  |  |  | 769 |
Others |  |  | 2,616 |  |  |  | 2,119 |
Total |  | $ | 45,139 |  |  | $ | 48,916 |

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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 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: 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=68060357&loc=d3e9038-108599 Reference 3: 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=68060357&loc=d3e8971-108599 Reference 4: 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=68060357&loc=d3e8595-108599 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=68060357&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 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: 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=68060357&loc=d3e8844-108599 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=68060357&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 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 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=68060357&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 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: 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=68060357&loc=d3e8864-108599 Reference 13: 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=68060357&loc=d3e8924-108599 Reference 14: 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=68060357&loc=d3e8906-108599 + Details
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