XML 82 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
Business segment information
 12 Months Ended
Dec. 31, 2011
Business segment information  
Business segment information

12.    Business segment information

 

The Company’s segment information is prepared on the same basis that management reviews the financial information for operational decision making purposes. At this time, the Company’s Chief Operating Decision Maker (the “CODM”) only uses GBU reporting for Sales and Operating Income to assess operating performance. Items below operating income are not considered when measuring the profitability of a segment.  In the future, the CODM may decide to review other financial metrics by GBU. Goodwill is also assigned to specific GBUs. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information.  Beginning January 1, 2011, the Company began managing its business by its three GBUs, which are comprised of Spine, Orthopedics and Sports Medicine supported by Corporate activities. These GBUs represent the current segments for which the Company’s Chief Operating Decision Maker reviews financial information and makes resource allocation decisions among business units. Accordingly, the Company’s segment information (as provided below) has been prepared based on the Company’s three GBUs reporting segments. Prior year disclosures have been revised to conform to these new GBU reporting segments. These new segments are discussed below.

 

Spine

 

Spine provides a portfolio of repair and regenerative products that allow physicians to successfully treat a variety of spinal conditions. This global business unit specializes in the design, development and marketing of the Company’s spinal repair products along with regenerative stimulation and biologics products used in spine applications. Spine distributes its products through a network of distributors, sales representatives and affiliates. This global business unit uses both direct and distributor sales representatives to sell spine products to hospitals, doctors, and other healthcare providers, globally.

 

Orthopedics

 

Orthopedics provides a comprehensive portfolio of repair and regenerative products that allow physicians to successfully treat a variety of orthopedic conditions unrelated to spine. This global business unit specializes in the design, development and marketing of the Company’s orthopedic repair products along with regenerative stimulation and biologics products used in orthopedic applications. Orthopedics distributes its products through a network of distributors, sales representatives and affiliates. This global business unit uses both direct and distributor sales representatives to sell orthopedics products to hospitals, doctors, and other healthcare providers globally.

 

Sports Medicine

 

Sports Medicine designs, manufactures and distributes a portfolio of non-invasive products that allow physicians and clinicians to treat a variety of sports medicine related conditions in order to minimize pain and restore mobility to their patients. Sports Medicine distributes products through a network of domestic and international distributors, sales representatives, and affiliates to hospitals, doctors and other healthcare providers, primarily in the U.S.

 

Corporate

 

Corporate activities are comprised of the operating expenses of Orthofix International N.V. and its U.S. holding company subsidiary, Orthofix Holdings, Inc., along with activities not necessarily identifiable within the three GBUs.

 

Business Segments by GBU:

 

 

 

Year ended December 31,
(US$ in thousands)

 

 

 

2011

 

2010

 

2009

 

 

 

Net Sales

 

Percent of
Total Net
Sales

 

Net Sales

 

Percent of
Total Net
Sales

 

Net Sales

 

Percent of
Total Net
Sales

 

Spine

 

$

304,217

 

52

%

$

306,404

 

54

%

$

279,425

 

51

%

Orthopedics

 

165,904

 

29

%

154,198

 

27

%

151,054

 

28

%

Sports Medicine

 

108,867

 

19

%

103,768

 

19

%

115,156

 

21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Net Sales

 

$

578,988

 

100

%

$

564,370

 

100

%

$

545,635

 

100

%

 

Our market sectors are Spine that includes implants, biologics, and also stimulation products, Orthopedics, and Sports Medicine.

 

Market Sectors:

 

 

 

Year ended December 31,
(US$ in thousands)

 

 

 

2011

 

2010

 

2009

 

 

 

Net Sales

 

Percent of
Total Net
Sales

 

Net Sales

 

Percent of
Total Net
Sales

 

Net Sales

 

Percent of
Total Net
Sales

 

Spine Products

 

 

 

 

 

 

 

 

 

 

 

 

 

Implants and Biologics

 

$

143,775

 

24

%

$

133,831

 

23

%

$

120,445

 

22

%

Stimulation

 

160,442

 

28

%

172,573

 

31

%

158,980

 

29

%

Total Spine Products

 

304,217

 

52

%

306,404

 

54

%

279,425

 

51

%

Orthopedics Products

 

165,904

 

29

%

149,175

 

26

%

139,304

 

25

%

Sports Medicine Products

 

103,040

 

18

%

95,514

 

18

%

96,446

 

18

%

Total Strategic Products

 

573,161

 

99

%

551,093

 

98

%

515,175

 

94

%

Divested Products

 

5,827

 

1

%

13,277

 

2

%

30,460

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Net Sales

 

$

578,988

 

100

%

$

564,370

 

100

%

$

545,635

 

100

%

 

Operating Income (Loss)

 

Year Ended
December 31,

 

(US$ in thousands)

 

2011

 

2010

 

2009

 

Spine (1)

 

$

46,618

 

$

80,688

 

$

60,830

 

Orthopedics (2)

 

12,368

 

5,879

 

5,781

 

Sports Medicine (3)

 

1,166

 

22,586

 

21,347

 

Corporate (4)

 

(27,633

)

(20,163

)

(24,083

)

 

 

 

 

 

 

 

 

Total

 

$

32,519

 

$

88,990

 

$

63,875

 

 

(1)

For 2011, the operating income for the Spine GBU included $42.5 million of expenses in connection with charges related to U.S. Government resolutions.

 

 

(2)

For 2011, the operating income for the Orthopedics GBU included $6.5 million of expenses in connection with charges related to U.S. Government resolutions.

 

 

(3)

For 2011, the operating income for the Sports Medicine GBU included $5 million of litigation and settlement costs for certain product liability matters related to our Sports Medicine GBU.  For 2011, the operating income for the Sports Medicine GBU included $2 million of insurance expense to cover additional product liability claims related to our Sports Medicine GBU.  For 2010, the operating income for the Sports Medicine GBU included $12 million from the net gain on sale of vascular operations.  For 2010, the operating income for the Sports Medicine GBU included $1.7 million of insurance expense to cover new product liability claims from its former pain management operations sold in 2008.

 

 

(4)

For 2011, the operating loss for the Corporate GBU included $7.5 million of expenses in connection with charges related to U.S. Government inquiries and $3.2 million of senior management succession charges.

 

The following table presents depreciation and amortization by segment:

 

 

 

Depreciation and amortization

 

(US$ in thousands)

 

2011

 

2010

 

2009

 

Spine

 

$

11,060

 

$

9,407

 

$

9,154

 

Orthopedics

 

5,506

 

6,282

 

5,733

 

Sports Medicine

 

6,158

 

6,706

 

7,348

 

Corporate

 

52

 

126

 

109

 

 

 

 

 

 

 

 

 

Total

 

$

22,776

 

$

22,521

 

$

22,344

 

 

Analysis of property, plant and equipment by geographic area:

 

(US$ in thousands)

 

2011

 

2010

 

U.S.

 

$

39,563

 

$

32,718

 

Italy

 

7,663

 

7,614

 

U.K.

 

1,449

 

1,618

 

Brazil

 

2,532

 

2,400

 

Others

 

917

 

1,185

 

 

 

 

 

 

 

Total

 

$

52,124

 

$

45,535