Business segment information

12 Months Ended

Dec. 31, 2012

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. 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. On May 24, 2012 as a result of the sale of its sports medicine business, the Company began managing its business by its two GBUs, which are comprised of Spine and Orthopedics supported by Corporate activities and represent the current segments for which the Company’s Chief Operating Decision Maker reviews financial information and makes resource allocation decisions among business units. These 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 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.

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 two GBUs.

Business Segments by GBU:

The table below presents external net sales for continuing operations by GBU reporting segment. Net sales includes product sales and marketing service fees which is comprised of sales of Trinity Evolution® in spine and orthopedic applications.

	External Net Sales by GBU Year ended December 31,
(US$ in thousands)	2012					2011					2010
	Net Sales		Percent of Total Net Sales			Net Sales		Percent of Total Net Sales			Net Sales		Percent of Total Net Sales
Spine
Spine Repair Implants and Regenerative Biologics	$	147,206		32	%	$	143,775		31	%	$	133,831		29	%
Spine Regenerative Stimulation		164,688		35	%		160,442		34	%		172,573		38	%
Total Spine		311,894		67	%		304,217		65	%		306,404		67	%
Orthopedics		150,426		33	%		165,904		35	%		154,225		33	%
Total Net Sales	$	462,320		100	%	$	470,121		100	%	$	460,629		100	%

The table below presents operating income (loss) from continuing operations by GBU reporting segment:

	Operating Income  (Loss) Year Ended December 31,
(US$ in thousands)	2012			2011			2010
Spine (1)	$	90,771		$	46,618		$	80,688
Orthopedics (2)		15,280			12,368			5,878
Corporate (3)		(17,041	)		(27,677	)		(20,316	)
Total	$	89,010		$	31,309		$	66,250

(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 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 for continuing operations by GBU reporting segment:

	Depreciation and amortization by GBU Year Ended December 31,
(US$ in thousands)	2012		2011		2010
Spine	$	12,152	$	11,060	$	9,407
Orthopedics		5,604		5,506		6,282
Corporate		70		52		126
Total	$	17,826	$	16,618	$	15,815

Geographical information

Analysis of net sales by geographic destination:

(US$ in thousands)	2012		2011		2010
U.S.	$	341,015	$	329,625	$	339,781
International:
U.K.		8,628		8,240		12,509
Italy		18,242		20,700		19,831
Brazil		38,015		48,851		29,067
Other		56,420		62,705		59,441
Total international		121,305		140,496		120,848
Total net sales	$	462,320	$	470,121	$	460,629

Analysis of property, plant and equipment by geographic area:

(US$ in thousands)	2012		2011
U.S.	$	37,081	$	30,806
Italy		7,617		7,663
U.K.		1,402		1,449
Brazil		3,421		2,532
Others		1,841		918
Total	$	51,362	$	43,368