LEWISVILLE, Texas--(BUSINESS WIRE)--
Orthofix International N.V. (NASDAQ:OFIX) today reported results for the
first quarter ended March 31, 2014. Net sales were $101.3 million for
the first quarter of 2014, decreasing 2.0% from net sales of $103.4
million in the first quarter of 2013. Net margin, which the Company
calculates as gross profit less sales and marketing expenses, increased
6.5% during the period to $34.8 million, or 34.4% of sales, over $32.7
million, or 31.6% of sales in the first quarter 2013.
President and Chief Executive Officer Brad Mason commented on the
Company's financial results, "The first quarter results were better than
expected and give us further confidence that our initiatives to improve
and grow our business are appropriate and effective. Additionally,
during the quarter we announced a number of Board and executive
leadership changes that bring added experience and talent to help us
drive improved results."
First Quarter 2014 Sales Results
BioStim
Net sales in the Company's BioStim strategic business unit, or SBU,
increased 0.5% to $38.4 million in the first quarter of 2014 compared to
$38.2 million for the same period in the prior year, an increase of $0.2
million. The BioStim revenue was driven by a stable performance in Spine
Stimulation and a lower, yet improving performance in Physio-Stim, as
the Company continued to transition the Physio-Stim sales force.
Biologics
Net sales in the Company's Biologics SBU decreased $0.4 million, or
2.7%, to $13.0 in the first quarter of 2014 compared to $13.4 million
for the same period in the prior year. This was due to a decrease in the
Company's marketing service fee rate with the Musculoskeletal Transplant
Foundation ("MTF") to 65% from 70% April 1, 2013, for Trinity Evolution
and Trinity Elite sales. Assuming no marketing fee rate decrease, sales
in Biologics grew 4.0% year-over-year in the first quarter.
Extremity Fixation
Net sales in the Company's Extremity Fixation SBU increased $0.9
million, or 3.3%, to $27.1 million in the first quarter of 2014 compared
to $26.2 million for the same period last year. The sales improvement
was driven primarily due to increased sales in the U.K. and France and
offset somewhat by lower performance in the U.S. and Brazil due to
ongoing restructuring activities.
Spine Fixation
Net sales in the Company's Spine Fixation SBU decreased $2.7 million, or
10.6%, to $22.8 million in the first quarter of 2014 compared to $25.5
million for the same period last year. This decrease was primarily due
to lower international sales.
First Quarter 2014 Net Margin and Earnings
Results
First quarter 2014 consolidated net margin increased 6.5% to $34.8
million over $32.7 million in the first quarter of the prior year. As a
percentage of sales, net margin improved to 34.4% in the first quarter
2014 from 31.6% in the first quarter 2013. This increase was primarily
driven by Spine Fixation and Extremity Fixation, which was offset by a
decrease in BioStim net margin. Spine Fixation net margin benefitted
from cost reductions and lower commissions due to a higher international
sales mix, while BioStim net margin was negatively impacted primarily by
an increase in commission expense.
First quarter 2014 net income (loss) from continuing operations was
($0.2) million, or ($0.01) per diluted share, compared to net income of
$7.6 million, or $0.39 per diluted share for the same period last year.
First quarter 2014 and 2013 net income also included the specified items
detailed below. When excluding these items, adjusted net income from
continuing operations for the first quarter 2014 was $5.2 million, or
$0.29 per diluted share, compared to $7.2 million, or $0.37 per diluted
share, in the first quarter 2013.
Conference Call
Orthofix will host a conference call to discuss first quarter results
today, Wednesday, May 7, 2014 at 4:30 p.m. EDT (3:30 p.m. CDT).
Interested parties may access the conference call by dialing (888)
267-2845 in the U.S. and (973) 413-6102 outside the U.S., and entering
the conference ID 38220. A replay of the call will be available for two
weeks by dialing (800) 332-6854 in the U.S. and (973) 528-0005 outside
the U.S., and entering the conference ID 38220. A webcast of the
conference call may be accessed by going to the Company's website at www.orthofix.com,
by clicking on the Investors link and then the Events and Presentations
page.
About Orthofix
Orthofix International N.V. is a diversified, global medical device
company focused on improving patients' lives by providing superior
reconstructive and regenerative orthopedic and spine solutions to
physicians worldwide. Headquartered in Lewisville, TX, the Company has
four strategic business units that include BioStim, Biologics, Extremity
Fixation and Spine Fixation. Orthofix products are widely distributed
via the Company's sales representatives, distributors and its
subsidiaries. In addition, Orthofix is collaborating on research and
development activities with leading clinical organizations such as the
Musculoskeletal Transplant Foundation, the Orthopedic Research and
Education Foundation and the Texas Scottish Rite Hospital for Children.
For more information, please visit www.orthofix.com.
Forward-Looking Statements
This communication contains certain forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements, which may include, but are not limited to, statements
concerning the projections, financial condition, results of operations
and businesses of Orthofix and its subsidiaries and are based on
management's current expectations and estimates and involve risks and
uncertainties that could cause actual results or outcomes to differ
materially from those contemplated by the forward-looking statements.
The forward-looking statements in this release do not constitute
guarantees or promises of future performance. Factors that could cause
or contribute to such differences may include, but are not limited to:
risks relating to our recent Audit and Finance Committee review and the
recently filed restatement of our financial statements for certain prior
periods and related legal proceedings (including potential action by the
Division of Enforcement of the SEC and pending securities class action
litigation); the Company's review of allegations of improper payments
involving the Company's Brazil-based subsidiary; the expected sales of
the Company's products, including recently launched products;
unanticipated expenditures; changing relationships with customers,
suppliers, strategic partners and lenders; changes to and the
interpretation of governmental regulations; the resolution of pending
litigation matters (including the Company's indemnification obligations
with respect to certain product liability claims against, and the
government investigation of, the Company's former sports medicine global
business unit); the Company's ongoing compliance obligations under a
corporate integrity agreement with the Office of Inspector General of
the Department of Health and Human Services (and related terms of
probation), a deferred prosecution agreement with the U.S. Department of
Justice and a Consent Decree with the SEC; risks relating to the
protection of intellectual property; changes to the reimbursement
policies of third parties; the impact of competitive products; changes
to the competitive environment, the acceptance of new products in the
market, conditions of the orthopedic industry, credit markets and the
economy; corporate development and market development activities,
including acquisitions or divestitures, unexpected costs or operating
unit performance related to recent acquisitions; and other risks
described in Item 1A under the heading "Risk Factors" in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2013, as well
as in other subsequent periodic reports filed by the Company with the
SEC. Existing and prospective investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date hereof. The Company undertakes no obligation to update or revise
the information contained in this press release.
The following table is a summary of sales reconciled to constant
currency sales growth for the quarters ended March 31, 2014, and 2013.
Amounts shown are in millions and reflect unaudited figures. Some
calculations may be impacted by rounding.
|
|
|
|
|
|
|
|
|
|
|
|
External net sales by strategic business unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
|
|
|
Reported
|
|
Currency
|
|
(U.S. Dollars in millions)
|
|
|
2014
|
|
2013
|
|
Growth
|
|
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
BioStim
|
|
|
|
38.4
|
|
|
38.2
|
|
1
|
%
|
|
1
|
%
|
|
Biologics
|
|
|
|
13.0
|
|
|
13.4
|
|
-3
|
%
|
|
-3
|
%
|
|
Extremity Fixation
|
|
|
|
27.1
|
|
|
26.2
|
|
3
|
%
|
|
4
|
%
|
|
Spine Fixation
|
|
|
|
22.8
|
|
|
25.5
|
|
-11
|
%
|
|
-11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
$
|
101.3
|
|
$
|
103.4
|
|
-2
|
%
|
|
-2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables are summaries of first quarter 2014 and 2013 net
margin calculations by strategic business unit. Amounts shown are in
millions and reflect unaudited figures. Some calculations may be
impacted by rounding.
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(U.S. Dollars in millions)
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Net margin by Strategic Business Unit:
|
|
|
|
|
|
|
BioStim
|
|
|
$
|
14.2
|
|
|
$
|
16.9
|
|
|
Biologics
|
|
|
|
6.7
|
|
|
|
6.0
|
|
|
Extremity Fixation
|
|
|
|
9.3
|
|
|
|
8.0
|
|
|
Spine Fixation
|
|
|
|
5.1
|
|
|
|
2.2
|
|
|
Corporate
|
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
Subtotal
|
|
|
|
34.8
|
|
|
|
32.7
|
|
|
|
|
|
|
|
|
|
Consolidated Expenses:
|
|
|
|
|
|
|
General and administrative expense
|
|
|
|
(17.5
|
)
|
|
|
(18.3
|
)
|
|
Research and development expense
|
|
|
|
(5.9
|
)
|
|
|
(5.7
|
)
|
|
Amortization of intangible assets
|
|
|
|
(0.6
|
)
|
|
|
(0.5
|
)
|
|
Costs related to accounting review and restatement
|
|
|
|
(8.3
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Consolidated Operating income
|
|
|
|
2.5
|
|
|
|
8.1
|
|
|
|
|
|
|
|
|
The following table reconciles reported operating income from continuing
operations to adjusted operating income from continuing operations for
the quarters ended March 31, 2014, and 2013. Some calculations may be
impacted by rounding. Please refer to the Non-GAAP performance measures
section at the end of this press release for more information about the
specified items below.
|
|
|
|
|
|
|
|
|
|
|
First Quarter Adjusted Operating Income from Continuing Operations
|
|
Q1 2014
|
|
|
Q1 2013
|
|
|
|
($000's)
|
|
|
% of Sales
|
|
|
($000's)
|
|
|
% of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP operating income
|
|
$
|
2,465
|
|
|
2.4
|
%
|
|
|
$
|
8,087
|
|
|
7.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specified Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs related to accounting review and restatement
|
|
|
8,306
|
|
|
|
|
|
|
-
|
|
|
|
|
Succession and restructuring charges
|
|
|
-
|
|
|
|
|
|
|
3,537
|
|
|
|
|
Adjusted operating income
|
|
$
|
10,771
|
|
|
10.6
|
%
|
|
|
$
|
11,624
|
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles reported net income from continuing
operations and net income from continuing operations per diluted share
to adjusted net income from continuing operations and adjusted net
income from continuing operations per diluted share for the quarters
ended March 31, 2014, and 2013. Some calculations may be impacted by
rounding. Please refer to the Non-GAAP performance measures section at
the end of this press release for more information about the specified
items below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter Adjusted Net Income from Continuing Operations
|
|
|
Q1 2014
|
|
|
Q1 2013
|
|
|
% Change
|
|
|
|
|
($000's)
|
|
|
EPS
|
|
|
($000's)
|
|
|
EPS
|
|
|
Earnings
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP net (loss) income and net (loss) income per diluted
share
|
|
|
$
|
(222
|
)
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
7,610
|
|
|
|
$
|
0.39
|
|
|
-103
|
%
|
|
|
-103
|
%
|
|
Specified Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs related to accounting review and restatement
|
|
|
|
5,482
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Succession and restructuring charges
|
|
|
|
-
|
|
|
|
|
|
|
|
2,756
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain
|
|
|
|
(53
|
)
|
|
|
|
|
|
|
(393
|
)
|
|
|
|
|
|
|
|
|
|
|
Gain related to demutualization of a mutual insurance company
|
|
|
|
-
|
|
|
|
|
|
|
|
(2,776
|
)
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income and net income per diluted share
|
|
|
$
|
5,207
|
|
|
|
$
|
0.29
|
|
|
|
$
|
7,197
|
|
|
|
$
|
0.37
|
|
|
-28
|
%
|
|
|
-22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited, U.S. Dollars, in thousands, except per share and
share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
101,342
|
|
|
$
|
103,373
|
|
|
Cost of sales
|
|
|
|
22,632
|
|
|
|
25,617
|
|
|
Gross profit
|
|
|
|
78,710
|
|
|
|
77,756
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
43,871
|
|
|
|
45,054
|
|
|
General and administrative
|
|
|
|
17,545
|
|
|
|
18,330
|
|
|
Research and development
|
|
|
|
5,939
|
|
|
|
5,741
|
|
|
Amortization of intangible assets
|
|
|
|
584
|
|
|
|
544
|
|
|
Costs related to the accounting review and restatement
|
|
|
|
8,306
|
|
|
|
-
|
|
|
|
|
|
|
76,245
|
|
|
|
69,669
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
2,465
|
|
|
|
8,087
|
|
|
|
|
|
|
|
|
|
Other income and expense
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
(486
|
)
|
|
|
(560
|
)
|
|
Other income (expense)
|
|
|
|
(261
|
)
|
|
|
4,764
|
|
|
Income before income taxes
|
|
|
|
1,718
|
|
|
|
12,291
|
|
|
Income tax expense
|
|
|
|
(1,940
|
)
|
|
|
(4,681
|
)
|
|
Net income (loss) from continuing operations
|
|
|
|
(222
|
)
|
|
|
7,610
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
|
(794
|
)
|
|
|
(4,434
|
)
|
|
Income tax (expense) benefit
|
|
|
|
234
|
|
|
|
1,324
|
|
|
Net income (loss) from discontinued operations
|
|
|
|
(560
|
)
|
|
|
(3,110
|
)
|
|
Net income (loss)
|
|
|
$
|
(782
|
)
|
|
$
|
4,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.39
|
|
|
Net loss from discontinued operations
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.16
|
)
|
|
Net income (loss) per common share - basic
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - diluted
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.39
|
|
|
Net loss from discontinued operations
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.16
|
)
|
|
Net income (loss) per common share - diluted
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
|
|
18,197,363
|
|
|
|
19,431,093
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - diluted
|
|
|
|
18,197,363
|
|
|
|
19,691,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
26,747
|
|
$
|
30,486
|
|
Restricted cash
|
|
|
|
19,270
|
|
|
23,761
|
|
Trade accounts receivable, net
|
|
|
|
76,917
|
|
|
75,567
|
|
Inventories, net
|
|
|
|
92,753
|
|
|
90,577
|
|
Deferred income taxes
|
|
|
|
33,956
|
|
|
33,947
|
|
Prepaid expenses and other current assets
|
|
|
|
28,781
|
|
|
25,906
|
|
Total current assets
|
|
|
|
278,424
|
|
|
280,244
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
52,532
|
|
|
54,606
|
|
Patents and other intangible assets, net
|
|
|
|
8,518
|
|
|
9,046
|
|
Goodwill
|
|
|
|
53,565
|
|
|
53,565
|
|
Deferred income taxes
|
|
|
|
18,758
|
|
|
18,336
|
|
Other long-term assets
|
|
|
|
6,743
|
|
|
7,385
|
|
Total assets
|
|
|
$
|
418,540
|
|
$
|
423,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
|
14,022
|
|
|
20,674
|
|
Other current liabilities
|
|
|
|
41,467
|
|
|
46,146
|
|
Total current liabilities
|
|
|
|
55,489
|
|
|
66,820
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
20,000
|
|
|
20,000
|
|
Deferred income taxes
|
|
|
|
13,307
|
|
|
13,132
|
|
Other long-term liabilities
|
|
|
|
12,487
|
|
|
12,736
|
|
Total liabilities
|
|
|
|
101,283
|
|
|
112,688
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
Common shares
|
|
|
|
1,836
|
|
|
1,810
|
|
Additional paid-in capital
|
|
|
|
223,630
|
|
|
216,653
|
|
Retained earnings
|
|
|
|
88,550
|
|
|
89,332
|
|
Accumulated other comprehensive income
|
|
|
|
3,241
|
|
|
2,699
|
|
Total shareholders' equity
|
|
|
|
317,257
|
|
|
310,494
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
418,540
|
|
$
|
423,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
(782
|
)
|
|
$
|
4,500
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
-
|
|
|
Depreciation and amortization
|
|
|
$
|
6,004
|
|
|
$
|
5,029
|
|
|
Other non-cash adjustments
|
|
|
$
|
4,523
|
|
|
$
|
4,367
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
Changes in working capital
|
|
|
$
|
(19,923
|
)
|
|
$
|
1,164
|
|
|
Net cash (used in) provided by operating activities
|
|
|
$
|
(10,178
|
)
|
|
$
|
15,060
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(3,737
|
)
|
|
|
(6,073
|
)
|
|
Net cash used in investing activities
|
|
|
|
(3,737
|
)
|
|
|
(6,073
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Net proceeds from issuance of common shares
|
|
|
|
5,542
|
|
|
|
2,143
|
|
|
Repayment of bank borrowings, net
|
|
|
|
-
|
|
|
|
(15
|
)
|
|
Change in restricted cash
|
|
|
|
4,502
|
|
|
|
(8,141
|
)
|
|
Excess income tax benefit on employee stock-based awards
|
|
|
|
29
|
|
|
|
78
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
10,073
|
|
|
|
(5,935
|
)
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
103
|
|
|
|
(431
|
)
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
|
(3,739
|
)
|
|
|
2,620
|
|
|
Cash and cash equivalents at the beginning of period
|
|
|
|
30,486
|
|
|
|
31,055
|
|
|
Cash and cash equivalents at the end of period
|
|
|
|
26,747
|
|
|
|
33,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Performance Measures
The tables in this press release present reconciliations of operating
income, net income and net income per diluted share, operating income
and net cash provided by operating activities calculated in accordance
with generally accepted accounting principles (GAAP) to non-GAAP
performance measures, referred to as "adjusted operating income from
continuing operations," "adjusted net income from continuing operations
and adjusted net income from continuing operations per diluted share,"
that exclude the items specified in the tables. Management believes it
is important to provide investors with the same non-GAAP metrics it uses
to supplement information regarding the performance and underlying
trends of Orthofix's business operations in order to facilitate
comparisons to its historical operating results and internally evaluate
the effectiveness of the Company's operating strategies. A more detailed
explanation of the items in the tables above that are excluded from GAAP
net sales and GAAP net income and net income per diluted share, as well
as why management believes the non-GAAP measures are useful to them, is
included in the Regulation G Supplemental Information below.
Reconciliations of Non-GAAP Performance Measures
Adjusted Operating Income From Continuing Operations Reconciling Items
-
Costs related to accounting review and restatement - legal,
accounting, and other professional costs related to the Company's
accounting review and restatement.
-
Succession and restructuring charges - In 2013 these costs
relate to the cessation of employment of certain of the Company's
former executive officers.
Adjusted Net Income From Continuing Operations and Adjusted Net
Income from Continuing Operations Per Diluted Share Reconciling Items
Note: The reconciling items were tax affected in the current period at
the prevailing rate within the respective jurisdictions.
-
Costs related to accounting review and restatement - legal,
accounting, and other professional costs related to the Company's
accounting review and restatement.
-
Succession and restructuring charges - In 2013 these costs
relate to the cessation of employment of certain of the Company's
former executive officers.
-
Foreign exchange loss (gain) - due to translation adjustments
resulting from the weakening or strengthening of the U.S. Dollar
against various foreign currencies. A number of Orthofix's foreign
subsidiaries have intercompany and third party trade accounts
receivables and payables that are held in currencies, most notably the
U.S. Dollar, other than their local currency, and movements in the
relative values of those currencies result in foreign exchange gains
and losses.
-
Gain related to demutualization of a mutual insurance company -
the Company received cash related to the demutualization of a mutual
insurance company, in which the Company was an eligible member to
share in such proceeds.
Management use of, and economic substance behind, Non-GAAP
Performance Measures
Management uses non-GAAP measures to evaluate performance period over
period, to analyze the underlying trends in the Company's business, to
assess its performance relative to its competitors and to establish
operational goals and forecasts that are used in allocating resources.
Management uses these non-GAAP measures as the basis for assessing the
ability of the underlying operations to generate cash. In addition,
management uses these non-GAAP measures to further its understanding of
the performance of the Company's business units. The items excluded from
Orthofix's non-GAAP measures are also excluded from the profit or loss
reported by the Company's business units for the purpose of analyzing
their performance.
Material Limitations Associated with the Use of Non-GAAP Measures
The non-GAAP measures used in this press release may have limitations as
analytical tools, and should not be considered in isolation or as a
replacement for GAAP performance measures. Some of the limitations
associated with the use of these non-GAAP performance measures are that
they exclude items that reflect an economic cost to the Company and can
have a material effect on cash flows. Similarly, equity compensation
expense does not directly impact cash flows, but is part of total
compensation costs accounted for under GAAP.
Compensation for Limitations Associated with Use of Non-GAAP Measures
Orthofix compensates for the limitations of its non-GAAP performance
measures by relying upon its GAAP results to gain a complete picture of
the Company's performance. The GAAP results provide the ability to
understand the Company's performance based on a defined set of criteria.
The non-GAAP measures reflect the underlying operating results of the
Company's businesses, excluding non-cash items, which management
believes is an important measure of the Company's overall performance.
The Company provides a detailed reconciliation of the non-GAAP
performance measures to their most directly comparable GAAP measures,
and encourages investors to review this reconciliation.
Usefulness of Non-GAAP Measures to Investors
Orthofix believes that providing non-GAAP measures that exclude certain
items provides investors with greater transparency to the information
used by the Company's senior management in its financial and operational
decision-making. Management believes that providing this information
enables investors to better understand the performance of the Company's
ongoing operations and to understand the methodology used by management
to evaluate and measure such performance. Disclosure of these non-GAAP
performance measures also facilitates comparisons of Orthofix's
underlying operating performance with other companies in its industry
that also supplement their GAAP results with non-GAAP performance
measures.
Orthofix International N.V.
Mark Quick, 214-937-2924
Investor
Relations
markquick@orthofix.com
Source: Orthofix International N.V.
News Provided by Acquire Media