-
Reported Operating Margin of 19%; Adjusted Operating Margin of 21%,
up 70 basis points
-
Gross Profit Margin of 81%, up 80 basis points
-
Reported and Adjusted Net Income from continuing operations up 1%
and 13%, respectively
LEWISVILLE, Texas--(BUSINESS WIRE)--
Orthofix International N.V. (NASDAQ:OFIX) (the Company) today announced
its results for the third quarter ended September 30, 2012. Net sales of
$114.8 million represent a decrease of 2% over the third quarter of last
year. Net sales grew 1% on a constant currency basis.
Net income from continuing operations was $13.1 million, or $0.67 per
diluted share compared to net income from continuing operations of $13.0
million, or $0.69 per diluted share, in the prior year. Adjusted net
income was up 13% to $14.8 million, or $0.76 per diluted share compared
to $13.2 million, or $0.70 per diluted share, in the prior year.
"We again demonstrated our ability to achieve operating margin leverage
while navigating through a challenging environment," said President and
Chief Executive Officer Robert Vaters. "Finishing the quarter with a net
cash balance and continued strong adjusted earnings, we are well
positioned to make product portfolio and distribution investments that
will drive long-term growth."
Sales Performance
Net sales were $114.8 million in the third quarter of 2012, down 2% on a
reported basis, and up 1% on a constant currency basis, from $117.3
million in the third quarter of the prior year. Foreign currency
negatively impacted third quarter net sales by approximately $3.8
million, or 3% of net sales.
|
|
|
|
|
|
|
|
|
External net sales by global business unit
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
|
|
|
|
Reported
|
|
Currency
|
|
(USD in millions)
|
|
|
|
2012
|
|
|
2011
|
|
Growth
|
|
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spine
|
|
|
|
|
|
|
|
|
|
|
|
Spine Repair Implants and Regenerative Biologics
|
|
|
$
|
36.6
|
|
$
|
36.8
|
|
0%
|
|
0%
|
|
|
Spine Regenerative Stimulation
|
|
|
|
42.8
|
|
|
39.7
|
|
8%
|
|
8%
|
|
Total Spine
|
|
|
|
79.4
|
|
|
76.5
|
|
4%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Orthopedics
|
|
|
|
35.4
|
|
|
40.8
|
|
-13%
|
|
-4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
$
|
114.8
|
|
$
|
117.3
|
|
-2%
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Some calculations may be impacted by rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter net sales for the Company's Spine global business unit
were up 4% to $79.4 million, which was driven by an 8% increase in
Regenerative Stimulation products used in spine applications. Revenue
from Repair Implants and Regenerative Biologics was flat over prior
year, due to challenging economic conditions in certain international
markets, which was offset primarily by continued adoption of Trinity
Evolution® in spine applications.
For the Company's Orthopedic global business unit, third quarter net
sales were $35.4 million, decreasing 13% on a reported basis, or 4% on a
constant currency basis, compared to the prior year. Foreign currency
negatively impacted reported net sales by $3.8 million or 11% of net
orthopedic sales. Constant currency sales decline was driven mostly by
weaker Physio-Stim sales and challenges in Brazil, which has been
impacted by increased competition and product delays due to the strike
at the country's regulatory agency.
Earnings Performance
Reported net income from continuing operations for the third quarter of
2012 was $13.1 million and net income from continuing operations per
diluted share was $0.67. Excluding certain items summarized in the table
below, adjusted net income in the third quarter of 2012 was $14.8
million, or $0.76 per diluted share, increasing 13% and 9%, respectively
from the third quarter of the prior year.
The following table reconciles reported net income and net income per
diluted share to adjusted net income and adjusted net income per diluted
share for each of the quarters ended September 30, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Adjusted Net Income from Continuing Operations
|
|
Q3 2012
|
|
Q3 2011
|
|
% Change
|
|
|
|
($000's)
|
|
EPS
|
|
($000's)
|
|
EPS
|
|
($000's)
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP net income from continuing operations
|
|
$
|
13,118
|
|
$
|
0.67
|
|
$
|
12,951
|
|
$
|
0.69
|
|
1
|
%
|
|
-2
|
%
|
|
Specified Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Investment MTF
|
|
|
1,260
|
|
|
|
|
-
|
|
|
|
|
|
|
|
Charges related to U.S. Government resolutions
|
|
|
205
|
|
|
|
|
-
|
|
|
|
|
|
|
|
Foreign exchange gain/loss
|
|
|
260
|
|
|
|
|
215
|
|
|
|
|
|
|
|
Adjusted Net Income from continuing operations
|
|
$
|
14,844
|
|
$
|
0.76
|
|
$
|
13,166
|
|
$
|
0.70
|
|
13
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to calculate EPS (in thousands)
|
|
|
|
|
19,533
|
|
|
|
|
18,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Some calculations may be impacted by rounding. Please refer
to the Non-GAAP Performance Measure section at the end of this
press release for more information about the specified items
listed above.
|
|
|
The following table reconciles operating income to adjusted operating
income for each of the quarters ended September 30, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Adjusted Operating Income
|
|
Q3 2012
|
|
Q3 2011
|
|
|
|
($000's)
|
|
% of Sales
|
|
($000's)
|
|
% of Sales
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP operating income
|
|
$
|
21,533
|
|
18.8%
|
|
$
|
23,599
|
|
20.1%
|
|
|
|
|
|
|
|
|
|
|
|
Specified Items:
|
|
|
|
|
|
|
|
|
|
Strategic Investment MTF
|
|
|
2,000
|
|
|
|
|
-
|
|
|
|
Charges related to U.S. Government resolutions
|
|
|
326
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income
|
|
$
|
23,859
|
|
20.8%
|
|
$
|
23,599
|
|
20.1%
|
|
|
|
|
|
|
|
|
|
|
|
Note: Some calculations may be impacted by rounding. Please refer
to the Non-GAAP Performance measure section at the end of this
press release for more information about the specified items
listed above.
|
|
|
After adjusting for a $0.3 million charges for prejudgment interest
related to U.S. Government resolutions and $2.0 million dollar strategic
investment in MTF, the third quarter 2012 adjusted operating margin
increased 70 basis points to 20.8% over the same period of the prior
year. This increase was partially driven by the gross margin improvement
in the quarter.
2012 Outlook Update
The Company expects net sales from continuing operations to be between
$472 million to $475 million, up 1% on a reported basis, or 3% on a
constant currency basis for the full year 2012. The Company expects GAAP
earnings per share from continuing operations to be approximately $2.84
to $2.89 per diluted share, and adjusted earnings from continuing
operations to be approximately $3.03 to $3.08 per diluted share.
The following table reconciles the 2012 full year guidance for GAAP
earnings per share from continuing operations to adjusted earnings per
share from continuing operations.
|
|
|
|
|
|
|
Reported and Adjusted EPS from Continuing Operations - Full Year
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP EPS from Continuing Operations Range |
|
$2.84
|
-
|
$2.89 |
|
|
|
|
|
|
|
Specified Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Investment MTF
|
|
|
$0.10
|
|
|
Arbitration Resolution of Co-Development Agreement
|
|
|
$0.10
|
|
|
Charges related to U.S. Government resolutions
|
|
|
$0.06
|
|
|
Change in Estimate of Tax Deduction
|
|
|
($0.07)
|
|
|
|
|
|
|
|
|
Adjusted EPS from Continuing Operations Range |
|
$3.03
|
-
|
$3.08 |
|
|
|
|
|
|
Conference Call
Orthofix will host a conference call today at 4:30 PM Eastern time to
discuss the Company's financial results for the third quarter of 2012.
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,
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 developing and delivering innovative repair and
regenerative solutions to the spine and orthopedic markets. Orthofix's
products are widely distributed around the world to orthopedic surgeons
and patients via Orthofix's sales representatives and its subsidiaries,
and via collaborations with other leading orthopedic product companies.
In addition, Orthofix is collaborating on R&D activities with leading
research and clinical organizations such as the Musculoskeletal
Transplant Foundation, the Orthopedic Research and Education Foundation,
and Texas Scottish Rite Hospital for Children. For more information
about Orthofix, 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 the expected sales of our products, including recently
launched products, unanticipated expenditures, the resolution of pending
litigation matters (including the government investigations and False
Claims Act matters relating to our spinal implant business, court review
and approvals of our pending settlements in certain government
litigation matters, as well as our indemnification obligations with
respect to certain retained product liability claims against, and the
government investigation of, our former Sports Medicine global business
unit) and our ongoing compliance obligations under a corporate integrity
agreement with the Office of Inspector General of the Department of
Health and Human Services and a deferred prosecution agreement with the
U.S. Department of Justice, changing relationships with customers,
suppliers, strategic partners and lenders, changes to and the
interpretation of governmental regulations, 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 factors
described in our annual report on Form 10-K, quarterly reports on Form
10-Q, and other periodic reports filed by the Company with the
Securities and Exchange Commission (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 (which contains information current as
of the date hereof, whether as a result of new information, future
events or circumstances, or otherwise.
The Company cannot predict the timing or outcome of ongoing litigation
matters and governmental investigations of our businesses which could
result in civil or criminal liability or findings of violations of law
(as further described in the "Legal Proceedings" sections of our annual
report on Form 10-K and quarterly reports on Form 10-Q), that could
materially impact our financial position and/or liquidity.
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited, U.S. Dollars, in thousands, except per share and
share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
114,752
|
|
|
$
|
117,306
|
|
|
$
|
350,286
|
|
|
$
|
347,036
|
|
|
Cost of sales
|
|
|
22,373
|
|
|
|
23,854
|
|
|
|
67,989
|
|
|
|
69,380
|
|
|
|
Gross profit
|
|
|
92,379
|
|
|
|
93,452
|
|
|
|
282,297
|
|
|
|
277,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
49,298
|
|
|
|
49,358
|
|
|
|
148,629
|
|
|
|
146,757
|
|
|
|
General and administrative
|
|
|
13,849
|
|
|
|
13,976
|
|
|
|
42,715
|
|
|
|
50,105
|
|
|
|
Research and development
|
|
|
6,858
|
|
|
|
5,982
|
|
|
|
23,160
|
|
|
|
17,655
|
|
|
|
Amortization of intangible assets
|
|
|
515
|
|
|
|
537
|
|
|
|
1,575
|
|
|
|
1,641
|
|
|
|
Charges related to U.S. Government resolutions
|
|
|
326
|
|
|
|
-
|
|
|
|
1,689
|
|
|
|
46,000
|
|
|
|
|
|
|
70,846
|
|
|
|
69,853
|
|
|
|
217,768
|
|
|
|
262,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
21,533
|
|
|
|
23,599
|
|
|
|
64,529
|
|
|
|
15,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expense
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(465
|
)
|
|
|
(2,267
|
)
|
|
|
(3,950
|
)
|
|
|
(6,880
|
)
|
|
|
Other expense
|
|
|
(1,020
|
)
|
|
|
(399
|
)
|
|
|
(992
|
)
|
|
|
(1,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
20,048
|
|
|
|
20,933
|
|
|
|
59,587
|
|
|
|
6,768
|
|
|
Income tax expense
|
|
|
(6,930
|
)
|
|
|
(7,982
|
)
|
|
|
(20,286
|
)
|
|
|
(20,038
|
)
|
|
|
Net income (loss) from continuing operations, net of tax
|
|
|
13,118
|
|
|
|
12,951
|
|
|
|
39,301
|
|
|
|
(13,270
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Breg, Inc. net of tax
|
|
|
221
|
|
|
|
-
|
|
|
|
1,261
|
|
|
|
-
|
|
|
|
Income (loss) from discontinued operations
|
|
|
(9,046
|
)
|
|
|
(553
|
)
|
|
|
(15,398
|
)
|
|
|
123
|
|
|
|
Income tax (expense) benefit
|
|
|
3,267
|
|
|
|
(20
|
)
|
|
|
5,617
|
|
|
|
(318
|
)
|
|
|
Net income (loss) from discontinued operations, net of tax
|
|
|
(5,558
|
)
|
|
|
(573
|
)
|
|
|
(8,520
|
)
|
|
|
(195
|
)
|
|
|
Net income (loss)
|
|
$
|
7,560
|
|
|
$
|
12,378
|
|
|
$
|
30,781
|
|
|
|
($13,465 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations, net of tax
|
|
$
|
0.69
|
|
|
$
|
0.70
|
|
|
$
|
2.08
|
|
|
|
($0.73 |
)
|
|
|
Net income (loss) from discontinued operations, net of tax
|
|
|
($0.29 |
)
|
|
|
($0.03 |
)
|
|
|
($0.45 |
)
|
|
|
($0.01 |
)
|
|
Net income (loss) per common share - basic
|
|
$
|
0.40
|
|
|
$
|
0.67
|
|
|
$
|
1.63
|
|
|
|
($0.74 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - diluted
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations, net of tax
|
|
$
|
0.67
|
|
|
$
|
0.69
|
|
|
$
|
2.04
|
|
|
|
($0.73 |
)
|
|
|
Net income (loss) from discontinued operations, net of tax
|
|
|
($0.28 |
)
|
|
|
($0.03 |
)
|
|
|
($0.45 |
)
|
|
|
($0.01 |
)
|
|
Net income (loss) per common share - diluted
|
|
$
|
0.39
|
|
|
$
|
0.66
|
|
|
$
|
1.59
|
|
|
|
($0.74 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
|
19,078,590
|
|
|
|
18,384,451
|
|
|
|
18,861,374
|
|
|
|
18,146,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - diluted
|
|
|
19,533,021
|
|
|
|
18,850,625
|
|
|
|
19,300,263
|
|
|
|
18,146,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss)
|
|
$
|
9,067
|
|
|
$
|
5,664
|
|
|
$
|
30,615
|
|
|
|
($15,254 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Some calculations may be impacted by rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
53,572
|
|
$
|
33,207
|
|
|
Restricted cash
|
|
|
67,319
|
|
|
45,476
|
|
|
Trade accounts receivable, net
|
|
|
155,978
|
|
|
132,828
|
|
|
Inventories, net
|
|
|
80,822
|
|
|
82,969
|
|
|
Deferred income taxes
|
|
|
19,059
|
|
|
16,349
|
|
|
Escrow receivable
|
|
|
-
|
|
|
41,537
|
|
|
Prepaid expenses and other current assets
|
|
|
28,122
|
|
|
26,069
|
|
|
Assets held for sale
|
|
|
-
|
|
|
171,185
|
|
Total current assets
|
|
|
404,872
|
|
|
549,620
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
46,550
|
|
|
43,368
|
|
Patents and other intangible assets, net
|
|
|
7,000
|
|
|
8,236
|
|
Goodwill
|
|
|
73,952
|
|
|
73,094
|
|
Deferred income taxes
|
|
|
19,158
|
|
|
18,584
|
|
Other long-term assets
|
|
|
13,541
|
|
|
11,570
|
|
|
Total assets
|
|
$
|
565,073
|
|
$
|
704,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Bank borrowings
|
|
$
|
282
|
|
$
|
1,318
|
|
|
Current portion of long-term debt
|
|
|
-
|
|
|
17,500
|
|
|
Trade accounts payable
|
|
|
18,089
|
|
|
16,488
|
|
|
Accrued charges related to U.S. Government resolutions
|
|
|
76,743
|
|
|
82,500
|
|
|
Other current liabilities
|
|
|
57,349
|
|
|
45,327
|
|
|
Liabilities held for sale
|
|
|
-
|
|
|
22,676
|
|
Total current liabilities
|
|
|
152,463
|
|
|
185,809
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
20,000
|
|
|
191,195
|
|
Deferred income taxes
|
|
|
9,779
|
|
|
9,778
|
|
Other long-term liabilities
|
|
|
5,221
|
|
|
2,519
|
|
|
Total liabilities
|
|
|
187,463
|
|
|
389,301
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
Common shares
|
|
|
1,928
|
|
|
1,846
|
|
|
Additional paid-in capital
|
|
|
246,052
|
|
|
214,310
|
|
|
Retained earnings
|
|
|
128,035
|
|
|
97,254
|
|
|
Accumulated other comprehensive income
|
|
|
1,595
|
|
|
1,761
|
|
Total shareholders' equity
|
|
|
377,610
|
|
|
315,171
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
565,073
|
|
$
|
704,472
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
30,781
|
|
|
|
($13,465 |
)
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
15,465
|
|
|
|
17,276
|
|
|
|
Other non-cash adjustments
|
|
|
6,768
|
|
|
|
14,242
|
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
Escrow receivable
|
|
|
41,537
|
|
|
|
(586
|
)
|
|
|
Charges related to U.S. Government resolutions
|
|
|
1,689
|
|
|
|
46,000
|
|
|
|
Changes in working capital
|
|
|
(27,845
|
)
|
|
|
(23,871
|
)
|
|
Net cash provided by operating activities
|
|
|
68,395
|
|
|
|
39,596
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(18,634
|
)
|
|
|
(17,321
|
)
|
|
|
Payment made in connection with acquisition
|
|
|
-
|
|
|
|
(5,250
|
)
|
|
|
Net proceeds from sale of Breg, Inc. |
|
|
153,773
|
|
|
|
-
|
|
|
Net cash provided by (used in) investing activities
|
|
|
135,139
|
|
|
|
(22,571
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Net proceeds from issuance of common shares
|
|
|
24,406
|
|
|
|
18,890
|
|
|
|
Repayments of long-term debt
|
|
|
(188,695
|
)
|
|
|
(3,750
|
)
|
|
|
Payment of refinancing fees
|
|
|
-
|
|
|
|
(758
|
)
|
|
|
Repayment of bank borrowings, net
|
|
|
(1,036
|
)
|
|
|
(2,642
|
)
|
|
|
Change in restricted cash
|
|
|
(20,219
|
)
|
|
|
(14,288
|
)
|
|
|
Cash payment for purchase of minority interest in subsidiary
|
|
|
-
|
|
|
|
(517
|
)
|
|
|
Tax benefit on non-qualified stock options
|
|
|
2,321
|
|
|
|
1,575
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(183,223
|
)
|
|
|
(1,490
|
)
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
54
|
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
20,365
|
|
|
|
15,459
|
|
|
Cash and cash equivalents at the beginning of period
|
|
|
33,207
|
|
|
|
13,561
|
|
|
Cash and cash equivalents at the end of period
|
|
$
|
53,572
|
|
|
$
|
29,020
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Performance Measures
The tables in this press release present reconciliations of net sales,
net income (loss) and net income (loss) per diluted share, operating
income and effective tax rate calculated in accordance with generally
accepted accounting principles (GAAP) to non-GAAP performance measures,
referred to as "Adjusted Constant Currency Net Sales", "Adjusted Net
Income and Adjusted Net Income per Diluted Share", "Adjusted EPS from
Continuing Operations" and "Adjusted Operating Income" 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 below that are excluded from GAAP net sales and
GAAP net income (loss) and net income (loss) 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 schedule attached
to this press release.
Reconciliations of Non-GAAP Performance Measures
Adjusted Net Income from continuing operations and Adjusted Net
Income from continuing operations per Diluted Share Reconciling Items
Note: The reconciling items were tax effected in the current period at
the prevailing rate within the respective jurisdictions.
-
Strategic Investment MTF — costs related to the Company's
strategic investment with MTF in the development and commercialization
of the next generation cell based bone growth technology.
-
Charges related to U.S. Government resolutions —prejudgment
interest associated with: finalizing definitive agreements to resolve
the U.S. Government investigation of the Company's bone growth
stimulation business, including resolution of a related civil matter;
and finalizing definitive agreements to resolve the U.S. Government
investigation of Blackstone Medical, Inc., including resolution of a
related civil matter
-
Foreign exchange loss (income) — 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.
Adjusted Operating Income Reconciling Items
-
Strategic Investment MTF — costs related to the Company's
strategic investment with MTF in the development and commercialization
of the next generation cell based bone growth technology.
-
Charges related to U.S. Government resolutions —prejudgment
interest associated with: finalizing definitive agreements to resolve
the U.S. Government investigation of the Company's bone growth
stimulation business, including resolution of a related civil matter;
and finalizing definitive agreements to resolve the U.S. Government
investigation of Blackstone Medical, Inc., including resolution of a
related civil matter.
Adjusted EPS from Continuing Operations Reconciling Items
Note: The reconciling items were tax effected in the current period at
the prevailing rate within the respective jurisdictions.
-
Strategic Investment MTF — costs related to the Company's
strategic investment with MTF in the development and commercialization
of the next generation cell based bone growth technology.
-
Arbitration Resolution of Co-Development Agreement — costs
related to finalizing a 2008 co-development agreement.
-
Charges related to U.S. Government resolutions —prejudgment
interest associated with: finalizing definitive agreements to resolve
the U.S. Government investigation of the Company's bone growth
stimulation business, including resolution of a related civil matter;
and finalizing definitive agreements to resolve the U.S. Government
investigation of Blackstone Medical, Inc., including resolution of a
related civil matter.
-
Change in Estimate of Tax Deduction —change in the estimate of
the tax deduction associated with the settlement of the U.S.
Government investigation of the Company's bone growth stimulation
business.
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.
In recent years, management has increased its focus on cash generation
and debt reduction. Management uses these non-GAAP measures as the basis
for assessing the ability of the underlying operations to generate cash
for use in paying down debt. 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
Director
of Investor Relations and Business Development
markquick@orthofix.com
Source: Orthofix International N.V.
News Provided by Acquire Media