-
Board of Directors Authorizes $50.0 million Share Repurchase Program
LEWISVILLE, Texas--(BUSINESS WIRE)--
Orthofix International N.V. (NASDAQ:OFIX) (the Company) today announced
its results for the first quarter ended March 31, 2013. Net sales were
$100.3 million, a 14% decrease over the first quarter of the prior year,
or 13% on a constant currency basis.
Net income from continuing operations was $4.9 million, or $0.25 per
diluted share compared to $0.64 per diluted share in the prior year.
Adjusted net income from continuing operations was $4.6 million, or
$0.23 per diluted share, decreasing 66% from $0.69 per diluted share
from the first quarter of the prior year.
The Orthofix Board of Directors has authorized a share repurchase
program allowing the Company to repurchase up to $50 million of the
Company's common stock, effective beginning May 10, 2013.
Brad Mason, President and Chief Executive Officer, commented, "I am
delighted to rejoin Orthofix and am confident that I can lead the
Company in a way that will maximize its potential to create shareholder
value. I am very encouraged by the many strengths I see in our
organization.
"That said, the first quarter sales and earnings results were
disappointing. The good news is that the primary issues that led to
these results are identifiable, within our control, and fixable. We are
developing a strategy with specific initiatives that will both improve
our internal competencies and drive growth.
"Importantly, Orthofix generated free cash flow of $9 million in the
quarter which, in spite of the revenue shortfall, highlights the
underlying stability of Orthofix's business. Given this and our
confidence in our prospects for the future, the Board has approved a
share repurchase program of up to $50 million. The Board and I believe
that, while Orthofix's stock is trading at current valuations, this is
an appropriate use of cash and will benefit the shareholders."
Sales Performance
Net sales were $100.3 million in the first quarter of 2013, down 14%
from $116.0 million in the first quarter of the prior year. Foreign
currency translation and two less selling days both negatively impacted
the first quarter net sales by 0.6% and 3.2%, respectively.
|
External net sales by global business unit
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
|
|
Reported
|
|
Currency
|
|
(USD in millions)
|
|
2013
|
|
2012
|
|
Decline
|
|
Decline
|
|
|
|
|
|
|
|
|
|
|
|
Spine
|
|
|
|
|
|
|
|
|
|
Spine Repair Implants and Regenerative Biologics
|
|
$
|
34.3
|
|
$
|
35.8
|
|
-4
|
%
|
|
-4
|
%
|
|
Spine Regenerative Stimulation
|
|
|
32.0
|
|
|
39.3
|
|
-18
|
%
|
|
-18
|
%
|
|
Total Spine
|
|
|
66.3
|
|
|
75.0
|
|
-12
|
%
|
|
-12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Orthopedics
|
|
|
33.9
|
|
|
41.0
|
|
-17
|
%
|
|
-16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$
|
100.3
|
|
$
|
116.0
|
|
-14
|
%
|
|
-13
|
%
|
|
Note: Spine Repair Implants and Regenerative Biologics includes
$9.4 million and $8.7 million of marketing service fees in the
three months ended March 31, 2013 and 2012, respectively.
Orthopedics includes $2.5 million of marketing service fees in the
three months ended March 31, 2013 and 2012.
|
|
|
|
|
|
Note: Some calculations may be impacted by rounding.
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|
|
Total Spine sales were $66.3 million, which decreased 12% from the prior
year. The reduction in sales was primarily a result of residual effects
of distribution disruptions and higher than ordinary mix of wholesale
revenue in 2012 in the Company's Stimulation business. In addition,
sales from Spine Implants were impacted by weakness in international
markets as well as pricing pressures in the U.S.
Orthopedics sales were $33.9 million, which decreased 17% on a reported
basis and 16% on a constant currency basis compared to the prior year.
The decline in revenue was due primarily to a number of challenges
currently impacting the Company in Brazil. Sales from Europe were also
negatively affected by poor macroeconomic conditions.
Earnings Performance
Reported net income for the first quarter of 2013 was $4.9 million and
net income per diluted share was $0.25. Excluding certain items
summarized in the table below, adjusted net income in the first quarter
of 2013 was $4.6 million, or $0.23 per diluted share, decreasing 66%
from the first 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 March 31, 2013 and 2012:
|
First Quarter Adjusted Net Income from Continuing Operations
|
|
Q1 2013
|
|
Q1 2012
|
|
% Change
|
|
|
|
($000's)
|
|
EPS
|
|
($000's)
|
|
EPS
|
|
Earnings
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP net income and net income per diluted share
|
|
$
|
4,908
|
|
|
$
|
0.25
|
|
$
|
12,216
|
|
$
|
0.64
|
|
-60
|
%
|
|
-61
|
%
|
|
Specified Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Succession charges
|
|
|
2,828
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
Gain related to demutualization of a mutual insurance company
|
|
|
(2,776
|
)
|
|
|
|
|
-
|
|
|
|
|
|
|
|
Foreign exchange gain/loss
|
|
|
(392
|
)
|
|
|
|
|
296
|
|
|
|
|
|
|
|
Strategic investment in MTF
|
|
|
-
|
|
|
|
|
|
630
|
|
|
|
|
|
|
|
Adjusted net income and net income per diluted share
|
|
$
|
4,568
|
|
|
$
|
0.23
|
|
$
|
13,142
|
|
$
|
0.69
|
|
-65
|
%
|
|
-66
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to calculate EPS (in thousands)
|
|
|
|
|
19,691
|
|
|
|
|
19,116
|
|
|
|
|
|
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 March 31, 2013 and 2012:
|
First Quarter Adjusted Operating Income from Continuing Operations
|
|
Q1 2013
|
|
Q1 2012
|
|
|
|
($000's)
|
|
% of Sales
|
|
($000's)
|
|
% of Sales
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP operating income
|
|
$
|
4,024
|
|
4.0
|
%
|
|
$
|
22,431
|
|
19.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Specified Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Succession charges
|
|
|
3,587
|
|
|
|
|
-
|
|
|
|
Strategic investment in MTF
|
|
|
-
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income
|
|
$
|
7,611
|
|
7.6
|
%
|
|
$
|
23,431
|
|
20.2
|
%
|
|
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 Free Cash Flow for the quarter ended
March 31, 2013:
|
Free Cash Flow
|
|
Q1 2013
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
15,454
|
|
|
Capital expenditures
|
|
|
(6,468
|
)
|
|
Free Cash Flow |
|
$
|
8,986
|
|
|
|
|
|
|
|
Share Repurchase Program
The Company announced today that its board of directors has authorized a
share repurchase program in an amount up to $50 million. Repurchases are
expected to consist primarily of open market transactions at prevailing
market prices in accordance with the guidelines specified under Rule
10b-18 of the Securities Exchange Act of 1934, as amended, though the
Company may also make repurchases through block trades or privately
negotiated transactions. The Company expects that repurchases will begin
on or about May 10, 2013. Repurchases are expected to be made from cash
on hand, cash generated from operations, and additional borrowings. The
timing of the transactions and the aggregate number of shares of common
stock that will be repurchased under the repurchase program will depend
on a variety of factors, including market conditions and the prices at
which the securities are repurchased. The Company may discontinue
repurchases without prior notice at any time if it determines additional
repurchases are not warranted.
Q2 2013 Outlook
For the second quarter, the Company expects revenues to be between $104
million and $107 million. The Company noted that in June 2013 it will
host a call to outline plans to drive revenue growth, enhance
performance and create long-term value for shareholders. The Company
will provide updated annual guidance at that time.
Conference Call
Orthofix will host a conference call today at 4:30 PM Eastern time to
discuss the Company's financial results for the first quarter of 2013.
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 developing and delivering innovative repair and
regenerative technologies 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 our indemnification obligations with
respect to certain product liability claims against, and the government
investigation of our former sports medicine global business unit), 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 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, whether as a result of new information,
future events or circumstances, or otherwise.
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Product sales
|
|
$
|
88,358
|
|
|
$
|
104,820
|
|
|
Marketing service fees
|
|
|
11,896
|
|
|
|
11,222
|
|
|
Net sales
|
|
|
100,254
|
|
|
|
116,042
|
|
|
Cost of sales
|
|
|
22,699
|
|
|
|
21,940
|
|
|
Gross profit
|
|
|
77,555
|
|
|
|
94,102
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
Sales and marketing
|
|
|
48,839
|
|
|
|
49,521
|
|
|
General and administrative
|
|
|
18,788
|
|
|
|
14,570
|
|
|
Research and development
|
|
|
5,400
|
|
|
|
7,050
|
|
|
Amortization of intangible assets
|
|
|
504
|
|
|
|
530
|
|
|
|
|
|
73,531
|
|
|
|
71,671
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
4,024
|
|
|
|
22,431
|
|
|
|
|
|
|
|
|
Other income and expense
|
|
|
|
|
|
Interest expense, net
|
|
|
(560
|
)
|
|
|
(2,221
|
)
|
|
Other income (expense)
|
|
|
4,764
|
|
|
|
(631
|
)
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
8,228
|
|
|
|
19,579
|
|
|
Income tax expense
|
|
|
(3,320
|
)
|
|
|
(7,363
|
)
|
|
Net income from continuing operations, net of tax
|
|
|
4,908
|
|
|
|
12,216
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
(4,432
|
)
|
|
|
(506
|
)
|
|
Income tax benefit
|
|
|
1,640
|
|
|
|
306
|
|
|
Net loss from discontinued operations, net of tax
|
|
|
(2,792
|
)
|
|
|
(200
|
)
|
|
Net income
|
|
$
|
2,116
|
|
|
$
|
12,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share - basic
|
|
|
|
|
|
Net income from continuing operations, net of tax
|
|
$
|
0.25
|
|
|
$
|
0.65
|
|
|
Net loss from discontinued operations, net of tax
|
|
|
($0.14 |
)
|
|
|
($0.01 |
)
|
|
Net income per common share - basic
|
|
$
|
0.11
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
Net income per common share - diluted
|
|
|
|
|
|
Net income from continuing operations, net of tax
|
|
$
|
0.25
|
|
|
$
|
0.64
|
|
|
Net loss from discontinued operations, net of tax
|
|
|
($0.14 |
)
|
|
|
($0.01 |
)
|
|
Net income per common share - diluted
|
|
$
|
0.11
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
Weighted average number of common
|
|
|
19,431,093
|
|
|
|
18,675,694
|
|
|
shares outstanding - basic
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
|
|
|
|
|
|
shares outstanding - diluted
|
|
|
19,691,141
|
|
|
|
19,116,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
33,675
|
|
|
$
|
31,055
|
|
Restricted cash
|
|
|
29,446
|
|
|
|
21,314
|
|
Trade accounts receivable, net
|
|
|
132,425
|
|
|
|
150,316
|
|
Inventories
|
|
|
92,133
|
|
|
|
88,744
|
|
Deferred income taxes
|
|
|
17,363
|
|
|
|
16,959
|
|
Prepaid expenses and other current assets
|
|
|
32,211
|
|
|
|
32,056
|
|
Total current assets
|
|
|
337,253
|
|
|
|
340,444
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
52,402
|
|
|
|
51,362
|
|
Patents and other intangible assets, net
|
|
|
6,765
|
|
|
|
6,880
|
|
Goodwill
|
|
|
72,607
|
|
|
|
74,388
|
|
Deferred income taxes
|
|
|
20,200
|
|
|
|
19,904
|
|
Other long-term assets
|
|
|
14,153
|
|
|
|
11,303
|
|
Total assets
|
|
$
|
503,380
|
|
|
$
|
504,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
14,230
|
|
|
$
|
21,812
|
|
Other current liabilities
|
|
|
51,295
|
|
|
|
46,985
|
|
Total current liabilities
|
|
|
65,525
|
|
|
|
68,797
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
20,000
|
|
|
|
20,000
|
|
Deferred income taxes
|
|
|
11,460
|
|
|
|
11,456
|
|
Other long-term liabilities
|
|
|
4,227
|
|
|
|
4,930
|
|
Total liabilities
|
|
|
101,212
|
|
|
|
105,183
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
Common shares
|
|
|
1,945
|
|
|
|
1,934
|
|
Additional paid-in capital
|
|
|
250,186
|
|
|
|
246,111
|
|
Retained earnings
|
|
|
150,665
|
|
|
|
148,549
|
|
Accumulated other comprehensive income
|
|
|
(628
|
)
|
|
|
2,504
|
|
Total shareholders' equity
|
|
|
402,168
|
|
|
|
399,098
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
503,380
|
|
|
$
|
504,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORTHOFIX INTERNATIONAL N.V.
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
(Unaudited, U.S. Dollars, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
2,116
|
|
|
$
|
12,016
|
|
|
Adjustments to reconcile net income to net cash
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
4,995
|
|
|
|
5,667
|
|
|
Other non-cash adjustments
|
|
|
5,642
|
|
|
|
6,639
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
Escrow receivable
|
|
|
-
|
|
|
|
41,537
|
|
|
Changes in working capital
|
|
|
2,701
|
|
|
|
(16,745
|
)
|
|
Net cash provided by operating activities
|
|
|
15,454
|
|
|
|
49,114
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Capital expenditures
|
|
|
(6,468
|
)
|
|
|
(6,523
|
)
|
|
Net cash used in investing activities
|
|
|
(6,468
|
)
|
|
|
(6,523
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Net proceeds from issuance of common shares
|
|
|
2,143
|
|
|
|
6,641
|
|
|
Repayments of long-term debt
|
|
|
-
|
|
|
|
(3,750
|
)
|
|
(Repayment of) proceeds from bank borrowings, net
|
|
|
(15
|
)
|
|
|
69
|
|
|
Change in restricted cash
|
|
|
(8,141
|
)
|
|
|
(32,271
|
)
|
|
Excess income tax benefit on employee stock-based awards
|
|
|
78
|
|
|
|
242
|
|
|
Net cash used in financing activities
|
|
|
(5,935
|
)
|
|
|
(29,069
|
)
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
(431
|
)
|
|
|
324
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
2,620
|
|
|
|
13,846
|
|
|
Cash and cash equivalents at the beginning of period
|
|
|
31,055
|
|
|
|
33,207
|
|
|
Cash and cash equivalents at the end of period
|
|
$
|
33,675
|
|
|
$
|
47,053
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Performance Measures
The tables in this press release present reconciliations of net sales,
net (income and net income per diluted share and operating income
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 Operating Income" and "Adjusted EPS
from Continuing Operations" 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 Net Income and Adjusted Net Income per Diluted Share
Reconciling Items
Note: The reconciling items were tax effected in the current period at
the prevailing rate within the respective jurisdictions.
-
Succession charges — In 2013 these costs relate to the
cessation of employment of the Company's former Chief Executive
Officer and former Chief Compliance Officer.
-
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.
-
Strategic investment in 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.
Adjusted Operating Income Reconciling Items
-
Strategic investment in 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.
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
Director
of Investor Relations and Business Development
markquick@orthofix.com
Source: Orthofix International N.V.
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