x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Netherlands
Antilles
|
N/A
|
|||
(State
or other jurisdiction of incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
|||
7
Abraham de Veerstraat
Curaçao
Netherlands
Antilles
|
N/A
|
|||
(Address
of principal executive offices)
|
(Zip
Code)
|
599-9-4658525
|
(Registrant’s
telephone number, including area
code)
|
Large
Accelerated filer o
|
Accelerated
filer x
|
Non-accelerated
filer o
|
3
|
||
3
|
||
19
|
||
30
|
||
30
|
||
31
|
||
31
|
||
31
|
||
33
|
||
34
|
||
37
|
PART I |
FINANCIAL
INFORMATION
|
(U.S.
Dollars, in thousands except share data and per share
date)
|
|
June
30,
|
|
December
31,
|
|
||
|
|
2006
|
|
2005
|
|
||
Assets
|
|
(Unaudited)
|
|
(Note
2)
|
|
||
Current
assets:
|
|
|
|
|
|
||
Cash
and cash equivalents
|
|
$
|
49,961
|
|
$
|
63,786
|
|
Restricted
cash
|
|
|
--
|
|
|
13,762
|
|
Trade
accounts receivable, net
|
|
|
90,228
|
|
|
80,745
|
|
Inventories
|
|
|
39,259
|
|
|
32,853
|
|
Deferred
income taxes
|
|
|
4,511
|
|
|
4,511
|
|
Prepaid
expenses and other current assets
|
|
|
14,101
|
|
|
11,618
|
|
Total
current assets
|
|
|
198,060
|
|
|
207,275
|
|
Securities
and other investments
|
|
|
4,082
|
|
|
4,082
|
|
Property,
plant and equipment, net
|
|
|
19,914
|
|
|
18,987
|
|
Patents
and other intangible assets, net
|
|
|
62,623
|
|
|
65,585
|
|
Goodwill,
net
|
|
|
178,461
|
|
|
174,738
|
|
Deferred
taxes and other long-term assets
|
|
|
9,223
|
|
|
3,194
|
|
Total
assets
|
|
$
|
472,363
|
|
$
|
473,861
|
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Bank
borrowings
|
|
$
|
3,794
|
|
$
|
79
|
|
Current
portion of long-term debt
|
|
|
11
|
|
|
15,187
|
|
Trade
accounts payable
|
|
|
12,145
|
|
|
11,602
|
|
Other
current liabilities
|
|
|
29,196
|
|
|
51,208
|
|
Total
current liabilities
|
|
|
45,146
|
|
|
78,076
|
|
Long-term
debt
|
|
|
37
|
|
|
21
|
|
Deferred
income taxes
|
|
|
24,698
|
|
|
25,652
|
|
Other
long-term liabilities
|
|
|
1,356
|
|
|
1,227
|
|
Total
liabilities
|
|
|
71,237
|
|
|
104,976
|
|
|
|
|
|
|
|
|
|
Contingencies
(Note 16)
|
|
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
Common
shares (16,036,973 and 16,009,249 shares issued at June 30, 2006
and
December 31, 2005, respectively)
|
|
|
1,604
|
|
|
1,602
|
|
Additional
paid-in capital
|
|
|
111,567
|
|
|
106,746
|
|
Retained
earnings
|
|
|
276,449
|
|
|
255,475
|
|
Accumulated
other comprehensive income
|
|
|
11,506
|
|
|
5,062
|
|
Total
shareholders’ equity
|
|
|
401,126
|
|
|
368,885
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
472,363
|
|
$
|
473,861
|
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
(Unaudited,
U.S. Dollars, in thousands except share and per share
data)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
|
|
|
|
|
|||||||||
Net
sales
|
$
|
84,735
|
$
|
79,540
|
$
|
165,851
|
$
|
157,228
|
|||||
Cost
of sales
|
21,199
|
20,775
|
42,658
|
41,671
|
|||||||||
Gross
profit
|
63,536
|
58,765
|
123,193
|
115,557
|
|||||||||
Operating
expenses
|
|
|
|
|
|||||||||
Sales
and marketing
|
31,920
|
28,763
|
62,708
|
56,225
|
|||||||||
General
and administrative
|
12,115
|
8,652
|
24,589
|
17,276
|
|||||||||
Research
and development
|
2,721
|
2,956
|
5,685
|
6,083
|
|||||||||
Amortization
of intangible assets
|
1,709
|
1,661
|
3,479
|
3,289
|
|||||||||
|
48,465
|
42,032
|
96,461
|
82,873
|
|||||||||
Operating
income
|
15,071
|
16,733
|
26,732
|
32,684
|
|||||||||
|
|
|
|
|
|||||||||
Interest
income (expense), net
|
255
|
(1,251
|
)
|
110
|
(2,561
|
)
|
|||||||
Other
income (expense), net
|
344
|
(608
|
)
|
291
|
1,435
|
||||||||
KCI
settlement, net
|
-
|
(163
|
)
|
1,093
|
(505
|
)
|
|||||||
Income
before income tax
|
15,670
|
14,711
|
28,226
|
31,053
|
|||||||||
Income
tax expense
|
(2,942
|
)
|
(5,306
|
)
|
(7,252
|
)
|
(10,869
|
)
|
|||||
|
|
|
|
|
|||||||||
Net
income
|
$
|
12,728
|
$
|
9,405
|
$
|
20,974
|
$
|
20,184
|
|||||
|
|
|
|
|
|||||||||
Net
income per common share - basic
|
$
|
0.79
|
$
|
0.59
|
$
|
1.31
|
$
|
1.28
|
|||||
|
|
|
|
|
|||||||||
Net
income per common share - diluted
|
$
|
0.79
|
$
|
0.58
|
$
|
1.30
|
$
|
1.24
|
|||||
|
|
|
|
|
|||||||||
Weighted
average number of common shares - basic
|
16,037,927
|
15,872,638
|
16,029,137
|
15,828,686
|
|||||||||
|
|
|
|
|
|||||||||
Weighted
average number of common shares - diluted
|
16,166,241
|
16,294,098
|
16,173,679
|
16,228,849
|
(Unaudited,
U.S. Dollars, in thousands)
|
2006
|
2005
|
|||||
|
|
|
|||||
Cash
flows from operating activities:
|
|
|
|||||
Net
income
|
$
|
20,974
|
$
|
20,184
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|||||
Depreciation
and amortization
|
7,307
|
7,215
|
|||||
Deferred
royalty income
|
--
|
(2,443
|
)
|
||||
Provision
for doubtful accounts
|
3,349
|
2,104
|
|||||
Tax
benefit on non-qualified stock options
|
--
|
1,162
|
|||||
Deferred
taxes
|
(7,681
|
)
|
(561
|
)
|
|||
Share
based compensation
|
3,903
|
294
|
|||||
Other
|
305
|
(189
|
)
|
||||
Change
in operating assets and liabilities:
|
|
|
|||||
Restricted
cash
|
13,762
|
4,731
|
|||||
Accounts
receivable
|
(10,499
|
)
|
(11,637
|
)
|
|||
Inventories
|
(5,082
|
)
|
(1,501
|
)
|
|||
Prepaid
expenses and other
|
(2,321
|
)
|
(2,635
|
)
|
|||
Accounts
payable
|
4
|
772
|
|||||
Current
liabilities
|
(22,457
|
)
|
(4,423
|
)
|
|||
Net
cash provided by operating activities
|
1,564
|
13,073
|
|||||
|
|
|
|||||
Cash
flows from investing activities:
|
|
|
|||||
Investments
in affiliates and subsidiaries
|
(1,108
|
)
|
--
|
||||
Capital
expenditures
|
(4,539
|
)
|
(6,101
|
)
|
|||
Net
cash used in investing activities
|
(5,647
|
)
|
(6,101
|
)
|
|||
|
|
|
|||||
Cash
flows from financing activities:
|
|
|
|||||
Net
proceeds from issuance of common stock
|
923
|
3,964
|
|||||
Tax
benefit on non-qualified stock options
|
66
|
--
|
|||||
Repayment
of loans and borrowings
|
(15,160
|
)
|
(16,153
|
)
|
|||
Proceeds
from loans and borrowings
|
3,709
|
59
|
|||||
Net
cash used in financing activities
|
(10,462
|
)
|
(12,130
|
)
|
|||
Effect
of exchange rate changes on cash
|
720
|
(641
|
)
|
||||
Net
decrease in cash and cash equivalents
|
(13,825
|
)
|
(5,799
|
)
|
|||
Cash
and cash equivalents at the beginning of the year
|
63,786
|
25,944
|
|||||
Cash
and cash equivalents at the end of the period
|
$
|
49,961
|
$
|
20,145
|
NOTE 1: |
BUSINESS
|
NOTE
2:
|
BASIS
OF PRESENTATION
|
NOTE
3:
|
RECENTLY
ISSUED ACCOUNTING STANDARDS
|
NOTE
4:
|
STOCK-BASED
COMPENSATION
|
(In
thousands)
|
Three
Months Ended
June
30, 2006
|
Six
Months Ended
June
30, 2006
|
|||||
|
|
|
|||||
Cost
of sales
|
$
|
37
|
$
|
68
|
|||
|
|
|
|||||
Sales
and marketing
|
200
|
410
|
|||||
|
|
|
|||||
General
and administrative (1)
|
1,320
|
2,948
|
|||||
|
|
|
|||||
Research
and development
|
71
|
183
|
|||||
|
|
|
|||||
Total
|
$
|
1,628
|
$
|
3,609
|
(1) |
Amount
includes $656 of stock-based compensation from accelerated vesting
of
options associated with transition of senior management in the
first
quarter of 2006.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
(In
thousands, except per share data)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
|
|
|
|
|
|||||||||
Net
income
|
|
|
|
|
|||||||||
As
reported
|
$
|
12,728
|
$
|
9,405
|
$
|
20,974
|
$
|
20,184
|
|||||
Add:
Stock-based employee compensation expense included in reported net
income,
net of related tax effects
|
1,118
|
87
|
2,531
|
174
|
|||||||||
Less:
Total stock-based employee compensation expense determined under
fair
value method for all awards net of tax
|
(1,118
|
)
|
(662
|
)
|
(2,531
|
)
|
(1,282
|
)
|
|||||
|
|
|
|
|
|||||||||
Pro
forma
|
$
|
12,728
|
$
|
8,830
|
$
|
20,974
|
$
|
19,076
|
|||||
|
|
|
|
|
|||||||||
Net
income per common share - basic
|
|
|
|
|
|||||||||
As
reported
|
$
|
0.79
|
$
|
0.59
|
$
|
1.31
|
$
|
1.28
|
|||||
Pro
forma
|
$
|
0.79
|
$
|
0.56
|
$
|
1.31
|
$
|
1.21
|
|||||
|
|
|
|
|
|||||||||
Net
income per common share - diluted
|
|
|
|
|
|||||||||
As
reported
|
$
|
0.79
|
$
|
0.58
|
$
|
1.30
|
$
|
1.24
|
|||||
Pro
forma
|
$
|
0.79
|
$
|
0.54
|
$
|
1.30
|
$
|
1.18
|
NOTE
5:
|
RECLASSIFICATIONS
|
NOTE
6:
|
INVENTORY
|
June
30,
|
December
31,
|
||||||
(In
thousands)
|
2006
|
2005
|
|||||
|
|
|
|||||
Raw
materials
|
$
|
7,066
|
$
|
7,242
|
|||
Work-in-process
|
4,773
|
3,344
|
|||||
Finished
goods
|
20,449
|
11,538
|
|||||
Field
inventory (as described above)
|
6,234
|
7,404
|
|||||
Consignment
inventory
|
4,692
|
6,659
|
|||||
Less
reserve for obsolescence
|
(3,955
|
)
|
(3,334
|
)
|
|||
$
|
39,259
|
$
|
32,853
|
NOTE
7:
|
ACQUISITIONS
|
NOTE
8:
|
GOODWILL
|
(In
thousands)
|
Americas
Orthofix
|
|
Americas
Breg
|
International
Orthofix
|
Total
|
||||||||
At
December 31, 2005
|
$
|
32,916
|
$
|
101,322
|
$
|
40,500
|
$
|
174,738
|
|||||
Acquisition
|
-
|
-
|
1,108
|
1,108
|
|||||||||
Foreign
Currency
|
(57
|
)
|
-
|
2,672
|
2,615
|
||||||||
At
June 30, 2006
|
$
|
32,859
|
$
|
101,322
|
$
|
44,280
|
$
|
178,461
|
NOTE
9:
|
LONG
TERM DEBT
|
(In
thousands)
|
June
30, 2006
|
December
31, 2005
|
|||||
Long-term
obligations
|
$
|
-
|
$
|
14,750
|
|||
Other
loans
|
48
|
458
|
|||||
48
|
15,208
|
||||||
Less
current portion
|
(11
|
)
|
(15,187
|
)
|
|||
$
|
37
|
$
|
21
|
NOTE
10:
|
COMMON
SHARES
|
NOTE
11:
|
COMPREHENSIVE
INCOME
|
(In
thousands)
|
Accumulated
Other Comprehensive Income/(Loss)
|
|||
Balance
at December 31, 2005
|
$
|
5,062
|
||
Foreign
currency translation adjustment
|
6,444
|
|||
Balance
at June 30, 2006
|
$
|
11,506
|
(In
thousands)
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||
2006
|
|
2005
|
2006
|
2005
|
|||||||||
Net
income
|
$
|
12,728
|
$
|
9,405
|
$
|
20,974
|
$
|
20,184
|
|||||
|
|||||||||||||
Other
comprehensive income:
|
|||||||||||||
Unrealized
(loss) gain on derivative instrument
|
--
|
(91
|
)
|
--
|
85
|
||||||||
Foreign
currency translation adjustment
|
4,803
|
(4,546
|
)
|
6,441
|
(8,006
|
)
|
|||||||
Total
comprehensive income
|
$
|
17,531
|
$
|
4,768
|
$
|
27,415
|
$
|
12,263
|
NOTE
12:
|
BUSINESS
SEGMENT INFORMATION
|
|
External
Sales
|
Intersegment
Sales
|
|||||||||||
(In
thousands)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Americas
Orthofix
|
$
|
41,466
|
$
|
35,878
|
$
|
951
|
$
|
534
|
|||||
Americas
Breg
|
18,673
|
17,391
|
324
|
89
|
|||||||||
International
Orthofix
|
24,596
|
26,271
|
17,960
|
14,132
|
|||||||||
Total
|
$
|
84,735
|
$
|
79,540
|
$
|
19,235
|
$
|
14,755
|
|
External
Sales
|
Intersegment
Sales
|
|||||||||||
(In
thousands)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Americas
Orthofix
|
$
|
80,760
|
$
|
69,642
|
$
|
1,658
|
$
|
1,004
|
|||||
Americas
Breg
|
37,234
|
35,385
|
621
|
263
|
|||||||||
International
Orthofix
|
47,857
|
52,201
|
34,146
|
28,903
|
|||||||||
Total
|
$
|
165,851
|
$
|
157,228
|
$
|
36,425
|
$
|
30,170
|
Operating
Income (Expense)
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||
(In
thousands)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Americas
Orthofix
|
$
|
9,879
|
$
|
9,123
|
$
|
18,358
|
$
|
16,720
|
|||||
Americas
Breg
|
2,076
|
2,453
|
3,534
|
5,347
|
|||||||||
International
Orthofix
|
6,104
|
6,911
|
10,746
|
14,013
|
|||||||||
Group
Activities
|
(2,301
|
)
|
(1,511
|
)
|
(4,529
|
)
|
(2,851
|
)
|
|||||
Eliminations
|
(687
|
)
|
(243
|
)
|
(1,377
|
)
|
(545
|
)
|
|||||
Total
|
$
|
15,071
|
$
|
16,733
|
$
|
26,732
|
$
|
32,684
|
Sales
by Market Sector
for
the three month period ended June 30, 2006
|
|||||||||||||
(In
thousands)
|
Americas
Orthofix
|
Americas
Breg
|
International
Orthofix
|
Total
|
|||||||||
Orthopedic
|
|||||||||||||
Spine
|
$
|
29,621
|
$
|
-
|
$
|
12
|
$
|
29,633
|
|||||
Reconstruction
|
2,903
|
18,673
|
10,906
|
32,482
|
|||||||||
Trauma
|
8,256
|
-
|
8,266
|
16,522
|
|||||||||
Total
Orthopedic
|
40,780
|
18,673
|
19,184
|
78,637
|
|||||||||
Non-Orthopedic
|
686
|
-
|
5,412
|
6,098
|
|||||||||
Total
|
$
|
41,466
|
$
|
18,673
|
$
|
24,596
|
$
|
84,735
|
Sales
by Market Sector
for
the three month period ended June 30, 2005
|
|||||||||||||
(In
thousands)
|
Americas
Orthofix
|
Americas
Breg
|
International
Orthofix
|
Total
|
|||||||||
Orthopedic
|
|||||||||||||
Spine
|
$
|
25,263
|
$
|
-
|
$
|
(40
|
)
|
$
|
25,223
|
||||
Reconstruction
|
2,179
|
17,391
|
12,174
|
31,744
|
|||||||||
Trauma
|
8,059
|
-
|
8,513
|
16,572
|
|||||||||
Total
Orthopedic
|
35,501
|
17,391
|
20,647
|
73,539
|
|||||||||
Non-Orthopedic
|
377
|
-
|
5,624
|
6,001
|
|||||||||
Total
|
$
|
35,878
|
$
|
17,391
|
$
|
26,271
|
$
|
79,540
|
Sales
by Market Sector
for
the six month period ended June 30, 2006
|
|||||||||||||
(In
thousands)
|
Americas
Orthofix
|
Americas
Breg
|
International
Orthofix
|
Total
|
|||||||||
Orthopedic
|
|||||||||||||
Spine
|
$
|
57,459
|
$
|
-
|
$
|
40
|
$
|
57,499
|
|||||
Reconstruction
|
5,474
|
37,234
|
22,045
|
64,753
|
|||||||||
Trauma
|
16,377
|
-
|
15,343
|
31,720
|
|||||||||
Total
Orthopedic
|
79,310
|
37,234
|
37,428
|
153,972
|
|||||||||
Non-Orthopedic
|
1,450
|
-
|
10,429
|
11,879
|
|||||||||
Total
|
$
|
80,760
|
$
|
37,234
|
$
|
47,857
|
$
|
165,851
|
Sales
by Market Sector
for
the six month period ended June 30, 2005
|
|||||||||||||
(In
thousands)
|
Americas
Orthofix
|
Americas
Breg
|
International
Orthofix
|
Total
|
|
||||||||
Orthopedic
|
|||||||||||||
Spine
|
$
|
48,330
|
$
|
-
|
$
|
69
|
$
|
48,399
|
|||||
Reconstruction
|
4,315
|
35,385
|
24,675
|
64,375
|
|||||||||
Trauma
|
16,253
|
-
|
16,330
|
32,583
|
|||||||||
Total
Orthopedic
|
68,898
|
35,385
|
41,074
|
145,357
|
|||||||||
Non-Orthopedic
|
744
|
-
|
11,127
|
11,871
|
|||||||||
Total
|
$
|
69,642
|
$
|
35,385
|
$
|
52,201
|
$
|
157,228
|
NOTE
13:
|
INCOME
TAXES
|
NOTE
14:
|
EARNINGS
PER SHARE
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Weighted
average common shares - basic
|
16,037,927
|
15,872,638
|
16,029,137
|
15,828,686
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Effect
of SFAS No. 123 (R)
|
(169,126
|
)
|
--
|
(177,943
|
)
|
--
|
|||||||
Stock
options outstanding
|
297,440
|
421,460
|
322,485
|
400,163
|
|||||||||
Weighted
average common shares - diluted
|
16,166,241
|
16,294,098
|
16,173,679
|
16,228,849
|
NOTE
15:
|
DERIVATIVE
INSTRUMENT
|
NOTE
16:
|
CONTINGENCIES
|
Three
Months Ended June 30,
|
|||||||||||||
(In
thousands)
|
2006
|
2005
|
|||||||||||
Net
Sales
|
Percent
of Total Net Sales
|
Net
Sales
|
Percent
of Total Net Sales
|
||||||||||
Americas
Orthofix
|
$
|
41,466
|
49
|
%
|
$
|
35,878
|
45
|
%
|
|||||
Americas
Breg
|
18,673
|
22
|
%
|
17,391
|
22
|
%
|
|||||||
International
Orthofix
|
24,596
|
29
|
%
|
26,271
|
33
|
%
|
|||||||
Total
|
$
|
84,735
|
100
|
%
|
$
|
79,540
|
100
|
%
|
Six
Months Ended June 30,
|
|||||||||||||
(In
thousands)
|
2006
|
2005
|
|||||||||||
Net
Sales
|
Percent
of Total Net Sales
|
Net
Sales
|
|
Percent
of Total Net Sales
|
|||||||||
Americas
Orthofix
|
$
|
80,760
|
49
|
%
|
$
|
69,642
|
44
|
%
|
|||||
Americas
Breg
|
37,234
|
22
|
%
|
35,385
|
23
|
%
|
|||||||
International
Orthofix
|
47,857
|
29
|
%
|
52,201
|
33
|
%
|
|||||||
Total
|
$
|
165,851
|
100
|
%
|
$
|
157,228
|
100
|
%
|
Three
Months Ended June 30,
|
|||||||||||||
(In
thousands)
|
2006
|
2005
|
|||||||||||
Net
Sales
|
Percent
of
Total
Net
Sales
|
Net
Sales
|
Percent
of
Total
Net Sales
|
||||||||||
Orthopedic
|
|
||||||||||||
Spine
|
$
|
29,633
|
35
|
%
|
$
|
25,223
|
32
|
%
|
|||||
Reconstruction
|
32,482
|
38
|
%
|
31,744
|
40
|
%
|
|||||||
Trauma
|
16,522
|
20
|
%
|
16,572
|
21
|
%
|
|||||||
Total
Orthopedic
|
78,637
|
93
|
%
|
73,539
|
93
|
%
|
|||||||
Non-Orthopedic
|
6,098
|
7
|
%
|
6,001
|
7
|
%
|
|||||||
Total
|
$
|
84,735
|
100
|
%
|
$
|
79,540
|
100
|
%
|
Six
Months Ended June 30,
|
|||||||||||||
(In
thousands)
|
2006
|
2005
|
|||||||||||
Net
Sales
|
Percent
of
Total
Net Sales
|
Net
Sales
|
Percent
of
Total
Net Sales
|
||||||||||
Orthopedic
|
|
||||||||||||
Spine
|
$
|
57,499
|
35
|
%
|
$
|
48,399
|
31
|
%
|
|||||
Reconstruction
|
64,753
|
39
|
%
|
64,375
|
41
|
%
|
|||||||
Trauma
|
31,720
|
19
|
%
|
32,583
|
21
|
%
|
|||||||
Total
Orthopedic
|
153,972
|
93
|
%
|
145,357
|
93
|
%
|
|||||||
Non-Orthopedic
|
11,879
|
7
|
%
|
11,871
|
7
|
%
|
|||||||
Total
|
$
|
165,851
|
100
|
%
|
$
|
157,228
|
100
|
%
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
(%)
|
(%)
|
(%)
|
(%)
|
||||||||||
Net
sales
|
100
|
100
|
100
|
100
|
|||||||||
Cost
of sales
|
25
|
26
|
26
|
27
|
|||||||||
Gross
profit
|
75
|
74
|
74
|
73
|
|||||||||
Operating
expenses
|
|||||||||||||
Sales
and marketing
|
38
|
36
|
38
|
36
|
|||||||||
General
and administrative
|
14
|
11
|
15
|
11
|
|||||||||
Research
and development
|
3
|
4
|
3
|
4
|
|||||||||
Amortization
of intangible assets
|
2
|
2
|
2
|
2
|
|||||||||
Total
operating income
|
18
|
21
|
16
|
20
|
|||||||||
Net
income
|
15
|
12
|
13
|
13
|
Net
Sales for the
Three
Months Ended June 30,
|
||||||||||
(In
US$ thousands)
|
2006
|
2005
|
Growth
|
|||||||
Orthopedic
|
||||||||||
Spine
|
$
|
29,621
|
$
|
25,263
|
17
|
%
|
||||
Reconstruction
|
2,903
|
2,179
|
33
|
%
|
||||||
Trauma
|
8,256
|
8,059
|
2
|
%
|
||||||
Total
Orthopedic
|
40,780
|
35,501
|
15
|
%
|
||||||
|
||||||||||
Non-Orthopedic
|
686
|
377
|
82
|
%
|
||||||
Americas
Orthofix
|
$
|
41,466
|
$
|
35,878
|
16
|
%
|
Net
Sales for the
Three
Months Ended June 30,
|
||||||||||
(In
US$ thousands)
|
2006
|
2005
|
Growth
|
|||||||
Orthopedic
|
||||||||||
Spine
|
$
|
12
|
$
|
(40
|
)
|
--
|
||||
Reconstruction
|
10,906
|
12,174
|
(10
|
)%
|
||||||
Trauma
|
8,266
|
8,513
|
(3
|
)%
|
||||||
Total
Orthopedic
|
19,184
|
20,647
|
(7
|
)%
|
||||||
|
||||||||||
Non-Orthopedic
|
5,412
|
5,624
|
(4
|
)%
|
||||||
International
Orthofix
|
$
|
24,596
|
$
|
26,271
|
(6
|
)%
|
Net
Sales for the
Six
Months Ended June 30,
|
||||||||||
(In
US$ thousands)
|
2006
|
2005
|
Growth
|
|||||||
Orthopedic
|
||||||||||
Spine
|
$
|
57,459
|
$
|
48,330
|
19
|
%
|
||||
Reconstruction
|
5,474
|
4,315
|
27
|
%
|
||||||
Trauma
|
16,377
|
16,253
|
1
|
%
|
||||||
Total
Orthopedic
|
79,310
|
68,898
|
15
|
%
|
||||||
|
||||||||||
Non-Orthopedic
|
1,450
|
744
|
95
|
%
|
||||||
Americas
Orthofix
|
$
|
80,760
|
$
|
69,642
|
16
|
%
|
Net
Sales for the
Six
Months Ended June 30,
|
||||||||||
(In
US$ thousands)
|
2006
|
2005
|
Growth
|
|||||||
Orthopedic
|
||||||||||
Spine
|
$
|
40
|
$
|
69
|
(42
|
)%
|
||||
Reconstruction
|
22,045
|
24,675
|
(11
|
)%
|
||||||
Trauma
|
15,343
|
16,330
|
(6
|
)%
|
||||||
Total
Orthopedic
|
37,428
|
41,074
|
(9
|
)%
|
||||||
|
||||||||||
Non-Orthopedic
|
10,429
|
11,127
|
(6
|
)%
|
||||||
International
Orthofix
|
$
|
47,857
|
$
|
52,201
|
(8
|
)%
|
Contractual
Obligations
|
Payments
Due By Period
|
|||||||||||||||
(Dollars
in thousands)
|
Total
|
Less
Than 1 Year
|
1
to 3 Years
|
4
to 5 Years
|
Over
5 Years
|
|||||||||||
Senior
secured term loan:
|
||||||||||||||||
As
of December 31, 2005
|
$
|
14,750
|
$
|
14,750
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
As
of June 30, 2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Other
borrowings:
|
||||||||||||||||
As
of December 31, 2005
|
$
|
458
|
$
|
437
|
$
|
21
|
$
|
-
|
$
|
-
|
||||||
As
of June 30, 2006
|
$
|
3,842
|
$
|
3,842
|
$
|
-
|
$
|
-
|
$
|
-
|
PART II |
OTHER
INFORMATION
|
1. |
The
following persons were elected by a plurality of the votes cast
at the
meeting as Directors of the Company for a one year term expiring
at the
Annual General Meeting in
2007:
|
Name
|
Votes
For
|
Votes
Withheld
|
||
|
||||
Jerry
Benjamin
|
11,015,493
|
851,530
|
||
Robert
Gaines-Cooper
|
10,661,172
|
1,215,851
|
||
Charles
W. Federico
|
10,653,545
|
1,223,478
|
||
James
F. Gero
|
10,959,745
|
917,278
|
||
Peter
J. Hewett
|
10,597,256
|
1,279,767
|
||
Guy
J. Jordan
|
11,763,364
|
113,659
|
||
Thomas
J. Kester
|
11,780,921
|
96,102
|
||
Walter
P. Von Wartburg
|
11,780,221
|
96,802
|
||
Kenneth
R. Weisshaar
|
11,781,271
|
95,752
|
||
Stefan
Widensohler
|
11,780,871
|
96,152
|
2. |
An
amendment to the Articles of Association of the Company so as to
provide
for greater flexibility with regard to the authority of the Board
of
Directors granting the Board of Directors express authority (1)
to declare
dividends out of the profits of the preceding fiscal year or years
then
available for distribution and (2) to declare and make distributions
out
of retained earnings reserves or out of the contributed surplus
capital
reserves was adopted and approved by a vote of 9,008,870 in favor,
921,976
against and 1,946,177
abstaining;
|
3. |
The
audited Financial Statements for the year ended December 31, 2005
were
adopted and approved by a vote of 11,800,294 in favor, 8,759 against
and
67,970 abstaining;
and
|
4. |
The
selection of Ernst & Young LLP to act as independent auditors for the
Company and its subsidiaries for the fiscal year ending December
31, 2006
was ratified by a vote of 11,811,783 in favor, 59,662 against and
5,578
abstaining.
|
(a) |
Exhibits
|
Exhibit
Number
|
Description
|
|
3.1
|
Certificate
of Incorporation of the Company (filed as an exhibit to the Company’s
annual report on Form 20-F dated June 29, 2001 and incorporated herein
by
reference).
|
|
3.2
|
Articles
of Association of the Company as Amended (filed as an exhibit to
the
Company’s quarterly report on Form 10-Q for the quarter ended September
30, 2004 and incorporated herein by reference).
|
|
10.1
|
Orthofix
Inc. Employee Stock Purchase Plan (filed as an exhibit to the Company’s
annual report on Form 10-K for the fiscal year ended December 31,
2002 and
incorporated herein by reference).
|
|
10.2
|
Orthofix
International N.V. Staff Share Option Plan (filed as an exhibit to
the
Company’s annual report on Form 10-K for the fiscal year ended December
31, 2002 and incorporated herein by reference).
|
|
10.3
|
Form
of Performance Accelerated Stock Option under the Staff Share Option
Plan
(filed as an exhibit to the Company’s annual report on Form 10-K for the
fiscal year ended December 31, 2002 and incorporated herein by
reference).
|
|
10.4
|
Form
of Performance Accelerated Stock Option Inducement Agreement (filed
as an
exhibit to the Company’s annual report on Form 10-K for the fiscal year
ended December 31, 2003 and incorporated here in by
reference).
|
|
10.5
|
Orthofix
International N.V. 2004 Long Term Incentive Plan, as amended (filed
as an
exhibit to the Company’s quarterly report on Form 10-Q for the quarter
ended September 30, 2004 and incorporated herein by
reference).
|
|
10.6
|
Form
of Nonqualified Stock Option Agreement Under the Orthofix International
N.V. 2004 Long Term Incentive Plan (filed as an exhibit to the Company’s
current report on Form 8-K filed April 17, 2006 and incorporated
herein by
reference)
|
|
10.7
|
Form
of Nonqualified Stock Option Agreement for Non-Employee Directors
under
the Orthofix International N.V. 2004 Long Term Incentive Plan (filed
as an
exhibit to the Company’s annual report on Form 10-K for the fiscal year
ended December 31, 2004 and incorporated herein by
reference).
|
|
10.8
|
Employment
Agreement, dated as of April 15, 2005, between Orthofix International
N.V.
and Charles W. Federico (filed as an exhibit to the Company’s current
report on Form 8-K filed April 18, 2005 and incorporated herein by
reference).
|
|
10.9
|
Employment
Agreement, dated as of July 13, 2006, between the Company and Thomas
Hein
(filed as an exhibit to the Company’s current report on Form 8-K filed
July 18, 2006 and incorporated herein by reference).
|
|
10.10
|
Employment
Agreement, dated as of November 20, 2003, between Orthofix International
N.V. and Bradley R. Mason (filed as an exhibit to the Company’s annual
report on Form 10-K for the fiscal year ended December 31, 2003 and
incorporated herein by reference).
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10.11
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Change
of Control Agreement, dated as of February 18, 2005, between Orthofix
Inc.
and Raymond C. Kolls (filed as an exhibit to the Company’s current report
on Form 8-K filed February 22, 2005 and incorporated herein by
reference).
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10.12
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Change
of Control Agreement, dated as of September 1, 2005, between Orthofix
Inc.
and Alan W. Milinazzo (filed as an exhibit to the Company’s current report
on Form 8-K filed September 8, 2005 and incorporated herein by
reference).
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10.13
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Full
Recourse Promissory Note between Orthofix International N.V. and
Charles
W. Federico dated January 10, 2002 (filed as an exhibit to the Company’s
annual report on Form 10-K for the fiscal year ended December 31,
2002 and
incorporated herein by reference).
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10.14
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Full
Recourse Promissory Note between Orthofix International N.V. and
Gary D.
Henley dated January 10, 2002 (filed as an exhibit to the Company’s annual
report on Form 10-K for the fiscal year ended December 31, 2002 and
incorporated herein by reference).
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10.15
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Acquisition
Agreement dated as of November 20, 2003, among Orthofix International
N.V., Trevor Acquisition, Inc., Breg, Inc. and Bradley R. Mason,
as
shareholders’ representative (filed as an exhibit to the Company’s current
report on Form 8-K filed January 8, 2004 and incorporated herein
by
reference).
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10.16
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Voting
and Subscription Agreement dated as of November 20, 2003, among Orthofix
International N.V. and the significant shareholders of Breg, Inc.
identified on the signature pages thereto (filed as an exhibit to
the
Company’s current report on Form 8-K filed January 8, 2004 and
incorporated herein by reference).
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10.17
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Employee
Agreement, as amended, dated December 29, 2005 between Orthofix
International N.V. and Charles W. Federico (filed as an exhibit to
the
Company’s current report on Form 8-K filed December 30, 2005 and
incorporated herein by reference).
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10.18
|
Form
of Indemnity Agreement (filed as an exhibit to the Company’s annual report
on Form 10-K for the fiscal year ended December 31, 2005 and incorporated
herein by reference).
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10.19
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Settlement
Agreement, dated February 23, 2006, between Intavent Orthofix Limited,
a
wholly-owned subsidiary of Orthofix International N.V. and Galvin
Mould
(filed as an exhibit to the Company’s current report on Form 8-K filed on
April 17, 2006 and incorporated herein by reference).
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10.20
|
Employment Agreement, dated July 13, 2006, between Orthofix, Inc. and Alan W. Milinazzo (filed as an exhibit to the Company’s current report on Form 8-K filed July 18, 2006 and incorporated herein by reference). | |
10.21
|
Employment Agreement, dated July 13, 2006, between Orthofix, Inc. and Raymond C. Kolls (filed as an exhibit to the Company’s current report on Form 8-K filed July 18, 2006 and incorporated herein by reference). | |
10.22
|
Employment Agreement, dated July 13, 2006, between Orthofix, Inc. and Michael M. Finegan (filed as an exhibit to the Company’s current report on Form 8-K filed July 18, 2006 and incorporated herein by reference). | |
14.1
|
Code
of Ethics of the Company (filed as an exhibit to the Company’s annual
report on Form 10-K for the fiscal year ended December 31, 2003 and
incorporated herein by reference).
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21.1
|
Subsidiaries
of the Company (filed as an exhibit to the Company’s annual report on Form
10-K for the fiscal year ended December 31, 2005 and incorporated
herein
by reference).
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Rule
13a-14(a)/15d-14(a) Certification of Chief Executive
Officer.
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||
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial
Officer.
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Section
1350 Certification of Chief Executive Officer.
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||
Section
1350 Certification of Chief Financial
Officer.
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