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Orthofix International Announces 3rd Quarter 2012 Results

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,
Reported Currency
(USD in millions)   2012   2011 Growth Growth
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.

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