Orthofix Medical Inc. · NASDAQ:OFIX
Orthofix Medical — Orthofix International — Proxy Contest (March 2009)
24 slides from Orthofix Medical's proxy contest presentation, Mar 12, 2009
Slide 1: RiskMetrics Group Presentation: Orthofix International N.V.
ii a If RAMIUS VALUE AND OPPORTUNITY MASTER FUND LTD RiskMetrics Group Presentation Orthofix International N.V. ‘Mareh 12, 2009
Slide 2: Overview of Ramius LLC
Overview of Ramius LLC Ramins LLC (“Ramius") is a registered investment advisor that manages in excess of $7.5 billion’ in assets in a variety of alternative investment strategies. Ramius is headquartered in New York with offices located in London, Tokyo, Hong Kong, Munich, and Vienna Ramins Value a
Slide 3: Why Change is Required at Orthofix Now
Why Change is Required at Orthofix Now The current Board has overseen a period of massive shareholder value destruction = Presided over the failed acquisition of Blackstone Medical = Approved taking on a heavy debt load to fund the acquisition = Accepted ballooning corporate overhead costs * Failed
Slide 4: Orthofix Shares Have Significantly Underperformed
Orthofix Shares Have Significantly Underperformed Over the past one, three, and five years, Orthofix stock has underperformed the broader indices and its peer group by a wide margin One Year, Dues Year, and Five Year Steck Pafermance G9/09) Hive Year Stock Performance @/104 te 3/909) Main wmf | word
Slide 5: Blackstone Medical
The Problem: Blackstone Medical The acquisition of Blackstone Medical on August 10, 2006 has been a failure from the outset CEO Alan Milinazzo, August 7, 2006 Conference Call: “T think really hove it’s worth considering that [Blackstone] is an acquisition that is done jor growth.” = Management expec
Slide 6: Blackstone Medical
The Problem: Blackstone Medical We fail to see how reasonable analysis at the time of de acquisition would have yielded results in line with management's expectations for positive earnings contributions in 2008 and beyond “We expect the acquisition to be accretive to non-GAAP cash eamings in 2007. A
Slide 7: Blackstone Medical
The Problem: Blackstone Medical There have been serious execution issues at Blackstone since the acquisition which have severely damaged shareholder value = In July 2007, just 10 months after closing, Blackstone received a suapoena How could this issue have iscued ty the depariment of Health and Hum
Slide 8: Blackstone Medical
The Problem: Blackstone Medical ‘Management has failed to recognize the true extent of the problems at Blackstone since inception The current plan does not adequately address the critical issues at Blackstone These meager savings compare ta = Current restructuring plan calls for $5 million of annual
Slide 9: Blackstone Medical
The Problem: Blackstone Medical The acquisition of Blackstone has cost shareholders dearly Orthofiz has written down the value of Blackstone from $333 million to $23.5 million currently Orthofix has written down 93% of the value of Blackstone since the acquisition ~ Orthofix bought Blackstone for $3
Slide 10: Blackstone Medical
The Problem: Blackstone Medical The acquisition of Blackstone Medical has significantly impaired Oxthofix’s balance sheet = Prior to the acquisition of Blackstone Medical, Orthofix had book value of $401 million, tangible book: value of $160 sillion and a net cash position of $46 million = However,
Slide 11: Blackstone Medical
The Problem: Blackstone Medical The acquisition of Blackstone has had little impact on Orthofit eamings per share has been nearly cut in half revenue growth rate, however, Revenue without Blacksione /with Blacksione ($ in mm) EPS without Blackstone / with Blackstone eon 9273 s2et $250 00 ‘S Ee 18 15
Slide 12: Bloated Corporate Overhead
The Problem: Bloated Corporate Overhead Orthofix is inefficient with a highly distributed corporate structure = Comore offices in Boston Legal, Finance, and Accounting groups in North Carolina antilrecently = President of North America is located in San Diego = Key mannfacturing in Texas Board appro
Slide 13: Debt Laden Balance Sheet
The Problem: Debt Laden Balance Sheet Due to the heavy debt load taken on to fund the purchase of Blackstone and the bloated corporate overhead, Orthofix must comply with stringent debt covenants = In October 2008, Orthofix was forced to negotiate a waiver with the frank group due to probable non-co
Slide 14: Overly Aggressive Guidance
The Problem: Overly Aggressive Guidance During this contested election process, management has tried to appease investors with overly aggressive, heavily back-end weighted guidance — analvsts are not convinced and neither are we 20D Anaiyat Consens Cats rayatcone CCanpavy Gace Fane ae a si25 sus Alt
Slide 15: The Solution: Orthofix Domestic, Orthofix Intl, and Breg
The Solution: Orthofix Domestic, Orthofix Intl, and Breg The core businesses at Orthofix continue to perform well and should be the focus Revenue - 2005 to LTH 720700) a a 00 0 on co $13 Orthofix’s core segments have grown eee We rvaruil at abu 10% Since 2605 sa a = mOrthofic Domestic = Breg m Ortho
Slide 16: The Current Board Has Failed Shareholders
The Current Board Has Failed Shareholders The current Board has overseen a period of massive shareholder value destruction 16 The current Board: Th resided over the filed acquisition of Blackstone Medical Approved taking on a heavy debt load to fin the acquisition Accepted ballooning corporate overh
Slide 17: The Current Board Has Failed Shareholders
The Current Board Has Failed Shareholde Each of the four directors we are looking to replace were on the Board prior to the acquisition of Blackstone in 2006 James F, Gero (Chairman of Orthofix since Decemher 2004, Direcior since 1998) = Cunently the CEO of Sietra Technologies, a private defense con
Slide 18: The Ramius Nominees Are Highly Qualified
The Ramius Nominees Are Highly Qualified The Ramius nominees possess the fortitude, skill sets, and experience to help maximize value for all Orthofix shareholders J. Michael Egan = Extensive experience in the orthopedic and medical device industry = CEO of Steadman Hawkins Research Fountlation, an
Slide 19: The Ramius Nominees Are Committed To Working With Other Board Members
The Ramius Nominees Are Committed To Working With Other Board Members To Restore Shareholder Value The Ramins nominees will use all available resources to work with the remaining Board to pursne the best risk adjusted opportunities to improve shareholder value and stabilize the capital structure = I
Slide 20: Appendix
Appendix = Director nominees I. Michael Egan Peter A. Feld Steven I. Lee Charles T. Orsatti 2» fe
Slide 21: Director Nominees
Director Nominees Michael Egan Has served as the Chief Executive Officer of Steadman Hawkins Research Foundation, an orthopedic research organization, since November 2006, From April 1996 through May 2004, Mr. Egan served as the President and CEO of Bluebird Development, LLC, a financial partnership
Slide 22: Director Nominees
Director Nominees Peter A. Feld Serves asa Managing Director of Ramius, an investment management firm, a position he has held since November 2008, Prior to becoming a Managing Director, Mr. Feld served asa Director at Ramius from February 2007 to November 2008. Mir. Feld joined Ramius as an Associat
Slide 23: Director Nominees
Director Nominees even J. Lee Has served as the President of SL Consultant Inc., a private investment fittn and hedge fund specializing in growing companies in the medical and high technology fields, since 2002 Mr. Lee was the Founder, President, Chief Executive Officer and Chairman of PolyMedica Co
Slide 24: Director Nominees
Director Nominees harles Orsatti Has served as the Managing Partner of Fairfield Capital Partners, Inc., a private equity fund with investments in securities, commercial real estate and business equity investments, since 1995. From 1998 to 2004, he was the Managing Member of Orsatti and Partners, LL