Segment and Geographic Information

9 Months Ended

12 Months Ended

Sep. 29, 2012

Dec. 31, 2011

Segment And Geographic Information

14. SEGMENT AND GEOGRAPHIC INFORMATION

We provide a broad array of orthopedic rehabilitation and regeneration products, as well as surgical implants to customers in the United States and abroad.

We currently develop, manufacture and distribute our products through the following four operating segments:

Bracing and Vascular Segment

Our Bracing and Vascular segment, which generates its revenues in the United States, offers our rigid knee bracing products, orthopedic soft goods, cold therapy products, vascular systems, therapeutic shoes and inserts and compression therapy products, primarily under our DonJoy, ProCare, Aircast and Dr. Comfort brands. This segment also includes our OfficeCare business, through which we maintain an inventory of soft goods and other products at healthcare facilities, primarily orthopedic practices, for immediate distribution to patients. The Bracing and Vascular segment primarily sells its products to orthopedic and sports medicine professionals, hospitals, podiatry practices, orthotic and prosthetic centers, home medical equipment providers and independent pharmacies.

Recovery Sciences Segment

Our Recovery Sciences segment, which generates its revenues in the United States, is divided into four main businesses:

• Empi. Our Empi business unit offers our home electrotherapy, iontophoresis, and home traction products. We primarily sell these products directly to patients or to physical therapy clinics. For products sold to patients, we arrange billing to the patients and their third party payors.

• Regeneration. Our Regeneration business unit primarily sells our bone growth stimulation products. We sell these products either directly to patients or to independent distributors. For products sold to patients, we arrange billing to the patients and their third party payors.

• Chattanooga. Our Chattanooga business unit offers products in the clinical rehabilitation market in the categories of clinical electrotherapy devices, clinical traction devices, and other clinical products and supplies such as treatment tables, continuous passive motion (CPM) devices and dry heat therapy.

• Athlete Direct. Our Athlete Direct business unit offers consumers ranging from fitness enthusiasts to competitive athletes our Compex electrostimulation devices, which are used in athletic training programs to aid muscle development and to accelerate muscle recovery after training sessions.

International Segment

Our International segment, which generates most of its revenues in Europe, sells all of our products and certain third party products through a combination of direct sales representatives and independent distributors.

Surgical Implant Segment

Our Surgical Implant segment, which generates its revenues in the United States, develops, manufactures and markets a wide variety of knee, hip and shoulder implant products that serve the orthopedic reconstructive joint implant market.

Information regarding our reportable business segments is presented below (in thousands). Segment results exclude the impact of amortization of intangible assets, certain general corporate expenses and various non-recurring and integration charges, as defined by management. The accounting policies of the reportable segments are the same as the accounting policies of the Company. We allocate resources and evaluate the performance of segments based on net sales, gross profit, operating income and other non-GAAP measures, as defined. We do not allocate assets to reportable segments because a significant portion of our assets are shared by segments.

	Three Months Ended						Nine Months Ended
	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net sales:
Bracing and Vascular	$	111,212		$	101,452		$	329,094		$	281,687
Recovery Sciences		80,906			81,956			249,997			253,335
International		64,671			64,475			206,649			207,423
Surgical Implant		17,197			15,235			53,170			48,170
	$	273,986		$	263,118		$	838,910		$	790,615
Gross profit:
Bracing and Vascular	$	57,306		$	52,997		$	169,148		$	149,593
Recovery Sciences		61,656			61,573			189,167			191,836
International		34,815			36,472			114,696			118,376
Surgical Implant		12,670			10,698			39,858			34,239
Expenses not allocated to segments and eliminations		(758	)		(6,085	)		(2,293	)		(15,138	)
	$	165,689		$	155,655		$	510,576		$	478,906
Operating income:
Bracing and Vascular	$	22,146		$	18,844		$	64,551		$	54,339
Recovery Sciences		23,054			21,392			66,920			68,892
International		10,604			11,723			39,502			40,790
Surgical Implant		812			827			4,746			2,230
Expenses not allocated to segments and eliminations		(34,087	)		(43,897	)		(102,960	)		(138,200	)
	$	22,529		$	8,889		$	72,759		$	28,051

Geographic Area

Following are our net sales by geographic area, based on location of customer (in thousands):

	Three Months Ended				Nine Months Ended
	September 29, 2012		October 1, 2011		September 29, 2012		October 1, 2011
Net sales:
United States	$	209,314	$	198,643	$	632,261	$	583,193
Other Europe, Middle East and Africa		29,729		30,533		98,146		98,967
Germany		19,790		20,712		64,209		68,203
Australia and Asia Pacific		6,506		5,708		19,418		17,333
Canada		6,301		5,605		18,264		16,909
Latin America		2,346		1,917		6,612		6,010
	$	273,986	$	263,118	$	838,910	$	790,615

19. SEGMENT AND GEOGRAPHIC INFORMATION

We provide a broad array of orthopedic rehabilitation and regeneration products, as well as surgical implants to customers in the United States and abroad.

During the first quarter of 2011, we changed the name of our Bracing and Supports segment to Bracing and Vascular to reflect the addition of our recent acquisitions, which have increased our focus on the vascular market. This segment also includes the U.S. results of operations attributable to Dr. Comfort, ETI and Circle City, from their respective dates of acquisition (see Note 3). This change had no impact on previously reported segment information.

We currently develop, manufacture and distribute our products through the following four operating segments:

Bracing and Vascular Segment

Our Bracing and Vascular segment, which generates its revenues in the United States, offers our rigid knee bracing products, orthopedic soft goods, cold therapy products, vascular systems, and compression therapy products, primarily under our DonJoy, ProCare and Aircast brands. The U.S. results of our recent Circle City and ETI acquisitions are included within this segment. This segment also includes our OfficeCare business, through which we maintain an inventory of soft goods and other products at healthcare facilities, primarily orthopedic practices, for immediate distribution to patients. In addition, included within this segment is our newly acquired Dr. Comfort business, which develops and manufactures therapeutic footwear and related medical and comfort products serving the diabetes care market in podiatry practices, orthotic and prosthetic centers, home medial equipment providers and independent pharmacies.

Recovery Sciences Segment

Our Recovery Sciences segment, which generates its revenues in the United States, is divided into four main businesses:

• Empi. Our Empi business unit offers our home electrotherapy, iontophoresis, and home traction products. We primarily sell these products directly to patients or to physical therapy clinics. For products sold to patients, we arrange billing to the patients and their third party payors.

• Regeneration. Our Regeneration business unit primarily sells our bone growth stimulation products. We sell these products either directly to patients or to independent distributors. For products sold to patients, we arrange billing to the patients and their third party payors.

• Chattanooga. Our Chattanooga business unit offers products in the clinical rehabilitation market in the categories of clinical electrotherapy devices, clinical traction devices, and other clinical products and supplies such as treatment tables, continuous passive motion (CPM) devices and dry heat therapy.

• Athlete Direct. Our Athlete Direct business unit offers consumers ranging from fitness enthusiasts to competitive athletes our Compex electrostimulation device, which is used in athletic training programs to aid muscle development and to accelerate muscle recovery after training sessions.

International Segment

Our International segment, which generates most of its revenues in Europe, sells all of our products and certain third party products through a combination of direct sales representatives and independent distributors.

Surgical Implant Segment

Our Surgical Implant segment develops, manufactures and markets a wide variety of knee, hip and shoulder implant products that serve the orthopedic reconstructive joint implant market in the United States.

Information regarding our reportable business segments is presented in the table below (in thousands). Segment results exclude the impact of amortization and impairment of goodwill and intangible assets, certain general corporate expenses, and charges related to various integration activities, as defined by management. The accounting policies of the reportable segments are the same as the accounting policies of the Company. We allocate resources and evaluate the performance of segments based on net sales, gross profit, operating income and other non-GAAP measures, as defined. Moreover, we do not allocate assets to reportable segments because a significant portion of assets are shared by the segments.

	Year Ended December 31,
	2011			2010			2009
Net sales:
Bracing and Vascular	$	387,928		$	311,620		$	298,759
Recovery Sciences		342,599			347,139			342,026
International		279,299			244,493			241,464
Surgical Implant		64,944			62,721			63,877
	$	1,074,770		$	965,973		$	946,126
Gross profit:
Bracing and Vascular	$	203,217		$	170,786		$	168,009
Recovery Sciences		258,920			265,196			257,466
International		161,142			143,562			137,142
Surgical Implant		46,860			46,031			49,799
Expenses not allocated to segments and eliminations		(13,507	)		(4,872	)		(5,009	)
	$	656,632		$	620,703		$	607,407
Operating (loss) income:
Bracing and Vascular	$	75,095		$	68,058		$	70,805
Recovery Sciences		93,394			117,656			107,157
International		57,501			56,356			49,051
Surgical Implant		4,323			7,121			12,955
Expenses not allocated to segments and eliminations		(322,578	)		(161,311	)		(161,111	)
	$	(92,265	)	$	87,880		$	78,857

Geographic Area

Following are our net sales by geographic area (in thousands):

	Year Ended December 31,
	2011		2010		2009
United States	$	795,471	$	718,601	$	704,954
Germany		90,000		74,441		74,185
Other Europe, Middle East, and Africa		109,768		98,502		110,140
Asia Pacific		8,952		20,426		15,541
Other		70,579		54,003		41,306
	$	1,074,770	$	965,973	$	946,126

Net sales are attributed to countries based on location of customer. In each of the years ended December 31, 2011, 2010 and 2009, no individual customer or distributor accounted for 10% or more of total annual net sales.

Following are our long-lived assets by geographic area (in thousands):

	December 31, 2011		December 31, 2010
United States	$	2,353,410	$	2,269,213
International		153,351		160,982
	$	2,506,761	$	2,430,195