SEGMENT AND RELATED INFORMATION

12 Months Ended

Dec. 31, 2011

SEGMENT AND RELATED INFORMATION

SEGMENT AND RELATED INFORMATION

NOTE O—SEGMENT AND RELATED INFORMATION

        The Company has identified three reportable segments in which it operates based on the products and services it provides. The Company evaluates segment performance and allocates resources based on the segments' income from operations. In December 2010, as a result of the acquisition of ACP, the Company realigned its reportable segments and identified the third operating segment. Therapeutic Solutions includes ACP and IN, Inc., which previously was included in Other. The results of IN, Inc. have been reclassified to Therapeutic Solutions in all years presented.

        The reportable segments are: (i) Patient-Care Services (ii) Distribution, and (iii) Therapeutic solutions. The reportable segments are described further below:

        Patient-Care Services—This segment consists of the Company's owned and operated patient-care centers and fabrication centers of O&P components. The patient-care centers provide services to design and fit O&P devices to patients. These centers also instruct patients in the use, care and maintenance of the devices. Fabrication centers are involved in the fabrication of O&P components for both the O&P industry and the Company's own patient-care centers. The principal reimbursement sources for the Company's services are:

• •

  Commercial and other, which consist of individuals, rehabilitation providers, private insurance companies, HMOs, PPOs, hospitals, vocational rehabilitation, workers' compensation programs and similar sources;

  •

  Medicare, a federally funded health insurance program providing health insurance coverage for persons aged 65 or older and certain disabled persons, which provides reimbursement for O&P products and services based on prices set forth in fee schedules for 10 regional service areas;

  •

  Medicaid, a health insurance program jointly funded by federal and state governments providing health insurance coverage for certain persons in financial need, regardless of age, which may supplement Medicare benefits for financially needy persons aged 65 or older; and

  •

  U.S. Department of Veterans Affairs.

        The Company estimates that government reimbursement, comprised of Medicare, Medicaid and the U.S. Department of Veterans Affairs, in the aggregate, accounted for approximately 40.0%, 40.4%, and 40.5% of the Company's net sales in 2011, 2010, and 2009, respectively.

        Distribution—This segment distributes O&P products and components to both the O&P industry and the Company's own patient-care practices.

        Therapeutic Solutions—This segment consists of the leasing of rehabilitation equipment from, and the provision of clinical program by, ACP as well the operations of IN, Inc. ACP is a developer of specialized rehabilitation technologies and provides evidence-based clinical programs for post-acute rehabilitation. IN, Inc. specializes in bringing emerging MyoOrthotics Technologies® to the O&P market. MyoOrthotics Technologies represents the merging of orthotic technologies with electrical stimulation.

        Other—This consists of Hanger corporate and Linkia. Linkia is a national managed-care agent for O&P services and a patient referral clearing house.

        The accounting policies of the segments are the same as those described in the summary of "Significant Accounting Policies" in Note B to the consolidated financial statements.

        Summarized financial information concerning the Company's reportable segments is shown in the following table. Intersegment sales mainly include sales of O&P components from the Distribution segment to the Patient-Care Services segment and were made at prices which approximate market values.

(In thousands)	Patient-Care Services		Distribution		Therapeutic Solutions			Other			Consolidating Adjustments			Total
2011
Net sales
Customers	$	753,409	$	100,456	$	64,014		$	660		$	—		$	918,539
Intersegments		15,853		174,431		3,520			—			(193,804	)		—
Depreciation and amortization		12,502		1,088		10,424			7,068			(113	)		30,969
Income from operations		139,790		28,293		3,703			(54,654	)		(305	)		116,827
Interest (income) expense		28,440		3,356		5,761			(5,736	)		—			31,821
Income (loss) before taxes		111,350		24,937		(2,058	)		(48,918	)		(305	)		85,006
Total assets		1,279,481		170,077		135,781			(456,839	)		—			1,128,500
Capital expenditures		11,886		1,318		3,667			11,253			—			28,124
2010
Net sales
Customers	$	714,665	$	95,544	$	6,622		$	548		$	—		$	817,379
Intersegments		—		168,823		3,839			—			(172,662	)		—
Depreciation and amortization		11,211		1,004		1,293			5,414			(113	)		18,809
Income from operations		131,430		30,395		(5,402	)		(75,023	)		(21	)		81,379
Interest (income) expense		28,410		3,397		480			(1,947	)		—			30,340
Income (loss) before taxes		103,020		26,998		(5,882	)		(88,671	)		(21	)		35,444
Total assets		1,054,270		146,166		142,970			(281,927	)		—			1,061,479
Capital expenditures		17,599		1,112		2,056			9,826			—			30,593
2009
Net sales
Customers	$	670,458	$	88,043	$	1,122		$	447		$	—		$	760,070
Intersegments		—		155,017		2,782			—			(157,799	)		—
Depreciation and amortization		10,288		893		349			4,902			(113	)		16,319
Income from operations		125,185		25,634		(5,762	)		(54,705	)		168			90,520
Interest (income) expense		28,470		3,443		—			(1,220	)		—			30,693
Income (loss) before taxes		96,715		22,191		(5,762	)		(53,318	)		168			59,994
Total assets		821,988		119,989		(16,902	)		(50,039	)		—			875,036
Capital expenditures		14,704		794		904			4,868			—			21,270

        The Company's foreign and export sales and assets located outside of the United States of America are not significant. Additionally, no single customer accounted for more than 10% of revenues in 2011, 2010, or 2009.