SEGMENT AND RELATED INFORMATION

12 Months Ended

Dec. 31, 2012

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

        Patient Care—This segment consists of the Company's owned and operated patient care clinics and fabrication centers of O&P components. The patient care clinics provide services to design and fit O&P devices to patients. These clinics 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 clinics. 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 40.4%, 40.0%, and 40.4% of the Company's net sales in 2012, 2011, and 2010, respectively.

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

        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 segment and were made at prices which approximate market values.  The Patient Care segment results below are revised as described in footnote B.

(In thousands)	Patient Care		Distribution		Therapeutic Solutions			Other			Consolidating Adjustments			Total
2012
Net sales
Customers	$	813,556	$	107,266	$	63,921		$	807		$	—		$	985,550
Intersegments		17,621		191,202		3,902			—			(212,725	)		—
Depreciation and amortization		14,307		1,139		11,232			7,974			—			34,652
Income (loss) from operations		149,544		34,178		4,182			(57,500	)		(1,066	)		129,338
Interest (income) expense		30,353		3,294		5,743			(8,221	)		—			31,169
Income (loss) before taxes		119,191		30,884		(1,561	)		(49,279	)		(1,066	)		98,169
Total assets		1,423,258		199,268		135,786			(520,985	)		—			1,237,327
Capital expenditures		15,311		438		3,948			13,466			—			33,163
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 (loss) from operations		138,918		28,293		3,703			(54,654	)		(305	)		115,955
Interest (income) expense		28,440		3,356		5,761			(5,736	)		—			31,821
Income (loss) before taxes		110,478		24,937		(2,058	)		(48,918	)		(305	)		84,134
Total assets		1,277,700		170,077		135,781			(456,839	)		—			1,126,719
Capital expenditures		11,886		1,318		4,217			11,253			—			28,674
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 (loss) from operations		130,521		30,395		(5,402	)		(75,023	)		(21	)		80,470
Interest (income) expense		28,410		3,397		480			(1,947	)		—			30,340
Income (loss) before taxes		102,111		26,998		(5,882	)		(88,671	)		(21	)		34,535
Total assets		1,053,361		146,166		142,970			(281,927	)		—			1,060,570
Capital expenditures		17,599		1,112		2,056			9,826			—			30,593

        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 2012, 2011, or 2010.