Segment and Geographic Information

6 Months Ended

Jun. 30, 2011

Segment and Geographic Information [Abstract]

Segment and Geographic Information

NOTE 9.     Segment and Geographic Information

We are engaged in the rental and sale of advanced wound care systems, regenerative medicine products and therapeutic support systems.  KCI has operations in more than 20 countries.

We have three reportable operating segments which correspond to our business units: AHS; LifeCell; and TSS.  Our three global operating segments also represent our reporting units as defined by the Codification.  We have three primary geographic regions for which we provide supplemental information: Americas, which is comprised principally of the United States and includes Canada, Puerto Rico and Latin America; EMEA, which is comprised principally of Europe and includes the Middle East and Africa; and APAC, which is comprised of the Asia Pacific region.  Revenue for each of our geographic regions in which we operate is disclosed for each of our business units.  In most countries where we operate, our product lines are marketed and serviced by the same infrastructure and, as such, we have allocated these costs to the various business units based on allocation methods including rental and sales events, headcount, revenue and other methods as deemed appropriate.  We measure segment profit as operating earnings, which is defined as income before interest and other income, interest expense, foreign currency gains and losses, and income taxes.  All intercompany transactions are eliminated in computing revenue and operating earnings.

Information on segments and a reconciliation of consolidated totals are as follows (dollars in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011		2010
Revenue:
AHS
Americas	$	266,859	$	266,681	$	524,719	$	516,513
EMEA		75,155		71,919		144,095		147,524
APAC		15,957		9,126		29,696		16,642
Subtotal – AHS		357,971		347,726		698,510		680,679
LifeCell
Americas		93,268		82,188		183,505		160,162
EMEA		3,062		1,555		5,839		2,596
Subtotal – LifeCell		96,330		83,743		189,344		162,758
TSS
Americas		40,966		44,563		85,519		92,963
EMEA		24,191		21,564		47,061		46,453
APAC		372		176		580		724
Subtotal – TSS		65,529		66,303		133,160		140,140
Total revenue	$	519,830	$	497,772	$	1,021,014	$	983,577

	Three months ended							Six months ended
	June 30,							June 30,
	2011			2010				2011			2010
Operating earnings:
AHS	$	128,815		$	116,689			$	243,189		$	217,281
LifeCell		24,775			19,819				52,913			41,871
TSS		4,387			(5,204	)	(1)		8,619			2,968		(1)
Non-allocated costs:
General headquarter expense		(12,251	)		(14,061	)	(2)		(27,927	)		(23,361	)	(2)
Share-based compensation		(8,234	)		(5,956	)			(15,879	)		(15,434	)
Acquisition-related expenses (3)		(8,855	)		(9,930	)			(17,711	)		(20,628	)
Total non-allocated costs		(29,340	)		(29,947	)			(61,517	)		(59,423	)
Total operating earnings	$	128,637		$	101,357			$	243,204		$	202,697
(1) Includes $7.4 million of expenses associated with the TSS product portfolio rationalization recorded in the second quarter of 2010. (2) Includes expenses associated with our global business transformation efforts, including severance and other expenses of $5.3 million recorded during the second quarter of 2010. (3) Includes amortization of acquired intangible assets and costs to retain key employees related to our purchase of LifeCell in May 2008.