Segment and Geographic Information

9 Months Ended

Sep. 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 three global 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				Nine months ended
	September 30,				September 30,
	2011		2010		2011		2010
Revenue:
AHS
Americas	$	281,227	$	275,494	$	805,946	$	792,007
EMEA		73,852		71,505		217,947		219,029
APAC		17,029		11,393		46,725		28,035
Subtotal – AHS		372,108		358,392		1,070,618		1,039,071
LifeCell
Americas		94,507		83,213		278,012		243,375
EMEA		2,934		1,722		8,773		4,318
Subtotal – LifeCell		97,441		84,935		286,785		247,693
TSS
Americas		37,687		41,788		123,206		134,751
EMEA		23,888		21,056		70,949		67,509
APAC		247		537		827		1,261
Subtotal – TSS		61,822		63,381		194,982		203,521
Total revenue	$	531,371	$	506,708	$	1,552,385	$	1,490,285

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Operating earnings:
AHS	$	154,442		$	122,827		$	397,631		$	340,108
LifeCell		27,511			24,561			80,424			66,432
TSS		(77	)		2,506			8,542			5,474		(1)
Non-allocated costs:
General headquarter expense (2)		(15,748	)		(12,194	)		(42,469	)		(35,555	)
Share-based compensation		(7,859	)		(8,739	)		(23,738	)		(24,173	)
Merger-related expenses (3)		(5,996	)		-			(7,202	)		-
LifeCell acquisition-related expenses (4)		(8,856	)		(8,809	)		(26,567	)		(29,437	)
Total non-allocated costs		(38,459	)		(29,742	)		(99,976	)		(89,165	)
Total operating earnings	$	143,417		$	120,152		$	386,621		$	322,849
(1) Includes $7.4 million of expenses associated with the TSS product portfolio rationalization recorded in the second quarter of 2010. (2) Includes restructuring charges of $2.1 million during the three and nine months ended September 30, 2011 and $5.3 million during the nine months ended September 30, 2010. (3) Represents expenses related to KCI’s pending merger. (4) Includes amortization of acquired intangible assets and costs to retain key employees related to our purchase of LifeCell in May 2008.