DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2011

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 2 – DISCONTINUED OPERATIONS

In the fourth quarter of 2010, the Company determined that its non-Coblation spine products met the criteria under GAAP to be reported as discontinued operations. The Company’s non-Coblation spine products consisted of its Parallax and Contour product lines.  As a result of this determination, the impact from these product lines on the Company’s reported net income in all periods is separately reported as “Income (loss) from discontinued operations” in our condensed consolidated statements of operations.  Assets identifiable with these discontinued operations were reported as “Assets held for sale” in our December 31, 2010 condensed consolidated balance sheet.

On June 30, 2011 the Company sold the discontinued operations for $5.5 million in cash and recorded a gain on the sale of assets of approximately $2.2 million ($1.3 million after tax), which is included in income from discontinued operations in the accompanying condensed consolidated statement of operations for the nine month period ended September 30, 2011.

Revenues, gain on the sale of assets, income (loss) and income taxes related to discontinued operations for the three and nine month periods ended September 30, 2011  and 2010  were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Revenue	$	—	$	1,429	$	2,271	$	4,532
Gain on sale of assets	—		—		2,177		—
Income (loss) from discontinued operations	—		119		3,084		(528		)
Income tax provision (benefit)	—		34		1,173		(160		)
Income (loss) from discontinued operations	—		85		1,911		(368		)