Segments and Geographical Information

6 Months Ended

Jun. 30, 2013

Segments and Geographical Information

Segments and Geographical Information

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. We report segment information based on the management approach. The management approach designates the internal reporting used by CODM for decision making and performance assessment as the basis for determining our reportable segments. The performance measures of our reportable segments include net revenues and gross profit.

We have grouped our operations into two reportable segments which are also our reporting units: Clear Aligner segment and SCCS segment.

• Our Clear Aligner segment consists of our Invisalign system which includes Invisalign Full, Express/Lite, Teen, Assist, Vivera retainers, along with our training and ancillary products for treating malocclusion.

• Our SCCS segment consists of intra-oral scanning systems and additional services available with the intra-oral scanners that provide digital alternatives to the traditional cast models. This segment includes our iTero scanner and OrthoCAD services.

These reportable operating segments are based on how our CODM views and evaluates our operations as well as allocation of resources (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Net Revenues	2013		2012		2013		2012
Clear Aligner
Invisalign Full	$	95,762	$	88,617	$	181,676	$	171,041
Invisalign Express/Lite	19,158		13,632		35,241		25,438
Invisalign Teen	19,937		16,380		38,510		31,528
Invisalign Assist	7,680		7,251		15,973		14,444
Invisalign non-case revenues	10,766		7,789		23,475		14,546
SCCS
Scanners	5,027		6,032		11,652		11,393
CAD/CAM Services	5,498		5,925		10,881		12,315
Total net revenues	$	163,828	$	145,626	$	317,408	$	280,705
Gross profit
Clear Aligner	$	120,124	$	105,617	$	229,451	$	203,006
Scanners and CAD/CAM Services	3,567		3,183		7,089		6,554
Total gross profit	$	123,691	$	108,800	$	236,540	$	209,560

Geographical Information

Net revenues and tangible long-lived assets are presented below by geographic area (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Net revenues: (1)
U.S.	$	121,651	$	110,838	$	241,692	$	214,096
the Netherlands	32,363		28,715		63,458		55,080
Other international	9,814		6,073		12,258		11,529
Total net revenues	$	163,828	$	145,626	$	317,408	$	280,705

	As of June 30,		As of December 31,
	2013		2012
Long-lived assets:
U.S.	$	62,644	$	60,098
Mexico	6,348		6,473
the Netherlands	5,299		4,707
Other international	2,641		7,913
Total long-lived assets	$	76,932	$	79,191

⁽¹⁾  Net revenues are attributed to countries based on location of where revenue is recognized.