SEGMENT AND GEOGRAPHIC INFORMATION

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

Starting in the first quarter of 2012, because of changes in how the Company internally manages and reports the results of its businesses to its chief operating decision maker, the Company began to disclose five reportable segments. The five reportable segments are U.S. Neurosurgery, U.S. Instruments, U.S. Extremities, U.S. Spine and Other, and International. The U.S. Neurosurgery segment sells a full line of products specifically for neurosurgery and critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, and cranial stabilization equipment. The U.S. Instruments business sells more than 60,000 instrument patterns and surgical products and lighting to hospitals, surgery centers, and dental, podiatry, and veterinary offices. The U.S. Extremities segment includes the U.S. extremity reconstruction business, which includes such offerings as skin and wound repair, bone and joint fixation, implants in the upper and lower extremities, bone grafts and nerve and tendon repair. The U.S. Spine and Other segment includes (i) the U.S. Spine business, which focuses on spinal fusion, spinal implants, and deformity correction, (ii) the U.S. Orthobiologics business, which focuses on bone graft substitutes and other related medical devices that are used to enhance the repair and regeneration of bone in various types of orthopedic surgical procedures, and (iii) the Private Label business, which sells the Company’s regenerative medicine and other products to strategic partners. The International segment sells similar products to those discussed above, but are managed through the following geographies: (i) Europe, Middle East and Africa, and (ii) Central/South America, Asia-Pacific and Canada. The Corporate and other category includes (i) various legal, finance, executive, and human resource functions, (ii) brand management, (iii) share-based compensation costs, and (iv) costs related to procurement, manufacturing operations and logistics for the Company’s entire organization. Accordingly, the segment information for the prior years has been restated in accordance with authoritative guidance on segment reporting.

The operating results of the various reportable segments as presented are not comparable to one another because (i) certain operating segments are more dependent than others on corporate functions for unallocated general and administrative and/or operational manufacturing functions, and (ii) the Company does not allocate certain manufacturing costs and general and administrative costs to the operating segment results.

Net sales and profit by reportable segment for the three and nine months ended September 30, 2012 and 2011 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(In thousands)
Segment Net Sales
U.S. Neurosurgery	$	43,269		$	42,800		$	125,776		$	122,246
U.S. Instruments	41,469			41,543			120,732			116,932
U.S. Extremities	32,961			24,825			91,596			69,341
U.S. Spine and Other	49,188			48,293			142,821			128,885
International	43,197			44,724			135,514			139,151
Total revenues	$	210,084		$	202,185		$	616,439		$	576,555
Segment Profit
U.S. Neurosurgery	$	23,201		$	22,624		$	66,247		$	62,489
U.S. Instruments	9,293			8,779			26,259			22,029
U.S. Extremities	14,996			9,657			37,484			27,692
U.S. Spine and Other	14,771			13,390			42,166			38,576
International	14,550			14,721			45,456			48,911
Segment profit	76,811			69,171			217,612			199,697
Amortization	(4,618)			(4,548)			(13,985)			(11,609)
Corporate and other	(52,457		)	(46,332		)	(148,403		)	(140,925		)
Operating income	$	19,736		$	18,291		$	55,224		$	47,163

The segment profits for the U.S. Instruments and U.S. Extremities segments for the three months ended March 31, 2012 and 2011 have been revised and are reflected in the segment profits for the nine months ended September 30, 2012 and 2011.

Revenue by major product category consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(In thousands)
Orthopedics	$	94,186	$	85,698	$	276,033	$	239,429
Neurosurgery	69,667		69,768		203,499		203,129
Instruments	46,231		46,719		136,907		133,997
Total Revenues	$	210,084	$	202,185	$	616,439	$	576,555

The Company attributes revenues to geographic areas based on the location of the customer. There are certain revenues that the various U.S. segments manage that are generated from non-U.S. customers and therefore included in Europe and the Rest of World revenues below. Total revenue by major geographic area consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
	(In thousands)
United States	$	165,930	$	156,530	$	478,087	$	434,324
Europe	20,351		21,839		66,903		72,203
Rest of World	23,803		23,816		71,449		70,028
Total Revenues	$	210,084	$	202,185	$	616,439	$	576,555