SEGMENT AND GEOGRAPHIC INFORMATION

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

The Company internally manages and reports the results of its businesses to its chief operating decision maker through five reportable segments. The five reportable segments and a description of their activities are described below:

• 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 and lighting products 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, together with 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 (ii) 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, information systems, 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.

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, 2014 and 2013 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(In thousands)
				(As adjusted)*						(As adjusted)*
Segment Net Sales
U.S. Neurosurgery	$	62,323		$	45,114		$	177,265		$	125,877
U.S. Instruments	39,853			43,004			116,078			121,900
U.S. Extremities	36,746			31,831			103,083			93,802
U.S. Spine and Other	42,015			47,408			128,168			134,889
International	48,782			45,889			151,535			138,977
Total revenues	$	229,719		$	213,246		$	676,129		$	615,445
Segment Profit
U.S. Neurosurgery	$	35,889		$	23,080		$	94,247		$	59,770
U.S. Instruments	12,416			13,713			34,728			35,963
U.S. Extremities	14,983			13,117			40,907			34,613
U.S. Spine and Other	13,108			(31,043		)	39,801			(4,844		)
International	15,170			14,693			49,549			41,697
Segment profit	91,566			33,560			259,232			167,199
Amortization	(2,995		)	(3,036)			(9,013)			(9,660)
Corporate and other	(70,844		)	(61,665		)	(211,362		)	(185,314		)
Operating income (loss)	$	17,727		$	(31,141	)	$	38,857		$	(27,775	)

* See Note 1 of these condensed consolidated financial statements for discussion of the impact of the change in accounting for the medical device excise tax.

Certain 2013 segment revenues and the related impact on segment profit above have been reclassified in order to conform with the current year's presentation.

Revenue by major product category consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(In thousands)
Orthopedics	$	91,650	$	92,125	$	271,958	$	271,862
Neurosurgery	92,089		72,639		269,717		204,283
Instruments	45,980		48,482		134,454		139,300
Total Revenues	$	229,719	$	213,246	$	676,129	$	615,445

The Company attributes revenues to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments that are generated from non-U.S. customers and therefore are 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,
	2014		2013		2014		2013
	(In thousands)
United States	$	180,101	$	166,555	$	522,288	$	473,740
Europe	23,850		21,543		75,026		68,936
Rest of World	25,768		25,148		78,815		72,769
Total Revenues	$	229,719	$	213,246	$	676,129	$	615,445