Exhibit 99.2
DJO Finance LLC
Unaudited Segment Information
In the second quarter of 2010, we changed how we report our segmented financial information to senior management. Prior to the second quarter of 2010, our Bracing and Supports and Recovery Sciences businesses were reported together within the Domestic Rehabilitation Segment. During the second quarter, as a result of our recent sales and marketing leadership reorganization, these businesses are now separately evaluated and managed. Segment information for all periods presented has been restated to reflect this change. Our restated segments are as follows (in thousands):
| | Year Ended | | Three Months Ended | |
| | Dec. 31,
2007
(See Note 1) | | Dec. 31,
2008 | | Dec. 31,
2009 | | March 28, 2009 | | June 27,
2009 | | Sept. 26,
2009 | | Dec. 31,
2009 | | April 3,
2010 | |
Net sales: | | | | | | | | | | | | | | | | | |
Bracing and Supports | | $ | 42,096 | | $ | 295,967 | | $ | 298,759 | | $ | 68,047 | | $ | 74,789 | | $ | 76,388 | | $ | 79,535 | | $ | 75,016 | |
Recovery Sciences | | 231,466 | | 338,592 | | 342,026 | | 79,157 | | 84,816 | | 85,794 | | 92,259 | | 84,204 | |
Surgical Implant | | 57,492 | | 61,597 | | 63,877 | | 15,303 | | 16,378 | | 15,416 | | 16,780 | | 16,962 | |
International | | 133,757 | | 252,313 | | 241,464 | | 55,146 | | 59,129 | | 58,588 | | 68,601 | | 63,894 | |
| | $ | 464,811 | | $ | 948,469 | | $ | 946,126 | | $ | 217,653 | | $ | 235,112 | | $ | 236,186 | | $ | 257,175 | | $ | 240,076 | |
| | | | | | | | | | | | | | | | | |
Gross profit: | | | | | | | | | | | | | | | | | |
Bracing and Supports | | $ | 22,333 | | $ | 155,021 | | $ | 168,009 | | $ | 36,874 | | $ | 41,728 | | $ | 44,146 | | $ | 45,261 | | $ | 41,361 | |
Recovery Sciences | | 144,759 | | 248,719 | | 257,466 | | 59,314 | | 64,471 | | 64,377 | | 69,304 | | 62,611 | |
Surgical Implant | | 46,172 | | 50,469 | | 49,799 | | 11,898 | | 12,864 | | 11,779 | | 13,258 | | 13,462 | |
International | | 70,225 | | 151,901 | | 137,142 | | 31,505 | | 34,706 | | 32,434 | | 38,497 | | 37,729 | |
Expenses not allocated to segments and eliminations | | (3,876 | ) | (7,818 | ) | (5,009 | ) | (938 | ) | (813 | ) | (2,589 | ) | (669 | ) | (2,441 | ) |
| | $ | 279,613 | | $ | 598,292 | | $ | 607,407 | | $ | 138,653 | | $ | 152,956 | | $ | 150,147 | | $ | 165,651 | | $ | 152,722 | |
| | | | | | | | | | | | | | | | | |
Operating income (loss): | | | | | | | | | | | | | | | | | |
Bracing and Supports | | $ | (5,687 | ) | $ | 53,776 | | $ | 70,805 | | $ | 12,628 | | $ | 18,262 | | $ | 20,687 | | $ | 19,228 | | $ | 15,635 | |
Recovery Sciences | | 17,459 | | 84,780 | | 107,157 | | 21,114 | | 27,133 | | 27,715 | | 31,195 | | 25,013 | |
Surgical Implant | | 11,656 | | 12,815 | | 12,955 | | 2,460 | | 3,717 | | 2,805 | | 3,973 | | 2,748 | |
International | | 9,422 | | 55,295 | | 49,051 | | 10,063 | | 12,868 | | 10,625 | | 15,495 | | 15,318 | |
Expenses not allocated to segments and eliminations | | (74,687 | ) | (173,325 | ) | (161,111 | ) | (33,146 | ) | (42,962 | ) | (38,274 | ) | (46,729 | ) | (41,143 | ) |
| | $ | (41,837 | ) | $ | 33,341 | | $ | 78,857 | | $ | 13,119 | | $ | 19,018 | | $ | 23,558 | | $ | 23,162 | | $ | 17,571 | |
Note 1. Pro Forma Information — The following unaudited pro forma net sales results for the year ended December 31, 2007 give effect to 2007 acquisitions including, DJO Opco, IOMED, PMI, Endeavor and Saunders as if they had been completed as of January 1, 2007 (for 2007 results). In addition, the unaudited pro forma amounts exclude net sales of the Empi Therapy Solutions catalog business which we sold and reported as a discontinued operation during 2009.
| | Pro forma
Dec. 31,
2007 | | | | | | | | | | | | | | | | |
Pro Forma Net Sales: | | | | | | | | | | | | | | | | | | |
Bracing and Supports | | $ | 293,879 | | | | | | | | | | | | | | | | |
Recovery Sciences | | 327,072 | | | | | | | | | | | | | | | | |
Surgical Implant | | 57,492 | | | | | | | | | | | | | | | | |
International | | 219,542 | | | | | | | | | | | | | | | | |
| | $ | 897,985 | | | | | | | | | | | | | | | | |
These pro forma amounts are not necessarily indicative of the operating results that would have occurred if these transactions had been completed as of January 1, 2007. The pro forma adjustments are based on currently available information and certain assumptions that we believe are reasonable.
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A description of the operations included within each segment is as follows:
Bracing and Supports Segment
Our Bracing and Supports Segment, which generates its revenues in the United States, offers our DonJoy, ProCare and Aircast products, including rigid knee bracing, orthopedic soft goods, cold therapy products, and vascular systems. This segment also includes our OfficeCare business, through which we maintain an inventory of soft goods and other products at healthcare facilities, primarily orthopedic practices, for immediate distribution to patients.
Recovery Sciences Segment
Our Recovery Sciences Segment, which generates its revenues in the United States, is divided into four main businesses:
· Empi. Our Empi business unit offers our home electrotherapy, iontophoresis, and home traction products. We primarily sell these products directly to patients or to physical therapy clinics. For products sold to patients, we arrange billing to the patients and their third party payors.
· Regeneration. Our Regeneration business unit primarily sells our bone growth stimulation products. We sell these products either directly to patients or to independent distributors. For products sold to patients, we arrange billing to the patients and their third party payors.
· Chattanooga. Our Chattanooga business unit offers products in the clinical rehabilitation market in the categories of clinical electrotherapy devices, clinical traction devices, and other clinical products and supplies such as treatment tables, continuous passive motion (“CPM”) devices and dry heat therapy.
· Athlete Direct. Our Athlete Direct business unit offers our Compex electrostimulation device to consumers, which range from people interested in improving their fitness to competitive athletes, to assist in athletic training programs through muscle development and to accelerate muscle recovery after training sessions.
Surgical Implant Segment
Our Surgical Implant Segment, which generates its revenues in the United States, develops, manufactures and markets a wide variety of knee, hip and shoulder implant products that serve the orthopedic reconstructive joint implant market.
International Segment
Our International Segment, which generates most of its revenues in Europe, sells all of our products and certain third party products through a combination of direct sales representatives and independent distributors.
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