ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying financial statements and related notes included in Item 1 of this report as well as our Annual Report on Form 10-K for the year ended December 31, 2008, and the Risk Factors described therein, and our Current Report on Form 8-K filed with the SEC on July 8, 2009.
Overview
We currently operate in two business segments and engage in the following principal business activities:
Animal Identification - We develop, manufacture and market visual and radio frequency identification ("RFID") products under the brand name Destron Fearing to customers worldwide. Destron Fearing products include visual and electronic tags and implantable RFID microchips that identify, track and locate animals, including bio-sensing chips that measure an animal's temperature. These products promote recovery of lost pets, livestock herd management, environmental protection, and animal health while fulfilling the requirements of certain government regulations aimed at insuring the safety of food supplies throughout the world. Our Animal Identification business is headquartered in Saint Paul, Minnesota, with direct and indirect wholly and majority-owned subsidiaries located in Europe and South America.
Emergency Identification - We develop, manufacture and market emergency identification products that are enabled through global positioning system ("GPS") technology, and sold worldwide under the brand names SARBE™ and McMurdo™. This segment's principal products are search and rescue beacons that safeguard people and high-value assets utilizing intelligent communications and emergency messaging services for telemetry, mobile data and satellite radio communications. SARBE safety products are sold to government and military customers worldwide, while McMurdo safety products are sold to a variety of commercial maritime, aviation, and recreational customers. We also develop, manufacture and market alarm sounders for hazardous industrial areas under the brand name Clifford & Snell. The Emergency Identification segment includes our 98.5% owned subsidiary, Signature Industries Limited ("Signature"), which is headquartered in the United Kingdom.
Our business segments are more fully discussed in Note 6 to our accompanying condensed consolidated financial statements.
Significant Factors Affecting our Results of Operations and Financial Condition During the three-months ended June 30, 2009, as compared to the three-months ended June 30, 2008, our revenue decreased approximately $3.5 million, or 16.8%, to $17.2 million. Approximately $1.1 million of the decrease was associated with the change in the exchange rate of the U.S. dollar to the U.K. pound. The remaining decrease in revenue is primarily due to a decrease in sales of our companion animal products and electronic tags. During the six-months ended June 30, 2009, as compared to the six-months ended June 30, 2008, our revenue decreased approximately $8.1 million, or 18.8%, to $35.0 million. Approximately $3.1 million of the decrease was associated with the change in the exchange rate of the U.S. dollar to the U.K. pound. The remaining decrease in revenue is primarily due to a decrease of approximately $3.0 million in sales of our companion animal products. Our operating loss was $0.9 million in the three-months ended June 30, 2009 as compared to an operating loss of $9.0 million in the three-months ended June 30, 2008. Excluding approximately $0.3 million of restructuring, severance and separation expenses, our operating loss was $0.5 million for the three-months ended June 30, 2009. Excluding approximately $1.5 million of restructuring, severance and separation expenses and $4.4 million of asset impairments, our operating loss was $3.2 million for the three-months ended June 30, 2008. Our operating loss was $1.5 million in the six-months ended June 30, 2009 as compared to an operating loss of $11.1 million in the six-months ended June 30, 2008. Excluding approximately $0.3 million of restructuring, severance and separation expenses, our operating loss was $1.2 million for the six-months ended June 30, 2009. Excluding approximately $1.9 million of restructuring, severance and separation expenses and $4.4 million of asset impairments, our operating loss was $4.8 million for the six-months ended June 30, 2008. We attribute the improvement in our operating loss for the three and six-months ended June 30, 2009 to cost containment initiations including the effect of our restructuring plan, which we initiated on June 30, 2008. Our restructuring plan is more fully discussed in Note 13 to the condensed consolidated financial statements. Critical Accounting Policies
Our Annual Report on Form 10-K for the year ended December 31, 2008 contains further information regarding our critical accounting policies.

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Impact of Recently Issued Accounting Standards For information regarding recent accounting pronouncements and their expected impact on our future consolidated results of operations or financial condition, see Note 2 to our accompanying condensed consolidated financial statements. Consolidated Results of Operations
The following table summarizes our results of operations as a percentage of net operating revenues and is derived from the accompanying unaudited condensed consolidated statements of operations in Part I, Item 1 of this quarterly report.