15 SEGMENT INFORMATION

In 2017, Baxter announced a change in its commercial structure to improve performance, optimize costs, increase speed in the decision-making process and drive improved accountability across the company. As a result, the company now reports its financial performance based on its new segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific). Segment results for the first quarter of 2017 have been recast to conform to the current year presentation.

The company’s segments provide a broad portfolio of essential healthcare products across its portfolio, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products.

The company uses operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of the company’s business segments. Intersegment sales are eliminated in consolidation.

Certain items are maintained at Corporate and are not allocated to a segment. They primarily include most of the company’s debt and cash and equivalents and related net interest expense, foreign exchange rate fluctuations (principally relating to intercompany receivables, payables and loans denominated in a foreign currency) and the majority of the foreign currency hedging activities, corporate headquarters costs, certain research and development costs, certain Global Business Unit (GBU) support costs, stock compensation expense, nonstrategic investments and related income and expense, certain employee benefit plan costs as well as certain gains, losses, and other charges (such as business optimization, integration and separation-related costs, and asset impairments). The company’s chief operating decision maker does not receive any asset information by operating segment and, accordingly, the company does not report asset information by operating segment.

Financial information for the company’s segments is as follows.

	Three months ended
	March 31,
(in millions)	2018		2017
Net sales
Americas	$	1,442	$	1,373
EMEA		724		631
APAC		511		471
Total net sales	$	2,677	$	2,475
Operating Income
Americas	$	566	$	533
EMEA		151		127
APAC		117		116
Total segment operating income	$	834	$	776

The following is a reconciliation of segment operating income to income from continuing operations before income taxes per the condensed consolidated statements of income.

	Three months ended
	March 31,
(in millions)	2018			2017
Total segment operating income	$	834		$	776
Corporate and other		(402	)		(423	)
Total operating income		432			353
Net interest expense		12			14
Other (income) expense, net		(18	)		11
Income from continuing operations before income taxes	$	438		$	328

Net Sales by GBU

The following table represents net sales by GBU.

	Three months ended
	March 31,
(in millions)	2018		2017
Renal Care ¹	$	868	$	789
Medication Delivery ²		676		664
Pharmaceuticals ³		496		427
Nutrition ⁴		223		212
Advanced Surgery ⁵		182		168
Acute Therapies ⁶		129		106
Other ⁷		103		109
Total Baxter	$	2,677	$	2,475

1	Renal Care includes sales of the company’s peritoneal dialysis (PD) and hemodialysis (HD) and additional dialysis therapies and services.

2	Medication Delivery includes sales of the company’s IV therapies, infusion pumps, administration sets and drug reconstitution devices.

3	Pharmaceuticals includes sales of the company’s premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

4	Nutrition includes sales of the company’s parenteral nutrition (PN) therapies.

5	Advanced Surgery includes sales of the company’s biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

6	Acute Therapies includes sales of the company’s continuous renal replacement therapies (CRRT) and other organ support therapies focused in the ICU.

7	Other includes sales primarily from the company’s pharmaceutical partnering business.