Segment Information

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Information

15. Segment Information

We design, manufacture and market orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; craniomaxillofacial and thoracic products (“CMFT”); and related surgical products. Our chief operating decision maker (“CODM”) allocates resources to achieve our operating profit goals through three operating segments. These operating segments, which also constitute our reportable segments, are Americas; EMEA; and Asia Pacific.

Our CODM evaluates performance based upon segment operating profit exclusive of operating expenses and income pertaining to intangible asset amortization, certain inventory and manufacturing-related charges, goodwill and intangible asset impairment, restructuring and other cost reduction initiatives, quality remediation, acquisition, integration, divestiture and related, litigation, certain European Union Medical Device Regulation (“EU MDR”) expenses, certain research and development ("R&D") agreements, other charges and corporate functions (collectively referred to as “Corporate items”). Corporate functions include corporate legal, finance, information technology, human resources and other corporate departments as well as certain operations, distribution, quality assurance and regulatory assurance expenses. Intercompany transactions have been eliminated from segment operating profit.

Our Americas operating segment is comprised principally of the U.S. and includes other North, Central and South American markets. This segment also includes research, development engineering, medical education, and brand management for our product category headquarter locations. Our EMEA operating segment is comprised principally of Europe and includes the Middle East and African markets. Our Asia Pacific operating segment is comprised principally of Japan, China and Australia and includes other Asian and Pacific markets. The EMEA and Asia Pacific operating segments include the commercial operations as well as regional headquarter expenses to operate in those markets. Since the Americas segment includes additional costs related to centralized product category headquarter expenses, profitability metrics in this operating segment are not comparable to the EMEA and Asia Pacific operating segments.

Our CODM does not review asset information by operating segment. Instead, our CODM reviews cash flow and other financial ratios by operating segment.

In the three-month period ended June 30, 2022, we discovered that our segment operating profit disclosures in Note 14 - Segment Information in our Quarterly Report on Form 10-Q for the three-month period ended March 31, 2022 contained errors. Certain Corporate items that are not part of our CODM’s review of operating segment performance were included in the disclosed segment operating profit. Therefore, the disclosed amount of segment operating profits for each of our reportable segments was understated, and the disclosed amount of our Corporate items expenses was understated. We evaluated the impact of these errors on the affected financial statements, assessing materiality both quantitatively and qualitatively, and concluded the errors were not material. We have revised the affected financial statements to correct these errors. Following is a summary of the changes in segment operating profit disclosures impacted by these revisions (in millions):

	Three Months Ended March 31, 2022									Three Months Ended March 31, 2021
	Operating Profit As Reported			Adjustment			Operating Profit As Revised			Operating Profit As Reported			Adjustment			Operating Profit As Revised
Americas	$	389.1		$	13.8		$	402.9		$	379.7		$	7.4		$	387.1
EMEA		78.3			27.6			105.9			75.3			6.9			82.2
Asia Pacific		82.9			11.6			94.5			114.6			(0.9	)		113.7
Corporate items		(221.1	)		(53.0	)		(274.1	)		(177.3	)		(13.4	)		(190.7	)

Net sales and operating profit by segment are as follows (in millions):

	Net Sales				Operating Profit
	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2022		2021		2022			2021
Americas	$	1,092.7	$	1,058.3	$	475.9		$	445.4
EMEA		379.9		376.8		98.2			91.9
Asia Pacific		309.2		328.2		106.8			105.5
Total	$	1,781.8	$	1,763.3
Corporate items						(264.0	)		(268.8	)
Intangible asset amortization						(133.0	)		(132.9	)
Intangible asset impairment						(3.0	)		(16.3	)
Operating profit					$	280.9		$	224.8

	Net Sales				Operating Profit
	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022			2021
Americas	$	2,097.0	$	2,004.4	$	878.8		$	832.5
EMEA		759.8		711.2		204.1			174.1
Asia Pacific		588.2		649.1		201.3			219.2
Total	$	3,445.0	$	3,364.7
Corporate items						(538.1	)		(459.5	)
Intangible asset amortization						(263.8	)		(266.5	)
Intangible asset impairment						(3.0	)		(16.3	)
Operating profit					$	479.3		$	483.5