Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Information

13. Segment Information

We design, develop, manufacture and market orthopaedic reconstructive implants, biologics, dental implants, spinal implants, trauma products and related surgical products which include surgical supplies and instruments designed to aid in surgical procedures and post-operation rehabilitation. We also provide other healthcare-related services. We manage operations through three major geographic segments – the Americas, which is comprised principally of the U.S. and includes other North, Central and South American markets; Europe, which is comprised principally of Europe and includes the Middle East and African markets; and Asia Pacific, which is comprised primarily of Japan and includes other Asian and Pacific markets. This structure is the basis for our reportable segment information discussed below. Management evaluates reportable segment performance based upon segment operating profit exclusive of operating expenses pertaining to share-based payment expense, inventory step-up and certain other inventory and manufacturing related charges, “Certain claims,” goodwill impairment, “Special items,” and global operations and corporate functions. Global operations and corporate functions include research, development engineering, medical education, brand management, corporate legal, finance, and human resource functions, U.S., Puerto Rico and Ireland-based manufacturing operations and logistics and intangible asset amortization resulting from business combination accounting. Intercompany transactions have been eliminated from segment operating profit.

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

	Net Sales				Operating Profit
	Three Months Ended June 30,				Three Months Ended June 30,
	2013		2012		2013			2012
Americas	$	660.1	$	614.3	$	324.9		$	315.7
Europe		307.5		305.2		92.5			94.5
Asia Pacific		201.9		205.5		87.0			79.0
Total	$	1,169.5	$	1,125.0
Share-based compensation						(12.2	)		(15.0	)
Inventory step-up and other inventory and manufacturing related charges						(11.7	)		(1.0	)
Certain claims						(47.0	)		—
Special items						(75.6	)		(30.7	)
Global operations and corporate functions						(147.5	)		(140.6	)
Operating profit					$	210.4		$	301.9

	Net Sales				Operating Profit
	Six Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013			2012
Americas	$	1,294.8	$	1,248.7	$	645.8		$	636.5
Europe		615.0		606.0		180.4			189.2
Asia Pacific		398.6		411.0		162.6			156.7
Total	$	2,308.4	$	2,265.7
Share-based compensation						(26.2	)		(27.8	)
Inventory step-up and other inventory and manufacturing related charges						(13.9	)		(2.0	)
Certain claims						(47.0	)		—
Special items						(109.1	)		(64.2	)
Global operations and corporate functions						(284.0	)		(290.9	)
Operating profit					$	508.6		$	597.5

Beginning in 2013, our Knees product category net sales include certain early intervention products that are primarily used in knee procedures. In 2012, these products were included in the Surgical and other product category. Net sales in the three and six month periods ended June 30, 2012 related to these products have been reclassified to conform to the 2013 presentation. Net sales by product category are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Reconstructive
Knees	$	481.0	$	464.6	$	952.0	$	939.2
Hips		338.4		340.0		669.2		684.5
Extremities		48.6		42.5		96.4		87.3
		868.0		847.1		1,717.6		1,711.0
Dental		61.4		61.5		121.1		121.7
Trauma		74.1		73.9		156.1		149.4
Spine		54.2		52.4		101.9		105.6
Surgical and other		111.8		90.1		211.7		178.0
Total	$	1,169.5	$	1,125.0	$	2,308.4	$	2,265.7