Segment Information

6 Months Ended

Jun. 30, 2014

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,
	2014		2013		2014			2013
Americas	$	639.7	$	660.1	$	315.2		$	324.9
Europe		334.7		307.5		102.5			92.4
Asia Pacific		208.5		201.9		93.9			92.4
Total	$	1,182.9	$	1,169.5
Share-based compensation						(13.0	)		(12.2	)
Inventory step-up						(1.7	)		(1.6	)
Certain claims						(21.8	)		(47.0	)
Special items						(64.7	)		(75.6	)
Global operations and corporate functions						(151.1	)		(162.9	)
Operating profit					$	259.3		$	210.4

	Net Sales				Operating Profit
	Six Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014			2013
Americas	$	1,278.4	$	1,294.8	$	625.1		$	645.5
Europe		661.6		615.0		204.2			180.7
Asia Pacific		404.4		398.6		188.4			172.8
Total	$	2,344.4	$	2,308.4
Share-based compensation						(24.2	)		(26.2	)
Inventory step-up						(4.2	)		(2.4	)
Certain claims						(21.8	)		(47.0	)
Special items						(110.6	)		(109.1	)
Global operations and corporate functions						(299.2	)		(305.7	)
Operating profit					$	557.7		$	508.6

Net sales by product category are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Reconstructive
Knees	$	497.9	$	481.0	$	985.8	$	952.0
Hips		341.0		338.4		672.7		669.2
Extremities		51.5		48.6		103.6		96.4
		890.4		868.0		1,762.1		1,717.6
Dental		61.1		61.4		122.1		121.1
Trauma		78.8		74.1		158.5		156.1
Spine		52.2		54.2		100.5		101.9
Surgical and other		100.4		111.8		201.2		211.7
Total	$	1,182.9	$	1,169.5	$	2,344.4	$	2,308.4