Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

16. Segment Information

We design, develop, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial (“CMF”) and thoracic products, dental implants; and related surgical products. 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; EMEA, 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 inventory step-up and certain other inventory and manufacturing related charges, “Certain claims,” goodwill impairment, intangible asset amortization, “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 share-based payment expense. 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 September 30,				Three Months Ended September 30,
	2015		2014		2015			2014
Americas	$	1,133.5	$	637.9	$	549.7		$	316.8
EMEA		375.2		270.7		105.1			82.7
Asia Pacific		253.5		197.4		121.6			90.8
Total	$	1,762.2	$	1,106.0
Inventory step-up and other inventory and manufacturing related charges						(132.6	)		(7.7	)
Intangible asset amortization						(122.6	)		(20.6	)
Certain claims						—			0.3
Special items						(195.9	)		(65.9	)
Global operations and corporate functions						(209.3	)		(141.2	)
Operating profit					$	116.0		$	255.2

	Net Sales				Operating Profit
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
Americas	$	2,458.2	$	1,916.3	$	1,217.6		$	947.4
EMEA		964.2		932.3		321.4			302.5
Asia Pacific		641.8		601.8		317.4			286.6
Total	$	4,064.2	$	3,450.4
Inventory step-up and other inventory and manufacturing related charges						(151.2	)		(32.9	)
Intangible asset amortization						(176.0	)		(72.0	)
Certain claims						(7.7	)		(21.5	)
Special items						(751.9	)		(164.3	)
Global operations and corporate functions						(515.8	)		(434.8	)
Operating profit					$	253.8		$	811.0

Due to the change in our interim quarter-end closing convention for the majority of our international subsidiaries, net sales for our EMEA and Asia Pacific reportable segments in the three and nine month periods ended September 30, 2015 include sales through September 30, 2015, whereas in the three and nine month periods ended September 30, 2014, net sales for those operating segments included sales through September 25, 2014. We have not restated the presentation of the 2014 financial statements to conform to this change of closing convention because the impact of the change is not material to our consolidated results of operations or to the comparisons between the 2015 and 2014 periods.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Knees	$	632.0	$	443.3	$	1,564.8	$	1,398.9
Hips		434.5		315.6		1,066.8		988.3
S.E.T		371.0		208.6		811.1		634.1
Dental		103.4		53.9		220.2		176.0
Spine & CMF		147.7		51.0		256.1		151.5
Other		73.6		33.6		145.2		101.6
Total	$	1,762.2	$	1,106.0	$	4,064.2	$	3,450.4

“S.E.T” refers to our Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma product category.