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Segment Data
12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Segment Data

17.Segment Data

We design, manufacture and market orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, craniomaxillofacial and thoracic products (“CMF”); office based technologies; dental implants; and related surgical products.  Our chief operating decision maker (“CODM”) allocates resources to achieve our operating profit goals through seven operating segments.  Our operating segments are comprised of both geographic and product category business units.  The geographic operating segments are 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, China and Australia and includes other Asian and Pacific markets.  The product category operating segments are Spine, Office Based Technologies, CMF and Dental.  The geographic operating segments include results from all of our product categories except those in the product category operating segments.  The Office Based Technologies, CMF and Dental product category operating segments reflect those respective product category results from all regions, whereas the Spine product category operating segment includes all spine product results excluding those from Asia Pacific. 

As it relates to the geographic operating segments, our CODM evaluates performance based upon segment operating profit exclusive of operating expenses pertaining to inventory and manufacturing-related charges, intangible asset amortization, goodwill and intangible asset impairment, acquisition, integration and related, quality remediation, litigation, certain European Union Medical Device Regulation expenses, other charges, 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, manufacturing operations and logistics and share-based payment expense.  As it relates to each product category operating segment, research, development engineering, medical education, brand management and other various costs that are specific to the product category operating segment’s operations are reflected in its operating profit results.  Due to these additional costs included in the product category operating segments, profitability metrics among the geographic operating segments and product category operating segments are not comparable.  Intercompany transactions have been eliminated from segment operating profit.

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

These seven operating segments are the basis for our reportable segment information provided below.  The four product category operating segments are individually insignificant to our consolidated results and therefore do not constitute a reporting segment either individually or combined.  For presentation purposes, these product category operating segments have been aggregated.  Prior period reportable segment financial information has been restated to reflect the impact of the adoption of ASU 2017-07 and ASU 2014-09, as described in Note 2.  

In November 2018 we hired a new Group President, Orthopedics.  This new position has different responsibilities than any previous leadership team member.  As of December 31, 2018, our operating segments have not changed.  However, it is likely in 2019 that there will be changes in either our operating segments or the composition of operating profit in our current operating segments.  We cannot determine at this time what those changes may be.    

Net sales and other information by segment is as follows (in millions):

 

 

 

Americas

 

 

EMEA

 

 

Asia

Pacific

 

 

Immaterial

Product

Category

Operating

Segments

 

 

Global

Operations

and

Corporate

Functions

 

 

Total

 

For the Year Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,932.6

 

 

$

1,576.1

 

 

$

1,236.9

 

 

$

1,187.3

 

 

$

-

 

 

$

7,932.9

 

Depreciation and amortization

 

 

120.4

 

 

 

70.3

 

 

 

66.6

 

 

 

45.0

 

 

 

738.2

 

 

 

1,040.5

 

Segment operating profit

 

 

2,055.9

 

 

 

478.4

 

 

 

427.3

 

 

 

208.6

 

 

 

(959.9

)

 

 

2,210.3

 

Inventory and manufacturing-related charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32.5

)

Intangible asset amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(595.9

)

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(979.7

)

Acquisition, integration and related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(133.7

)

Quality remediation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(165.4

)

Litigation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(186.0

)

European Union Medical Device Regulation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3.7

)

Other charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(79.6

)

Operating profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33.8

 

For the Year Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,928.9

 

 

$

1,523.4

 

 

$

1,158.3

 

 

$

1,192.7

 

 

$

-

 

 

$

7,803.3

 

Depreciation and amortization

 

 

127.6

 

 

 

71.7

 

 

 

60.2

 

 

 

45.7

 

 

 

757.5

 

 

 

1,062.7

 

Segment operating profit

 

 

2,126.8

 

 

 

478.3

 

 

 

417.6

 

 

 

262.9

 

 

 

(860.0

)

 

 

2,425.6

 

Inventory and manufacturing-related charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(70.8

)

Intangible asset amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(603.9

)

Goodwill and intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(331.5

)

Acquisition, integration and related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(279.8

)

Quality remediation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(195.1

)

Litigation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(104.0

)

Other charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41.2

)

Operating profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

799.3

 

For the Year Ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,927.9

 

 

$

1,512.7

 

 

$

1,095.6

 

 

$

1,132.2

 

 

$

-

 

 

$

7,668.4

 

Depreciation and amortization

 

 

135.5

 

 

 

69.6

 

 

 

53.3

 

 

 

38.1

 

 

 

742.8

 

 

 

1,039.3

 

Segment operating profit

 

 

2,133.3

 

 

 

498.2

 

 

 

431.8

 

 

 

272.6

 

 

 

(811.1

)

 

 

2,524.8

 

Inventory and manufacturing-related charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(468.3

)

Intangible asset amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(565.9

)

Intangible asset impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31.1

)

Acquisition, integration and related

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(504.9

)

Quality remediation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54.3

)

Litigation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33.3

)

Other charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45.9

)

Operating profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

821.1

 

 

We conduct business in the following countries that hold 10 percent or more of our total consolidated Property, plant and equipment, net (in millions):

 

 

 

As of December 31,

 

 

 

2018

 

 

2017

 

United States

 

$

1,235.1

 

 

$

1,151.6

 

Other countries

 

 

780.3

 

 

 

887.0

 

Property, plant and equipment, net

 

$

2,015.4

 

 

$

2,038.6

 

 

U.S. sales were $4,560.0 million, $4,582.2 million, and $4,525.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.  Sales within any other individual country were less than 10 percent of our consolidated sales in each of those years.  Sales are attributable to a country based upon the customer's country of domicile.