Business Segment Information

The Company operates in two segments: North America and International. Corporate operating expenses are not included in either of the segments and are presented separately as a reconciling item to consolidated results. These segments are strategic business units that are managed separately based on geography. The North America segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the U.S. and Canada. The International segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America. The Company evaluates segment performance based on net sales, gross profit and operating income.

The Company’s North America and International segment assets include investments in subsidiaries that are appropriately eliminated in the Company’s accompanying Condensed Consolidated Financial Statements. The remaining inter-segment eliminations are comprised of intercompany accounts receivable and payable.

The following table summarizes total assets by segment:



(in millions)	March 31, 2018			December 31, 2017
North America	$	2,790.0		$	2,759.4
International	639.5			609.4
Corporate	629.1			627.3
Inter-segment eliminations	(1,308.6		)	(1,302.1		)
Total assets	$	2,750.0		$	2,694.0

The following table summarizes property, plant and equipment, net by segment:



(in millions)	March 31, 2018		December 31, 2017
North America	$	310.6	$	307.6
International	54.7		54.7
Corporate	71.5		72.8
Total property, plant and equipment, net	$	436.8	$	435.1

The following table summarizes segment information for the three months ended March 31, 2018:



(in millions)	North America		International			Corporate			Eliminations			Consolidated
Net sales	$	485.0	$	163.0		$	—		$	—		$	648.0

Inter-segment sales	$	0.6	$	0.2		$	—		$	(0.8	)	$	—
Inter-segment royalty expense (income)	0.5		(0.5		)	—			—			—
Gross profit	184.0		83.9			—			—			267.9
Operating income (loss)	54.0		26.9			(27.0		)	—			53.9
Income (loss) before income taxes	51.8		26.5			(45.5		)	—			32.8

Depreciation and amortization ⁽¹⁾	$	13.4	$	3.7		$	10.1		$	—		$	27.2
Capital expenditures	16.8		2.9			2.1			—			21.8


(1)	Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes segment information for the three months ended March 31, 2017:



(in millions)	North America		International			Corporate			Eliminations			Consolidated
Net sales	$	582.3	$	139.8		$	—		$	—		$	722.1

Inter-segment sales	$	0.9	$	0.1		$	—		$	(1.0	)	$	—
Inter-segment royalty expense (income)	1.7		(1.7		)	—			—			—
Gross profit	214.5		72.1			—			—			286.6
Operating income (loss)	51.4		25.9			(17.8		)	—			59.5
Income (loss) before income taxes	59.4		23.7			(36.5		)	—			46.6

Depreciation and amortization ⁽¹⁾	$	12.3	$	3.7		$	0.2		$	—		$	16.2
Capital expenditures	8.6		1.5			2.8			—			12.9


(1)	Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes property, plant and equipment, net by geographic region:



(in millions)	March 31, 2018		December 31, 2017
United States	$	375.2	$	373.2
Canada	6.9		7.2
Other International	54.7		54.7
Total property, plant and equipment, net	$	436.8	$	435.1
Total International	$	61.6	$	61.9

The following table summarizes net sales by geographic region:



	Three Months Ended
	March 31,
(in millions)	2018		2017
United States	$	440.2	$	533.5
Canada	44.8		48.8
Other International	163.0		139.8
Total net sales	$	648.0	$	722.1
Total International	$	207.8	$	188.6