NOTE K – SEGMENT REPORTING

We have three reportable segments comprised of MedSurg, Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments.

Each of our reportable segments generates revenues from the sale of medical devices. We measure and evaluate our reportable segments based on reportable segment net sales, operating income of reportable segments, excluding intersegment profits, and reportable segment operating income as a percentage of reportable segment net sales. Reportable segment operating income as a percentage of reportable segment net sales is defined as operating income of reportable segments divided by reportable segment net sales. Our presentation of reportable segment net sales and operating income of reportable segments includes the impact of foreign currency fluctuations, since our chief operating decision maker (CODM) reviews operating results both including and excluding the impact of foreign currency fluctuations, and the following presentation more closely aligns to our unaudited condensed consolidated financial statements. We exclude from operating income of reportable segments certain corporate-related expenses and certain transactions or adjustments that our CODM considers to be non-operational, such as amounts related to amortization expense, intangible asset impairment charges, acquisition-related items, restructuring and restructuring-related items and litigation-related items. Although we exclude these amounts from operating income of reportable segments, they are included in Income (loss) before income taxes on the unaudited condensed consolidated statements of operations and are included in the reconciliation below.

A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows (in millions, except percentages):



	Three Months Ended March 31,
	2019			2018

Net sales
MedSurg	$	766		$	711
Rhythm and Neuro	757			736
Cardiovascular	972			933
	$	2,493		$	2,379


	Three Months Ended March 31,
	2019			2018

Income (loss) before income taxes
MedSurg	$	256		$	259
Rhythm and Neuro	155			153
Cardiovascular	275			290
Operating income of reportable segments	686			703
Corporate expenses, including hedging activities	(48		)	(100		)
Intangible asset impairment charges, acquisition-related, restructuring- and restructuring-related and litigation-related net (charges) credits	63			(54		)
Amortization expense	(160		)	(141		)
Operating income (loss)	541			407
Other expense, net	(84		)	(84		)
Income (loss) before income taxes	$	457		$	323


	Three Months Ended March 31,
	2019			2018

Reportable segment operating income as a percentage of reportable segment net sales
MedSurg	33.4		%	36.4		%
Rhythm and Neuro	20.5		%	20.8		%
Cardiovascular	28.3		%	31.1		%