Segment Reporting

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

SEGMENT REPORTING

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 June 30,						Six Months Ended June 30,
Net sales	2019			2018			2019			2018
MedSurg	$	818		$	751		$	1,584		$	1,462
Rhythm and Neuro	786			775			1,543			1,512
Cardiovascular	1,026			965			1,998			1,898
	$	2,631		$	2,490		$	5,124		$	4,870
	Three Months Ended June 30,						Six Months Ended June 30,
Income (loss) before income taxes	2019			2018			2019			2018
MedSurg	$	295		$	273		$	551		$	532
Rhythm and Neuro	167			160			322			313
Cardiovascular	301			300			577			590
Operating income of reportable segments	763			734			1,449			1,436
Corporate expenses, including hedging activities	(91		)	(100		)	(140		)	(200		)
Intangible asset impairment charges, acquisition-related, restructuring- and restructuring-related and litigation-related net (charges) credits	(127		)	(95		)	(64		)	(149		)
Amortization expense	(161		)	(147		)	(321		)	(288		)
Operating income (loss)	384			392			925			799
Other expense, net	(239		)	(45		)	(323		)	(129		)
Income (loss) before income taxes	$	145		$	347		$	602		$	670
Reportable segment operating income as a percentage of reportable segment net sales	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
MedSurg	36.1		%	36.4		%	34.8		%	36.4		%
Rhythm and Neuro	21.2		%	20.6		%	20.9		%	20.7		%
Cardiovascular	29.3		%	31.1		%	28.9		%	31.1		%