Segment Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

16.  Segment Information

We design, manufacture and market orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, craniomaxillofacial and thoracic products (“CMFT”); office based technologies; dental implants; and related surgical products.  Our chief operating decision maker (“CODM”) allocates resources to achieve our operating profit goals through three operating segments.  These operating segments, which also constitute our reportable segments, are Americas and Global Businesses; EMEA; and Asia Pacific.  

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, restructuring and other cost reduction initiatives, quality remediation, acquisition, integration, divestiture and related, litigation, certain European Union Medical Device Regulation (“EU MDR”) expenses, other charges and corporate functions.  Corporate functions include corporate legal, finance, information technology, human resources and other corporate departments.  Intercompany transactions have been eliminated from segment operating profit.

Our Americas and Global Businesses operating segment is comprised principally of the U.S. and includes other North, Central and South American markets for all of our product categories as well as the global results for our Dental product division.  This segment also includes our global manufacturing operations for all product categories and research, development engineering, medical

education, and brand management for our global product category headquarter locations.  Our EMEA operating segment is comprised principally of Europe and includes the Middle East and African markets for all product categories except Dental.  Our Asia Pacific operating segment is comprised principally of Japan, China and Australia and includes other Asian and Pacific markets for all product categories except Dental.  The EMEA and Asia Pacific operating segments include the commercial operations as well as regional headquarter expenses to operate in those markets.

Since the Americas and Global Businesses includes additional costs related to global manufacturing operations and other centralized global product category headquarter expenses, profitability metrics in this operating segment are not comparable to the EMEA and Asia Pacific operating segments.  

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

We reclassified certain insignificant prior period amounts to conform to the current period presentation.

Net sales and operating profit by segment are as follows (in millions):

	Net Sales				Operating Profit (Loss)
	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2021			2020
Americas and Global Businesses	$	1,161.4	$	1,136.6	$	371.6		$	363.0
EMEA		349.1		371.3		86.3			108.8
Asia Pacific		336.9		275.9		120.3			92.6
Corporate Functions		-		-		(101.9	)		(98.2	)
Total	$	1,847.4	$	1,783.8
Inventory and manufacturing-related charges						5.9			(0.6	)
Intangible asset amortization						(155.5	)		(147.6	)
Goodwill impairment						-			(612.0	)
Restructuring and other cost reduction initiatives						(21.9	)		(45.0	)
Quality remediation						(10.2	)		(15.9	)
Acquisition, integration, divestiture and related						(13.4	)		(4.4	)
Litigation						(6.1	)		(79.8	)
European Union Medical Device Regulation						(6.9	)		(11.0	)
Other charges						(2.6	)		(5.9	)
Operating profit (loss)					$	265.6		$	(456.0	)

As a result of the planned spin off of NewCo, starting April 1, 2021 we added an additional operating segment to reflect the new management responsibilities for the recently hired Chief Executive Officer of NewCo.  The new operating segment will consist of the Global Dental and Americas Spine businesses and be carved out of the current Americas and Global Businesses operating segment.  The EMEA and Asia Pacific operating segments will not change.  We are currently reviewing the new organizational responsibilities and related costs that will be part of the new operating segment.  After this new operating segment is added in future periods, we expect to reclassify previously reported information to conform to the new presentation.