Segment And Geographic Information

9 Months Ended

Sep. 29, 2012

Segments, Geographical Areas [Abstract]

Segment And Geographic Information

SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company’s four operating segments are Cardiac Rhythm Management (CRM), Cardiovascular (CV), Atrial Fibrillation (AF) and Neuromodulation (NMD). The primary products produced by each operating segment are: CRM – tachycardia implantable cardioverter defibrillator systems (ICDs) and bradycardia pacemaker systems (pacemakers); CV – vascular products, which include vascular closure products, pressure measurement guidewires, optical coherence tomography (OCT) imaging products, vascular plugs and other vascular accessories, and structural heart products, which include heart valve replacement and repair products and structural heart defect devices; AF – electrophysiology (EP) introducers and catheters, advanced cardiac mapping, navigation and recording systems and ablation systems; and NMD – neurostimulation products, which include spinal cord and deep brain stimulation devices.

As discussed in Note 7, during the third quarter of 2012, the Company announced the realignment of its product divisions into two new operating units: the Cardiovascular and Ablation Technologies Division (combining CV and AF) and the Implantable Electronic Systems Division (combining CRM and NMD). In addition, the Company is centralizing certain support functions, including information technology, human resources, legal, business development and certain marketing functions. While this divisional realignment was effective August 30, 2012, the Company will continue to report under its legacy operating segment structure for internal management financial forecasting and reporting purposes through the end of fiscal year 2012. The Company will report under the new organizational structure effective the beginning of fiscal year 2013.

The Company has aggregated the four operating segments into two reportable segments based upon their similar operational and economic characteristics: CRM/NMD and CV/AF. Net sales of the Company’s reportable segments include end-customer revenues from the sale of products they each develop and manufacture or distribute. The costs included in each of the reportable segments’ operating results include the direct costs of the products sold to customers and operating expenses managed by each of the reportable segments. Certain expenses managed by the Company’s selling and corporate functions, including all stock-based compensation expense, impairment charges, certain acquisition-related charges, in-process research and development (IPR&D) charges, excise tax expense and special charges have not been recorded in the individual reportable segments. As a result, reportable segment operating profit is not representative of the operating profit of the products in these reportable segments. Additionally, certain assets are managed by the Company’s selling and corporate functions, principally including trade receivables, inventory, cash and cash equivalents, certain marketable securities and deferred income taxes. For management reporting purposes, the Company does not compile capital expenditures by reportable segment; therefore, this information has not been presented, as it is impracticable to do so.

The following table presents net sales and operating profit by reportable segment (in millions):

	CRM/NMD		CV/AF		Other			Total
Three Months ended September 29, 2012:
Net sales	$	792	$	534	$	—		$	1,326
Operating profit	526		298		(589		)	235
Three Months ended October 1, 2011:
Net sales	$	853	$	530	$	—		$	1,383
Operating profit	523		281		(493		)	311
Nine Months ended September 29, 2012:
Net sales	$	2,482	$	1,649	$	—		$	4,131
Operating profit	1,650		915		(1,690		)	875
Nine Months ended October 1, 2011:
Net sales	$	2,603	$	1,602	$	—		$	4,205
Operating profit	1,624		834		(1,500		)	958

The following table presents the Company’s total assets by reportable segment (in millions):

Total Assets	September 29, 2012		December 31, 2011
CRM/NMD	$	2,330	$	2,412
CV/AF	2,986		3,093
Other	3,703		3,500
	$	9,019	$	9,005

Geographic Information

The following table presents net sales by geographic location of the customer (in millions):

	Three Months Ended				Nine Months Ended
Net Sales	September 29, 2012		October 1, 2011		September 29, 2012		October 1, 2011
United States	$	640	$	658	$	1,969	$	2,012
International
Europe	311		359		1,059		1,139
Japan	172		162		500		466
Asia Pacific	118		111		339		310
Other	85		93		264		278
	686		725		2,162		2,193
	$	1,326	$	1,383	$	4,131	$	4,205

The amounts for long-lived assets by significant geographic market include net property, plant and equipment by physical location of the asset as follows (in millions):

Long-Lived Assets	September 29, 2012		December 31, 2011
United States	$	1,026	$	1,007
International
Europe	79		84
Japan	35		31
Asia Pacific	83		81
Other	186		185
	383		381
	$	1,409	$	1,388