Segment Reporting

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE N – SEGMENT REPORTING

We have three reportable segments comprised of MedSurg, Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices. We measure and evaluate our reportable segments based on net sales of reportable segments, operating income of reportable segments, excluding intersegment profits, and operating income of reportable segments as a percentage of net sales of reportable segments. Operating income of reportable segments as a percentage of net sales of reportable segments is defined as operating income of reportable segments divided by net sales of reportable segments. We exclude from operating income of reportable segments certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker (CODM) considers to be non-operational, such as amounts related to amortization expense, intangible asset impairment charges, acquisition/divestitures-related items, restructuring and restructuring-related items, medical device regulation charges and litigation-related charges/(credits). Although we exclude these amounts from operating income of reportable segments, they are included in reported Income (loss) before income taxes on the consolidated statements of operations and are included in the reconciliation below.

Our seven core businesses are organized into three reportable segments: MedSurg, Rhythm and Neuro, and Cardiovascular. Following our acquisition of BTG, which closed during the third quarter of 2019, we have included BTG’s Interventional Medicine business within our Peripheral Interventions operating segment, within the Cardiovascular reportable segment. We present BTG’s Specialty Pharmaceuticals business as a standalone operating segment alongside our reportable segments.

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

	Year Ended December 31,
Net sales	2019		2018		2017
MedSurg	$	3,307	$	3,007	$	2,742
Rhythm and Neuro	3,140		3,041		2,808
Cardiovascular	4,208		3,777		3,500
Total net sales of reportable segments	10,654		9,823		9,048
All other (Specialty Pharmaceuticals)	81		n/a		n/a
Consolidated net sales	$	10,735	$	9,823	$	9,048

	Year Ended December 31,
Depreciation expense	2019		2018		2017
MedSurg	$	75	$	72	$	68
Rhythm and Neuro	92		91		91
Cardiovascular	138		133		120
Total depreciation expense of reportable segments	306		296		279
All other (Specialty Pharmaceuticals)	6		n/a		n/a
Consolidated depreciation expense	$	311	$	296	$	279

	Year Ended December 31,
Income (loss) before income taxes	2019			2018			2017
MedSurg	$	1,204		$	1,102		$	984
Rhythm and Neuro	666			655			537
Cardiovascular	1,137			1,117			988
Total operating income of reportable segments	3,007			2,875			2,509
All other (Specialty Pharmaceuticals)	56			n/a			n/a
Unallocated amounts:
Corporate expenses, including hedging activities	(264		)	(372		)	(252		)
Intangible asset impairment charges, acquisition/divestiture-related, restructuring- and restructuring-related, litigation-related net (charges) credits and EU MDR implementation costs	(582		)	(398		)	(407		)
Amortization expense	(699		)	(599		)	(565		)
Operating income (loss)	1,518			1,506			1,285
Other expense, net	(831		)	(85		)	(353		)
Income (loss) before income taxes	$	687		$	1,422		$	933

Operating income of reportable segments as a percentage of net sales of reportable segments	Year Ended December 31,
	2019		2018		2017
MedSurg	36.4	%	36.7	%	35.9	%
Rhythm and Neuro	21.2	%	21.5	%	19.1	%
Cardiovascular	27.0	%	29.6	%	28.2	%

	As of December 31,
Total assets	2019		2018
MedSurg	$	1,803	$	1,846
Rhythm and Neuro	1,873		1,696
Cardiovascular	2,535		1,954
Total assets of reportable segments	6,211		5,497
All other (Specialty Pharmaceuticals)	211		—
Goodwill	10,176		7,911
Other intangible assets, net	7,886		6,372
All other corporate assets	6,082		1,219
	$	30,565	$	20,999

	As of December 31,
Long-lived assets	2019		2018		2017
U.S.	$	1,148	$	1,061	$	1,065
Ireland	327		242		210
Other countries	604		478		422
Property, plant and equipment, net	2,079		1,782		1,697
Goodwill	10,176		7,911		6,998
Other intangible assets, net	7,886		6,372		5,837
Operating lease right-of-use assets in Other long-term assets	336		—		—
	$	20,477	$	16,064	$	14,531