Business Segment Information

3 Months Ended

Mar. 30, 2014

Business Segment Information

Note 14 — Business segment information

An operating segment is a component of the Company (a) that engages in business activities from which it may earn revenues and incur expenses, (b) whose operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance, and (c) for which discrete financial information is available. The Company does not evaluate its operating segments using discrete asset information.

Effective January 1, 2014, the Company realigned its operating segments due to changes in the Company’s internal financial reporting structure. The Company’s North American Vascular, Anesthesia/Respiratory and Surgical businesses, which previously comprised much of the former Americas reportable segment, are now separate reportable segments.  As a result, the Company now has six reportable segments: Vascular North America, Anesthesia/Respiratory North America, Surgical North America, EMEA, Asia and OEM. Certain operating segments are not material and are therefore included in the “All other” line item in tabular presentations of segment information. Additionally, the Company made changes to the allocation methodology of certain costs, including manufacturing variances and research and development costs, among the businesses to improve accountability, which resulted in changes to the previously reported segment profitability. All prior comparative periods have been restated to reflect these changes.

The Company’s Vascular North America, Anesthesia/Respiratory North America, Surgical North America, EMEA and Asia reportable segments design, manufacture and distribute medical devices primarily used in critical care, surgical applications and cardiac care and generally serve two end markets: hospitals and healthcare providers, and home health. The products of these segments are most widely used in the acute care setting for a range of diagnostic and therapeutic procedures and in general and specialty surgical applications. The Company’s OEM segment designs, manufactures and supplies devices and instruments for other medical device manufacturers.

The following tables present the Company’s segment results for the three months ended March 30, 2014 and March 31, 2013:

	Three Months Ended
	March 30, 2014		March 31, 2013
	(Dollars in thousands)
Revenue
Vascular North America	$	62,506	$	56,674
Anesthesia/Respiratory North America		54,714		58,174
Surgical North America		35,231		36,688
EMEA		150,245		142,418
Asia		49,602		42,368
OEM		33,182		31,338
All other		53,066		44,217
Consolidated net revenues	$	438,546	$	411,877

	Three Months Ended
	March 30, 2014			March 31, 2013
	(Dollars in thousands)
Operating Profit
Vascular North America	$	9,392		$	5,026
Anesthesia/Respiratory North America		5,687			5,678
Surgical North America		10,548			13,662
EMEA		26,881			23,242
Asia		12,837			12,096
OEM		6,604			6,360
All other		9,768			2,015
Total segment operating profit (1)		81,717			68,079
Unallocated expenses (2)		(22,697	)		(18,675	)
Income from continuing operations before    Interest and taxes	$	59,020		$	49,404

(1) Segment operating profit includes segment net revenues from external customers reduced by its standard cost of goods sold, adjusted for fixed manufacturing cost absorption variances, selling, general and administrative expenses, research and development expenses and an allocation of corporate expenses.

(2) Unallocated expenses primarily include manufacturing variances with the exception of fixed manufacturing cost absorption variances and restructuring and other impairment charges.

	Three Months Ended
	March 30, 2014		March 31, 2013
	(Dollars in thousands)
Depreciation and Amortization
Vascular North America	$	7,855	$	6,559
Anesthesia/Respiratory North America		4,428		3,841
Surgical North America		2,369		2,554
EMEA		8,937		7,151
Asia		1,838		1,212
OEM		1,456		1,148
All other		4,530		3,876
Consolidated depreciation and amortization	$	31,413	$	26,341

Geographic Data

The following table provides total net revenues for the three months ended March 30, 2014 and March 31, 2013 and total net property, plant and equipment by geographic region as of March 30, 2014 and December 31, 2013:

	Three Months Ended
	March 30, 2014		March 31, 2013
	(Dollars in thousands)
Net revenue (based on business unit location)
United States	$	216,461	$	207,514
Other Americas		14,771		14,151
Germany		33,991		33,751
Other Europe		134,784		106,686
All other		38,539		49,775
	$	438,546	$	411,877

	March 30, 2014		December 31, 2013
	(Dollars in thousands)
Net property, plant and equipment
United States	$	203,005	$	203,985
Other Americas		11,933		12,350
Germany		12,191		12,135
Other Europe		63,991		61,891
All other		37,559		35,539
	$	328,679	$	325,900