Business Segment Information

6 Months Ended

Jun. 29, 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 and six months ended June 29, 2014 and June 30, 2013:

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(Dollars in thousands)
Revenue
Vascular North America	$	64,187	$	56,746	$	126,694	$	113,420
Anesthesia/Respiratory North America		55,049		58,516		109,763		116,690
Surgical North America		37,969		37,749		73,200		74,437
EMEA		154,670		137,842		304,914		280,260
Asia		62,539		50,409		112,142		92,777
OEM		36,610		32,110		69,791		63,448
All other		57,081		46,687		110,147		90,904
Consolidated net revenues	$	468,105	$	420,059	$	906,651	$	831,936

	Three Months Ended						Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(Dollars in thousands)
Operating Profit
Vascular North America	$	9,988		$	6,326		$	19,381		$	11,352
Anesthesia/Respiratory North America		6,293			9,264			11,980			14,942
Surgical North America		14,366			13,651			24,914			27,313
EMEA		30,080			21,226			56,961			44,468
Asia		17,096			13,971			29,932			26,067
OEM		8,296			7,734			14,900			14,094
All other		10,355			9,507			20,121			11,522
Total segment operating profit (1)		96,474			81,679			178,189			149,758
Unallocated expenses (2)		(21,722	)		(17,928	)		(44,417	)		(36,603	)
Income from continuing operations before    Interest and taxes	$	74,752		$	63,751		$	133,772		$	113,155

(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				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(Dollars in thousands)
Depreciation and Amortization
Vascular North America	$	8,066	$	6,875	$	15,921	$	13,434
Anesthesia/Respiratory North America		3,708		2,874		8,136		6,715
Surgical North America		1,666		2,678		4,035		5,232
EMEA		9,673		6,843		18,610		13,994
Asia		2,305		1,203		4,143		2,415
OEM		1,608		1,213		3,064		2,361
All other		5,376		3,933		9,906		7,809
Consolidated depreciation and amortization	$	32,402	$	25,619	$	63,815	$	51,960

Geographic Data

The following table provides total net revenues for the three and six months ended June 29, 2014 and June 30, 2013 and total net property, plant and equipment by geographic region as of June 29, 2014 and December 31, 2013:

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(Dollars in thousands)
Net revenue (based on selling location)
United States	$	228,349	$	210,833	$	444,810	$	418,347
Other Americas		15,188		14,527		29,958		28,678
Germany		35,264		32,708		69,254		66,459
Other Europe		138,929		108,068		273,713		214,754
All other		50,375		53,923		88,916		103,698
	$	468,105	$	420,059	$	906,651	$	831,936

	June 29, 2014		December 31, 2013
	(Dollars in thousands)
Net property, plant and equipment
United States	$	198,266	$	203,985
Other Americas		12,160		12,350
Germany		12,129		12,135
Other Europe		80,075		61,891
All other		40,778		35,539
	$	343,408	$	325,900