SEGMENT INFORMATION

Edwards Lifesciences conducts operations worldwide and is managed in the following geographical regions: United States, Europe, Japan, and Rest of World. All regions sell products that are used to treat advanced cardiovascular disease.

The Company's geographic segments are reported based on the financial information provided to the Chief Operating Decision Maker (the Chief Executive Officer). The Company evaluates the performance of its geographic segments based on net sales and income before provision for income taxes ("pre-tax income"). The accounting policies of the segments are substantially the same as those described in Note 2 of the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2017. Segment net sales and segment pre-tax income are based on internally derived standard foreign exchange rates, which may differ from year to year, and do not include inter-segment profits. Because of the interdependence of the reportable segments, the operating profit as presented may not be representative of the geographical distribution that would occur if the segments were not interdependent. Net sales by geographic area are based on the location of the customer.

Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include net interest expense, global marketing expenses, corporate research and development expenses, manufacturing variances, corporate headquarters costs, special gains and charges, stock-based compensation, foreign currency hedging activities, certain litigation costs, and most of the Company's amortization expense. Although most of the Company's depreciation expense is included in segment pre-tax income, due to the Company's methodology for cost build-up, it is impractical to determine the amount of depreciation expense included in each segment, and, therefore, a portion is maintained at the corporate level. The Company neither discretely allocates assets to its operating segments, nor evaluates the operating segments using discrete asset information.

The table below presents information about Edwards Lifesciences' reportable segments (in millions):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Segment Net Sales
United States	$	518.5	$	470.4	$	1,510.2	$	1,413.9
Europe	191.6		167.8		608.1		614.3
Japan	95.4		84.0		288.4		257.1
Rest of World	96.8		87.1		290.2		261.4
Total segment net sales	$	902.3	$	809.3	$	2,696.9	$	2,546.7
Segment Operating Income
United States	$	353.0	$	303.2	$	1,010.5	$	921.4
Europe	90.9		75.3		295.6		306.9
Japan	55.0		46.4		171.8		145.2
Rest of World	28.3		24.7		89.6		77.4
Total segment operating income	$	527.2	$	449.6	$	1,567.5	$	1,450.9

The table below presents reconciliations of segment net sales to consolidated net sales and segment operating income to consolidated pre-tax income (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net Sales Reconciliation
Segment net sales	$	902.3		$	809.3		$	2,696.9		$	2,546.7
Foreign currency	4.3			12.2			48.2			0.1
Consolidated net sales	$	906.6		$	821.5		$	2,745.1		$	2,546.8
Pre-tax Income Reconciliation
Segment operating income	$	527.2		$	449.6		$	1,567.5		$	1,450.9
Unallocated amounts:
Corporate items	(274.6		)	(216.6		)	(800.3		)	(658.8		)
Special charges (Note 4)	—			(9.7		)	—			(9.7		)
Intellectual property litigation expenses	(7.9		)	(13.7		)	(19.1		)	(31.6		)
Foreign currency	4.2			4.4			5.4			2.5
Consolidated operating income	248.9			214.0			753.5			753.3
Non-operating (expense) income	(0.2		)	(2.2		)	9.7			(42.3		)
Consolidated pre-tax income	$	248.7		$	211.8		$	763.2		$	711.0

Enterprise-wide Information

Enterprise-wide information is based on actual foreign exchange rates used in the Company's consolidated condensed financial statements.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(in millions)
Net Sales by Geographic Area
United States	$	518.7	$	470.4	$	1,510.3	$	1,413.9
Europe	201.3		182.3		659.3		627.0
Japan	94.2		83.2		289.5		253.0
Rest of World	92.4		85.6		286.0		252.9
	$	906.6	$	821.5	$	2,745.1	$	2,546.8
Net Sales by Major Product and Service Area
Transcatheter Heart Valve Therapy	$	557.8	$	481.2	$	1,694.3	$	1,507.9
Surgical Heart Valve Therapy	184.6		195.6		554.4		602.2
Critical Care	164.2		144.7		496.4		436.7
	$	906.6	$	821.5	$	2,745.1	$	2,546.8



	September 30, 2018		December 31, 2017
	(in millions)
Long-lived Tangible Assets by Geographic Area
United States	$	617.6	$	608.7
Europe	33.2		28.4
Japan	6.9		7.6
Rest of World	198.9		139.7
	$	856.6	$	784.4