Business Segment Information

The Company operates in two segments: North America and International. Corporate operating expenses are not included in either of the segments and are presented separately as a reconciling item to consolidated results. These segments are strategic business units that are managed separately based on geography. The North America segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in the U.S. and Canada. The International segment consists of Tempur and Sealy manufacturing and distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America. The Company evaluates segment performance based on net sales, gross profit and operating income.

The Company’s North America and International segment assets include investments in subsidiaries that are appropriately eliminated in the Company’s accompanying Condensed Consolidated Financial Statements. The remaining inter-segment eliminations are comprised of intercompany accounts receivable and payable.

The following table summarizes total assets by segment:



(in millions)	June 30, 2017			December 31, 2016
North America	$	2,689.1		$	2,581.4
International	612.4			572.6
Corporate	649.9			658.7
Inter-segment eliminations	(1,240.2		)	(1,110.1		)
Total assets	$	2,711.2		$	2,702.6

The following table summarizes property, plant and equipment, net by segment:



(in millions)	June 30, 2017		December 31, 2016
North America	$	295.8	$	297.4
International	54.0		54.9
Corporate	75.0		69.9
Total property, plant and equipment, net	$	424.8	$	422.2

The following table summarizes segment information for the three months ended June 30, 2017:



(in millions)	North America		International			Corporate			Eliminations			Consolidated
Net sales	$	525.4	$	133.9		$	—		$	—		$	659.3

Inter-segment sales	$	1.3	$	0.2		$	—		$	(1.5	)	$	—
Inter-segment royalty expense (income)	1.2		(1.2		)	—			—			—
Gross profit	198.9		69.7			—			—			268.6
Operating income (loss)	55.8		26.3			(25.5		)	—			56.6
Income (loss) before income taxes	54.3		24.9			(44.4		)	—			34.8

Depreciation and amortization ⁽¹⁾	$	12.9	$	3.6		$	9.6		$	—		$	26.1
Capital expenditures	5.1		2.1			5.8			—			13.0


(1)	Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes segment information for the three months ended June 30, 2016:



(in millions)	North America		International			Corporate			Eliminations			Consolidated
Net sales	$	668.2	$	136.2		$	—		$	—		$	804.4

Inter-segment sales	$	1.3	$	0.1		$	—		$	(1.4	)	$	—
Inter-segment royalty expense (income)	2.1		(2.1		)	—			—			—
Gross profit	267.3		69.6			—			—			336.9
Operating income (loss)	103.3		23.2			(26.3		)	—			100.2
Income (loss) before income taxes	100.2		21.0			(92.0		)	—			29.2

Depreciation and amortization ⁽¹⁾	$	10.9	$	3.9		$	8.1		$	—		$	22.9
Capital expenditures	5.7		2.4			3.6			—			11.7


(1)	Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes segment information for the six months ended June 30, 2017:



(in millions)	North America		International			Corporate			Eliminations			Consolidated
Net sales	$	1,107.7	$	273.7		$	—		$	—		$	1,381.4

Inter-segment sales	$	2.2	$	0.3		$	—		$	(2.5	)	$	—
Inter-segment royalty expense (income)	2.9		(2.9		)	—			—			—
Gross profit	413.4		141.8			—			—			555.2
Operating income (loss)	107.1		52.2			(43.2		)	—			116.1
Income (loss) before income taxes	113.7		48.6			(80.9		)	—			81.4

Depreciation and amortization ⁽¹⁾	$	25.2	$	7.3		$	9.8		$	—		$	42.3
Capital expenditures	13.7		3.6			8.6			—			25.9


(1)	Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes segment information for the six months ended June 30, 2016:



(in millions)	North America		International			Corporate			Eliminations			Consolidated
Net sales	$	1,248.2	$	277.2		$	—		$	—		$	1,525.4

Inter-segment sales	$	2.5	$	0.1		$	—		$	(2.6	)	$	—
Inter-segment royalty expense (income)	3.8		(3.8		)	—			—			—
Gross profit	481.8		146.1			—			—			627.9
Operating income (loss)	180.6		50.5			(54.2		)	—			176.9
Income (loss) before income taxes	177.2		45.4			(137.1		)	—			85.5

Depreciation and amortization ⁽¹⁾	$	21.2	$	7.8		$	17.6		$	—		$	46.6
Capital expenditures	11.3		4.7			8.3			—			24.3


(1)	Depreciation and amortization includes stock-based compensation amortization expense.

The following table summarizes property, plant and equipment, net by geographic region:



(in millions)	June 30, 2017		December 31, 2016
United States	$	363.8	$	360.7
Canada	7.0		6.6
Other International	54.0		54.9
Total property, plant and equipment, net	$	424.8	$	422.2
Total International	$	61.0	$	61.5

The following table summarizes net sales by geographic region:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2017		2016		2017		2016
United States	$	471.2	$	614.1	$	1,004.7	$	1,151.3
Canada	54.2		54.1		103.0		96.9
Other International	133.9		136.2		273.7		277.2
Total net sales	$	659.3	$	804.4	$	1,381.4	$	1,525.4
Total International	$	188.1	$	190.3	$	376.7	$	374.1