Goodwill And Other Intangibles

3 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 9. GOODWILL AND OTHER INTANGIBLES

Goodwill

Changes in the carrying amount of our goodwill for the three months ended March 31, 2016 were as follows (in thousands):



	Carrying Amount
	U.S. Branded Pharmaceuticals			U.S. Generic Pharmaceuticals		International Pharmaceuticals			Total
Balance as of December 31, 2015:
Goodwill	$	1,676,276		$	5,789,934	$	592,424		$	8,058,634
Accumulated impairment losses	(673,500		)	—		(85,780		)	(759,280		)
Balance as of December 31, 2015	$	1,002,776		$	5,789,934	$	506,644		$	7,299,354
Measurement period adjustments	—			97,430		435			97,865
Effect of currency translation on gross balance	—			—		29,485			29,485
Effect of currency translation on accumulated impairment	—			—		(1,922		)	(1,922		)
Balance as of March 31, 2016:
Goodwill	$	1,676,276		$	5,887,364	$	622,344		$	8,185,984
Accumulated impairment losses	(673,500		)	—		(87,702		)	(761,202		)
	$	1,002,776		$	5,887,364	$	534,642		$	7,424,782

Other Intangible Assets

The following is a summary of other intangibles held by the Company at March 31, 2016 and December 31, 2015 (in thousands):



Cost basis:	Balance as of December 31, 2015			Acquisitions (1)			Impairments (2)			Other (3)			Effect of Currency Translation			Balance as of March 31, 2016
Indefinite-lived intangibles:
In-process research and development	$	1,742,880		$	(114,200	)	$	(55,100	)	$	(3,821	)	$	3,027		$	1,572,786
Total indefinite-lived intangibles	$	1,742,880		$	(114,200	)	$	(55,100	)	$	(3,821	)	$	3,027		$	1,572,786
Definite-lived intangibles:
Licenses (weighted average life of 10 years)	$	676,867		$	—		$	—		$	—		$	—		$	676,867
Customer relationships (weighted average life of 15 years)	11,318			—			(11,318		)	—			—			—
Tradenames (weighted average life of 12 years)	7,537			—			—			—			(5		)	7,532
Developed technology (weighted average life of 12 years)	6,731,573			(32,300		)	(89,525		)	1,862			31,986			6,643,596
Total definite-lived intangibles (weighted average life of 11 years)	$	7,427,295		$	(32,300	)	$	(100,843	)	$	1,862		$	31,981		$	7,327,995
Total other intangibles	$	9,170,175		$	(146,500	)	$	(155,943	)	$	(1,959	)	$	35,008		$	8,900,781

Accumulated amortization:	Balance as of December 31, 2015			Amortization			Impairments			Other			Effect of Currency Translation			Balance as of March 31, 2016
Indefinite-lived intangibles:
In-process research and development	$	—		$	—		$	—		$	—		$	—		$	—
Total indefinite-lived intangibles	$	—		$	—		$	—		$	—		$	—		$	—
Definite-lived intangibles:
Licenses	$	(508,225	)	$	(14,881	)	$	—		$	—		$	—		$	(523,106	)
Customer relationships	(7,858		)	—			7,858			—			—			—
Tradenames	(6,544		)	(22		)	—			—			—			(6,566		)
Developed technology	(818,606		)	(196,766		)	2,173			322			(3,846		)	(1,016,723		)
Total definite-lived intangibles	$	(1,341,233	)	$	(211,669	)	$	10,031		$	322		$	(3,846	)	$	(1,546,395	)
Total other intangibles	$	(1,341,233	)	$	(211,669	)	$	10,031		$	322		$	(3,846	)	$	(1,546,395	)
Net other intangibles	$	7,828,942														$	7,354,386

__________


(1)	Includes measurement period adjustments relating to the Par acquisition, partially offset by the capitalization of payments relating to XIAFLEX^®.

(2)

Includes the impairment of certain intangible assets of our U.S. Generic Pharmaceuticals segment of approximately $129.6 million, and the impairment of certain intangible assets in connection with the wind down of our Astora business, with a net impairment of approximately $16.3 million, which is reported as Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2016. See Note 3. Discontinued Operations and Held for Sale for further information relating to the Astora wind down.


(3)	Includes the sale of certain intangible assets in our International Pharmaceuticals segment, partially offset by certain IPR&D assets totaling $3.8 million being placed into service.

Amortization expense for the three months ended March 31, 2016 and 2015 totaled $211.7 million and $95.3 million, respectively. Estimated amortization of intangibles for the five fiscal years subsequent to December 31, 2015 is as follows (in thousands):



2016	$	807,613
2017	$	690,977
2018	$	609,018
2019	$	549,786
2020	$	522,080

Changes in the gross carrying amount of our other intangibles for the three months ended March 31, 2016 were as follows (in thousands):



	Gross Carrying Amount
December 31, 2015	$	9,170,175
Impairment of certain Astora intangible assets	(26,318		)
Capitalization of payments relating to XIAFLEX®	8,000
Sale of certain International Pharmaceuticals intangible assets	(1,959		)
Impairment of certain U.S. Generic Pharmaceuticals intangible assets	(129,625		)
Measurement period adjustments relating to acquisitions closed during 2015	(154,500		)
Effect of currency translation	35,008
March 31, 2016	$	8,900,781

Impairments

U.S. Generic Pharmaceuticals Segment

During the three months ended March 31, 2016, the Company identified certain market and regulatory conditions impacting the commercial potential of certain indefinite and definite-lived intangible assets in our U.S. Generic Pharmaceuticals segment. Accordingly, we tested these assets for impairment and determined that the carrying value of certain of these assets was no longer fully recoverable, resulting in pre-tax, non-cash asset impairment charges of $29.3 million during the first quarter of 2016. In addition, the Company recognized pre-tax, non-cash asset impairment charges of $100.3 million related to the 2016 U.S. Generic Pharmaceuticals restructuring initiative, which resulted from the discontinuation of certain commercial products and the abandonment of certain IPR&D projects. See Note 4. Restructuring for discussion of our material restructuring initiatives.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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