Segment Results (Tables)

9 Months Ended

Sep. 30, 2016

Schedule of reportable segments information

The following represents selected information for the Company’s reportable segments for the three and nine months ended September 30, 2016 and 2015 (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net revenues to external customers:
U.S. Branded Pharmaceuticals	$	279,843	$	304,778	$	876,998	$	905,198
U.S. Generic Pharmaceuticals	533,691		367,933		1,682,439		1,063,221
International Pharmaceuticals (1)	70,801		73,016		209,324		226,602
Total net revenues to external customers	$	884,335	$	745,727	$	2,768,761	$	2,195,021

Adjusted income from continuing operations before income tax:
U.S. Branded Pharmaceuticals	$	131,615	$	156,897	$	422,816	$	484,758
U.S. Generic Pharmaceuticals	$	228,717	$	177,961	$	655,453	$	507,507
International Pharmaceuticals	$	22,077	$	18,961	$	64,446	$	54,729

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(1)	Revenues generated by our International Pharmaceuticals segment are primarily attributable to Canada, Mexico and South Africa.

Schedule of reconciliations of consolidated loss from continuing operations before income tax

The table below provides reconciliations of our consolidated loss from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our segment adjusted income from continuing operations before income tax for the three and nine months ended September 30, 2016 and 2015 (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Total consolidated loss from continuing operations before income tax	$	(145,311	)	$	(964,645	)	$	(518,254	)	$	(1,084,636	)
Corporate unallocated costs (1)	159,123			137,180			473,933			363,298
Amortization of intangible assets	211,548			121,503			636,061			333,759
Inventory step-up and certain manufacturing costs that will be eliminated pursuant to integration plans	14,208			42,919			111,787			131,783
Upfront and milestone payments to partners	1,770			9,261			5,875			14,063
Separation benefits and other cost reduction initiatives (2)	9,782			22,669			70,412			70,256
Impact of Voltaren^® Gel generic competition	—			—			(7,750		)	—
Acceleration of Auxilium employee equity awards at closing	—			—			—			37,603
Certain litigation-related charges, net (3)	18,256			—			28,715			19,875
Asset impairment charges (4)	93,504			923,607			263,080			1,000,850
Acquisition-related and integration items (5)	19,476			(27,688		)	80,201			51,177
Loss on extinguishment of debt	—			40,909			—			41,889
Costs associated with unused financing commitments	—			64,281			—			78,352
Other than temporary impairment of equity investment	—			—			—			18,869
Foreign currency impact related to the remeasurement of intercompany debt instruments	(114		)	(5,693		)	1,558			(23,991		)
Other, net	167			(10,484		)	(2,903		)	(6,153		)
Total segment adjusted income from continuing operations before income tax	$	382,409		$	353,819		$	1,142,715		$	1,046,994

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(1)	Corporate unallocated costs include interest expense, net, certain corporate overhead costs, such as headcount and facility expenses and certain other income and expenses.

(2)

Separation benefits and other cost reduction initiatives include decreases of excess inventory reserves of $(9.0) million and increases of excess inventory reserves of $24.3 million during the three and nine months ended September 30, 2016, respectively, primarily related to the 2016 U.S. Generic Pharmaceuticals restructuring initiative. The adjustment for the three months ended September 30, 2016 resulted from the sell-through of certain inventory previously reserved. In addition, employee separation costs of $14.8 million and $30.0 million and other restructuring costs of $3.9 million and $16.1 million were recorded for the three and nine months ended September 30, 2016, respectively. Amounts in the comparable 2015 periods include employee separation costs of $20.8 million and $58.1 million, respectively, and a $7.9 million charge recorded during the nine months ended September 30, 2015, upon the cease use date of Auxilium’s former corporate headquarters, representing the liability for our remaining obligations under the respective lease agreement, net of estimated sublease income. These amounts were primarily recorded as Cost of revenues and Selling, general and administrative expense in our Condensed Consolidated Statements of Operations. See Note 4. Restructuring for discussion of our material restructuring initiatives.


(3)	These amounts include charges for Litigation-related and other contingencies, net as further described in Note 12. Commitments and Contingencies.


(4)	Asset impairment charges primarily relate to charges to write down intangible assets as further described in Note 9. Goodwill and Other Intangibles and goodwill impairment charges recorded during the third quarter of 2015.

(5)

Acquisition-related and integration items include costs directly associated with previous acquisitions of $7.9 million and $55.4 million for the three and nine months ended September 30, 2016, respectively, compared to $52.6 million and $134.8 million for the comparable 2015 periods. In addition, during the three and nine months ended September 30, 2016, there is a charge for changes in fair value of contingent consideration of $11.6 million and $24.8 million, respectively. During the three and nine months ended September 30, 2015, acquisition-related and integration costs are net of a benefit due to changes in the fair value of contingent consideration of $80.3 million and $83.6 million, respectively.