Segment Information

9 Months Ended

Jul. 31, 2016

Segment Reporting [Abstract]

Segment Information

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 (our Chief Executive Officer) 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’s five operating segments are: North America DPS, Europe DPS, PDS, DSS and BLS. The North America DPS and Europe DPS operating segments met the aggregation criteria to be presented as one DPS reportable segment. As a result, the Company has determined it has three reportable segments: DPS, PDS and DSS. The DPS, PDS and DSS operating segments comprise the Patheon business unit. BLS and Corporate are not individually reportable segments since the quantitative thresholds have not been met and, as such, have been reported in Other. The BLS segment was spun-off on July 31, 2015 and its results are included within continuing operations through the spinoff date since the Company will have continuing involvement after spinoff. Refer to Note 2 for further discussion.

The DPS segment includes commercial manufacturing outsourcing services, the PDS segment includes pharmaceutical development services, and the DSS segment includes active pharmaceutical ingredients and pharmaceutical intermediates. Corporate expenses primarily relate to general, administrative and sales and marketing expenses related to the corporate organization. These expenses are centrally directed and controlled and are not included in internal measures of segment operating performance. The CODM does not evaluate its operating segments using discrete asset information.

As a result of the dispositions disclosed in Note 2, the Company has recast the presentation of its segment results for the prior periods to be consistent with the current period presentation.

	Three months ended July 31, 2016
	DPS	PDS	DSS	Other		Intersegment Eliminations	Total
	$	$	$	$		$	$
Revenues	309.1	57.0	115.9	—		—	482.0
Adjusted EBITDA	87.8	20.1	31.1	(25.3	)		113.7
Depreciation and amortization	15.5	1.7	10.5	0.4			28.1
Impairment charge	—	—	0.1	—			0.1
Capital expenditures	42.9	5.0	13.6	6.4			67.9

	Three months ended July 31, 2015
	DPS	PDS	DSS	Other		Intersegment Eliminations		Total
	$	$	$	$		$		$
Revenues	287.6	54.0	91.7	30.9		(15.9	)	448.3
Adjusted EBITDA	77.5	19.5	20.8	(13.6	)			104.2
Depreciation and amortization	15.0	1.3	8.0	2.3				26.6
Impairment charge	—	—	3.2	—				3.2
Capital expenditures	22.4	9.2	5.3	(2.1	)			34.8

	Nine months ended July 31, 2016
	DPS	PDS	DSS	Other		Intersegment Eliminations		Total
	$	$	$	$		$		$
Revenues	855.0	158.9	342.7	—		(0.1	)	1,356.5
Adjusted EBITDA	215.5	50.6	76.7	(72.1	)			270.7
Depreciation and amortization	45.2	4.2	30.6	1.5				81.5
Impairment charge	—	—	0.1	—				0.1
Capital expenditures	99.6	20.6	29.9	13.0				163.1

	Nine months ended July 31, 2015
	DPS	PDS	DSS	Other		Intersegment Eliminations		Total
	$	$	$	$		$		$
Revenues	871.7	147.5	256.8	100.3		(64.1	)	1,312.2
Adjusted EBITDA	224.5	51.9	37.8	(45.7	)			268.5
Depreciation and amortization	45.6	3.3	21.5	8.9				79.3
Impairment charge	—	—	3.2	—				3.2
Capital expenditures	77.8	11.5	12.8	1.6				103.7

The Company accounted for inter-segment sales between DPS and BLS at cost plus a specified mark-up. Intersegment eliminations for the three and nine months ended July 31, 2015 primarily represent inter-segment sales between DPS and BLS before the BLS spinoff on July 31, 2015.

The Company evaluates the performance of its segments based on segment Adjusted EBITDA. The Company's Adjusted EBITDA is income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition and integration costs (including certain product returns and inventory write-offs recorded in gross profit), gains and losses on sale of capital assets, Biologics earnout income and expense, income taxes, impairment charges, remediation costs, depreciation and amortization, stock-based compensation expense, consulting costs related to our operational initiatives, purchase accounting adjustments, acquisition-related litigation expenses and other income and expenses. Adjusted EBITDA is one of several metrics used to measure segment operating performance and is also used to determine executive compensation. "Adjusted EBITDA margin" is Adjusted EBITDA as a percentage of revenues. The Company's presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies and is not equivalent to "Consolidated EBITDA" as defined in the Credit Agreement (as discussed in Note 12).

Below is a reconciliation of Adjusted EBITDA to its most comparable U.S. GAAP measure.

	Three months ended July 31,				Nine months ended July 31,
	2016		2015		2016		2015
	$		$		$		$
Total Adjusted EBITDA	113.7		104.2		270.7		268.5
Depreciation and amortization	(28.1	)	(26.6	)	(81.5	)	(79.3	)
Repositioning expenses	(0.4	)	(3.1	)	(2.9	)	(21.3	)
Acquisition and integration costs	(2.4	)	(6.1	)	(12.6	)	(18.4	)
Interest expense, net	(43.1	)	(42.3	)	(129.5	)	(98.9	)
Impairment charge	(0.1	)	(3.2	)	(0.1	)	(3.2	)
Provision for income taxes	(0.3	)	(9.9	)	(0.3	)	(19.8	)
Refinancing expenses	—		—		—		(3.7	)
Operational initiatives related consulting costs	(0.5	)	(2.9	)	(3.9	)	(8.9	)
Pre-IPO public company costs	(0.4	)	(0.2	)	(1.2	)	(2.4	)
Acquisition-related litigation expenses	(1.1	)	(5.6	)	(3.0	)	(7.8	)
Stock-based compensation expense	(13.2	)	(3.5	)	(16.2	)	(11.3	)
Remediation costs	(8.9	)	—		(27.4	)	—
Other	(6.4	)	0.4		(1.4	)	0.6
Net income (loss) from continuing operations	8.8		1.2		(9.3	)	(5.9	)

As illustrated in the table below, revenues are attributed to countries based on the location of the customer's billing address, capital assets are attributed to the country in which they are located and goodwill is attributed to the country in which the entity to which the goodwill pertains is located:

	Three months ended July 31, 2016
	Canada	US*	Europe	Other**	Total
	$	$	$	$	$
Revenues	14.6	312.5	136.1	18.8	482.0

* Includes Puerto Rico

** Primarily includes Japan

	Three months ended July 31, 2015
	Canada	US*	Europe	Other**	Total
	$	$	$	$	$
Revenues	11.7	296.2	93.6	46.8	448.3

* Includes Puerto Rico

** Primarily includes Japan and other Asian countries

	As of and for the nine months ended July 31, 2016
	Canada	US*	Europe	Other**	Total
	$	$	$	$	$
Revenues	27.0	901.9	372.8	54.8	1,356.5
Capital Assets	97.6	497.7	349.5	15.7	960.5
Goodwill	2.7	269.4	7.5	2.2	281.8

* Includes Puerto Rico

** Primarily includes Japan

	As of and for the nine months ended July 31, 2015
	Canada	US*	Europe	Other**	Total
	$	$	$	$	$
Revenues	28.7	835.6	370.4	77.5	1,312.2
Capital Assets	96.4	425.5	306.2	16.8	844.9
Goodwill	2.6	269.2	5.7	2.1	279.6

* Includes Puerto Rico

** Primarily includes Japan and other Asian countries