SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2013

Segment revenues and profit for the years ended December 31, 2013, 2012 and 2011 were as follows:



	2013			2012			2011
Revenues:
Developed Markets⁽¹⁾	$	4,293,216		$	2,502,264		$	1,762,535
Emerging Markets⁽²⁾	1,476,389			978,112			664,915
Total revenues	5,769,605			3,480,376			2,427,450
Segment profit:
Developed Markets⁽³⁾	573,232			815,902			740,316
Emerging Markets⁽⁴⁾	92,995			68,958			(24,929		)
Total segment profit	666,227			884,860			715,387
Corporate⁽⁵⁾	(165,666		)	(138,200		)	(180,008		)
Restructuring, integration and other costs	(514,825		)	(344,387		)	(97,667		)
In-process research and development impairments and other charges	(153,639		)	(189,901		)	(109,200		)
Acquisition-related costs	(36,416		)	(78,604		)	(32,964		)
Acquisition-related contingent consideration	29,259			5,266			10,986
Other expense	(234,442		)	(59,349		)	(6,575		)
Operating (loss) income	(409,502		)	79,685			299,959
Interest income	8,023			5,986			4,084
Interest expense	(844,316		)	(481,596		)	(334,526		)
Loss on extinguishment of debt	(65,014		)	(20,080		)	(36,844		)
Foreign exchange and other	(9,465		)	19,721			26,551
Gain on investments, net	5,822			2,056			22,776
Loss before recovery of income taxes	$	(1,314,452	)	$	(394,228	)	$	(18,000	)

____________________________________

(1)

Developed Markets segment revenues reflect incremental product sales revenue of $2,051.0 million in 2013, in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from the B&L, Medicis, Obagi, OraPharma, J&J North America and QLT acquisitions. Developed Markets segment revenues reflect incremental product sales revenue $679.0 million in 2012, in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, primarily from Dermik, Ortho Dermatologics, iNova, OraPharma and Medicis acquisitions.

(2)

Emerging Markets segment revenues reflect incremental product sales revenue of $415.6 million in 2013, in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from the B&L, Natur Produkt, Gerot Lannach and Atlantis acquisitions. Emerging Markets segment revenues reflect incremental product sales revenue of $310.9 million in 2012, in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, primarily from Sanitas, iNova, Probiotica, PharmaSwiss,and Gerot Lannach acquisitions.

(3)

Developed Markets segment profit in 2013 reflects (i) the addition of operations from all 2012 acquisitions and all 2013 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $1,080.4 million in 2013, in the aggregate, primarily from B&L, legacy Valeant and Medicis operations and (ii) an impairment charge of $551.6 million related to ezogabine/retigabine in the third quarter of 2013 (see note 7 titled “FAIR VALUE MEASUREMENTS”). Developed Markets segment profit in 2012 reflects the addition of operations from all 2011 acquisitions and all 2012 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $506.4 million in 2012, in the aggregate, primarily from legacy Valeant, Dermik, Ortho Dermatologics, iNova, Medicis and OraPharma operations. Developed Markets segment profit in 2011 reflects the addition of operations from all 2010 acquisitions and all 2011 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $144.8 million in 2011, in the aggregate, primarily from legacy Valeant, Dermik, iNova and Ortho Dermatologics operations.

(4)

Emerging Markets segment profit in 2013 reflects the addition of operations from all 2012 acquisitions and all 2013 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $320.5 million in 2013, in the aggregate, primarily from B&L, legacy Valeant and Medicis operations. Emerging Markets segment profit in 2012 reflects the addition of operations from all 2011 acquisitions and all 2012 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $180.5 million in 2012, in the aggregate, primarily from legacy Valeant, PharmaSwiss, Sanitas, iNova and Gerot Lannach operations. Emerging Markets segment profit in 2011 reflects the addition of operations from all 2010 acquisitions and all 2011 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $136.8 million in 2011, in the aggregate, primarily from legacy Valeant, PharmaSwiss and Sanitas operations.


(5)	Corporate reflects non-restructuring-related share-based compensation expense of $45.5 million, $66.2 million and $93.0 million in 2013, 2012 and 2011, respectively. The non-restructuring-related share-based compensation expense includes the effect of the fair value increment on Valeant stock options and RSUs converted into the Company awards of $58.6 million in 2011.

Schedule of total assets by segment

Total assets by segment as of December 31, 2013, 2012 and 2011 were as follows:



	2013		2012		2011
Assets⁽¹⁾:
Developed Markets⁽²⁾	$	20,473,356	$	12,893,726	$	9,171,332
Emerging Markets⁽³⁾	6,441,678		4,022,039		3,270,476
	26,915,034		16,915,765		12,441,808
Corporate	1,055,763		1,034,614		666,311
Total assets	$	27,970,797	$	17,950,379	$	13,108,119

____________________________________


(1)	The segment assets as of December 31, 2012 and 2011 contain reclassifications between segments to conform to the current year management structure.

(2)

Developed Markets segment assets as of December 31, 2013 reflect (i) the provisional amounts of identifiable intangible assets and goodwill of B&L of $3,977.9 million and $3,226.7 million, respectively, (ii) the amounts of identifiable intangible assets and goodwill of Obagi of $335.5 million and $158.5 million, respectively, and (iii) the amounts of identifiable intangible assets acquired from Eisai of $112.0 million. Developed Markets segment assets as of December 31, 2013 reflect the amounts of identifiable intangible assets and goodwill acquired from Medicis, OraPharma, QLT, J&J North America, and University Medical of $2,227.0 million and $1,481.0 million, in the aggregate, respectively.

(3)

Emerging Markets segment assets as of December 31, 2013 reflect (i) the provisional amounts of identifiable intangible assets and goodwill of B&L of $782.7 million and $1,135.7 million, respectively, (ii) the amounts of identifiable intangible assets and goodwill of Natur Produkt of $104.8 million and $40.9 million, respectively, and (iii) the amount of Obagi’s goodwill of $21.6 million. Emerging Markets segment assets as of December 31, 2012 reflect the provisional amounts of identifiable intangible assets and goodwill of Probiotica, J&J ROW, Atlantis and Gerot Lannach of $303.6 million and $47.5 million, in the aggregate, respectively.

Schedule of capital expenditures, depreciation and amortization by segment

Capital expenditures, and depreciation and amortization, including impairments of finite-lived intangible assets by segment for the years ended December 31, 2013, 2012 and 2011 were as follows:



	2013		2012		2011
Capital expenditures:
Developed Markets	$	54,126	$	12,270	$	3,700
Emerging Markets	51,922		61,607		33,989
	106,048		73,877		37,689
Corporate	9,271		33,761		20,826
Total capital expenditures	$	115,319	$	107,638	$	58,515
Depreciation and amortization, including impairments of finite-lived intangible assets⁽¹⁾:
Developed Markets	$	1,687,705	$	755,108	$	447,420
Emerging Markets	313,659		224,544		159,039
	2,001,364		979,652		606,459
Corporate	14,442		6,570		6,144
Total depreciation and amortization, including impairments of finite-lived intangible assets	$	2,015,806	$	986,222	$	612,603

____________________________________

The increase in capital expenditures in Emerging Markets segment in 2012 was driven primarily by the construction of two manufacturing facilities in Serbia and Mexico.

(1)

Depreciation and amortization, including impairments of finite-lived intangible assets in 2013 reflects the impact of acquisition accounting adjustments related to the fair value adjustment to identifiable intangible assets as follows: Developed Markets — $773.0 million; and Emerging Markets — $255.4 million. In addition, depreciation and amortization, including impairments of finite-lived intangible assets in 2013 also reflects (i) an impairment charge of $551.6 million related to ezogabine/retigabine (immediate-release formulation) which is co-developed and marketed under a collaboration agreement with GSK, (ii) impairment charges of $31.5 million related to the write-down of the carrying values of intangible assets related to certain suncare and skincare brands sold primarily in Australia, and (iii) a write-off of $22.2 million related to Opana®, a pain relief medication approved in Canada.

Depreciation and amortization, including impairments of finite-lived intangible assets in 2012 reflects the impact of acquisition accounting adjustments related to the fair value adjustment to identifiable intangible assets as follows: Developed Markets — $430.5 million; and Emerging Markets — $177.5 million. In addition, depreciation and amortization, including impairments of finite-lived intangible assets in 2012 also reflects (i) impairment charges of $31.3 million related to the write-down of the carrying values of intangible assets related to certain suncare and skincare brands sold primarily in Australia, which were classified as assets held for sale as of December 31, 2012, (ii) an $18.7 million impairment charge related to the write-down of the carrying value of the Dermaglow® intangible asset, which was classified as an asset held for sale as of December 31, 2012, and (iii) impairment charges of $13.3 million related to the discontinuation of certain products in the Brazilian and Polish markets.

Depreciation and amortization, including impairments of finite-lived intangible assets in 2011 reflects the impact of acquisition accounting adjustments related to the fair value adjustment to identifiable intangible assets as follows: Developed Markets — $116.3 million; and Emerging Markets — $106.0 million. In addition, depreciation and amortization, including impairments of finite-lived intangible assets in 2011 also reflects impairment charges of $7.9 million and $19.8 million related to the write-down of the carrying values of the IDP-111 and 5-FU intangible assets, respectively

Schedule of revenues by product category

Revenues by product category for the years ended December 31, 2013, 2012 and 2011 were as follows:



	2013		2012		2011
Pharmaceuticals	$	2,640,364	$	1,978,960	$	1,471,810
Devices	842,244		77,037		995
OTC	704,706		209,280		140,144
Branded and Other Generics	1,453,019		1,023,315		642,101
Alliance and Royalty, Service and Other	129,272		191,784		172,400
	$	5,769,605	$	3,480,376	$	2,427,450

Schedule of revenues and long-lived assets by geographic region

Revenues and long-lived assets by geographic region for the years ended and as of December 31, 2013, 2012 and 2011 were as follows:



	Revenues⁽¹⁾						Long-Lived Assets⁽²⁾
	2013		2012		2011		2013		2012		2011
U.S. and Puerto Rico	$	3,194,531	$	1,885,842	$	1,361,636	$	592,045	$	60,432	$	22,619
Canada	387,389		349,137		256,820		87,722		109,728		129,510
Poland	268,788		199,278		179,501		110,035		110,890		106,743
Russia	202,840		71,181		8,720		7,048		228		—
Mexico	200,890		167,445		151,948		82,491		73,894		53,500
Australia	178,204		184,073		79,204		3,391		4,402		16,636
Brazil	155,577		135,114		87,190		41,371		45,959		49,231
Germany	130,938		1,931		22,396		83,805		—		—
Japan	104,902		12,164		—		1,336		—		—
Serbia	91,930		90,768		81,867		39,981		32,057		10,039
China	90,988		552		—		44,334		—		—
France	86,916		2,532		—		40,472		—		—
Other ⁽³⁾	675,712		380,359		198,168		100,205		25,134		25,964
	$	5,769,605	$	3,480,376	$	2,427,450	$	1,234,236	$	462,724	$	414,242

____________________________________


(1)	Revenues are attributed to countries based on the location of the customer.


(2)	Long-lived assets consist of property, plant and equipment, net of accumulated depreciation, which is attributed to countries based on the physical location of the assets.


(3)	Other consists primarily of countries in Europe, the Middle East, Africa, and Asia.

Schedule of external customers that accounted for 10% or more of total revenues

External customers that accounted for 10% or more of the Company’s total revenues for the years ended December 31, 2013, 2012 and 2011 were as follows:



	2013	2012	2011
McKesson Corporation	19%	20%	23%
Cardinal Health, Inc.	13%	20%	21%
AmerisourceBergen Corporation	7%	8%	10%

- Definition

Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

+ References+ Details