SEGMENT INFORMATION

Reportable Segments

During the third quarter of 2016, the Company’s CEO, who is the Company’s Chief Operating Decision Maker, commenced managing the business differently through changes in and reorganizations to the Company’s business structure, including changes to its operating and reportable segments, which necessitated a realignment of the Company's historical segment structure. Pursuant to this change, which was effective in the third quarter of 2016, the Company operates in three operating and reportable segments: (i) Bausch + Lomb/International, (ii) Branded Rx and (iii) U.S. Diversified Products. Effective for the first quarter of 2017, revenues and profits from the Company's operations in Canada, included in the Branded Rx segment in prior periods, are included in the Bausch + Lomb/International segment. Prior period presentations of segment revenues, segment profits and segment assets have been recast to conform to the current segment reporting structure.

The following is a brief description of the Company’s segments:

•

The Bausch + Lomb/International segment consists of: (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products, primarily comprised of Bausch + Lomb products, with a focus on the Vision Care, Surgical, Consumer and Ophthalmology Rx products and (ii) sales in Canada, Europe, Asia, Australia and New Zealand, Latin America, Africa and the Middle East of branded pharmaceutical products, branded generic pharmaceutical products, OTC products, medical device products, and Bausch + Lomb products.


•	The Branded Rx segment consists of sales in the U.S. of: (i) Salix products, (ii) dermatological products, (iii) branded pharmaceutical products, branded generic pharmaceutical products, OTC products and medical device products and (iv) oncology, dentistry and women’s health products.


•	The U.S. Diversified Products segment consists of sales in the U.S. of: (i) pharmaceutical products, OTC products and medical device products in the areas of neurology and certain other therapeutic classes, including aesthetics (which includes the Solta and Obagi businesses) and (ii) generic products.

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as amortization of intangible assets, asset impairments, in-process research and development costs, restructuring and integration costs, acquisition-related contingent consideration costs and other (income) expense are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance.

Corporate includes the finance, treasury, certain research and development programs, tax and legal operations of the Company’s businesses and maintains and/or incurs certain assets, liabilities, expenses, gains and losses related to the overall management of the Company, which are not allocated to the other business segments. In addition, a portion of share-based compensation is considered a corporate cost, since the amount of such expense depends on Company-wide performance rather than the operating performance of any single segment.

Prior period segment financial information has been recast to conform to current segment presentation.

Segment Revenues and Profits

Segment revenues and profits for the three and six months ended June 30, 2017 and 2016 were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Revenues:
Bausch + Lomb/International	$	1,241		$	1,277		$	2,391		$	2,423
Branded Rx	636			653			1,240			1,318
U.S. Diversified Products	356			490			711			1,051
	2,233			2,420			4,342			4,792

Segment profits:
Bausch + Lomb/International	377			382			710			691
Branded Rx	341			337			667			594
U.S. Diversified Products	255			384			519			848
	973			1,103			1,896			2,133

Corporate	(139		)	(136		)	(306		)	(340		)
Amortization of intangible assets	(623		)	(673		)	(1,258		)	(1,351		)
Asset impairments	(85		)	(230		)	(223		)	(246		)
Restructuring and integration costs	(18		)	(20		)	(36		)	(58		)
Acquired in-process research and development costs	(1		)	(2		)	(5		)	(3		)
Acquisition-related contingent consideration	49			(7		)	59			(9		)
Other income, net	19			46			259			21
Operating income	175			81			386			147
Interest income	3			2			6			3
Interest expense	(459		)	(472		)	(933		)	(899		)
Loss on extinguishment of debt	—			—			(64		)	—
Foreign exchange and other	39			12			68			6
Loss before recovery of income taxes	$	(242	)	$	(377	)	$	(537	)	$	(743	)

Segment Assets

Total assets by segment were as follows:



(in millions)	June 30, 2017		December 31, 2016
Assets:
Bausch + Lomb/International	$	16,129	$	16,201
Branded Rx	19,407		21,143
U.S. Diversified Products	5,229		5,820
	40,765		43,164
Corporate	968		365
Total assets	$	41,733	$	43,529