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 (gastrointestinal products), (ii) Ortho Dermatologics (dermatological products) and (iii) oncology (or Dendreon), dentistry and women’s health products. As a result of the Dendreon Sale completed on June 28, 2017, the Company exited the oncology business.


•	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 business and the Obagi business 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 nine months ended September 30, 2017 and 2016 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Revenues:
Bausch + Lomb/International	$	1,254		$	1,243		$	3,645		$	3,666
Branded Rx	633			766			1,873			2,084
U.S. Diversified Products	332			470			1,043			1,521
	$	2,219		$	2,479		$	6,561		$	7,271

Segment profits:
Bausch + Lomb/International	$	387		$	381		$	1,097		$	1,072
Branded Rx	357			484			1,024			1,078
U.S. Diversified Products	238			379			757			1,227
	982			1,244			2,878			3,377
Corporate	(126		)	(185		)	(432		)	(525		)
Amortization of intangible assets	(657		)	(664		)	(1,915		)	(2,015		)
Goodwill impairments	(312		)	(1,049		)	(312		)	(1,049		)
Asset impairments	(406		)	(148		)	(629		)	(394		)
Restructuring and integration costs	(6		)	(20		)	(42		)	(78		)
Acquired in-process research and development costs	—			(31		)	(5		)	(34		)
Acquisition-related contingent consideration	238			(9		)	297			(18		)
Other income (expense), net	325			(1		)	584			20
Operating income (loss)	38			(863		)	424			(716		)
Interest income	3			3			9			6
Interest expense	(459		)	(470		)	(1,392		)	(1,369		)
Loss on extinguishment of debt	(1		)	—			(65		)	—
Foreign exchange and other	19			(2		)	87			4
Loss before recovery of income taxes	$	(400	)	$	(1,332	)	$	(937	)	$	(2,075	)

Segment Assets

Total assets by segment were as follows:



(in millions)	September 30, 2017		December 31, 2016
Assets:
Bausch + Lomb/International	$	15,608	$	16,201
Branded Rx	18,455		21,143
U.S. Diversified Products	5,172		5,820
	39,235		43,164
Corporate	739		365
Total assets	$	39,974	$	43,529