SEGMENT INFORMATION

Reportable Segments

During 2017, the Company divested certain businesses. In 2018, the Company began reallocating capital and resources to other businesses. As a result, during the second quarter of 2018, the Company’s CEO, who is the Company’s Chief Operating Decision Maker, commenced managing the business differently through changes in its operating and reportable segments, which necessitated a realignment of the Company's historical segment structure. This realignment is consistent with how the Company’s CEO currently: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. Pursuant to these changes, in the second quarter of 2018, the Company began operating in the following reportable segments: (i) Bausch + Lomb/International segment, (ii) Salix segment, (iii) Ortho Dermatologics segment and (iv) Diversified Products segment. Prior period presentations of segment revenues and segment profits have been recast to conform to the current segment reporting structure. See Note 2, "SIGNIFICANT ACCOUNTING POLICIES" for additional information regarding changes to the Company's reportable segments.

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) with the exception of sales of Solta products, sales in Canada, Europe, Asia, 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 Salix segment consists of sales in the U.S. of gastrointestinal ("GI") products.


•	The Ortho Dermatologics segment consists of: (i) sales in the U.S. of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta medical aesthetic devices.

•

The Diversified Products segment consists of: (i) sales in the U.S. of pharmaceutical products in the areas of neurology and certain other therapeutic classes, (ii) sales in the U.S. of generic products, (iii) sales in the U.S. of dentistry products, (iv) sales in the U.S. of oncology (or Dendreon) products, (v) global sales of women’s health (or Sprout) products and (vi) sales of certain other businesses divested during 2017 that were not core to the Company's operations. As a result of the divestitures of the Company's equity interests in Dendreon (June 28, 2017) and Sprout (December 20, 2017), the Company exited the oncology and women's health businesses, respectively.

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, net, 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 incurs certain expenses, gains and losses related to the overall management of the Company, which are not allocated to the other business segments. In assessing segment performance and managing operations, management does not review segment assets. Furthermore, 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.

Segment Revenues and Profits

Segment revenues and profits were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2018			2017
Revenues:
Bausch + Lomb/International	$	1,147		$	1,234		$	3,459		$	3,591
Salix	460			452			1,323			1,141
Ortho Dermatologics	177			177			460			556
Diversified Products	352			356			1,017			1,273
	$	2,136		$	2,219		$	6,259		$	6,561

Segment profits:
Bausch + Lomb/International	$	341		$	381		$	988		$	1,078
Salix	304			277			868			677
Ortho Dermatologics	89			73			193			264
Diversified Products	266			251			763			859
	1,000			982			2,812			2,878
Corporate	(167		)	(126		)	(442		)	(432		)
Amortization of intangible assets	(658		)	(657		)	(2,142		)	(1,915		)
Goodwill impairments	—			(312		)	(2,213		)	(312		)
Asset impairments	(89		)	(406		)	(434		)	(629		)
Restructuring and integration costs	(3		)	(6		)	(16		)	(42		)
Acquired in-process research and development costs	—			—			(1		)	(5		)
Acquisition-related contingent consideration	19			238			23			297
Other (expense) income, net	15			325			4			584
Operating income (loss)	117			38			(2,409		)	424
Interest income	3			3			9			9
Interest expense	(420		)	(459		)	(1,271		)	(1,392		)
Loss on extinguishment of debt	—			(1		)	(75		)	(65		)
Foreign exchange and other	—			19			18			87
Loss before (provision for) benefit from income taxes	$	(300	)	$	(400	)	$	(3,728	)	$	(937	)

Revenues by Segment and Product Category

Revenues by segment and product category were as follows:



	Three Months Ended September 30, 2018										Three Months Ended September 30, 2017
(in millions)	Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total		Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total
Pharmaceuticals	$	222	$	460	$	140	$	233	$	1,055	$	241	$	452	$	140	$	272	$	1,105
Devices	365		—		29		—		394		367		—		25		—		392
OTC	352		—		—		—		352		397		—		—		—		397
Branded and Other Generics	192		—		—		115		307		213		—		—		79		292
Other revenues	16		—		8		4		28		16		—		12		5		33
	$	1,147	$	460	$	177	$	352	$	2,136	$	1,234	$	452	$	177	$	356	$	2,219

	Nine Months Ended September 30, 2018										Nine Months Ended September 30, 2017
(in millions)	Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total		Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total
Pharmaceuticals	$	667	$	1,323	$	348	$	712	$	3,050	$	722	$	1,140	$	448	$	1,016	$	3,326
Devices	1,117		—		90		—		1,207		1,049		—		75		—		1,124
OTC	1,046		—		—		—		1,046		1,153		—		—		—		1,153
Branded and Other Generics	576		—		—		294		870		613		—		—		246		859
Other revenues	53		—		22		11		86		54		1		33		11		99
	$	3,459	$	1,323	$	460	$	1,017	$	6,259	$	3,591	$	1,141	$	556	$	1,273	$	6,561

Geographic Information

Revenues are attributed to a geographic region based on the location of the customer were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2018		2017		2018		2017
U.S. and Puerto Rico	$	1,329	$	1,306	$	3,766	$	3,945
China	91		90		273		240
Canada	78		83		231		238
Japan	59		58		165		166
Poland	49		51		164		147
France	46		41		159		142
Mexico	56		54		153		144
Egypt	45		41		134		116
Germany	38		39		130		119
Russia	38		57		106		148
United Kingdom	29		29		87		79
Italy	19		19		64		58
Spain	17		17		61		55
Other	242		334		766		964
	$	2,136	$	2,219	$	6,259	$	6,561

Major Customers

Customers that accounted for 10% or more of total revenues consist of:



	Nine Months Ended September 30,
	2018	2017
AmerisourceBergen Corporation	18%	15%
McKesson Corporation (including McKesson Specialty)	18%	20%
Cardinal Health, Inc.	13%	13%