SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2019

Reportable Segments

The Company’s CEO, who is the Company’s Chief Operating Decision Maker, manages the business through operating and reportable segments consistent with how the Company’s CEO: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. The Company operates in the following reportable segments: (i) Bausch + Lomb/International segment, (ii) Salix segment, (iii) Ortho Dermatologics segment and (iv) Diversified Products segment.

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

Effective in the first quarter of 2019, one product historically included in the reported results of the Ortho Dermatologics business unit in the Ortho Dermatologics segment is now included in the reported results of the Generics business unit in the Diversified Products segment and another product historically included in the reported results of the Ortho Dermatologics

business unit in the Ortho Dermatologics segment is now included in the reported results of the Dentistry business unit in the Diversified Products segment as management believes the products better align with the new respective business units. These changes in product alignment are not material. Prior period presentations of business unit and segment revenues and profits have been conformed to current segment and business unit reporting structures.

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 expense (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 Profit

Segment revenues and profits for the years 2019, 2018 and 2017 were as follows:



(in millions)	2019			2018			2017
Revenues:
Bausch + Lomb/International	$	4,739		$	4,664		$	4,795
Salix	2,022			1,749			1,566
Ortho Dermatologics	565			617			721
Diversified Products	1,275			1,350			1,642
Total revenues	$	8,601		$	8,380		$	8,724
Segment profit:
Bausch + Lomb/International	$	1,332		$	1,330		$	1,412
Salix	1,349			1,149			935
Ortho Dermatologics	222			257			333
Diversified Products	932			1,012			1,115
Total segment profit	3,835			3,748			3,795
Corporate	(609		)	(605		)	(562		)
Amortization of intangible assets	(1,897		)	(2,644		)	(2,690		)
Goodwill impairments	—			(2,322		)	(312		)
Asset impairments	(75		)	(568		)	(714		)
Restructuring and integration costs	(31		)	(22		)	(52		)
Acquisition-related contingent consideration	(12		)	9			289
Other expense (income), net	(1,414		)	20			348
Operating (loss) income	(203		)	(2,384		)	102
Interest income	12			11			12
Interest expense	(1,612		)	(1,685		)	(1,840		)
Loss on extinguishment of debt	(42		)	(119		)	(122		)
Foreign exchange and other	8			23			107
Loss before benefit from income taxes	$	(1,837	)	$	(4,154	)	$	(1,741	)

Capital Expenditures

Capital expenditures by segment for the years 2019, 2018 and 2017 were as follows:



(in millions)	2019		2018		2017
Capital expenditures:
Bausch + Lomb/International	$	225	$	139	$	159
Salix	2		2		3
Ortho Dermatologics	1		1		2
Diversified Products	2		2		4
	230		144		168
Corporate	40		13		3
Total capital expenditures	$	270	$	157	$	171

Revenues by Product and by Product Category

The top ten products represented 39%, 36% and 32% of total product sales for the years 2019, 2018 and 2017, respectively. Revenues by segment and product category were as follows:



(in millions)	Bausch + Lomb/ International						Salix							Ortho Dermatologics						Diversified Products						Total
	2019		2018		2017		2019		2018			2017		2019		2018		2017		2019		2018		2017		2019		2018		2017
Pharmaceuticals	$	885	$	892	$	956	$	2,022	$	1,752		$	1,564	$	355	$	457	$	567	$	810	$	927	$	1,290	$	4,072	$	4,028	$	4,377
Devices	1,524		1,505		1,421		—		—			—		193		135		111		—		—		—		1,717		1,640		1,532
OTC	1,452		1,412		1,529		—		—			—		—		—		—		—		—		—		1,452		1,412		1,529
Branded and Other Generics	801		784		819		—		—			—		—		—		—		447		407		338		1,248		1,191		1,157
Other revenues	77		71		70		—		(3		)	2		17		25		43		18		16		14		112		109		129
	$	4,739	$	4,664	$	4,795	$	2,022	$	1,749		$	1,566	$	565	$	617	$	721	$	1,275	$	1,350	$	1,642	$	8,601	$	8,380	$	8,724

Geographic Information

Revenues are attributed to a geographic region based on the location of the customer for the years 2019, 2018 and 2017 were as follows:



(in millions)	2019		2018		2017
U.S. and Puerto Rico	$	5,164	$	5,011	$	5,225
China	368		361		331
Canada	339		319		326
Japan	241		226		223
Poland	231		218		201
Mexico	228		211		201
Egypt	218		178		152
France	201		205		188
Russia	180		154		200
Germany	150		170		157
United Kingdom	115		117		108
Spain	86		83		77
Italy	85		85		78
Other	995		1,042		1,257
	$	8,601	$	8,380	$	8,724

Long-lived assets consisting of property, plant and equipment, net of accumulated depreciation, are attributed to geographic regions based on their physical location as of December 31, 2019 and 2018 were as follows:



(in millions)	2019		2018
U.S. and Puerto Rico	$	656	$	593
Ireland	255		217
Canada	103		99
Poland	90		94
Germany	68		66
Egypt	62		50
Mexico	50		48
France	30		31
China	27		25
Serbia	27		28
Italy	22		23
Other	76		79
	$	1,466	$	1,353

Major Customers

Customers that accounted for 10% or more of total revenues were as follows:



	2019	2018	2017
McKesson Corporation	17%	18%	19%
AmerisourceBergen Corporation	16%	18%	15%
Cardinal Health, Inc.	14%	13%	13%