Segment Results (Tables)

3 Months Ended

Mar. 31, 2014

Schedule of reportable segments information

The following represents selected information for the Company’s reportable segments for the three months ended March 31, 2014 and 2013 (in thousands):



	Three Months Ended March 31,
	2014			2013
Net revenues to external customers:
U.S. Branded Pharmaceuticals	$	234,165		$	357,589
U.S. Generic Pharmaceuticals	211,855			178,253
Devices (1)	123,767			122,652
International Pharmaceuticals (2)	24,822			—
Total consolidated net revenues to external customers	$	594,609		$	658,494
Adjusted income (loss) from continuing operations before income tax:
U.S. Branded Pharmaceuticals	$	134,417		$	174,407
U.S. Generic Pharmaceuticals	73,797			47,112
Devices	39,705			31,644
International Pharmaceuticals	9,295			—
Corporate unallocated	(79,191		)	(83,017		)
Total consolidated adjusted income from continuing operations before income tax	$	178,023		$	170,146

Schedule of revenue by reportable segment

The following table displays our Devices segment revenue by geography for the three months ended March 31, 2014 and 2013 (in thousands):



	Three Months Ended March 31,
	2014		2013
Devices:
United States	$	77,459	$	78,367
International	46,308		44,285
Total Devices revenues	$	123,767	$	122,652


(2)	Revenues generated by our International Pharmaceuticals segment are primarily attributable to Canada and South Africa.

Schedule of reconciliations of consolidated adjusted income (loss) before income tax

The table below provides reconciliations of our consolidated adjusted income from continuing operations before income tax to our consolidated (loss) income from continuing operations before income tax, which is determined in accordance with U.S. GAAP, for the three months ended March 31, 2014 and 2013 (in thousands):



	Three Months Ended March 31,
	2014			2013
Total consolidated adjusted income from continuing operations before income tax:	$	178,023		$	170,146
Upfront and milestone payments to partners	(11,155		)	(2,574		)
Asset impairment charges	—			(1,100		)
Acquisition-related and integration items (1)	(45,269		)	(558		)
Separation benefits and other cost reduction initiatives (2)	(277		)	(13,694		)
Excise tax expense (3)	(60,000		)	—
Amortization of intangible assets	(55,194		)	(47,250		)
Inventory step-up	(3,581		)	—
Non-cash interest expense	(5,969		)	(5,450		)
Loss on extinguishment of debt	(9,596		)	(11,312		)
Watson litigation settlement income, net	—			19,227
Certain litigation-related charges (4)	(641,100		)	(76,532		)
Total consolidated (loss) income from continuing operations before income tax	$	(654,118	)	$	30,903

__________


(1)	Acquisition-related and integration-items include costs directly associated with the closing of certain acquisitions, changes in the fair value of contingent consideration and the costs of integration activities related to both current and prior period acquisitions.

(2)

Separation benefits and other cost reduction initiatives include employee separation costs of $5.0 million and $0.8 million for the three months ended March 31, 2014 and 2013, respectively. Refer to Note 4. Restructuring for discussion of our material restructuring initiatives. These amounts are partially offset by changes in estimates related to certain cost reduction initiative accruals. Additionally, the amount of separation benefits and other cost reduction initiatives during the three months ended March 31, 2013 includes an expense recorded upon the cease use date of our Chadds Ford, Pennsylvania properties in the first quarter of 2013, representing the liability for our remaining obligations under the respective lease agreements of $7.2 million. These expenses were primarily recorded as Selling, general and administrative and Research and development expense in our Condensed Consolidated Statements of Operations.


(3)	This amount represents charges for the excise tax pursuant to Section 4985 now that the Company expects the merger between Endo and Paladin to be taxable to U.S. shareholders of EHSI as a result of the shareholder gain from the transaction. The final determination is subject to the Company completing its shareholder basis study, which is expected to be finalized later in 2014.


(4)	These amounts includes charges for Litigation-related and other contingencies, consisting primarily of mesh-related product liability charges, as well as mesh litigation-related defense costs for the three months ended March 31, 2014 and 2013.

Additional selected financial information for reportable segments

The following represents additional selected financial information for our reportable segments for the three months ended March 31, 2014 and 2013 (in thousands):



	Three Months Ended March 31,
	2014		2013
Depreciation expense:
U.S. Branded Pharmaceuticals	$	4,037	$	6,305
U.S. Generic Pharmaceuticals	7,569		3,170
Devices	2,086		2,802
International Pharmaceuticals	141		—
Corporate unallocated	1,894		2,465
Total depreciation expense	$	15,727	$	14,742



	Three Months Ended March 31,
	2014		2013
Amortization expense:
U.S. Branded Pharmaceuticals	$	20,723	$	21,280
U.S. Generic Pharmaceuticals	18,614		10,881
Devices	15,524		15,239
International Pharmaceuticals	$	4,000	$	—
Total amortization expense	$	58,861	$	47,400

- 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.

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