Intangible Assets, net:

($ amounts in thousands)



	September 30, 2014							December 31, 2013
			Accumulated							Accumulated
	Cost		Amortization			Net		Cost		Amortization			Net
Developed products (1)	$	989,955	$	(314,543	)	$	675,412	$	878,607	$	(204,218	)	$	674,389
Other product related royalty streams	115,600		(32,995		)	82,605		115,600		(22,709		)	92,891
IPR&D (2)	376,673		—			376,673		298,100		—			298,100
Trade names (3)	27,100		(83		)	27,017		26,400		—			26,400
Other	1,000		(786		)	214		1,000		(132		)	868
	$	1,510,328	$	(348,407	)	$	1,161,921	$	1,319,707	$	(227,059	)	$	1,092,648

(1) Developed products include intangible assets related to commercial products as part of the Merger, subsequently developed IPR&D, products acquired from the Watson/Actavis Merger, and intangible assets related to commercial products as part of the JHP Acquisition. These products are amortized based on its remaining useful life.

(2) IPR&D indefinite-lived assets include IPR&D as part of the Merger, IPR&D acquired from the Watson/Actavis Merger, and IPR&D acquired as part of the JHP Acquisition.

(3) Trade names include Par and JHP trade names. JHP trade name is amortized over its useful life, while the Par trade name is treated as an indefinite-lived asset and is not amortized.

We recorded amortization expense related to intangible assets of $121,348 thousand for the nine months ended September 30, 2014 and $135,744 thousand for the nine months ended September 30, 2013. Amortization expense was included in cost of goods sold.

During the three months ended September 30, 2014, we reduced IPR&D by approximately $3.8 million related to the sale of three ANDAs.

Intangible Assets Acquired in the Merger

We were acquired on September 28, 2012 through the Merger. Refer to Note 2, “Sky Growth Merger,” for details of the Merger and related transactions. As part of the Merger, we revalued intangible assets related to commercial products (developed technology), royalty streams, IPR&D, and our trade name.

The remaining net book value of the related intangible asset related to developed products is being amortized over a weighted average amortization period of approximately five years.

IPR&D assets are related to R&D projects that were incomplete at the Merger. Due to the nature of our generic product portfolio pipeline, individual products in the annual IPR&D groups are expected to launch within an annual time period or reasonably close thereto. When the first product of each annual IPR&D group launches, it is our policy to commence amortization of the entire annual group utilizing the related cash flows expected to be generated for the annual group. The remaining net book value of the related intangible asset associated with subsequently developed annual IPR&D groups will be amortized over a weighted average amortization period of approximately six years.

Trade names constitute intellectual property rights and are marketing-related intangible assets. Our corporate trade name was valued using a relief from royalty method of the income approach and accounted for as an indefinite-lived intangible asset that will be subject to annual impairment testing or whenever events or changes in business circumstances necessitate an evaluation for impairment using a fair value approach.

Intangible Assets acquired with the Divested Products from the Watson/Actavis Merger

On November 6, 2012, in connection with the Watson/Actavis Merger, we acquired the U.S. marketing rights to five generic products that were marketed by Watson or Actavis, eight ANDAs that were awaiting regulatory approval and a generic product in late-stage development. Refer to Note 4, “Acquisition of Divested Products from the Watson/Actavis Merger,” for details of the transaction.

The remaining net book value of the related intangible asset related to developed products is being amortized over a weighted average amortization period of approximately five years.

IPR&D consists of technology-related intangible assets used in R&D activities, which were incomplete at the time of the acquisition. Upon the successful completion and launch of a product in the group, we will make a separate determination of useful life of the related IPR&D intangible asset and commence amortization.

Intangible Assets acquired with the JHP Acquisition

On February 20, 2014, we acquired intangible assets as part of the JHP Acquisition. Refer to Note 3, "JHP Acquisition," for further details. The intangible assets related to commercial products (developed technology), IPR&D, and the JHP trade name.

The fair value of the developed technology and in-process research and development intangible assets were estimated using the discounted cash flow method of the income approach. We believe that the level and timing of cash flows appropriately reflect market participant assumptions. Some of the significant assumptions inherent in the development of the identifiable intangible asset valuations, from the perspective of a market participant, include the estimated net cash flows by year by project or product (including net revenues, costs of sales, research and development costs, selling and marketing costs and other charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset's life cycle, competitive trends impacting the asset and each cash flow stream, and other factors.

Developed products are defined as products that are commercialized, all research and development efforts have been completed by the seller, and final regulatory approvals have been received. The developed product intangible assets are composite assets, comprising the market position of the product, the developed technology utilized, and the customer base to which the products are sold. Developed technology and the customer base were considered but have not been identified separately as any related cash flows would be very much intertwined with the product related intangibles. Developed products held by the Company are considered separable from the business as they could be sold to a third party. Developed products were valued using a multi-period excess earnings method under the income approach. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows attributable to the intangible asset only. The remaining net book value of the related intangible asset related to developed products will be amortized over a weighted average amortization period of approximately nine years.

IPR&D is related to R&D projects that were incomplete at the time of the JHP Acquisition. We grouped and valued IPR&D based on the projected year of launch for each group, with the exception of one project that was expected to produce large cash flows in the future and we valued this project by itself. IPR&D is considered separable from the business as it could be sold to a third party. The value of IPR&D was accounted for as an indefinite-lived intangible asset and will be subject to impairment testing until the completion or abandonment of each group. Upon the successful completion and launch of a product in a group, we will make a separate determination of useful life of the IPR&D intangible asset and commence amortization. This methodology resulted in six groups of IPR&D (2014 through 2018 plus a group with a single IPR&D project). When the first product of each IPR&D group launches, it is our policy to commence amortization of the entire group utilizing the related cash flows expected to be generated for the group. Due to the nature of our generic injectable product portfolio pipeline, individual products in the IPR&D groups are expected to launch within an annual time period or reasonably close thereto.

Trade names constitute intellectual property rights and are marketing-related intangible assets. The JHP trade name was valued using a relief from royalty method of the income approach and accounted for with a five year useful life based on expected utility. This asset will be subject to impairment testing whenever events or changes in business circumstances necessitate an evaluation for impairment using a fair value approach.

Intangible Asset Impairments

During the nine months ended September 30, 2014, we recorded intangible asset impairments totaling $89,086 thousand related to an adjustment to the forecasted operating results for eight Par Pharmaceutical segment products compared to their originally forecasted operating results at date of acquisition, inclusive of one discontinued product, one partially impaired product primarily due to the contract ending with the partner and a partially impaired IPR&D project from the JHP Acquisition due to an adverse court ruling pertaining to related patent litigation. The estimated fair values of the assets were determined by completing updated discounted cash flow models. During the nine months ended September 30, 2013, we recorded intangible asset impairments totaling $39,946 thousand related to an adjustment to the forecasted operating results of five Par Pharmaceutical segment products compared to their originally forecasted operating results at date of acquisition, as well as ceased selling one product that had been acquired with the divested products from the Watson/Actavis Merger.

Estimated Amortization Expense for Existing Intangible Assets at September 30, 2014

The following table assumes the intangible asset related to the Par trade name as an indefinite-lived asset that will not be amortized in the future.

($ amounts in thousands)



	Estimated
	Amortization
	Expense
Remainder of 2014	$	69,809
2015	178,636
2016	172,693
2017	202,519
2018	158,776
2019 and thereafter	353,088
	$	1,135,521