Allergan plc (Form: 10-Q, Received: 08/08/2016 17:10:32)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number	Exact name of registrant as specified in its charter, principal office and address and telephone number	State of incorporation or organization	I.R.S. Employer Identification No.
001-36867	Allergan plc Clonshaugh Business and Technology Park Coolock, Dublin, D17 E400, Ireland (862) 261-7000	Ireland	98-1114402

001-36887	Warner Chilcott Limited Cannon’s Court 22	Bermuda	98-0496358
	Victoria Street
	Hamilton HM 12
	Bermuda
	(441) 295-2244

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Allergan plc		YES x		NO ¨
Warner Chilcott Limited		YES x		NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Allergan plc		YES x		NO ¨
Warner Chilcott Limited		YES x		NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Allergan plc	Large accelerated filer	x	Accelerated filer	¨
	Non-accelerated filer (Do not check if a smaller reporting company)	¨	Smaller reporting company	¨

Warner Chilcott Limited	Large accelerated filer	¨	Accelerated filer	¨
	Non-accelerated filer (Do not check if a smaller reporting company)	x	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Allergan plc		YES ¨		NO x
Warner Chilcott Limited		YES ¨		NO x

Number of shares of Allergan plc’s Ordinary Shares outstanding on August 3, 2016: 395,952,199. There is no trading market for securities of Warner Chilcott Limited, all of which are indirectly wholly owned by Allergan plc.

This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc. The information in this Quarterly Report on Form 10-Q is equally applicable to Allergan plc and Warner Chilcott Limited, except where otherwise indicated. Warner Chilcott Limited meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.

TABLE OF CONTENTS

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)	3
	Consolidated Balance Sheets of Allergan plc as of June 30, 2016 and December 31, 2015	3
	Consolidated Statements of Operations of Allergan plc for the three and six months ended June 30, 2016 and June 30, 2015	4
	Consolidated Statements of Comprehensive (Loss) / Income of Allergan plc for the three and six months ended June 30, 2016 and June 30, 2015	5
	Consolidated Statements of Cash Flows of Allergan plc for the six months ended June 30, 2016 and 2015	6
	Consolidated Balance Sheets of Warner Chilcott Limited as of June 30, 2016 and December 31, 2015	7
	Consolidated Statements of Operations of Warner Chilcott Limited for the three and six months ended June 30, 2016 and June 30, 2015	8
	Consolidated Statements of Comprehensive (Loss) / Income of Warner Chilcott Limited for the three and six months ended June 30, 2016 and June 30, 2015	9
	Consolidated Statements of Cash Flows of Warner Chilcott Limited for the six months ended June 30, 2016 and 2015	10
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	81
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	117
Item 4.	Controls and Procedures	118
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	120
Item 1A.	Risk Factors	120
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	120
Item 6.	Exhibits	120
	Signatures	121

PART I. FINANCI AL INFORMATION

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS

ALLERGAN PLC

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except par value)

	June 30,			December 31,
	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	489.5		$	1,096.0
Marketable securities		17.1			9.3
Accounts receivable, net		2,490.5			2,125.4
Inventories		726.8			757.5
Prepaid expenses and other current assets		787.3			495.3
Current assets held for sale		4,244.0			4,095.6
Total current assets		8,755.2			8,579.1
Property, plant and equipment, net		1,557.2			1,531.3
Investments and other assets		352.6			408.7
Non current assets held for sale		10,798.0			10,713.3
Deferred tax assets		179.5			49.5
Product rights and other intangibles		64,460.8			67,836.2
Goodwill		46,515.8			46,465.2
Total assets	$	132,619.1		$	135,583.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	4,490.1		$	4,148.6
Income taxes payable		92.6			53.7
Current portion of long-term debt and capital leases		2,506.6			2,396.5
Current liabilities held for sale		1,778.1			1,693.2
Total current liabilities		8,867.4			8,292.0
Long-term debt and capital leases		37,075.1			40,133.9
Other long-term liabilities		1,039.6			1,262.0
Long-term liabilities held for sale		476.5			535.4
Other taxes payable		743.0			801.9
Deferred tax liabilities		7,776.7			7,968.8
Total liabilities		55,978.3			58,994.0
Commitments and contingencies (Refer to Note 20)
Equity:
Preferred shares, $0.0001 par value per share, 5.1 million shares authorized, 5.1 million and 5.1 million shares issued and outstanding, respectively	$	4,929.7		$	4,929.7
Ordinary shares; $0.0001 par value per share; 1,000.0 million shares authorized, 395.8 million and 394.5 million shares issued and outstanding, respectively		-			-
Additional paid-in capital		68,769.0			68,508.3
Retained earnings		3,262.3			3,647.5
Accumulated other comprehensive (loss)		(317.1	)		(494.1	)
Total shareholders’ equity		76,643.9			76,591.4
Noncontrolling interest		(3.1	)		(2.1	)
Total equity		76,640.8			76,589.3
Total liabilities and equity	$	132,619.1		$	135,583.3

See accompanying Notes to Consolidated Financial Statements.

ALLERGAN PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net revenues	$	3,684.8		$	3,628.7		$	7,084.1		$	5,611.7
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		441.5			917.8			918.9			1,439.7
Research and development		636.5			349.7			1,039.6			667.4
Selling and marketing		866.8			801.5			1,633.6			1,333.6
General and administrative		343.2			319.6			672.7			848.9
Amortization		1,633.1			1,515.7			3,222.8			2,301.1
In-process research and development impairments		268.9			197.6			274.9			197.6
Asset sales and impairments, net		(17.6	)		2.9			(19.3	)		7.5
Total operating expenses		4,172.4			4,104.8			7,743.2			6,795.8
Operating (loss)		(487.6	)		(476.1	)		(659.1	)		(1,184.1	)

Interest income		2.5			2.6			5.4			4.1
Interest expense		(345.8	)		(339.9	)		(678.6	)		(511.8	)
Other (expense) income, net		150.1			(40.4	)		150.6			(238.3	)
Total other income (expense), net		(193.2	)		(377.7	)		(522.6	)		(746.0	)
(Loss) before income taxes and noncontrolling interest		(680.8	)		(853.8	)		(1,181.7	)		(1,930.1	)
(Benefit) for income taxes		(258.2	)		(381.9	)		(666.9	)		(652.1	)
Net (loss) from continuing operations, net of tax		(422.6	)		(471.9	)		(514.8	)		(1,278.0	)
(Loss) / income from discontinued operations, net of tax		(77.3	)		230.3			271.3			524.1
Net (loss)		(499.9	)		(241.6	)		(243.5	)		(753.9	)
(Income) attributable to noncontrolling interest		(1.8	)		(1.5	)		(2.5	)		(1.2	)
Net (loss) attributable to shareholders		(501.7	)		(243.1	)		(246.0	)		(755.1	)
Dividends on preferred shares		69.6			69.6			139.2			92.8
Net (loss) attributable to ordinary shareholders	$	(571.3	)	$	(312.7	)	$	(385.2	)	$	(847.9	)

(Loss) / income per share attributable to ordinary shareholders - basic:
Continuing operations	$	(1.25	)	$	(1.38	)	$	(1.66	)	$	(4.02	)
Discontinued operations		(0.19	)		0.58			0.69			1.54
Net (loss) per share - basic	$	(1.44	)	$	(0.80	)	$	(0.97	)	$	(2.48	)
(Loss) / income per share attributable to ordinary shareholders - diluted:
Continuing operations	$	(1.25	)	$	(1.38	)	$	(1.66	)	$	(4.02	)
Discontinued operations		(0.19	)		0.58			0.69			1.54
Net (loss) per share - diluted	$	(1.44	)	$	(0.80	)	$	(0.97	)	$	(2.48	)

Weighted average shares outstanding:
Basic		395.6			392.6			395.2			341.3
Diluted		395.6			392.6			395.2			341.3

See accompanying Notes to Consolidated Financial Statements.

ALLERGAN PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME

(Unaudited; in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net (loss)	$	(499.9	)	$	(241.6	)	$	(243.5	)	$	(753.9	)
Other comprehensive (loss) / income
Foreign currency translation (losses) / gains		(349.9	)		765.3			192.9			451.4
Unrealized gains / (losses), net of tax		4.4			7.6			(15.9	)		3.6
Reclassification for gains included in net income, net of tax		-			-			-			-
Total other comprehensive (loss) / income, net of tax		(345.5	)		772.9			177.0			455.0
Comprehensive (loss) / income		(845.4	)		531.3			(66.5	)		(298.9	)
Comprehensive (income) attributable to noncontrolling interest		(1.8	)		(1.5	)		(2.5	)		(1.2	)
Comprehensive (loss) / income attributable to ordinary shareholders	$	(847.2	)	$	529.8		$	(69.0	)	$	(300.1	)

See accompanying Notes to Consolidated Financial Statements.

ALLERGAN PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

	Six Months Ended June 30,
	2016			2015
Cash Flows From Operating Activities:
Net (loss)	$	(243.5	)	$	(753.9	)
Reconciliation to net cash provided by operating activities:
Depreciation		76.9			132.5
Amortization		3,227.6			2,598.9
Provision for inventory reserve		116.9			63.4
Share-based compensation		188.8			400.7
Deferred income tax benefit		(327.1	)		(588.9	)
In-process research and development impairments		274.9			197.6
Loss / (gain) on asset sales and impairments, net		(19.3	)		58.4
Amortization of inventory step-up		42.4			706.1
Amortization of deferred financing costs		21.0			280.5
Contingent consideration adjustments, including accretion		60.8			8.1
Excess tax benefit from stock-based compensation		(31.9	)		(36.3	)
Other, net		(26.4	)		64.3
Changes in assets and liabilities (net of effects of acquisitions):
Decrease / (increase) in accounts receivable, net		(501.2	)		(896.1	)
Decrease / (increase) in inventories		(183.2	)		(234.8	)
Decrease / (increase) in prepaid expenses and other current assets		245.4			83.1
Increase / (decrease) in accounts payable and accrued expenses		424.0			108.6
Increase / (decrease) in income and other taxes payable		(477.6	)		(216.2	)
Increase / (decrease) in other assets and liabilities		(267.5	)		(49.7	)
Net cash provided by operating activities		2,601.0			1,926.3
Cash Flows From Investing Activities:
Additions to property, plant and equipment		(182.8	)		(248.2	)
Additions to product rights and other intangibles		-			(28.5	)
Additions to investments		-			(21.0	)
Proceeds from sale of investments and other assets		25.5			855.8
Proceeds from sales of property, plant and equipment		14.5			81.5
Acquisitions of businesses, net of cash acquired		-			(35,109.9	)
Net cash (used in) investing activities		(142.8	)		(34,470.3	)
Cash Flows From Financing Activities:
Proceeds from borrowings of long-term indebtedness		-			26,456.4
Proceeds from borrowings on credit facility and other		900.0			2,882.0
Debt issuance and other financing costs		-			(310.8	)
Payments on debt, including capital lease obligations and credit facility		(3,835.6	)		(4,096.2	)
Proceeds from issuance of preferred shares		-			4,929.7
Proceeds from issuance of ordinary shares		-			4,071.1
Proceeds from stock plans		107.3			108.2
Payments of contingent consideration		(63.8	)		(92.0	)
Repurchase of ordinary shares		(67.3	)		(101.0	)
Dividends		(139.2	)		(68.7	)
Excess tax benefit from stock-based compensation		31.9			36.3
Net cash (used in) / provided by financing activities		(3,066.7	)		33,815.0
Effect of currency exchange rate changes on cash and cash equivalents		2.0			(3.1	)
Net (decrease) / increase in cash and cash equivalents		(606.5	)		1,267.9
Cash and cash equivalents at beginning of period		1,096.0			250.0
Cash and cash equivalents at end of period	$	489.5		$	1,517.9
Schedule of Non-Cash Investing and Financing Activities:
Dividends accrued	$	24.2		$	24.0
Non-cash equity issuance for the Acquisition of Allergan net assets	$	-		$	34,687.2

See accompanying Notes to Consolidated Financial Statements.

WARNER CHILCOTT LIMITED

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions)

	June 30,			December 31,
	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	487.2		$	1,036.2
Marketable securities		17.1			9.3
Accounts receivable, net		2,490.5			2,125.4
Receivables from Parents		99.8			457.3
Inventories		726.8			757.5
Prepaid expenses and other current assets		785.1			492.8
Current assets held for sale		4,244.0			4,095.6
Total current assets		8,850.5			8,974.1
Property, plant and equipment, net		1,557.2			1,531.3
Investments and other assets		352.6			408.7
Non current assets held for sale		10,798.0			10,713.3
Deferred tax assets		179.4			49.5
Product rights and other intangibles		64,460.8			67,836.2
Goodwill		46,515.8			46,465.2
Total assets	$	132,714.3		$	135,978.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	4,461.7		$	4,094.5
Payables to Parents		1,533.3			1,466.8
Income taxes payable		92.6			53.7
Current portion of long-term debt and capital leases		2,506.6			2,396.5
Current liabilities held for sale		1,778.1			1,693.2
Total current liabilities		10,372.3			9,704.7
Long-term debt and capital leases		37,075.1			40,133.9
Other long-term liabilities		1,039.6			1,262.0
Long-term liabilities held for sale		476.5			535.4
Other taxes payable		743.0			801.9
Deferred tax liabilities		7,776.7			7,968.8
Total liabilities		57,483.2			60,406.7
Commitments and contingencies
Equity:
Members' capital		72,935.1			72,935.1
Retained earnings		2,616.2			3,132.7
Accumulated other comprehensive (loss)		(317.1	)		(494.1	)
Total members’ equity		75,234.2			75,573.7
Noncontrolling interest		(3.1	)		(2.1	)
Total equity		75,231.1			75,571.6
Total liabilities and equity	$	132,714.3		$	135,978.3

See accompanying Notes to Consolidated Financial Statements.

WARNER CHILCOTT LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net revenues	$	3,684.8		$	3,628.7		$	7,084.1		$	5,611.7
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		441.5			917.8			918.9			1,439.7
Research and development		636.5			349.7			1,039.6			667.4
Selling and marketing		866.8			801.5			1,633.6			1,333.6
General and administrative		339.7			315.4			654.0			841.1
Amortization		1,633.1			1,515.7			3,222.8			2,301.1
In-process research and development impairments		268.9			197.6			274.9			197.6
Asset sales and impairments, net		(17.6	)		2.9			(19.3	)		7.5
Total operating expenses		4,168.9			4,100.6			7,724.5			6,788.0
Operating (loss)		(484.1	)		(471.9	)		(640.4	)		(1,176.3	)
Non-operating income (expense):
Interest income		2.5			2.6			5.4			4.1
Interest expense		(345.8	)		(339.9	)		(678.6	)		(511.8	)
Other income (expense), net		0.1			(40.4	)		0.6			(238.3	)
Total other income (expense), net		(343.2	)		(377.7	)		(672.6	)		(746.0	)
(Loss) before income taxes and noncontrolling interest		(827.3	)		(849.6	)		(1,313.0	)		(1,922.3	)
(Benefit) for income taxes		(258.2	)		(381.9	)		(666.9	)		(652.1	)
Net (loss) from continuing operations, net of tax		(569.1	)		(467.7	)		(646.1	)		(1,270.2	)
(Loss) / income from discontinued operations, net of tax		(77.3	)		230.3			271.3			524.1
Net (loss)		(646.4	)		(237.4	)		(374.8	)		(746.1	)
(Income) attributable to noncontrolling interest		(1.8	)		(1.5	)		(2.5	)		(1.2	)
Net (loss) attributable to members	$	(648.2	)	$	(238.9	)	$	(377.3	)	$	(747.3	)

See accompanying Notes to Consolidated Financial Statements.

WARNER CHILCOTT LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME

(Unaudited; in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net (loss)	$	(646.4	)	$	(237.4	)	$	(374.8	)	$	(746.1	)
Other comprehensive (loss) / income
Foreign currency translation (losses) / gains		(349.9	)		765.3			192.9			451.4
Unrealized gains / (losses), net of tax		4.4			7.6			(15.9	)		3.6
Reclassification for gains included in net income, net of tax		-			-			-			-
Total other comprehensive (loss) / income, net of tax		(345.5	)		772.9			177.0			455.0
Comprehensive (loss) / income		(991.9	)		535.5			(197.8	)		(291.1	)
Comprehensive (income) attributable to noncontrolling interest		(1.8	)		(1.5	)		(2.5	)		(1.2	)
Comprehensive (loss) / income attributable to ordinary shareholders	$	(993.7	)	$	534.0		$	(200.3	)	$	(292.3	)

See accompanying Notes to Consolidated Financial Statements.

WARNER CHILCOTT LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

	Six Months Ended June 30,
	2016			2015
Cash Flows From Operating Activities:
Net (loss)	$	(374.8	)	$	(746.1	)
Reconciliation to net cash provided by operating activities:
Depreciation		76.9			132.5
Amortization		3,227.6			2,598.9
Provision for inventory reserve		116.9			63.4
Share-based compensation		188.8			400.7
Deferred income tax benefit		(327.1	)		(588.9	)
In-process research and development impairments		274.9			197.6
Loss / (gains) on asset sales and impairments, net		(19.3	)		58.4
Amortization of inventory step-up		42.4			706.1
Amortization of deferred financing costs		21.0			280.5
Contingent consideration adjustments, including accretion		60.8			8.1
Other, net		(26.4	)		64.3
Changes in assets and liabilities (net of effects of acquisitions):
Decrease / (increase) in accounts receivable, net		(501.2	)		(895.4	)
Decrease / (increase) in inventories		(183.2	)		(234.8	)
Decrease / (increase) in prepaid expenses and other current assets		243.2			81.9
Increase / (decrease) in accounts payable and accrued expenses		452.4			142.9
Increase / (decrease) in income and other taxes payable		(477.6	)		(216.2	)
Increase / (decrease) in other assets and liabilities, including receivable / payable with Parents		(64.9	)		(130.8	)
Net cash provided by operating activities		2,730.4			1,923.1
Cash Flows From Investing Activities:
Additions to property, plant and equipment		(182.8	)		(248.2	)
Additions to product rights and other intangibles		-			(28.5	)
Additions to investments		-			(21.0	)
Proceeds from the sale of investments and other assets		25.5			855.8
Proceeds from sales of property, plant and equipment		14.5			81.5
Acquisitions of businesses, net of cash acquired		-			(35,109.9	)
Net cash (used in) investing activities		(142.8	)		(34,470.3	)
Cash Flows From Financing Activities:
Proceeds from borrowings of long-term indebtedness		-			26,456.4
Proceeds from borrowings on credit facility and other		900.0			2,882.0
Debt issuance and other financing costs		-			(310.8	)
Payments on debt, including capital lease obligations and credit facility		(3,835.6	)		(4,096.2	)
Payments of contingent consideration		(63.8	)		(92.0	)
Dividend to Parent		(139.2	)		(68.8	)
Contribution from Parent		-			9,000.8
Net cash (used in) provided by financing activities		(3,138.6	)		33,771.4
Effect of currency exchange rate changes on cash and cash equivalents		2.0			(3.1	)
Net (decrease) / increase in cash and cash equivalents		(549.0	)		1,221.1
Cash and cash equivalents at beginning of period		1,036.2			244.3
Cash and cash equivalents at end of period	$	487.2		$	1,465.4

See accompanying Notes to Consolidated Financial Statements

ALLERGAN PLC AND WARNER CHILCOTT LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — General

Allergan plc is focused on developing, manufacturing and commercializing innovative branded pharmaceuticals (“brand”, “branded” or “specialty brand”). Prior to completing the Teva Transaction (defined below), the Company also sold high-quality generic and over-the-counter (“OTC”) medicines and biologic products for patients around the world.

Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women's health, urology, and anti-infective therapeutic categories, and operated the world's third-largest global generics business, providing patients around the globe with increased access to affordable, high-quality medicines. Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry.

With commercial operations in over 100 countries, Allergan is committed to working with physicians, healthcare providers and patients to deliver innovative and meaningful treatments that help people around the world live longer, healthier lives. Warner Chilcott Limited is a wholly-owned subsidiary of Allergan plc and has the same principal business activities. As a result of the Allergan Acquisition (defined below) which closed on March 17, 2015, the Company expanded its franchises to include ophthalmology, neurosciences and medical aesthetics/dermatology/plastic surgery, which complements the Company’s existing central nervous system, gastroenterology, women’s health and urology franchises. The combined company benefits significantly from Allergan, Inc’s. (“Legacy Allergan”) global brand equity and consumer awareness of key products, including Botox ^® and Restasis ^® . The Allergan Acquisition also expanded our presence and market and product reach across many international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.

On July 26, 2015 we entered into a master purchase agreement (the “Teva Agreement”), under which Teva Pharmaceutical Industries Ltd. (“Teva”) agreed to acquire our global generic pharmaceuticals business and certain other assets (the “Teva Transaction”). Upon the closing of the Teva Transaction on August 2, 2016, we received $33.4 billion in cash which includes estimated working capital and other contractual adjustments, and 100.3 million unregistered Teva ordinary shares (or American Depository Shares with respect thereto), which approximated $5.0 billion in value using the closing date Teva opening stock price discounted at a rate of 5.9 percent due to the lack of marketability. As part of the Teva agreement, Teva acquired our global generics business, including the United States (“U.S.”) and international generic commercial units, our third-party supplier Medis, our global generic manufacturing operations, our global generic research and development (“R&D”) unit, our international OTC commercial unit (excluding OTC eye care products) and some established international brands.

On June 30, 2016, the Company held for sale its Anda Distribution business, which distributes generic, brand, specialty and OTC pharmaceutical products from more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the United States. The Company decided to hold for sale this business unit as the Company intends to continue its evolution into a focused branded pharmaceutical company. On August 2, 2016, the Company entered into a definitive agreement under which Teva will acquire the Anda Distribution business for $500.0 million. The transaction is expected to close in the second half of 2016 and is subject to customary closing conditions, including antitrust clearance in the U.S.

As a result of the Teva Transaction and the decision to hold for sale the Company’s Anda Distribution business, and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) number 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, the Company is accounting for the assets and liabilities to be divested as held for sale. Further, the financial results of the businesses held for sale have been reclassified to discontinued operations for all periods presented in our consolidated financial statements.

The results of our discontinued operations include the results of our generic product development, manufacturing and distribution of off-patent pharmaceutical products, established international brands marketed similarly to generic products and out-licensed generic pharmaceutical products primarily in Europe through our Medis third-party business, as well as our Anda Distribution business.

The accompanying consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2015 (“Annual Report”). Certai n information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted from the accompanying consolidated financial statements. The accompanying year end consolidated balance sheet was derived from the audited financial statements included in the Annual Report as revised for discontinued operations treatment of our Anda Distribution business. The accompanying interim fi nancial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s consolidated financial position, results of operations, comprehensive (loss) / income and cash flows for the periods presented. Unless otherwise noted, all such adjustments are of a normal, recurring nature. All intercompany transactions and balances have been eliminated in consolidation. The Company’s results of operations, comprehensive (loss) / income and cas h flows for the interim periods are not necessarily indicative of the results of operations, comprehensive (loss) / income and cash flows that it may achieve in future periods.

In connection with the Allergan Acquisition, the Company changed its name from Actavis plc to Allergan plc. Actavis plc’s ordinary shares were traded on the NYSE under the symbol “ACT” until the opening of trading on June 15, 2015, at which time Actavis plc changed its corporate name to “Allergan plc” and changed its ticker symbol to “AGN.” Pursuant to Rule 12g-3(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Allergan plc is the successor issuer to Actavis plc’s ordinary shares which are deemed to be registered under Section 12(b) of the Exchange Act, and Allergan plc is subject to the informational requirements of the Exchange Act, and the rules and regulations promulgated thereunder.

NOTE 2 – Reconciliation of Warner Chilcott Limited results to Allergan plc results

Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc (together with other Warner Chilcott Limited parents, the “Parent”), the ultimate parent of the group. The results of Warner Chilcott Limited are consolidated into the results of Allergan plc. Due to the deminimis activity between Allergan plc and Warner Chilcott Limited, references throughout this filing relate to both Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited representations relate only to itself and not to any other company.

Except where otherwise indicated, and excluding certain insignificant cash and non-cash transactions at the Allergan plc level, these notes relate to the consolidated financial statements for both separate registrants, Allergan plc and Warner Chilcott Limited. In addition to certain inter-company payable and receivable amounts between the entities, the following is a reconciliation of the financial position and results of operations of Warner Chilcott Limited to Allergan plc ($ in millions):

	As of June 30, 2016						As of December 31, 2015
	Allergan plc		Warner Chilcott Limited		Difference		Allergan plc		Warner Chilcott Limited		Difference
Cash and cash equivalents	$	489.5	$	487.2	$	2.3	$	1,096.0	$	1,036.2	$	59.8
Prepaid expenses and other current assets		787.3		785.1		2.2		495.3		492.8		2.5
Accounts payable and accrued liabilities		4,490.1		4,461.7		28.4		4,148.6		4,094.5		54.1

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
	Allergan plc			Warner Chilcott Limited			Difference			Allergan plc			Warner Chilcott Limited			Difference
General and administrative expenses	$	343.2		$	339.7		$	3.5		$	672.7		$	654.0		$	18.7
Operating (loss)		(487.6	)		(484.1	)		(3.5	)		(659.1	)		(640.4	)		(18.7	)
Other income / (expense)		150.1			0.1			150.0			150.6			0.6			150.0
(Loss) before income taxes and noncontrolling interest		(680.8	)		(827.3	)		146.5			(1,181.7	)		(1,313.0	)		131.3
Net (loss) from continuing operations, net of tax		(422.6	)		(569.1	)		146.5			(514.8	)		(646.1	)		131.3
Net (loss)		(499.9	)		(646.4	)		146.5			(243.5	)		(374.8	)		131.3
Dividends on preferred stock		69.6			-			69.6			139.2			-			139.2
Net (loss) attributable to ordinary shareholder/members		(571.3	)		(648.2	)		76.9			(385.2	)		(377.3	)		(7.9	)

	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
	Allergan plc			Warner Chilcott Limited			Difference			Allergan plc			Warner Chilcott Limited			Difference
General and administrative expenses	$	319.6		$	315.4		$	4.2		$	848.9		$	841.1		$	7.8
Operating (loss)		(476.1	)		(471.9	)		(4.2	)		(1,184.1	)		(1,176.3	)		(7.8	)
(Loss) before income taxes and noncontrolling interest		(853.8	)		(849.6	)		(4.2	)		(1,930.1	)		(1,922.3	)		(7.8	)
Net (loss) from continuing operations, net of tax		(471.9	)		(467.7	)		(4.2	)		(1,278.0	)		(1,270.2	)		(7.8	)
Net (loss)		(241.6	)		(237.4	)		(4.2	)		(753.9	)		(746.1	)		(7.8	)
Dividends on preferred stock		69.6			-			69.6			92.8			-			92.8
Net (loss) attributable to ordinary shareholder/members		(312.7	)		(238.9	)		(73.8	)		(847.9	)		(747.3	)		(100.6	)

The difference between general and administrative expenses in the three and six months ended June 30, 2016 and 2015 were due to corporate related expenses incurred at Allergan plc as well as non-recurring transaction costs. Movements in equity are due to historical differences in the results of operations of the companies and differences in equity awards.

NOTE 3 — Summary of Significant Accounting Policies

The following are interim updates to certain of the policies described in “Note 4” of the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2015 included in the Annual Report.

Reclassifications

In April 2015, the FASB issued guidance which changes the classification of debt issuance costs from being an asset on the balance sheet to netting the costs against the carrying value of the debt. As a result, the Company reclassified debt issuance costs as of December 31, 2015 by decreasing “prepaid expenses and other current assets” and “current portion of long-term debt and capital leases” by $36.3 million as well as decreasing “investments and other assets” and “long-term debt and capital leases” by $159.5 million. In addition, the Company made certain presentation reclassifications relating to segment results and guarantor financial statements.

Revenue Recognition

General

Revenue from product sales is recognized when title and risk of loss to the product transfers to the customer, which is based on the transaction shipping terms. Recognition of revenue also requires reasonable assurance of collection of sales proceeds, the seller’s price to the buyer to be fixed or determinable and the completion of all performance obligations. The Company warrants products against defects and for specific quality standards, permitting the return of products under certain circumstances. Product sales are

recorded ne t of all sales-related deductions including, but not limited to: chargebacks, trade discounts, billback adjustments, sales returns and allowances, commercial and government rebates, customer loyalty programs and fee for service arrangements with certain di stributors, which we refer to in the aggregate as “SRA” allowances.

Royalty and commission revenue is recognized as a component of net revenues in accordance with the terms of their respective contractual agreements when collectability is reasonably assured and when revenue can be reasonably measured.

Provisions for SRAs

As is customary in the pharmaceutical industry, our gross product sales are subject to a variety of deductions in arriving at reported net product sales. When the Company recognizes gross revenue from the sale of products, an estimate of SRA is recorded, which reduces the product revenues. Accounts receivable and/or accrued liabilities are also reduced and/or increased by the SRA amount depending on whether we have the right of offset with the customer. These provisions are estimated based on historical payment experience, historical relationship of the deductions to gross product revenues, government regulations, estimated utilization or redemption rates, estimated customer inventory levels and current contract sales terms. The estimation process used to determine our SRA provision has been applied on a consistent basis and no material revenue adjustments have been necessary to increase or decrease our reserves for SRA as a result of a significant change in underlying estimates. The Company uses a variety of methods to assess the adequacy of the SRA reserves to ensure that our financial statements are fairly stated.

Chargebacks — A chargeback represents an amount payable in the future to a wholesaler for the difference between the invoice price paid by our wholesale customer for a particular product and the negotiated contract price that the wholesaler’s customer pays for that product. The chargeback provision and related reserve varies with changes in product mix, changes in customer pricing and changes to estimated wholesaler inventories. The provision for chargebacks also takes into account an estimate of the expected wholesaler sell-through levels to indirect customers at certain contract prices. The Company validates the chargeback accrual quarterly through a review of the inventory reports obtained from our largest wholesale customers. This customer inventory information is used to verify the estimated liability for future chargeback claims based on historical chargeback and contract rates. These large wholesalers represent the vast majority of the recipients of the Company’s chargeback payments. We continually monitor current pricing trends and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated.

Rebates — Rebates include volume related incentives to direct and indirect customers, third-party managed care and Medicare Part D rebates, Medicaid rebates and other government rebates. Rebates are accrued based on an estimate of claims to be paid for product sold into trade by the Company. Volume rebates are generally offered to customers as an incentive to use the Company’s products and to encourage greater product sales. These rebate programs include contracted rebates based on customers’ purchases made during an applicable monthly, quarterly or annual period. The provision for third-party rebates is estimated based on our customers’ contracted rebate programs and the Company’s historical experience of rebates paid. Any significant changes to our customer rebate programs are considered in establishing the provision for rebates. The provisions for government rebates are based, in part, upon historical experience of claims submitted by the various states / authorities, contractual terms and government regulations. We monitor legislative changes to determine what impact such legislation may have on our provision.

Cash Discounts — Cash discounts are provided to customers that pay within a specific period. The provision for cash discounts is estimated based upon invoice billings and historical customer payment experience. The Company’s experience of payment history is fairly consistent and most customer payments qualify for the cash discount.

Returns and Other Allowances — The Company’s provision for returns and other allowances include returns, pricing adjustments, promotional allowances, loyalty cards and billback adjustments.

Consistent with industry practice, the Company maintains a returns policy that allows customers to return product for a credit. In accordance with the Company’s policy, credits for customer returns of products are applied against outstanding account activity or are settled in cash. Product exchanges are not permitted. Customer returns of product are generally not resalable. The Company’s estimate of the provision for returns is based upon historical experience and current trends of actual customer returns. Additionally, we consider other factors when estimating the current period returns provision, including levels of inventory in the distribution channel, as well as significant market changes which may impact future expected returns.

Pricing adjustments, which includes shelf stock adjustments, (primarily related to our former generics business) are credits issued to reflect price decreases in selling prices charged to the Company’s direct customers. Shelf stock adjustments are based upon the amount of product our customers have in their inventory at the time of an agreed-upon price reduction. Th e provision for shelf stock adjustments is based upon specific terms with the Company’s customers and includes estimates of existing customer inventory levels based upon their historical purchasing patterns. We regularly monitor all price changes to evalua te the Company’s reserve balances. The adequacy of these reserves is readily determinable as pricing adjustments and shelf stock adjustments are negotiated and settled on a customer-by-customer basis.

Promotional allowances are credits that are issued in connection with a product launch or as an incentive for customers to carry our product. The Company establishes a reserve for promotional allowances based upon contractual terms.

Billback adjustments, which primarily relate to our former generics business, are credits that are issued to certain customers who purchase directly from us as well as indirectly through a wholesaler. These credits are issued in the event there is a difference between the customer’s direct and indirect contract price. The provision for billbacks is estimated based upon historical purchasing patterns of qualified customers who purchase product directly from us and supplement their purchases indirectly through our wholesale customers.

Loyalty cards allow the end user patients a discount per prescription and are accrued based on historical experience, contract terms and the volume of product and cards in the distribution channel.

Accounts receivable balances in the Company’s consolidated financial statements are presented net of SRA estimates. SRA balances in accounts receivable were $181.4 million and $245.2 million at June 30, 2016 and December 31, 2015, respectively. SRA balances within accounts payable and accrued expenses were $1,713.0 million and $1,570.0 million at June 30, 2016 and December 31, 2015, respectively. The movements in the SRA reserve balances for continuing operations in the six months ended June 30, 2016 are as follows ($ in millions):

Balance as of December 31, 2015	$	1,815.2
Provision to reduce gross product sales to net product sales		3,395.7
Payments and other		(3,316.5	)
Balance as of June 30, 2016	$	1,894.4

The provisions recorded to reduce gross product sales to net product sales, excluding discontinued operations, were as follows ($ in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Gross product sales	$	5,388.4		$	4,945.3		$	10,394.8		$	7,907.4
Provisions to reduce gross product sales to net product sales		(1,754.1	)		(1,361.7	)		(3,395.7	)		(2,367.8	)
Net product sales	$	3,634.3		$	3,583.6		$	6,999.1		$	5,539.6
Percentage of provisions to gross sales		32.6	%		27.5	%		32.7	%		29.9	%

The Company also had SRA reserves relating to discontinued operations of $1,703.1 million and $1,738.7 million as of June 30, 2016 and December 31, 2015, respectively.

Goodwill and Intangible Assets with Indefinite-Lives

General

The Company tests goodwill and intangible assets with indefinite-lives for impairment annually in the second quarter by comparing the fair value of each of the Company’s reporting units to the respective carrying value of the reporting units. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

Goodwill is considered impaired if the carrying amount of the net assets exceeds the fair value of the reporting unit. Impairment, if any, would be recorded in operating income and this could result in a material impact to net income / (loss) and income / (loss) earnings per share.

Acquired in-process research and development (“IPR&D”) intangible assets represent the value assigned to acquired research and development projects that, as of the date acquired, represent the right to develop, use, sell and/or offer for sale a product or other intellectual property that the Company has acquired with respect to products and/or processes that have not been completed or approved. The IPR&D intangible a ssets are subject to impairment testing until completion or abandonment of each project. Upon abandonment, the assets are impaired. Impairment testing requires the development of significant estimates and assumptions involving the determination of estimate d net cash flows for each year for each project or product (including net revenues, cost of sales, research and development (“R&D”) costs, selling and marketing costs and other costs which may be allocated), 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, the potential regulatory and commercial success risks, and competitive trends impacting the asset and each cash flow stream as well as other factors. The major risks and uncertainties associated with the timely and successful completion of the IPR&D projects include legal risk, market risk and regulatory risk. Changes in these assumptions could result in future impairment charges. No assurances can be g iven that the underlying assumptions used to prepare the discounted cash flow analysis will not change or the timely completion of each project to commercial success will occur. For these and other reasons, actual results may vary significantly from estima ted results.

Upon successful completion of each project and approval of the product, we will make a separate determination of the useful life of the intangible, transfer the amount to currently marketed products (“CMP”) and amortization expense will be recorded over the estimated useful life.

Annual Testing

In connection with the realignment of the Company’s operating segments in the second quarter of 2016, goodwill was reallocated to reporting units under the new segment structure. The Company evaluated goodwill for six reporting units during the second quarter of 2016. The Company performed its annual impairment test utilizing long-term growth rates for its reporting units ranging from 0% to 2.5% in its estimation of fair value and discount rates ranging from 8.0% to 9.5%. The factors used in evaluating goodwill for impairment are subject to change and are tracked against historical results by management. Changes in the key assumptions by management can change the results of testing. The Company determined there was no impairment associated with goodwill.

In the second quarter of 2016, the Company tested its indefinite-lived trade name intangible assets for impairment noting no impairment.

The Company performed its annual IPR&D impairment test in the second quarter of 2016 noting the impairment of an international eye care pipeline project of $35.0 million based on a decrease in projected cash flows due to market conditions as well as an impairment of $20.0 million for a specified indication of a Botox therapeutic product based on a decrease in projected cash flows due to a decline in market demand assumptions. In addition, during the three months ended June 30, 2016, the Company impaired IPR&D projects relating to women’s healthcare of $24.0 million and osteoarthritis of approximately $190.0 million based on clinical results.

During the second quarter of 2015, the Company recorded a $197.6 million impairment related to IPR&D for select projects as the Company revised its sales forecast of certain assets as well as the timing of the launch of certain projects.

Litigation and Contingencies

The Company is involved in various legal proceedings in the normal course of its business, including product liability litigation, intellectual property litigation, employment litigation and other litigation. Additionally, the Company, in consultation with its counsel, assesses the need to record a liability for contingencies on a case-by-case basis in accordance with FASB Accounting Standards Codification (“ASC”) Topic 450 “Contingencies” (“ASC 450”). Accruals are recorded when the Company determines that a loss related to a matter is both probable and reasonably estimable. These accruals are adjusted periodically as assessment efforts progress or as additional information becomes available. Acquired contingencies in business combinations are recorded at fair value to the extent determinable, otherwise in accordance ASC 450. Refer to “NOTE 20 — Commitments and Contingencies” for more information.

Earnings Per Share (“EPS”)

The Company computes EPS in accordance with ASC Topic 260, “Earnings Per Share” (“ASC 260”) and related guidance, which requires two calculations of EPS to be disclosed: basic and diluted. Basic EPS is computed by dividing net (loss) / income by the weighted average ordinary shares outstanding during a period. Diluted EPS is based on the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the exercise of stock options and restricted stock

units. Diluted EPS also includes the impact of ordinary share equivalents to be issued upon the mandatory conversion of the Company’s preferred shares. Ordinary share equivalents have been excluded where their inclusion would be anti-dilutive.

A reconciliation of the numerators and denominators of basic and diluted EPS consisted of the following ($ in millions, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net (loss) / income:
Net (loss) attributable to ordinary shareholders excluding income from discontinued operations, net of tax	$	(494.0	)	$	(543.0	)	$	(656.5	)	$	(1,372.0	)
Income from discontinued operations, net of tax		(77.3	)		230.3			271.3			524.1
Net (loss) attributable to ordinary shareholders	$	(571.3	)	$	(312.7	)	$	(385.2	)	$	(847.9	)

Basic weighted average ordinary shares outstanding		395.6			392.6			395.2			341.3

Basic EPS:
Continuing operations	$	(1.25	)	$	(1.38	)	$	(1.66	)	$	(4.02	)
Discontinued operations	$	(0.19	)	$	0.58		$	0.69		$	1.54
Net (loss) per share	$	(1.44	)	$	(0.80	)	$	(0.97	)	$	(2.48	)

Diluted weighted average ordinary shares outstanding		395.6			392.6			395.2			341.3

Diluted EPS:
Continuing operations	$	(1.25	)	$	(1.38	)	$	(1.66	)	$	(4.02	)
Discontinued operations	$	(0.19	)	$	0.58		$	0.69		$	1.54
Net (loss) per share	$	(1.44	)	$	(0.80	)	$	(0.97	)	$	(2.48	)

Stock awards to purchase 4.2 million and 4.7 million ordinary shares for the three and six months ended June 30, 2016, respectively, were outstanding, but not included in the computation of diluted EPS, because the awards were anti-dilutive for continuing operations and as such the treatment for discontinued operations is also anti-dilutive. The weighted average impact of ordinary share equivalents of 17.6 million for the three and six months ended June 30 2016, which are anticipated to result from the mandatory conversion of the Company’s preferred shares were not included in the calculation of diluted EPS as their impact would be anti-dilutive.

Stock awards to purchase 5.1 million and 4.7 million ordinary shares during the three and six months ended June 30, 2015, respectively, were outstanding, but not included in the computation of diluted EPS, because the impact of the awards were anti-dilutive for continuing operations and as such the treatment for discontinued operations is also anti-dilutive. The weighted average impact of ordinary share equivalents of 16.7 million and 11.1 million for the three and six months ended June 30, 2015, respectively, which are anticipated to result from the mandatory conversion of the Company’s preferred shares were not included in the calculation of diluted EPS as their impact would be anti-dilutive.

Restructuring Costs

The Company records liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred. In accordance with existing benefit arrangements, employee severance costs are accrued when the restructuring actions are probable and estimable. Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period. The Company also incurs costs with contract terminations and costs of transferring products as part of restructuring activities. Refer to “NOTE 19 — Business Restructuring Charges” for more information.

Recent Accounting Pronouncements

On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), with an effective date for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, for public business entities, certain not-for-profit entities, and certain employee benefit plans. The effective date

for ASU 2014-09 was deferred by one year through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date , to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. T he Company is evaluating the impact, if any, the pronouncement will have on both historical and future financial positions and results of operations.

In January 2016, the FASB issued Accounting Standards Update 2016-01, which changes the requirement to require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this guidance is not anticipated to have a material impact on the Company’s financial position or results of operations.

In February 2016, the FASB issued Accounting Standards Update 2016-02, which states that a lessee should recognize the assets and liabilities that arise from leases. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In March 2016, the FASB has issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606 Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the entity is an agent). The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The effective date and transition of these amendments is the same as the effective date and transition requirements in Topic 606. The Company is evaluating the impact, if any, the pronouncement will have on both historical and future financial positions and results of operations.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period. The Company is evaluating the impact the pronouncement will have on our financial positions and results of operations .

In April 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. The Company is evaluating the impact, if any, the pronouncement will have on both historical and future financial positions and results of operations.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients, which include assessing the specific collectability criterion and accounting for contracts that do not meet the criteria for Step 1 to determine whether a contract is valid and represents a genuine transaction; presentation of sales taxes and other similar taxes collected from customers; noncash consideration; contract modifications at transition; and completed contracts at transition. The amendments also clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption, however, an entity is still required to disclose the effect of the changes on any prior periods retrospectively adjusted. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements for Topic 606. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to im prove financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets including trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform th eir credit loss estimates. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within thos e fiscal years, beginning after December 15, 2018. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

NOTE 4 — Acquisitions and Other Agreements

During the six months ended June 30, 2015, the Company acquired material assets and businesses. The pro forma results of the businesses acquired that materially impacted the reported results of the Company are as follows (unaudited; $ in millions except per share information):

	Six Months Ended June 30, 2015
	As reported			Allergan Acquisition		Pro Forma
Net Revenue	$	5,611.7		$	1,523.0	$	7,134.7
Net (loss) / income attributable to ordinary shareholders	$	(847.9	)	$	377.7	$	(470.2	)
Net (loss) per share
Basic	$	(2.48	)			$	(1.19	)
Diluted	$	(2.48	)			$	(1.19	)

2016 Transactions

The following are the material transactions that were completed in the six months ended June 30, 2016.

Licenses and Asset Acquisitions

Topokine

On April 21, 2016, the Company acquired Topokine Therapeutics (“Topokine”), a privately held, clinical-stage biotechnology company focused on development stage topical medicines for fat reduction. Under the terms of the agreement, the Company acquired Topokine for an upfront payment of $85.0 million and success-based development and sales milestones of up to $260.0 million for XAF5, a first-in-class topical agent in development for the treatment of steatoblepharon, also known as undereye bags. The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront net payment of approximately $85.0 million was expensed as a component of R&D expense and the future milestones will be recorded when the event becomes probable.

Heptares License

On April 6, 2016, the Company entered into an agreement with Heptares Therapeutics (“Heptares”), under which the Company licensed exclusive global rights to a portfolio of novel subtype-selective muscarinic receptor agonists in development for the treatment of major neurological disorders, including Alzheimer's disease. Under the terms of the agreement, Heptares received an upfront payment of $125.0 million and is eligible to receive contingent milestone payments of up to approximately $665.0 million associated with the successful Phase 1, 2 and 3 clinical development and launch of the first three licensed compounds for multiple indications and up to approximately $2.575 billion associated with achieving certain annual sales thresholds during the several years following launch (the “Heptares Transaction”). In addition, Heptares is eligible to receive up to double-digit tiered royalties on net sales of all products resulting from the partnership. The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront payment of approximately $125.0 million was expensed as a component of R&D expense and the future milestones will be recorded when the event becomes probable.

Anterios

On January 6, 2016, the Company acquired Anterios, Inc. (“Anterios”), a clinical stage biopharmaceutical company developing a next generation delivery system and botulinum toxin-based prescription products. Under the terms of the agreement, the Company acquired Anterios for an upfront net payment of approximately $90.0 million and potential development and commercialization milestone payments related to an investigational topical formulation of botulinum toxin type A in development for the potential treatment of hyperhidrosis, acne, and crow’s feet lines and the related NDS™, Anterios' proprietary platform delivery technology that enables local, targeted delivery of neurotoxins through the skin without the need for injections (“the Anterios Transaction”). Total future milestone payments could amount to $387.5 million. The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront net payment of approximately $90.0 million was expensed as a component of R&D expense and the future milestones will be recorded when the event becomes probable.

2015 Transactions

The following are the material transactions that were completed in the year ended December 31, 2015.

Acquisitions

AqueSys

On October 16, 2015, the Company acquired AqueSys, Inc. (“AqueSys”), a private, clinical-stage medical device company focused on developing ocular implants that reduce intraocular pressure (“IOP”) associated with glaucoma, in an all-cash transaction. Under the terms of the agreement, the Company acquired AqueSys for an acquisition accounting purchase price of $298.9 million, including $193.5 million for the estimated fair value of contingent consideration relating to the regulatory approval and commercialization milestone payments. The Company acquired AqueSys for its development program, including XEN45, a soft shunt that is implanted in the sub conjunctival space in the eye through a minimally invasive procedure with a single use, pre-loaded proprietary injector (the “AqueSys Acquisition”).

Assets Acquired and Liabilities Assumed at Fair Value

The AqueSys Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date ($ in millions):

	Amount
Cash and cash equivalents	$	6.2
Current assets		1.2
IPR&D intangible assets		302.0
Intangible assets		221.0
Goodwill		138.5
Current liabilities		(6.9	)
Contingent consideration		(193.5	)
Deferred tax liabilities, net		(169.6	)
Net assets acquired	$	298.9

Kythera

On October 1, 2015, the Company acquired Kythera Biopharmaceuticals (“Kythera”) for $75 per share, or an acquisition accounting purchase price of $2,089.5 million (the “Kythera Acquisition”). Kythera was focused on the discovery, development and commercialization of novel prescription aesthetic products. Kythera’s lead product, Kybella ^® injection, is the first and only Food and Drug Administration (“FDA”) approved, non-surgical treatment for moderate to severe submental fullness, commonly referred to as double chin.

Assets Acquired and Liabilities Assume d at Fair Value

The Kythera Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date ($ in millions):

	Amount
Cash and cash equivalents	$	78.1
Marketable securities		79.9
Inventory		18.2
Other current assets		14.5
IPR&D intangible assets		320.0
Intangible assets		2,120.0
Goodwill		328.7
Other current liabilities		(48.6	)
Deferred tax, net		(766.7	)
Outstanding indebtedness		(54.6	)
Net assets acquired	$	2,089.5

Auden Mckenzie

On May 29, 2015 the Company acquired Auden Mckenzie Holdings Limited (“Auden”), a company specializing in the development, licensing and marketing of niche generic medicines and proprietary brands in the United Kingdom (“UK”) and across Europe for approximately 323.7 million British Pounds, or $495.9 million (the “Auden Acquisition”). The assets and liabilities acquired, as well as the results of operations for the acquired Auden business are part of the assets divested in the Teva Transaction. Results of Auden are included as a component of income from discontinued operations and the acquired financial position is included in assets and liabilities held for sale.

Recognition and Measurement of Assets Acquired and Liabilities Assumed at Fair Value

The Auden Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the final fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date ($ in millions):

	Amount
Cash and cash equivalents	$	32.2
Inventory		49.1
IPR&D intangible assets		38.6
Intangible assets		342.4
Goodwill		123.3
Other assets and liabilities		7.2
Contingent consideration		(17.3	)
Deferred tax liabilities, net		(79.6	)
Net assets acquired	$	495.9

Allergan

health and urology franchises. The combined company also benefited significantly f rom Legacy Allergan’s global brand equity and consumer awareness of key products, including Botox ^® and Restasis ^® . The transaction expanded our presence and market and product reach across many international markets, with strengthened commercial positions a cross Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.

Inventories

The fair value of inventories acquired included an acquisition accounting fair market value step-up of $923.9 million. In the six months ended June 30, 2016, the Company recognized $21.6 million as a component of cost of sales as the inventory acquired was sold to the Company’s customers.

In the three and six months ended June 30, 2015, the Company recognized $433.4 million and $504.4 million, respectively, as a component of cost of sales as the inventory acquired was sold to the Company’s customers.

Acquisition-Related Expenses

As a result of the Allergan Acquisition, the Company incurred the following transaction and integration costs in the three months ended June 30, 2016 and 2015, respectively ($ in millions):

	Three Months Ended June 30, 2016		Three Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Legacy Allergan employees	$	2.1	$	7.4
Acquisition, integration and restructuring related charges		1.9		1.2
Research and development
Stock-based compensation acquired for Legacy Allergan employees		9.4		36.1
Acquisition, integration and restructuring related charges		1.0		6.3
Selling and marketing
Stock-based compensation acquired for Legacy Allergan employees		16.7		39.7
Acquisition, integration and restructuring related charges		7.9		10.5
General and administrative
Stock-based compensation acquired for Legacy Allergan employees		8.4		43.2
Acquisition, integration and restructuring related charges		53.8		62.0
Other (expense) income
Bridge loan facilities expense		-		(1.9	)
Interest rate lock		-		-
Total transaction and integration costs	$	101.2	$	208.3

As a result of the acquisition, the Company incurred the following transaction and integration costs in the six months ended June 30, 2016 and 2015, respectively ($ in millions):

	Six Months Ended June 30, 2016		Six Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Legacy Allergan employees	$	5.2	$	14.3
Acquisition, integration and restructuring related charges		5.8		12.1
Research and development
Stock-based compensation acquired for Legacy Allergan employees		23.3		91.6
Acquisition, integration and restructuring related charges		3.8		66.2
Selling and marketing
Stock-based compensation acquired for Legacy Allergan employees		37.2		62.9
Acquisition, integration and restructuring related charges		12.9		60.5
General and administrative
Stock-based compensation acquired for Legacy Allergan employees		18.3		226.2
Acquisition-related expenditures		-		65.5
Acquisition, integration and restructuring related charges		93.6		165.7
Other (expense) income
Bridge loan facilities expense		-		(264.9	)
Interest rate lock		-		31.0
Total transaction and integration costs	$	200.1	$	998.9

Licenses and Asset Acquisitions

Migraine License

On August 17, 2015, the Company entered into an agreement with Merck & Co. (“Merck”) under which the Company acquired the exclusive worldwide rights to Merck’s early development stage investigational small molecule oral calcitonin gene-related peptide receptor antagonists, which are being developed for the treatment and prevention of migraines (the “Merck Transaction”). The Merck Transaction is being accounted for as an asset acquisition. The Company acquired these rights for an upfront charge of $250.0 million. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing as well as certain other inputs and processes that the transaction did not qualify as a business. The Company paid $125.0 million in the year ended December 31, 2015 and the remaining $125.0 million was paid in April 2016. Additionally, Merck is owed contingent payments based on commercial and development milestones of up to $965.0 million as well as royalties.

Divestitures

Respiratory Business

As part of the Forest Acquisition (defined below), we acquired certain assets that comprised Legacy Forest’s branded respiratory business in the U.S. and Canada (the “Respiratory Business”). During the year ended December 31, 2014, we held for sale respiratory assets of $734.0 million, including allocated goodwill to this unit of $309.1 million. On March 2, 2015, the Company sold the Respiratory Business to AstraZeneca plc (“AstraZeneca”) for consideration of $600.0 million upon closing, additional funds to be received for the sale of certain of our inventory to AstraZeneca and low single-digit royalties above a certain revenue threshold. AstraZeneca also paid Allergan an additional $100.0 million and Allergan has agreed to a number of contractual consents and approvals, including certain amendments to the ongoing collaboration agreements between AstraZeneca and Allergan (the “Respiratory Sale”). As a result of the final terms of the agreement, in the six months ended June 30, 2015, the Company recognized an incremental charge in cost of sales (including the acquisition accounting fair value mark-up of inventory) relating to inventory that will not be sold to AstraZeneca of $35.3 million. In the quarter ended June 30, 2015, the Company recorded an out-of-period pre-tax expense of $38.8 million related to the write off of royalty rights that expired in April 2015 in connection with the first quarter 2015 transaction. The impact of the out-of-period adjustment is not material to either the three months ended March 31, 2015 or the three months ended June 30, 2015. The Company recognized a loss in other (expense) income for the sale of the business of $38.8 million and $5.3 million, in the three and six months ended June 30, 2015, respectively.

2014 Transactions

The following are the material transactions that were completed in the year ended December 31, 2014 impacted our results of operations in the current period.

Durata Therapeutics

On November 17, 2014, the Company completed its tender offer to purchase all of the outstanding shares of Durata Therapeutics, Inc. (“Durata”), an innovative pharmaceutical company focused on the development and commercialization of novel therapeutics for patients with infectious diseases and acute illnesses (the “Durata Acquisition”). The Company purchased all outstanding shares of Durata, which were valued at approximately $724.5 million, including the assumption of debt. Additionally, there is one contingent value right (“CVR”) per share, entitling the holder to receive additional cash payments of up to $5.00 per CVR if certain regulatory or commercial milestones related to Durata’s lead product Dalvance ^® are achieved. The CVR had an acquisition date fair value of $49.0 million.

Contingent Consideration

At the time of the Durata Acquisition, additional consideration was conditionally due to the seller based upon the approval of Dalvance ^® in Europe, the approval of a single dose indication and the product reaching certain sales milestones. The Company estimated the acquisition accounting fair value of the contingent consideration to be $49.0 million using a probability weighted approach that considered the possible outcomes based on assumptions related to the timing and probability of the product launch date, discount rates matched to the timing of the payment, and probability of success rates and discount adjustments on the related cash flows. On March 2, 2015, the Company announced that the European Commission had granted Allergan’s subsidiary Durata Therapeutics International B.V., marketing authorization for Xydalba™ (dalbavancin) for the treatment of acute bacterial skin and skin structure infections (ABSSSI) in adults. The approval triggered the first CVR payment in the quarter ended March 31, 2015 of $30.9 million. In January 2016, the Company received approval from the FDA for an expanded label that will include a single dose of Dalvance ^® , which triggered a second CVR payment of $30.9 million in the quarter ended March 31, 2016. The difference between the probability weighted fair value and the final payments are recorded as a component of cost of sales.

Forest Laboratories

On July 1, 2014, the Company acquired Forest Laboratories, Inc. (“Legacy Forest”) for $30.9 billion including outstanding indebtedness assumed of $3.3 billion, equity consideration of $20.6 billion, which includes outstanding equity awards, and cash consideration of $7.1 billion (the “Forest Acquisition”). Under the terms of the transaction, Legacy Forest shareholders received 89.8 million Allergan plc ordinary shares, 6.1 million Allergan plc non-qualified stock options and 1.1 million Allergan plc share units. Legacy Forest was a leading, fully integrated, specialty pharmaceutical company largely focused on the United States market. Legacy Forest marketed a portfolio of branded drug products and developed new medicines to treat patients suffering from diseases principally in the following therapeutic areas: central nervous system, cardiovascular, gastrointestinal, respiratory, anti-infective, and cystic fibrosis. A portion of the assets acquired were divested as part of the Teva Transaction.

Inventories

The fair value of inventories acquired included an acquisition accounting fair market value step-up of $1,036.3 million. In the six months ended June 30, 2016, the Company recognized $20.1 million as a component of cost of sales as the inventory acquired on July 1, 2014 was sold to the Company’s customers.

In the three and six months ended June 30, 2015, the Company recognized $49.8 million and $186.6 million, respectively, as a component of cost of sales as the inventory acquired on July 1, 2014 was sold to the Company’s customers in addition to a write-off associated with the Respiratory Sale. A portion of these amounts are included in discontinued operations in the six months ended June 30, 2015.

As a result of the Forest Acquisition, the Company incurred the following transaction and integration costs in the three months ended June 30, 2016 and 2015, respectively ($ in millions):

	Three Months Ended June 30, 2016		Three Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Forest employees	$	0.7	$	1.5
Acquisition, integration and restructuring related charges		-		0.1
Research and development
Stock-based compensation acquired for Forest employees		4.8		8.5
Acquisition, integration and restructuring related charges		0.2		-
Selling and marketing
Stock-based compensation acquired for Forest employees		7.4		8.8
Acquisition, integration and restructuring related charges		-		0.1
General and administrative
Stock-based compensation acquired for Forest employees		10.6		11.1
Acquisition, integration and restructuring related charges		-		34.2
Total transaction and integration costs	$	23.7	$	64.3

As a result of the Forest Acquisition, the Company incurred the following transaction and integration costs in the and six months ended June 30, 2016 and 2015, respectively ($ in millions):

	Six Months Ended June 30, 2016		Six Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Forest employees	$	1.2	$	2.7
Acquisition, integration and restructuring related charges		-		1.1
Research and development
Stock-based compensation acquired for Forest employees		8.9		24.5
Acquisition, integration and restructuring related charges		0.3		8.8
Selling and marketing
Stock-based compensation acquired for Forest employees		14.8		28.4
Acquisition, integration and restructuring related charges		-		16.9
General and administrative
Stock-based compensation acquired for Forest employees		18.7		32.2
Acquisition, integration and restructuring related charges		1.2		47.2
Total transaction and integration costs	$	45.1	$	161.8

NOTE 5 — Discontinued Operations

Global Generics Business

On July 27, 2015, the Company announced that it entered into the Teva Transaction, which closed on August 2, 2016. Under the Teva Agreement, Teva acquired Allergan's global generics business, including the U.S. and international generic commercial units, our third-party supplier Medis, our global generic manufacturing operations, our global generic R&D unit, our international OTC commercial unit (excluding OTC eye care products) and some established international brands. Allergan retained its global branded pharmaceutical and medical aesthetics businesses, as well as its biosimilars development programs, certain OTC products, and the Anda Distribution business now being held for sale. The Company will also have continuing involvement with Teva after the close of the transaction. As a result of the Teva Transaction, the Company holds equity in Teva, continues to distribute products divested to Teva through our held for sale Anda Distribution business as well as purchases product manufactured by Teva for sale in our US General Medicine segment as part of ongoing transitional service and contract manufacturing agreements.

Financial results of the global generics business and the Anda Distribution business are presented as "In come from discontinued operations" on the Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015; and assets and liabilities of the businesses are presented as "Current assets held for sale", "Non current assets hel d for sale", “Current liabilities held for sale” and “Long term liabilities held for sale” on the Consolidated Balance Sheet as of June 30, 2016 and December 31, 2015 .

The following table presents key financial results of the businesses included in "Income from discontinued operations" for the three and six months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net revenues	$	2,095.9		$	2,126.3		$	3,747.8		$	4,377.5
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		1,281.0			1,212.3			2,267.3			2,403.8
Research and development		120.0			105.2			232.3			218.5
Selling and marketing		142.5			179.5			283.5			382.9
General and administrative		167.6			160.6			309.1			324.3
Amortization		2.4			157.8			4.8			297.8
Asset sales and impairments, net		-			(2.3	)		-			50.9
Total operating expenses		1,713.5			1,813.1			3,097.0			3,678.2
Operating income		382.4			313.2			650.8			699.3
Other (expense) income, net		(0.6	)		(8.3	)		(0.4	)		(8.1	)
Provision for income taxes		459.1			74.6			379.1			167.1
Net (loss) / income from discontinued operations	$	(77.3	)	$	230.3		$	271.3		$	524.1

For the six months ended June 30, 2016, the Company recorded a deferred tax expense of $262.5 million related to investments in certain subsidiaries. The recognition of this benefit has been reflected in income from discontinued operations, net of tax with the deferred tax asset reflected in non-current deferred tax assets on the balance sheet.

The following table presents the aggregate carrying amounts of the major classes of assets and liabilities related to the businesses ($ in millions):

	June 30, 2016		December 31, 2015
Assets:
Accounts receivable, net	$	2,506.0	$	2,365.9
Inventories		1,450.2		1,390.7
Prepaid expenses and other current assets		283.3		329.7
Property, plant and equipment, net		1,450.2		1,398.2
Investments and other assets		35.1		42.2
Non-current deferred tax assets		178.7		162.1
Product rights and other intangibles		2,982.3		3,014.8
Goodwill		6,151.7		6,096.0
Total assets	$	15,037.5	$	14,799.6

Liabilities:
Accounts payable and accrued expenses	$	1,751.3	$	1,656.7
Income taxes payable		24.0		34.4
Debt and capital leases		4.5		5.8
Other long-term liabilities		62.9		92.0
Other taxes payable		35.9		69.0
Long-term deferred tax liabilities		376.0		370.7
Total liabilities	$	2,254.6	$	2,228.6

Depreciation and amortization was ceased upon the determination that the held for sale criteria were met, which was the announcement date of the Teva Transaction and June 30, 2016 for the Anda Distribution business. The depreciation, amortization and signi ficant operating and investing non-cash items of the discontinued operations were as follows ($ in millions):

	Six Months Ended June 30,
	2016		2015
Depreciation from discontinued operations	$	2.1	$	75.6
Amortization from discontinued operations		4.8		297.8
Capital expenditures		75.0		110.1
Deferred income taxes expense		342.0		130.1

NOTE 6 – Other Income/(Expense)

On November 23, 2015, the Company announced that it entered into a definitive merger agreement (the “Pfizer Agreement”) under which Pfizer Inc. (“Pfizer”), a global innovative biopharmaceutical company, and Allergan plc would merge in a stock and cash transaction. On April 6, 2016, the Company announced that its merger agreement with Pfizer was terminated by mutual agreement. In connection with the termination of the merger agreement, Pfizer has paid Allergan plc $150.0 million for reimbursement of expenses associated with the transaction which is included as a component of other income (expense) in the three and six months ended June 30, 2016. In addition, as part of the then pending Pfizer Agreement, the Company incurred transaction related expenses of $38.2 million and $74.9 million in the three and six months ended June 30, 2016, respectively.

NOTE 7 — Share-Based Compensation

The Company recognizes compensation expense for all share-based compensation awards made to employees and directors based on the fair value of the awards on the date of grant. A summary of the Company’s share-based compensation plans is presented below.

Equity Award Plans

The Company has adopted several equity award plans which authorize the granting of options, restricted shares, restricted stock units and other forms of equity awards of the Company’s ordinary shares, subject to certain conditions.

The Company granted/grants awards with the following features:

Time-based vesting restricted stock awards;

Performance-based restricted stock awards measured to the EBITDA, as defined, of the Company or other performance-based targets defined by the Company;

Performance-based restricted stock awards measured to the Total Stockholders Return, compared to pre-defined metrics;

Non-qualified options to purchase outstanding shares; and

Cash-settled awards recorded as a liability. These cash settled awards are based on pre-established earnings per share, total shareholder returns and cost savings targets.

Option award plans require options to be granted at the fair value of the shares underlying the options at the date of the grant and generally become exercisable over periods ranging from three to five years. Each option granted expires ten years from the date of the grant. Restricted stock awards are grants that entitle the holder to ordinary shares, subject to certain terms. Restricted stock unit awards are grants that entitle the holder the right to receive an ordinary share, subject to certain terms. Restricted stock and restricted stock unit awards (both time-based vesting and performance-based vesting) generally have restrictions eliminated over a one to four year vesting period. Restrictions generally lapse for non-employee directors after one year. Certain restricted stock units are performance-based awards issued at a target number with the actual number of restricted shares issued ranging based on achievement of the performance criteria. The Company’s equity awards include the acquired awards from the Allergan and Kythera acquisitions (“2015 Acquired Awards”).

Fair Value Assumptions

All restricted stock and restricted stock units (whether time-based vesting or performance-based vesting), are granted and expensed, using the fair value per share on the applicable grant date, over the applicable vesting period. Non-qualified options to purchase ordinary shares are granted to employees at exercise prices per share equal to the closing market price per share on the date of grant. The fair value of non-qualified options is determined on the applicable grant dates using the Black-Scholes method of valuation and that amount is recognized as an expense over the vesting period. Using the Black-Scholes valuation model, the fair value of options is based on the following assumptions:

	2016 Grants	2015 Grants	2015 Acquired Awards
Dividend yield	0%	0%	0%
Expected volatility	27.0%	26.0-29.0%	26.0-27.0%
Risk-free interest rate	1.6%	1.9-2.1%	0.1-2.1%
Expected term (years)	7.0	7.0 - 7.5	up to 6.9

Share-Based Compensation Expense

Share-based compensation expense recognized in the Company’s results of operations for the three months ended June 30, 2016 and 2015 were as follows ($ in millions):

	Three Months Ended June 30,
	2016			2015
Equity based compensation awards	$	89.8		$	175.2
Cash-settled equity awards in connection with the Allergan Acquisition		-			-
Non equity-settled awards other		(1.6	)		-
Total stock-based compensation expense	$	88.2		$	175.2

Included in the table above is stock-based compensation relating to discontinued operations of $4.6 million and $9.7 million for the three months ended June 30, 2016 and 2015, respectively.

Share-based compensation expense recognized in the Company’s results of operations for the six months ended June 30, 2016 and 2015 were as follows ($ in millions):

	Six Months Ended June 30,
	2016		2015
Equity-based compensation awards	$	188.8	$	400.7
Cash-settled equity awards in connection with the Allergan Acquisition		-		127.1
Non equity-settled awards other		7.6		-
Total stock-based compensation expense	$	196.4	$	527.8

Included in the table above is stock-based compensation relating to discontinued operations of $12.8 million and $19.5 million for the six months ended June 30, 2016 and 2015, respectively.

Included in the equity-based compensation awards for the three and six months ended June 30, 2016 and 2015 is the impact of accelerations and step-ups relating to the acquisition accounting treatment of outstanding awards acquired in the Allergan and Forest acquisitions as follows ($ in millions):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Allergan Acquisition	$	25.8	$	105.5	$	60.0	$	239.8
Forest Acquisition		14.3		26.0		27.2		70.9
Total	$	40.1	$	131.5	$	87.2	$	310.7

Unrecognized future stock-based compensation expense was $ 646.4 million as of June 30, 2016, including $ 220.1 million from the Allergan Acquisition and $ 68.4 mill ion from the Forest Acquisition. This amount will be recognized as an expense over a remaining weighted average period of 1.7 years. Stock-based compensation is being amortized and charged to operations over the same period as the restrictions are eliminat ed for the participants, which is generally on a straight-line basis.

Share Activity

The following is a summary of equity award activity for unvested restricted stock and stock units in the period from December 31, 2015 through June 30, 2016:

(in millions, except per share data)	Shares			Weighted Average Grant Date Fair Value			Weighted Average Remaining Contractual Term (Years)		Aggregate Grant Date Fair Value
Restricted shares / units outstanding at December 31, 2015		2.0		$	209.90			1.7	$	419.8
Granted		0.6			281.75					169.0
Vested		(0.7	)		(167.34	)				(117.1	)
Forfeited	*				(244.31	)				(14.3	)
Restricted shares / units outstanding at June 30, 2016		1.9		$	250.08			1.9	$	457.4

*	Forfeited non-qualified options in the six months ended June 30, 2016 were approximately 34,000 shares/units.

The following is a summary of equity award activity for non-qualified options to purchase ordinary shares in the period from December 31, 2015 through June 30, 2016:

(in millions, except per share data)	Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2015		10.5		$	149.11			6.7	$	1,707.8
Granted		0.2			283.70
Exercised		(0.9	)		(116.40	)
Cancelled		(0.1	)		(115.00	)
Outstanding, June 30, 2016		9.7		$	112.85			6.3	$	1,145.2
Vested and expected to vest at June 30, 2016		9.2		$	111.42			6.2	$	1,095.3

NOTE 8 — Reportable Segments

In the second quarter of 2016, Allergan announced a realignment of its businesses to streamline operations. Prior to the realignment, the Company operated and managed its business as four distinct operating segments: US Brands, US Medical Aesthetics, International and Anda Distribution. Under the new organizational structure being reported, and the decision to hold for sale our Anda Distribution business, the Company organized its businesses into the following segments: US Specialized Therapeutics, US General Medicine and International. In addition, certain revenues and shared costs, and the results of corporate initiatives, are managed outside of the three segments. Prior period results have been recast to align to the current segment presentation.

The operating segments are organized as follows:

The US Specialized Therapeutics segment includes sales and expenses relating to branded products within the US, including Medical Aesthetics, Medical Dermatology, Eye Care, Neurosciences and Urology therapeutic products.

The US General Medicine segment includes sales and expenses relating to branded products within the US that do not fall into the US Specialized Therapeutics business units, including Central Nervous System, Gastrointestinal, Women’s Health, Anti-Infectives and Established Brands.

The International segment includes sales and expenses relating to products sold outside the US.

The Company evaluates segment performance based on segment contribution. Segment contribution for our segments represents net revenues less cost of sales (defined below), selling and marketing expenses, and select general and administrative expenses. Included in segment revenues are products sales that are sold through the Anda Distribution business once the Anda Distribution business has sold the product to a third party customer. These sales are included in segment results and are reclassified into revenues from discontinued operations through a reduction of Corporate revenues which eliminates the sales made by our Anda Distribution business from results of continuing operations. Cost of sales for these products in discontinued operations is equal to our average third party cost of sales for third party brand products distributed by Anda Distribution. The Company does not evaluate the following items at the segment level:

Revenues and operating expenses within cost of sales, selling and marketing expenses, and general and administrative expenses that result from the impact of corporate initiatives. Corporate initiatives primarily include integration, restructuring, acquisition and other shared costs.

General and administrative expenses that result from shared infrastructure, including certain expenses located within the United States.

Total assets including capital expenditures.

Other select revenues and operating expenses including R&D expenses, amortization, IPR&D impairments and asset sales and impairments, net as not all such information has been accounted for at the segment level, or such information has not been used by all segments.

The Company defines segment net revenues as product sales and other revenue derived from branded products or licensing agreements. In March 2015, as a result of the Allergan Acquisition, we began to promote Restasis ^® , Lumigan ^® /Ganfort ^® , Alphagan ^® /Combigan ^® , Botox ^® , fillers, other aesthetic products and other eye care products.

Cost of sales within segment contribution includes standard production and packaging costs for the products we manufacture, third party acquisition costs for products manufactured by others, profit-sharing or royalty payments for products sold pursuant to licensing agreements and finished goods inventory reserve charges. Cost of sales included within segment contribution does not include non-standard production costs, such as non-finished goods inventory obsolescence charges, manufacturing variances and excess capacity utilization charges, where applicable. Cost of sales does not include amortization or impairment costs for acquired product rights or other acquired intangibles.

Selling and marketing expenses consist mainly of personnel-related costs, product promotion costs, distribution costs, professional service costs, insurance, depreciation and travel costs.

General and administrative expenses consist mainly of personnel-related costs, facilities costs, transaction costs, insurance, depreciation, litigation and settlement costs and professional services costs which are general in nature and attributable to the segment.

Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30, 2016
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,488.9		$	1,449.1		$	757.0		$	3,695.0

Operating expenses:
Cost of sales ⁽¹⁾		75.1			214.9			115.0			405.0
Selling and marketing		287.8			332.7			207.2			827.7
General and administrative		46.0			43.7			30.9			120.6
Segment Contribution	$	1,080.0		$	857.8		$	403.9		$	2,341.7
Contribution margin		72.5	%		59.2	%		53.4	%		63.4	%
Corporate											308.4
Research and development											636.5
Amortization											1,633.1
In-process research and development impairments											268.9
Asset sales and impairments, net											(17.6	)
Operating (loss)										$	(487.6	)
Operating margin											(13.2	)%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results.

	Three Months Ended June 30, 2015
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,347.7		$	1,608.0		$	717.1		$	3,672.8

Operating expenses:
Cost of sales ⁽¹⁾		74.4			238.0			111.8			424.2
Selling and marketing		247.8			309.2			196.1			753.1
General and administrative		20.9			18.1			35.0			74.0
Segment Contribution	$	1,004.6		$	1,042.7		$	374.2		$	2,421.5
Contribution margin		74.5	%		64.8	%		52.2	%		65.9	%
Corporate											831.7
Research and development											349.7
Amortization											1,515.7
In-process research and development impairments											197.6
Asset sales and impairments, net											2.9
Operating (loss)										$	(476.1	)
Operating margin											(13.0	)%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results.

The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,
	2016			2015
Segment net revenues	$	3,695.0		$	3,672.8
Corporate revenues		(10.2	)		(44.1	)
Net revenues	$	3,684.8		$	3,628.7

No country outside of the United States represents ten percent or more of net revenues. The US Specialized Therapeutics and US General Medicine segments are comprised solely of sales within the United States.

Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30, 2016
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	2,787.6		$	2,902.8		$	1,430.3		$	7,120.7

Operating expenses:
Cost of sales ⁽¹⁾		145.8			434.5			214.2			794.5
Selling and marketing		552.4			610.0			394.5			1,556.9
General and administrative		85.2			85.9			58.5			229.6
Segment Contribution	$	2,004.2		$	1,772.4		$	763.1		$	4,539.7
Contribution margin		71.9	%		61.1	%		53.4	%		63.8	%
Corporate											680.8
Research and development											1,039.6
Amortization											3,222.8
In-process research and development impairments											274.9
Asset sales and impairments, net											(19.3	)
Operating (loss)											(659.1	)
Operating margin											(9.3	)%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results.

	Six Months Ended June 30, 2015
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,593.0		$	3,251.7		$	835.8		$	5,680.5

Operating expenses:
Cost of sales ⁽¹⁾		88.6			446.5			135.5			670.6
Selling and marketing		288.8			654.3			238.4			1,181.5
General and administrative		28.9			71.3			42.4			142.6
Segment Contribution	$	1,186.7		$	2,079.6		$	419.5		$	3,685.8
Contribution margin		74.5	%		64.0	%		50.2	%		64.9	%
Corporate											1,696.3
Research and Development											667.4
Amortization											2,301.1
In-process research and development impairments											197.6
Asset sales and impairments, net											7.5
Operating (loss)											(1,184.1	)
Operating margin											(20.8	)%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results.

The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30,
	2016			2015
Segment net revenues	$	7,120.7		$	5,680.5
Corporate revenues		(36.6	)		(68.8	)
Net revenues	$	7,084.1		$	5,611.7

The following tables present global net revenu es for the top products of the Company for the three and six months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,
	Global						U.S.						International
	2016			2015			2016			2015			2016		2015
Botox ^®	$	719.7		$	631.4		$	502.2		$	430.1		$	217.5	$	201.3
Restasis ^®		390.6			325.0			371.3			309.9			19.3		15.1
Fillers		224.9			196.0			117.6			104.2			107.3		91.8
Namenda XR ^®		166.5			204.7			166.5			204.7			-		-
Lumigan ^® /Ganfort ^®		175.1			176.5			80.6			86.1			94.5		90.4
Bystolic ^®		150.7			157.1			150.3			157.1			0.4		-
Linzess ^® /Constella ^®		155.1			113.2			150.5			112.1			4.6		1.1
Alphagan ^® /Combigan ^®		140.2			135.5			96.0			93.4			44.2		42.1
Asacol ^® /Delzicol ^®		130.8			149.3			119.8			134.0			11.0		15.3
Lo Loestrin ^®		101.0			79.2			101.0			79.2			-		-
Viibryd ^® /Fetzima ^®		81.8			80.7			81.7			80.7			0.1		-
Estrace ^® Cream		97.2			70.1			97.2			70.1			-		-
Minastrin ^® 24		83.6			56.1			83.0			56.1			0.6		-
Breast Implants		91.9			93.4			51.7			50.2			40.2		43.2
Carafate ^® /Sulcrate ^®		50.9			46.9			50.3			46.9			0.6		-
Ozurdex ^®		67.2			51.0			21.5			16.6			45.7		34.4
Aczone ^®		54.1			60.3			54.1			60.3			-		-
Namenda ^® IR		4.1			232.6			4.1			232.6			-		-
Other Products Revenues		823.8			814.8			652.8			632.4			171.0		182.4
Less product sold through Anda Distribution business		(24.4	)		(45.1	)		(24.4	)		(45.1	)		-		-
Total Net Revenues	$	3,684.8		$	3,628.7		$	2,927.8		$	2,911.6		$	757.0	$	717.1

	Six Months Ended June 30,
	Global						U.S.						International
	2016			2015			2016			2015			2016		2015
Botox ^®	$	1,357.2		$	715.4		$	957.7		$	490.8		$	399.5	$	224.6
Restasis ^®		704.3			354.9			670.0			338.6			34.3		16.3
Fillers		427.7			220.6			220.3			117.0			207.4		103.6
Namenda XR ^®		339.6			355.3			339.6			355.3			-		-
Lumigan ^® /Ganfort ^®		344.7			197.7			162.1			94.2			182.6		103.5
Bystolic ^®		314.7			321.2			313.9			320.8			0.8		0.4
Linzess ^® /Constella ^®		296.0			209.4			287.6			207.6			8.4		1.8
Alphagan ^® /Combigan ^®		266.9			151.5			180.9			103.5			86.0		48.0
Asacol ^® /Delzicol ^®		252.0			298.4			225.7			265.9			26.3		32.5
Lo Loestrin ^®		190.3			162.5			190.3			161.9			-		0.6
Viibryd ^® /Fetzima ^®		165.1			160.3			165.0			160.3			0.1		-
Estrace ^® Cream		177.8			142.0			177.8			142.0			-		-
Minastrin ^® 24		164.0			121.5			162.6			120.9			1.4		0.6
Breast Implants		175.0			112.9			98.1			61.9			76.9		51.0
Carafate ^® /Sulcrate ^®		112.4			100.5			111.3			100.5			1.1		-
Ozurdex ^®		127.7			58.0			40.9			19.3			86.8		38.7
Aczone ^®		87.1			66.3			87.1			66.3			-		-
Namenda ^® IR		9.9			478.0			9.9			478.0			-		-
Other Products Revenues		1,628.0			1,455.7			1,309.3			1,241.5			318.7		214.2
Less product sold through Anda Distribution business		(56.3	)		(70.4	)		(56.3	)		(70.4	)		-		-
Total Net Revenues	$	7,084.1		$	5,611.7		$	5,653.8		$	4,775.9		$	1,430.3	$	835.8

Unless included above, no product represents ten percent or more of total net revenues.

The following table presents top product sales and net revenues for the US Specialized Therapeutics segment for the three and six months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Total Eye Care	$	636.1	$	578.6	$	1,169.1	$	673.3
Restasis ^®		371.3		309.9		670.0		338.6
Lumigan ^® /Ganfort ^®		80.6		86.1		162.1		94.2
Alphagan ^® /Combigan ^®		96.0		93.4		180.9		103.5
Ozurdex ^®		21.5		16.6		40.9		19.3
Eye Drops		49.1		49.0		89.9		86.5
Other Eye Care		17.6		23.6		25.3		31.2
Total Medical Aesthetics		419.8		366.2		793.7		421.3
Facial Aesthetics		320.2		263.7		599.6		298.9
Botox ^® Cosmetics		189.9		159.5		355.3		181.9
Fillers		117.6		104.2		220.3		117.0
Kybella ^®		12.7		-		24.0		-
Plastic Surgery		52.8		54.1		100.9		68.2
Breast Implants		51.7		50.2		98.1		61.9
Other Plastic Surgery		1.1		3.9		2.8		6.3
Skin Care		46.8		48.4		93.2		54.2
SkinMedica ^®		29.1		25.5		55.7		28.6
Latisse ^®		17.7		22.9		37.5		25.6
Total Medical Dermatology		97.1		120.7		166.1		141.6
Aczone ^®		54.1		60.3		87.1		66.3
Tazorac ^®		23.4		25.5		40.5		38.1
Botox ^® Hyperhidrosis		16.3		18.4		32.6		20.5
Other Medical Dermatology		3.3		16.5		5.9		16.7
Total Neuroscience and Urology		326.3		277.7		633.1		345.8
Botox ^® Therapeutics		296.0		252.2		569.8		288.4
Rapaflo ^®		29.4		25.5		62.4		57.4
Other Neuroscience and Urology		0.9		-		0.9		-
Other Revenues		9.6		4.5		25.6		11.0
Net revenues	$	1,488.9	$	1,347.7	$	2,787.6	$	1,593.0

The following table presents top product sales and revenues for the US General Medicine segment for the three and six months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Total Central Nervous System (CNS)	$	317.5	$	560.8	$	639.1	$	1,078.4
Namenda XR ^®		166.5		204.7		339.6		355.3
Namzaric ^®		12.8		1.6		23.1		1.6
Viibryd ^® /Fetzima ^®		81.7		80.7		165.0		160.3
Vraylar ^™		11.1		-		18.7		-
Saphris ^®		41.3		41.2		82.8		83.2
Namenda ^® IR		4.1		232.6		9.9		478.0
Total Gastrointestinal (GI)		442.0		373.2		845.6		739.8
Linzess ^®		150.5		112.1		287.6		207.6
Viberzi ^®		20.4		-		24.4		-
Asacol ^® /Delzicol ^®		119.8		134.0		225.7		265.9
Carafate ^® /Sulcrate ^®		50.3		46.9		111.3		100.5
Canasa ^® /Salofalk ^®		46.7		34.6		87.8		67.6
Zenpep ^®		43.0		37.1		92.6		78.4
Other GI		11.3		8.5		16.2		19.8
Total Women's Health		296.1		219.4		559.8		448.7
Lo Loestrin ^®		101.0		79.2		190.3		161.9
Minastrin ^® 24		83.0		56.1		162.6		120.9
Estrace ^® Cream		97.2		70.1		177.8		142.0
Liletta ^®		5.7		4.9		10.6		4.9
Other Women's Health		9.2		9.1		18.5		19.0
Total Anti-Infectives		63.1		44.1		114.6		86.0
Teflaro ^®		35.2		31.7		68.6		69.5
Avycaz ^®		13.7		5.4		22.1		5.4
Dalvance ^®		10.2		4.5		16.4		6.4
Other Anti-Infectives		4.0		2.5		7.5		4.7
Established Brands		308.5		394.5		719.5		867.2
Bystolic ^®		150.3		157.1		313.9		320.8
Armour Thyroid		40.6		25.2		82.7		54.2
Enablex ^®		-		18.0		12.8		34.3
Lexapro ^®		16.5		16.3		35.2		35.8
Savella ^®		22.3		27.8		46.0		51.6
PacPharma		14.7		26.2		43.5		29.2
Other Established Brands		64.1		123.9		185.4		341.3
Other Revenues		21.9		16.0		24.2		31.6
Net revenues	$	1,449.1	$	1,608.0	$	2,902.8	$	3,251.7

The following table presents top product sales and net revenues for the International segment for the three and six months ended June 30, 2016 and 2015 ($ in million s):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Total Eye Care	$	318.7	$	301.7	$	610.2	$	342.2
Lumigan ^® /Ganfort ^®		94.5		90.4		182.6		103.5
Alphagan ^® /Combigan ^®		44.2		42.1		86.0		48.0
Ozurdex ^®		45.7		34.4		86.8		38.7
Optive ^®		26.0		25.4		50.1		28.7
Restasis ^®		19.3		15.1		34.3		16.3
Other Eye Drops		46.0		49.2		89.1		55.5
Other Eye Care		43.0		45.1		81.3		51.5
Total Medical Aesthetics		284.1		262.2		529.0		295.1
Facial Aesthetics		240.6		215.2		446.1		239.9
Botox ^® Cosmetics		132.7		123.4		237.6		136.3
Fillers		107.3		91.8		207.4		103.6
Belkyra ^® (Kybella ^® )		0.6		-		1.1		-
Plastic Surgery		40.3		43.2		77.1		51.0
Breast Implants		40.2		43.2		76.9		51.0
Earfold ^™		0.1		-		0.2		-
Skin Care		3.2		3.8		5.8		4.2
Botox ^® Therapeutics and Other		141.1		129.8		264.4		166.0
Botox ^® Therapeutics		84.8		77.9		161.9		88.3
Asacol ^® /Delzicol ^®		11.0		15.3		26.3		32.5
Constella ^®		4.6		1.1		8.4		1.8
Other Products		40.7		35.5		67.8		43.4
Other Revenues		13.1		23.4		26.7		32.5
Net revenues	$	757.0	$	717.1	$	1,430.3	$	835.8

NOTE 9 — Inventories

Inventories consist of finished goods held for sale and distribution, raw materials and work-in-process. Inventories are stated at the lower of cost (first-in, first-out method) or market (net realizable value). The Company writes down inventories to net realizable value based on forecasted demand, market conditions or other factors, which may differ from actual results.

Inventories consisted of the following ($ in millions):

	June 30,		December 31,
	2016		2015
Raw materials	$	290.6	$	242.4
Work-in-process		118.7		149.7
Finished goods		422.8		451.9
		832.1		844.0
Less: inventory reserves		105.3		86.5
Total Inventories	$	726.8	$	757.5

As of June 30, 2016, there was zero related to the fair-value step-up of acquired inventory. Included in finished goods was $46.1 million related to the fair-value step-up of acquired inventory as of December 31, 2015.

NOTE 10 — Investments and Other Assets

Investments in marketable securities, other investments and other assets consisted of the following ($ in millions):

	June 30, 2016		December 31, 2015
Marketable securities:
U.S. Treasury and agency securities — maturing within one year	$	17.1	$	9.3
Total marketable securities	$	17.1	$	9.3
Investments and other assets:
Legacy Allergan deferred executive compensation investments	$	114.0	$	118.1
Equity method investments		13.0		17.3
Cost method investments		16.5		16.7
Other long-term investments		65.1		78.2
Taxes receivable		41.3		39.6
Other assets		102.7		138.8
Total investments and other assets	$	352.6	$	408.7

The Company’s marketable securities and other long-term investments are classified as available-for-sale and are recorded at fair value based on quoted market prices using the specific identification method. These investments are classified as either current or non-current, as appropriate, in the Company’s consolidated balance sheets.

NOTE 11 — Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following ($ in millions):

	June 30, 2016		December 31, 2015
Accrued expenses:
Accrued third-party rebates	$	1,433.2	$	1,281.6
Accrued payroll and related benefits		413.9		401.0
Interest payable		307.4		312.0
Current portion of contingent consideration obligations		282.0		79.9
Accrued returns		279.8		288.4
Accrued pharmaceutical fees		261.9		162.2
Litigation-related reserves and legal fees		179.8		191.7
Accrued R&D expenditures		120.0		384.1
Royalties payable		108.3		119.1
Accrued severance, retention and other shutdown costs		64.4		108.5
Accrued selling and marketing expenditures		64.2		127.2
Accrued non-provision taxes		77.0		98.1
Dividends payable		24.2		24.0
Other accrued expenses		437.3		354.9
Total accrued expenses	$	4,053.4	$	3,932.7
Accounts payable		436.7		215.9
Total Accounts Payable and Accrued Expenses	$	4,490.1	$	4,148.6

NOTE 12 — Goodwill, Product Rights and Other Intangible Assets

In the second quarter of 2016, there was a strategic shift in the business as our operations are streamlined. Under the new organizational structure being reported, the Company organized its business into the following segments: US Specialized Therapeutics, US General Medicine and International. The Company recast goodwill by segment as a result of this change.

The Company’s goodwill by segment consisted of the following ($ in millions):

	US Specialized Therapeutics		US General Medicines			International		Total
Balance as of December 31, 2015	$	18,347.2	$	21,340.5		$	6,777.5	$	46,465.2
Foreign exchange and other adjustments		-		(26.6	)		77.2		50.6
Balance as of June 30, 2016	$	18,347.2	$	21,313.9		$	6,854.7	$	46,515.8

As of June 30, 2016 and December 31, 2015, the gross balance of goodwill, pre-impairments, was $46,533.1 million and $46,482.5 million, respectively. Goodwill in discontinued operations was $6,151.7 million and $6,096.0 million as of June 30, 2016 and December 31, 2015, respectively.

Product rights and other intangible assets consisted of the following ($ in millions):

Cost Basis	Balance as of December 31, 2015		Acquisitions		Impairments			IPR&D to CMP Transfers			Disposals/ Held for Sale/ Other			Foreign Currency Translation		Balance as of June 30, 2016
Intangibles with definite lives:
Product rights and other related intangibles	$	64,366.0	$	31.6	$	-		$	1,342.4		$	(194.6	)	$	61.1	$	65,606.5
Trade name		690.0		-		-			-			-			-		690.0
Total definite-lived intangible assets	$	65,056.0	$	31.6	$	-		$	1,342.4		$	(194.6	)	$	61.1	$	66,296.5
Intangibles with indefinite lives:
IPR&D	$	11,128.2	$	-	$	(274.9	)	$	(1,342.4	)	$	-		$	11.5	$	9,522.4
Total indefinite-lived intangible assets	$	11,128.2	$	-	$	(274.9	)	$	(1,342.4	)	$	-		$	11.5	$	9,522.4
Total product rights and related intangibles	$	76,184.2	$	31.6	$	(274.9	)	$	-		$	(194.6	)	$	72.6	$	75,818.9

Accumulated Amortization	Balance as of December 31, 2015			Amortization			Impairments		IPR&D to CMP Transfers		Disposals/ Held for Sale/ Other		Foreign Currency Translation		Balance as of June 30, 2016
Intangibles with definite lives:
Product rights and other related intangibles	$	(8,288.5	)	$	(3,184.0	)	$	-	$	-	$	176.9	$	35.8	$	(11,259.8	)
Trade name		(59.5	)		(38.8	)		-		-		-		-		(98.3	)
Total definite-lived intangible assets	$	(8,348.0	)	$	(3,222.8	)	$	-	$	-	$	176.9	$	35.8	$	(11,358.1	)
Total product rights and related intangibles	$	(8,348.0	)	$	(3,222.8	)	$	-	$	-	$	176.9	$	35.8	$	(11,358.1	)
Net Product Rights and Other Intangibles	$	67,836.2													$	64,460.8

The following items had a significant impact on net product rights and other intangibles in the six months ended June 30, 2016:

The Company recognized approximately $190.0 million in IPR&D impairments due to the termination of an osteoarthritis R&D project due to clinical results;

The Company impaired IPR&D assets relating to an international eye care pipeline project of $35.0 million based on a decrease in projected cash flows due to market conditions;

The Company impaired IPR&D assets relating to a specified indication of a Botox ^® therapeutic product of $20.0 million based on a decrease in projected cash flows due to a decline in market demand assumptions;

The Company recognized $24.0 million in IPR&D impairments due to the termination of a wom en’s healthcare R&D project due to clinical results; and

During the six months ended June 30, 2016, the Company reclassified certain intangible assets from IPR&D to CMP primarily related to Aczone ^® , Juvederm ^® , Dalvance ^® and Botox ^® .

Assuming no additions, disposals or adjustments are made to the carrying values and/or useful lives of the intangible assets, annual amortization expense on product rights and other related intangibles as of June 30, 2016 over the remainder of 2016 and each of the next five years is estimated to be as follows ($ in millions):

	Amortization Expense
2016 remaining	$	3,214.2
2017	$	6,469.2
2018	$	5,955.8
2019	$	5,845.9
2020	$	5,607.7
2021	$	4,732.5

The above amortization expense is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, finalization of preliminary fair value estimates, potential impairments, accelerated amortization or other events.

NOTE 13 — Long-Term Debt and Capital Leases

Total debt and capital leases consisted of the following ($ in millions):

	Balance As of						Fair Market Value As of
	June 30, 2016			December 31, 2015			June 30, 2016		December 31, 2015
Senior Notes:
Floating Rate Notes
$500.0 million floating rate notes due September 1, 2016	$	500.0		$	500.0		$	500.5	$	500.5
$500.0 million floating rate notes due March 12, 2018		500.0			500.0			502.0		499.6
$500.0 million floating rate notes due March 12, 2020		500.0			500.0			500.5		496.2
		1,500.0			1,500.0			1,503.0		1,496.3
Fixed Rate Notes
$800.0 million 5.750% notes due April 1, 2016		-			800.0			-		808.4
$1,000.0 million 1.850% notes due March 1, 2017		1,000.0			1,000.0			1,003.7		1,001.5
$500.0 million 1.300% notes due June 15, 2017		500.0			500.0			499.3		496.3
$1,200.0 million 1.875% notes due October 1, 2017		1,200.0			1,200.0			1,206.1		1,196.0
$3,000.0 million 2.350% notes due March 12, 2018		3,000.0			3,000.0			3,034.3		3,004.6
$250.0 million 1.350% notes due March 15, 2018		250.0			250.0			248.3		244.9
$1,050.0 million 4.375% notes due February 1, 2019		1,050.0			1,050.0			1,112.7		1,099.5
$500.0 million 2.450% notes due June 15, 2019		500.0			500.0			506.5		494.4
$400.0 million 6.125% notes due August 14, 2019		400.0			400.0			448.2		444.2
$3,500.0 million 3.000% notes due March 12, 2020		3,500.0			3,500.0			3,598.9		3,505.1
$650.0 million 3.375% notes due September 15, 2020		650.0			650.0			676.5		656.6
$750.0 million 4.875% notes due February 15, 2021		750.0			750.0			825.6		807.4
$1,200.0 million 5.000% notes due December 15, 2021		1,200.0			1,200.0			1,342.4		1,299.4
$3,000.0 million 3.450% notes due March 15, 2022		3,000.0			3,000.0			3,102.1		3,006.8
$1,700.0 million 3.250% notes due October 1, 2022		1,700.0			1,700.0			1,733.8		1,669.6
$350.0 million 2.800% notes due March 15, 2023		350.0			350.0			346.4		327.7
$1,200.0 million 3.850% notes due June 15, 2024		1,200.0			1,200.0			1,256.9		1,202.6
$4,000.0 million 3.800% notes due March 15, 2025		4,000.0			4,000.0			4,168.3		3,984.6
$2,500.0 million 4.550% notes due March 15, 2035		2,500.0			2,500.0			2,574.7		2,462.2
$1,000.0 million 4.625% notes due October 1, 2042		1,000.0			1,000.0			1,032.4		956.1
$1,500.0 million 4.850% notes due June 15, 2044		1,500.0			1,500.0			1,586.7		1,483.6
$2,500.0 million 4.750% notes due March 15, 2045		2,500.0			2,500.0			2,635.4		2,452.7
		31,750.0			32,550.0			32,939.2		32,604.2
Total Senior Notes Gross		33,250.0			34,050.0			34,442.2		34,100.5
Unamortized premium		193.9			225.9			-		-
Unamortized discount		(101.6	)		(107.4	)		-		-
Total Senior Notes Net		33,342.3			34,168.5			34,442.2		34,100.5
Term Loan Indebtedness:
WC Term Loan
WC Three Year Tranche variable rate debt maturing October 1, 2016		-			191.5
WC Five Year Tranche variable rate debt maturing October 1, 2018		-			498.8
		-			690.3
ACT Term Loan
2017 Term Loan variable rate debt maturing October 31, 2017		-			572.1
2019 Term Loan variable rate debt maturing July 1, 2019**		1,170.0			1,700.0
		1,170.0			2,272.1
AGN Term Loan
AGN Three Year Tranche variable rate debt maturing March 17, 2018		2,750.0			2,750.0
AGN Five Year Tranche variable rate debt maturing March 17, 2020**		2,406.3			2,543.8
		5,156.3			5,293.8
Total Term Loan Indebtedness		6,326.3			8,256.2
Other Indebtedness
Revolver Borrowings		-			200.0
Debt Issuance Costs		(174.6	)		(195.8	)
Other		85.5			97.4
Total Other Borrowings		(89.1	)		101.6
Capital Leases		2.2			4.1
Total Indebtedness	$	39,581.7		$	42,530.4

**	The indebtedness requires a quarterly repayment of 2.5%.

Fair market value in the table above is determined in accordance with ASC Topic 820 “Fair Value Measurement” (“ASC 820”) under Level 2 based upon quoted prices for similar items in active markets. The book value of the outstanding term loan indebtedness approximates fair value as the debt is at variable interest rates and re-prices frequently.

Unless otherwise indicated, the remaining loan balances after the quarterly required payments are due upon maturity.

Floating Rate Notes

On March 4, 2015, Actavis Funding SCS, a limited partnership (société en commandite simple) organized under the laws of the Grand Duchy of Luxembourg and an indirect wholly-owned subsidiary of Allergan plc, issued floating rate notes due 2016 (the “2016 Floating Rate Notes”), floating rate notes due 2018 (the “2018 Floating Rate Notes”), floating rate notes due 2020 (the “2020 Floating Rate Notes”), 1.850% notes due 2017 (the “1.850% 2017 Notes”), 2.350% notes due 2018 (the “2.350% 2018 Notes”), 3.000% notes due 2020 (the “3.000% 2020 Notes”), 3.450% notes due 2022 (the “3.450% 2022 Notes”), 3.800% notes due 2025 (the “3.800% 2025 Notes”), 4.550% notes due 2035 (the “4.550% 2035 Notes”) and 4.750% notes due 2045 (the “4.750% 2045 Notes”). The notes are fully and unconditionally guaranteed by Actavis Funding SCS’s indirect parents, Warner Chilcott Limited and Actavis Capital S.a.r.l. (“Actavis Capital”), and by Actavis, Inc., a subsidiary of Actavis Capital, on an unsecured and unsubordinated basis. Allergan plc has not guaranteed the notes.

The 2016 Floating Rate Notes, the 2018 Floating Rate Notes and the 2020 Floating Rate Notes bear interest at a floating rate equal to three-month LIBOR plus 0.875%, 1.080% and 1.255% per annum, respectively. Interest on the 2016 Floating Rate Notes is payable quarterly on March 1, June 1, September 1 and December 1 of each year, and began on June 1, 2015. Interest on the 2018 Floating Rate Notes and the 2020 Floating Rate Notes is payable quarterly on March 12, June 12, September 12 and December 12 of each year, and began on June 12, 2015.

Fixed Rate Notes

The Company has issued fixed rate notes over multiple issuances for various business needs. Interest on the various notes is generally payable semi-annually with various payment dates.

Acquired Allergan Notes

On March 17, 2015 in connection with the Allergan Acquisition, the Company acquired, and subsequently guaranteed, along with Warner Chilcott Limited, the indebtedness of Allergan, Inc. comprised of the $350.0 million 2.800% senior notes due 2023, the $650.0 million 3.375% senior notes due 2020, the $250.0 million 1.350% senior notes due 2018 and the $800.0 million 5.750% senior notes due 2016. Interest payments are due on the $350.0 million senior notes semi-annually on the principal amount of the notes at a rate of 2.80% per annum, and are redeemable at any time at the Company’s option, subject to a make-whole provision based on the present value of remaining interest payments at the time of the redemption, if the redemption occurs prior to December 15, 2022 (three months prior to the maturity of the 2023 senior notes). If the redemption occurs on or after December 15, 2022, then such redemption is not subject to the make-whole provision. Interest payments are due on the $650.0 million senior notes semi-annually on the principal amount of the notes at a rate of 3.375% per annum, and are redeemable at any time at the Company’s option, subject to a make-whole provision based on the present value of remaining interest payments at the time of the redemption. Interest payments are due on the $250.0 million senior notes semi-annually on the principal amount of the notes at a rate of 1.350% per annum, and are redeemable at any time at the Company’s option, subject to a make-whole provision based on the present value of remaining interest payments at the time of the redemption. Interest payments were due on the $800.0 million senior notes semi-annually on the principal amount of the notes at a rate of 5.750% per annum. The fair value of the acquired senior notes was determined to be $2,087.5 million as of March 17, 2015. As such, as part of acquisition accounting, the company recorded a premium of $37.5 million to be amortized as contra interest over the life of the notes.

The $800.0 million 5.750% senior notes were paid in full on April 1, 2016 with proceeds from the first quarter of 2016 borrowings under the revolving credit facility of $900.0 million.

Credit Facility Indebtedness

WC Term Loan

On December 17, 2014, Allergan plc and certain of its subsidiaries entered into a second amendment agreement (the “WC Term Loan Amendment”) among Allergan plc, Warner Chilcott Limited, Warner Chilcott Finance, LLC, Actavis WC 2 S.à r.l. (“Actavis WC 2”), Warner Chilcott Company, LLC (“WCCL”), Warner Chilcott Corporation (“WC Corporation” and together with Actavis WC 2 and WCCL, the “WC Borrowers”), Bank of America, N.A. (“BofA”), as administrative agent, and the lenders party thereto. The WC

Term Loan Amendment amends and restates Allergan plc’s existing amended and restated WC term loan credit and guaranty agreement, dated as of June 9, 2014 (such agreement, prior to its amendment and restatement pursuant to the WC Term Loan Amendment, the “2014 WC Term Loan”), among the WC Borrowers, Allergan plc, Warner Chilcott Limited, Warner Chilcott Finance, LLC, the lenders from time to time party thereto and BofA, as administrative agent, which amended and restated Allergan plc’s existing WC term loan credit and guaranty agreement, dated as of August 1, 2013 (such agreement, prior to its amendment and restatement pursuant to the 2014 WC Term Loan Amendment, the “Existing WC Term Loan”) among the WC Borrower s, Warner Chilcott Finance, LLC, Actavis Limited, BofA, as administrative agent and a syndicate of banks participating as lenders.

Pursuant to the Existing WC Term Loan, on October 1, 2013 (the “WC Closing Date”), the lenders party thereto provided term loans in a total aggregate principal amount of $2.0 billion, comprised of (i) a $1.0 billion tranche that would have matured on October 1, 2016 (the “WC Three Year Tranche”) and (ii) a $1.0 billion tranche that would have matured on October 1, 2018 (the “WC Five Year Tranche”). The proceeds of borrowings under the Existing WC Term Loan Agreement, together with $41.0 million of cash on hand, were used to finance the repayment in full of all amounts outstanding under Warner Chilcott’s then-existing Credit Agreement, dated as of March 17, 2011, as amended by Amendment No. 1 on August 20, 2012, among the WC Borrowers, Warner Chilcott Holdings Company III, Limited, BofA, as administrative agent and a syndicate of banks participating as lenders.

Borrowings under the WC Term Loan Agreement bore interest at the applicable borrower’s choice of a per annum rate equal to either (a) a base rate plus an applicable margin per annum varying from (x) 0.00% per annum to 0.75% per annum under the WC Three Year Tranche and (y) 0.125% per annum to 0.875% per annum under the WC Five Year Tranche, depending on the publicly announced debt ratings for non-credit-enhanced, senior unsecured long-term indebtedness of Allergan plc (such applicable debt rating the “Debt Rating”) or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 1.75% per annum under the WC Three Year Tranche and (y) 1.125% per annum to 1.875% per annum under the WC Five Year Tranche, depending on the Debt Rating. In the six months ended June 30, 2016, the Company repaid in full the WC Term Loan indebtedness.

ACT Term Loan

On December 17, 2014, Allergan plc and certain of its subsidiaries entered into a third amendment agreement (the “ACT Term Loan Amendment”) among Allergan plc, Warner Chilcott Limited, Actavis Capital, Actavis, Inc., Actavis Funding SCS, BofA, as administrative agent, and the lenders party thereto. The ACT Term Loan Amendment amends and restates Allergan plc’s existing second amended and restated Allergan term loan credit and guaranty agreement, dated as of March 31, 2014 (such agreement, prior to its amendment and restatement pursuant to the ACT Term Loan Amendment, the “2014 ACT Term Loan Agreement” and together with the Existing ACT Term Loan Agreement (defined below), the “ACT Term Loan”) among Actavis Capital, Allergan plc, Warner Chilcott Limited, Actavis, Inc., Actavis Funding SCS, BofA, as administrative agent, and the lenders from time to time party thereto, which amended and restated Allergan plc’s existing amended and restated Allergan term loan credit and guaranty agreement, dated as of October 1, 2013 (such agreement, prior to its amendment and restatement pursuant to the ACT Term Loan Amendment, the “Existing ACT Term Loan Agreement”) among Actavis Capital, Allergan plc, Actavis, Inc., BofA, as administrative agent, and the lenders from time to time party thereto.

The Existing ACT Term Loan Agreement amended and restated Actavis, Inc.’s $1,800.0 million senior unsecured term loan credit facility, dated as of June 22, 2012. At the closing of the Existing ACT Term Loan Agreement, an aggregate principal amount of $1,572.5 million was outstanding (the “2017 Term Loan”).

On March 31, 2014, Allergan plc, Actavis Capital, Actavis, Inc., BofA, as Administrative Agent, and a syndicate of banks participating as lenders entered into the 2014 ACT Term Loan Agreement to amend and restate the Existing ACT Term Loan Agreement. On July 1, 2014, in connection with the Forest Acquisition, the Company borrowed $2.0 billion of term loan indebtedness under tranche A-2 of the 2014 ACT Term Loan Agreement, which is due July 1, 2019 (the “2019 Term Loan”).

Loans under the ACT Term Loan bore interest, at the Company’s choice, of a per annum rate equal to either (a) a base rate, plus an applicable margin per annum varying from (x) 0.00% per annum to 1.00% per annum with respect to the 2017 term-loan and (y) 0.125% per annum to 0.875% per annum with respect to the 2019 term-loan, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 2.00% per annum with respect to the 2017 term-loan and (y) 1.125% per annum to 1.875% per annum with respect to the 2019 term-loan, depending on the Debt Rating.

The Company was subject to, and at June 30, 2016 was in compliance with, all financial and operational covenants under the terms of the ACT Term Loan. On August 2, 2016, the Company repaid in full the outstanding ACT Term Loan indebtedness with the proceeds from the Teva Transaction.

AGN Term Loan

On December 17, 2014, Allergan, Inc. and certain of its subsidiaries entered into a senior unsecured term loan credit agreement (the “AGN Term Loan”), among Actavis Capital, as borrower, Allergan plc, Warner Chilcott Limited, Actavis, Inc., Actavis Funding SCS, the lenders from time to time party thereto (the “Term Lenders”), JPMorgan Chase Bank, N.A. (“JPMCB”), as administrative agent and the other financial institutions party thereto. Under the AGN Term Loan, the Term Lenders provided (i) a $2.75 billion tranche maturing on March 17, 2018 (the “AGN Three Year Tranche”) and (ii) a $2.75 billion tranche and maturing on March 17, 2020 (the “AGN Five Year Tranche”). The proceeds of borrowings under the AGN Term Loan were used to finance, in part, the cash component of the Allergan Acquisition consideration and certain fees and expenses incurred in connection with the Allergan Acquisition.

Borrowings under the AGN Term Loan bore interest at our choice of a per annum rate equal to either (a) a base rate plus an applicable margin per annum varying from (x) 0.00% per annum to 1.00% per annum under the AGN Three Year Tranche and (y) 0.125% per annum to 1.250%% per annum under the AGN Five Year Tranche, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 2.00% per annum under the AGN Three Year Tranche and (y) 1.125% per annum to 2.250% per annum under the AGN Five Year Tranche, depending on the Debt Rating. The outstanding principal amount of loans under the AGN Three Year Tranche was not subject to quarterly amortization and was payable in full on the maturity date. The outstanding principal amount of loans under the AGN Five Year Tranche was payable in equal quarterly amounts of 2.50% per quarter prior to March 17, 2020, with the remaining balance payable on March 17, 2020. On August 2, 2016, the Company repaid in full the outstanding term loan indebtedness with the proceeds from the Teva Transaction.

The obligations of Actavis Capital under the Term Loan Credit Agreement were guaranteed by Warner Chilcott Limited, Actavis, Inc. and Actavis Funding SCS and by any subsidiary of Allergan plc (other than Actavis Capital or a direct subsidiary of Allergan plc) that becomes a guarantor of third party indebtedness in an aggregate principal amount exceeding $350.0 million (unless, in the case of a foreign subsidiary, such guarantee would give rise to adverse tax consequences as reasonably determined by Allergan plc).

The Company was subject to, and at June 30, 2016 was in compliance with, all financial and operational covenants under the terms of the AGN Term Loan. On August 2, 2016, the Company repaid in full the outstanding AGN Term Loan indebtedness with the proceeds from the Teva Transaction.

Cash Bridge Loan Facility

On March 11, 2015, Allergan and certain of its subsidiaries entered into a 60-day senior unsecured bridge credit agreement (the “Cash Bridge Loan Facility”), among Actavis Capital, as borrower, Allergan plc, Warner Chilcott Limited, Actavis, Inc., Actavis Funding SCS, the lenders from time to time party thereto (the “Cash Bridge Lenders”), JPMCB, as administrative agent and the other financial institutions party thereto. Under the Cash Bridge Loan Facility, the Cash Bridge Lenders committed to provide, subject to certain conditions, unsecured bridge financing, of which $2.8 billion was drawn to finance the Allergan Acquisition on March 17, 2015. The outstanding balance of the Cash Bridge Loan Facility was repaid on April 9, 2015.

Borrowings under the Cash Bridge Loan Facility bore interest at our choice of a per annum rate equal to either (a) a base rate plus an applicable margin per annum varying from 0.00% per annum to 1.00% per annum, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from 1.00% per annum to 2.00% per annum, depending on the Debt Rating.

Revolving Credit Facility

On December 17, 2014, Allergan plc and certain of its subsidiaries entered into a revolving credit loan and guaranty agreement (the “Revolver Agreement”) among Actavis Capital, as borrower, Allergan plc, Warner Chilcott Limited, Actavis, Inc., Actavis Funding SCS, the lenders from time to time party thereto (the “Revolving Lenders”), JPMCB as administrative agent, J.P. Morgan Europe Limited, as London agent, and the other financial institutions party thereto. Under the Revolver Agreement, the Revolving Lenders have committed to provide an unsecured revolving credit facility in an aggregate principal amount of up to $1.0 billion. The Revolver Agreement replaced Allergan plc’s existing $750.0 million second amended and restated Actavis revolving credit and guaranty agreement dated as of June 30, 2014 (the “Existing Revolver”) among Actavis Capital, Allergan plc, Warner Chilcott Limited, Actavis, Inc., Actavis Funding SCS, BofA, as administrative agent and the lenders from time to time party thereto.

The Revolver Agreement provided that loans thereunder would bear interest, at our choice, of a per annum rate equal to either (a) a base rate, plus an applicable margin per annum varying from 0.00% per annum to 1.00% per annum depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from 0.875% per annum to 2.00% per annum depending on the Debt Rating. Additionally, to maintain availability of funds, the Company pays an unused commitment fee, which according to the pricing grid is set at 0.075% to 0.250% per annum, depending on the Debt Rating, of the unused portion of the revolver.

The obligations under the Revolver Agreement were guaranteed by Allergan plc, Warner Chilcott Limited, Actavis, Inc. and Actavis Funding SCS and by any subsidiary of Allergan (other than Actavis Capital) that be comes a guarantor of third party indebtedness in an aggregate principal amount exceeding $350.0 million (unless, in the case of a foreign subsidiary, such guarantee would give rise to adverse tax consequences as reasonably determined by Allergan plc).

The Company was subject to, and as of June 30, 2016 was in compliance with, all financial and operational covenants under the terms of the Revolving Credit Facility. At June 30, 2016, there were no outstanding borrowings under the Revolving Credit Facility and letters of credit outstanding were $28.8 million. The net availability under the Revolving Credit Facility was $971.2 million. In the six months ended June 30, 2016, the Company borrowed $900.0 million under the revolving credit facility and repaid $900.0 million. On August 2, 2016, the Company repaid all outstanding amounts under the Revolving Credit Facility and terminated the Revolving Credit Facility in connection with the Teva Transaction. The letters of credit remain outstanding with JPMCB and Wells Fargo Bank, National Association under separate arrangements.

Annual Debt Maturities

As of June 30, 2016, annual debt maturities were as follows ($ in millions):

	Total Payments
2016 remaining	$	710.6
2017		3,141.3
2018		6,921.3
2019		3,029.4
2020		6,093.8
2021		1,950.0
2022 and after		17,729.9
	$	39,576.3
Capital leases		2.2
Debt issuance costs		(174.6	)
Other short-term borrowings		85.5
Unamortized premium		193.9
Unamortized discount		(101.6	)
Total Indebtedness	$	39,581.7

Amounts represent total anticipated cash payments assuming scheduled repayments.

NOTE 14 — Other Long-Term Liabilities

Other long-term liabilities consisted of the following ($ in millions):

	June 30,		December 31,
	2016		2015
Acquisition related contingent consideration liabilities	$	576.9	$	788.1
Long-term pension and post retirement liability		220.3		222.1
Legacy Allergan deferred executive compensation		114.1		117.9
Long-term severance and restructuring liabilities		31.8		34.9
Product warranties		27.8		28.4
Long-term contractual obligations		26.8		26.4
Deferred revenue		12.3		18.2
Other long-term liabilities		29.6		26.0
Total other long-term liabilities	$	1,039.6	$	1,262.0

NOTE 15 – Income Taxes

the tax benefit for the six months ended June 30, 2016 included an expense of $195.2 million primarily related to a change in a valuation allowance on a portion of U.S. capital loss carryforwards resulting from restruc turing associated with the sale of the global generics business, a benefit of $ 35.7 million related to the reversal of deferred tax liabilities associated with certain IPR&D impairments and a benefit of $ 45.2 million for the recognition of previously unrec ognized tax benefits. The effective tax rate for the six months ended June 30, 2015 was impacted by income earned in low tax jurisdictions and U.S. losses tax benefited at rates greater than the Irish statutory rate. The increase in the effective tax rate for the period ended June 30, 2016 as compared to the period ended June 30, 2015 is primarily related to the change related to the valuation allowance on a portion of the U.S. capital loss carryforwards .

During the second quarter, the United States Department of the Treasury has proposed new regulations under Section 385 of the Internal Revenue Code which may result in certain types of intercompany debt being characterized as equity. The impact of these regulations, if enacted, may impact the Company’s tax provision. The Company is currently assessing the impact of these proposed regulations on its consolidated financial statements.

The Company conducts business globally and, as a result, it files U.S. federal, state and foreign tax returns. The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for amounts it believes are in accordance with the accounting standard, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the condensed consolidated financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations with tax authorities, identification of new issues and issuance of new legislation, regulations or case law.

Due to our various acquisitions, the Company has several concurrent audits still pending with the IRS as set forth below:

IRS Audits		Tax Years
Actavis, Inc. (fka Watson Pharmaceuticals, Inc.)		2008, 2009, 2010 and 2011
Actavis Inc.		2009, 2010, 2011 and 2012
Warner Chilcott Corporation		2010, 2011 and 2012
Durata Therapeutics Inc.		2012
Allergan, Inc.		2009 and 2010

NOTE 16 — Shareholders’ Equity

A summary of the changes in shareholders’ equity for the six months June 30, 2016 consisted of the following ($ in millions):

	Allergan plc
Shareholders’ equity as of December 31, 2015	$	76,591.4
Increase in additional paid in capital for share-based compensation plans		188.8
Net income attributable to ordinary shareholders		(385.2	)
Proceeds from stock plans		107.3
Excess tax benefit from employee stock plans		31.9
Repurchase of ordinary shares		(67.3	)
Other comprehensive income		177.0
Shareholders’ equity as of June 30, 2016	$	76,643.9

	Warner Chilcott Limited
Members' equity as of December 31, 2015	$	75,573.7
Net income attributable to members		(377.3	)
Dividend to Parent		(139.2	)
Other comprehensive income		177.0
Members' equity as of June 30, 2016	$	75,234.2

Accumulated Other Comprehensive (Loss) / Income

For most of the Company’s international operations, the local currency has been determined to be the functional currency. The results of its non-U.S. dollar based operations are translated to U.S. dollars at the average exchange rates during the period. Assets and

liabilities are translated at the rate of exchange prevailing on the balance sheet date. Equity is translated at the prevailing rate of exchange at the date of the equity transaction. Translation adjustments are reflected in shareholders’ equity a nd are included as a component of other comprehensive (loss) / income. The effects of converting non-functional currency assets and liabilities into the functional currency are recorded as transaction gains/losses in general and administrative expenses in the consolidated statements of operations.

The movements in accumulated other comprehensive (loss) / income for the three and six months ended June 30, 2016 were as follows ($ in millions):

	Foreign Currency Translation Items			Unrealized (losses) net of tax			Total Accumulated Other Comprehensive (Loss) / Income
Balance as of December 31, 2015	$	(564.3	)	$	70.2		$	(494.1	)
Other comprehensive gain / (loss) before reclassifications into general and administrative		542.8			(20.3	)		522.5
Total other comprehensive income / (loss)		542.8			(20.3	)		522.5
Balance as of March 31, 2016	$	(21.5	)	$	49.9		$	28.4
Other comprehensive (loss) / gain before reclassifications into general and administrative		(349.9	)		4.4			(345.5	)
Total other comprehensive (loss) / income		(349.9	)		4.4			(345.5	)
Balance as of June 30, 2016	$	(371.4	)	$	54.3		$	(317.1	)

The movements in accumulated other comprehensive (loss) / income for the three and six months ended June 30, 2015 were as follows ($ in millions):

	Foreign Currency Translation Items			Unrealized gains net of tax			Total Accumulated Other Comprehensive (Loss) / Income
Balance as of December 31, 2014	$	(434.4	)	$	(31.0	)	$	(465.4	)
Other comprehensive (loss) before reclassifications into general and administrative		(313.9	)		(4.0	)		(317.9	)
Total other comprehensive (loss)		(313.9	)		(4.0	)		(317.9	)
Balance as of March 31, 2015	$	(748.3	)	$	(35.0	)	$	(783.3	)
Other comprehensive income before reclassifications into general and administrative		765.3			7.6			772.9
Total other comprehensive income		765.3			7.6			772.9
Balance as of June 30, 2015	$	17.0		$	(27.4	)	$	(10.4	)

NOTE 17 — Derivative Instruments and Hedging Activities

The Company’s revenue, earnings, cash flows and fair value of its assets and liabilities can be impacted by fluctuations in foreign exchange risks and interest rates, as applicable. The Company manages the impact of foreign exchange risk and interest rate movements through operational means and through the use of various financial instruments, including derivative instruments such as foreign currency derivatives.

Foreign Currency Derivatives

Overall, the Company is a net recipient of currencies other than the U.S. dollar and, as such, benefits from a weaker dollar and is adversely affected by a stronger dollar relative to major currencies worldwide. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may negatively affect the Company’s consolidated revenues and favorably impact operating expenses in U.S. dollars.

The Company enters into foreign currency derivatives to reduce current and future earnings and cash flow volatility associated with foreign exchange rate changes to allow management to focus its attention on its core business issues. Accordingly, the Company enters into various contracts which change in value as foreign excha nge rates change to economically offset the effect of changes in the value of foreign currency assets and liabilities, commitments and anticipated foreign currency denominated sales and operating expenses. The Company enters into foreign currency derivativ es in amounts between minimum and maximum anticipated foreign exchange exposures. The Company does not designate the current derivative instruments as accounting hedges.

The Company uses foreign currency derivatives, which provide for the sale or purchase or the option to sell or purchase foreign currencies to economically hedge the currency exchange risks associated with probable but not firmly committed transactions that arise in the normal course of the Company’s business. Probable but not firmly committed transactions are comprised primarily of sales of products and purchases of raw material in currencies other than the U.S. dollar. The foreign currency derivatives are entered into to reduce the volatility of earnings generated in currencies other than the U.S. dollar. While these instruments are subject to fluctuations in value, such fluctuations are anticipated to offset changes in the value of the underlying exposures.

The Company recognized realized and unrealized losses on such contracts of $18.1 million and $3.4 million during the three and six months ended June 30, 2016, respectively. The Company recognized realized and unrealized losses on such contracts of $24.9 million and $37.7 million during the three and six months ended June 30, 2015, respectively.

The fair value of outstanding foreign currency derivatives are recorded in “Prepaid expenses and other current assets” or “Investments and other assets” or “Accounts payable and accrued expenses.” At June 30, 2016 and December 31, 2015, foreign currency derivative assets associated with the foreign exchange option contracts of $29.5 million and $25.0 million, respectively, were included in “Prepaid expenses and other current assets.” At June 30, 2016 and December 31, 2015, foreign currency derivative assets associated with the foreign exchange option contracts of $36.3 million and $48.5 million, respectively, were included in “Investments and other assets.” At June 30, 2016 and December 31, 2015, there were zero and $0.3 million in foreign currency derivative liabilities associated with the foreign exchange forward contracts included in “Accounts payable and accrued expenses.”

NOTE 18 — Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. Fair values determined based on Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined based on Level 2 inputs utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active. Fair values determined based on Level 3 inputs utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity. A financial asset or liability’s classification within the above hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Assets and liabilities measured at fair value or disclosed at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 consisted of the following (in millions):

	Fair Value Measurements as of June 30, 2016 Using:
	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	17.1	$	17.1	$	-	$	-
Deferred executive compensation investments		114.0		93.0		21.0		-
Foreign currency derivatives		65.8		-		65.8		-
Investments and other		94.6		94.6		-		-
Total assets	$	291.5	$	204.7	$	86.8	$	-
Liabilities:
Deferred executive compensation liabilities		114.1		93.1		21.0		-
Contingent consideration obligations		858.9		-		-		858.9
Total liabilities	$	973.0	$	93.1	$	21.0	$	858.9

	Fair Value Measurements as of December 31, 2015 Using:
	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	29.9	$	29.9	$	-	$	-
Deferred executive compensation investments		118.1		102.3		15.8		-
Foreign currency derivatives		73.2		-		73.2		-
Investments and other		112.2		112.2		-		-
Total assets	$	333.4	$	244.4	$	89.0	$	-
Liabilities:
Deferred executive compensation liabilities		117.9		102.1		15.8		-
Contingent consideration obligations		868.0		-		-		868.0
Total liabilities	$	985.9	$	102.1	$	15.8	$	868.0

Marketable securities and investments consist of available-for-sale investments in U.S. treasury and agency securities and publicly traded equity securities for which market prices are readily available. Unrealized gains or losses on marketable securities and investments are recorded in accumulated other comprehensive (loss) / income.

Foreign Currency Contracts

At June 30, 2016 and December 31, 2015, the notional principal and fair value of the Company’s outstanding foreign currency derivative financial instruments were as follows ($ in millions, except average contract rate or strike amount):

	June 30, 2016				December 31, 2015
	Notional Principal		Average Contract Rate or Strike Amount		Notional Principal			Average Contract Rate or Strike Amount
Foreign currency forward exchange contracts:
(Receive U.S. dollar/pay foreign currency)
Russian ruble	$	21.0		65.39	$	18.8			72.97
	$	21.0			$	18.8

Estimated fair value	$	0.1			$	(0.3	)

Foreign currency sold - put options:
Euro	$	286.7		1.41	$	340.5		1.41
	$	286.7			$	340.5

Estimated fair value	$	65.7			$	73.5

The notional principal amounts provide one measure of the transaction volume outstanding as of June 30, 2016 and December 31, 2015, and do not represent the amount of the Company’s exposure to market loss. The estimates of fair value are based on applicable and commonly used pricing models using prevailing financial market information as of June 30, 2016 and December 31, 2015. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.

Contingent Consideration Obligations

The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs and is based on a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on our own assumptions. Changes in the fair value of the contingent consideration obligations, including accretion, are recorded in our consolidated statements of operations as follows ($ in millions):

	Three Months Ended
Expense / (income)	June 30, 2016			June 30, 2015
Cost of sales	$	(4.8	)	$	4.8
Research and development		34.4			(25.4	)
General and administrative		-			-
Total	$	29.6		$	(20.6	)

	Six Months Ended
Expense / (income)	June 30, 2016		June 30, 2015
Cost of sales	$	3.0	$	32.5
Research and development		60.3		(25.4	)
General and administrative		0.1		(1.1	)
Total	$	63.4	$	6.0

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016 and 2015 ($ in millions):

Balance as of

December 31, 2015

Net

transfers

in to

(out of)

Level 3

Purchases

and

settlements,

net

Net

accretion

and fair

value

adjustments

Foreign

currency

translation

Balance as of

June 30, 2016

Liabilities:

Contingent consideration

obligations

868.0

(72.5

)

63.4

858.9

Balance as of

December 31, 2014

Net

transfers

in to

(out of)

Level 3

Purchases

and

settlements,

net

Net

accretion

and fair

value

adjustments

Foreign

currency

translation

Balance as of

June 30, 2015

Liabilities:

Contingent consideration

obligations

373.8

277.4

6.0

657.2

During the six months ended June 30, 2016, the following activity in contingent consideration obligations was incu rred ($ in millions):

	Balance as of December 31, 2015		Acquisitions		Fair Value Adjustments and Accretion			Payments and Other			Balance as of June 30, 2016
Allergan Acquisition	$	329.7	$	-	$	38.9		$	(39.9	)	$	328.7
AqueSys Acquisition		193.5		-		12.0			-			205.5
Medicines 360 acquisition		144.1		-		8.9			-			153.0
Oculeve Acquisition		90.0		-		8.1			-			98.1
Forest Acquisition		20.4		-		(1.9	)		(0.1	)		18.4
Metrogel acquisition		30.9		-		(6.8	)		(7.6	)		16.5
Uteron acquisition		8.2		-		-			0.1			8.3
Durata Acquisition		24.5		-		2.2			(26.7	)		-
Other		26.7		-		2.0			1.7			30.4
Total	$	868.0	$	-	$	63.4		$	(72.5	)	$	858.9

NOTE 19 — Business Restructuring Charges

During 2016, activity related to our business restructuring and facility rationalization activities primarily related to the cost optimization initiatives in conjunction with the Allergan Acquisition. Restructuring activities for the six months ended June 30, 2016 as follows ($ in millions):

	Severance and Retention			Share-Based Compensation			Other			Total
Reserve balance at December 31, 2015	$	96.7		$	-		$	48.6		$	145.3
Charged to expense
Cost of sales		3.2			0.3			0.2			3.7
Research and development		2.6			0.9			0.7			4.2
Selling and marketing		5.5			5.9			0.9			12.3
General and administrative		5.4			4.1			4.6			14.1
Total expense		16.7			11.2			6.4			34.3
Cash payments		(54.9	)		-			(18.5	)		(73.4	)
Other reserve impact		(0.9	)		(11.2	)		2.1			(10.0	)
Reserve balance at June 30, 2016	$	57.6		$	-		$	38.6		$	96.2

During the three months ended June 30, 2016 and 2015, the Company recognized restructuring charges of $18.2 million and $122.7 million, respectively. During the six months ended June 30, 2016 and 2015, the Company recognized restructuring charges of $34.3 million and $632.3 million, respectively.

NOTE 20 – Commitments & Contingencies

The Company and its affiliates are involved in various disputes, governmental and/or regulatory inspections, inquires, investigations and proceedings, and litigation matters that arise from time to time in the ordinary course of business. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect the Company, its results of operations, financial condition and cash flows. The Company’s general practice is to expense legal fees as services are rendered in connection with legal matters, and to accrue for liabilities when losses are probable and reasonably estimable.

The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued. As of June 30, 2016, the Company’s consolidated balance sheet includes accrued loss contingencies of approximately $240.0 million, which includes approximately $130.0 million which were assumed by Teva as part of the closing of the Teva Transaction on August 2, 2016.

The Company’s legal proceedings range from cases brought by a single plaintiff to mass tort actions and class actions with thousands of putative class members. These legal proceedings, as well as other matters, involve various aspects of our business and a

variety of claims (including, but not limited to, qui tam actions, antitrust, product liability, breach of contract, securities, patent infringement and trade practices), some of which present novel factual al legations and/or unique legal theories. In addition, a number of the matters pending against us are at very early stages of the legal process (which in complex proceedings of the sort faced by us often extend for several years). As a result, some matters h ave not yet progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss. In those proceedings in which plaintiffs do request publicly quantified amounts of relief, the Company does not believe that the quantified amounts are meaningful because they are merely stated jurisdictional limits, exaggerated and/or unsupported by the evidence or applicable burdens of proof.

As noted above, on August 2, 2016, the Company completed the closing of the Teva Transaction. At closing Teva assumed certain liabilities and claims of the Company described below under “Teva Assumed Liabilities”. At June 30, 2016 such assumed liabilities remained liabilities of the Company.

Antitrust Litigation

Asacol ^® Litigation. On June 22, 2015, two class action complaints were filed in federal court in Massachusetts on behalf of a putative class of indirect purchasers. In each complaint plaintiffs allege that they paid higher prices for Warner Chilcott’s Asacol ^® HD and Delzicol ^® products as a result of Warner Chilcott’s alleged actions preventing or delaying generic competition in the market for Warner Chilcott’s older Asacol ^® product in violation of U.S. federal antitrust laws and/or state laws. Plaintiffs seek unspecified injunctive relief, treble damages and/or attorneys’ fees. All of the actions were consolidated in the federal district court. On September 21, 2015, three additional complaints were filed on behalf of putative classes of indirect purchasers, each raising similar allegations to the complaints filed in June 2015. Defendants have moved to dismiss the indirect purchasers’ complaint. A hearing was held on the motion to dismiss on May 11, 2016. O n July 20, 2016, the court issued a decision granting the motion in part, dismissing the indirect purchaser plaintiffs’ claims based on purported reverse payments and dismissed several of plaintiffs’ claims based on state laws. A complaint was filed on behalf of a putative class of direct purchasers of Asacol ^® in federal court in New York on April 26, 2016. On April 26, 2016, a direct purchaser, Meijer, Inc., filed a complaint in federal court in New York. The direct purchaser complaint makes similar allegations to the complaints filed by the indirect purchaser plaintiffs. On May 25, 2016, defendants filed a motion to transfer the direct purchaser action to the federal court in Massachusetts where it could be consolidated with the indirect purchaser cases. Defendants do not have to respond to this direct purchaser complaint until the motion to transfer is decided. Two additional direct purchaser putative class action complaints were filed in federal court in New York on June 29, 2016. The Company believes it has substantial meritorious defenses and intends to defend itself vigorously. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Botox ^® Litigation . On February 24, 2015, a class action complaint was filed in federal court in California. The complaint alleges unlawful market allocation in violation of Section 1 of the Sherman Act, 15 U.S.C. §1, agreement in restraint of trade in violation of 15 U.S.C. §1 of the Sherman Act, unlawful maintenance of monopoly market power in violation of Section 2 of the Sherman Act, 15 U.S.C. §2 of the Sherman Act, violations of California’s Cartwright Act, Section 16700 et seq. of Calif. Bus. and Prof. Code., and violations of California’s unfair competition law, Section 17200 et seq. of Calif. Bus. and Prof. Code. Plaintiffs filed an amended complaint on May 29, 2015. On June 29, 2015, the Company filed a motion to dismiss the complaint. On October 20, 2015, the Court denied the Company’s motion to dismiss the complaint. On December 18, 2015, plaintiffs filed a motion for partial judgment on the pleadings or, in the alternative, for partial summary judgment or adjudication. The Company filed a response to the motion for judgment on the pleadings on February 11, 2016. The court held oral argument on plaintiff’s motion on March 4, 2016 and took the matter under submission. On May 31, 2016, the court denied plaintiffs’ motion for partial judgment on the pleadings or, in the alternative, for partial summary judgment or adjudication. On June 14, 2016, plaintiffs filed a motion for reconsideration of the court’s denial of the motion. On July 19, 2016, plaintiffs filed a motion for class certification. The Company believes it has substantial meritorious defenses and intends to defend itself vigorously. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Doryx ^® Litigation . In July 2012, Mylan Pharmaceuticals Inc. (“Mylan”) filed a complaint against Warner Chilcott and Mayne Pharma International Pty. Ltd. (“Mayne”) in federal court in Pennsylvania alleging that Warner Chilcott and Mayne prevented or delayed Mylan’s generic competition to Warner Chilcott’s Doryx ^® products in violation of U.S. federal antitrust laws and tortiously interfered with Mylan’s prospective economic relationships under Pennsylvania state law. In the complaint, Mylan seeks unspecified treble and punitive damages and attorneys’ fees. Following the filing of Mylan’s complaint, three putative class actions were filed against Warner Chilcott and Mayne by purported direct purchasers, and one putative class action was filed against by purported indirect purchasers. In addition, four retailers filed in the same court a civil antitrust complaint in their individual capacities against Warner Chilcott and Mayne regarding Doryx ^® . In each of the class and individual cases the plaintiffs allege that they paid higher prices for Warner Chilcott’s Doryx ^® products as a result of Warner Chilcott’s and Mayne’s alleged actions preventing or delaying

generic competition in violation of U.S. federal antitrust laws and/or state laws. Plaintiffs seek unspecified injunctive relief, treble damages and/or attorneys’ fees. All of the actions were consolidated in the federal district court.

Warner Chilcott and Mayne’s motion to dismiss was denied without prejudice by the court in June 2013. Thereafter, Warner Chilcott and Mayne reached agreements to settle the claims of the Direct Purchaser Plaintiff class representatives, the Indirect Purchaser Plaintiff class representatives and each of the individual retailer plaintiffs. Warner Chilcott and Mylan filed motions for summary judgment on March 10, 2014. On April 16, 2015, the court issued an order granting Warner Chilcott and Mayne’s motion for summary judgment, denying Mylan’s summary judgment motion and entering judgment in favor of Warner Chilcott and Mayne on all counts. Mylan is appealing the district court’s decision to the Third Circuit Court of Appeals and the appeal is fully briefed and an oral argument was held on July 14, 2016.

The Company intends to vigorously defend its rights in the litigations. However, it is impossible to predict with certainty the outcome of any litigation and whether any additional similar suits will be filed.

Loestrin ^® 24 Litigation. On April 5, 2013, two putative class actions were filed in the federal district court against Actavis, Inc. and certain affiliates alleging that Watson’s 2009 patent lawsuit settlement with Warner Chilcott related to Loestrin ^® 24 Fe (norethindrone acetate/ethinyl estradiol tablets and ferrous fumarate tablets, “Loestrin ^® 24”) is unlawful. The complaints, both asserted on behalf of putative classes of end-payors, generally allege that Watson and another generic manufacturer improperly delayed launching generic versions of Loestrin ^® 24 in exchange for substantial payments from Warner Chilcott, which at the time was an unrelated company, in violation of federal and state antitrust and consumer protection laws. The complaints each seek declaratory and injunctive relief and damages. Additional complaints have been filed by different plaintiffs seeking to represent the same putative class of end-payors. In addition to the end-payor suits, two lawsuits have been filed on behalf of a class of direct payors. The Company anticipates additional claims or lawsuits based on the same or similar allegations. After a hearing on September 26, 2013, the JPML issued an order transferring all related Loestrin ^® 24 cases to the federal court for the District of Rhode Island. On September 4, 2014, the court granted the defendants’ motion to dismiss the complaint. The plaintiffs appealed the district court’s decision to the First Circuit Court of Appeals and oral argument was held on December 7, 2015. On February 22, 2016 the First Circuit issued its decision vacating the decision of, and remanding the matter to, the district court. On June 11, 2016, defendants filed an omnibus motion to dismiss the claims of the direct purchaser class plaintiffs, end-payor class plaintiffs and individual direct purchaser plaintiffs.

Namenda ^® Litigation . On September 15, 2014, the State of New York, through the Office of the Attorney General of the State of New York, filed a lawsuit in the United States District Court for the Southern District of New York alleging that Forest is acting to prevent or delay generic competition to Forest’s immediate-release product Namenda ^® in violation of federal and New York antitrust laws and committed other fraudulent acts in connection with its commercial plans for Namenda ^® XR. In the complaint, the state seeks unspecified monetary damages and injunctive relief. On September 24, 2014, the state filed a motion for a preliminary injunction prohibiting Forest from discontinuing or otherwise limiting the availability of immediate-release Namenda ^® until the conclusion of the litigation. A hearing was held in November 2014 on the state’s preliminary injunction motion. On December 11, 2014, the district court issued a ruling granting the state’s injunction motion and issued an injunction on December 15, 2014. On May 22, 2015, the Court of Appeals for the Second Circuit affirmed the preliminary injunction. On June 5, 2015, Forest filed a petition with the Second Circuit for rehearing en banc which was denied. Forest and the New York Attorney General reached a settlement on November 24, 2015. On May 29, 2015, a putative class action was filed on behalf of a class of direct purchasers and on June 8, 2015 a similar putative class action was filed on behalf of a class of indirect purchasers. Since that time, additional complaints have been filed on behalf of putative classes of direct and indirect purchasers. The class action complaints make claims similar to those asserted by the New York Attorney General and also include claims that Namenda ^® patent litigation settlements between Forest and generic companies also violated the antitrust laws. On December 22, 2015, Forest and its co-defendants filed motions to dismiss the pending complaints of the putative classes of direct and indirect purchasers. These motions remain pending. The Company believes it has substantial meritorious defenses and intends to defend both its brand and generic defendant entities vigorously. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Zymar ^® /Zymaxid ^® Litigation . On February 16, 2012, Apotex Inc. and Apotex Corp. filed a complaint in the federal district court in Delaware against Senju Pharmaceuticals Co., Ltd. (“Senju”), Kyorin Pharmaceutical Co., Ltd. (“Kyorin”), and Allergan, Inc. (“Allergan”) alleging monopolization in violation of Section 2 of the Sherman Act, conspiracy to monopolize, and unreasonable restraint of trade in the market for gatifloxacin ophthalmic formulations, which includes Allergan’s ZYMAR ^® gatifloxacin ophthalmic solution 0.3% and ZYMAXID ^® gatifloxacin ophthalmic solution 0.5% products. On May 24, 2012, Allergan filed a motion to dismiss the complaint to the extent it seeks to impose liability for alleged injuries occurring prior to August 19, 2011, which is the date Apotex obtained final approval of its proposed generic product. Allergan and the other defendants also moved to dismiss. Defendants also filed a motion to stay the action pending resolution of related patent actions in the federal court in Delaware and in the U.S. Court of Appeals for the Federal Circuit. On February 7, 2013, the court granted defendants’ motion to stay the proceedings pending resolution

of the appeal in the patent di spute and denied the motion to dismiss without prejudice to renew. On September 18, 2014, defendants filed a new motion to dismiss the Apotex plaintiffs’ complaint. The court dismissed Allergan’s motion on May 2, 2015. Thereafter, Allergan filed an answer to Apotex’s complaint on June 1, 2015. On June 6, 2014, a separate antitrust class action complaint was filed in the federal district court in Delaware against the same defendants as in the Apotex case. The complaint alleges that defendants unlawfully excl uded or delayed generic competition in the gatifloxacin ophthalmic formulations market (generic versions of ZYMAR ^® and ZYMAXID ^® ). On September 18, 2014, Allergan filed a motion to dismiss for lack of subject matter jurisdiction and joined in co-defendants’ motion to dismiss for failure to state a claim. On August 19, 2015, the court granted Allergan’s motion to dismiss. On September 18, 2015, plaintiff filed a notice of appeal with the U.S. Court of Appeals for the Third Circuit. The Third Circuit oral arg ument was held on June 13, 2016. The Company believes it has substantial meritorious defenses and intends to defend itself vigorously. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on th e Company’s business, results of operations, financial condition and cash flows.

Commercial Litigation

Celexa ^® /Lexapro ^® Class Actions . Forest and certain of its affiliates are defendants in three federal court actions filed on behalf of individuals who purchased Celexa ^® and/or Lexapro ^® for pediatric use, all of which have been consolidated for pretrial purposes in an MDL proceeding in the federal district court Massachusetts (the “Celexa ^® /Lexapro ^® MDL”). These actions, two of which were originally filed as putative nationwide class actions, and one of which is a putative California-wide class action, allege that Forest marketed Celexa ^® and/or Lexapro ^® for off-label pediatric use and paid illegal kickbacks to physicians to induce prescriptions of Celexa ^® and Lexapro ^® . The complaints assert various similar claims, including claims under the state consumer protection statutes and state common laws. Plaintiffs in the various actions sought to have certified California, Missouri, Illinois and New York state-wide classes. However, only the Missouri state class was certified. Forest subsequently reached an agreement with the MDL plaintiffs to settle the Missouri class claims, including claims by both individuals and third party payors that purchased Celexa ^® or Lexapro ^® for use by a minor from 1998 to December 31, 2013, for $7.65 million with a potential to increase the amount to $10.35 million if settling plaintiffs meet certain thresholds. On September 8, 2014 the court granted final approval for the settlement.

Additional actions relating to the promotion of Celexa ^® and/or Lexapro ^® have been filed all of which have been consolidated in the Celexa ^® /Lexapro ^® MDL. On May 3, 2013, an action was filed in federal court in California on behalf of individuals who purchased Lexapro ^® for adolescent use, seeking to certify a state-wide class action in California and alleging that our promotion of Lexapro ^® for adolescent depression has been deceptive. On March 5, 2014 the court granted Forest’s motion to dismiss this complaint. Plaintiff then appealed the district court’s decision to the Court of Appeals for the First Circuit and on February 20, 2015, the First Circuit affirmed the dismissal of the complaint, ruling that Plaintiffs’ California state law claims were preempted by the Federal Food, Drug, and Cosmetic Act (FDCA). On November 13, 2013, an action was filed in federal court in Minnesota seeking to certify a nationwide class of third-party payor entities that purchased Celexa ^® and Lexapro ^® for pediatric use. The complaint asserts claims under the federal Racketeer Influenced and Corrupt Organizations Act, alleging that Forest engaged in an off-label marketing scheme and paid illegal kickbacks to physicians to induce prescriptions of Celexa ^® and Lexapro ^® . Forest moved to dismiss the complaint and on December 12, 2014, the court issued a ruling dismissing plaintiff’s claims under Minnesota’s Deceptive Trade Practices Act, but denying the remaining portions of the motion. A motion for class certification was filed in February, 2016, and denied on June 2, 2016. On March 13, 2014, an action was filed in the federal court in Massachusetts by two third-party payors seeking to certify a nationwide class of persons and entities that purchased Celexa ^® and Lexapro ^® for use by pediatric use. The complaint asserts claims under the federal Racketeer Influenced and Corrupt Organizations Act, state consumer protection statutes, and state common laws, alleging that Forest engaged in an off-label marketing scheme and paid illegal kickbacks to physicians to induce prescriptions of Celexa ^® and Lexapro ^® . The court granted Forest’s motion to dismiss this complaint in its December 12, 2014 ruling. On August 28, 2014, an action was filed in the federal district court in Washington seeking to certify a nationwide class of consumers and subclasses of Washington and Massachusetts consumers that purchased Celexa ^® and Lexapro ^® for pediatric use. The complaint asserts claims under the federal Racketeer Influenced and Corrupt Organizations Act, alleging that Forest engaged in off-label marketing scheme and paid illegal kickbacks to physicians to induce prescriptions of Celexa ^® and Lexapro ^® . Forest’s response to the complaint was filed on December 19, 2014. On June 16, 2015, the court issued a ruling on the motion to dismiss, granting it in part and denying it in part. Plaintiffs thereafter filed an amended complaint. Forest moved to dismiss the amended complaint. On June 9, 2016, the court denied Forest’s motion.

Forest and certain of its affiliates are also named as defendants in two actions filed on behalf of entities or individuals who purchased or reimbursed certain purchases of Celexa ^® and Lexapro ^® for pediatric use pending in the Missouri state court. These claims arise from similar allegations as those contained in the federal actions described in the preceding paragraphs. One action, filed on November 6, 2009, was brought by two entities that purchased or reimbursed certain purchases of Celexa ^® and/or Lexapro ^® . The complaint asserts claims under the Missouri consumer protection statute and Missouri common law, and seeks unspecified damages and attorneys’ fees. The other action, filed on July 22, 2009, was filed as a putative class action on behalf of a class of Missouri citizens who purchased Celexa ^® for pediatric use. The complaint asserts claims under the Missouri consumer protection statute and Missouri common law, and seeks unspecified damages and attorneys’ fees. In October 2010, the court certified a class of Missouri

domiciliary citizens who purchased Celexa ^® for pediatric use at any time prior to the date of the class certification order, but who do not have a claim for personal injury. The Company reached agreements with both sets of pla intiffs in the Missouri actions to resolve each matter for payments that are not material to our financial condition or results of operations.

The Company intends to continue to vigorously defend against these actions. At this time, the Company does not believe losses, if any, would have a material effect on the results of operations or financial position taken as a whole.

Telephone Consumer Protection Act Litigation. A putative class action complaint against Anda, Inc. (“Anda”), a subsidiary of the Company, was filed in Missouri state court alleging claims for conversion and alleged violations of the Telephone Consumer Protection Act (“TCPA”) and Missouri Consumer Fraud and Deceptive Business Practices Act. An amended complaint alleges that by sending unsolicited facsimile advertisements, Anda misappropriated the class members’ paper, toner, ink and employee time when they received the alleged unsolicited faxes, and that the alleged unsolicited facsimile advertisements were sent to the plaintiff in violation of the TCPA and Missouri Consumer Fraud and Deceptive Business Practices Act. The complaint seeks to assert class action claims on behalf of the plaintiff and other similarly situated third parties. On May 19, 2011, the plaintiff’s filed a motion seeking certification of a class of entities with Missouri telephone numbers who were sent Anda faxes for the period January 2004 through January 2008 but the court vacated the class certification hearing until the FCC Petition, described in more detail below, was addressed. On May 1, 2012, a separate action was filed in federal court in Florida, purportedly on behalf of the “end users of the fax numbers in the United States but outside Missouri to which faxes advertising pharmaceutical products for sale by Anda were sent.” On July 10, 2012, Anda filed its answer and affirmative defenses. The parties filed a joint motion to stay the action pending the resolution of the FCC Petition which the court granted. In addition, in October 2012, Forest and certain of its affiliates were named as defendants, in a putative class action in federal court in Missouri. This suit alleges that Forest and another defendant violated the TCPA and was filed on behalf of a proposed class that includes all persons who, from four years prior to the filing of the action, were sent telephone facsimile messages of material advertising the commercial availability of any property, goods, or services by or on behalf of defendants, which did not display an opt-out notice compliant with a certain regulation promulgated by the FCC. On July 17, 2013, the district court granted Forest’s motion to stay the action pending the administrative proceeding initiated by the pending FCC Petition and a separate petition Forest filed. On October 31, 2015, another class action complaint was filed in Missouri state court against Allergan USA, Inc., Warner Chilcott Corporation and Actavis, Inc. alleging violations of the Telephone Consumer Protection Act, the Missouri Consumer Fraud and Protection Act and conversion on behalf of a putative nationwide class of plaintiffs to who defendant Warner Chilcott Corporation sent unsolicited facsimile advertisements. Defendants removed this action to the federal district court for the Western District of Missouri on December 10, 2015 and responded to the complaint on February 8, 2016. On February 17, 2016, plaintiffs voluntarily dismissed defendants Allergan USA, Inc. and Actavis, Inc. from the litigation.

In a related matter, in November 2010 Anda filed a petition with the FCC, asking the FCC to clarify the statutory basis for its regulation requiring “opt-out” language on faxes sent with express permission of the recipient (the “FCC Petition”). On May 2, 2012, the Consumer & Governmental Affairs Bureau of the FCC dismissed the FCC Petition. On May 14, 2012, Anda filed an application for review of the Bureau’s dismissal by the full Commission, requesting the FCC to vacate the dismissal and grant the relief sought in the FCC Petition. The FCC did not rule on the application for review. On June 27, 2013, Forest filed a Petition for Declaratory Ruling with the FCC requesting that the FCC find that (1) the faxes at issue in the action complied, or substantially complied with the FCC regulation, and thus did not violate it, or (2) the FCC regulation was not properly promulgated under the TCPA. On January 31, 2014, the FCC issued a Public Notice seeking comment on several other recently-filed petitions, all similar to the one Anda filed in 2010. On October 30, 2014, the FCC issued a final order on the FCC Petition granting Anda, Forest and several other petitioners a retroactive waiver of the opt-out notice requirement for all faxes sent with express consent. The litigation plaintiffs, who had filed comments on the January 2014 Public Notice, have appealed the final order to the Court of Appeals for the District of Columbia. Anda, Forest and other petitioners have moved to intervene in the appeal seeking review of that portion of the FCC final order addressing the statutory basis for the opt out/express consent portion of the regulation.

Anda and Forest believe they have substantial meritorious defenses to the putative class actions brought under the TCPA, and intend to defend the actions vigorously. However, these actions, if successful, could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Prescription Drug Abuse Litigation . On May 21, 2014, the California counties Santa Clara and Orange filed a lawsuit in California state court on behalf of the State of California against several pharmaceutical manufacturers. Plaintiffs named Actavis plc in the suit. The California plaintiffs filed an amended complaint on June 9, 2014. On June 2, 2014, the City of Chicago also filed a complaint in Illinois state court against the same set of defendants, including Actavis plc, that were sued in the California Action. Co-defendants in the action removed the matter to the federal court in Illinois. Both the California and Chicago complaints allege that the manufacturer defendants engaged in a deceptive campaign to promote their products in violation of state and local laws. Each of the complaints seeks unspecified monetary damages, penalties and injunctive relief. Defendants have moved to dismiss the complaints in each action. On May 8, 2015, the court in the Chicago litigation granted the Company’s motion to dismiss the complaint. On August 26, 2015, the City of Chicago filed a second amended complaint. In the California action, on August 27, 2015, the court stayed

the action based on primary jurisdiction arguments raised in the motions to dismiss. On June 3, 2016, the California plaintiffs filed a motion to lift the stay and a motion for leave to file a third amended complaint. On July 1, 2016, the Company and codefendants filed joint oppositions to the California plaintiffs’ motion to lift the stay and motion for leave to file a third amended complaint. On July 27, 2016, the court ordered the California plaintiffs to file another motion for le ave to file an amended complaint along with a proposed amended complaint. On December 15, 2015, the State of Mississippi filed a lawsuit in Mississippi state court against several pharmaceutical manufacturers. The Mississippi action parallels the allegat ions in the California and Chicago matters and seeks monetary and equitable relief. In March and April 2016, the defendants filed motions to dismiss, stay, and transfer venue in the Mississippi action. The Company anticipates that additional suits will b e filed. The Company believes it has several meritorious defenses to the claims alleged. However, an adverse determination in these actions could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Testosterone Replacement Therapy Class Action . On November 24, 2014, the Company was served with a putative class action complaint filed on behalf a class of third party payers in federal court in Illinois. The suit alleges that the Company and other named pharmaceutical defendants violated various laws including the federal Racketeer Influenced and Corrupt Organizations Act and state consumer protection laws in connection with the sale and marketing of certain testosterone replacement therapy pharmaceutical products (“TRT Products”), including the Company’s Androderm ^® product. This matter was filed in the TRT Products Liability MDL, described in more detail below, notwithstanding that it is not a product liability matter. Plaintiff alleges that it reimbursed third parties for dispensing TRT Products to beneficiaries of its insurance policies. Plaintiff seeks to obtain certain equitable relief, including injunctive relief and an order requiring restitution and/or disgorgement, and to recover damages and multiple damages in an unspecified amount. Defendants filed a joint motion to dismiss the complaint, after which plaintiff amended its complaint. Defendants jointly filed a motion to dismiss the amended complaint, which was granted in part and denied in part on February 3, 2016. The Court dismissed plaintiff’s substantive RICO claims for mail and wire fraud for failure to plead with particularity under Rule 9(b) but granted plaintiffs leave to replead. The court also dismissed plaintiff’s state law statutory claims and common law claims for fraud and unjust enrichment. The Court declined to dismiss plaintiff’s conspiracy claims pursuant to 18 U.S.C. § 1962(d) and its claims for negligent misrepresentation. On March 2, 2016, the defendants jointly filed a Motion for Reconsideration of the court’s ruling on plaintiff’s claims under 18 U.S.C. § 1962(d). Plaintiff filed its Third Amended Complaint on April 7, 2016. Defendants jointly filed a motion to dismiss the Third Amended Complaint on May 5, 2016, plaintiffs filed opposition to same on June 20, 2016 and defendants jointly filed a reply on July 7, 2016. On August 2, 2016, the court dismissed all claims in the Third Amended Complaint against the Company except Count XXIV alleging conspiracy under 18 U.S.C. § 1962(d) . The Company believes it has substantial meritorious defenses to the claims alleged and intends to vigorously defend the action. However, an adverse determination in the case could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

TNS Products Litigation . On March 19, 2014, a complaint was filed in the federal district court in California. The complaint alleges violations of the California Unfair Competition Law, the Consumers Legal Remedies Act, and the False Advertising Law, and deceit. On June 2, 2014, Plaintiff filed a first amended complaint. On June 23, 2014, Allergan filed a motion to dismiss the first amended complaint. On September 5, 2014, the court granted-in-part and denied-in-part Allergan’s motion to dismiss. On September 8, 2014, the court set trial for September 1, 2015. On November 4, 2014, Allergan and SkinMedica filed a motion to dismiss. On January 7, 2015, Allergan and SkinMedica’s motion to dismiss was denied. On January 15, 2015, the court set a trial date of February 16, 2016. On February 19, 2015 Plaintiff filed a third amended complaint. On May 27, 2015, the case was stayed pending the decision of the Ninth Circuit Court of Appeals in another matter involving similar legal issues. The Company believes it has substantial meritorious defenses and intends to defend itself vigorously. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

West Virginia Prescription Drug Abuse Litigation . On June 26, 2012, the State of West Virginia filed a lawsuit against multiple distributors of prescription drugs, including Anda. The complaint generally alleges that the defendants distributed prescription drugs in West Virginia in violation of state statutes, regulation and common law. The complaint seeks injunctive relief and unspecified damages and penalties. On January 3, 2014, plaintiff filed an amended complaint which the defendants moved to dismiss. On December 16, 2014, the court issued an order denying the defendants’ motion to dismiss. On January 27, 2015, the State filed a second amended complaint which the Company moved to dismiss. On September 8, 2015, the court issued a ruling denying the motion to dismiss the second amended complaint. On October 23, 2015, defendants filed a writ of prohibition in the Supreme Court of Appeals of West Virginia seeking review of the court’s denial of the motion to dismiss the second amended complaint. On January 5, 2016, the Supreme Court of Appeals of West Virginia declined to issue an order to show cause on defendants’ writ of prohibition. On June 20, 2016, the parties executed a settlement agreement and the parties have submitted a dismissal with prejudice for order by the court. On July 6, 2016, the court entered the agreed order of dismissal with prejudice.

Xaleron Dispute. On February 5, 2016, Xaleron Pharmaceuticals, Inc. filed a lawsuit against Allergan, Inc. and Actavis, Inc. in state court in New York. The complaint, filed on February 26, 2016, alleges Allergan misappropriated Xaleron’s confidential business information and asserts claims for unfair competition, tortious interference with prospective economic advantage and unjust

enrichment. The company filed a motion to dismiss the complaint on April 15, 2016. A hearing on the motion to dismiss is scheduled for September 9, 2016. The Company intends to vigorously defend against this action. However, this action, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Employment Litigation

In July 2012, Forest and certain of its affiliates were named as defendants in an action brought by certain former company sales representatives and specialty sales representatives in the federal district court in New York. The action is a putative class and collective action, and alleges class claims under Title VII for gender discrimination with respect to pay and promotions, as well as discrimination on the basis of pregnancy, and a collective action claim under the Equal Pay Act. The proposed Title VII gender class includes all current and former female sales representatives employed by the Company throughout the U.S. from 2008 to the date of judgment, and the proposed Title VII pregnancy sub-class includes all current and former female sales representatives who have been, are, or will become pregnant while employed by the Company throughout the U.S. from 2008 to the date of judgment. The proposed Equal Pay Act collective action class includes current, former, and future female sales representatives who were not compensated equally to similarly-situated male employees during the applicable liability period. The Second Amended Complaint also includes non-class claims on behalf of certain of the named Plaintiffs for sexual harassment and retaliation under Title VII, and for violations of the Family and Medical Leave Act. On August 14, 2014, the court issued a decision on the Company’s motion to dismiss, granting it in part and denying it in part, striking the plaintiffs’ proposed class definition and instead limiting the proposed class to a smaller set of potential class members and dismissing certain of the individual plaintiffs’ claims. Plaintiffs filed a motion for conditional certification of an Equal Pay Act collective action on May 22, 2015 which the Company has opposed. On September 2, 2015, the court granted plaintiffs motion to conditionally certify a collective action. The Company intends to continue to vigorously defend against this action. At this time, the Company does not believe losses, if any, would have a material effect on the results of operations or financial position taken as a whole.

Patent Litigation

Patent Enforcement Matters

Amrix ^® . In August 2014, Aptalis Pharmatech, Inc. (“Aptalis”) and Ivax International GmbH (“Ivax”), Aptalis’s licensee for Amrix, brought an action for infringement of U.S. Patent No. 7,790,199 (the “’199 patent”), and 7,829,121 (the “’121 patent”) in the U.S. District Court for the District of Delaware against Apotex Inc. and Apotex Corp. (collectively “Apotex”). Apotex has notified Aptalis that it has filed an ANDA with the FDA seeking to obtain approval to market a generic version of Amrix before these patents expire. (The ’199 and ’121 patents expire in November 2023.) This lawsuit triggered an automatic stay of approval of Apotex’s ANDA until no earlier than December 27, 2016 (unless there is a final court decision adverse to Forest sooner, and subject to any other exclusivities, such as a first filer 180 day market exclusivity). A bench trial concluded on November 17, 2015. Post-trial briefing concluded on April 8, 2016. The Company believes it has meritorious claims to prevent the generic applicant from launching a generic version of Amrix. However, there can be no assurance a generic version will not be launched.

Bystolic ^® IPR . On December 23, 2015, Forest Laboratories Holdings Limited (“Forest”) received a notification letter that an Inter Partes Review of the USPTO (“IPR”) petition was filed by Lower Drug Prices for Consumers, LLC (“LDPC”) regarding U.S. Patent No. 6,545,040, expiring on December 17, 2021 (the “’040 Patent”). LDPC filed the IPR petition on December 22, 2015, and refiled a corrected petition on January 20, 2016. Forest filed a Patent Owner’s Preliminary Response on April 22, 2016. On July 1, 2016, the USPTO Patent and Trial Appeal Board filed their decision denying institution of the IPR.

Canasa ^® . In July 2013, Aptalis Pharma US, Inc. and Aptalis Pharma Canada Inc. brought actions for infringement of U.S. Patent Nos. 8,217,083 (the “’083 patent”) and 8,436,051 (the “’051 patent”) in the U.S. District Court for the District of New Jersey against Mylan and Sandoz. These companies have notified Aptalis that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Canasa ^® before these patents expire. Amended complaints were filed against these companies in November 2013 adding claims for infringement of U.S. Patent No. 7,854,384 (the “’384 patent”). The ’083, ’051, and ’384 patents expire in June 2028. On November 11, 2015, Aptalis entered into a settlement agreement with Mylan. Under the terms of the settlement agreement, Mylan may launch its generic version of Canasa ^® on December 15, 2018, or earlier under certain circumstances. On March 22, 2016, Aptalis entered into a settlement agreement with Sandoz. On December 14, 2015, Aptalis brought an action for infringement of the ’083, ’051, and ’384 patents in the U.S. District Court for the District of New Jersey against Pharmaceutical Sourcing Partners, Inc. (“PSP”). PSP had notified Aptalis that it had filed an ANDA with the FDA seeking to obtain approval to market generic versions of Canasa ^® before certain of these patents expire. This lawsuit triggered an automatic stay of approval of PSP’s ANDA that expires no earlier than May 2018 (unless a court issues a decision adverse to Aptalis sooner). On December 23 and 27, 2015, Aptalis brought actions for infringement of the ’083, ’051, and ’384 patents in the U.S. District Courts for the District of New Jersey and the District of Delaware, respectively, against Delcor Asset Corp., Renaissance Pharma, Inc. and Renaissance

Acquisition Holdings, LLC (“Delcor”). Delcor has noti fied Aptalis that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Canasa before certain of these patents expire. These lawsuits triggered an automatic stay of approval of Delcor’s ANDA that expires no earlier than May 2018 (unless there is a final court decision adverse to Aptalis sooner). On March 14, 2016, Aptalis filed a motion to dismiss PSP’s Seventh and Eighth counterclaims alleging unfair competition and tortious interference under state law, or in the alter native, to bifurcate the trial and stay discovery relating to PSP’s Seventh and Eighth counterclaims. Trial is scheduled for November 2017 in the PSP action. On April 8, 2016, Aptalis entered into a settlement agreement with Delcor. On May 27, 2016, the Co urt denied Aptalis’ motion to the extent that it concerns dismissal of PSP’s Seventh and Eighth counterclaims, denied without prejudice to the extent that the motion concerns bifurcation and a stay and granted leave to Aptalis to move again concerning bifu rcation and a stay. On June 24, 2016, Aptalis filed an answer to PSP’s counterclaims. The Company believes it has meritorious claims to prevent the generic applicants from launching a generic version of Canasa ^® . However, there can be no assurance a generic version will not be launched.

Combigan ^® II-III . In 2012, Allergan filed a complaint against Sandoz, Alcon, Apotex and Watson in the U.S. District Court for the Eastern District of Texas, Marshall Division, alleging that their proposed products infringe U.S. Patent Number 8,133,890 (“890 Patent”), and subsequently amended their complaint to assert infringement of U.S. Patent Number 8,354,409. In March 2013, Allergan received a Paragraph IV invalidity and non-infringement certification from Sandoz, contending that the ‘890 Patent is invalid and not infringed by the proposed generic product. In October 2013, Allergan filed a motion to stay and administratively close the Combigan II matter, which was granted. In April 2015, Allergan filed a stipulation of dismissal and the U.S. District Court granted the Order with respect to the Watson defendants. In October 2015, the U.S. District Court entered an order consolidating the Combigan ^® III matter C.A. 2:15-cv-00347-JRG into this matter C.A. 2:12-cv-00207-JRG , as lead case and subsequently, set the bench trial for October 25, 2016. A Markman Hearing was held on March 2, 2016. On May 19, 2016, Sandoz filed an amended answer and counterclaims.

On May 19, 2016, Sandoz filed an opposed motion for leave to amend its answer and counterclaim seeking to add a count for declaratory judgment of invalidity of the ‘149 Patent. On July 20, 2016, Alcon and Sandoz filed motions for summary judgment of invalidity and non-infringement of claim 4 of the ‘149 Patent, and Allergan filed a motion for summary judgment of infringement of claim 4 of the ‘149 Patent and to preclude Sandoz from re-challenging the validity of that claim. The Court set oral argument for August 25, 2016 on the parties’ pending motions. While the Company intends to vigorously defend the patents at issue in this litigation, Allergan can offer no assurance as to whether the lawsuit will be successful and that a generic version will not be launched.

Delzicol ^® . On August 28, 2015, Warner Chilcott Company, LLC, Warner Chilcott (US), LLC, and Qualicaps Co., Ltd. (collectively, “Plaintiffs”) brought an action for infringement of U.S. Patent No. 6,649,180 (the “‘180 patent”) in the United States District Court for the Eastern District of Texas against Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (collectively, “Teva”). Teva notified Plaintiffs that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Delzicol ^® before the ‘180 patent expires in April 2020. This lawsuit triggered an automatic stay of approval of Teva’s ANDA that expires no earlier than January 2018 (unless there is a final court decision adverse to Plaintiffs sooner). Trial is scheduled for October 2017. On November 9, 2015, Plaintiffs also brought an action for infringement of ‘180 patent in the United States District Court for the Eastern District of Texas against Mylan Pharmaceuticals, Inc., Mylan Laboratories Limited and Mylan, Inc. (collectively, “Mylan”). Mylan notified Plaintiffs that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Delzicol ^® before the ‘180 patent expires in April 2020. This lawsuit triggered an automatic stay of approval of Mylan’s ANDA that expires no earlier than March 2018 (unless a court issues a decision adverse to Plaintiffs sooner). On December 16, 2015, Mylan filed a motion to dismiss for failure to state a claim, lack of personal jurisdiction, and improper venue, which remains pending. Trial is scheduled for October 2017. In March 2016, the Court entered an order consolidating the Mylan litigation ( C.A. 2:15-cv-01740 ) with the Teva litigation ( C.A. 2:15-cv-01471 ) matter as the lead case.

On April 1, 2016, Warner Chilcott Company, LLC, Warner Chilcott (US), LLC, Allergan Pharmaceuticals International Ltd., Allergan USA, LLC and Qualicaps Co., Ltd. (collectively, “Plaintiffs”) brought an action for infringement of the ‘180 patent in the United States District Court for the Eastern District of Texas against Zydus International Pvt. Ltd., Zydus Pharmaceuticals (USA) Inc. and Cadila Healthcare Ltd. (collectively, “Zydus”). Zydus notified the Company that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Delzicol ^® before the ‘180 patent expires. In May 2016, Plaintiffs filed a first amended complaint against Mylan and a first amended and second amended complaint against Teva. In June 2016, Plaintiffs filed a second amended complaint against Mylan and a third amended complaint against Teva. On June 27, 2016, Teva filed an answer and counterclaims and Mylan filed a motion to dismiss the second amended complaint for failure to state a claim, lack of personal jurisdiction, and improper venue, which remains pending. On June 9, 2016, Zydus filed an answer and counterclaims.

On July 21, 2016, the Plaintiffs filed an answer to Teva’s counterclaim and to Zydus’s counterclaim. While the Company intends to vigorously defend the patent at issue in these litigations, Warner Chilcott can offer no assurance as to whether the lawsuits will be successful and that a generic version will not be launched.

Gelnique ^® 10% gel. In October 2015, Actavis Laboratories, UT, Inc. (“Actavis”) filed a complaint in the U.S. D istrict Court for the District of Delaware for infringement of U.S. Patent Nos. 7,029,694 (“’694 Patent”), 7,179,483 (“’483 Patent”), 8,241,662 (“’662 Patent”), and 8,920,392 (“’392 Patent”) against Par Pharmaceutical, Inc. (“Par”). Par notified Plaintiff that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Gelnique ^® 10% gel before the ’694 Patent, ’483 Patent, ’662 Patent, and the ’392 Patent expires. The ’694, ’483, and ’662 Patents expire in April 2020, and the ’392 Patent expires in March 2031. This lawsuit triggered an automatic stay of approval of Par’s ANDA that expires no earlier than February 19, 2018 (unless there is a final court decision adverse to Plaintiff sooner). In June and July 2016, the Court ente red stipulations and orders staying this litigation.

Lastacaft ^® . In May 2016, Allergan, Inc. (“Allergan”) and Vistakon Pharmaceuticals, LLC (“Vistakon”) filed a complaint in the U.S. District Court for the District of Delaware for infringement of U.S. Patent No. 8,664,215 (“’215 Patent”) against Somerset Therapeutics, LLC (“Somerset”). Somerset notified Allergan and Vistakon that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Lastacaft ^® before the ‘215 Patent expires. While the Company intends to vigorously defend the patents at issue in this litigation, Allergan can offer no assurance as to whether the lawsuit will be successful and that a generic version will not be launched.

Latisse ^® III . In December 2014, Allergan and Duke University filed a complaint for declaratory judgment of infringement of U.S. Patent Nos. 8,906,962 (“‘962 Patent”) against Apotex. In January 2015, Allergan and Duke subsequently filed an amended complaint against Apotex to assert infringement of U.S. Patent Number 8,926,953 (“‘953 Patent”). In March 2015, Allergan and Duke filed a second amended complaint asserting only the ‘953 Patent. Apotex filed a motion to dismiss for failure to state a claim with respect to the ‘953 Patent.

On August 31, 2015, the court issued an order and judgment dismissing the case with prejudice in favor of Apotex, Sandoz and Akorn on all of Allergan’s claims alleging infringement of the ‘953 patent. In the Sandoz and Akorn matters, the court also declared and adjudged the ‘953 patent invalid as obvious, and collaterally estopped Allergan from asserting the ‘953 patent against Sandoz or Akorn or contesting the invalidity of the ‘953 patent. In late September, the court entered a final judgment that declared and adjudged claims 8, 23 and 26 of the ‘953 patent invalid as obvious and collaterally estopped Allergan from asserting claims 8, 23 and 26 of the ‘953 patent against Apotex and Akorn or contesting the invalidity of claims 8, 23 and 26 of the ‘953 patent. On September 30, 2015, Allergan filed a Notice of Appeal to the Court of Appeals for the Federal Circuit. On October 19, 2015, the U.S. Court of Appeals for the Federal Circuit docketed the appeal filed by Allergan. In March 2016, Allergan filed its opening brief. In June 2016, Akorn, Apotex, Hi-Tech and Sandoz filed their response brief. In July 2016, Allergan filed its reply brief. While the Company intends to vigorously defend the patents at issue in this litigation, Allergan can offer no assurance as to whether the lawsuit will be successful and that a generic version will not be launched.

Namenda XR ^® . Between January and October 2014, Forest Laboratories, Inc., Forest Laboratories Holdings, Ltd. (collectively, “Forest”) and Merz Pharma and Adamas Pharmaceuticals, Forest’s licensors for Namenda XR ^® (all collectively, “Plaintiffs”), brought actions for infringement of some or all of U.S. Patent Nos. 5,061,703 (the “‘703 patent”), 8,039,009 (the “’009 patent”), 8,168,209 (the “‘209 patent”), 8,173,708 (the “‘708 patent”), 8,283,379 (the “‘379 patent”), 8,329,752 (the “‘752 patent”), 8,362,085 (the “‘085 patent”), and 8,598,233 (the “‘233 patent”) in the U.S. District Court for the District of Delaware against Wockhardt, Teva, Sun, Apotex, Anchen, Zydus, Watson, Par, Mylan, Amneal, Ranbaxy, and Amerigen, and related subsidiaries and affiliates thereof. These companies have notified Plaintiffs that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Namenda XR ^® before these certain patents expire. Including a 6-month pediatric extension of regulatory exclusivity, the ‘703 patent expires in October 2015, the ‘009 patent expires in September 2029, and the ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents expire in May 2026. These lawsuits triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than June 2016 (unless there is a final court decision adverse to Plaintiffs sooner). On June 11, 2014, Mylan filed a motion to dismiss for lack of personal jurisdiction, which the district court denied on March 30, 2015. On December 18, 2014, Ranbaxy filed an IPR before the Patent Trial and Appeal Board, U.S. Patent and Trademark Office, with respect to the ‘085 patent. Adamas filed a preliminary response on April 14, 2015. On May 1, 2015, Forest entered into a settlement agreement with Ranbaxy. On May 15, 2015, the Patent Trial and Appeal Board granted Adamas and Ranbaxy’s joint motion to terminate the case. On October 17, 2014, Forest and Actavis Laboratories FL, Inc. (f/k/a Watson Laboratories, Inc. — Florida) filed a stipulation dismissing their respective claims without prejudice. On November 3, 2014, Plaintiffs entered into a settlement agreement with Wockhardt. Under the terms of the settlement agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide a license to Wockhardt that will permit it to launch its generic version of Namenda XR ^® as of the date that is the later of (a) two (2) calendar months prior to the expiration date of the last to expire of the ‘703 patent, the ‘209 patent, the ‘708 patent, the ‘379 patent, the ‘752 patent, the ‘085 patent, and the ‘233 patent, including any extensions and/or pediatric exclusivities; or (b) the date that Wockhardt obtains final FDA approval of its ANDA, or earlier in certain circumstances. On January 13, 2015, Plaintiffs entered into settlement agreements with Anchen and Par. Under the terms of the settlement agreements, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide licenses to Anchen and Par that will permit them to launch their generic versions of Namenda XR ^® as of the date that is the later of (a) two (2) calendar months prior to the expiration date of the last to expire of the ‘209 patent, the ‘708 patent, the ‘379 patent, the ‘752 patent, the ‘085 patent, and the ‘233 patent, as well as the ‘009 patent for

Par only, including any extensions and/or pediatric exclusivities; or (b) the dates th at Anchen and Par obtain final FDA approval of their respective ANDAs, or earlier in certain circumstances. On May 11, 2015, Forest entered into a settlement agreement with Sun. On August 18, 2015, Forest entered into a settlement agreement with Zydus. On September 9, 2015, Forest entered into a settlement agreement with Amneal. Under the terms of the settlement agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide a license to Amneal that wil l permit it to launch its generic version of Namenda XR ^® beginning January 31, 2020, following receipt by Amneal of final approval from the FDA on its ANDA for generic Namenda XR ^® ; or (b) under certain circumstances, Amneal has an option to launch an autho rized generic version of Namenda XR ^® beginning on January 31, 2021. The Company entered into a settlement agreement with Amerigen on October 20, 2015. The Company entered into a settlement agreement with Mylan on November 16, 2015. The Company entered into a settlement agreement with Lupin on December 22, 2015. On January 5, 2016, the district court issued a claim construction ruling that included findings of indefiniteness as to certain claim terms in the asserted patents. On February 11, 2016, the Company settled with Apotex. Trial began on February 16, 2016 with the remaining defendant Teva with respect to the ‘009 patent. Post-trial briefing concluded on April 29, 2016. The Parties have reached agreement on settlement with Teva subject to Court approval . In June 2016, after reaching an agreement to settle, the parties filed and the Court entered a judgment of infringement in favor of Plaintiffs and against Teva regarding the ‘009 patent. On July 26, 2016, the Court entered a final judgment of invalidity of claim 1 of the ‘209 patent, claims 1, 6, 10 and 15 of the ‘708 patent, claim 1 of the ‘379 patent, claims 1 and 9 of the ‘752 patent, claims 1 and 7 of the ‘085 patent and claim 1 of the ‘233 patent in favor of Teva. On October 9, 2015, the Company also brought an action for infringement of the ‘009, ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents in the U.S. District Court for the District of Delaware against Accord Healthcare, Inc. and Intas Pharmaceuticals Limited (collectively, “Accord”). The Accord d efendants have notified Plaintiffs that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namenda XR ^® before these patents expire. On January 14, 2016, Forest entered into a settlement agreement with Accord. On D ecember 18, 2015, the Company also brought an action for infringement of the ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents in the U.S. District Court for the District of Delaware against Panacea Biotec, Ltd. (“Panacea”). Panacea has notified Plaintiffs th at it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namenda XR ^® before these patents expire. On May 17, 2016, the Company entered into a settlement agreement with Panacea.

Namzaric ^® . On August 27, 2015, Forest Laboratories, LLC, Forest Laboratories Holdings, Ltd. (collectively, “Forest”) and Adamas Pharmaceuticals, Inc. (all collectively, “Plaintiffs”), brought an action for infringement of some or all of U.S. Patent Nos. 8,039,009 (the “’009 patent”), 8,058,291 (the “‘291 patent”), 8,168,209 (the “‘209 patent”), 8,173,708 (the “‘708 patent”), 8,283,379 (the “‘379 patent”), 8,293,794 (the “‘794 patent”), 8,329,752 (the “‘752 patent”), 8,338,485 (the “‘485 patent”), 8,338,486 (the “‘486 patent”), 8,362,085 (the “‘085 patent”), 8,580,858 (the “‘858 patent”) and 8,598,233 (the “‘233 patent”) in the U.S. District Court for the District of Delaware against Amneal Pharmaceuticals LLC and Par Pharmaceutical, Inc., and related subsidiaries and affiliates thereof. These companies have notified Plaintiffs that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Namzaric ^® before these certain patents expire. Including a 6-month pediatric extension of regulatory exclusivity, the ‘009 patent expires in September 2029, and the ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents expire in May 2026. The ‘291 patent expires in December 2029, and the ‘794, ‘485, ‘486, and ‘858 patents expire in November 2025. These lawsuits triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than January 2018 (unless there is a final court decision adverse to Plaintiffs sooner). On October 23, 2015, the Company also brought an action for infringement of the ‘009, ‘291, ‘209, ‘708, ‘379, ‘794, ‘752, ‘485, ‘486, ‘085, ‘858 and ‘233 patents in the U.S. District Court for the District of Delaware against Amerigen Pharmaceuticals, Inc. and Amerigen Pharmaceuticals Ltd. (collectively, “Amerigen”). The Amerigen defendants have notified Plaintiffs that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namzaric ^® before these certain patents expire. On January 5, 2016, the district court in the Namenda XR ^® patent litigations issued a claim construction ruling that included findings of indefiniteness as to certain claim terms in certain of the patents also asserted in the pending Namzaric ^® patent litigations. The Company entered into a settlement agreement with Par on April 29, 2016. Under the terms of the settlement agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide a license to Par that will permit it to launch its generic version of Namzaric ^® as of June 5, 2029, or earlier in certain circumstances. Trial is scheduled for October 2017. In June 2016, Forest filed a motion for leave to file an amended complaint to add the ‘009 patent against Amneal, which the District Court granted on July 19, 2016. On May 20, 2016, the Company also brought an action for infringement of the ‘009, ‘291, ‘209, ‘708, ‘379, ‘794, ‘752, ‘485, ‘486, ‘085, ‘858 and ‘233 patents in the U.S. District Court for the District of Delaware against Accord Healthcare Inc. USA and Intas Pharmaceuticals Limited (collectively, “Accord”). The Accord defendants have notified Plaintiffs that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namzaric ^® before these certain patents expire. The Company entered into a settlement agreement with Accord on July 20, 2016. While the Company intends to vigorously defend the patents at issue in this litigation, Forest can offer no assurance as to whether the lawsuit will be successful and that a generic version will not be launched.

Rapaflo ^® . On June 17, 2013, Actavis, Inc., Watson Laboratories, Inc., (collectively, “Actavis”) and Kissei Pharmaceutical Co., Ltd. (“Kissei”) sued Hetero USA Inc., Hetero Labs Limited, and Hetero Labs Limited, Unit 3 (collectively, “Hetero”) in the United States District Court for the District of Delaware, alleging that sales of silodosin tablets, a generic version of Actavis’ Rapaflo ^® tablets, would infringe U.S. Patent No. 5,387,603 (the “‘603 patent”). On June 17, 2013 Actavis and Kissei sued Sandoz Inc. (“Sandoz”) in the United States District Court for the District of Delaware, alleging that sales of Sandoz’s generic version of Rapaflo ^®

would infringe the ‘603 patent. The complaint seeks injunctive relief. On December 22, 2014 the Parties completed a settlement agr eement with Hetero. Actavis and Kissei’s lawsuit against Sandoz have been consolidated and remain pending. Pursuant to the provisions of the Hatch-Waxman Act, the FDA is precluded from granting final approval to the generic applicants prior to April 8, 201 6. The Company believes it has meritorious claims to prevent the generic applicants from launching a generic version of Rapaflo ^® . However, if a generic applicant prevails in the pending litigation or launches a generic version of Rapaflo ^® before the pendin g litigation is finally resolved, it could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Restasis ^® . Between August and September 2015, Allergan brought actions for infringement of U.S. Patent Nos. 8,629,111 (the “‘111 patent”), 8,633,162 (the “‘162 patent”), 8,642,556 (the “‘556 patent”), 8,648,048 (the “‘048 patent”), and 8,685,930 (the “‘930 patent”) in the U.S. District Court for the Eastern District of Texas against Akorn, Inc., Apotex, Inc., Mylan Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Inc., InnoPharma, Inc., and Pfizer, Inc., and related subsidiaries and affiliates thereof. On September 14, 2015, Allergan brought an action for infringement of these patents in the U.S. District Court for the District of Delaware against InnoPharma, Inc. and Pfizer, Inc. These companies have notified Allergan that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Restasis ^® before these patents expire in August 2024. In the Texas actions the District Court granted joint motions to dismiss without prejudice Teva Pharmaceutical Industries Ltd. and Pfizer, Inc., on October 12 and October 22, 2015, respectively. Teva Pharmaceuticals USA, Inc. (“Teva”) and InnoPharma, Inc. (“InnoPharma”) remain defendants in the respective actions. In October 2015, Mylan Pharmaceuticals, Inc. and Mylan, Inc. (“Mylan”) filed a motion to dismiss for lack of personal jurisdiction and improper venue, and for failure to state a claim as to Mylan, Inc.; Teva filed a motion to dismiss for lack of personal jurisdiction and improper venue; Apotex, Inc. and Apotex Corp. (“Apotex”) filed an answer, affirmative defenses and counterclaim; Akorn, Inc. (“Akorn”) filed an answer and counterclaim; and Teva filed an answer, counterclaim and motion to dismiss. Allergan entered into a settlement agreement with Apotex on December 15, 2015. In December 2015, Allergan and Apotex filed a joint stipulation of dismissal and the U.S. District Court granted the Order with respect to the Apotex defendants. In January 2016, the Court scheduled a bench trial for August 29, 2017.

In February 2016, Allergan filed an amended complaint to include U.S. Patent Number 9,248,191 (the “’191 patent”). In February and March 2016, Allergan received Paragraph IV letters from Apotex, Mylan and Teva notifying Allergan that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Restasis ^® before the patents expire in August 2024, contending that the ‘191 patent is invalid and not infringed by their respective proposed generic products.

On March 1, 2016, Allergan received a Paragraph IV letter from Famy Care Limited (“Famy Care”) notifying Allergan that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Restasis ^® before the patents expire in August 2024, contending that the ‘111 patent, the ʼ162 patent, the ‘556 patent, the ‘048 patent, the ‘930 patent, and the ‘191 patent are invalid and not infringed by their respective proposed generic products. In March 2016, the Court entered an order requesting supplemental briefs on the effect of the Federal Circuit’s Acorda decision (No. 2014-1456) on Teva’s and Mylan’s pending motions to dismiss. In their supplemental briefs, Teva acknowledged that, under the Acorda decision, it is subject to specific personal jurisdiction in the Eastern District of Texas and that venue is proper, and Mylan requested that the District Court refrain from taking action on its pending motion until after Mylan has sought panel and en banc rehearing in the Acorda action. In April 2016, the Court issued a memorandum and opinion denying Mylan’s and Teva’s motions to dismiss. On April 12, 2016, Allergan filed a complaint for infringement of the ʼ111 patent, ʼ162 patent, ʼ556 patent, ʼ048 patent, ʼ930 patent, and the ʼ191 patent in the U.S. District Court for the Eastern District of Texas against Famy Care. In March and April 2016, Allergan filed answers to Teva, Akorn and InnoPharma’s counterclaims. On June 6, 2016, Famy Care filed an answer, affirmative defenses and counterclaims. In June 2016, Allergan filed a motion for consolidation and the Court entered an order consolidating the Famy Care matter, C.A. 2:16-cv-00401-WCB , into C.A. 2:15-cv-01455-WCB, (the “Lead” case).

On July 20, 2016, Allergan filed a complaint for infringement of the ʼ111 patent, ʼ162 patent, ʼ556 patent, ʼ048 patent, ʼ930 patent, and the ʼ191 patent in the U.S. District Court for the District of Delaware and, on July 21, 2016, a complaint in the U.S. District Court for the Eastern District of Texas against TWi Pharmaceuticals, Inc. and TWi Pharmaceuticals USA, Inc. (“TWi”). TWi notified Allergan that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Restasis ^® before these certain patents expire. While the Company intends to vigorously defend the patents at issue in this litigation, Allergan can offer no assurance as to whether the lawsuit will be successful and that a generic version will not be launched.

Restasis ^® IPR. On June 6, 2016, Allergan, Inc. (“Allergan”) received notification letters that Inter Partes Review of the USPTO (“IPR”) petitions were filed by Mylan Pharmaceuticals Inc. (“Mylan”) regarding U.S. Patent Nos. 8,629,111 (the “’111 patent”), 8,633,162 (the “’162 patent”), 8,642,556 (the “’556 patent”), 8,648,048 (the “’048 patent”), 8,685,930 (the “’930 patent”), and 9,248,191 (the “’191 patent”), which patents expire on August 27, 2024. Mylan filed the IPR petition on June 3, 2016. On June 23, 2016, Allergan received a notification letter that a IPR petition and motion for joinder was filed by Argentum Pharmaceuticals LLC (“Argentum”) regarding the ’111 patent.

Saphris ^® . Between September 2014 and May 2015, Forest Labo ratories, LLC, and Forest Laboratories Holdings, Ltd. (collectively, “Forest”) brought actions for infringement of some or all of U.S. Patent Nos. 5,763,476 (the “‘476 patent”), 7,741,358 (the “‘358 patent”) and 8,022,228 (the “‘228 patent”) in the U.S. Di strict Court for the District of Delaware against Sigmapharm Laboratories, LLC, Hikma Pharmaceuticals, LLC, Breckenridge Pharmaceutical, Inc., Alembic Pharmaceuticals, Ltd. and Amneal Pharmaceuticals, LLC, and related subsidiaries and affiliates thereof. I ncluding a 6-month pediatric extension of regulatory exclusivity, the ‘476 patent expires in December 2020, and the ‘358 and ‘228 patents expire in October 2026. These lawsuits triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than February 13, 2017 (unless a court issues a decision adverse to Forest sooner). On February 3, 2015, the District Court consolidated the then-pending actions for all purposes. On September 30, 2015, the District Court consolidated all pending actions. On March 28, 2016, the Court entered Forest and Hikma’s proposed joint stipulation and order of adverse judgment and dismissal of claims related to the ‘358 and ‘228 patents. In April 2016, the Court granted the proposed consent judgment of non-in fringement and order of dismissal of counterclaims related to the ‘358 and ‘228 patents, as well as a stipulation and order with respect to infringement of Claims 1, 2, and 6 of the ʼ476 patent, between Plaintiffs and Breckenridge. The Court also granted t he proposed stipulation of entry and proposed order of adverse judgment and dismissal of counterclaims related to the ʼ358 and ʼ228 patents between Plaintiffs and Sigmapharm. Trial is scheduled to begin in October 2016 with respect to the ‘476 patent, the only remaining patent-in-suit. On May 2, 2016, the Court granted the proposed stipulation and order of infringement of certain claims of the ‘476 patent as to Hikma. In July 2016, the parties filed and the Court entered a stipulation of entry and order of infringement of certain claims of the ‘476 patent by Alembic. The Company believes it has meritorious claims to prevent the generic applicants from launching a generic version of Saphris ^® . However, there can be no assurance a generic version will not be la unched.

Savella ^® . Between September 2013 and February 2014, Forest Laboratories, Inc., Forest Laboratories Holdings, Ltd. (collectively, “Forest”) and Royalty Pharma Collection Trust (“Royalty”), Forest’s licensor for Savella ^® , brought actions for infringement of U.S. Patent Nos. 6,602,911 (the “‘911 patent”), 7,888,342 (the “‘342 patent”), and 7,994,220 (the “‘220 patent”) in the U.S. District Court for the District of Delaware against Amneal, Apotex, First Time US Generics, Glenmark, Hetero, Lupin, Mylan, Par, Ranbaxy, and Sandoz, and related subsidiaries and affiliates thereof. These companies have notified Forest and Royalty that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Savella before these patents expire. (The ‘342 patent expires in November 2021, the ‘911 patent expires in January 2023, and the ‘220 patent expires in September 2029.) These lawsuits triggered an automatic stay of approval of the applicable ANDAs until July 14, 2016 (unless a court issues a decision adverse to Forest and Royalty Pharma sooner). On March 7, 2014, Forest and Royalty voluntarily dismissed, without prejudice, all claims against Sandoz. On March 20, 2014, the district court consolidated all of the remaining pending actions for all purposes and issued a scheduling order setting a trial date in January 2016. On May 12, 2014, Forest and Royalty entered into a settlement agreement with First Time US Generics. Under the terms of the settlement agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Forest will provide a license to First Time that will permit it to launch its generic version of Savella ^® as of the date that is the later of (a) six (6) calendar months prior to the expiration date of the last to expire of the ‘911 patent, the ‘342 patent, and the ‘220 patent, including any extensions and/or pediatric exclusivities; or (b) the date that First Time obtains final FDA approval of its ANDA, or earlier in certain circumstances. On December 15, 2014, Forest and Royalty entered into a settlement agreement with Ranbaxy. On April 8, 2015, Defendants filed a motion to dismiss for lack of standing. On or about April 29, 2015, Forest entered into a settlement agreement with Par that will permit Par to launch its generic version of Savella ^® as of the date that is the later of (a) six (6) calendar months prior to the expiration date of the last to expire of the ‘911 patent, the ‘342 patent, and the ‘220 patent, including any extensions and/or pediatric exclusivities; or (b) the date that Par obtains final FDA approval of its ANDA, or earlier in certain circumstances. On December 11, 2015, Forest and Royalty entered into settlement agreements with Hetero and Glenmark. On January 8, 2016, Forest and Royalty entered into a settlement agreement with Amneal. On January 19, 2016, Forest and Royalty entered into a settlement agreement with Apotex. The defendants under these agreements may enter the market as of March 19, 2026. A bench trial concluded on January 26, 2016. Post-trial briefing concluded on April 26, 2016. In June 2016, Forest and Royalty entered into a settlement agreement with Lupin. On July 11, 2016, the Court entered an order, opinion and judgment in favor of Plaintiffs and against Mylan, that Mylan infringes the asserted claims of the ‘911, ‘342 and ‘220 patents, and that the asserted claims of the ‘911, ‘342 and ‘220 patents are valid.

Teflaro ^® . In January 2015, Forest Laboratories, LLC, Forest Laboratories Holdings, Ltd., and Cerexa, Inc. (collectively, “Forest”) and Takeda Pharmaceutical Company Limited (“Takeda”), Forest’s licensor for Teflaro ^® , brought an action for infringement of some or all of U.S. Patent Nos. 6,417,175 (the “‘175 patent”), 6,906,055 (the “‘055 patent”), 7,419,973 (the “‘973 patent”) and 8,247,400 (the “‘400 patent”) in the U.S. District Court for the District of Delaware against Apotex and Sandoz, and related subsidiaries and affiliates thereof. These companies have notified Forest and Takeda that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Teflaro ^® before some or all of the ‘175, ‘055, ‘973 and ‘400 patents expire. (The ‘175 patent expires in April 2022, the ‘055 and ‘973 patents expire in December 2021, and the ‘400 patent expires in February 2031.) These lawsuits triggered an automatic stay of approval of the applicable ANDAs until April 29, 2018 (unless a court issues a decision adverse to Forest and Takeda sooner). On June 24, 2015, the District Court issued a scheduling order setting a trial date in June 2017.

In April 2016, Forest filed a complaint for infringement of the ʼ175 patent in the U.S. District Court for the District of Delaware against Apotex. Apotex had notified Forest and Takeda that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Teflaro ^® before the ʼ175 patent expires in April 2022. This lawsuit triggered an automatic stay of approval of the applicable ANDA with respect to the ’175 patent until September 8, 2018 (unless a court issues a decision adverse to Forest and Takeda sooner). In May 2016, Apotex filed an answer and counterclaim as to the ‘175 patent and Forest filed an answer to Apotex’s counterclaims. On June 14, 2016, Allergan filed a motion for con solidation and the Court entered an order consolidating C.A. 1:16-cv-00269-GMS , into C.A. 1:15-cv-00018-GMS, (the “Lead” case). While the company intends to vigorously defend the patents at issue in this litigation, Forest can offer no assurance as to whet her the lawsuit will be successful and that a generic version will not be launched.

Viibryd ^® . In March 2015, Forest Laboratories, LLC, Forest Laboratories Holdings, Ltd., (collectively, “Forest”) and Merck KGaA and Merck Patent Gesellschaft Mit Beschränkter Haftung (collectively, “Merck”), Forest’s licensor for Viibryd, brought actions for infringement of U.S. Patent Nos. 7,834,020 (the “‘020 patent”), 8,193,195 (the “‘195 patent”), 8,236,804 (the “‘804 patent”) and 8,673,921 (the “‘921 patent”) in the U.S. District Court for the District of Delaware against Accord Healthcare Inc. (“Accord”), Alembic Pharmaceuticals, Ltd. (“Alembic”), Apotex, Inc. (“Apotex”), InvaGen Pharmaceuticals, Inc. (“InvaGen”), and Teva Pharmaceuticals USA, Inc. (“Teva”), and related subsidiaries and affiliates thereof. These companies have notified Forest and/or Merck that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Viibryd before the ‘020, ‘195, ‘804 and ‘921 patents expire in June 2022. These lawsuits triggered an automatic stay of approval of the applicable ANDAs until July 21, 2018 (unless a court issues a decision adverse to Forest and Merck sooner). On August 24, 2015, the District Court consolidated the actions for all purposes and issued a scheduling order setting a trial date in January 2018. On November 23, 2015, Forest and Merck brought an action for infringement of the ‘020, ‘195, ‘804 and ‘921 patents in the U.S. District Court for the District of Delaware against InvaGen, which matter was consolidated with the earlier-filed action against InvaGen. While the Company intends to vigorously defend the patents at issue in this litigation, Forest can offer no assurance as to whether the lawsuit will be successful and that a generic version will not be launched.

Patent Defense Matters

Teva Namenda XR Patent Litigation . In December 2013, Forest Laboratories, Inc. (“Forest”) was named as a defendant in an action brought by Teva Pharmaceuticals USA, Inc. and Mayne Pharma International Pty Ltd. in the U.S. District Court for the District of Delaware. The complaint alleges that Forest infringes U.S. Patent No. 6,194,000 by making, using, selling, offering to sell, and importing Namenda XR. The district court has scheduled a trial to begin in July 2016. On October 29, 2015, Plaintiffs filed a First Amended Complaint, adding Forest Pharmaceuticals, Inc. as a named defendant. Defendants responded on November 18, 2015. On December 7, 2015, Plaintiffs filed a motion to dismiss Defendants’ counterclaims for invalidity and motion to strike certain of Defendants’ affirmative defenses concerning invalidity. Plaintiffs’ motion remains pending. The relief requested in the Amended Complaint includes damages, but not preliminary or permanent injunctive relief. On March 16, 2016, the Court entered an order denying the Company’s request to file a motion for summary judgment. In June 2016, the Court entered an order granting with prejudice, Teva’s motion to dismiss Forest’s counterclaim for invalidity and motion to strike defendant’s fourth and fifth affirmative defenses. In July 2016, the parties filed and the Court entered a stipulation of dismissal with prejudice.

Product Liability Litigation

Actonel ^® Litigation . Warner Chilcott is a defendant in approximately 172 cases and a potential defendant with respect to approximately 392 unfiled claims involving a total of approximately 573 plaintiffs and potential plaintiffs relating to Warner Chilcott’s bisphosphonate prescription drug Actonel ^® . The claimants allege, among other things, that Actonel ^® caused them to suffer osteonecrosis of the jaw (“ONJ”), a rare but serious condition that involves severe loss or destruction of the jawbone, and/or atypical fractures of the femur (“AFF”). All of the cases have been filed in either federal or state courts in the United States. Warner Chilcott is in the initial stages of discovery in these litigations. In addition, Warner Chilcott is aware of four purported product liability class actions that were brought against Warner Chilcott in provincial courts in Canada alleging, among other things, that Actonel ^® caused the plaintiffs and the proposed class members who ingested Actonel ^® to suffer atypical fractures or other side effects. It is expected that these plaintiffs will seek class certification. Plaintiffs have typically asked for unspecified monetary and injunctive relief, as well as attorneys’ fees. Warner Chilcott is indemnified by Sanofi for certain Actonel claims pursuant to a collaboration agreement relating to the two parties’ co-promotion of the product in the United States and other countries. In addition, Warner Chilcott is also partially indemnified by the Procter & Gamble Company (“P&G”) for ONJ claims that were pending at the time Warner Chilcott acquired P&G’s global pharmaceutical business in October 2009. In May and September 2013, Warner Chilcott entered into two settlement agreements that resolved a majority of the then-existing ONJ-related claims which are subject to the acceptance by the individual respective claimants.

The Company believes it has substantial meritorious defenses to these cases and intends to defend these claims vigorously. Warner Chilcott maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company

cannot predict the outcome of this litigation. These actions, if success ful, or if insurance does not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Benicar ^® Litigation. The Company is named in approximately 2,785 actions involving allegations that Benicar ^® , a treatment for hypertension that Forest co-promoted with Daiichi Sankyo between 2002 and 2008, caused certain gastrointestinal injuries. Under Forest’s Co-Promotion Agreement, Daiichi Sankyo is defending us in these lawsuits.

Celexa ^® /Lexapro ^® Litigation . Forest and its affiliates are defendants in approximately 185 actions alleging that Celexa ^® or Lexapro ^® caused various birth defects. Several of the cases involve multiple minor-plaintiffs. The majority of these actions have been consolidated in state court in Missouri where one case is set for trial in May 2017. There are birth defect cases pending in other jurisdictions,, none of which are set for trial.

The Company believes it has substantial meritorious defenses to the Celexa ^® /Lexapro ^® cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if insurance does not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Testosterone Litigation . Beginning in 2014, a number of product liability suits were filed against the Company and certain of its affiliates, as well as other manufacturers and distributors of testosterone products, for personal injuries including but not limited to cardiovascular events allegedly arising out of the use of Androderm ^® testosterone cypionate, AndroGel and/or testosterone enanthate. Actavis, Inc. and/or one or more of its subsidiaries have been served in approximately 551 currently pending actions, three of which are pending in state courts and the remainder of which are pending in federal court. The federal court actions have been consolidated in an MDL in federal court in Illinois. The defendants have responded to the plaintiffs’ master complaint in the MDL. Plaintiffs have dismissed all claims relating to any of Actavis’ generic TRT products from the cases. These cases are in the initial stages and discovery is in the early stages. The Company anticipates that additional suits will be filed. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if insurance does not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Government Investigations, Government Litigation and Qui Tam Litigation

Warner Chilcott. Beginning in February 2012, Warner Chilcott, along with several of its current and former employees in its sales organization and certain third parties, received subpoenas from the United States Attorney for the District of Massachusetts. The subpoena received by Warner Chilcott seeks information and documentation relating to a wide range of matters, including sales and marketing activities, payments to people who are in a position to recommend drugs, medical education, consultancies, prior authorization processes, clinical trials, off-label use and employee training (including with respect to laws and regulations concerning off-label information and physician remuneration), in each case relating to all of Warner Chilcott’s current key products. The Company has recorded a contingent liability for the quarter ended March 31, 2015 under ASC 450, Contingencies, based on its analysis of this matter, however, there can be no assurance that the Company’s estimate will not differ materially from the recorded contingent liability. The Company is also aware of three qui tam complaints filed by former Warner Chilcott sales representatives and unsealed in February and March 2013 and March 2014. Two unsealed federal qui tam complaints were filed in the federal court in Massachusetts and allege that Warner Chilcott violated Federal and state false claims acts through the promotion of all of Warner Chilcott’s current key products by, among other things, making improper claims concerning the products, providing kickbacks to physicians and engaging in improper conduct concerning prior authorizations. Since then, one of the two complaints was voluntarily dismissed. The remaining complaint seeks, among other things, treble damages, civil penalties of up to eleven thousand dollars for each alleged false claim and attorneys’ fees and costs. Other similar complaints may exist under seal. The United States of America elected not to intervene in the unsealed actions. On October 29, 2015, Warner Chilcott subsidiary, Warner Chilcott Sales (US) LLC, reached an agreement with the federal government, the 50 states and the District of Columbia that resolves both the government’s investigation and the pending federal qui tam case. As part of the settlement, on April 22, 2016, Warner Chilcott Sales (US) LLC pled guilty to a charge of health care fraud in violation of 18 U.S.C. § 1347. The third complaint was filed in California state court and contains similar allegations as the other qui tam complaints and asserts additional causes of action under California state law. The State of California declined to intervene in this action. Warner Chilcott filed a motion to dismiss this complaint and has reached an agreement to settle the California action.

Forest. Forest received a subpoena dated August 5, 2013 from the U.S. Department of Health and Human Services, Office of Inspector General. The subpoena requests documents relating to the marketing and promotion of Bystolic ^® , Savella ^® , and Namenda ^® ,

including with respect to speaker programs for these products. In February 2014, the U.S. District Court for the Eastern District of Wisconsin unsealed a qui tam complaint. The complaint asserts clai ms under the False Claims Act and contains allegations regarding off-label promotion of Bystolic ^® and Savella ^® and “kickbacks” provided to physicians to induce prescriptions of Bystolic ^® , Savella ^® , and Viibryd ^® . Forest moved to dismiss the complaint. On Ja nuary 6, 2015, the court granted Forest’s motion to dismiss the complaint. On February 5, 2016, the relator filed a second amended complaint. The U.S. Attorney’s Office declined to intervene in this action but has reserved the right to do so at a later dat e. On February 23 and 24, 2016, the parties participated in a non-binding mediation. As a result of the mediation, a framework now exists for the parties to reach an agreement to settle this matter. However, the framework is subject to a number of conditio ns, including additional approvals within the government and Forest. The settlement, if approved, would include the dismissal of the action pending in federal court in Wisconsin. The Company continues to cooperate with this investigation and to discuss the se issues with the government.

Forest received a subpoena, dated April 29, 2015, from the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”). The subpoena requests documents relating to Average Manufacturer (“AMP”) and Best Price calculations for several of its products. The Company is cooperating fully with the OIG’s requests.

In April 2014, the federal district court in Massachusetts unsealed a qui tam complaint which asserts claims under the False Claims Act and contains allegations regarding off-label promotion of Namenda ^® . The Company filed a motion to dismiss the relator’s Second Amended Complaint and the court granted in part and denied in part Forest’s motion, dismissing the False Claims Act conspiracy claim only. The U.S. Attorney’s Office declined to intervene in this action but has reserved the right to do so at a later date.

The Company intends to vigorously defend itself in the litigations. However, this case is in the early stage of litigation, it is impossible to predict with certain the outcome of this case, and the Company can offer no assurance as to when the lawsuit will be decided, whether the Company will be successful in its defense and whether any additional similar suits will be filed. If this claim is successful, such claim could adversely affect the Company and could have a material adverse effect on the Company’s business, financial condition, results of operation and cash flows.

Forest and certain of its affiliates are defendants in four state court actions pending in Illinois, Mississippi, Utah and Wisconsin involving qui tam actions alleging generally that the plaintiffs (all government agencies) were overcharged for their share of Medicaid drug reimbursement costs. Discovery is ongoing in these actions. A trial in the Mississippi action is scheduled in August 2015. Forest and the other defendants filed a motion to dismiss Utah’s amended complaint. This motion to dismiss was denied in part, and discovery is proceeding. On February 17, 2014, the Wisconsin state court granted defendants’ motion to dismiss plaintiff’s Second Amended Complaint. However, the relator filed a separate action making the same basic allegations as in its amended complaint in the original action. The Company intends to continue to vigorously defend against these actions. At this time, the Company does not believe losses, if any, would have a material effect on the results of operations or financial position taken as a whole.

On December 28, 2015, a putative class action complaint was filed in state court in Pennsylvania on behalf of a putative class of private payers. Defendants removed the complaint to the federal court in Pennsylvania. The complaint alleges that manufacturers of generic drugs including Actavis Group, Forest Laboratories, Inc. and Watson Pharmaceuticals, Inc., caused plaintiffs to overpay for prescription drug products through the use of inflated AWPs. The complaint alleges violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, negligent misrepresentation/fraud, unjust enrichment, civil conspiracy and aiding and abetting. Defendants removed this action to the federal court in Pennsylvania under the Class Action Fairness Act. Plaintiffs filed an amended complaint on March 29, 2016. On May 3, 2016, the court issued an order staying all deadlines in this action. An additional complaint then was filed in state court in Pennsylvania on behalf an individual indirect purchaser containing similar allegations to the class complaint. While the matters related to Actavis Group and Watson Pharmaceuticals, Inc. were assumed by Teva as part of the Teva Transaction, the complaint against Forest Laboratories remains with the Company.

With regard to the remaining drug pricing actions, the Company believes that it has meritorious defenses and intends to vigorously defend itself in those actions. The Company continually monitors the status of these actions and may settle or otherwise resolve some or all of these matters on terms that the Company deems to be in its best interests. However, the Company can give no assurance that it will be able to settle the remaining actions on terms it deems reasonable, or that such settlements or adverse judgments in the remaining actions, if entered, will not exceed the amounts of the liability reserves. Additional actions by other states, cities and/or counties are anticipated. These actions and/or the actions described above, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Allergan . In December 2011, the federal district court in Pennsylvania issued an order partially unsealing the second amended qui tam complaint, filed by relators Herbert J. Nevyas, M.D. and Anita Nevyas-Wallace, M.D., to be informally provided to Allergan, Inc. The complaint asserts claims under Federal and State False Claims Acts and Federal and State Anti-Kickback Acts. On December 16, 2013, the court entered an order to unseal this qui tam action. On April 1, 2014, Allergan filed a motion to dismiss. On

May 26, 2015, the court issued a ruling granting, in part, the motion to dismiss and denying it in part. Allergan filed an answer to the remaining claims on June 25, 20 15. On July 7, 2015, the court scheduled trial in this matter for October 31, 2016. In May 2016, the parties reached a settlement, which remains subject to approval by various Federal and State agencies.

On November 25, 2014, prior to the completion of its merger with Actavis plc (“Actavis”), Allergan, Inc. received a request for documents and information from the United States Securities and Exchange Commission (“SEC”) related to Actavis or Salix Pharmaceuticals, Inc. (“Salix”). On June 30, 2015, Allergan, Inc. received a subpoena from the SEC requesting documents related to Actavis or Salix. On June 30, 2015, Actavis received a subpoena from the SEC requesting documents related to Allergan. In January 2016, the SEC began meeting with current and former employees of Allergan and Actavis and indicated that its review focused on the content of Allergan, Inc.’s disclosures during the pendency of the tender offer by Valeant Pharmaceuticals International for Allergan, Inc.’s common stock. The company is cooperating fully with the SEC in responding to the subpoena.

The Company and its affiliates are involved in various other disputes, governmental and/or regulatory inspections, inquires, investigations and proceedings that could result in litigation, and other litigation matters that arise from time to time. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect the Company, its results of operations, financial condition and cash flows.

Teva Assumed Liabilities

The following matters were assumed by Teva as part of the completion of the Teva Transaction on August 2, 2016.

Actos ^® Litigation . On December 31, 2013 two putative class actions, on behalf of putative classes of indirect purchaser plaintiffs, were filed in the federal court for the Southern District of New York against Actavis plc and certain of its affiliates alleging that Watson Pharmaceuticals, Inc.’s (“Watson” now known as Actavis, Inc.) 2010 patent lawsuit settlement with Takeda Pharmaceutical, Co. Ltd. related to Actos ^® (pioglitazone hydrochloride and metformin “Actos ^® ”) is unlawful. Several additional complaints have also been filed. Plaintiffs then filed a consolidated, amended complaint on May 20, 2014. The amended complaint generally alleges an overall scheme that included Watson improperly delaying the launch of its generic version of Actos ^® in exchange for substantial payments from Takeda in violation of federal and state antitrust and consumer protection laws. The complaint seeks declaratory and injunctive relief and unspecified damages. Defendants have moved to dismiss the amended complaint. On September 23, 2015, the court granted the motion to dismiss the indirect purchasers’ complaint in its entirety. The indirect purchaser plaintiffs have appealed the dismissal of their complaint. In May 2015, two additional putative class action complaints, each of which makes similar allegations against the Company and Takeda, were filed by plaintiffs on behalf of a putative class of direct purchasers. Defendants have moved to dismiss the direct purchasers’ complaint.

AndroGel . The Company believes that it has substantial meritorious defenses to the claims alleged. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. AndroGel ^® Litigation. On January 29, 2009, the U.S. Federal Trade Commission and the State of California filed a lawsuit in federal district court in California alleging that the September 2006 patent lawsuit settlement between Watson and Solvay Pharmaceuticals, Inc. (“Solvay”), related to AndroGel ^® 1% (testosterone gel) CIII is unlawful. The complaint generally alleged that Watson improperly delayed its launch of a generic version of AndroGel ^® in exchange for Solvay’s agreement to permit Watson to co-promote AndroGel ^® for consideration in excess of the fair value of the services provided by Watson, in violation of federal and state antitrust and consumer protection laws. The complaint sought equitable relief and civil penalties. On February 2 and 3, 2009, three separate lawsuits alleging similar claims were filed in federal district court in California by various private plaintiffs purporting to represent certain classes of similarly situated claimants. On April 8, 2009, the Court transferred the government and private cases to the United States District Court for the Northern District of Georgia. The FTC and the private plaintiffs filed amended complaints on May 28, 2009. The private plaintiffs amended their complaints to include allegations concerning conduct before the U.S. Patent and Trademark Office (the “USPTO”), conduct in connection with the listing of Solvay’s patent in the FDA “Orange Book,” and sham litigation. Additional actions alleging similar claims have been filed in various courts by other private plaintiffs purporting to represent certain classes of similarly situated direct or indirect purchasers of AndroGel ^® . The Judicial Panel on Multidistrict Litigation (“JPML”) transferred all federal court actions then pending outside of Georgia to that district. The district court then granted the Company’s motion to dismiss all claims except the private plaintiffs’ sham litigation claims. After the dismissal was upheld by the Eleventh Circuit Court of Appeals, the FTC petitioned the United States Supreme Court to hear the case. On June 17, 2013, the Supreme Court issued a decision, holding that the settlements between brand and generic drug companies which include a payment from the brand company to the generic competitor must be evaluated under a “rule of reason” standard of review and ordered the case remanded (the “Supreme Court AndroGel Decision”). The case is now back in the district court in Georgia. On August 5, 2014 the indirect purchaser plaintiffs filed an amended complaint which the Company answered on September 15, 2014.

The Company believes it has substant ial meritorious defenses and intends to defend itself vigorously. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and c ash flows.

Cipro ^® Litigation . Beginning in July 2000, a number of suits were filed against Watson and certain Company affiliates including The Rugby Group, Inc. (“Rugby”) in various state and federal courts alleging claims under various federal and state competition and consumer protection laws. The actions generally allege that the defendants engaged in unlawful, anticompetitive conduct in connection with alleged agreements, entered into prior to Watson’s acquisition of Rugby from Sanofi Aventis (“Sanofi”), related to the development, manufacture and sale of the drug substance ciprofloxacin hydrochloride, the generic version of Bayer’s brand drug, Cipro ^® . The actions generally seek declaratory judgment, damages, injunctive relief, restitution and other relief on behalf of certain purported classes of individuals and other entities. While many of these actions have been dismissed, actions remain pending in various state courts, including California, Kansas, Tennessee, and Florida. There has been activity in Tennessee and Florida since 2003. In the action pending in Kansas, plaintiffs’ motion for class certification has been fully briefed. In the action pending in the California state court, following the decision from the United States Supreme Court in the Federal Trade Commission v. Actavis matter involving AndroGel ^® , described above, Plaintiffs and Bayer announced that they reached an agreement to settle the claims pending against Bayer and Bayer has now been dismissed from the action. Plaintiffs are continuing to pursue claims against the generic defendants, including Watson and Rugby. The remaining parties submitted letter briefs to the court regarding the impact of the Supreme Court AndroGel Decision and on May 7, 2015, the California Supreme Court issued a ruling, consistent with the Supreme Court AndroGel Decision discussed above, that the settlements between brand and generic drug companies which include a payment from the brand company to the generic competitor must be evaluated under a “rule of reason” standard of review. On June 3, 2016, plaintiffs in the California action filed a motion for summary adjudication and defendants filed a motion to decertify the class.

In addition to the pending actions, the Company understands that various state and federal agencies are investigating the allegations made in these actions. Sanofi has agreed to defend and indemnify Watson and its affiliates in connection with the claims and investigations arising from the conduct and agreements allegedly undertaken by Rugby and its affiliates prior to Watson’s acquisition of Rugby, and is currently controlling the defense of these actions.

Lidoderm ^® Litigation . On November 8, 2013, a putative class action was filed in the federal district court against Actavis, Inc. and certain of its affiliates alleging that Watson’s 2012 patent lawsuit settlement with Endo Pharmaceuticals, Inc. related to Lidoderm ^® (lidocaine transdermal patches, “Lidoderm ^® ”) is unlawful. The complaint, asserted on behalf of putative classes of direct purchaser plaintiffs, generally alleges that Watson improperly delayed launching generic versions of Lidoderm ^® in exchange for substantial payments from Endo in violation of federal and state antitrust and consumer protection laws. The complaint seeks declaratory and injunctive relief and damages. Additional lawsuits containing similar allegations have followed on behalf of other classes of putative direct purchasers and suits have been filed on behalf of putative classes of end-payer plaintiffs. The Company anticipates additional claims or lawsuits based on the same or similar allegations may be filed. On April 3, 2014 the JPML consolidated the cases in federal district court in California. Defendants filed motions to dismiss each of the plaintiff classes’ claims. On November 17, 2014, the court issued an order granting the motion in part but denying it with respect to the claims under Section 1 of the Sherman Act. Plaintiffs then filed an amended, consolidated complaint on December 19, 2014. Defendants have responded to the amended consolidated complaint. On March 5, 2015, a group of five retailers filed a civil antitrust complaint in their individual capacities regarding Lidoderm ^® in the same court where it was consolidated with the direct and indirect purchaser class complaints. The retailer complaint recites similar facts and asserts similar legal claims for relief to those asserted in the related cases described above. The five retailers amended their complaint on July 27, 2015. On March 30, 2016, the U.S. Federal Trade Commission filed a lawsuit in federal district court in the Eastern District of Pennsylvania against the company, one of its Global Generics business subsidiaries, Watson Laboratories, Inc., Endo Pharmaceuticals Inc. and others arising out of patent settlements relating to Lidoderm and Opana ER (generic oxymorphone extended release tablets). The Lidoderm settlement was reached by Endo Pharmaceuticals Inc. and Watson Laboratories, Inc. in May 2012, and all allegations against the Company and Watson Laboratories, Inc. relate to the Lidoderm settlement only. The FTC action as to Watson Laboratories, Inc. parallels the allegations contained in the private litigation, and seeks monetary and equitable relief. On June 23, 2016, the defendants filed motions to sever the Federal Trade Commission’s lawsuit into two separate actions, one involving Lidoderm and one involving Opana ER. On July 12, 2016, the defendants filed motions to dismiss the Federal Trade Commission’s complaint.

The Company believes it has substantial meritorious defenses and intends to defend itself vigorously. However, these actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Generic Drug Pricing Litigation. On March 2, 2016, a class action complaint was filed against Allergan plc and several other defendants in federal court in Pennsylvania on behalf of a putative class of direct and indirect purchasers of certain pharmaceutical products. Several additional indirect purchaser class action complaints were subsequently filed in the same court, and one complaint was filed in federal court in Rhode Island. A motion has been filed with the Judicial Panel for Multidistrict Litigation to consolidate

the actions and oral argument on the motion was held on July 28, 2016. On June 9, 2016, plaintiffs in the original filed action filed an amended complaint. Each of the complaints allege that the defendants engaged in a conspiracy to fix, maintain and/or stabilize the prices of certain generic drug products. The Company intends to vigorously defend against this action. Howeve r, this action, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

FDA Litigation (Teva Assumed Liabilities)

In May 2002, Company subsidiary Watson Laboratories, Inc. reached an agreement with the FDA on the terms of a consent decree with respect to its Corona, California manufacturing facility. The court approved the consent decree on May 13, 2002 ( United States of America v. Watson Laboratories, Inc., et. al ., United States District Court for the Central District of California, EDCV-02-412-VAP). The consent decree applies only to the Company’s Corona, California facility and not other manufacturing sites. The decree requires that the Corona, California facility complies with the FDA’s current Good Manufacturing Practices (“cGMP”) regulations.

Pursuant to the agreement, the Company hired an independent expert to conduct inspections of the Corona facility at least once each year. In February 2014 the independent expert concluded its most recent inspection of the Corona facility. At the conclusion of the inspection, the independent expert reported its opinion to the FDA that, based on the findings of the audit of the facility, the FDA’s applicable cGMP requirements, applicable FDA regulatory guidance, and the collective knowledge, education, qualifications and experience of the expert’s auditors and reviewers, the systems at the Corona facility audited and evaluated by the expert are in compliance with the FDA’s cGMP regulations. However, the FDA is not required to accept or agree with the independent expert’s opinion. The FDA has conducted periodic inspections of the Corona facility since the entry of the consent decree, and concluded its most recent general cGMP inspection in April 2014. At the conclusion of the inspection, the FDA inspectors issued a Form 483 to the facility identifying certain observations concerning the instances where the facility failed to follow cGMP regulations. The facility recently responded to the Form 483 observations. If in the future, the FDA determines that, with respect to its Corona facility, the Company has failed to comply with the consent decree or FDA regulations, including cGMPs, or has failed to adequately address the FDA’s inspectional observations, the consent decree allows the FDA to order a variety of actions to remedy the deficiencies. These actions could include ceasing manufacturing and related operations at the Corona facility, and recalling affected products. Such actions, if taken by the FDA, could have a material adverse effect on the Company, its results of operations, financial position and cash flows.

Oxymorphone Extended-Release Tablets (Generic version of Opana ^® ER) . On December 11, 2012, Endo Pharmaceuticals Inc. (“Endo”) sued Actavis, Inc. and Actavis South Atlantic LLC (“Actavis South Atlantic”) in the United States District Court for the Southern District of New York, alleging that sales of the Company’s 7.5 mg and 15 mg oxymorphone extended-release tablets, generic versions of Endo’s Opana ^® ER, infringe U.S. Patent Nos. 7,851,482; 8,309,122; and 8,329,216. Thereafter, FDA approved Actavis’ 5 mg, 10 mg, 20 mg, 30 mg, and 40 mg oxymorphone extended-release tablets and Endo filed a motion for a preliminary injunction seeking to prevent Actavis from selling the new strengths. On September 12, 2013, the district court denied Endo’s motion for a preliminary injunction and Actavis immediately launched the new strengths. On March 31, 2014, the Federal Circuit reversed the district court’s denial of Endo’s motion for a preliminary injunction and remanded the matter to the district court for further consideration. On January 13, 2015, Endo dismissed its claims against Actavis concerning the ‘482 patent. Trial with respect to the ‘122 and ‘216 patents began on March 23, 2015 and concluded on April 24, 2015. On August 14, 2015, the court found the ‘122 and ‘216 patents valid and infringed and ordered Actavis to cease selling its generic product within 60 days. Actavis filed a motion to amend the judgment to remove the injunction on continuing sales or in the alternative stay the injunction pending appeal. On October 8, 2015, the court tolled the 60 day period for Actavis to cease selling its generic product while the court considers the motion to amend the judgment. On April 29, 2016, the district court denied Actavis’ motion to amend the judgment to remove the injunction on continuing sales or in the alternative for a stay pending appeal, and Actavis discontinued selling its generic products. On May 3, 2016, Actavis filed in the Federal Circuit an emergency motion to stay the injunction pending appeal. On May 13, 2016, the Federal Circuit denied Actavis’ emergency motion, and Actavis filed a motion for reconsideration. The Federal Circuit denied Actavis’ motion for reconsideration on May 16, 2016 and ordered that appeal briefing should commence. Actavis’ appeal is currently pending. On November 7, 2014, Endo and Mallinckrodt LLC sued Actavis and certain of its affiliates in the United States District Court for the District of Delaware, alleging that sales of the Company’s generic versions of Opana ^® ER, 5mg, 7.5 mg, 10 mg, 15 mg, 20 mg, 30 mg and 40 mg, infringe U.S. Patent Nos. 7,808,737 (which the USPTO recently issued to Endo) and 8,871,779 (which Endo licensed from Mallinckrodt). The case is currently pending, and trial is scheduled to begin on February 21, 2017. On September 23, 2015, the Magistrate Judge recommended granting Actavis’ motion to dismiss the ‘737 patent for invalidity/unpatentable subject matter. On November 17, 2015 the District Court Judge upheld the Magistrate’s recommendation regarding invalidity of the ‘737 patent and dismissed that patent from the case. The Company believes it has substantial meritorious defenses to the case. However, Actavis has sold its generic versions of Opana ^® ER during the pendency of the above actions. Therefore, an adverse final determination that one of the patents in suit is valid and infringed could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Alendronate Litigation . Beginning in 2010, approximately 127 product liability suits on behalf of approximately 169 plaintiffs have been filed ag ainst the Company and certain of its affiliates, including Cobalt Laboratories, as well as other manufacturers and distributors of alendronate for personal injuries including AFF and ONJ allegedly arising out of the use of alendronate. The actions are pend ing in various state and federal courts. Several of the cases were consolidated in an MDL proceeding in federal court in New Jersey. In 2012, the MDL court granted the Company’s motion to dismiss all of the cases then pending against the Company in the New Jersey MDL. The Third Circuit affirmed the dismissal. Any new cases against the Company filed in the MDL are subject to dismissal unless plaintiffs can establish that their claims should be exempted from the 2012 dismissal order. Other cases were consolid ated in an MDL in federal court in New York, where the Company filed a similar motion to dismiss. The Court granted, in part, the motion to dismiss which has resulted in the dismissal of several other cases. The Company has also been served with six cases that are part of a consolidated litigation in the California state court. In 2012, the California court partially granted a motion filed on behalf of all generic defendants seeking dismissal. Appeals in the California cases have been exhausted and the Comp any has not yet been able to determine how that will affect the cases filed against it. The remaining active cases are part of a mass tort coordinated proceeding in New Jersey state court. In the New Jersey proceeding, the Court granted, in part, a motion to dismiss. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litiga tion. These actions, if successful, or if our indemnification arrangements or insurance do not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results o f operations, financial condition and cash flows.

Metoclopramide Litigation. Beginning in 2009, a number of product liability suits were filed against certain Company affiliates, including legacy Actavis and Watson companies, as well as other manufacturers and distributors of metoclopramide, for personal injuries allegedly arising out of the use of metoclopramide. Approximately 1,500 cases remain pending against Actavis, Watson and/or its affiliates in state and federal courts, representing claims by multiple plaintiffs. Discovery in these cases has not progressed beyond the preliminary stages as the Company has taken steps to dismiss the suits based on preemption including through initiating or defending appeals on such motions.

The Company believes that, with respect to the majority of the cases against the legacy Watson companies, it will be defended in and indemnified by Pliva, Inc., an affiliate of Teva, from whom the Company purchased its metoclopramide product line in late 2008. With respect to the cases pending against the legacy Actavis companies, the Company recently reached an agreement in principle to resolve the majority of the matters. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if our indemnification arrangements or insurance do not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Propoxyphene Litigation. Beginning in 2011, a number of product liability suits were filed against Watson and certain of its affiliates, as well as other manufacturers and distributors of propoxyphene, for personal injuries including adverse cardiovascular events or deaths allegedly arising out of the use of propoxyphene. Cases were pending against Watson and/or its affiliates in various state and federal courts, representing claims by approximately 1,400 plaintiffs. A number of the cases were consolidated in an MDL in federal district court in Kentucky. On June 22, 2012, the MDL court granted the generic defendants’ joint motion to dismiss the remaining MDL cases. On June 27, 2014, the Sixth Circuit affirmed the district court’s dismissal. Plaintiffs did not file a petition for a writ of certiorari with the United States Supreme Court. In addition, approximately 35 cases were filed in California state court. These cases were removed to federal district courts and, after disputes over whether the cases should be remanded to state court, the Ninth Circuit Court of Appeals determined that the removals to federal court were proper. Many of the cases in California federal courts were transferred to the U.S. District Court for the Eastern District of Kentucky and consolidated for all pretrial proceedings in front of Judge Reeves, who presided over the MDL proceedings. A Show Cause Order was entered requiring plaintiffs to show cause on or before April 18, 2016 why their claims against the Generic Defendants (including Watson) should not be dismissed pursuant to the Court's prior order in the MDL dismissing all of the claims against the Generic Defendants with prejudice. Several of these cases were dismissed voluntarily with prejudice, and the remaining cases were dismissed pursuant to the Show Cause Order. In addition, approximately eight lawsuits were filed in Oklahoma, which have now been dismissed with prejudice, with the exception of seven plaintiffs in four of the cases whose claims were dismissed without prejudice, giving them one year (from June 1, 2016) to re-file their claims. There were six cases remaining in the California federal courts that named Watson as a defendant, five of which have been voluntarily dismissed with prejudice. In one of those cases the claims of two plaintiffs (a married couple) were excepted from the voluntary dismissal and; therefore, that one couple’s claim remains pending in California federal court. The last remaining California case was transferred to the Eastern District of Kentucky and assigned to Judge Reeves. It is anticipated that this case may be voluntarily dismissed or that it will be dismissed by Judge Reeves pursuant to prior orders. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if insurance does

not provide sufficient coverage against such claims, could adv ersely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Government Investigations, Government Litigation and Qui Tam Litigation (Teva Assumed Liabilities)

Actavis. On June 25, 2015, the Company received a subpoena from the U.S. Department of Justice (“DOJ”), Antitrust Division seeking information relating to the marketing and pricing of certain of the Company’s generic products and communications with competitors about such products. The Company intends to cooperate fully with the DOJ’s requests.

Patent Settlement Investigations . The Company and various of its affiliates have received letters and investigatory subpoenas from the U.S. Federal Trade Commission (“FTC”) indicating that the FTC is conducting a nonpublic investigations into certain agreements the Company have made to settle patent disputes with other brand and generic pharmaceutical companies. The Company is cooperating in responding to the investigations.

Governmental Reimbursement and Drug Pricing Investigations and Litigation . The Company has also received investigatory subpoenas from the U.S. Attorney’s Office and various state agencies requesting information and documents relating to certain categories of drug pricing including, but not limited to, Average Wholesale Price (“AWP”), Wholesale Acquisition Cost (“WAC”), Average Manufacturer Price (“AMP”) and Best Price (“BP”). The Company intends to cooperate with this subpoena.

Beginning in 1999, the Company was informed by the DOJ that it, along with numerous other pharmaceutical companies, is a defendant in a qui tam action brought in 1995 under the U.S. False Claims Act. Since that time, the Company also received and responded to notices or subpoenas from the U.S. House Committee on Energy and Commerce as well as from Attorneys General of various states, including Florida, Nevada, New York, California and Texas, relating to pharmaceutical pricing issues and whether allegedly improper actions by pharmaceutical manufacturers led to excessive payments by Medicare and/or Medicaid. Other state and federal inquiries regarding pricing and reimbursement issues are anticipated.

The Company and certain of its subsidiaries have also been named as defendants in various lawsuits filed by numerous states and qui tam relators, including Wisconsin, Kentucky, Illinois, Mississippi, Missouri, South Carolina, Utah, Kansas and Louisiana. These actions allege generally that the plaintiffs (all governmental entities) were overcharged for their share of Medicaid drug reimbursement costs as a result of reporting by manufacturers of AWP that did not correspond to actual provider costs of prescription drugs. In 2011, Watson settled certain claims made against it by a relator in a qui tam action brought against the Company on behalf of the United States. The settlement of that qui tam action resolved all claims on behalf of the United States asserted in that action except for claims relating to the federal share of Medicaid payments made by the States of Alabama, Alaska, Kentucky, Idaho, Illinois, South Carolina and Wisconsin. The Company subsequently settled all claims, including the claims on behalf of the United States, brought by Alabama. In addition, the Company has reached settlements with the states of the Louisiana, Missouri, Kansas and South Carolina. In addition, the Company has begun having discussions with the plaintiffs in the Illinois and Wisconsin actions about a possible resolution of those matters. The court in the Utah case dismissed that state’s claims against the Company. The case against Watson on behalf of Kentucky was tried in November 2011. The jury reached a verdict in Watson’s favor on each of Kentucky’s claims against Watson. An agreed form of judgment has been entered and the case now has been dismissed with prejudice. The case against Watson on behalf of Mississippi was tried from November 2012 through April 2013. On August 28, 2013, the court issued a ruling in favor of the state and awarded the state $12.4 million in compensatory damages and civil penalties, and on March 20, 2014 issued its ruling imposing an additional $17.9 million in punitive damages. Post-trial motions were filed and denied by the court. The Company is appealing both the original and punitive damage awards.

On December 28, 2015, a putative class action complaint was filed in state court in Pennsylvania on behalf of a putative class of private payers. Defendants removed the complaint to the federal court in Pennsylvania. The complaint alleges that manufacturers of generic drugs including Actavis Group, and Watson Pharmaceuticals, Inc., caused plaintiffs to overpay for prescription drug products through the use of inflated AWPs. The complaint alleges violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, negligent misrepresentation/fraud, unjust enrichment, civil conspiracy and aiding and abetting. Defendants removed this action to the federal court in Pennsylvania under the Class Action Fairness Act. Plaintiffs filed an amended complaint on March 29, 2016. On May 3, 2016, the court issued an order staying all deadlines in this action. An additional complaint then was filed in state court in Pennsylvania on behalf an individual indirect purchaser containing similar allegations to the class complaint.

Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

DESI Drug Reimbursement Litigation. In December 2009, the Company learned that numerous pharmaceutical companies, including certain subsidiaries of the Company, were named as defendants in a qui tam action pending in federal court in Massachusetts. The tenth amended complaint, which was served on certain of the Company’s subsidiaries, alleges that the defendants falsely reported to the United States that certain pharmaceutical products, including those subject to the Food and Drug Administration’s Drug Efficacy Study Implementation (“DESI”) review program, were eligible for Medicaid reimbursement and thereby allegedly caused false claims for payment to be made through the Medicaid program. The Company’s subsidiaries named in the action together with all other named defendants filed a Joint Motion to Dismiss the Tenth Amended Complaint on December 9, 2011. On February 25, 2013, the court granted the motion to dismiss as to all defendants. The plaintiff may appeal. On September 11, 2013, a similar action was filed against certain Company subsidiaries as well as Warner Chilcott and numerous other pharmaceutical company defendants by the State of Louisiana based on the same core set of allegations as asserted in the federal court action in Massachusetts. Defendants filed exceptions to plaintiffs’ complaint. On June 28, 2015, the State of Louisiana filed an amended complaint and defendants promptly moved to dismiss. On September 21, 2015, the court granted defendants’ motion to dismiss the amended complaint in its entirety. The state is appealing the dismissal of its claims. Oral argument on the appeal is scheduled for August 8, 2016. Additional actions alleging similar claims could be asserted. The Company believes that it has meritorious defenses to the claims and intends to vigorously defend itself against such allegations. However, these actions or similar actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Medicaid Price Adjustments. The Company has notified the Centers for Medicare and Medicaid Services (“CMS”) that certain of the legacy Actavis group’s Medicaid price submissions require adjustment for the period 2007 through 2012. The Company is in the process of completing the resubmissions. Based on prevailing CMS practices the Company does not expect to incur penalties in connection with the resubmissions. With respect to periods prior to 2007, the Company has advised CMS that its records are insufficient to support a reliable recalculation of its price submissions, and has proposed not to recalculate the price submissions for such periods. Because there are insufficient records to support a reliable recalculation of its price submissions prior to 2007, at this time the amount of any potential liability related to the price submissions prior to 2007 is not estimable and the Company has not concluded that any liability for periods prior to 2007 is probable. The Company believes it has substantial meritorious positions and defenses with respect to these pricing resubmission matters. However, if CMS were to successfully pursue claims against the Company for the periods in question, such claims could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Hydrocortisone Investigation . On March 8, 2016, the Company and certain of its affiliates received notice from the UK Competition and Markets Authority (“CMA”) that it has launched a formal investigation under Section 25 of the Competition Act of 1998 (“CA98”) into suspected abuse of dominance by a Company subsidiary in relation to the supply of 10mg and 20mg hydrocortisone tablets. The CMA is investigating whether the conduct infringes the Chapter II prohibition of the CA98 and/or Article 102 of the Treaty on the Functioning of the European Union. The Company is fully cooperating with the investigation. This government investigation could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Paroxetine Investigation . On April 19, 2013, the UK Office of Fair Trading (which closed in April, 2014 in connection with a government restructuring and transferred responsibility for this matter to the U.K. CMA) issued a Statement of Objections against GlaxoSmithKline (“GSK”) and various generic drug companies, including Actavis UK Limited, formerly known as Alpharma Limited, now a subsidiary of the Company, alleging that GSK’s settlements with such generic drug companies improperly delayed generic entry of paroxetine, in violation of the United Kingdom’s competition laws. The Company has responded to the Statement of Objections, however, on February 12, 2016 the UK CMA imposed a fine on the Company. The Company believes it has substantial meritorious defenses to the allegations. However, an adverse determination in the matter could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Romanian Investigation. In July 2015, the Company received a subpoena as part of a nationwide investigation of the pharmaceutical industry conducted by the Romanian government. The purpose of the investigation is to gather documents and information, and to examine sponsorship arrangements concluded with certain oncologists and hematologists during the period from January 2012 through June 2015. The Company is fully cooperating with the investigation. This government investigation could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

NOTE 21 – Warner Chilcott Limited (“WCL”) Guarantor and Non-Guarantor Condensed Consolidating Financial Information

The following financial information is presented to segregate the financial results of WCL, Actavis Funding SCS, and Actavis, Inc. (the issuers of the long-term notes), the guarantor subsidiaries for the long-term notes and the non-guarantor subsidiaries. The guarantors jointly and severally, and fully and unconditionally, guarantee the Company’s obligation under the long-term notes.

The information includes elimination entries necessary to consolidate the guarantor and the non-guarantor subsidiaries. Investments in subsidiaries are accounted for using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries, equity and intercompany balances and transactions.

WCL, Actavis Capital S.a.r.l. and Actavis, Inc. are guarantors of the long-term notes.

Warner Chilcott Limited has revised its consolidating financial statements as previously presented in Footnote 20 of the June 30, 2015 Quarterly Report on Form 10-Q and its December 31, 2015 balance sheet in Footnote 26 of the Annual Report due to a change in the Company’s legal entity structure and other reclassifications that occurred during the six months ended June 30, 2016. As a result, prior period information has been recast to conform to the current period presentation. As part of the Teva Transaction, the Company anticipates further legal entity structure changes, which will impact the presentation of this footnote for the three and nine months ending September 30, 2016.

The following financial information presents the consolidating balance sheets as of June 30, 2016 and December 31, 2015, the related statement of operations for the three and six months ended June 30, 2016 and 2015 and the statement of cash flows for the six months ended June 30, 2016 and 2015.

Warner Chilcott Limited

Consolidating Balance Sheets

As of June 30, 2016

(Unaudited; in millions)

Current assets:	Warner Chilcott Limited (Parent Guarantor)		Actavis Capital S.a.r.l. (Guarantor)		Actavis Funding SCS (Issuer)		Actavis Inc. (Issuer and Guarantor)			Non- guarantors		Eliminations			Consolidated Warner Chilcott Limited
Cash and cash equivalents	$	0.1	$	0.3	$	-	$	-		$	486.8	$	-		$	487.2
Marketable securities		-		-		-		-			17.1		-			17.1
Accounts receivable, net		-		0.5		-		-			2,490.0		-			2,490.5
Receivable from Parents		-		-		-		-			99.8		-			99.8
Inventories, net		-		-		-		-			726.8		-			726.8
Intercompany receivables		-		95,374.0		25,881.9		476.2			104,067.9		(225,800.0	)		-
Prepaid expenses and other current assets		-		-		-		0.2			784.9		-			785.1
Current assets held for sale		-		-		-		-			4,244.0		-			4,244.0
Total current assets		0.1		95,374.8		25,881.9		476.4			112,917.3		(225,800.0	)		8,850.5
Property, plant and equipment, net		-		-		-		1.3			1,555.9		-			1,557.2
Investments and other assets		-		5.0		-		12.5			335.1		-			352.6
Investment in subsidiaries		75,231.0		79,069.0		-		6,427.5			-		(160,727.5	)		-
Non current assets held for sale		-		-		-		37.7			10,760.3		-			10,798.0
Deferred tax assets		-		-		-		-			179.4		-			179.4
Product rights and other intangibles		-		-		-		-			64,460.8		-			64,460.8
Goodwill		-		-		-		-			46,515.8		-			46,515.8
Total assets	$	75,231.1	$	174,448.8	$	25,881.9	$	6,955.4		$	236,724.6	$	(386,527.5	)	$	132,714.3

Current liabilities:
Accounts payable and accrued expenses		-		-		218.1		106.9			4,136.7		-			4,461.7
Intercompany payables		-		93,455.4		948.6		9,663.9			121,732.1		(225,800.0	)		-
Payable to Parents		-		-		-		-			1,533.3		-			1,533.3
Income taxes payable		-		-		-		1.5			91.1		-			92.6
Current portion of long-term debt and capital leases		-		413.7		1,975.5		-			117.4		-			2,506.6
Current liabilities held for sale		-		-		-		-			1,778.1		-			1,778.1
Total current liabilities		-		93,869.1		3,142.2		9,772.3			129,388.7		(225,800.0	)		10,372.3
Long-term debt and capital leases		-		5,897.4		22,520.6		4,253.0			4,404.1		-			37,075.1
Other long-term liabilities		-		-		-		-			1,039.6		-			1,039.6
Non current liabilities held for sale		-		-		-		-			476.5		-			476.5
Other taxes payable		-		-		-		18.4			724.6		-			743.0
Deferred tax liabilities		-		-		-		-			7,776.7		-			7,776.7
Total liabilities		-		99,766.5		25,662.8		14,043.7			143,810.2		(225,800.0	)		57,483.2
Total equity / (deficit)		75,231.1		74,682.3		219.1		(7,088.3	)		92,914.4		(160,727.5	)		75,231.1
Total liabilities and equity	$	75,231.1	$	174,448.8	$	25,881.9	$	6,955.4		$	236,724.6	$	(386,527.5	)	$	132,714.3

Warner Chilcott Limited

Consolidating Balance Sheets

As of December 31, 2015

($ in millions)

Current assets:	Warner Chilcott Limited (Parent Guarantor)		Actavis Capital S.a.r.l. (Guarantor)		Actavis Funding SCS (Issuer)		Actavis Inc. (Issuer and Guarantor)			Non- guarantors		Eliminations			Consolidated Warner Chilcott Limited
Cash and cash equivalents	$	-	$	13.5	$	-	$	2.0		$	1,020.7	$	-		$	1,036.2
Marketable securities		-		-		-		-			9.3		-			9.3
Accounts receivable, net		-		-		-		-			2,125.4		-			2,125.4
Receivable from Parents		-		-		-		-			457.3		-			457.3
Inventories		-		-		-		-			757.5		-			757.5
Intercompany receivables		-		94,999.2		25,225.6		302.4			101,864.8		(222,392.0	)		-
Prepaid expenses and other current assets		-		5.0		-		6.1			481.7		-			492.8
Current assets held for sale		-		-		-		-			4,095.6		-			4,095.6
Total current assets		-		95,017.7		25,225.6		310.5			110,812.3		(222,392.0	)		8,974.1
Property, plant and equipment, net		-		-		-		34.3			1,497.0		-			1,531.3
Investments and other assets		-		-		-		33.6			375.1		-			408.7
Investment in subsidiaries		75,571.6		79,597.3		-		5,461.1			-		(160,630.0	)		-
Non current assets held for sale		-		-		-		45.8			10,667.5		-			10,713.3
Deferred tax assets		-		-		-		-			49.5		-			49.5
Product rights and other intangibles		-		-		-		-			67,836.2		-			67,836.2
Goodwill		-		-		-		-			46,465.2		-			46,465.2
Total assets	$	75,571.6	$	174,615.0	$	25,225.6	$	5,885.3		$	237,702.8	$	(383,022.0	)	$	135,978.3
Current liabilities:
Accounts payable and accrued expenses		-		3.9		210.5		171.5			3,708.6		-			4,094.5
Intercompany payables		-		92,093.5		526.3		9,245.0			120,527.2		(222,392.0	)		-
Payable to Parents		-		-		-		-			1,466.8		-			1,466.8
Income taxes payable		-		-		-		44.1			9.6		-			53.7
Current portion of long-term debt and capital leases		-		749.1		475.5		-			1,171.9		-			2,396.5
Current liabilities held for sale		-		-		-		23.3			1,669.9		-			1,693.2
Total current liabilities		-		92,846.5		1,212.3		9,483.9			128,554.0		(222,392.0	)		9,704.7
Long-term debt and capital leases		-		6,995.0		24,013.0		4,269.4			4,856.5		-			40,133.9
Other long-term liabilities		-		-		-		-			1,262.0		-			1,262.0
Non current liabilities for sale		-		-		-		-			535.4		-			535.4
Other taxes payable		-		-		-		72.1			729.8		-			801.9
Deferred tax liabilities		-		-		-		-			7,968.8		-			7,968.8
Total liabilities		-		99,841.5		25,225.3		13,825.4			143,906.5		(222,392.0	)		60,406.7
Total equity / (deficit)		75,571.6		74,773.5		0.3		(7,940.1	)		93,796.3		(160,630.0	)		75,571.6
Total liabilities and equity	$	75,571.6	$	174,615.0	$	25,225.6	$	5,885.3		$	237,702.8	$	(383,022.0	)	$	135,978.3

Warner Chilcott Limited

Consolidating Statements of Operations

For the Three Months Ended June 30, 2016

(Unaudited; in millions)

	Warner Chilcott Limited (Parent Guarantor)			Actavis Capital S.a.r.l. (Guarantor)			Actavis Funding SCS (Issuer)		Actavis Inc. (Issuer and Guarantor)			Non- guarantors			Eliminations			Consolidated Warner Chilcott Limited
Net revenues	$	-		$	-		$	-	$	-		$	3,684.8		$	-		$	3,684.8

Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		-			-			-		-			441.5			-			441.5
Research and development		-			-			-		-			636.5			-			636.5
Selling and marketing		-			-			-		-			866.8			-			866.8
General and administrative		-			-			-		11.5			328.2			-			339.7
Amortization		-			-			-		-			1,633.1			-			1,633.1
In-process research and development impairments		-			-			-		-			268.9			-			268.9
Asset sales and impairments, net		-			-			-		-			(17.6	)		-			(17.6	)
Total operating expenses		-			-			-		11.5			4,157.4			-			4,168.9
Operating (loss)		-			-			-		(11.5	)		(472.6	)		-			(484.1	)

Non-operating income (expense):
Interest income / (expense), net		-			(43.9	)		218.6		(39.6	)		(478.4	)		-			(343.3	)
Other income (expense), net		-			-			-		-			0.1			-			0.1
Total other income (expense), net		-			(43.9	)		218.6		(39.6	)		(478.3	)		-			(343.2	)
(Loss) / income before income taxes and noncontrolling interest		-			(43.9	)		218.6		(51.1	)		(950.9	)		-			(827.3	)
Provision / (benefit) for income taxes		-			-			-		8.8			(267.0	)		-			(258.2	)
Losses / (earnings) of equity interest subsidiaries		648.2			581.7			-		(622.4	)		-			(607.5	)		-
Net (loss) / income from continuing operations, net of tax	$	(648.2	)	$	(625.6	)	$	218.6	$	562.5		$	(683.9	)	$	607.5		$	(569.1	)
Income from discontinued operations		—			—			—		-			(77.3	)		—			(77.3	)
Net (loss) / income	$	(648.2	)	$	(625.6	)	$	218.6	$	562.5		$	(761.2	)	$	607.5		$	(646.4	)
(Income) / loss attributable to noncontrolling interest		-			-			-		-			(1.8	)		-			(1.8	)
Net (loss) / income attributable to ordinary shareholders	$	(648.2	)	$	(625.6	)	$	218.6	$	562.5		$	(763.0	)	$	607.5		$	(648.2	)
Other comprehensive (loss) / income		(345.5	)		(345.5	)		-		-			(345.5	)		691.0			(345.5	)
Comprehensive (loss) / income	$	(993.7	)	$	(971.1	)	$	218.6	$	562.5		$	(1,108.5	)	$	1,298.5		$	(993.7	)

Warner Chilcott Limited

Consolidating Statements of Operations

For the Six Months Ended June 30, 2016

(Unaudited; in millions)

	Warner Chilcott Limited (Parent Guarantor)			Actavis Capital S.a.r.l. (Guarantor)			Actavis Funding SCS (Issuer)		Actavis Inc. (Issuer and Guarantor)			Non- guarantors			Eliminations			Consolidated Warner Chilcott Limited
Net revenues		-			-			-		-			7,084.1			-			7,084.1

Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		-			-			-		-			918.9			-			918.9
Research and development					-			-		-			1,039.6			-			1,039.6
Selling and marketing		-			-			-		-			1,633.6			-			1,633.6
General and administrative		-			0.5			-		19.8			633.7			-			654.0
Amortization		-			-			-		-			3,222.8			-			3,222.8
In process research and development impairments		-			-			-		-			274.9			-			274.9
Asset sales and impairments, net		-			-			-		-			(19.3	)		-			(19.3	)
Total operating expenses		-			0.5			-		19.8			7,704.2			-			7,724.5
Operating (loss)		-			(0.5	)		-		(19.8	)		(620.1	)		-			(640.4	)

Non-operating income (expense):
Interest income / (expense), net		-			437.6			218.8		(78.7	)		(1,250.9	)		-			(673.2	)
Other income (expense), net		-			-			-		-			0.6			-			0.6
Total other income (expense), net		-			437.6			218.8		(78.7	)		(1,250.3	)		-			(672.6	)
Income / (loss) before income taxes and noncontrolling interest		-			437.1			218.8		(98.5	)		(1,870.4	)		-			(1,313.0	)
Provision / (benefit) for income taxes		-			-			-		16.1			(683.0	)		-			(666.9	)
Losses / (earnings) of equity interest subsidiaries		377.3			783.7			-		(966.4	)		-			(194.6	)		-
Net (loss) / income from continuing operations, net of tax	$	(377.3	)	$	(346.6	)	$	218.8	$	851.8		$	(1,187.4	)	$	194.6		$	(646.1	)
Income from discontinued operations		-			-			-		-			271.3			-			271.3
Net (loss) / income	$	(377.3	)	$	(346.6	)	$	218.8	$	851.8		$	(916.1	)	$	194.6		$	(374.8	)
(Income) attributable to noncontrolling interest		-			-			-		-			(2.5	)		-			(2.5	)
Net (loss) / income attributable to ordinary shareholders	$	(377.3	)	$	(346.6	)	$	218.8	$	851.8		$	(918.6	)	$	194.6		$	(377.3	)
Other Comprehensive income / (loss)		177.0			255.4			-		-			177.0			(432.4	)		177.0
Comprehensive income / (loss)	$	(200.3	)	$	(91.2	)	$	218.8	$	851.8		$	(741.6	)	$	(237.8	)	$	(200.3	)

Warner Chilcott Limited

Consolidating Statements of Operations

For the Three Months Ended June 30, 2015

(Unaudited; in millions)

	Warner Chilcott Limited (Parent Guarantor)			Actavis Capital S.a.r.l. (Guarantor)			Actavis Funding SCS (Issuer)			Actavis Inc. (Issuer and Guarantor)			Non- guarantors			Eliminations			Consolidated Warner Chilcott Limited
Net revenues	$	-		$	-		$	-		$	-		$	3,628.7		$	-		$	3,628.7

Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		-			-			-			-			917.8			-			917.8
Research and development		-			-			-			-			349.7			-			349.7
Selling and marketing		-			-			-			-			801.5			-			801.5
General and administrative		-			1.0			0.1			80.1			234.2			-			315.4
Amortization		-			-			-			-			1,515.7			-			1,515.7
In process research and development impairments		-			-			-			-			197.6			-			197.6
Asset sales and impairments, net		-			-			-			0.3			2.6			-			2.9
Total operating expenses		-			1.0			0.1			80.4			4,019.1			-			4,100.6
Operating (loss)		-			(1.0	)		(0.1	)		(80.4	)		(390.4	)		-			(471.9	)

Non-operating income (expense):
Interest income / (expense), net		-			235.9			2.4			(43.6	)		(532.0	)		-			(337.3	)
Other income (expense), net		-			(1.9	)		-			-			(38.5	)		-			(40.4	)
Total other income (expense), net		-			234.0			2.4			(43.6	)		(570.5	)		-			(377.7	)
Income / (loss) before income taxes and noncontrolling interest		-			233.0			2.3			(124.0	)		(960.9	)		-			(849.6	)
(Benefit) for income taxes		-			-			-			(45.3	)		(336.6	)		-			(381.9	)
Losses / (earnings) of equity interest subsidiaries		238.9			433.3			-			(134.3	)		-			(537.9	)		-
Net (loss) / income from continuing operations, net of tax	$	(238.9	)	$	(200.3	)	$	2.3		$	55.6		$	(624.3	)	$	537.9		$	(467.7	)
Income from discontinued operations		-			-			-			-			230.3			-			230.3
Net (loss) / income	$	(238.9	)	$	(200.3	)	$	2.3		$	55.6		$	(394.0	)	$	537.9		$	(237.4	)
(Income) attributable to noncontrolling interest		-			-			-			-			(1.5	)		-			(1.5	)
Net (loss) / income attributable to ordinary shareholders	$	(238.9	)	$	(200.3	)	$	2.3		$	55.6		$	(395.5	)	$	537.9		$	(238.9	)
Other Comprehensive income / (loss)		772.9			751.5			-			-			772.9			(1,524.4	)		772.9
Comprehensive income / (loss)	$	534.0		$	551.2		$	2.3		$	55.6		$	377.4		$	(986.5	)	$	534.0

Warner Chilcott Limited

Consolidating Statements of Operations

For the Six Months Ended June 30, 2015

(Unaudited; in millions)

	Warner Chilcott Limited (Parent Guarantor)			Actavis Capital S.a.r.l. (Guarantor)			Actavis Funding SCS (Issuer)			Actavis Inc. (Issuer and Guarantor)			Non- guarantors			Eliminations			Consolidated Warner Chilcott Limited
Net revenues	$	-		$	-		$	-		$	-		$	5,611.7		$	-		$	5,611.7

Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		-			-			-			-			1,439.7			-			1,439.7
Research and development		-			-			-			-			667.4			-			667.4
Selling and marketing		-			-			-			-			1,333.6			-			1,333.6
General and administrative		-			213.2			16.1			89.9			521.9			-			841.1
Amortization		-			-			-			-			2,301.1			-			2,301.1
In process research and development impairments		-			-			-			-			197.6			-			197.6
Asset sales and impairments, net		-			-			-			0.3			7.2			-			7.5
Total operating expenses		-			213.2			16.1			90.2			6,468.5			-			6,788.0
Operating (loss)		-			(213.2	)		(16.1	)		(90.2	)		(856.8	)		-			(1,176.3	)

Non-operating income (expense):
Interest income / (expense), net		-			288.3			(14.7	)		(87.4	)		(693.9	)		-			(507.7	)
Other income (expense), net		-			(265.4	)		31.0			0.1			(4.0	)		-			(238.3	)
Total other income (expense), net		-			22.9			16.3			(87.3	)		(697.9	)		-			(746.0	)
(Loss) / income before income taxes and noncontrolling interest		-			(190.3	)		0.2			(177.5	)		(1,554.7	)		-			(1,922.3	)
(Benefit) for income taxes		-			-			-			(67.8	)		(584.3	)		-			(652.1	)
Losses / (earnings) of equity interest subsidiaries		747.3			510.0			-			(386.5	)		-			(870.8	)		-
Net (loss) /income from continuing operations, net of tax	$	(747.3	)	$	(700.3	)	$	0.2		$	276.8		$	(970.4	)	$	870.8		$	(1,270.2	)
Income from discontinued operations		-			-			-			-			524.1			-			524.1
Net (loss) / income	$	(747.3	)	$	(700.3	)	$	0.2		$	276.8		$	(446.3	)	$	870.8		$	(746.1	)
(Income) attributable to noncontrolling interest		-			-			-			-			(1.2	)		-			(1.2	)
Net (loss) income attributable to ordinary shareholders	$	(747.3	)	$	(700.3	)	$	0.2		$	276.8		$	(447.5	)	$	870.8		$	(747.3	)
Other Comprehensive income / (loss)		455.0			520.6			-			-			455.0			(975.6	)		455.0
Comprehensive (loss) income	$	(292.3	)	$	(179.7	)	$	0.2		$	276.8		$	7.5		$	(104.8	)	$	(292.3	)

Warner Chilcott Limited

Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2016

(Unaudited; in millions)

	Warner Chilcott Limited (Parent Guarantor)			Actavis Capital S.a.r.l. (Guarantor)			Actavis Funding SCS (Issuer)			Actavis Inc. (Issuer and Guarantor)			Non- guarantors			Eliminations			Consolidated Warner Chilcott Limited
Cash Flows From Operating Activities:
Net income / (loss)	$	(377.3	)	$	(346.6	)	$	218.8		$	851.8		$	(916.1	)	$	194.6		$	(374.8	)
Reconciliation to net cash provided by operating activities:
(Earnings) / losses of equity interest subsidiaries		377.3			783.7			-			(966.4	)		-			(194.6	)		-
Depreciation		-			-			-			0.9			76.0			-			76.9
Amortization		-			-			-			-			3,227.6			-			3,227.6
Provision for inventory reserve		-			-			-			-			116.9			-			116.9
Share-based compensation		-			-			-			-			188.8			-			188.8
Deferred income tax benefit		-			-			-			-			(327.1	)		-			(327.1	)
In-process research and development impairments		-			-			-			-			274.9			-			274.9
Loss / (gain) on asset sales and impairments, net					-			-			-			(19.3	)					(19.3	)
Amortization of inventory step-up		-			-			-			-			42.4			-			42.4
Amortization of deferred financing costs		-			5.2			12.3			-			3.5			-			21.0
Contingent consideration adjustments, including accretion		-			-			-			-			60.8			-			60.8
Dividends from subsidiaries		139.2			-			-			-			-			(139.2	)		-
Other, net		-			-			-			-			(26.4	)		-			(26.4	)
Changes in assets and liabilities (net of effects of acquisitions)		0.1			984.1			(231.1	)		114.3			(1,398.7	)		-			(531.3	)
Net cash provided by operating activities		139.3			1,426.4			-			0.6			1,303.3			(139.2	)		2,730.4
Cash Flows From Investing Activities:
Additions to property plant and equipment		-			-			-			(2.6	)		(180.2	)		-			(182.8	)
Additions to product rights and other intangibles		-			-			-			-			-			-			-
Additions to investments		-			-			-			-			-			-			-
Proceeds from sale of investments and other assets					-			-			-			25.5			-			25.5
Proceeds from sales of property, plant and equipment		-			-			-			-			14.5			-			14.5
Acquisitions of business, net of cash acquired		-			-			-			-			-			-			-
Net cash (used in) investing activities		-			-			-			(2.6	)		(140.2	)		-			(142.8	)
Cash Flows From Financing Activities:
Proceeds from borrowings of long-term indebtedness		-			-			-			-			-			-			-
Proceeds from borrowings on credit facility		-			900.0			-			-			-			-			900.0
Debt issuance and other financing costs		-			-			-			-			-			-			-
Payments on debt, including capital lease obligations		-			(2,339.6	)		-			-			(1,496.0	)		-			(3,835.6	)
Payments of contingent consideration		-			-			-			-			(63.8	)		-			(63.8	)
Dividends to Parent		(139.2	)		-			-			-			(139.2	)		139.2			(139.2	)
Contribution from Parent		-			-			-			-			-			-			-
Net cash provided by / (used in) financing activities		(139.2	)		(1,439.6	)		-			-			(1,699.0	)		139.2			(3,138.6	)
Effect of currency exchange rate changes on cash and cash equivalents		-			-			-			-			2.0			-			2.0
Movement in cash held for sale		-			-			-			-			-			-			-
Net increase / (decrease) in cash and cash equivalents		0.1			(13.2	)		-			(2.0	)		(533.9	)		-			(549.0	)
Cash and cash equivalents at beginning of period		-			13.5			-			2.0			1,020.7			-			1,036.2
Cash and cash equivalents at end of period	$	0.1		$	0.3		$	-		$	-		$	486.8		$	-		$	487.2

Warner Chilcott Limited

Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2015

(Unaudited; in millions)

	Warner Chilcott Limited (Parent Guarantor)			Actavis Capital S.a.r.l. (Guarantor)			Actavis Funding SCS (Issuer)			Actavis Inc. (Issuer and Guarantor)			Non- guarantors			Eliminations			Consolidated Warner Chilcott Limited
Cash Flows From Operating Activities:
Net income / (loss)	$	(747.3	)	$	(700.3	)	$	0.2		$	276.8		$	(446.3	)	$	870.8		$	(746.1	)
Reconciliation to net cash provided by operating activities:
(Earnings) / losses of equity interest subsidiaries		747.3			510.0			-			(386.5	)		-			(870.8	)		-
Depreciation		-			-			-			0.1			132.4			-			132.5
Amortization		-			-			-			-			2,598.9			-			2,598.9
Provision for inventory reserve		-			-			-			-			63.4			-			63.4
Share-based compensation		-			-			-			18.3			382.4			-			400.7
Deferred income tax benefit		-			-			-			-			(588.9	)		-			(588.9	)
In-process research and development impairments		-			-			-			-			197.6			-			197.6
Loss / (gain) on asset sales and impairments, net		-			-			-			-			58.4			-			58.4
Amortization of inventory step-up		-			-			-			-			706.1			-			706.1
Amortization of deferred financing costs		-			268.8			8.6			2.0			1.1			-			280.5
Contingent consideration adjustments, including accretion		-			-			-			-			8.1			-			8.1
Dividends from subsidiaries		68.8			68.8			-			-			-			(137.6	)		-
Other, net		-			-			-			-			64.3			-			64.3
Changes in assets and liabilities (net of effects of acquisitions)		(0.1	)		(4,672.9	)		(20,820.7	)		111.9			24,129.4			0.0			(1,252.4	)
Net cash provided by operating activities		68.7			(4,525.6	)		(20,811.9	)		22.6			27,306.9			(137.6	)		1,923.1
Cash Flows From Investing Activities:
Additions to property plant and equipment		-			-			-			(21.8	)		(226.4	)		-			(248.2	)
Additions to product rights and other intangibles		-			-			-			-			(28.5	)		-			(28.5	)
Additions to investments		(9,000.8	)		(9,000.8	)		-			-			(21.0	)		18,001.6			(21.0	)
Proceeds from sale of investments and other assets		-			-			-			-			855.8			-			855.8
Proceeds from sales of property, plant and equipment		-			-			-			-			81.5			-			81.5
Acquisitions of business, net of cash acquired		-			-			-			-			(35,109.9	)		-			(35,109.9	)
Net cash (used in) investing activities		(9,000.8	)		(9,000.8	)		-			(21.8	)		(34,448.5	)		18,001.6			(34,470.3	)
Cash Flows From Financing Activities:
Proceeds from borrowings of long-term indebtedness		-			5,500.0			20,955.6			-			0.8			-			26,456.4
Proceeds from borrowings on credit facility		-			2,810.0						-			72.0			-			2,882.0
Debt issuance and other financing costs		-			(167.1	)		(143.7	)		-			-			-			(310.8	)
Payments on debt, including capital lease obligations		-			(3,553.3	)		-			-			(542.9	)		-			(4,096.2	)
Payments of contingent consideration		-			-			-			-			(92.0	)		-			(92.0	)
Dividends to Parent		(68.8	)		(68.8	)		-			-			(68.8	)		137.6			(68.8	)
Contribution from Parent		9,000.8			9,000.8			-			-			9,000.8			(18,001.6	)		9,000.8
Net cash provided by / (used in) financing activities		8,932.0			13,521.6			20,811.9			-			8,369.9			(17,864.0	)		33,771.4
Effect of currency exchange rate changes on cash and cash equivalents		-			-			-			-			(3.1	)		-			(3.1	)
Movement in cash held for sale		-			-			-			-			-			-			-
Net increase / (decrease) in cash and cash equivalents		(0.1	)		(4.8	)		-			0.8			1,225.2			-			1,221.1
Cash and cash equivalents at beginning of period		0.1			5.5			-			1.5			237.2			-			244.3
Cash and cash equivalents at end of period	$	-		$	0.7		$	-		$	2.3		$	1,462.4		$	-		$	1,465.4

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and the results of operations should be read in conjunction with the “Consolidated Financial Statements” and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “Annual Report”). This discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, among others, those identified under “Risk Factors” in our Annual Report, and elsewhere in this Quarterly Report.

References throughout to “we,” “our,” “us,” the “Company” or “Allergan” refer to financial information and transactions of Allergan plc. References to “Warner Chilcott Limited” refer to Warner Chilcott Limited, the Company’s indirect wholly-owned subsidiary, and, unless the context otherwise requires, its subsidiaries. Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc, the ultimate parent of the group. The results of Warner Chilcott Limited are consolidated into the results of Allergan plc. Due to the deminimis activity between Allergan plc and Warner Chilcott Limited, references throughout this filing relate to both Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited representations relate only to itself and not to any other company.

Overview

As a result of the Teva Transaction and the decision to hold for sale the Company’s Anda Distribution business, and in accordan ce with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) number 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of D isposals of Components of an Entity”, the Company is accounting for the assets and liabilities to be divested as held for sale. Further, the financial results of the businesses held for sale have been reclassified to discontinued operations for all period s presented in our consolidated financial statements.

2016 Transactions

The following are the material transactions that were completed in the six months ended June 30, 2016.

Licenses and Asset Acquisitions

Topokine

On April 21, 2016, the Company acquired Topokine Therapeutics (“Topokine”), a privately held, clinical-stage biotechnology company focused on development stage topical medicines for fat reduction. Under the terms of the agreement, the Company acquired Topokine for an upfront payment of $85.0 million and success-based development and sales milestones of up to $260.0 million for XAF5, a first-in-class topical agent in late-stage development for the treatment of steatoblepharon, also known as undereye bags. The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront net payment of approximately $85.0 million was expensed as a component of R&D expense and the future milestones will be recorded when the event becomes probable.

Heptares

Anterios

2015 Transactions

The following are the material transactions that were completed in the year ended December 31, 2015.

Acquisitions

AqueSys

On October 16, 2015, the Company acquired AqueSys, Inc. (“AqueSys”), a private, clinical-stage medical device company focused on developing ocular implants that reduce intraocular pressure (“IOP”) associated with glaucoma, in an all-cash transaction, which is being accounted for as a business acquisition. Under the terms of the agreement, the Company acquired AqueSys for an acquisition accounting purchase price of $298.9 million, including $193.5 million for the estimated fair value of contingent consideration relating to the regulatory approval and commercialization milestone payments. The Company acquired AqueSys for its lead development program, including XEN45, a soft shunt that is implanted in the sub conjunctival space in the eye through a minimally invasive procedure with a single use, pre-loaded proprietary injector (the “AqueSys Acquisition”).

Kythera

On October 1, 2015, the Company acquired Kythera Biopharmaceuticals (“Kythera”) for $75 per share, or an acquisition accounting purchase price of $2,089.5 million (the “Kythera Acquisition”), which is being accounted for as a business acquisition. Kythera was focused on the discovery, development and commercialization of novel prescription aesthetic products. Kythera’s lead product, Kybella ^® injection, is the first and only Food and Drug Administration (“FDA”) approved, non-surgical treatment for moderate to severe submental fullness, commonly referred to as double chin.

Auden Mckenzie

Allergan

On March 17, 2015, the Company acquired Legacy Allergan for approximately $77.0 billion including outstanding indebtedness assumed of $2.2 billion, cash consideration of $40.1 billion and equity consideration of $34.7 billion, which includes outstanding equity awards (the “Allergan Acquisition”). Under the terms of the agreement, Legacy Allergan shareholders received 111.2 million of the Company’s ordinary shares, 7.0 million of the Company’s non-qualified stock options and 0.5 million of the Company’s share units. The addition of Legacy Allergan’s therapeutic franchises in ophthalmology, neurosciences and medical aesthetics/dermatology/plastic surgery complements the Company’s existing central nervous system, gastroenterology, women’s health and urology franchises. The combined company also benefited significantly from Legacy Allergan’s global brand equity and consumer awareness of key products, including Botox ^® and Restasis ^® . The transaction expanded our presence and market and product reach across many international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.

As a result of the Allergan Acquisition, the Company incurred the following transaction and int egration costs in the three months ended June 30, 2016 and 2015, respectively ($ in millions):

	Three Months Ended June 30, 2016		Three Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Legacy Allergan employees	$	2.1	$	7.4
Acquisition, integration and restructuring related charges		1.9		1.2
Research and development
Stock-based compensation acquired for Legacy Allergan employees		9.4		36.1
Acquisition, integration and restructuring related charges		1.0		6.3
Selling and marketing
Stock-based compensation acquired for Legacy Allergan employees		16.7		39.7
Acquisition, integration and restructuring related charges		7.9		10.5
General and administrative
Stock-based compensation acquired for Legacy Allergan employees		8.4		43.2
Acquisition, integration and restructuring related charges		53.8		62.0
Other (expense) income
Bridge loan facilities expense		-		(1.9	)
Interest rate lock		-		-
Total transaction and integration costs	$	101.2	$	208.3

As a result of the acquisition, the Company incurred the following transaction and integration costs in the six months ended June 30, 2016 and 2015, respectively ($ in millions):

	Six Months Ended June 30, 2016		Six Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Legacy Allergan employees	$	5.2	$	14.3
Acquisition, integration and restructuring related charges		5.8		12.1
Research and development
Stock-based compensation acquired for Legacy Allergan employees		23.3		91.6
Acquisition, integration and restructuring related charges		3.8		66.2
Selling and marketing
Stock-based compensation acquired for Legacy Allergan employees		37.2		62.9
Acquisition, integration and restructuring related charges		12.9		60.5
General and administrative
Stock-based compensation acquired for Legacy Allergan employees		18.3		226.2
Acquisition-related expenditures		-		65.5
Acquisition, integration and restructuring related charges		93.6		165.7
Other (expense) income
Bridge loan facilities expense		-		(264.9	)
Interest rate lock		-		31.0
Total transaction and integration costs	$	200.1	$	998.9

Licenses and Asset Acquisitions

Migraine License

Divestitures

Respiratory Business

2014 Transactions

The following are the material transactions that were completed in the year ended December 31, 2014 impacted our results of operations in the current period.

Durata Therapeutics

Contingent Consideration

At the time of the Durata Acquisition, additional consideration was conditionally due to the seller based upon the approval of Dalvance ^® in Europe, the approval of a single dose indication and the product reaching certain sales milestones. The Company estimated the acquisition accounting fair value of the contingent consideration to be $49.0 million using a probability weighted approach that considered the possible outcomes based on assumptions related to the timing and probability of the product launch date, discount rates matched to the timing of the payment, and probability of success rates and discount adjustments on the related cash flows. On March 2, 2015, the Company announced that the European Commission had granted Allergan’s subsidiary Durata Therapeutics International B.V., marketing authorization for Xydalba™ (dalbavancin) for the treatment of acute bacterial skin and skin structure infections (ABSSSI) in adults. The approval triggered the first CVR payment in the six months ended June 30, 2015 of $30.9 million. In January 2016, the Company received approval from the FDA for an expanded label that will include a single dose of Dalvance ^® , which triggered a second CVR payment of $30.9 million in the six months ended June 30, 2016. The difference between the probability weighted fair value and the final payments are recorded as a component of cost of sales.

Forest Laboratories

As a result of the Forest Acquisition, the Company incurred the following transaction and integration costs in the three months ended June 30, 2016 and 2015, respectively ($ in millions):

	Three Months Ended June 30, 2016		Three Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Forest employees	$	0.7	$	1.5
Acquisition, integration and restructuring related charges		-		0.1
Research and development
Stock-based compensation acquired for Forest employees		4.8		8.5
Acquisition, integration and restructuring related charges		0.2		-
Selling and marketing
Stock-based compensation acquired for Forest employees		7.4		8.8
Acquisition, integration and restructuring related charges		-		0.1
General and administrative
Stock-based compensation acquired for Forest employees		10.6		11.1
Acquisition, integration and restructuring related charges		-		34.2
Total transaction and integration costs	$	23.7	$	64.3

As a result of the Forest Acquisition, the Company incurred the following transaction and integration costs in the six months ended June 30, 2016 and 2015, respectively ($ in millions):

	Six Months Ended June 30, 2016		Six Months Ended June 30, 2015
Cost of sales
Stock-based compensation acquired for Forest employees	$	1.2	$	2.7
Acquisition, integration and restructuring related charges		-		1.1
Research and development
Stock-based compensation acquired for Forest employees		8.9		24.5
Acquisition, integration and restructuring related charges		0.3		8.8
Selling and marketing
Stock-based compensation acquired for Forest employees		14.8		28.4
Acquisition, integration and restructuring related charges		-		16.9
General and administrative
Stock-based compensation acquired for Forest employees		18.7		32.2
Acquisition, integration and restructuring related charges		1.2		47.2
Total transaction and integration costs	$	45.1	$	161.8

Operating results

Segments

The operating segments are organized as follows:

The International segment includes sales and expenses relating to products sold outside the US.

General and administrative expenses that result from shared infrastructure, including certain expenses located within the United States.

Total assets including capital expenditures.

Selling and marketing expenses consist mainly of personnel-related costs, product promotion costs, distribution costs, professional service costs, insurance, depreciation and travel costs.

Three Months Ended June 30, 2016 and 2015

Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30, 2016
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,488.9		$	1,449.1		$	757.0		$	3,695.0

Operating expenses:
Cost of sales ⁽¹⁾		75.1			214.9			115.0			405.0
Selling and marketing		287.8			332.7			207.2			827.7
General and administrative		46.0			43.7			30.9			120.6
Segment Contribution	$	1,080.0		$	857.8		$	403.9		$	2,341.7
Contribution margin		72.5	%		59.2	%		53.4	%		63.4	%
Corporate											308.4
Research and development											636.5
Amortization											1,633.1
In-process research and development impairments											268.9
Asset sales and impairments, net											(17.6	)
Operating (loss)										$	(487.6	)
Operating margin											(13.2	)%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results.

	Three Months Ended June 30, 2015
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,347.7		$	1,608.0		$	717.1		$	3,672.8

Operating expenses:
Cost of sales ⁽¹⁾		74.4			238.0			111.8			424.2
Selling and marketing		247.8			309.2			196.1			753.1
General and administrative		20.9			18.1			35.0			74.0
Segment Contribution	$	1,004.6		$	1,042.7		$	374.2		$	2,421.5
Contribution margin		74.5	%		64.8	%		52.2	%		65.9	%
Corporate											831.7
Research and development											349.7
Amortization											1,515.7
In-process research and development impairments											197.6
Asset sales and impairments, net											2.9
Operating (loss)										$	(476.1	)
Operating margin											(13.0	)%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results.

The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,						Change
	2016			2015			Dollars		%
Segment net revenues	$	3,695.0		$	3,672.8		$	22.2		0.6	%
Corporate revenues		(10.2	)		(44.1	)		33.9		76.9	%
Net revenues	$	3,684.8		$	3,628.7		$	56.1		1.5	%

The following table represents global net revenues for the top products for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,
	Global
	2016			2015			$ Overall Change			$ Currency Change			$ Operational Change			% Overall Change			% Currency Change			% Operational Change
Botox ^®	$	719.7		$	631.4		$	88.3		$	(10.2	)	$	98.5			14.0	%		(1.6	)%		15.6	%
Restasis ^®		390.6			325.0			65.6			(1.2	)		66.8			20.2	%		(0.4	)%		20.6	%
Fillers		224.9			196.0			28.9			(5.4	)		34.3			14.7	%		(2.8	)%		17.5	%
Namenda XR ^®		166.5			204.7			(38.2	)		-			(38.2	)		(18.7	)%	-				(18.7	)%
Lumigan ^® /Ganfort ^®		175.1			176.5			(1.4	)		(1.9	)		0.5			(0.8	)%		(1.1	)%		0.3	%
Bystolic ^®		150.7			157.1			(6.4	)		-			(6.4	)		(4.1	)%	-				(4.1	)%
Linzess ^® /Constella ^®		155.1			113.2			41.9			(0.2	)		42.1			37.0	%		(0.2	)%		37.2	%
Alphagan ^® /Combigan ^®		140.2			135.5			4.7			(2.2	)		6.9			3.5	%		(1.6	)%		5.1	%
Asacol ^® /Delzicol ^®		130.8			149.3			(18.5	)		(0.9	)		(17.6	)		(12.4	)%		(0.6	)%		(11.8	)%
Lo Loestrin ^®		101.0			79.2			21.8			-			21.8			27.5	%	-				27.5	%
Viibryd ^® /Fetzima ^®		81.8			80.7			1.1			-			1.1			1.4	%	-				1.4	%
Estrace ^® Cream		97.2			70.1			27.1			-			27.1			38.7	%	-				38.7	%
Minastrin ^® 24		83.6			56.1			27.5			-			27.5			49.0	%	-				49.0	%
Breast Implants		91.9			93.4			(1.5	)		(1.4	)		(0.1	)		(1.6	)%		(1.5	)%		(0.1	)%
Carafate ^® /Sulcrate ^®		50.9			46.9			4.0			-			4.0			8.5	%	-				8.5	%
Ozurdex ^®		67.2			51.0			16.2			(0.4	)		16.6			31.8	%		(0.8	)%		32.6	%
Aczone ^®		54.1			60.3			(6.2	)		-			(6.2	)		(10.3	)%	-				(10.3	)%
Namenda ^® IR		4.1			232.6			(228.5	)		-			(228.5	)		(98.2	)%	-				(98.2	)%
Other Products Revenues		823.8			814.8			9.0			(8.7	)		17.7			1.1	%		(1.1	)%		2.2	%
Less product sold through Anda Distribution business		(24.4	)		(45.1	)		20.7			-			20.7			(45.9	)%	-				(45.9	)%
Total Net Revenues	$	3,684.8		$	3,628.7		$	56.1		$	(32.5	)	$	88.6			1.5	%		(0.9	)%		2.4	%

US Specialized Therapeutics Segment

The following table presents top product sales and net contribution for the US Specialized Therapeutics segment for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,						Change
	2016 ⁽¹⁾			2015 ⁽¹⁾			Dollars			%
Total Eye Care	$	636.1		$	578.6		$	57.5			9.9	%
Restasis ^®		371.3			309.9			61.4			19.8	%
Lumigan ^® /Ganfort ^®		80.6			86.1			(5.5	)		(6.4	)%
Alphagan ^® /Combigan ^®		96.0			93.4			2.6			2.8	%
Ozurdex ^®		21.5			16.6			4.9			29.5	%
Eye Drops		49.1			49.0			0.1			0.2	%
Other Eye Care		17.6			23.6			(6.0	)		(25.4	)%
Total Medical Aesthetics		419.8			366.2			53.6			14.6	%
Facial Aesthetics		320.2			263.7			56.5			21.4	%
Botox ^® Cosmetics		189.9			159.5			30.4			19.1	%
Fillers		117.6			104.2			13.4			12.9	%
Kybella ^®		12.7			-			12.7		n.a.
Plastic Surgery		52.8			54.1			(1.3	)		(2.4	)%
Breast Implants		51.7			50.2			1.5			3.0	%
Other Plastic Surgery		1.1			3.9			(2.8	)		(71.8	)%
Skin Care		46.8			48.4			(1.6	)		(3.3	)%
SkinMedica ^®		29.1			25.5			3.6			14.1	%
Latisse ^®		17.7			22.9			(5.2	)		(22.7	)%
Total Medical Dermatology		97.1			120.7			(23.6	)		(19.6	)%
Aczone ^®		54.1			60.3			(6.2	)		(10.3	)%
Tazorac ^®		23.4			25.5			(2.1	)		(8.2	)%
Botox ^® Hyperhidrosis		16.3			18.4			(2.1	)		(11.4	)%
Other Medical Dermatology		3.3			16.5			(13.2	)		(80.0	)%
Total Neuroscience and Urology		326.3			277.7			48.6			17.5	%
Botox ^® Therapeutics		296.0			252.2			43.8			17.4	%
Rapaflo ^®		29.4			25.5			3.9			15.3	%
Other Neuroscience and Urology		0.9			-			0.9		n.a.
Other Revenues		9.6			4.5			5.1			113.3	%
Net revenues	$	1,488.9		$	1,347.7		$	141.2			10.5	%
Operating expenses:
Cost of sales ⁽²⁾		75.1			74.4			0.7			0.9	%
Selling and marketing		287.8			247.8			40.0			16.1	%
General and administrative		46.0			20.9			25.1			120.1	%
Segment contribution	$	1,080.0		$	1,004.6		$	75.4			7.5	%
Segment margin		72.5	%		74.5	%					(2.0	)%
Segment gross margin ⁽³⁾		95.0	%		94.5	%					0.5	%

⁽¹⁾	Includes revenues earned that were distributed through the Anda Distribution business to third party customers.

⁽²⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results .

⁽³⁾	Defined as net revenues less segment related cost of sales as a percentage of net revenues.

Net Revenues

The increase in revenues was primarily driven by increases in total Eye Care, Facial Aesthetics and Neuroscience and Urology revenues, offset, in part, by a reduction in Medical Dermatology revenues.

Within Eye Care, Restasis ^® revenues increased $61.4 million, or 19.8% versus the prior year period primarily due to prescription growth, net price appreciation and favorable trade buying patterns. Lumigan ^® /Ganfort ^® revenues decreased $5.5 million,

or 6.4% versus the prior year period, primarily due to a mode st prescription decline and unfavorable trade buying patterns, offset, in part, by net price appreciation.

The increase in Facial Aesthetics revenues were primarily driven by Botox ^® Cosmetics which increased $30.4 million, or 19.1% versus the prior year period primarily due to volume increases. Also contributing to the increase was an increase in Fillers revenues of $13.4 million, or 12.9% versus the prior year period driven primarily by volume increases coupled with modest price appreciation.

Within Neuroscience and Urology, Botox ^® Therapeutics revenues increased $43.8 million, or 17.4% versus the prior year period driven by volume increases.

The decrease in Medical Dermatology revenues was due, in part, to a decrease in revenues related to a decrease in Aczone revenues of $6.2 million, or 10.3% versus the prior year period, primarily due to a decrease in net selling prices, offset, in part, by prescription growth. Non-promoted brands declined as a result of supply constraints.

Cost of Sales

The increase in cost of sales was primarily due to the increase in net revenues, offset, in part, by favorable product mix. Segment gross margins remained stable at 95.0% for the three months ended June 30, 2016 compared to 94.5% for the three months ended June 30, 2015.

Selling and Marketing Expenses

The increase in selling and marketing expenses primarily relates to an increase in sales force and promotion costs associated with the Facial Aesthetics business driven in part by the launch of Kybella ^® and an increase in the US Pharmaceutical Fee, driven primarily by an increase in product revenues.

General and Administrative Expenses

The increase in general and administrative costs is a result of the Company’s new operating management structure wherein more costs are directly supporting the operating segments versus corporate functions. Consequently, general and administrative expenses increased as a result of this change. In addition, there was also a period over period increase in compensation costs.

US General Medi cine Segment

The following table presents top product sales and net contribution for the US General Medicine segment for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,						Change
	2016 ⁽¹⁾			2015 ⁽¹⁾			Dollars			%
Total Central Nervous System (CNS)	$	317.5		$	560.8			(243.3	)		(43.4	)%
Namenda XR ^®		166.5			204.7			(38.2	)		(18.7	)%
Namzaric ^®		12.8			1.6			11.2		n.m.
Viibryd ^® /Fetzima ^®		81.7			80.7			1.0			1.2	%
Vraylar ^™		11.1			-			11.1		n.a.
Saphris ^®		41.3			41.2			0.1			0.2	%
Namenda ^® IR		4.1			232.6			(228.5	)		(98.2	)%
Total Gastrointestinal (GI)		442.0			373.2			68.8			18.4	%
Linzess ^®		150.5			112.1			38.4			34.3	%
Viberzi ^®		20.4			-			20.4		n.a.
Asacol ^® /Delzicol ^®		119.8			134.0			(14.2	)		(10.6	)%
Carafate ^® /Sulcrate ^®		50.3			46.9			3.4			7.2	%
Canasa ^® /Salofalk ^®		46.7			34.6			12.1			35.0	%
Zenpep ^®		43.0			37.1			5.9			15.9	%
Other GI		11.3			8.5			2.8			32.9	%
Total Women's Health		296.1			219.4			76.7			35.0	%
Lo Loestrin ^®		101.0			79.2			21.8			27.5	%
Minastrin ^® 24		83.0			56.1			26.9			48.0	%
Estrace ^® Cream		97.2			70.1			27.1			38.7	%
Liletta ^®		5.7			4.9			0.8			16.3	%
Other Women's Health		9.2			9.1			0.1			1.1	%
Total Anti-Infectives		63.1			44.1			19.0			43.1	%
Teflaro ^®		35.2			31.7			3.5			11.0	%
Avycaz ^®		13.7			5.4			8.3			153.7	%
Dalvance ^®		10.2			4.5			5.7			126.7	%
Other Anti-Infectives		4.0			2.5			1.5			60.0	%
Established Brands		308.5			394.5			(86.0	)		(21.8	)%
Bystolic ^®		150.3			157.1			(6.8	)		(4.3	)%
Armour Thyroid		40.6			25.2			15.4			61.1	%
Enablex ^®		-			18.0			(18.0	)		(100.0	)%
Lexapro ^®		16.5			16.3			0.2			1.2	%
Savella ^®		22.3			27.8			(5.5	)		(19.8	)%
PacPharma		14.7			26.2			(11.5	)		(43.9	)%
Other Established Brands		64.1			123.9			(59.8	)		(48.3	)%
Other Revenues		21.9			16.0			5.9			36.9	%
Net revenues	$	1,449.1		$	1,608.0		$	(158.9	)		(9.9	)%
Operating expenses:
Cost of sales ⁽²⁾		214.9			238.0			(23.1	)		(9.7	)%
Selling and marketing		332.7			309.2			23.5			7.6	%
General and administrative		43.7			18.1			25.6			141.4	%
Segment contribution	$	857.8		$	1,042.7		$	(184.9	)		(17.7	)%
Segment margin		59.2	%		64.8	%					(5.6	)%
Segment gross margin ⁽³⁾		85.2	%		85.2	%					0.0	%

⁽¹⁾	Includes revenues earned that were distributed through the Anda Distribution business to third party customers.

⁽²⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results .

⁽³⁾	Defined as net revenues less segment related cost of sales as a percentage of net revenues.

Net Revenues

The decrease in segment revenues is primarily due to a decrease in Central Nervous System revenues driven by the loss of exclusivity in July of 2015 for Namenda ^® IR, which declined by $228.5 million, or 98.2%, versus the prior year period. Namenda XR ^® contributed revenues of $166.5 million in the three months ended June 30, 2016, a decline of $38.2 million, or 18.7% versus the prior year period, due to modest prescription declines coupled with lower average selling prices to maintain formulary coverage.

Growth within our Gastrointestinal franchise was primarily driven by Linzess ^® and the newly launched Viberzi ^® products. Linzess ^® revenues increased $38.4 million, or 34.3% versus the prior year period primarily due to prescription growth. Our Asacol ^® / Delzicol ^® franchise revenues decreased $14.2 million, or 10.6% primarily due to volume declines as a result of lower promotion and some loss in formulary coverage, offset by net price appreciation.

Our Women’s Healthcare franchise increase versus the prior year period is primarily due to both price and volume increases within our top products. Lo Loestrin ^® increased 27.5% due to strong prescription growth, favorable trade buying patterns and net price appreciation. Estrace ^® Cream increased 38.7% as a result of modest prescription increases, favorable trade buying patterns and net price appreciation. Minastrin ^® 24 increased 48.0% as a result of favorable trade buying patterns and net price appreciation.

The decline in Established Brands revenues is primarily due to loss of exclusivity on certain products and product divestitures. The decline due to product divestitures was $22.5 million, in addition to the impact of Enablex ^® being genericized, or $18.0 million.

Cost of Sales

The decrease in cost of sales was primarily a result of a decrease in product revenues. Segment gross margins remained stable at 85.2%.

Selling and Marketing Expenses

The increase in selling and marketing expenses relates to promotional spending associated with recently launched products, including Viberzi ^® and Vraylar ^® .

General and Administrative Expenses

International Segment

The following table presents top product sales and net contribution for the International segment for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,						Change
	2016			2015			$ Overall Change			$ Currency Change			$ Operational Change			% Overall Change			% Currency Change			% Operational Change
Total Eye Care	$	318.7		$	301.7		$	17.0		$	(13.2	)	$	30.2			5.6	%		(4.4	)%		10.0	%
Lumigan ^® /Ganfort ^®		94.5			90.4			4.1			(1.9	)		6.0			4.5	%		(2.1	)%		6.6	%
Alphagan ^® /Combigan ^®		44.2			42.1			2.1			(2.2	)		4.3			5.0	%		(5.2	)%		10.2	%
Ozurdex ^®		45.7			34.4			11.3			(0.4	)		11.7			32.8	%		(1.2	)%		34.0	%
Optive ^®		26.0			25.4			0.6			(1.4	)		2.0			2.4	%		(5.5	)%		7.9	%
Restasis ^®		19.3			15.1			4.2			(1.2	)		5.4			27.8	%		(7.9	)%		35.8	%
Other Eye Drops		46.0			49.2			(3.2	)		(2.2	)		(1.0	)		(6.5	)%		(4.5	)%		(2.0	)%
Other Eye Care		43.0			45.1			(2.1	)		(3.9	)		1.8			(4.7	)%		(8.6	)%		4.0	%
Total Medical Aesthetics		284.1			262.2			21.9			(13.5	)		35.4			8.4	%		(5.1	)%		13.5	%
Facial Aesthetics		240.6			215.2			25.4			(11.9	)		37.3			11.8	%		(5.5	)%		17.3	%
Botox ^® Cosmetics		132.7			123.4			9.3			(6.5	)		15.8			7.5	%		(5.3	)%		12.8	%
Fillers		107.3			91.8			15.5			(5.4	)		20.9			16.9	%		(5.9	)%		22.8	%
Belkyra ^® (Kybella ^® )		0.6			-			0.6			-			0.6		n.a.			n.a.			n.a.
Plastic Surgery		40.3			43.2			(2.9	)		(1.4	)		(1.5	)		(6.7	)%		(3.2	)%		(3.5	)%
Breast Implants		40.2			43.2			(3.0	)		(1.4	)		(1.6	)		(6.9	)%		(3.2	)%		(3.7	)%
Earfold ^™		0.1			-			0.1			-			0.1		n.a.			n.a.			n.a.
Skin Care		3.2			3.8			(0.6	)		(0.2	)		(0.4	)		(15.8	)%		(5.3	)%		(10.5	)%
Botox® Therapeutics and Other		141.1			129.8			11.3			(5.8	)		17.1			8.7	%		(4.5	)%		13.2	%
Botox ^® Therapeutics		84.8			77.9			6.9			(3.7	)		10.6			8.9	%		(4.7	)%		13.6	%
Asacol ^® /Delzicol ^®		11.0			15.3			(4.3	)		(0.9	)		(3.4	)		(28.1	)%		(5.9	)%		(22.2	)%
Constella ^®		4.6			1.1			3.5			(0.2	)		3.7		n.m.				(18.2	)%	n.m.
Other Products		40.7			35.5			5.2			(1.0	)		6.2			14.6	%		(2.8	)%		17.5	%
Other Revenues		13.1			23.4			(10.3	)		-			(10.3	)		(44.0	)%		0.0	%		(44.0	)%
Net revenues	$	757.0		$	717.1		$	39.9		$	(32.5	)	$	72.4			5.6	%		(4.5	)%		10.1	%
Operating expenses:
Cost of sales ⁽¹⁾		115.0			111.8			3.2			(5.2	)		8.4			2.9	%		(4.7	)%		7.5	%
Selling and marketing		207.2			196.1			11.1			(8.8	)		19.9			5.7	%		(4.5	)%		10.1	%
General and administrative		30.9			35.0			(4.1	)		(1.7	)		(2.4	)		(11.7	)%		(4.9	)%		(6.9	)%
Segment contribution	$	403.9		$	374.2		$	29.7		$	(16.8	)	$	46.5			7.9	%		(4.5	)%		12.4	%
Segment margin		53.4	%		52.2	%											1.2	%
Segment gross margin ⁽²⁾		84.8	%		84.4	%											0.4	%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results .

⁽²⁾	Defined as net revenues less segment related cost of sales as a percentage of net revenues.

Net Revenues

The increase in segment net revenues is primarily due to the performance of total Eye Care and Facial Aesthetics. Within total Eye Care, Ozurdex ^® increased $11.3 million, or 32.8% versus the prior year period, primarily driven by volume increases. Volume-driven growth was also realized in our Glaucoma products and Restasis ^® . Within Facial Aesthetics, Fillers revenues increased $15.5 million, or 16.9% versus the prior year period, primarily resulting from volume increases, offset in part, by unfavorable currency impacts. Botox ^® Therapeutics sales also grew 8.9% driven by volume increases, offset in part, by unfavorable currency impacts.

Cost of Sales

The increase in cost of sales was primarily due to the increase in net revenues, offset, in part, by favorable product mix. Segment gross margins remained stable at 84.8% for the three months ended June 30, 2016 compared to 84.4% for the three months ended June 30, 2015.

Selling and Marketing Expenses

The increase in selling and marketing expenses relates to promotional spending associated with recent International product launches including Earfold ^™ , Belkyra ^® and Constella ^® .

General and Administrative Expenses

The decrease in general and administrative costs is primarily due to the impact of corporate restructuring programs.

Corporate

Corporate represents the results of corporate initiatives as well as the impact of select revenues and shared costs. The following represents the corporate amounts for the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30, 2016
	Integration and Restructuring			Fair Value Adjustments			Effect of Purchase Accounting			Reclassification of Sales Distributed Through Anda to Discontinued Operations			Other			Revenues and Shared Costs			Total

Net Sales	$	-		$	-		$	-		$	(24.4	)	$	-		$	14.2		$	(10.2	)
Operating expenses:
Cost of sales ⁽¹⁾		3.3			(4.8	)		1.9			(23.7	)		0.1			59.7			36.5
Selling and marketing		20.4			-			17.9			-			0.1			0.7			39.1
General and administrative		75.5			-			11.4			-			45.9			89.8			222.6
Contribution	$	(99.2	)	$	4.8		$	(31.2	)	$	(0.7	)	$	(46.1	)	$	(136.0	)	$	(308.4	)

⁽¹⁾ Excludes amortization and impairment of acquired intangibles including product rights.
	Three Months Ended June 30, 2015
	Integration and Restructuring			Fair Value Adjustments			Effect of Purchase Accounting			Reclassification of Sales Distributed Through Anda to Discontinued Operations			Other			Revenues and Shared Costs			Total

Net Sales	$	-		$	-		$	-		$	(45.1	)	$	-		$	1.0		$	(44.1	)
Operating expenses:
Cost of sales ⁽¹⁾		0.5			4.8			493.8			(44.0	)		-			38.5			493.6
Selling and marketing		8.9			-			39.5			-			-			-			48.4
General and administrative		75.9			-			47.1			-			50.3			72.3			245.6
Contribution	$	(85.3	)	$	(4.8	)	$	(580.4	)	$	(1.1	)	$	(50.3	)	$	(109.8	)	$	(831.7	)

⁽¹⁾ Excludes amortization and impairment of acquired intangibles including product rights.

In the three months ended June 30, 2016, integration and restructuring charges were primarily related to the integration of the Legacy Allergan business as well as charges incurred with the terminated merger with Pfizer, Inc. of $38.2 million. The Company

incurred charges related to the purchase accounting impact on stock-based compensation related the Allergan and Forest acquisitions, which increased cost of sales, selling and marketing and general and administrative expenses. In addition, in the three mon ths ended June 30, 2016, the Company incurred mark-to-market unrealized gains for foreign currency option contracts that are entered into in order to offset future exposure to movements in currencies of $8.6 million as well as legal settlement charges of $ 49.7 million.

Shared costs primarily include above site and unallocated costs associated with running our global manufacturing facilities. The increase in shared cost of sales is primarily due to higher inventory obsolescence charges in the three months ended June 30, 2016 versus the prior year period. Within shared costs are corporate general and administrative expenses. The increase in costs versus the prior year period is primarily due to an increase in outside service fees, compensation costs and a decrease in recognized transactional foreign currency gains, offset in part, by more costs included within operating segments as part of our new management reporting structure, which reduced corporate expenses.

In the three months ended June 30, 2015, integration and restructuring charges primarily related to integration of the Allergan and Forest businesses. In the three months ended June 30, 2015, the Company incurred purchase accounting effects of $486.2 million in cost of sales primarily related to fair value inventory step-up from the Allergan and Forest acquisitions as products were sold to the Company’s third party customers. The Company also incurred charges related to the purchase accounting impact on stock-based compensation related the Allergan and Forest acquisitions, which increased cost of sales, selling and marketing and general and administrative expenses. In the three months ended June 30, 2015, the Company incurred mark-to-market unrealized losses for foreign currency option contracts that are entered into to offset future exposure to movements in currencies of $37.7 million.

Research and Development Expenses

R&D expenses consist predominantly of personnel-related costs, active pharmaceutical ingredient costs, contract research, biostudy and facilities costs associated with product development.

R&D expenses consisted of the following components in the three months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,					Change
	2016		2015			Dollars			%
Ongoing operating expenses	$	345.0	$	302.0		$	43.0			14.2	%
Brand related milestone payments and upfront license payments		243.2		30.0			213.2		n.m.
Acquisition accounting fair market value adjustment to stock-based compensation		10.2		37.3			(27.1	)		(72.7	)%
Acquisition, integration, and restructuring charges		3.7		5.8			(2.1	)		(36.2	)%
Contingent consideration adjustments, net		34.4		(25.4	)		59.8		n.m.
Total expenditures	$	636.5	$	349.7		$	286.8			82.0	%

The increase in ongoing operating expenses in the three months ended June 30, 2016 versus the prior year period is primarily due to higher Ophthalmology and Early Stage product clinical spending. Included in brand related milestones for the three months ended June 30, 2016 are milestone payments and upfront license payments related to the Heptares Transaction of $125.0 million and the Topokine Transaction of $85.8 million.

In the three months ended June 30, 2016, the Company had an increase in charges relating to contingent consideration liabilities, primarily due to the status of the Company’s Oxymetazoline Rosacea project. In the three months ended June 30, 2015, the Company had contingent consideration income due to an update to the then anticipated scheduling of the Furiex lead candidate, Viberzi ^® .

Amortization

Amortization in the three months ended June 30, 2016 and 2015 was as follows:

	Three Months Ended June 30,				Change
($ in millions)	2016		2015		Dollars		%
Amortization	$	1,633.1	$	1,515.7	$	117.4		7.7	%

Amortization for the three months ended June 30, 2016 increased as compared to the prior period as a result of the Kythera Acquisition and amortization related to recently launched products.

IPR&D Impairments and Asset Sales and Impairments, Net

IPR&D impairments and Asset sales and impairments, net consisted of the following components in the three months ended June 30, 2016 and 2015:

	Three Months Ended June 30,					Change
($ in millions)	2016			2015		Dollars			%
IPR&D impairments	$	268.9		$	197.6	$	71.3			36.1	%
Asset sales and impairments, net		(17.6	)		2.9		(20.5	)	n.m.

In the three months ended June 30, 2016, the Company recorded an impairment of an international eye care pipeline project of $35.0 million based on a decrease in projected cash flows due to market conditions as well as an impairment of $20.0 million for a specified indication of a Botox ^® therapeutic product based on a decrease in projected cash flows due to a decline in market demand assumptions. In addition, during the three months ended June 30, 2016, the Company impaired IPR&D projects relating to women’s healthcare of $24.0 million and osteoarthritis of approximately $190.0 million based on clinical trial results.

During the three months ended June 30, 2015, the Company recorded a $197.6 million impairment related to IPR&D for select projects, primarily relating to women’s healthcare as the Company revised its sales forecast of certain assets as well as the timing of the launch of certain projects.

Asset sales and impairments, net in the three months ended June 30, 2016, included the gain on the sale of certain investments.

Interest Income

Interest income in the three months ended June 30, 2016 and 2015 was as follows:

	Three Months Ended June 30,				Change
($ in millions)	2016		2015		Dollars			%
Interest income	$	2.5	$	2.6	$	(0.1	)		(3.8	)%

Interest Expense

Interest expense consisted of the following components in the three months ended June 30, 2016 and 2015:

	Three Months Ended June 30,				Change
($ in millions)	2016		2015		Dollars			%
Fixed Rate Notes	$	284.7	$	287.0		(2.3	)		(0.8	)%
AGN Term Loan		31.2		25.1		6.1			24.3	%
ACT Term Loan		15.1		14.4		0.7			4.9	%
Floating Rate Notes		5.9		5.7		0.2			3.5	%
WC Term Loan		2.7		4.2		(1.5	)		(35.7	)%
Revolving Credit Facility		2.4		0.2		2.2		n.m.
Other		3.8		3.3		0.5			15.2	%
Interest expense	$	345.8	$	339.9	$	5.9			1.7	%

Other (expense) income, net

Other (expense) income, net consisted of the following components in the three months ended June 30, 2016 and 2015:

	Three Months Ended June 30,					Change
($ in millions)	2016		2015			Dollars		%
Bridge loan commitment fee	$	-	$	(1.9	)	$	1.9		(100.0	)%
Pfizer termination fee (Allergan plc only)		150.0		-			150.0	n.a.
Other (expense) income		0.1		(38.5	)		38.6		(100.3	)%
Other (expense) income, net	$	150.1	$	(40.4	)	$	190.5		(471.5	)%

Pfizer termination fee

In the three months ended June 30, 2016, the Company has received a payment of $150.0 million from Pfizer Inc. for reimbursement of expenses associated with the termination of the merger agreement which is reported as other income.

Disposal of a business

In the quarter ended June 30, 2015, the Company wrote-off $38.8 million of royalty rights that expired in connection with the Respiratory Sale.

(Benefit) for Income Taxes

	Three Months Ended June 30,						Change
($ in millions)	2016			2015			Dollars		%
(Benefit) for income taxes	$	(258.2	)	$	(381.9	)	$	123.7		(32.4	)%
Effective tax rate		37.9	%		44.7	%

The Company’s effective tax rate for the three months ended June 30, 2016 was 37.9% compared to 44.7% for the three months ended June 30, 2015. The effective tax rate for the three months ended June 30, 2016 was impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. Additionally, the tax benefit for the three months ended June 30, 2016 included an expense of $70.9 million primarily related to a change in a valuation allowance on a portion of U.S. capital loss carryforwards resulting from restructuring associated with the sale of the global generics business and a benefit of $35.7 million related to the reversal of deferred tax liabilities associated with certain IPR&D impairments. The effective tax rate for the three months ended June 30, 2015 was impacted by income earned in low tax jurisdictions and U.S. losses tax benefited at rates greater than the Irish statutory rate. The decrease in the effective tax rate for the period ended June 30, 2016 as compared to the period ended June 30, 2015 is the result of changes in the mix of income and losses in jurisdictions with rates other than the Irish statutory rate.

Six Months Ended June 30, 2016 and 2015

Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30, 2016
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	2,787.6		$	2,902.8		$	1,430.3		$	7,120.7

Operating expenses:
Cost of sales ⁽¹⁾		145.8			434.5			214.2			794.5
Selling and marketing		552.4			610.0			394.5			1,556.9
General and administrative		85.2			85.9			58.5			229.6
Segment Contribution	$	2,004.2		$	1,772.4		$	763.1		$	4,539.7
Contribution margin		71.9	%		61.1	%		53.4	%		63.8	%
Corporate											680.8
Research and development											1,039.6
Amortization											3,222.8
In-process research and development impairments											274.9
Asset sales and impairments, net											(19.3	)
Operating (loss)											(659.1	)
Operating margin											(9.3	)%

⁽¹⁾ Excludes amortization and impairment of acquired intangibles including product rights.
	Six Months Ended June 30, 2015
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,593.0		$	3,251.7		$	835.8		$	5,680.5

Operating expenses:
Cost of sales ⁽¹⁾		88.6			446.5			135.5			670.6
Selling and marketing		288.8			654.3			238.4			1,181.5
General and administrative		28.9			71.3			42.4			142.6
Segment Contribution	$	1,186.7		$	2,079.6		$	419.5		$	3,685.8
Contribution margin		74.5	%		64.0	%		50.2	%		64.9	%
Corporate											1,696.3
Research and Development											667.4
Amortization											2,301.1
In-process research and development impairments											197.6
Asset sales and impairments, net											7.5
Operating (loss)											(1,184.1	)
Operating margin											(20.8	)%

⁽¹⁾ Excludes amortization and impairment of acquired intangibles including product rights.

The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30,						Change
	2016			2015			Dollars		%
Segment net revenues	$	7,120.7		$	5,680.5		$	1,440.2		25.4	%
Corporate revenues		(36.6	)		(68.8	)		32.2		46.8	%
Net revenues	$	7,084.1		$	5,611.7		$	1,472.4		26.2	%

The following tables represent global net revenues for the top products for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30,
	Global
	2016			2015			$ Overall Change			$ Currency Change			$ Operational Change			% Overall Change			% Currency Change			% Operational Change
Botox ^®	$	1,357.2		$	715.4		$	641.8		$	(12.8	)	$	654.6			89.7	%		(1.8	)%		91.5	%
Restasis ^®		704.3			354.9			349.4			(1.4	)		350.8			98.5	%		(0.4	)%		98.9	%
Fillers		427.7			220.6			207.1			(6.5	)		213.6			93.9	%		(2.9	)%		96.8	%
Namenda XR ^®		339.6			355.3			(15.7	)		-			(15.7	)		(4.4	)%		-			(4.4	)%
Lumigan ^® /Ganfort ^®		344.7			197.7			147.0			(2.9	)		149.9			74.4	%		(1.4	)%		75.8	%
Bystolic ^®		314.7			321.2			(6.5	)		-			(6.5	)		(2.0	)%		-			(2.0	)%
Linzess ^® /Constella ^®		296.0			209.4			86.6			(0.2	)		86.8			41.4	%		(0.1	)%		41.5	%
Alphagan ^® /Combigan ^®		266.9			151.5			115.4			(2.9	)		118.3			76.2	%		(1.9	)%		78.1	%
Asacol ^® /Delzicol ^®		252.0			298.4			(46.4	)		(1.0	)		(45.4	)		(15.5	)%		(0.3	)%		(15.2	)%
Lo Loestrin ^®		190.3			162.5			27.8			-			27.8			17.1	%		-			17.1	%
Viibryd ^® /Fetzima ^®		165.1			160.3			4.8			-			4.8			3.0	%		-			3.0	%
Estrace ^® Cream		177.8			142.0			35.8			-			35.8			25.2	%		-			25.2	%
Minastrin ^® 24		164.0			121.5			42.5			-			42.5			35.0	%		-			35.0	%
Breast Implants		175.0			112.9			62.1			(1.9	)		64.0			55.0	%		(1.7	)%		56.7	%
Carafate ^® /Sulcrate ^®		112.4			100.5			11.9			-			11.9			11.8	%		-			11.8	%
Ozurdex ^®		127.7			58.0			69.7			(0.7	)		70.4			120.2	%		(1.1	)%		121.3	%
Aczone ^®		87.1			66.3			20.8			-			20.8			31.4	%		-			31.4	%
Namenda ^® IR		9.9			478.0			(468.1	)		-			(468.1	)		(97.9	)%		-			(97.9	)%
Other Products Revenues		1,628.0			1,455.7			172.3			(13.3	)		185.6			11.8	%		(0.8	)%		12.6	%
Less product sold through Anda Distribution business		(56.3	)		(70.4	)		14.1			-			14.1			(20.0	)%		-			(20.0	)%
Total Net Revenues	$	7,084.1		$	5,611.7		$	1,472.4		$	(43.6	)	$	1,516.0			26.2	%		(0.7	)%		27.0	%

100

US Specialized Therapeutics Segment

The following table presents top product sales and net contribution for the US Specialized Therapeutics segment for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30,						Change
	2016 ⁽¹⁾			2015 ⁽¹⁾			Dollars			%
Total Eye Care	$	1,169.1		$	673.3		$	495.8			73.6	%
Restasis ^®		670.0			338.6			331.4			97.9	%
Lumigan ^® /Ganfort ^®		162.1			94.2			67.9			72.1	%
Alphagan ^® /Combigan ^®		180.9			103.5			77.4			74.8	%
Ozurdex ^®		40.9			19.3			21.6			111.9	%
Eye Drops		89.9			86.5			3.4			3.9	%
Other Eye Care		25.3			31.2			(5.9	)		(18.9	)%
Total Medical Aesthetics		793.7			421.3			372.4			88.4	%
Facial Aesthetics		599.6			298.9			300.7			100.6	%
Botox ^® Cosmetics		355.3			181.9			173.4			95.3	%
Fillers		220.3			117.0			103.3			88.3	%
Kybella ^®		24.0			-			24.0		n.a.
Plastic Surgery		100.9			68.2			32.7			47.9	%
Breast Implants		98.1			61.9			36.2			58.5	%
Other Plastic Surgery		2.8			6.3			(3.5	)		(55.6	)%
Skin Care		93.2			54.2			39.0			72.0	%
SkinMedica ^®		55.7			28.6			27.1			94.8	%
Latisse ^®		37.5			25.6			11.9			46.5	%
Total Medical Dermatology		166.1			141.6			24.5			17.3	%
Aczone ^®		87.1			66.3			20.8			31.4	%
Tazorac ^®		40.5			38.1			2.4			6.3	%
Botox ^® Hyperhidrosis		32.6			20.5			12.1			59.0	%
Other Medical Dermatology		5.9			16.7			(10.8	)		(64.7	)%
Total Neuroscience and Urology		633.1			345.8			287.3			83.1	%
Botox ^® Therapeutics		569.8			288.4			281.4			97.6	%
Rapaflo ^®		62.4			57.4			5.0			8.7	%
Other Neuroscience and Urology		0.9			-			0.9		n.a.
Other Revenues		25.6			11.0			14.6			132.7	%
Net revenues	$	2,787.6		$	1,593.0		$	1,194.6			75.0	%
Operating expenses:
Cost of sales ⁽²⁾		145.8			88.6			57.2			64.6	%
Selling and marketing		552.4			288.8			263.6			91.3	%
General and administrative		85.2			28.9			56.3			194.8	%
Segment contribution	$	2,004.2		$	1,186.7		$	817.5			68.9	%
Segment margin		71.9	%		74.5	%					(2.6	)%
Segment gross margin ⁽³⁾		94.8	%		94.4	%					0.4	%

⁽¹⁾	Includes revenues earned that were distributed through the Anda Distribution business to third party customers.

⁽²⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results .

⁽³⁾	Defined as net revenues less segment related cost of sales as a percentage of net revenues.

Net Revenues

The increase in net revenues was primarily due to the contribution from the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015.

101

Cost of Sales

The increase in cost of sales was primarily due to the contribution from the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015. Segment gross margins remained stable at 94.8% for the six months ended June 30, 2016 compared to 94.4% for the six months ended June 30, 2015.

Selling and Marketing Expenses

The increase in selling and marketing expenses was primarily due to the contribution from the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015 as well as costs incurred with recent product launches.

General and Administrative Expenses

The increase in general and administrative expenses was primarily due to the contribution from the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015 and an increase due to the Company’s new operating management structure wherein more costs are directly supporting the operating segments versus corporate functions. Consequently, general and administrative expenses increased as a result of this change. In addition, there was also a period over period increase in compensation costs.

102

US General Medicine Segment

The following table presents top product sales and net contribution for the US General Medicine segment for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30,						Change
	2016 ⁽¹⁾			2015 ⁽¹⁾			Dollars			%
Total Central Nervous System (CNS)	$	639.1		$	1,078.4			(439.3	)		(40.7	)%
Namenda XR ^®		339.6			355.3			(15.7	)		(4.4	)%
Namzaric ^®		23.1			1.6			21.5		n.m.
Viibryd ^® /Fetzima ^®		165.0			160.3			4.7			2.9	%
Vraylar ^™		18.7			-			18.7		n.a.
Saphris ^®		82.8			83.2			(0.4	)		(0.5	)%
Namenda ^® IR		9.9			478.0			(468.1	)		(97.9	)%
Total Gastrointestinal (GI)		845.6			739.8			105.8			14.3	%
Linzess ^®		287.6			207.6			80.0			38.5	%
Viberzi ^®		24.4			-			24.4		n.a.
Asacol ^® /Delzicol ^®		225.7			265.9			(40.2	)		(15.1	)%
Carafate ^® /Sulcrate ^®		111.3			100.5			10.8			10.7	%
Canasa ^® /Salofalk ^®		87.8			67.6			20.2			29.9	%
Zenpep ^®		92.6			78.4			14.2			18.1	%
Other GI		16.2			19.8			(3.6	)		(18.2	)%
Total Women's Health		559.8			448.7			111.1			24.8	%
Lo Loestrin ^®		190.3			161.9			28.4			17.5	%
Minastrin ^® 24		162.6			120.9			41.7			34.5	%
Estrace ^® Cream		177.8			142.0			35.8			25.2	%
Liletta ^®		10.6			4.9			5.7			116.3	%
Other Women's Health		18.5			19.0			(0.5	)		(2.6	)%
Total Anti-Infectives		114.6			86.0			28.6			33.3	%
Teflaro ^®		68.6			69.5			(0.9	)		(1.3	)%
Avycaz ^®		22.1			5.4			16.7		n.m.
Dalvance ^®		16.4			6.4			10.0			156.3	%
Other Anti-Infectives		7.5			4.7			2.8			59.6	%
Established Brands		719.5			867.2			(147.7	)		(17.0	)%
Bystolic ^®		313.9			320.8			(6.9	)		(2.2	)%
Armour Thyroid		82.7			54.2			28.5			52.6	%
Enablex ^®		12.8			34.3			(21.5	)		(62.7	)%
Lexapro ^®		35.2			35.8			(0.6	)		(1.7	)%
Savella ^®		46.0			51.6			(5.6	)		(10.9	)%
PacPharma		43.5			29.2			14.3			49.0	%
Other Established Brands		185.4			341.3			(155.9	)		(45.7	)%
Other Revenues		24.2			31.6			(7.4	)		(23.4	)%
Net revenues	$	2,902.8		$	3,251.7		$	(348.9	)		(10.7	)%
Operating expenses:
Cost of sales ⁽²⁾		434.5			446.5			(12.0	)		(2.7	)%
Selling and marketing		610.0			654.3			(44.3	)		(6.8	)%
General and administrative		85.9			71.3			14.6			20.5	%
Segment contribution	$	1,772.4		$	2,079.6		$	(307.2	)		(14.8	)%
Segment margin		61.1	%		64.0	%					(2.9	)%
Segment gross margin ⁽³⁾		85.0	%		86.3	%					(1.3	)%

⁽¹⁾	Includes revenues earned that were distributed through the Anda Distribution business to third party customers.

⁽²⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results .

⁽³⁾	Defined as net revenues less segment related cost of sales as a percentage of net revenues.

103

Net Revenues

The decrease in segment revenues is primarily driven by the loss of exclusivity of Namenda ^® IR, which declined by $468.1 million, or 97.9%, versus the prior year period. Namenda XR ^® contributed revenues of $339.6 million in the six months ended June 30, 2016, a decline of $15.7 million, or 4.4% versus the prior year period, due to a decline in average net selling price to maintain strong formulary coverage offset by modest prescription growth. The launches of Namzaric ^® and Vraylar ^® also have helped to offset the impact of the decline in Namenda ^® IR.

Growth within our Gastrointestinal franchise was primarily driven by Linzess ^® and the newly launched Viberzi ^® product. Linzess ^® revenues increased $80.0 million, or 38.5% versus the prior year period primarily due to prescription growth. The Asacol ^® / Delzicol ^® franchise revenues decreased $40.2 million, or 15.1% primarily due to volume declines as a result of lower promotion and some loss in formulary coverage, offset by net price appreciation.

Our Women’s Healthcare franchise increased $111.1 million or 24.8% versus the prior year period. Lo Loestrin ^® increased 17.5% due to strong prescription growth and net price appreciation. Estrace ^® Cream increased 25.2% as a result of modest prescription increases and net price appreciation. Minastrin ^® 24 increased 34.5% as a result of favorable trade buying patterns and net price appreciation offset by modest prescription declines.

The decline in Established Brands revenues is primarily due to loss of exclusivity on certain products and product divestitures. The decline due to product divestitures was $106.8 million, in addition to the impact of Enablex ^® being genericized in the second quarter of 2016, or $21.5 million.

Cost of Sales

The decrease in cost of sales was primarily due to a decline in product revenues as well as an unfavorable product mix. Segment gross margins remained generally stable at 85.0% for the six months ended June 30, 2016 compared to 86.3% for the six months ended June 30, 2015.

Selling and Marketing Expenses

The decrease in selling and marketing expenses relates to cost savings due to corporate initiatives, offset in part, by promotional spending related to recently launched products.

General and Administrative Expenses

104

International Segment

The following table presents top products sales and net contribution for the International segment for the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30,						Change
	2016			2015			$ Overall Change			$ Currency Change			$ Operational Change			% Overall Change			% Currency Change			% Operational Change
Total Eye Care	$	610.2		$	342.2		$	268.0		$	(17.6	)	$	285.6			78.3	%		(5.1	)%		83.5	%
Lumigan ^® /Ganfort ^®		182.6			103.5			79.1			(2.9	)		82.0			76.4	%		(2.8	)%		79.2	%
Alphagan ^® /Combigan ^®		86.0			48.0			38.0			(2.9	)		40.9			79.2	%		(6.0	)%		85.2	%
Ozurdex ^®		86.8			38.7			48.1			(0.7	)		48.8			124.3	%		(1.8	)%		126.1	%
Optive ^®		50.1			28.7			21.4			(1.6	)		23.0			74.6	%		(5.6	)%		80.1	%
Restasis ^®		34.3			16.3			18.0			(1.4	)		19.4			110.4	%		(8.6	)%		119.0	%
Other Eye Drops		89.1			55.5			33.6			(3.1	)		36.7			60.5	%		(5.6	)%		66.1	%
Other Eye Care		81.3			51.5			29.8			(5.0	)		34.8			57.9	%		(9.7	)%		67.6	%
Total Medical Aesthetics		529.0			295.1			233.9			(16.6	)		250.5			79.3	%		(5.6	)%		84.9	%
Facial Aesthetics		446.1			239.9			206.2			(14.5	)		220.7			86.0	%		(6.0	)%		92.0	%
Botox ^® Cosmetics		237.6			136.3			101.3			(8.0	)		109.3			74.3	%		(5.9	)%		80.2	%
Fillers		207.4			103.6			103.8			(6.5	)		110.3			100.2	%		(6.3	)%		106.5	%
Belkyra ^® (Kybella ^® )		1.1			-			1.1			-			1.1		n.a.			n.a.			n.a.
Plastic Surgery		77.1			51.0			26.1			(1.9	)		28.0			51.2	%		(3.7	)%		54.9	%
Breast Implants		76.9			51.0			25.9			(1.9	)		27.8			50.8	%		(3.7	)%		54.5	%
Earfold ^™		0.2			-			0.2			-			0.2		n.a.			n.a.			n.a.
Skin Care		5.8			4.2			1.6			(0.2	)		1.8			38.1	%		(4.8	)%		42.9	%
Botox® Therapeutics and Other		264.4			166.0			98.4			(9.4	)		107.8			59.3	%		(5.7	)%		64.9	%
Botox ^® Therapeutics		161.9			88.3			73.6			(4.8	)		78.4			83.4	%		(5.4	)%		88.8	%
Asacol ^® /Delzicol ^®		26.3			32.5			(6.2	)		(1.0	)		(5.2	)		(19.1	)%		(3.1	)%		(16.0	)%
Constella ^®		8.4			1.8			6.6			(0.2	)		6.8		n.m.				(11.1	)%	n.m.
Other Products		67.8			43.4			24.4			(3.4	)		27.8			56.2	%		(7.8	)%		64.1	%
Other Revenues		26.7			32.5			(5.8	)		-			(5.8	)		(17.8	)%		0.0	%		(17.8	)%
Net revenues	$	1,430.3		$	835.8		$	594.5		$	(43.6	)	$	638.1			71.1	%		(5.2	)%		76.3	%
Operating expenses:
Cost of sales ⁽¹⁾		214.2			135.5			78.7			(7.1	)		85.8			58.1	%		(5.2	)%		63.3	%
Selling and marketing		394.5			238.4			156.1			(11.9	)		168.0			65.5	%		(5.0	)%		70.5	%
General and administrative		58.5			42.4			16.1			(2.1	)		18.2			38.0	%		(5.0	)%		42.9	%
Segment contribution	$	763.1		$	419.5		$	343.6		$	(22.5	)	$	366.1			81.9	%		(5.4	)%		87.3	%
Segment margin		53.4	%		50.2	%											3.2	%
Segment gross margin ⁽²⁾		85.0	%		83.8	%											1.2	%

⁽¹⁾	Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results .

⁽²⁾	Defined as net revenues less segment related cost of sales as a percentage of net revenues.

Net Revenues

The increase in net revenues was primarily due to the contribution from the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015.

Cost of Sales

The increase in cost of sales was primarily due to the contribution from the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015. Segment gross margins remained stable at 85.0% for the six months ended June 30, 2016 compared to 83.8% for the six months ended June 30, 2015.

105

Selling and Marketing Expenses

The increase in selling and marketing expenses was primarily due to the contribution from the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015, offset, in part, by cost savings due to corporate initiatives.

General and Administrative Expenses

Corporate

	Six Months Ended June 30, 2016
	Integration and Restructuring			Fair Value Adjustments			Effect of Purchase Accounting			Reclassification of Sales Distributed Through Anda to Discontinued Operations			Other			Revenues and Shared Costs			Total

Net Sales	$	-		$	-		$	-		$	(56.3	)	$	-		$	19.7		$	(36.6	)
Operating expenses:
Cost of sales ⁽¹⁾		8.0			3.0			47.1			(55.2	)		0.1			121.5			124.5
Selling and marketing		33.9			-			39.0			-			0.1			3.6			76.6
General and administrative		136.6			0.1			23.7			-			65.2			217.5			443.1
Contribution	$	(178.5	)	$	(3.1	)	$	(109.8	)	$	(1.1	)	$	(65.4	)	$	(322.9	)	$	(680.8	)

⁽¹⁾ Excludes amortization and impairment of acquired intangibles including product rights .
	Six Months Ended June 30, 2015
	Integration and Restructuring			Fair Value Adjustments			Effect of Purchase Accounting			Reclassification of Sales Distributed Through Anda to Discontinued Operations			Other			Revenues and Shared Costs			Total

Net Sales	$	-		$	-		$	-		$	(70.4	)	$	-		$	1.6		$	(68.8	)
Operating expenses:
Cost of sales ⁽¹⁾		48.4			32.5			699.7			(68.7	)		-			57.2			769.1
Selling and marketing		76.4			-			75.6			-			-			0.1			152.1
General and administrative		278.1			(1.1	)		243.5			-			50.3			135.5			706.3
Contribution	$	(402.9	)	$	(31.4	)	$	(1,018.8	)	$	(1.7	)	$	(50.3	)	$	(191.2	)	$	(1,696.3	)

⁽¹⁾ Excludes amortization and impairment of acquired intangibles including product rights.

In the six months ended June 30, 2016, integration and restructuring charges primarily related to the integration of the Legacy Allergan business as well as charges incurred with the terminated merger with Pfizer, Inc. of $74.9 million. In the six months ended June 30, 2016, the Company incurred purchase accounting effects of $42.4 million in cost of sales primarily related to the fair value inventory step-up from the Allergan and Forest acquisitions as products were sold to the Company’s third party customers. The Company also incurred charges related to the purchase accounting impact on stock-based compensation related to the Allergan and

106

Forest acquisitions, which increased cost of sales, selling and marketing and general and administrative expenses. In the s ix months ended June 30, 2016, general and administrative costs included legal settlement charges of $59.2 million.

Shared costs primarily include above site and unallocated costs associated with running our global manufacturing facilities and corporate general and administrative expenses. In the six months ended June 30, 2016, the increase in “Revenues and Shared Costs” versus the prior year were primarily due to the Allergan Acquisition, which contributed a full six months in 2016 as opposed to three and a half months in 2015.

In the six months ended June 30, 2015, integration and restructuring charges primarily related to integration of the Allergan and Forest businesses. In the six months ended June 30, 2015, the Company incurred purchase accounting effects of $684.8 million in cost of sales primarily related to fair value inventory step-up from the Allergan and Forest acquisitions as products were sold to the Company’s third party customers. The Company also incurred charges related to the purchase accounting impact on stock-based compensation related the Allergan and Forest acquisitions, which increased cost of sales, selling and marketing and general and administrative expenses. In addition, in the six months ended June 30, 2015, the Company incurred mark-to-market unrealized losses for foreign currency option contracts that are entered into to offset future exposure to movements in currencies of $37.7 million.

Research and Development Expenses

R&D expenses consisted of the following components in the six months ended June 30, 2016 and 2015 ($ in millions):

	Six Months Ended June 30,						Change
	2016			2015			Dollars			%
Ongoing operating expenses	$	621.5		$	473.7		$	147.8			31.2	%
Brand-related milestone payments and upfront license payments		334.2			40.0			294.2			735.5	%
Acquisition accounting fair market value adjustment to stock-based compensation		23.8			103.6			(79.8	)		(77.0	)%
Acquisition, integration, and restructuring charges		(0.2	)		75.5			(75.7	)		(100.3	)%
Contingent consideration adjustments, net		60.3			(25.4	)		85.7			(337.4	)%
Total expenditures	$	1,039.6		$	667.4		$	372.2			55.8	%

The increase in ongoing operating expenses in the six months ended June 30, 2016 versus the prior year period is primarily due to the impact of the Allergan Acquisition which contributed six months in 2016 versus three and a half months in 2015 coupled with higher Ophthalmology and Early Stage product clinical spending. Included in brand related milestones for the six months ended June 30, 2016 are milestone payments and upfront license payments related to the Heptares Transaction of $125.0 million, the Topokine Transaction of $85.8 million, and the Anterios Transaction of $89.2 million.

In the six months ended June 30, 2016, the Company had an increase charge in contingent consideration liabilities, primarily due to the status of the Company’s Oxymetazoline Rosacea project. In the six months ended June 30, 2015, the Company had contingent consideration income due to an update to the then anticipated scheduling of the Furiex lead candidate, Viberzi ^® .

Amortization

Amortization in the six months ended June 30, 2016 and 2015 was as follows:

	Six Months Ended June 30,				Change
($ in millions)	2016		2015		Dollars		%
Amortization	$	3,222.8	$	2,301.1	$	921.7		40.1	%

Amortization for the six months ended June 30, 2016 increased as compared to the prior year period primarily as a result of increased amortization of $1,972.9 million of identifiable assets acquired in the Allergan Acquisition, compared to $1,020.8 in the six months ended June 30, 2015.

107

IPR&D Impairments and Asset Sales and Impairments, Net

IPR&D impairments and Asset sales and impairments, net consisted of the following components in the six months ended June 30, 2016 and 2015:

	Six Months Ended June 30,					Change
($ in millions)	2016			2015		Dollars			%
IPR&D impairments	$	274.9		$	197.6	$	77.3			39.1	%
Asset sales and impairments, net		(19.3	)		7.5		(26.8	)	n.m.

In the six months ended June 30, 2016, the Company recorded an impairment of an international eye care pipeline project of $35.0 million based on a decrease in projected cash flows due to market conditions as well as an impairment of $20.0 million for a specified indication of a Botox ^® therapeutic product based on a decrease in projected cash flows due to a decline in market demand assumptions. In addition, during the six months ended June 30, 2016, the Company impaired IPR&D projects relating to women’s healthcare of $24.0 million and osteoarthritis of approximately $190.0 million based on clinical trial results.

During the six months ended June 30, 2015, the Company recorded a $197.6 million impairment related to IPR&D for select projects, primarily relating to women’s healthcare as the Company revised its sales forecast of certain assets as well as the timing of the launch of certain projects.

Asset sales and impairments, net in the six months ended June 30, 2016, included the gain on the sale of certain investments.

Interest Income

Interest income in the six months ended June 30, 2016 and 2015 was as follows:

	Six Months Ended June 30,				Change
($ in millions)	2016		2015		Dollars		%
Interest income	$	5.4	$	4.1	$	1.3		31.7	%

Interest Expense

Interest expense consisted of the following components in the six months ended June 30, 2016 and 2015:

	Six Months Ended June 30,				Change
($ in millions)	2016		2015		Dollars			%
Fixed Rate Notes	$	571.2	$	426.5	$	144.7			33.9	%
AGN Term Loan		55.5		29.2		26.3			90.1	%
ACT Term Loan		26.2		28.8		(2.6	)		(9.0	)%
Floating Rate Notes		11.8		7.0		4.8			68.6	%
WC Term Loan		6.4		10.7		(4.3	)		(40.2	)%
Revolving Credit Facility		2.6		1.9		0.7			36.8	%
Other		4.9		7.7		(2.8	)		(36.4	)%
Interest expense	$	678.6	$	511.8	$	166.8			32.6	%

Interest expense increased to $678.6 million for the six months ended June 30, 2016 primarily due to interest from the indebtedness incurred as part of the Allergan Acquisition of $438.5 million compared to $270.2 million in the six months ended June 30, 2015.

108

Other (expense) income, net

Other (expense) income, net consisted of the following components in the six months ended June 30, 2016 and 2015:

	Six Months Ended June 30,					Change
($ in millions)	2016		2015			Dollars			%
Bridge loan commitment fee	$	-	$	(264.9	)	$	264.9			(100.0	)%
Interest rate lock		-		31.0			(31.0	)		(100.0	)%
Pfizer termination fee (Allergan plc only)		150.0		-			150.0		n.a.
Other (expense) income		0.6		(4.4	)		5.0			(113.6	)%
Other (expense) income, net	$	150.6	$	(238.3	)	$	388.9			(163.2	)%

Pfizer termination fee

In the six months ended June 30, 2016, the Company has received a payment of $150.0 million from Pfizer Inc. for reimbursement of expenses associated with the termination of the merger agreement which is reported as other income.

Bridge Loan Commitment Fee

During the six months ended June 30, 2015, the Company incurred costs associated with bridge loan commitments in connection with the Allergan Acquisition of $264.9 million.

Interest Rate Lock

During the six months ended June 30, 2015, the Company entered into interest rate locks on a portion of the $21.0 billion of debt issued as part of the Allergan Acquisition. As a result of the interest rate locks, the Company recorded income of $31.0 million.

(Benefit) for Income Taxes

	Six Months Ended June 30,						Change
($ in millions)	2016			2015			Dollars			%
(Benefit) / Provision for income taxes	$	(666.9	)	$	(652.1	)	$	(14.8	)		2.3	%
Effective tax rate		56.4	%		33.8	%

The Company’s effective tax rate for the six months ended June 30, 2016 was 56.4% compared to 33.8% for the six months ended June 30, 2015. The effective tax rate for the six months ended June 30, 2016 was impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. Additionally, the tax benefit for the six months ended June 30, 2016 included an expense of $195.2 million primarily related to a change in a valuation allowance on a portion of U.S. capital loss carryforwards resulting from restructuring associated with the sale of the global generics business, a benefit of $35.7 million related to the reversal of deferred tax liabilities associated with certain IPR&D impairments and a benefit of $45.2 million for the recognition of previously unrecognized tax benefits. The effective tax rate for the six months ended June 30, 2015 was impacted by income earned in low tax jurisdictions and U.S. losses tax benefited at rates greater than the Irish statutory rate. The increase in the effective tax rate for the period ended June 30, 2016 as compared to the period ended June 30, 2015 is primarily related to the change related to the valuation allowance on a portion of the U.S. capital loss carryforwards.

Discontinued Operations

109

On June 30, 2016, the Company held for sale its Anda Distribution business, which distributes generic, brand, specialty and OTC pharmaceutical products from m ore than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the United States. The Company decided to hold for sale this business unit as the Company intends t o continue its evolution into a focused branded phar maceutical company. On August 2 , 2016, the Company entered into a definitive agreement under which Teva will acquire the Anda Distribution business for $500.0 million and is subject to customary closing conditions, including antitrust clearance in the U.S .

Financial results of the global generics business and the Anda Distribution business are presented as "Income from discontinued operations" on the Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015; and assets and liabilities of the businesses are presented as "Current assets held for sale", "Non current assets held for sale", “Current liabilities held for sale” and “Long term liabilities held for sale” on the Consolidated Balance Sheet as of June 30, 2016 and December 31, 2015.

The following table presents key financial results of the businesses included in "Income from discontinued operations" for the three and six months ended June 30, 2016 and 2015 ($ in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net revenues	$	2,095.9		$	2,126.3		$	3,747.8		$	4,377.5
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		1,281.0			1,212.3			2,267.3			2,403.8
Research and development		120.0			105.2			232.3			218.5
Selling and marketing		142.5			179.5			283.5			382.9
General and administrative		167.6			160.6			309.1			324.3
Amortization		2.4			157.8			4.8			297.8
Asset sales and impairments, net		-			(2.3	)		-			50.9
Total operating expenses		1,713.5			1,813.1			3,097.0			3,678.2
Operating income		382.4			313.2			650.8			699.3
Other (expense) income, net		(0.6	)		(8.3	)		(0.4	)		(8.1	)
Provision for income taxes		459.1			74.6			379.1			167.1
Net (loss) / income from discontinued operations	$	(77.3	)	$	230.3		$	271.3		$	524.1

The decrease in net revenues in the six months ended June 30, 2016 versus the six months ended June 30, 2015 is primarily due to lower sales of key products in the United States including generic versions of Guanfacine, Oxycontin as well as our Lidocaine Patch and oral contraceptives, and lower sales of our Anda Distribution Business, offset, in part, by the launch of generic Crestor ^® in the second quarter of 2016. The decrease in cost of sales is due to the decrease in net revenues. The decrease in selling and marketing and general and administrative expenses is primarily due to lower spending across International Generics, due in part to fewer sales force and administrative personnel resulting from the impact of corporate initiatives.

110

Liquidity and Capi tal Resources

Working Capital Position

Working capital at June 30, 2016 and December 31, 2015 is summarized as follows:

	June 30,			December 31,			Increase
($ in millions):	2016			2015			(Decrease)
Current Assets:
Cash and cash equivalents	$	489.5		$	1,096.0		$	(606.5	)
Marketable securities		17.1			9.3			7.8
Accounts receivable, net		2,490.5			2,125.4			365.1
Inventories		726.8			757.5			(30.7	)
Prepaid expenses and other current assets		787.3			495.3			292.0
Current assets held for sale		4,244.0			4,095.6			148.4
Total current assets		8,755.2			8,579.1			176.1
Current liabilities:
Accounts payable and accrued expenses	$	4,490.1		$	4,148.6		$	341.5
Income taxes payable		92.6			53.7			38.9
Current portion of long-term debt and capital leases		2,506.6			2,396.5			110.1
Current liabilities held for sale		1,778.1			1,693.2			84.9
Total current liabilities		8,867.4			8,292.0			575.4
Working Capital	$	(112.2	)	$	287.1		$	(399.3	)
Working Capital excluding assets held for sale, net	$	(2,578.1	)	$	(2,115.3	)	$	(462.8	)
Current Ratio, excluding net assets held for sale		0.64			0.68

Working capital excluding assets held for sale, net, decreased $462.8 million primarily due to cash used to optionally prepay long-term debt as well as increase in current tax assets.

Cash Flows from Operations

Summarized cash flow from operations is as follows:

	Six Months Ended June 30,
($ in millions)	2016		2015
Net cash provided by operating activities	$	2,601.0	$	1,926.3

Cash flows from operations represent net income / (loss) adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities increased $674.7 million in the six months ended June 30, 2016 versus the prior year period, due primarily to an increase in net income, adjusted for non-cash activity of $229.7 million ($3,361.1 million and $3,131.4 million of net income / (loss), adjusted for non-cash activities in the six months ended June 30, 2016 and 2015, respectively), as well as a lower net increase in working capital versus the prior year period.

Management expects that available cash balances and the remaining 2016 cash flows from operating activities will provide sufficient resources to fund our operating liquidity needs and expected 2016 capital expenditure funding requirements.

Investing Cash Flows

Our cash flows from investing activities are summarized as follows:

	Six Months Ended June 30,
($ in millions)	2016			2015
Net cash (used in) investing activities	$	(142.8	)	$	(34,470.3	)

111

Investing cash flows consist primarily of cash used in acquisitions of businesses and intangibles assets (primarily product rights), capital expenditures and purchases of investments and marketable securities partially offset by proceeds from the sale of i nvestments and marketable securities. Included in the six months ended June 30, 2016 was cash used for capital expenditures of $182.8 million, offset, in part, by proceeds of sales investments and other assets and property, plant and equipment.

Included in the six months ended June 30, 2015 was cash used in connection with the Allergan Acquisition and the Auden Acquisition, net of cash acquired, of $34,646.2 million and $463.7 million, respectively, and capital expenditures for property, plant and equipment of $248.2 million, offset, in part by cash received from the sale of assets, primarily the Respiratory Business, of $855.8 million.

Financing Cash Flows

Our cash flows from financing activities are summarized as follows:

	Six Months Ended June 30,
($ in millions)	2016			2015
Net cash (used in) / provided by financing activities	$	(3,066.7	)	$	33,815.0

Financing cash flows consist primarily of borrowings and repayments of debt, repurchases of ordinary shares and proceeds from the exercise of stock options. Cash used in financing activities in the six months ended June 30, 2016 included payments of debt of $3,835.6 million, contingent consideration of $63.8 million and dividends of $139.2 million, offset by borrowings under the credit facility of $900.0 million.

Included in the six months ended June 30, 2015 was the issuance of indebtedness of $29,338.4 million, the issuance of ordinary shares of $4,071.1 million and the issuance of Mandatory Convertible Preferred Shares of $4,929.7 million in connection with the Allergan Acquisition, offset in part by payments of debt of $4,096.2 million and debt issuance costs of $310.8 million.

112

Debt and Borrowing Capacity

Total debt and capital leases consisted of the following ($ in millions):

	Balance As of						Fair Market Value As of
	June 30, 2016			December 31, 2015			June 30, 2016		December 31, 2015
Senior Notes:
Floating Rate Notes
$500.0 million floating rate notes due September 1, 2016	$	500.0		$	500.0		$	500.5	$	500.5
$500.0 million floating rate notes due March 12, 2018		500.0			500.0			502.0		499.6
$500.0 million floating rate notes due March 12, 2020		500.0			500.0			500.5		496.2
		1,500.0			1,500.0			1,503.0		1,496.3
Fixed Rate Notes
$800.0 million 5.750% notes due April 1, 2016		-			800.0			-		808.4
$1,000.0 million 1.850% notes due March 1, 2017		1,000.0			1,000.0			1,003.7		1,001.5
$500.0 million 1.300% notes due June 15, 2017		500.0			500.0			499.3		496.3
$1,200.0 million 1.875% notes due October 1, 2017		1,200.0			1,200.0			1,206.1		1,196.0
$3,000.0 million 2.350% notes due March 12, 2018		3,000.0			3,000.0			3,034.3		3,004.6
$250.0 million 1.350% notes due March 15, 2018		250.0			250.0			248.3		244.9
$1,050.0 million 4.375% notes due February 1, 2019		1,050.0			1,050.0			1,112.7		1,099.5
$500.0 million 2.450% notes due June 15, 2019		500.0			500.0			506.5		494.4
$400.0 million 6.125% notes due August 14, 2019		400.0			400.0			448.2		444.2
$3,500.0 million 3.000% notes due March 12, 2020		3,500.0			3,500.0			3,598.9		3,505.1
$650.0 million 3.375% notes due September 15, 2020		650.0			650.0			676.5		656.6
$750.0 million 4.875% notes due February 15, 2021		750.0			750.0			825.6		807.4
$1,200.0 million 5.000% notes due December 15, 2021		1,200.0			1,200.0			1,342.4		1,299.4
$3,000.0 million 3.450% notes due March 15, 2022		3,000.0			3,000.0			3,102.1		3,006.8
$1,700.0 million 3.250% notes due October 1, 2022		1,700.0			1,700.0			1,733.8		1,669.6
$350.0 million 2.800% notes due March 15, 2023		350.0			350.0			346.4		327.7
$1,200.0 million 3.850% notes due June 15, 2024		1,200.0			1,200.0			1,256.9		1,202.6
$4,000.0 million 3.800% notes due March 15, 2025		4,000.0			4,000.0			4,168.3		3,984.6
$2,500.0 million 4.550% notes due March 15, 2035		2,500.0			2,500.0			2,574.7		2,462.2
$1,000.0 million 4.625% notes due October 1, 2042		1,000.0			1,000.0			1,032.4		956.1
$1,500.0 million 4.850% notes due June 15, 2044		1,500.0			1,500.0			1,586.7		1,483.6
$2,500.0 million 4.750% notes due March 15, 2045		2,500.0			2,500.0			2,635.4		2,452.7
		31,750.0			32,550.0			32,939.2		32,604.2
Total Senior Notes Gross		33,250.0			34,050.0			34,442.2		34,100.5
Unamortized premium		193.9			225.9			-		-
Unamortized discount		(101.6	)		(107.4	)		-		-
Total Senior Notes Net		33,342.3			34,168.5			34,442.2		34,100.5
Term Loan Indebtedness:
WC Term Loan
WC Three Year Tranche variable rate debt maturing October 1, 2016		-			191.5
WC Five Year Tranche variable rate debt maturing October 1, 2018		-			498.8
		-			690.3
ACT Term Loan
2017 Term Loan variable rate debt maturing October 31, 2017		-			572.1
2019 Term Loan variable rate debt maturing July 1, 2019**		1,170.0			1,700.0
		1,170.0			2,272.1
AGN Term Loan
AGN Three Year Tranche variable rate debt maturing March 17, 2018		2,750.0			2,750.0
AGN Five Year Tranche variable rate debt maturing March 17, 2020**		2,406.3			2,543.8
		5,156.3			5,293.8
Total Term Loan Indebtedness		6,326.3			8,256.2
Other Indebtedness
Revolver Borrowings		-			200.0
Debt Issuance Costs		(174.6	)		(195.8	)
Other		85.5			97.4
Total Other Borrowings		(89.1	)		101.6
Capital Leases		2.2			4.1
Total Indebtedness	$	39,581.7		$	42,530.4

**	The indebtedness requires a quarterly repayment of 2.5%.

113

Fair market value in the table above is determined in accordance with ASC Topic 820 “Fair Value Measurement” (“ASC 820”) under Le vel 2 based upon quoted prices for similar items in active markets. The book value of the outstanding term loan indebtedness approximates fair value as the debt is at variable interest rates and re-prices frequently.

Unless otherwise indicated, the remaining loan balances after the quarterly required payments are due upon maturity.

Floating Rate Notes

Fixed Rate Notes

The Company has issued fixed rate notes over multiple issuances for various business needs. Interest on the various notes is generally payable semi-annually with various payment dates.

Acquired Allergan Notes

The $800.0 million 5.750% senior notes were paid in full on April 1, 2016 with proceeds from the first quarter of 2016 borrowings under the revolving credit facility of $900.0 million.

Credit Facility Indebtedness

WC Term Loan

114

Term Loan Amendment amends and restates Allergan plc’s existing amended and restated WC term loan credit and guaranty agreement, dated as of June 9, 2014 (such agreement, prior to its amendment and restateme nt pursuant to the WC Term Loan Amendment, the “2014 WC Term Loan”), among the WC Borrowers, Allergan plc, Warner Chilcott Limited, Warner Chilcott Finance, LLC, the lenders from time to time party thereto and BofA, as administrative agent, which amended a nd restated Allergan plc’s existing WC term loan credit and guaranty agreement, dated as of August 1, 2013 (such agreement, prior to its amendment and restatement pursuant to the 2014 WC Term Loan Amendment, the “Existing WC Term Loan”) among the WC Borrow ers, Warner Chilcott Finance, LLC, Actavis Limited, BofA, as administrative agent and a syndicate of banks participating as lenders.

ACT Term Loan

Loans under the ACT Term bore interest, at the Company’s choice, of a per annum rate equal to either (a) a base rate, plus an applicable margin per annum varying from (x) 0.00% per annum to 1.00% per annum with respect to the 2017 term-loan and (y) 0.125% per annum to 0.875% per annum with respect to the 2019 term-loan, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 2.00% per annum with respect to the 2017 term-loan and (y) 1.125% per annum to 1.875% per annum with respect to the 2019 term-loan, depending on the Debt Rating.

115

AGN Term L oan

The obligations of Actavis Capital under the Term Loan Credit Agreement were guaranteed by Warner Chilcott Limited, Actavis, Inc. and Actavis Funding SCS and any subsidiary of Allergan plc (other than Actavis Capital or a direct subsidiary of Allergan plc) that becomes a guarantor of third party indebtedness in an aggregate principal amount exceeding $350.0 million (unless, in the case of a foreign subsidiary, such guarantee would give rise to adverse tax consequences as reasonably determined by Allergan plc).

Cash Bridge Loan Facility

Revolving Credit Facility

116

The obligations under the Revolver Agreement were guaranteed by Allergan plc, Warner Chilcott Limited, Actavis, Inc. and Actavis Funding SCS and any subsid iary of Allergan (other than Actavis Capital) that becomes a guarantor of third party indebtedness in an aggregate principal amount exceeding $350.0 million (unless, in the case of a foreign subsidiary, such guarantee would give rise to adverse tax consequ ences as reasonably determined by Allergan plc).

The Company was subject to, and as of June 30, 2016 was in compliance with, all financial and operational covenants under the terms of the Revolving Credit Facility. At June 30, 2016, there were no outstanding borrowings under the Revolving Credit Facility and letters of credit outstanding were $28.8 million. The net availability under the Revolving Credit Facility was $971.2 million. In the six months ended June 30, 2016, the Company borrowed $900.0 million under the revolving credit facility and repaid $900.0 million. On August 2, 2016, the Company repaid all outstanding amounts under the Revolving Credit Facility and terminated the Revolving Credit Facility in connection with the Teva Transaction. The letters of credit remain outstanding with JPMCB and Wells Fargo, National Association under separate arrangements.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, net revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion provides forward-looking quantitative and qualitative information about our potential exposure to market risk. Market risk represents the potential loss arising from adverse changes in the value of financial instruments. The risk of loss is assessed based on the likelihood of adverse changes in fair values, cash flows or future earnings. We are exposed to market risk for changes in the market values of our investments (Investment Risk), the impact of interest rate changes (Interest Rate Risk) and the impact of foreign currency exchange changes (Foreign Currency Exchange Risk).

We maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including both government and government agency obligations with ratings of A or better and money market funds. Our investments in marketable securities are governed by our investment policy which seeks to preserve the value of our principal, provide liquidity and maximize return on the Company’s investment against minimal interest rate risk. Consequently, our interest rate and principal risk are minimal on our non-equity investment portfolio. The quantitative and qualitative disclosures about market risk are set forth below.

Investment Risk

As of June 30, 2016, our total investments in marketable and equity securities of other companies, including equity method investments were $111.7 million (included in marketable securities and investments and other assets). The fair values of these investments are subject to significant fluctuations due to volatility of the stock market and changes in general economic conditions.

As of August 2, 2016, the Company owns 100.3 million Teva ordinary shares, which are subject to changes in value based on the price of Teva shares. The Company is subject to lock-up restrictions with the investment in Teva, and as such, is also subject to liquidity risk.

We regularly review the carrying value of our investments and identify and recognize losses, for income statement purposes, when events and circumstances indicate that any declines in the fair values of such investments below our accounting basis are other than temporary.

Interest Rate Risk

Our exposure to interest rate risk relates primarily to our non-equity investment portfolio and our floating rate debt. Our cash is invested in bank deposits and A-rated or better money market mutual funds.

Our portfolio of marketable securities includes U.S. treasury and agency securities classified as available-for-sale securities, with no security having a maturity in excess of two years. These securities are exposed to interest rate fluctuations. Because of the short-term nature of these investments, we are subject to minimal interest rate risk and do not believe that an increase in market rates would have a significant negative impact on the realized value of our portfolio.

117

Floating Rate Debt

At June 30, 2016, borrowings outstanding under the floating rate notes and term loan indebtedness were $7,826.3 million. On August 2, 2016, the Company repaid $6,326.3 million of term loan indebtedness with proceeds from the Teva Transaction. Assuming a one percent increase in the applicable interest rate on the Company’s floating rates notes, annual interest expense would increase by approximately $15.0 million over the next twelve months.

Fixed Rate Debt

The Company has outstanding borrowings under its fixed rate notes. Changes in market interest rates generally affect the fair value of fixed-rate debt, but do not impact earnings or cash flows.

Foreign Currency Exchange Risk

Overall, we are a net recipient of currencies other than the U.S. dollar and, as such, benefit from a weaker dollar and are adversely affected by a stronger dollar relative to major currencies worldwide. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may negatively affect our consolidated revenues or operating costs and expenses as expressed in U.S. dollars.

From time to time, we enter into foreign currency option and forward contracts to reduce earnings and cash flow volatility associated with foreign exchange rate changes to allow our management to focus its attention on our core business issues. Accordingly, we enter into various contracts which change in value as foreign exchange rates change to allow the Company at its option to economically offset the effect of changes in the value of foreign currency assets and liabilities, commitments and anticipated foreign currency denominated sales and operating expenses. We enter into foreign currency option and forward contracts in amounts between minimum and maximum anticipated foreign exchange exposures.

We use foreign currency option contracts, which provide for the sale or purchase of foreign currencies, if exercised, to economically hedge the currency exchange risks associated with probable but not firmly committed transactions that arise in the normal course of our business. Probable but not firmly committed transactions are comprised primarily of sales of products and purchases of raw material in currencies other than the U.S. dollar. The foreign currency option contracts are entered into to reduce the volatility of earnings generated in currencies other than the U.S. dollar, primarily earnings denominated in the Euro. While these instruments are subject to fluctuations in value, such fluctuations are anticipated to offset changes in the value of the underlying exposures.

Net foreign currency gains and losses did not have a material effect on the Company’s results of operations for the six months ended June 30, 2016 and 2015, respectively.

Other

We do not believe that inflation has had a significant impact on our revenues or operations, nor do we have any material commodity price risks.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

118

Changes in Internal Control Over Financial Reporting

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures over financial reporting for the period covered by this Form 10–Q. Based on this assessment, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2016, the Company’s disclosure controls and procedures are effective.

The Company transitioned certain legacy Actavis Brand, Corporate U.S. and foreign operations into the Legacy Allergan SAP Enterprise Resource Planning (“ERP”) system in 2016. Other Brand subsidiaries are expected to transition to the Legacy Allergan SAP ERP system within 2016 and early 2017. The legacy Actavis SAP ERP systems will transition to Teva as part of the divestiture. Management also transitioned revenue management systems from the legacy Actavis Brand systems to the Legacy Allergan system for the administration of legacy Actavis Brand chargebacks, rebates and Medicaid claims. The legacy Actavis system will transition to Teva as a part of the divestiture.

There have been no other changes in the Company’s internal control over financial reporting, during the fiscal quarter ended June 30, 2016, that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

119

PART II. OTHE R INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

For information regarding legal proceedings, refer to “PART I, ITEM 3. LEGAL PROCEEDINGS,” of our Annual Report on Form 10-K for the year ended December 31, 2015 and “ Legal Matters ” in “NOTE 20 — Commitments and Contingencies” in the accompanying “Notes to Consolidated Financial Statements” in this Quarterly Report.

ITEM 1A.

RISK FACTORS

Except as set forth below, there have been no material changes in the Company’s risk factors from those disclosed in the Company’s Form 10-K for the year ended December 31, 2015.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sale of Unregistered Securities; Uses of Proceeds from Registered Securities

None.

Issuer Purchases of Equity Securities

During the quarter ended June 30, 2016, we repurchased 60,173 of our ordinary shares to satisfy tax withholding obligations in connection with the vesting of restricted shares issued to employees as follows:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publically Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
April 1 - 30, 2016		6,480	$	268.16		—		—
May 1 - 31, 2016		28,167	$	223.23		—		—
June 1 - 30, 2016		25,526	$	232.37		—		—
April 1 – June 30, 2016		60,173	$	231.95		—		—

ITEM 6.

EXHIBITS

Reference is hereby made to the Exhibit Index on page 122.

120

SIGNAT URES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 8, 2016.

ALLERGAN PLC WARNER CHILCOTT LIMITED

By:		/s/ Maria Teresa Hilado
Name:		Maria Teresa Hilado
Title:		Chief Financial Officer (Principal Financial Officer)

By:		/s/ James C. D’Arecca
Name:		James C. D’Arecca
Title:		Chief Accounting Officer (Principal Accounting Officer)

121

EXHIBIT INDEX

Exhibit		Description

2.1		First Amendment to the Master Purchase Agreement, dated as of June 9, 2016, by and between Teva Pharmaceutical Industries Ltd. and Allergan plc. (incorporated by reference to Exhibit 2.1 to Allergan plc’s Current Report on Form 8-K filed on July 13, 2016).

2.2		Second Amendment to the Master Purchase Agreement, dated as of July 5, 2016, by and between Teva Pharmaceutical Industries Ltd. and Allergan plc. (incorporated by reference to Exhibit 2.1 to Allergan plc’s Current Report on Form 8-K filed on July 13, 2016).

2.3		Third Amendment to the Master Purchase Agreement, dated as of July 11, 2016, by and between Teva Pharmaceutical Industries Ltd. and Allergan plc. (incorporated by reference to Exhibit 2.1 to Allergan plc’s Current Report on Form 8-K filed on July 13, 2016).

2.4		Letter Agreement, dated as of July 11, 2016, between Teva Pharmaceutical Industries Ltd. and Allergan plc.

10.1#*		Amended and Restated Allergan plc 2011 Incentive Award Plan

10.2#*		Amended and Restated 2013 Incentive Award Plan of Allergan plc
10.3#		Form of Amended and Restated Other Cash-Based Award Agreement (incorporated by reference to Exhibit 10.1 to Allergan plc’s Current Report on Form 8-K filed on August 8, 2016)
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14a of the Securities Exchange Act of 1934.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14a of the Securities Exchange Act of 1934.

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. of Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. of the Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Scheme Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Label Definition Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

#	I ndicates a management contract or compensatory plan or arrangement.

*	Filed herewith.

**	Furnished herewith and not “filed” for purposes of Section 18 of the Exchange Act.

122

Exhibit 10.1

AMENDED AND RESTATED ALLERGAN plc 2011 INCENTIVE AWARD PLAN

Article 1

PURPOSE

The purpose of the Amended and Restated Allergan, Inc. 2011 Incentive Award Plan (the “ Plan ”) is to promote the success and enhance the value of Allergan plc (the “ Company ”) by linking the individual interests of the members of the Board and Employees to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board and Employees upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent. The Plan succeeds the Allergan, Inc. 1989 Incentive Compensation Plan, the Allergan, Inc. 2001 Premium Priced Stock Option Plan, the Allergan, Inc. Employee Recognition Stock Award Plan, the Allergan, Inc. 2003 Nonemployee Director Equity Incentive Plan, the Allergan, Inc. 2008 Incentive Award Plan and the Allergan, Inc. 2011 Incentive Award Plan (the “ Prior Plan ”), in each case, as amended from time to time. This Plan constitutes an amendment and restatement of the Amended and Restated Allergan, Inc. 2011 Incentive Award Plan.

Article 2

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.

2.1 “ Administrator ” shall mean the entity that conducts the general administration of the Plan as provided in Article 13. With reference to the administration of the Plan with respect to Awards granted to Non-Employee Directors, the term “Administrator” shall refer to the Board. With reference to the duties of the Committee under the Plan which have been delegated to one or more persons pursuant to Section 13.6, or as to which the Board has assumed, the term “Administrator” shall refer to such person(s) unless and until the Committee or the Board has revoked such delegation or the Board has terminated the assumption of such duties.

2.2 “ Affiliate ” shall mean (a) Subsidiary; (b) any entity that is disregarded, under Treasury Regulation Section 301.7701-3, as an entity separate from either (i) the Company or (ii) any Subsidiary, and (c) any other entity in which the Company has an ownership interest.

2.3 “ Allergan ” shall mean Allergan plc, a public limited company organized under the laws of Ireland.

2.4 “ Allergan Common Stock ” means a share of common stock, par value $0.01 per share, of Allergan.

2.5 “ Applicable Accounting Standards ” shall mean Generally Accepted Accounting Principles in the United States or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.

2.6 “ Award ” shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award, a Performance-Based Award, a Dividend Equivalents award, a Deferred Stock award, a Deferred Stock Unit award, a Stock Payment award, a Performance Bonus Award, a Performance Share award, or a Stock Appreciation Right which may be awarded or granted under the Plan (collectively, “ Awards ”).

2.7 “ Award Agreement ” shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.

2.8 “ Award Limit ” shall mean with respect to Awards that shall be payable in Shares or in cash, as the case may be, the respective limit set forth in Section 3.3.

2.9 “ Board ” shall mean the Board of Directors of the Company.

2.10 “ Change in Control ” shall mean the occurrence of any of the following:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “ Person ”)), (i) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of ordinary shares of the Company which, when added to the Common Stock beneficially owned by such Person, represents more than fifty percent (50%) of either (A) the total Fair Market Value of the then outstanding stock of the Company (the “ Outstanding Company Shares ”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”), or (ii) during any 12-month period, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of securities of the Company representing fifty percent (50%) or more of the Outstanding Company Voting Securities; provided, however, that for purposes of this subsection (a), the following acquisitions of securities of the Company shall not constitute a Change in Control: (V) any acquisition directly from the Company, (W) any acquisition by the Company, (X) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (Y) any acquisition made by a Person who is eligible under the provisions of Rule 13d-1 under the Exchange Act as in effect on the date hereof to report such acquisition on Schedule 13G, or (Z) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of Section 2.10(c) below; or

(b) Individuals who, as of the Closing Date, constitute the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided, however, that any person becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the

directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such person whose initial assumption of office as a member of the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all (defined as more than 50% of the total gross fair market value) of the assets of the Company (a “ Business Combination ”), in each case unless, following such Business Combination, (i) Persons who were the beneficial owners, respectively, of the Outstanding Company Shares and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding Shares and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries), (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing such Business Combination.

Notwithstanding anything herein to the contrary, with respect to Awards granted prior to the Closing Date, the definition of Change in Control that will apply will be that definition in effect at the time of the grant of such Award.

In addition, if a Change in Control constitutes a payment event with respect to any portion of an Award that provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event must also constitute a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5) to the extent required by Section 409A.

The Administrator shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control” event as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

2.11 “ Closing Date ” shall have the meaning set forth in the Merger Agreement.

2.12 “ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder.

2.13 “ Committee ” shall mean the Compensation Committee of the Board , or another committee or subcommittee of the Board, appointed as provided in Section 13.1.

2.14 “ Common Stock ” shall mean the ordinary shares of the Company, par value $0.0001 per share.

2.15 “ Company ” shall have the meaning set forth in Article 1.

2.16 “ Covered Employee ” shall mean any Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code.

2.17 “ Deferred Stock ” shall mean a right to receive Shares awarded under Section 10.4.

2.18 “ Deferred Stock Unit ” shall mean a right to receive Shares awarded under Section 10.5.

2.19 “ Director ” shall mean a member of the Board, as constituted from time to time.

2.20 “ Disability ” shall mean, unless otherwise defined in an employment agreement between the Holder and the Company, total and permanent disability in accordance with the Company’s long-term disability plan, as determined by the Committee.

2.21 “ Dividend Equivalent ” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 10.2.

2.22 “ DRO ” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.

2.23 “ Effective Date ” shall mean the date the Plan was approved by the Allergan board of directors.

2.24 “ Effective Time ” shall have the meaning set forth in the Merger Agreement.

2.25 “ Eligible Individual ” shall mean any person who is an Employee or a Non-Employee Director, as determined by the Committee.

2.26 “ Employee ” shall mean any officer or other employee of the Company or of any Affiliate, other than any individuals who were employed, immediately before the Effective Time, by the Company or any of its Subsidiaries as of immediately before the Effective Time.

2.27 “ Equity Restructuring ” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.

2.28 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended from time to time.

2.29 “ Fair Market Value ” shall mean, as of any given date, the value of a Share determined as follows:

(a) If the Common Stock is traded on any established stock exchange, the closing price for a Share as quoted on such exchange for such date, or if there is no closing price for a Share on the date in question, the closing price for a Share on the first trading date immediately prior to such date during which a sale occurred, as reported in The Wall Street Journal (or such other source as the Company may deem reliable for such purposes);

(b) If the Common Stock is regularly quoted by a recognized securities dealer but closing sales prices are not reported, the value of a Share shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on the date in question, the high bid and low asked prices for a share of Common Stock on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(c) If the Common Stock is not traded on an established stock exchange or quoted on a national market or other quotation system, the value established by the Administrator acting in good faith.

2.30 “ Full Value Award ” shall mean any Award other than (i) an Option, (ii) a Stock Appreciation Right or (iii) any other Award for which the Holder pays the intrinsic value existing as of the date of grant (whether directly or by forgoing a right to receive a payment from the Company or any Affiliate).

2.31 “ Full Value Ratio ” shall mean that 2.46 Shares.

2.32 “ Greater Than 10% Stockholder” shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined in Section 424(e) of the Code).

2.33 “ Holder ” shall mean a person who has been granted an Award.

2.34 “ Incentive Stock Option ” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.

2.35 “ Legacy Allergan Shares ” shall mean the product of (i) the number of shares of Allergan, Inc. Common Stock that remain available for issuance as of the Effective Time and (ii) the Stock Award Exchange Ratio (which shall be rounded up to the nearest whole share if half a share or more or down to the nearest whole share if less than half a share); provided , however, that in no event shall the number of Legacy Allergan Shares equal or exceed twenty percent (20%) of the outstanding Shares as of the Closing Date.

2.36 “ Merger Agreement ” shall mean the Agreement and Plan of Merger (as it may be amended from time to time) dated as of November 16, 2014, between the Company, Avocado Acquisition Inc., a wholly owned subsidiary of the Company, and Allergan , Inc .

2.37 “ Non-Employee Director ” shall mean a Director of the Company who is not an Employee.

2.38 “ Non-Qualified Stock Option ” shall mean an Option that is not an Incentive Stock Option.

2.39 “ Normal Retirement Eligibility Date ” shall mean, with respect to any Holder, the later of (a) the date on which such Holder attains age 55 and (b) the date such Holder completes five years of continuous employment with the Company or any of its Affiliates.

2.40 “ NYSE Rules ” shall mean the NYSE Company Listed Manual and interpretive guidance thereunder, including Rule 303A.08.

2.41 “ Option ” shall mean a right to purchase Shares at a specified exercise price, granted under Article 6. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock Option; provided , however , that Options granted to Non-Employee Directors shall only be Non-Qualified Stock Options.

2.42 “ Option Term ” shall have the meaning set forth in Section 6.4.

2.43 “ Parent ” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities ending with the Company if each of the entities other than the Company beneficially owns, at the time of the determination, securities or interests representing at least fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

2.44 “ Performance-Based Award ” shall mean an Award other than an Option or Stock Appreciation Right granted pursuant to Article 6 or 11, but which is subject to the terms and conditions set forth in Article 5. All Performance-Based Awards are intended to qualify as Performance-Based Compensation.

2.45 “ Performance-Based Compensation ” shall mean any compensation that is intended to qualify as “performance-based compensation” as described in Section 162(m)(4)(C) of the Code.

2.46 “ Performance Bonus Award ” has the meaning set forth in Section 10.6.

2.47 “ Performance Criteria ” shall mean the criteria (and adjustments) that the Committee selects for an Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period, determined as follows:

(a) The Performance Criteria that shall be used to establish Performance Goals are limited to the following: (i) operating earnings or net earnings (either before or after any one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization); (ii) gross

or net sales, revenue and growth of sales revenue (either before or after cost of goods, selling and general administrative expenses, research and development expenses or any other expenses or interest); (iii) income or net income (either before or after taxes); (iv) adjusted net income; (v) operating income or net operating income; (vi) operating profit or net operating profit; (vii) cash flow (including, but not limited to, operating cash flow and free cash flow); (viii) return on equity; (ix) return on capital; (x) return on stockholders’ equity; (xi) return on assets or net assets; (xii) total stockholder return; (xiii) return on sales; (xiv) gross or net profit or operating margin; (xv) costs; (xvi) funds from operations; (xvii) expenses; (xviii) working capital; (xix) earnings per share; (xx) adjusted earnings per share; (xxi) price per Share; (xxii) regulatory body approval for commercialization of a product; (xxiii) implementation or completion of critical projects; (xxiv) market share; (xxv) economic value; (xxvi) economic value-added; (xxvii) cost reductions or savings; (xxviii) research and development expenses (including research and development expenses as a percentage of sales or revenues); (xxix) productivity; (xxx) operating efficiency and (xxxi) customer satisfaction; any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators or indices. The Committee shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period for such Holder.

(b) The Administrator may, in its sole discretion, provide that one or more objectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments may include one or more of the following: (i) items related to a change in accounting principle; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions, including costs incurred to effect an acquisition, integration and transition costs, and adjustments to estimated contingent consideration and pre-acquisition contingencies; (vi) items attributable to the business operations of any entity acquired by the Company during the Performance Period; (vii) items related to the disposal of a business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a business under Applicable Accounting Standards; (ix) items attributable to any stock dividend, stock split, combination or exchange of stock occurring during the Performance Period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Company’s core, on-going business activities; (xiv) items related to acquired in-process research and development; (xv) items relating to changes in tax laws and discrete income tax adjustments related to previously filed income tax returns; (xvi) items relating to major licensing or partnership arrangements; (xvii) items relating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractual settlements; (xix) items related to changes in foreign exchange rates; or (xx) items relating to any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business conditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.

2.48 “ Performance Goals ” shall mean, for a Performance Period, one or more goals established in writing by the Administrator for the Performance Period based upon one or more

Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a n Subsidiary , division, business unit, or an individual. The achievement of each Performance Goal shall be determined, to the extent applicable, with reference to Applicable Accounting Standards.

2.49 “ Performance Period ” shall mean one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Holder’s right to, and the payment of, an Award.

2.50 “ Performance Share ” shall mean a right granted to a Participant pursuant to Section 10.1 to receive Shares, the payment of which is contingent upon achieving certain Performance Goals or other performance-based targets established by the Administrator.

2.51 “ Permitted Transferee ” shall mean, with respect to a Holder, any “family member” of the Holder, as defined under the instructions to use the Form S-8 Registration Statement under the Securities Act, after taking into account any state, federal, local or foreign tax and securities laws applicable to transferable Awards.

2.52 “ Plan ” shall have the meaning set forth in Article 1.

2.53 “ Program ” shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may be granted under the Plan.

2.54 “ Qualified Termination ” shall mean (i) a Holder’s Termination of Service by the Company for any reason other than the Holder’s death, Disability, willful misconduct or activity deemed detrimental to the interests of the Company; or (ii) a Holder’s Termination of Service by the Holder for good reason, which includes (i) a substantial adverse change in the nature or status of the Holder’s responsibilities, (ii) a reduction in the Holder’s base salary and/or levels of entitlement or participation under any incentive plan or employee benefit program without the substitution or implementation of an alternative arrangement of substantially equal value, or (iii) the Company requiring the Holder to relocate to a work location more than fifty (50) miles from his or her work location prior to the Change in Control.

2.55 “ Restricted Stock ” shall mean Common Stock awarded under Article 8 that is subject to certain restrictions and may be subject to risk of forfeiture or repurchase.

2.56 “ Restricted Stock Units ” shall mean the right to receive Shares awarded under Article 9.

2.57 “ Securities Act ” shall mean the Securities Act of 1933, as amended.

2.58 “ Shares ” shall mean shares of Common Stock.

2.59 “ Stock Appreciation Right ” shall mean a stock appreciation right granted under Article 11.

2.60 “ Stock Appreciation Right Term ” shall have the meaning set forth in Section 11.4.

2.61 “ Stock Award Exchange Ratio ” shall mean the sum of (i) 0.3683 plus (ii) a fraction resulting from dividing (x) 129.22 by (y) the volume weighted average price of a Share for a ten (10) trading day period, starting with the opening of trading on the eleventh (11th) trading day prior to the Closing Date to the closing of trading on the second to last trading day prior to the Closing Date, as reported by Bloomberg.

2.62 “ Stock Payment ” shall mean (a) a payment in the form of Shares, or (b) an option or other right to purchase Shares, as part of a bonus, deferred compensation or other arrangement, in each case, awarded under Section 10.3, and made in lieu of all or any portion of any earned bonus or other compensation; provided , that the intrinsic value of the Stock Payment award on the date of grant shall not exceed the amount of compensation forgone.

2.63 “ Subsidiary ” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

2.64 “ Substitute Award ” shall mean an Award granted under the Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, which has substantially the same value and is subject to terms and conditions, including vesting, no less favorable to the Holder than the vesting and other terms and conditions for which such Award was substituted, and which Award provides for immediate vesting upon the Holder’s Qualified Termination by the successor employer within the two (2) year period following the date of grant of such Substitute Award; provided , however , that in no event shall the term “Substitute Award” be construed to refer to (i) an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right or (ii) an Award granted in accordance with and pursuant to the terms of the Merger Agreement upon the assumption of the outstanding Awards granted under the Prior Plan.

2.65 “ Termination of Service ” shall mean:

(a) As to a Non-Employee Director, the time when a Holder who is a Non-Employee Director ceases to be a Director for any reason, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Affiliate.

(b) As to an Employee, the time when the employee-employer relationship between a Holder and the Company or any Affiliate is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Affiliate.

The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to Terminations of Service, including, without limitation, the question of whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service; provided , however , that, with respect to Incentive Stock Options, unless the Administrator otherwise provides in the terms of the Program, the Award Agreement or otherwise, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relations shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

Article 3

SHARES SUBJECT TO THE PLAN

3.1 Number of Shares .

(a) Subject to Section 14.2 and Section 3.1(b), the aggregate number of Shares which may be issued or transferred pursuant to Awards under the Plan as of the Effective Time is the sum of (i) the number of Shares subject to outstanding Awards under the Prior Plan, as converted pursuant to the terms of the Merger Agreement and (ii) the Legacy Allergan Shares; provided , however , that such aggregate number of Shares available for issuance under the Plan shall be reduced by the Full Value Ratio for each Share delivered in settlement of any Full Value Award.

(b) If any Shares subject to an Award that is not a Full Value Award are forfeited or expire or such Award is settled for cash (in whole or in part), the Shares subject to such Award shall, to the extent of such forfeiture, expiration or cash settlement, again be available for future grants of Awards under the Plan. To the extent that a Full Value Award is forfeited or expires or such Full Value Award is settled for cash (in whole or in part), the Shares available under the Plan shall be increased by the Full Value Ratio for each Share subject to such Full Value Award that is forfeited, expired or settled in cash. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 3.1(a) and will not be available for future grants of Awards: (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the Holder or withheld by the Company to satisfy any tax withholding obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of Options. Any Shares repurchased by the Company under Section 8.4 at the same price paid by the Holder so that such Shares are returned to the Company will again be available for Awards. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan. Notwithstanding the

provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code.

(c) Substitute Awards shall not reduce the Shares authorized for grant under the Plan. Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Affiliates immediately prior to such acquisition or combination.

3.2 Stock Distributed . Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market in management’s sole discretion in compliance with the Plan and applicable law.

3.3 Limitation on Number of Shares Subject to Awards . Notwithstanding any provision in the Plan to the contrary, and subject to Section 14.2, the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person during any calendar year shall be the product of (a) 1,500,000 multiplied by (b) the Stock Award Exchange Ratio. The maximum aggregate amount of cash that may be paid in cash to any one person during any calendar year with respect to one or more Performance-Based Awards (including, without limitation, all Performance Bonus Awards) payable in cash shall be $5,000,000. For purposes of this Section 3.3, each Share subject to an Award (including a Full Value Award) shall be counted as one Share against the Award Limit.

3.4 Full Value Award Vesting Limitations .

(a) Notwithstanding any other provision of the Plan to the contrary, Full Value Awards made to Employees shall become vested over a period of not less than three years (or, in the case of vesting based upon the attainment of Performance Goals or other performance-based objectives, over a period of not less than one year measured from the commencement of the period over which performance is evaluated) following the date the Award is made; provided , however , that, notwithstanding the foregoing, (a) the Administrator may provide that such vesting restrictions may lapse or be waived upon the Holder’s death, disability or retirement and (b) Full Value Awards that result in the issuance of an aggregate of up to 5% of the Shares available pursuant to Section 3.1(a) may be granted to any one or more Holders without respect to such minimum vesting provisions.

(b) Following the grant of an Award, the Administrator, in its discretion and on whatever terms and conditions it selects, may provide that the period during which an Award vests or becomes exercisable will accelerate, in whole or in part, in connection with a Change in Control or a Holder’s Termination of Service by reason of the Holder’s retirement, death or disability. In addition, the Administrator may accelerate the vesting or exercisability of an aggregate number of Shares not to exceed 5% of the maximum aggregate number of Shares which may be issued or transferred pursuant to Awards under the Plan at any time and for any reason. Except as permitted under this Section 3.4(b), the Administrator shall not exercise any discretion to accelerate the vesting or exercisability of any Award after the grant date of such Award. Nothing in this Section 3.4(b) shall be construed to limit or restrict the Administrator’s authority to establish the terms of an Award at the time of grant, including the events or conditions upon which the vesting or exercisability of an Award may accelerate.

3.5 Legacy Allergan Shares

(a) Following the Effective Time, pursuant to the NYSE Rules, the Company shall be able to issue both the Legacy Allergan Shares and any Shares underlying outstanding Awards as of the Effective Time that may become available in accordance with Section 3.1(b) following the Effective Time in satisfaction of the vesting, exercise or settlement of Awards that may be granted under the Plan.

(b) For the avoidance of doubt, in accordance with the NYSE Rules, (i) Awards granted following the Effective Time may be granted to Holders other than any individuals who were employed, immediately before the Effective Time, by the Company or any of its Subsidiaries as of immediately before the Effective Time and (ii) the time during which the Legacy Allergan Shares and the Shares underlying outstanding Awards as of the Effective Time. that may become available in accordance with Section 3.1(b) following the Effective Time. are available for grant under the Plan will not be extended beyond the period when they would have been available for grant under the Prior Plan.

Article 4

GRANTING OF AWARDS

4.1 Participation . The Administrator may, from time to time, select from among all Eligible Individuals, those to whom an Award shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan. No Eligible Individual shall have any right to be granted an Award pursuant to the Plan.

4.2 Award Agreement . Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award, which may include the term of the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award and accelerations or waivers thereof, including the provisions applicable in the event of the Holder’s Termination of Service, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award. Award Agreements evidencing Awards intended to qualify as Performance-Based Compensation shall contain such terms and conditions as may be necessary to meet the applicable provisions of

Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.

4.3 Limitations Applicable to Section 16 Persons . Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b‑3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

4.4 At-Will Employment; Voluntary Participation . Nothing in the Plan or in any Program or Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of, or as a Director for, the Company or any Affiliate, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Affiliate. Participation by each Holder in the Plan shall be voluntary and nothing in the Plan shall be construed as mandating that any Eligible Individual shall participate in the Plan.

4.5 Foreign Holders . Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Affiliates operate or have Employees or Non-Employee Directors, or in order to comply with the requirements of any foreign securities exchange, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Affiliates shall be covered by the Plan; (b) determine which Eligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable foreign laws or listing requirements of any foreign securities exchange; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; provided , however , that no such subplans and/or modifications shall increase the share limitations contained in Sections 3.1 and 3.3; and (e) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities exchange. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Code, the Exchange Act, the Securities Act, any other securities law or governing statute, the rules of the securities exchange or automated quotation system on which the Shares are listed, quoted or traded or any other applicable law. For purposes of the Plan, all references to foreign laws, rules, regulations or taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof.

4.6 Stand-Alone and Tandem Awards . Awards granted pursuant to the Plan may, in the sole discretion of the Administrator, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

Article 5

PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS PERFORMANCE-BASED COMPENSATION

5.1 Purpose . The Committee, in its sole discretion, may determine at the time an Award is granted or at any time thereafter whether such Award is intended to qualify as Performance-Based Compensation. If the Committee, in its sole discretion, decides to grant such an Award to an Eligible Individual that is intended to qualify as Performance-Based Compensation, then the provisions of this Article 5 shall control over any contrary provision contained in the Plan. The Administrator may in its sole discretion grant Awards to other Eligible Individuals that are based on Performance Criteria, Performance Goals or other performance conditions but that do not satisfy the requirements of this Article 5 and that are not intended to qualify as Performance-Based Compensation. Unless otherwise specified by the Administrator at the time of grant, the Performance Criteria with respect to an Award intended to be Performance-Based Compensation payable to a Covered Employee shall be determined on the basis of Applicable Accounting Standards, if applicable.

5.2 Applicability . The grant of an Award to an Eligible Individual for a particular Performance Period shall not require the grant of an Award to such Eligible Individual in any subsequent Performance Period and the grant of an Award to any one Eligible Individual shall not require the grant of an Award to any other Eligible Individual in such period or in any other period.

5.3 Types of Awards . Notwithstanding anything in the Plan to the contrary, the Committee may grant any Award to an Eligible Individual intended to qualify as Performance-Based Compensation, including, without limitation, Restricted Stock that has restrictions which lapse upon the attainment of specified Performance Goals, Restricted Stock Units that vest and become payable upon the attainment of specified Performance Goals and any Performance-Based Awards described in Article 10 that vest or become exercisable or payable upon the attainment of one or more specified Performance Goals.

5.4 Procedures with Respect to Performance-Based Awards . To the extent necessary to comply with the requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted to one or more Eligible Individuals which is intended to qualify as Performance-Based Compensation, no later than 90 days following the commencement of any Performance Period or any designated fiscal period or period of service (or such earlier time as may be required under Section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Eligible Individuals, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period based on the Performance Criteria, and (d) specify the

relationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the Committee shall certify in writing whether and the extent to which the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned under such Awards, the Committee shall have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant, including the assessment of individual or corporate performance for the Performance Period.

5.5 Payment of Performance-Based Awards . Unless otherwise provided in the applicable Program or Award Agreement and only to the extent otherwise permitted by Section 162(m)(4)(C) of the Code, as to an Award that is intended to qualify as Performance-Based Compensation, the Holder must be employed by the Company or an Affiliate throughout the Performance Period. Unless otherwise provided in the applicable Performance Goals, Program or Award Agreement, a Holder shall be eligible to receive payment pursuant to such Awards for a Performance Period only if and to the extent the Performance Goals for such period are achieved.

5.6 Additional Limitations . Notwithstanding any other provision of the Plan and except as otherwise determined by the Administrator, any Award which is granted to an Eligible Individual and is intended to qualify as Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code or any regulations or rulings issued thereunder that are requirements for qualification as Performance-Based Compensation, and the Plan, the Program and the Award Agreement shall be deemed amended to the extent necessary to conform to such requirements.

Article 6

GRANTING OF OPTIONS

6.1 Granting of Options to Eligible Individuals . The Administrator is authorized to grant Options to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine which shall not be inconsistent with the Plan.

6.2 Qualification of Incentive Stock Options . No Incentive Stock Option shall be granted to any person who is not an Employee of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) of the Company. No person who qualifies as a Greater Than 10% Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. Any Incentive Stock Option granted under the Plan may be modified by the Administrator, with the consent of the Holder, to disqualify such Option from treatment as an “incentive stock option” under Section 422 of the Code. To the extent that the aggregate Fair Market Value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any subsidiary or parent corporation thereof (each as defined in Section 424(f) and (e) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The rule set forth in the preceding sentence shall be applied by taking Options

and other “incentive stock options” into account in the order in which they were granted and the Fair Market Value of stock shall be determined as of the time the respective options were granted.

6.3 Option Exercise Price . The exercise price per Share subject to each Option shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted (or, as to Incentive Stock Options, on the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code).

6.4 Option Term . The term of each Option (the “ Option Term ”) shall be set by the Administrator in its sole discretion; provided , however , that the Option Term shall not be more than ten (10) years from the date the Option is granted, or five (5) years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder. The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Holder has the right to exercise the vested Options, which time period may not extend beyond the last day of the Option Term, except as required otherwise by foreign law with respect to any subplan. Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and rulings thereunder, the Administrator may extend the Option Term of any outstanding Option, and may extend the time period during which vested Options may be exercised, in connection with any Termination of Service of the Holder, and may amend any other term or condition of such Option relating to such a Termination of Service.

6.5 Option Vesting .

(a) The period during which the right to exercise, in whole or in part, an Option vests in the Holder shall be set by the Administrator and the Administrator may determine that an Option may not be exercised in whole or in part for a specified period after it is granted. Such vesting may be based on service with the Company or any Affiliate, any of the Performance Criteria, or any other criteria selected by the Administrator.

(b) No portion of an Option which is unexercisable at a Holder’s Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in the Program, the Award Agreement or by action of the Administrator following the grant of the Option.

6.6 Substitute Awards . Notwithstanding the foregoing provisions of this Article 6 to the contrary, in the case of an Option that is a Substitute Award, the price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant; provided that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.

6.7 Substitution of Stock Appreciation Rights . The Administrator may provide in the applicable Program or the Award Agreement evidencing the grant of an Option that the Administrator, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided that such Stock Appreciation Right shall be exercisable with respect to the same number of Shares for which such substituted Option would have been exercisable, and shall also have the same exercise price, vesting schedule and remaining Option Term as the substituted Option.

Article 7

EXERCISE OF OPTIONS

7.1 Partial Exercise . An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional shares and the Administrator may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of shares.

7.2 Manner of Exercise . All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the stock administrator of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

(a) A written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option;

(b) Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or regulations, the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded or any other applicable law. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;

(c) In the event that the Option shall be exercised pursuant to Section 12.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option, as determined in the sole discretion of the Administrator; and

(d) Full payment of the exercise price and applicable withholding taxes to the stock administrator of the Company for the shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by Section 12.1 and 12.2.

7.3 Notification Regarding Disposition . The Holder shall give the Company prompt written or electronic notice of any disposition of Shares acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the

Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the transfer of such shares to such Holder.

Article 8

AWARD OF RESTRICTED STOCK

8.1 Award of Restricted Stock .

(a) The Administrator is authorized to grant Restricted Stock to Eligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate.

(b) The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided , however , that if a purchase price is charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unless otherwise permitted by applicable law. In all cases, legal consideration shall be required for each issuance of Restricted Stock.

8.2 Rights as Stockholders . Subject to Section 8.4, upon issuance of Restricted Stock, the Holder shall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said shares, subject to the restrictions in the applicable Program or in each individual Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the shares; provided , however , that, in the sole discretion of the Administrator, any extraordinary distributions with respect to the Shares shall be subject to the restrictions set forth in Section 8.3. In addition, with respect to a share of Restricted Stock with performance-based vesting, dividends which are paid prior to vesting shall only be paid out to the Holder to the extent that the performance-based vesting conditions are subsequently satisfied and the share of Restricted Stock vests.

8.3 Restrictions . Subject to Section 3.4, all shares of Restricted Stock (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in the terms of the applicable Program or in each individual Award Agreement, be subject to such restrictions and vesting requirements as the Administrator shall provide. Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Administrator, including, without limitation, criteria based on the Holder’s duration of employment, directorship or consultancy with the Company, the Performance Criteria, Company performance, individual performance or other criteria selected by the Administrator. By action taken after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the vesting of such Restricted Stock by removing any or all of the restrictions imposed by the terms of the Program or the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire.

8.4 Repurchase or Forfeiture of Restricted Stock . Except as otherwise determined by the Administrator at the time of the grant of the Award or thereafter, if no price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Holder’s rights in unvested Restricted Stock then subject to restrictions shall lapse, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration. If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Company shall have the right to repurchase from the Holder the unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stock or such other amount as may be specified in the Program or the Award Agreement. Notwithstanding the foregoing, except as otherwise provided by Section 3.4, the Administrator in its sole discretion may provide that in the event of certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service or any other event, the Holder’s rights in unvested Restricted Stock shall not lapse, such Restricted Stock shall vest and, if applicable, the Company shall not have a right of repurchase.

8.5 Certificates for Restricted Stock . Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine. Certificates or book entries evidencing shares of Restricted Stock must include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. The Company may, in its sole discretion, (a) retain physical possession of any stock certificate evidencing shares of Restricted Stock until the restrictions thereon shall have lapsed and/or (b) require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to such Restricted Stock.

8.6 Section 83(b) Election . If a Holder makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

Article 9

AWARD OF RESTRICTED STOCK UNITS

9.1 Grant of Restricted Stock Units . The Administrator is authorized to grant Awards of Restricted Stock Units to any Eligible Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.

9.2 Term . Except as otherwise provided herein, the term of a Restricted Stock Unit award shall be set by the Administrator in its sole discretion.

9.3 Purchase Price . The Administrator shall specify the purchase price, if any, to be paid by the Holder to the Company with respect to any Restricted Stock Unit award; provided , however , that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by applicable law.

9.4 Vesting of Restricted Stock Units . At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holder’s duration of service to the Company or any Affiliate, one or more Performance Criteria, Company performance, individual performance or other specific criteria, in each case on a specified date or dates or over any period or periods, as determined by the Administrator, subject to Section 3.4.

9.5 Maturity and Payment . At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the Holder (if permitted by the applicable Award Agreement); provided that, except as otherwise determined by the Administrator, set forth in any applicable Award Agreement, and subject to compliance with Section 409A of the Code, in no event shall the maturity date relating to each Restricted Stock Unit occur following the later of (a) the 15 ^th day of the third month following the end of calendar year in which the Restricted Stock Unit vests; or (b) the 15 ^th day of the third month following the end of the Company’s fiscal year in which the Restricted Stock Unit vests. On the maturity date, the Company shall, subject to Section 12.4(e), transfer to the Holder one unrestricted, fully transferable Share for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such shares on the maturity date or a combination of cash and Common Stock as determined by the Administrator.

9.6 Payment upon Termination of Service . An Award of Restricted Stock Units shall only be payable while the Holder is an Employee or a member of the Board, as applicable; provided , however , that the Administrator, in its sole and absolute discretion may provide (in an Award Agreement or otherwise) that a Restricted Stock Unit award may be paid subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service.

9.7 No Rights as a Stockholder . Unless otherwise determined by the Administrator, a Holder who is awarded Restricted Stock Units shall possess no incidents of ownership with respect to the Shares represented by such Restricted Stock Units, unless and until the same are transferred to the Holder pursuant to the terms of this Plan and the Award Agreement.

9.8 Dividend Equivalents . Subject to Section 10.2, the Administrator may, in its sole discretion, provide that Dividend Equivalents shall be earned by a Holder of Restricted Stock Units based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date an Award of Restricted Stock Units is granted to a Holder and the maturity date of such Award.

Article 10

AWARD OF PERFORMANCE SHARE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS, DEFERRED STOCK, DEFERRED STOCK UNITS, PERFORMANCE BONUS AWARDS

10.1 Performance Share Awards . The Administrator is authorized to grant Performance Share awards to any Eligible Individual and to determine whether such Performance Share awards shall be Performance-Based Compensation. Performance Share awards shall be denominated in a number of Shares or in unit equivalents of Shares and/or units of value including the dollar value of Shares. The value of Performance Share awards may be linked to any one or more of the Performance Criteria or other specific criteria, including service to the Company or any Affiliate, determined by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator. In making such determinations, the Administrator may consider (among such other factors as it deems relevant in light of the specific type of award) the contributions, responsibilities and other compensation of the particular Holder.

10.2 Dividend Equivalents .

(a) The Administrator is authorized to grant Dividend Equivalents to any Eligible Individual based on dividends declared on the Common Stock, to be credited as of dividend record dates during the period between the date an Award is granted to a Holder and the date such Award vests, is exercised, is distributed or expires, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Administrator. In addition, Dividend Equivalents with respect to an Award with performance-based vesting that are based on dividends paid prior to the vesting of such Award shall only be paid out to the Holder to the extent that the performance-based vesting conditions are subsequently satisfied and the Award vests.

(b) Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights.

10.3 Stock Payments . The Administrator is authorized to make Stock Payments to any Eligible Individual. The number or value of shares of any Stock Payment shall be determined by the Administrator and may be based upon one or more Performance Criteria or any other specific criteria, including service to the Company or any Affiliate, determined by the Administrator. Shares underlying a Stock Payment which is subject to a vesting schedule or other conditions or criteria set by the Administrator will not be issued until those conditions have been satisfied. Unless otherwise provided by the Administrator, a Holder of a Stock Payment shall have no rights as a Company stockholder with respect to such Stock Payment until such time as the Stock Payment has vested and the Shares underlying the Award have been issued to the Holder. Stock Payments may, but are not required to, be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to such Eligible Individual.

10.4 Deferred Stock . The Administrator is authorized to grant Deferred Stock to any Eligible Individual. The number of shares of Deferred Stock shall be determined by the Administrator and may (but is not required to) be based on one or more Performance Criteria or other specific criteria, including service to the Company or any Affiliate, as the Administrator determines, in each case on a specified date or dates or over any period or periods determined by the Administrator, subject to Section 3.4. Shares underlying a Deferred Stock award which is subject to a vesting schedule or other conditions or criteria set by the Administrator will be issued on the vesting date(s) or date(s) that those conditions and criteria have been satisfied, as applicable. Unless otherwise provided by the Administrator, a Holder of Deferred Stock shall have no rights as a Company stockholder with respect to such Deferred Stock until such time as the Award has vested and any other applicable conditions and/or criteria have been satisfied and the Shares underlying the Award have been issued to the Holder.

10.5 Deferred Stock Units . The Administrator is authorized to grant Deferred Stock Units to any Eligible Individual. The number of Deferred Stock Units shall be determined by the Administrator and may (but is not required to) be based on one or more Performance Criteria or other specific criteria, including service to the Company or any Affiliate, as the Administrator determines, in each case on a specified date or dates or over any period or periods determined by the Administrator. Each Deferred Stock Unit shall entitle the Holder thereof to receive one Share on the date the Deferred Stock Unit becomes vested or upon a specified settlement date thereafter (which settlement date may (but is not required to) be the date of the Holder’s Termination of Service). Shares underlying a Deferred Stock Unit award which is subject to a vesting schedule or other conditions or criteria set by the Administrator will not be issued until on or following the date that those conditions and criteria have been satisfied. Unless otherwise provided by the Administrator, a Holder of Deferred Stock Units shall have no rights as a Company stockholder with respect to such Deferred Stock Units until such time as the Award has vested and any other applicable conditions and/or criteria have been satisfied and the Shares underlying the Award have been issued to the Holder.

10.6 Performance Bonus Awards . The Administrator is authorized to grant one or more Performance Bonus Awards to Eligible Individuals in such amounts and subject to such terms and conditions not inconsistent with the Plan as the Administrator shall determine. Awards granted under this Section 10.6 shall be denominated in the form of cash (but may be payable in cash, stock or a combination thereof) (a “ Performance Bonus Award ”) and shall be payable upon the attainment of Performance Goals that are established by the Administrator and relate to one or more of the Performance Criteria or other specific criteria, including service to the Company or Subsidiaries, in each case on a specified date or dates or over any period or periods determined by the Administrator, subject to Section 3.4. Any such Performance Bonus Award paid to a Covered Employee shall be based upon objectively determinable bonus formulas established in accordance with Article 5.

10.7 Term . The term of a Performance-Based Award, Performance Bonus Award, Performance Share award, Dividend Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred Stock Unit award shall be set by the Administrator in its sole discretion.

10.8 Purchase Price . The Administrator may establish the purchase price, if any, of a Performance-Based Award, Performance Bonus Award or Performance Share award, shares

distributed as a Stock Payment award, shares of Deferred Stock or shares distributed pursuant to a Deferred Stock Unit award; provided , however , that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by applicable law.

10.9 Termination of Service . A Performance-Based Award, Performance Bonus Award, Performance Share award, Stock Payment award, Dividend Equivalent award, Deferred Stock award and/or Deferred Stock Unit award is distributable only while the Holder is an Employee or Director, as applicable. The Administrator, however, in its sole discretion may provide that the Performance-Based Award, Performance Bonus Award, Performance Share award, Dividend Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred Stock Unit award may be distributed subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service, subject to Section 3.4(b).

Article 11

AWARD OF STOCK APPRECIATION RIGHTS

11.1 Grant of Stock Appreciation Rights .

(a) The Administrator is authorized to grant Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine consistent with the Plan.

(b) A Stock Appreciation Right shall entitle the Holder (or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Administrator may impose. Except as described in (c) below, the exercise price per Share subject to each Stock Appreciation Right shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value on the date the Stock Appreciation Right is granted.

(c) Notwithstanding the foregoing provisions of Section 11.1(b) to the contrary, in the case of a Stock Appreciation Right that is a Substitute Award, the price per share of the shares subject to such Stock Appreciation Right may be less than 100% of the Fair Market Value per share on the date of grant; provided that the excess of: (i) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (ii) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.

11.2 Stock Appreciation Right Vesting .

(a) The period during which the right to exercise, in whole or in part, a Stock Appreciation Right vests in the Holder shall be set by the Administrator and the Administrator may determine that a Stock Appreciation Right may not be exercised in whole or in part for a specified period after it is granted. Such vesting may be based on service with the Company or any Affiliate, or any other criteria selected by the Administrator. At any time after grant of a Stock Appreciation Right, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the period during which a Stock Appreciation Right vests.

(b) No portion of a Stock Appreciation Right which is unexercisable at Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in the applicable Program or Award Agreement or by action of the Administrator following the grant of the Stock Appreciation Right.

11.3 Manner of Exercise . All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the stock administrator of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

(a) A written or electronic notice complying with the applicable rules established by the Administrator stating that the Stock Appreciation Right, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right;

(b) Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act, any other federal, state or foreign securities laws or regulations, the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded or any other applicable law. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on Share certificates and issuing stop-transfer notices to agents and registrars; and

(c) In the event that the Stock Appreciation Right shall be exercised pursuant to this Section 11.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Stock Appreciation Right, as determined in the sole discretion of the Administrator.

11.4 Stock Appreciation Right Term . The term of each Stock Appreciation Right (the “ Stock Appreciation Right Term ”) shall be set by the Administrator in its sole discretion; provided , however , that the term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted. The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Holder has the right to exercise the vested Stock Appreciation Rights, which time period may not extend beyond the expiration date of the Stock Appreciation Right Term. Except as limited by the requirements of Section

409A of the Code and regulations and rulings thereunder, the Administrator may extend the Stock Appreciation Right Term of any outstanding Stock Appreciation Right, and may extend the time period during which vested Stock Appreciation Rights may be exercised, in connection with any Termination of Service of the Holder, and may amend any other term or condition of such Stock Appreciation Right relating to such a Termination of Service.

11.5 Payment . Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 11 shall be in cash, Shares (based on Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.

Article 12

ADDITIONAL TERMS OF AWARDS

12.1 Payment . The Administrator shall determine the methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) or Shares held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker with respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other form of legal consideration acceptable to the Administrator. The Administrator shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Holders. Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

12.2 Tax Withholding . The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holder’s FICA, employment tax or other social security contribution obligation) required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan. The Administrator may in its sole discretion and in satisfaction of the foregoing requirement allow a Holder to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares which may be so withheld or surrendered shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates or such other withholding rates for federal, state, local and foreign income tax and payroll/employment tax purposes that are applicable to such taxable income and that have been determined by the Administrator to avoid adverse accounting consequences. The Administrator

shall determine the fair market value of the Shares, consistent with applicable provisions of the Code and applicable foreign tax regulations, for tax withholding obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.

12.3 Transferability of Awards .

(a) Except as otherwise provided in Section 12.3(b):

(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised, or the shares underlying such Award have been issued, and all restrictions applicable to such shares have lapsed;

(ii) No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Holder or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence; and

(iii) During the lifetime of the Holder, only the Holder may exercise an Award (or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Holder, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Program or Award Agreement, be exercised by his personal representative or by any person empowered to do so under the deceased Holder’s will or under the then applicable laws of descent and distribution.

(b) Notwithstanding Section 12.3(a), the Administrator, in its sole discretion, may determine to permit a Holder to transfer an Award other than an Incentive Stock Option to any one or more Permitted Transferees, subject to the following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Holder (other than the ability to further transfer the Award); and (iii) the Holder and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal, state and foreign securities laws and (C) evidence the transfer.

(c) Notwithstanding Section 12.3(a), if provided in the applicable Award Agreement, a Holder may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Holder and to receive any distribution with respect to any

Award upon the Holder’s death. A beneficiary, legal guardian, legal representative or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder, except to the extent the Plan, the Program and the Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator. If the Holder is married and resides in a community property state, a designation of a person other than the Holder’s spouse as his or her beneficiary with respect to more than 50% of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse. If no beneficiary has been designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to the Holder’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time; provided that the change or revocation is filed with the Administrator prior to the Holder’s death.

12.4 Conditions to Issuance of Shares .

(a) Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Board or the Committee has determined, with advice of counsel, that the issuance of such shares is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded, and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Board or the Committee may require that a Holder make such reasonable covenants, agreements, and representations as the Board or the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements.

(b) All Share certificates delivered pursuant to the Plan and all shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state, or foreign securities or other laws, rules and regulations and the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted, or traded. The Administrator may place legends on any Share certificate or book entry to reference restrictions applicable to the Shares.

(c) The Administrator shall have the right to require any Holder to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.

(d) The Administrator may, in its discretion, issue fractional Shares, pay cash in lieu of fractional Shares, or eliminate fractional Shares by rounding down;

(e) Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule or regulation, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).

12.5 Prohibition on Repricing . Subject to Section 14.2, the Administrator shall not, without the approval of the stockholders of the Company, (i) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per share, or (ii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares. Subject to Section 14.2, the Administrator shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Award to increase the price per share or to cancel and replace an Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award.

12.6 Acceleration Upon Qualifying Terminations of Service Due to Death or Disability . Notwithstanding anything to the contrary in Section 3.4, and except as may otherwise be provided in any applicable Award Agreement or other written agreement entered into between the Company and a Holder, in the event of a Holder’s Termination of Service by reason of such Holder’s death or permanent and total disability (within the meaning of Section 22(e)(3) of the Code), then such Holder’s Awards shall become fully vested and exercisable (if applicable) and all forfeiture restrictions applicable to such Awards shall lapse immediately prior to the Holder’s Termination of Service.

Article 13

ADMINISTRATION

13.1 Administrator . Except as otherwise permitted herein, the Board (or another committee or a subcommittee of the Board assuming the functions of such committee under the Plan) shall administer the Plan with respect to Awards granted to Non-Employee Directors and the Committee shall administer the Plan with respect to all other Awards (except as otherwise permitted herein). The Committee shall consist solely of two or more Directors appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as both a “non-employee director” as defined by Rule 16b-3 of the Exchange Act or any successor rule, an “outside director” for purposes of Section 162(m) of the Code and an “independent director” under the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded; provided that any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 13.l or otherwise provided in any charter of the Committee. Except as may otherwise be provided in any charter of the Committee, appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written or electronic notice to the Board. Vacancies in the Committee may only be filled by the Board. The Committee may delegate its authority hereunder to the extent permitted by Section 13.6.

13.2 Duties and Powers of Committee . It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan, the Program and the Award Agreement, and to adopt such rules for the administration, interpretation and application of the Plan as are not inconsistent therewith, to interpret, amend or revoke any such rules and to amend any Program or Award Agreement; provided that the rights or obligations of the Holder of the Award that is the subject

of any such Program or Award Agreement are not affected adversely by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 14.10. Any such grant or award under the Plan need not be the same with respect to each Holder. Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to (a) matters relating to Awards granted to Non-Employee Directors and (b) matters which under Rule 16b ‑3 under the Exchange Act or any successor rule, or Section 162(m) of the Code, or any regulations or rules issued thereunder, or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded are required to be determined in the s ole discretion of the Committee. Notwithstanding the foregoing, the full Board, acting by a majority of its members in office, shall conduct the general administration of the Plan with respect to Awards granted to Non-Employee Directors.

13.3 Action by the Committee . Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

13.4 Authority of Administrator . Subject to the Company’s memorandum and articles of association, the Committee’s Charter and any specific designation in the Plan, the Administrator has the exclusive power, authority and sole discretion to:

(a) Designate Eligible Individuals to receive Awards;

(b) Determine the type or types of Awards to be granted to each Eligible Individual;

(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any performance criteria, any reload provision, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;

(e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(f) Prescribe the form of each Award Agreement, which need not be identical for each Holder;

(g) Decide all other matters that must be determined in connection with an Award;

(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(i) Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement;

(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan; and

(k) Accelerate wholly or partially the vesting or lapse of restrictions of any Award or portion thereof at any time after the grant of an Award, subject to whatever terms and conditions it selects and Sections 3.4 and 14.2(d); provided , however , that the Administrator shall not have the authority to accelerate the vesting or waive the forfeiture of any Performance-Based Awards.

13.5 Decisions Binding . The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties.

13.6 Delegation of Authority . To the extent permitted by applicable law or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, the Board or Committee may from time to time delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to grant or amend Awards or to take other administrative actions pursuant to Article 13; provided , however , that in no event shall an officer of the Company be delegated the authority to grant awards to, or amend awards held by, the following individuals: (a) individuals who are subject to Section 16 of the Exchange Act, (b) Covered Employees, or (c) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder; provided , further , that any delegation of administrative authority shall only be permitted to the extent it is permissible under Section 162(m) of the Code and applicable securities laws or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 13.6 shall serve in such capacity at the pleasure of the Board and the Committee.

Article 14

MISCELLANEOUS PROVISIONS

14.1 Amendment, Suspension or Termination of the Plan . Except as otherwise provided in this Section 14.1, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee. However, without approval of the Company’s stockholders given within twelve (12) months before or after the action by the Administrator, no action of the Administrator may, except as provided in Section 14.2, (a) increase the limits imposed in Section 3.1 on the maximum number of shares which may be issued under the Plan, or (b) reduce the price per share of any outstanding Option or Stock Appreciation Right granted under the Plan, or (c) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares. Except as provided in Section 14.10, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides. No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and in no event may any Award be granted under the Plan after the tenth (10 ^th ) anniversary of the Effective Date.

14.2 Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events .

(a) In the event of any dividend or other distribution (whether in the form of cash, Common Stock, other securities or other property), recapitalization, reclassification, stock split, reverse stock split, combination or exchange of Shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, liquidation, dissolution, sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or any other change affecting the Shares of the Company’s Common Stock or the share price of the Company’s Common Stock other than an Equity Restructuring, the Administrator shall make equitable adjustments, if any, to reflect such change with respect to (i) the aggregate number and kind of Shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 on the maximum number and kind of Shares which may be issued under the Plan, adjustments of the Award Limit, and adjustments of the manner in which Shares subject to Full Value Awards will be counted); (ii) the number and kind of Shares (or other securities or property) subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iv) the grant or exercise price per share for any outstanding Awards under the Plan. Any adjustment affecting an Award intended as Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code.

(b) In the event of any transaction or event described in Section 14.2(a) or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations or accounting principles, the Administrator, in its sole discretion,

and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

(i) To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Holder’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 14.2 the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Holder’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Holder’s rights had such Award been currently exercisable or payable or fully vested;

(ii) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

(iii) To make adjustments in the number and type of shares of the Company’s stock (or other securities or property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock or Deferred Stock and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future;

(iv) To provide that such Award shall be exercisable or payable or fully vested with respect to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Program or Award Agreement; and

(v) To provide that the Award cannot vest, be exercised or become payable after such event.

(c) In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 14.2(a) and 14.2(b):

(i) The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or

(ii) The Administrator shall make such equitable adjustments, if any, as the Administrator in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 on the maximum

number and kind of shares which may be issued under the Plan, and adjustments of the Award Limit, and adjustments of the manner in which shares subject to Full Value Awards will be counted). The adjustments provided under this Section 14.2(c) shall be nondiscretionary and shall be final and binding on the affected Holder and the Company.

(d) The Administrator may, in its sole discretion, include such further provisions and limitations in any Award, Award Agreement or certificate, as it may deem equitable and in the best interests of the Company, that are not inconsistent with the provisions of the Plan.

(e) With respect to Awards which are granted to Covered Employees and are intended to qualify as Performance-Based Compensation, no adjustment or action described in this Section 14.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause such Award to fail to so qualify as Performance-Based Compensation, unless the Administrator determines that the Award should not so qualify. No adjustment or action described in this Section 14.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Administrator determines that the Award is not to comply with such exemptive conditions.

(f) The existence of the Plan, the Program, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

(g) No action shall be taken under this Section 14.2 which shall cause an Award to fail to comply with Section 409A of the Code or the Treasury Regulations thereunder, to the extent applicable to such Award.

(h) In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the share price of the Common Stock including any Equity Restructuring, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of thirty (30) days prior to the consummation of any such transaction.

(i) Except as expressly provided in the Plan, no Holder shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any

dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award.

14.3 Change in Control

(a) Notwithstanding any other provision of the Plan, except as otherwise set forth in an Award Agreement, in the event of a Change in Control, each outstanding Award shall remain outstanding, or shall be assumed or a Substitute Award shall be provided by the successor corporation, or a parent or Subsidiary of the successor corporation.

(b) Except as otherwise set forth in an Award Agreement, if the Award continues to be outstanding following the effective date of a Change in Control, then in the event of a Holder’s Qualified Termination with the Company or any of its subsidiaries during the two (2) year period following the Change in Control and prior to the full vesting of the Award granted prior to the Change in Control, all outstanding unvested Awards granted to the Holder prior to the Change in Control shall immediately become fully vested and exercisable to the extent permitted by law, notwithstanding any provisions of the Plan or of the applicable Award Agreement to the contrary.

(c) Except as otherwise set forth in an Award Agreement, in the event that the successor corporation, or a parent or Subsidiary of the successor corporation, with respect to the Change in Control transaction refuses to assume or provide a Substitute Award for the Award, the Holder shall have the right to exercise the Award as to all of the shares subject thereto, including shares as to which such Award otherwise would not be exercisable, and the Holder shall have the right to vest in, and received a distribution of, such Award, with respect to all of the shares subject thereto.

(d) If an Award becomes exercisable in lieu of assumption or substitution with a Substitute Award by the successor corporation, or a parent or subsidiary corporation, with respect to a Change in Control transaction, the Administrator shall notify the Holder that the Award shall be fully exercisable for a period of not less than fifteen (15) days from the date of such notice prior to the Change in Control transaction, and the Award shall terminate upon the expiration of such period.

(e) For purposes of this Section 14.3, the Award shall be assumed if, following the Change in Control transaction, the Award confers on the Holder the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control transaction, the consideration (whether in stock, cash, or other securities or property, or a combination thereof) received or to be received for each Share in the Change in Control transaction on the effective date of the Change in Control transaction (and if holders of Shares were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the issued or outstanding Shares); provided, however, that, if such consideration received in the Change in Control transaction was not solely common stock of the successor

corporation or its p arent, the Administrator may, with the consent of the successor corporation or its parent, provide for the consideration to be received upon the exercise, vesting or distribution of the assumed Award, for each S hare subject to the Award, to be solely common stock of th e successor corporation or its p arent equal i n fair market value to the per S hare consideration received by the holders of Shares in the Change in Control transaction.

(f) For the avoidance of doubt, any Awards granted prior to the Effective Time shall not be subject to this Section 14.3 and will be governed by the terms and conditions of their respective Award Agreements.

(g) No action shall be taken under this Section 14.3 which shall cause an Award to fail to comply with Section 409A of the Code or the Treasury Regulations thereunder, to the extent applicable to such Award.

14.4 No Stockholders Rights . Except as otherwise provided herein, a Holder shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Holder becomes the record owner of such Shares.

14.5 Paperless Administration . In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system.

14.6 Effect of Plan upon Other Compensation Plans . The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate. Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish any other forms of incentives or compensation for Employees or Directors of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

14.7 Compliance with Laws . The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable federal, state, local and foreign laws, rules and regulations (including but not limited to state, federal and foreign securities law and margin requirements), the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

14.8 Titles and Headings, References to Sections of the Code or Exchange Act . The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto.

14.9 Governing Law . The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof or of any other jurisdiction.

14.10 Section 409A . To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A of the Code, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Administrator determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Administrator may adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.

14.11 No Rights to Awards . No Eligible Individual or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat Eligible Individuals, Holders or any other persons uniformly.

14.12 Unfunded Status of Awards . The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Affiliate.

14.13 Indemnification . To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such

persons may be entitled pursuant to the Company ’ s memorandum and articles of association , as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

14.14 Relationship to other Benefits . No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

14.15 Expenses . The expenses of administering the Plan shall be borne by the Company and its Affiliates.

14.16 Forfeiture and Clawback Provisions . Pursuant to its general authority to determine the terms and conditions applicable to Awards and the Award Agreements under the Plan, the Administrator shall have the right to provide, in the terms of Awards granted following the Effective Time under the Plan, or to require a Holder of an Award granted following the Effective Time to agree by separate written instrument, that (a) any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Common Stock underlying the Award, must be paid to the Company, and (b) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (i) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (ii) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Administrator or (iii) the Holder incurs a Termination of Service for “cause” (as such term is defined in the sole and absolute discretion of the Committee, or as set forth in a written agreement relating to such Award between the Company and the Holder).

Exhibit 10.2

THE AMENDED AND RESTATED 2013 INCENTIVE AWARD PLAN OF

ALLERGAN plc

Actavis, Inc. (as successor to Watson Pharmaceuticals, Inc.), a Nevada corporation, adopted the 2001 Incentive Award Plan of Watson Pharmaceuticals, Inc. (the “ Original Plan ”), effective as of February 12, 2001 (the “ Effective Date ”), for the benefit of its eligible Employees, Consultants and Directors. The Original Plan was subsequently amended effective as of May 16, 2001, May 19, 2003, and August 4, 2003, May 13, 2005, and November 3, 2006. The Original Plan was amended and restated in its entirety to provide for certain additional types of awards to eligible Employees, Consultants and Directors, effective as of May 4, 2007. The Original Plan was subsequently amended and restated effective as of May 7, 2010 to add Section 3.6, titled “Foreign Holders,” which sets forth certain provisions related to for awards that may be made to eligible Employees, Consultants and Directors outside of the United States. The Original Plan was subsequently amended and restated in its entirety to increase the number of shares available for awards under the Original Plan and to make certain other administrative changes in terms, effective as of March 2, 2011.

Allergan plc (formerly Actavis plc), a public limited company organized under the laws of Ireland, as successor to Actavis, Inc., assumed, amended and restated the Original Plan (as such plan has been amended and restated from time to time) and renamed it “ The 2013 Incentive Award Plan of Actavis plc ” (the “ 2013 Plan ”), incorporating certain other changes in the terms as set forth therein, effective as of October 1, 2013. Allergan plc amended and restated the 2013 Plan with the Board adopting the Amended and Restated 2013 Incentive Award Plan of Actavis plc (the “A&R Plan”) as of July 1, 2014, to be effective as of the consummation of the Company’s merger with Forest Laboratories, Inc., subject to approval of the Plan by the Company’s stockholders within twelve (12) months after the A&R Plan is adopted by the Board. The A&R Plan was approved by the Company’s stockholders on June 5, 2015. Allergan plc amended and restated the A&R Plan with the Board approving this Amended and Restated 2013 Incentive Award Plan of Allergan plc effective as of July 21, 2016.

The purposes of the Plan are as follows:

(1) To provide an additional incentive for Directors, key Employees and Consultants (as such terms are defined below) to further the growth, development and financial success of the Company by personally benefiting through the ownership of Company shares and/or rights which recognize such growth, development and financial success.

(2) To enable the Company to obtain and retain the services of Directors, key Employees and Consultants considered essential to the long range success of the Company by offering them an opportunity to own shares in the Company and/or rights which will reflect the growth, development and financial success of the Company.

ARTICLE I.

DEFINITIONS

1.1. “ Administrator ” shall mean the entity that conducts the general administration of the Plan as provided herein. With reference to the administration of the Plan with respect to Awards granted to Independent Directors, the term “Administrator” shall refer to the Board. With reference to the administration of the Plan with respect to any other Award, the term “Administrator” shall refer to the Committee unless the Board has assumed the authority for administration of the Plan generally as provided in Section 11.1. With reference to the duties of the Committee under the Plan which have been delegated to one or more persons pursuant to Section 11.5, the term “Administrator” shall refer to such person(s) unless the Committee or the Board has revoked such delegation.

1.2. “ Applicable Accounting Standards ” shall mean generally accepted accounting principles in the United States, International Financial Reporting Standards or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.

1.3. “ Award ” shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award, a Dividend Equivalents award, a Deferred Stock award, a Stock Payment award, a Stock Appreciation Right or an Other Cash-Based Award, which may be awarded or granted under the Plan (collectively, “ Awards ”).

1.4. “ Award Agreement ” shall mean a written or electronic agreement executed by an authorized officer of the Company and the Holder which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.

1.5. “ Award Limit ” shall mean five hundred thousand (500,000) shares of Common Stock, as adjusted pursuant to Section 12.3; provided, however, that each share of Common Stock subject to an Award shall be counted as one share against the Award Limit.

1.6. “ Board ” shall mean the Board of Directors of the Company.

1.7. “ Change in Control ” shall mean the occurrence of any of the following:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “ Person ”)), (i) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of ordinary shares of the Company which, when added to the common stock beneficially owned by such Person, represents more than fifty percent (50%) of either (A) the total fair market value of the then outstanding stock of the Company (the “ Outstanding Company Shares ”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Company Voting Securities ”), or (ii) during any 12-month period, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of securities of the Company representing fifty percent (50%) or more of the Outstanding Company Voting Securities; provided, however, that for purposes of this subsection (a), the following acquisitions of securities of the Company shall not constitute a Change of Control: (V) any acquisition directly from the Company, (W) any acquisition by the Company, (X) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (Y) any acquisition made by a Person who is eligible under the provisions of Rule 13d-1 under the Exchange Act as in effect on the date hereof to report such acquisition on Schedule 13G, or (Z) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of Section 1.7(c) below; or

(b) Individuals who, as of July 1, 2014, constitute the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided, however, that any person becoming a director subsequent to such date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such person whose initial assumption of office as a member of the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all (defined as more than 50% of the total gross fair market value) of the assets of the Company (a “ Business Combination ”), in each case unless, following such Business Combination, (i) Persons who were the beneficial owners, respectively, of the Outstanding Company Ordinary Shares and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries), (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or

indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing such Business Combination.

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any portion of an Award that provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A.

The Committee shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided , that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

1.8. “Closing” shall mean the consummation of the Company’s merger with Forest Laboratories, Inc.

1.9. “ Closing Date ” shall mean July 1, 2014.

1.10. “ Code ” shall mean the U.S. Internal Revenue Code of 1986, as amended.

1.11. “ Committee ” shall mean the Compensation Committee of the Board, or another committee or subcommittee of the Board, appointed as provided in Section 11.1.

1.12. “ Common Stock ” shall mean the ordinary shares of the Company, par value $0.0001 per share.

1.13. “ Company ” shall mean Allergan plc, a public limited company organized under the laws of Ireland.

1.14. “ Consultant ” shall mean any consultant or adviser if: (a) the consultant or adviser renders bona fide services to the Company or any Subsidiary; (b) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities; and (c) the consultant or adviser is a natural person who has contracted directly with the Company or Subsidiary to render such services.

1.15. “ Deferred Stock ” shall mean rights to receive Common Stock awarded under Section 8.4 of the Plan.

1.16. “ Director ” shall mean a member of the Board.

1.17. “ Disability ” shall mean unless otherwise defined in an employment agreement between the Holder and the Company, total and permanent disability in accordance with the Company’s long-term disability plan, as determined by the Committee.

1.18. “ Dividend Equivalent ” shall mean a right to receive the equivalent value (in cash or Common Stock) of dividends paid on Common Stock, awarded under Section 8.2 of the Plan.

1.19. “ DRO ” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder.

1.20. “ Employee ” shall mean any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company, or of any corporation which is a Subsidiary.

1.21. “ Equity Restructuring ” shall mean a nonreciprocal transaction between the Company and its shareholders, such as a share dividend, share split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of shares (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per-share value of the Common Stock underlying outstanding Awards.

1.22. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.23. “ Fair Market Value ” means, as of any date, the value of a share of Common Stock determined as follows:

(a) If the Common Stock is listed on any established stock exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market) or any national market system, including without limitation any market system of The NASDAQ Stock Market, the value of a share of Common Stock shall be the closing sales price for a share of Common Stock as quoted on such exchange or system for such date, or if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Common Stock on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(b) If the Common Stock is regularly quoted by a recognized securities dealer but closing sales prices are not reported, the value of a share of Common Stock shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a share of Common Stock on the date in question, the high bid and low asked prices for a share of Common Stock on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(c) If the Common Stock is neither listed on an established stock exchange or a national market system nor regularly quoted by a recognized securities dealer, the value of a share of Common Stock shall be established by the Administrator in good faith.

1.24. “ Forest Laboratories Plan ” shall mean the Forest Laboratories, Inc. Equity Incentive Plan (as amended August 15, 2013) previously approved by the shareholders of Forest Laboratories, Inc., a Delaware corporation.

1.25. “ Full Value Award ” shall mean any Award other than an Option or Stock Appreciation Right.

1.26. “ Holder ” shall mean a person who has been granted or awarded an Award.

1.27. “ Incentive Stock Option ” shall mean an option which conforms to the applicable provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the Administrator.

1.28. “ Independent Director ” shall mean a member of the Board who is not an Employee.

1.29. “ Legacy Actavis Participants ” shall mean an Employee, Consultant or Director who provided services to Actavis, Inc. and/or its Subsidiaries immediately prior to May 16, 2013.

1.30. “ Legacy Forest Laboratories Participants ” shall mean an Employee, Consultant or Director who provided services to Forest Laboratories, Inc. and/or its subsidiaries immediately prior to the Closing Date.

1.31. “ Legacy Warner Chilcott Participants ” shall mean an Employee, Consultant or Director who provided services to Warner Chilcott plc and/or its subsidiaries immediately prior to October 1, 2013.

1.32. “ New Actavis Participants ” shall mean an Employee, Consultant or Director who commenced providing services to the Company and/or its Subsidiaries on or following October 1, 2013, excluding any Legacy Actavis Participant, Legacy Forest Laboratories Participant or Legacy Warner Chilcott Participant.

1.33. “ Non-Qualified Stock Option ” shall mean an Option which is not designated as an Incentive Stock Option by the Administrator.

1.34. “ Option ” shall mean a share option granted under Article IV of the Plan. An Option granted under the Plan shall, as determined by the Administrator, be either a Non-Qualified Stock Option or an Incentive Stock Option; provided , however , that Options granted to Independent Directors and Consultants shall be Non-Qualified Stock Options.

1.35. “ Other Cash-Based Award ” means an Award granted under Section 8.6 of the Plan.

1.36. “ Performance Criteria ” shall mean the criteria (and adjustments) that the Committee selects for an Award, determined as follows

(a) The Performance Criteria that shall be used pursuant to this Plan are limited to any one or more of the following business criteria: (i) net earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization); (ii) gross or net sales or revenue; (iii) net income (either before or after taxes); (iv) adjusted net income; (v) operating income, earnings or profit; (vi) cash flow (including, but not limited to, operating cash flow and free cash flow); (vii) return on assets; (viii) return on capital; (ix) return on shareholders’ equity; (x) total shareholder return (either absolute or relative to a peer group of companies); (xi) return on sales; (xii) gross or net profit or operating margin; (xiii) costs (including, but not limited to, cost reductions or savings); (xiv) funds from operations; (xv) expenses; (xvi) working capital; (xvii) earnings per share; (xviii) adjusted earnings per share; (xix) price per share of Common Stock; (xx) regulatory body approval for commercialization of a product; (xxi) implementation or completion of critical projects; (xxii) market share; and (xxiii) economic value, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators or indices.

(b) The Committee may, in its sole discretion, provide that one or more objectively determinable adjustments shall be made to one or more of the Performance Criteria. Such adjustments may include one or more of the following: (i) items related to a change in accounting principle; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquired by the Company during an applicable performance period; (vii) items related to the disposal of a business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a business under Applicable Accounting Standards; (ix) items attributable to any stock dividend, stock split, combination or exchange of stock occurring during an applicable performance period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Company’s core, on-going business activities; (xiv) items related to acquired in-process research and development; (xv) items relating to changes in tax laws; (xvi) items relating to major licensing or partnership arrangements; (xvii) items relating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractual settlements; or (xix) items relating to any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business conditions. For all Awards intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code, such determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.

1.37. “ Plan ” shall mean the Amended and Restated 2013 Incentive Award Plan of Allergan plc, as may be further amended and/or restated from time to time.

1.38. “ Qualified Substitute Award ” shall mean an Award which has substantially the same value and is subject to terms and conditions, including vesting, no less favorable to the Holder than the vesting and other terms and conditions for which such Award was substituted, and which Award provides for immediate vesting upon a Qualified Termination of the Holder’s employment by the successor employer within the two (2) year period following the date of grant of such Qualified Substitute Award.

1.39. “ Qualified Termination ” shall mean (i) a termination by the Company of a Holder’s employment with the Company or any of its subsidiaries for any reason other than the Holder’s death, Disability, willful misconduct or activity deemed detrimental to the interests of the Company; or (ii) a resignation by the Holder from employment with the Company or any of its subsidiaries with good reason, which includes (i) a substantial adverse change in the nature or status of the Holder’s responsibilities, (ii) a reduction in the Holder’s base salary and/or levels of entitlement or participation under any incentive plan or employee benefit program without the substitution or implementation of an alternative arrangement of substantially equal value, or (iii) the Company requiring the Holder to relocate to a work location more than fifty (50) miles from his work location prior to the Change in Control.

1.40. “ Restricted Stock ” shall mean Common Stock awarded under Article VII of the Plan.

1.41. “ Restricted Stock Units ” shall mean rights to receive Common Stock awarded under Section 8.5 of the Plan.

1.42. “ Rule 16b-3 ” shall mean Rule 16b-3 promulgated under the Exchange Act, as such Rule may be amended from time to time.

1.43. “ Section 162(m) Participant ” shall mean any key Employee designated by the Administrator as a key Employee whose compensation for the fiscal year in which the key Employee is so designated or a future fiscal year may be subject to the limit on deductible compensation imposed by Section 162(m) of the Code.

1.44. “ Securities Act ” shall mean the Securities Act of 1933, as amended.

1.45. “ Stock Appreciation Right ” shall mean a stock appreciation right granted under Article IX of the Plan.

1.46. “ Stock Payment ” shall mean: (a) a payment in the form of shares of Common Stock, or (b) an option or other right to purchase shares of Common Stock, as part of a deferred compensation arrangement, made in lieu of all or any portion of the compensation, including without limitation, salary, bonuses and commissions, that otherwise would become payable to a key Employee, Independent Director or Consultant in cash, awarded under Section 8.3 of the Plan.

1.47. “ Subsidiary ” shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

1.48. “ Substitute Award ” shall mean an Award granted under this Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock; provided , however , that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.

1.49. “ Termination of Consultancy ” shall mean the time when the engagement of a Holder as a Consultant to the Company or a Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, by resignation, discharge, death or retirement, but excluding terminations where there is a simultaneous commencement of employment with the Company or any Subsidiary, or any parent thereof. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Consultancy, including, but not by way of limitation, the question of whether a Termination of Consultancy resulted from a discharge for good cause, and all questions of whether a particular leave of absence constitutes a Termination of Consultancy. Notwithstanding any other provision of the Plan, the Company or any Subsidiary has an absolute and unrestricted right to terminate a Consultant’s service at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in writing.

1.50. “ Termination of Directorship ” shall mean the time when a Holder who is an Independent Director ceases to be a Director for any reason, including, but not by way of limitation, a termination by resignation, removal, failure to be elected, death or retirement. The Board, in its sole and absolute discretion, shall determine the effect of all matters and questions relating to Termination of Directorship with respect to Independent Directors.

1.51. “ Termination of Employment ” shall mean the time when the employee-employer relationship between a Holder and the Company or any Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement; but excluding: (a) terminations where there is a simultaneous reemployment or continuing employment of a Holder by the Company or any Subsidiary, or any parent thereof, (b) at the discretion of the Administrator, terminations which result in a temporary severance of the employee-employer relationship, and (c) at the discretion of the Administrator, terminations which are followed by the simultaneous establishment of a consulting relationship by the Company or a Subsidiary, or any parent thereof, with the former employee. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not by way of limitation, the question of whether a Termination of Employment resulted from a discharge for good cause, and all questions of whether a particular leave of absence constitutes a Termination of Employment; provided , however , that, with respect to Incentive Stock Options, unless otherwise determined by the Administrator in its discretion, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Employment if, and to the extent that, such leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section.

1.52. “ Warner Chilcott Plan ” shall mean the Warner Chilcott Equity Incentive Plan previously approved by the shareholders of Warner Chilcott plc, a public limited company organized under the laws of Ireland.

ARTICLE II.

SHARES SUBJECT TO PLAN

2.1. Shares Subject to Plan.

(a) The shares of stock subject to Awards shall be Common Stock. Subject to adjustment as provided in Section 12.3, the aggregate number of such shares of Common Stock which may be issued pursuant to Awards under the Plan after December 31, 2010 shall not exceed (i) 8,241,885 shares, representing the shares of stock authorized for issuance under the Original Plan as of December 31, 2010, plus any shares of stock that after December 31, 2010, were added back under the Original Plan, or may be added back to the Plan, in accordance with the terms set forth in Section 2.2 below (collectively, the “ Original Shares ”), plus (ii) 1,269,340 shares, which were assumed under the Warner Chilcott Plan (the “ Warner Chilcott Shares ”), plus (iii) 7,157,687 shares, which were assumed under the Forest Laboratories Plan, excluding any awards granted under the Forest Laboratories Plan prior to the Closing Date which are conditioned upon the Closing (the “ Forest Laboratories Shares ”). On and after the Closing Date, (x) Original Shares shall be available for Awards granted to Legacy Actavis Participants and New Actavis Participants, (y) Warner Chilcott Shares shall be available for Awards granted to Legacy Warner Chilcott Participants and New Actavis Participants and (z) Forest Laboratories Shares shall be available for Awards granted to Legacy Forest Employees and New Actavis Participants . The shares of Common Stock issuable upon exercise of such Options or rights or upon any such Awards may be either previously authorized but unissued shares or treasury shares. For each Original Share or Warner Chilcott Share granted, the aggregate number of shares of Common Stock available for issuance under the Plan pursuant to this Section 2.1 shall be reduced by one share. For each Forest Laboratories Share issuable upon the exercise of an Option or the vesting of a Stock Appreciation Right or Dividend Equivalent award granted under the Plan, the aggregate number of shares of Common Stock available for issuance under the Plan shall be decreased by one share. However, for all other Forest Laboratories Shares granted, the aggregate number of shares of Common Stock available for issuance under the Plan shall be reduced by 2.45 shares.

(b) The maximum number of shares which may be subject to Awards granted under the Plan to any individual in any fiscal year of the Company shall not exceed the Award Limit. To the extent required by Section 162(m) of the Code, shares subject to Awards which are canceled continue to be counted against the Award Limit.

2.2. Add-Backs . In the event that under the Original Plan or under this Plan, (a) an Award expires or is canceled, forfeited, settled in cash or otherwise terminated without delivery to the Holder of all or a portion of the shares of Common Stock subject to the Award (including on payment in shares on exercise of a Stock Appreciation Right), such shares shall, to the extent of such cancellation, forfeiture, expiration, cash settlement or termination, will again be available for Awards; (b) shares of Common Stock that have been issued in connection with any Award (e.g., Restricted Stock) that is canceled, forfeited, or settled in cash such that those shares are returned to the Company, such shares, to the extent of such cancellation, forfeiture, or cash settlement will again be available for Awards; and (c) shares of Common Stock are withheld or surrendered in payment of the exercise price or taxes relating to any Award, the shares tendered or withheld will again be available for Awards; provided, however , that, no shares shall become available pursuant to this Section 2.2 to the extent that (x) the transaction resulting in the return of shares occurs more than ten years after the date of the most recent shareholder approval of the Plan, or (y) such return of shares would constitute a “material revision” of the Plan subject to shareholder approval under then applicable rules of the New York Stock Exchange (or any other applicable exchange or quotation system). For all shares that become available again for Awards, the aggregate number of shares of Common Stock available for issuance under the Plan pursuant to Section 2.1 shall be increased by one share, with the exception of Forest Laboratories Shares other than those which were issuable upon the exercise of an Option or the vesting of a Stock Appreciation Right or Dividend Equivalent award granted under the Plan, for which the aggregate number of shares of Common Stock available for issuance under the Plan shall be increased by 2.45 shares. Notwithstanding the provisions of this Section 2.2, no shares of Common Stock may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code. To the extent that Original Shares underlying an Award are again available for Awards pursuant to this Section 2.2, such Original Shares shall be used for Awards granted to Legacy Actavis Participants or New Actavis Participants. To the extent that Warner Chilcott Shares underlying an Award are again available for Awards pursuant to this Section 2.2, such Warner Chilcott Shares shall be used for Awards granted to Legacy Warner Chilcott Participants or New Actavis Participants. To the extent that Forest Laboratories Shares underlying an Award are again available for Awards pursuant to this Section 2.2, such Forest Laboratories Shares shall be used for Awards granted to Legacy Forest Participants or New Actavis Participants, as described in Section 4.1 of this Agreement. The Original Shares, Warner Chilcott Shares and Forest Laboratories Shares shall be used for purposes of the Plan in accordance with this Section 2.2 and the applicable listing standards and rules issued by the New York Stock Exchange (or any other applicable exchange or quotation system).

2.3 Substitute Awards . Shares of Common Stock issued or issuable pursuant to Substitute Awards shall not be counted against, or reduce, the aggregate number of shares authorized for grant under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by its shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not be counted against, or reduce, the aggregate number of shares authorized for grant under the Plan; provided , that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Subsidiaries immediately prior to such acquisition or combination. The Warner Chilcott Shares and Forest Laboratories Shares shall be used for purposes of the Plan in accordance with this Section 2.3 and the applicable listing standards and rules issued by the New York Stock Exchange (or any other applicable exchange or quotation system).

ARTICLE III.

GRANTING OF AWARDS

3.1. Award Agreement . Each Award shall be evidenced by an Award Agreement. Award Agreements evidencing Awards intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.

3.2. Provisions Applicable to Section 162(m) Participants .

(a) The Committee, in its discretion, may determine whether an Award is to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code.

(b) Notwithstanding anything in the Plan to the contrary, the Committee may grant any Award to a Section 162(m) Participant, including a Restricted Stock award, a Restricted Stock Unit award, a Dividend Equivalent award, a Deferred Stock award or a Stock Payment award, the restrictions with respect to which lapse upon the attainment of performance goals which are related to one or more of the Performance Criteria and any Award described in Article VIII that vests or becomes exercisable or payable upon the attainment of performance goals which are related to one or more of the Performance Criteria.

(c) To the extent necessary to comply with the performance-based compensation requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted under Articles VII and VIII which may be granted to one or more Section 162(m) Participants, no later than ninety (90) days following the commencement of any fiscal year in question or any other designated fiscal period or period of service (or such other time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (i) designate one or more Section 162(m) Participants, (ii) select the Performance Criteria applicable to the fiscal year or other designated fiscal period or period of service, (iii) establish the various performance targets, in terms of an objective formula or standard, and amounts of such Awards, as applicable, which may be earned for such fiscal year or other designated fiscal period or period of service, and (iv) specify the relationship between Performance Criteria and the performance targets and the amounts of such Awards, as applicable, to be earned by each Section 162(m) Participant for such fiscal year or other designated fiscal period or period of service. Following the completion of each fiscal year or other designated fiscal period or period of service, the Committee shall certify in writing whether the applicable performance targets have been achieved for such fiscal year or other designated fiscal period or period of service. In determining the amount earned by a Section 162(m) Participant, the Committee shall have the right to reduce (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the fiscal year or other designated fiscal period or period of service.

(d) The maximum value of a cash payment made under an Other Cash-Based Award which may be granted under the Plan with respect to any fiscal year of the Company to any Section 162(m) Participant shall be $50,000,000.

(e) Furthermore, notwithstanding any other provision of the Plan, any Award which is granted to a Section 162(m) Participant and is intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall be subject to any additional limitations set forth in Section 162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued thereunder that are requirements for qualification as performance-based compensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent necessary to conform to such requirements.

3.3. Limitations Applicable to Section 16 Persons . Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

3.4. Consideration . In consideration of the granting of an Award under the Plan, the Holder shall agree, in the Award Agreement, to remain in the employ of (or to consult for or to serve as an Independent Director of, as applicable) the Company or any Subsidiary for a period of at least one year (or such shorter period as may be fixed in the Award Agreement or by action of the Administrator following grant of the Award) after the Award is granted (or, in the case of an Independent Director, until the next annual meeting of shareholders of the Company).

3.5. At-Will Employment . Nothing in the Plan or in any Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of, or as a Consultant for, the Company or any Subsidiary, or as a Director of the Company, or shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written employment agreement between the Holder and the Company and any Subsidiary. Participation by each Holder in the Plan shall be voluntary and nothing in the Plan shall be construed as mandating that any Employee, Independent Director or Consultant shall participate in the Plan.

3.6. Foreign Holders . Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and any Subsidiary of the Company operate or have Employees, Independent Directors or Consultants, or in order to comply with the requirements of any foreign stock exchange or applicable laws, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by the Plan; (b) determine which Employees, Independent Directors or Consultants outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Employees, Independent Directors or Consultants outside the United States to comply with applicable foreign laws or listing requirements of any such foreign stock exchange; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Article II or expand the classes of persons to whom Awards may be granted under the Plan; and (e) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any such foreign stock exchange. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Code, the Exchange Act, the Securities Act or any other securities law or governing statute or any other applicable law.

ARTICLE IV.

GRANTING OF OPTIONS TO EMPLOYEES,

CONSULTANTS AND INDEPENDENT DIRECTORS

4.1. Eligibility . Any Employee or Consultant selected by the Administrator pursuant to Section 4.4(a)(i) shall be eligible to be granted an Option. Each Independent Director of the Company shall be eligible to be granted Options at the times and in the manner set forth in Section 4.5.

4.2. Disqualification for Stock Ownership . No person may be granted an Incentive Stock Option under the Plan if such person, at the time the Incentive Stock Option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any then existing Subsidiary or parent corporation (within the meaning of Section 422 of the Code) unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code.

4.3. Qualification of Incentive Stock Options . No Incentive Stock Option shall be granted to any person who is not an Employee.

4.4. Granting of Options to Employees and Consultants .

(a) The Administrator shall from time to time, in its absolute discretion, and, subject to applicable limitations of the Plan:

(i) Determine which Employees are key Employees and select from among the key Employees or Consultants (including Employees or Consultants who have previously received Awards under the Plan) such of them as in its opinion should be granted Options;

(ii) Subject to the Award Limit, determine the number of shares to be subject to such Options granted to the selected key Employees or Consultants;

(iii) Subject to Section 4.3, determine whether such Options are to be Incentive Stock Options or Non-Qualified Stock Options and whether such Options are to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code; and

(iv) Determine the terms and conditions of such Options, consistent with the Plan; provided , however , that the terms and conditions of Options intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall include, but not be limited to, such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code.

(b) Upon the selection of a key Employee or Consultant to be granted an Option, the Administrator shall instruct the Secretary of the Company to issue the Option and may impose such conditions on the grant of the Option as it deems appropriate.

(c) Any Incentive Stock Option granted under the Plan may be modified by the Administrator, with the consent of the Holder, to disqualify such Option from treatment as an “incentive stock option” under Section 422 of the Code.

4.5. Granting of Options to Independent Directors . The Board shall from time to time, in its absolute discretion, and subject to applicable limitations of the Plan:

(a) Select from among the Independent Directors (including Independent Directors who have previously received Options under the Plan) such of them as in its opinion should be granted Options;

(b) Subject to the Award Limit, determine the number of shares to be subject to such Options granted to the selected Independent Directors; and

4.6. Options in Lieu of Cash Compensation . Options may be granted under the Plan to Employees and Consultants in lieu of cash bonuses which would otherwise be payable to such Employees and Consultants, and to Independent Directors in lieu of directors’ fees which would otherwise be payable to such Independent Directors, pursuant to such policies which may be adopted by the Administrator from time to time.

ARTICLE V.

TERMS OF OPTIONS

5.1. Option Price . The price per share of the shares subject to each Option granted to Employees, Independent Directors and Consultants shall be set by the Administrator; provided , however , that:

(a) In the case of Options intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code, such price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Option is granted;

(b) In the case of Incentive Stock Options such price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code);

(c) In the case of Incentive Stock Options granted to an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation thereof (within the meaning of Section 422 of the Code), such price shall not be less than 110% of the Fair Market Value of a share of Common Stock on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code); and

(d) In the case of Non-Qualified Stock Options, such price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the Option is granted.

5.2. Option Term . The term of an Option granted to an Employee, Independent Director or Consultant shall be set by the Administrator in its discretion; provided, however , that the term shall not be more than ten (10) years from the date the Option is granted, or five (5) years from the date the Option is granted if the Option is an Incentive Stock Option granted to an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary Corporation or parent corporation thereof (as defined in Section 424(e) of the Code). Except as limited by requirements of Section 422 of the Code and regulations and rulings thereunder applicable to Incentive Stock Options, the Administrator may extend the term of any outstanding Option in connection with any Termination of Employment, Termination of Directorship or Termination of Consultancy of the Holder up to a maximum of ten (10) years from the date the Option is granted, or amend any other term or condition of such Option relating to such a Termination of Employment, Termination of Directorship or Termination of Consultancy. Notwithstanding any of the forgoing, in the event the term of an Option would expire at a time when trading in shares of the Common Stock by Holder is prohibited by law or the Company’s insider trading policy, the term of such Option shall automatically be extended, subject to a maximum of ten (10) years from the date the Option is granted and any requirements of Section 422 of the Code, to the 30 ^th day following the expiration of any applicable trading prohibition.

5.3. Option Vesting .

(a) The period during which the right to exercise, in whole or in part, an Option granted to an Employee, Independent Director or a Consultant vests in the Holder shall be set by the Administrator and the Administrator may determine that an Option may not be exercised in whole or in part for a specified period after it is granted. At any time after grant of an Option, the Administrator may, in its sole and absolute discretion and subject to whatever terms and conditions it selects, accelerate the period during which an Option granted to an Employee, Independent Director or Consultant vests.

(b) No portion of an Option granted to an Employee, Independent Director or Consultant which is unexercisable at Termination of Employment, Termination of Directorship or Termination of Consultancy, as applicable, shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in the Award Agreement or by action of the Administrator following the grant of the Option.

(c) To the extent that the aggregate fair market value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any Subsidiary or parent corporation thereof, within the meaning of Section 424 of the Code, exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The rule set forth in the preceding sentence shall be applied by taking Options and other “incentive stock options” into account in the order in which they were granted. For purposes of this Section 5.3(c), the fair market value of stock shall be determined as of the time the Option or other “incentive stock options” with respect to such stock is granted.

5.4. Substitute Awards . Notwithstanding the foregoing provisions of this Article V to the contrary, in the case of an Option that is a Substitute Award, the price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant, provided , that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof, does not exceed the excess of: (c) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (d) the aggregate exercise price of such shares.

5.5. Substitution of Stock Appreciation Rights . The Administrator may provide in the Award Agreement evidencing the grant of an Option that the Administrator, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option, subject to the provisions of Section 9.2; provided , that such Stock Appreciation Right shall be exercisable with respect to the same number of shares of Common Stock for which such substituted Option would have been exercisable and at the Option exercise price per share.

ARTICLE VI.

EXERCISE OF OPTIONS

6.1. Partial Exercise . An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional shares and the Administrator may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of shares.

6.2. Manner of Exercise . All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, or such other person or entity designated by the Board, or his, her or its office, as applicable:

(a) A written (or electronic) notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option;

(b) Such representations and documents as the Administrator, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal or state securities laws or regulations or applicable law. The Administrator may, in its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;

(c) In the event that the Option shall be exercised pursuant to Section 12.1 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option; and

(d) Full cash payment to the Secretary of the Company for the shares with respect to which the Option, or portion thereof, is exercised. However, the Administrator may, in its discretion, (i) allow payment, in whole or in part, through the delivery of shares of Common Stock owned by the Holder, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof; (ii) allow payment, in whole or in part, through the surrender of shares of Common Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof; (iii) allow payment, in whole or in part, through the delivery of property of any kind which constitutes good and valuable consideration; (iv) allow payment, in whole or in part, through the delivery of a notice that the Holder has placed a market sell order with a broker with respect to shares of Common Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price, provided , that payment of such proceeds is then made to the Company upon settlement of such sale; or (v) allow payment through any combination of the consideration provided in the foregoing paragraphs (i), (ii), (iii) and (iv); provided , however , that the payment in the manner prescribed in the preceding paragraphs shall not be permitted to the extent that the Administrator determines that payment in such manner shall result in an extension or maintenance of credit, an arrangement for the extension of credit, or a renewal or an extension of credit in the form of a personal loan to or for any Director or executive officer of the Company that is prohibited by Section 13(k) of the Exchange Act or other applicable law.

6.3. Conditions to Issuance of Stock Certificates . The Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed;

(b) The completion of any registration or other qualification of such shares under any state or federal law, or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body which the Administrator shall, in its absolute discretion, deem necessary or advisable;

(c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;

(d) The lapse of such reasonable period of time following the exercise of the Option as the Administrator may establish from time to time for reasons of administrative convenience; and

(e) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax, which in the discretion of the Administrator may be in the form of consideration used by the Holder to pay for such shares under Section 6.2(d).

6.4. Rights as Shareholders . Holders shall not be, nor have any of the rights or privileges of, shareholders of the Company in respect of any shares purchasable upon the exercise of any part of an Option unless and until certificates representing such shares have been issued by the Company to such Holders.

6.5. Ownership and Transfer Restrictions . The Administrator, in its absolute discretion, may impose such restrictions on the ownership and transferability of the shares purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the respective Award Agreement and may be referred to on the certificates evidencing such shares. The Holder shall give the Company prompt notice of any disposition of shares of Common Stock acquired by exercise of an Incentive Stock Option within (a) two years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the transfer of such shares to such Holder.

6.6. Additional Limitations on Exercise of Options . Holders may be required to comply with any timing or other restrictions with respect to the settlement or exercise of an Option, including a window-period limitation, as may be imposed in the discretion of the Administrator.

ARTICLE VII.

AWARD OF RESTRICTED STOCK

7.1. Eligibility . Subject to the Award Limit, Restricted Stock may be awarded to any Employee whom the Administrator determines is a key Employee, or any Independent Director or any Consultant, whom the Administrator determines should receive such an Award.

7.2. Award of Restricted Stock .

(a) The Administrator may from time to time, in its absolute discretion:

(i) Determine which Employees are key Employees, and select from among the key Employees, Independent Directors or Consultants (including Employees, Independent Directors or Consultants who have previously received other Awards under the Plan) such of them as in its opinion should be awarded Restricted Stock; and

(ii) Determine the purchase price, if any, and other terms and conditions applicable to such Restricted Stock, consistent with the Plan.

(b) The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided , however , that such purchase price shall be no less than the par value of the Common Stock to be purchased. In all cases, legal consideration shall be required for each issuance of Restricted Stock.

(c) Upon the selection of an Employee, Independent Director or Consultant to be awarded Restricted Stock, the Administrator shall instruct the Secretary of the Company to issue such Restricted Stock and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate.

7.3. Rights as Shareholders . Subject to Section 7.4, upon delivery of the shares of Restricted Stock to the escrow holder pursuant to Section 7.6, the Holder shall have, unless otherwise provided by the Administrator, all the rights of a shareholder with respect to said shares, subject to the restrictions in his or her Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the shares; provided , however , that, in the discretion of the Administrator, any dividends or distributions with respect to the Common Stock shall be subject to the restrictions set forth in Section 7.4. In addition, with respect to a share of Restricted Stock with performance-based vesting, dividends which are paid prior to vesting shall only be paid out to the Holder to the extent that the performance-based vesting conditions are subsequently satisfied and the share of Restricted Stock vests.

7.4. Restriction . All shares of Restricted Stock issued under the Plan (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in the terms of each individual Award Agreement, be subject to such restrictions as the Administrator shall provide, which restrictions may include, without limitation, restrictions concerning voting rights and transferability and restrictions based on duration of employment, directorship or consultancy with the Company, or any Subsidiary, or any parent thereof, Company performance and individual performance, or any one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Administrator. By action taken after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may determine to be appropriate, and except with respect to shares of Restricted Stock granted to Section 162(m) Participants, remove any or all of the restrictions imposed by the terms of the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire. If no consideration was paid by the Holder upon issuance, a Holder’s rights in unvested Restricted Stock shall lapse, and such Restricted Stock shall be surrendered to the Company without consideration (or may be redeemed or acquired by the Company for no consideration), upon Termination of Employment, Termination of Directorship, or Termination of Consultancy, as applicable; provided , however , that the Administrator in its sole and absolute discretion may provide that such rights shall not lapse in the event of a Termination of Employment, Termination of Directorship or Termination of Consultancy, as applicable, following a “change of ownership or control” (within the meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because of the

Holder’s death or Disability; and, provided , further , the Administrator in its sole and absolute discretion may provide that no such lapse or surrender shall occur in the event of a Termination of Employment, Termination of Directorship, or Termination of Consultancy , as applicable, without cause or following any Change in Control or because of the Holder’s retirement, or otherwise (provided that, in the case of shares of Restricted Stock granted to Section 162(m) Participants that are intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code, such shares shall continue to be subject to the applicable Performance Criteria following such Termination of Employment, Termination of Directorship, or Termination of Consultancy).

7.5. Repurchase of Restricted Stock . The Administrator shall provide in the terms of each individual Award Agreement that the Company shall have the right to repurchase or redeem from the Holder the Restricted Stock then subject to restrictions under the Award Agreement immediately upon a Termination of Employment, Termination of Directorship, or Termination of Consultancy, as applicable, at a cash price per share equal to the price paid by the Holder for such Restricted Stock; provided , however , that the Administrator in its sole and absolute discretion may provide that no such right of repurchase or redemption shall exist in the event of a Termination of Employment, Termination of Directorship or Termination of Consultancy, as applicable, following a “change of ownership or control” (within the meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because of the Holder’s death or Disability; and, provided , further , that, except with respect to shares of Restricted Stock granted to Section 162(m) Participants that is intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code, the Administrator in its sole and absolute discretion may provide that no such right of repurchase shall exist in the event of a Termination of Employment, Termination of Directorship, or Termination of Consultancy, as applicable, without cause or following any Change in Control or because of the Holder’s retirement, or otherwise.

7.6. Escrow . The Secretary of the Company or such other escrow holder as the Administrator may appoint shall retain physical custody of each certificate representing Restricted Stock until all of the restrictions imposed under the Award Agreement with respect to the shares evidenced by such certificate expire or shall have been removed.

7.7. Legend . In order to enforce the restrictions imposed upon shares of Restricted Stock hereunder, the Administrator shall cause a legend or legends to be placed on certificates representing all shares of Restricted Stock that are still subject to restrictions under Award Agreements, which legend or legends shall make appropriate reference to the conditions imposed thereby.

7.8. Section 83(b) Election . If a Holder makes an election under Section 83(b) of the Code, or any successor section thereto, to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a copy of such election to the Company immediately after filing such election with the Internal Revenue Service.

ARTICLE VIII.

DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS,

RESTRICTED STOCK UNITS

8.1. Eligibility . Subject to the Award Limit, one or more Dividend Equivalent awards, Deferred Stock awards, Stock Payment awards, Restricted Stock Unit awards and/or Other Cash-Based Awards may be granted to any Employee whom the Administrator determines is a key Employee, or any Independent Director or any Consultant, whom the Administrator determines should receive such an Award.

8.2. Dividend Equivalents .

(a) Any key Employee, Independent Director or Consultant selected by the Administrator may be granted Dividend Equivalents based on the dividends declared on the Common Stock, to be credited as of dividend record dates, during the period between the date an Award is granted, and the date such Award vests, is exercised, is distributed, terminates or expires, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Administrator. In addition, Dividend Equivalents with respect to an Award with performance-based vesting that are based on dividends paid prior to the vesting of such Award shall only be paid out to the Holder to the extent that the performance-based vesting conditions are subsequently satisfied and the Award vests.

(b) Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights.

8.3. Stock Payments . Any key Employee, Independent Director or Consultant selected by the Administrator may receive Stock Payments in the manner determined from time to time by the Administrator. The number of shares shall be determined by the Administrator and may be based upon the Performance Criteria or other specific performance criteria determined appropriate by the Administrator, determined on the date such Stock Payment is made or on any date thereafter.

8.4. Deferred Stock . Any key Employee, Independent Director or Consultant selected by the Administrator may be granted an award of Deferred Stock in the manner determined from time to time by the Administrator. The number of shares of Deferred Stock shall be determined by the Administrator and may be based upon the Performance Criteria or other specific performance criteria determined to be appropriate by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator. Common Stock underlying a Deferred Stock award shall not be issued until the Deferred Stock award shall have vested, pursuant to a vesting schedule or performance criteria set by the Administrator. The Administrator shall specify the distribution dates applicable to each Deferred Stock award which shall be no earlier than the vesting dates or events of the award and may be determined at the election of the Employee, Independent Director or Consultant. Unless otherwise provided by the Administrator, a Holder of Deferred Stock shall have no rights as a Company shareholder with respect to such Deferred Stock until such time as the Award has vested and the Common Stock underlying the Award has been issued.

8.5. Restricted Stock Units . Any key Employee, Independent Director or Consultant selected by the Administrator may be granted an award of Restricted Stock Units in the manner determined from time to time by the Administrator. The Administrator is authorized to make awards of Restricted Stock Units in such amounts and subject to such terms and conditions as determined by the Administrator. The Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, and may specify that such Restricted Stock Units become fully vested and nonforfeitable pursuant to the satisfaction of one or more Performance Criteria or other specific performance goals as the Administrator determines to be appropriate at the time of the grant of the Restricted Stock Units or thereafter, in each case on a specified date or dates or over any period or periods determined by the Administrator. The Administrator shall specify the distribution dates applicable to each award of Restricted Stock Units which shall be no earlier than the vesting dates or events of the award and may be determined at the election of the Employee, Independent Director or Consultant; provided that, except as otherwise determined by the Administrator, set forth in any applicable Award Agreement, and subject to compliance with Section 409A of the Code, in no event shall the maturity date relating to each Restricted Stock Unit occur following the later of (a) the 15th day of the third month following the end of calendar year in which the Restricted Stock Unit vests; or (b) the 15th day of the third month following the end of the Company’s fiscal year in which the Restricted Stock Unit vests. On the distribution dates, the Company shall transfer to the Holder one unrestricted, fully transferable share of Common Stock for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such shares on the maturity date or a combination of cash and Common Stock as determined by the Administrator. The Administrator shall specify the purchase price, if any, to be paid by the Employee, Independent Director or Consultant to the Company for such shares of Common Stock to be distributed pursuant to the Restricted Stock Unit award.

8.6. Other Cash-Based Awards . The Committee may from time to time grant Other Cash-Based Awards to Employees in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by applicable law. Other Cash-Based Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time. The grant of an Other Cash-Based Award shall not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation thereunder.

8.7. Term . The term of a Dividend Equivalent award, Deferred Stock award, Stock Payment award, Restricted Stock Unit award and/or Other Cash-Based Award shall be set by the Administrator in its discretion.

8.7. Exercise or Purchase Price . The Administrator may establish the exercise or purchase price of shares of Deferred Stock, shares distributed as a Stock Payment award or shares distributed pursuant to a Restricted Stock Unit award; provided , however , that such price shall not be less than the par value of a share of Common Stock.

8.8. Exercise upon Termination of Employment, Termination of Consultancy or Termination of Directorship . A Dividend Equivalent award, Deferred Stock award, Stock Payment award and/or Restricted Stock Unit award is distributable only while the Holder is an Employee, Consultant or Independent Director, as applicable; provided , however , that the Administrator in its sole and absolute discretion may provide that the Dividend Equivalent award, Deferred Stock award, Stock Payment award and/or Restricted Stock Unit award may be distributed subsequent to a Termination of Employment, Termination of Directorship or Termination of Consultancy following a “change of control or ownership” (within the meaning of Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company.

8.9. Form of Payment . Payment of the amount determined under Section 8.2 above shall be in cash, in Common Stock or a combination of both, as determined by the Administrator. To the extent any payment under this Article VIII is effected in Common Stock, it shall be made subject to satisfaction of all provisions of Section 6.3.

ARTICLE IX.

STOCK APPRECIATION RIGHTS

9.1. Grant of Stock Appreciation Rights . A Stock Appreciation Right may be granted to any key Employee, Independent Director or Consultant selected by the Administrator. A Stock Appreciation Right may be granted: (a) in connection and simultaneously with the grant of an Option, (b) with respect to a previously granted Option, or (c) independent of an Option. A Stock Appreciation Right shall be subject to such terms and conditions not inconsistent with the Plan as the Administrator shall impose and shall be evidenced by an Award Agreement.

9.2. Coupled Stock Appreciation Rights .

(a) A Coupled Stock Appreciation Right (“ CSAR ”) shall be related to a particular Option and shall be exercisable only when and to the extent the related Option is exercisable.

(b) A CSAR may be granted to the Holder for no more than the number of shares subject to the simultaneously or previously granted Option to which it is coupled.

(c) A CSAR shall entitle the Holder (or other person entitled to exercise the Option pursuant to the Plan) to surrender to the Company unexercised a portion of the Option to which the CSAR relates (to the extent then exercisable pursuant to its terms) and to receive from the Company in exchange therefor an amount determined by multiplying the difference obtained by subtracting the Option exercise price from the Fair Market Value of a share of Common Stock on the date of exercise of the CSAR by the number of shares of Common Stock with respect to which the CSAR shall have been exercised, subject to any limitations the Administrator may impose.

9.3. Independent Stock Appreciation Rights .

(a) An Independent Stock Appreciation Right (“ ISAR ”) shall be unrelated to any Option and shall have a term set by the Administrator provided, however, that the term shall not be more than ten (10) years from the date the ISAR is granted. An ISAR shall be exercisable in such installments as the Administrator may determine. An ISAR shall cover such number of shares of Common Stock as the Administrator may determine. The exercise price per share of Common Stock subject to each ISAR shall be set by the Administrator; provided, that such exercise price per share shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the ISAR is granted. An ISAR is exercisable only while the Holder is an Employee, Independent Director or Consultant; provided, that the Administrator may determine that the ISAR may be exercised subsequent to Termination of Employment, Termination of Directorship or Termination of Consultancy without cause, or following a Change in Control of the Company, or because of the Holder’s retirement, death or Disability, or otherwise. Notwithstanding any of the forgoing, in the event the term of an ISAR would expire at a time when trading in shares of the Common Stock by Holder is prohibited by law or the Company’s insider trading policy, the term of such ISAR shall automatically be extended, subject to a maximum of ten (10) years from the date the ISAR is granted, to the 30 ^th day following the expiration of any applicable trading prohibition.

(b) An ISAR shall entitle the Holder (or other person entitled to exercise the ISAR pursuant to the Plan) to exercise all or a specified portion of the ISAR (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the ISAR from the Fair Market Value of a share of Common Stock on the date of exercise of the ISAR by the number of shares of Common Stock with respect to which the ISAR shall have been exercised, subject to any limitations the Administrator may impose.

9.4. Payment and Limitations on Exercise .

(a) Payment of the amounts determined under Section 9.2(c) and 9.3(b) above shall be in cash, in Common Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised) or a combination of both, as determined by the Administrator. To the extent such payment is effected in Common Stock it shall be made subject to satisfaction of all provisions of Section 6.3 above pertaining to Options.

(b) Holders of Stock Appreciation Rights may be required to comply with any timing or other restrictions with respect to the settlement or exercise of a Stock Appreciation Right, including a window-period limitation, as may be imposed in the discretion of the Administrator.

ARTICLE X.

COMPLIANCE WITH SECTION 409A OF THE CODE

10.1. Awards subject to Code Section 409A . Any Award that constitutes, or provides for, a deferral of compensation subject to Section 409A of the Code (a “ Section 409A Award ”) shall satisfy the requirements of Section 409A of the Code and this Article X, to the extent applicable. The Award Agreement with respect to a Section 409A Award shall incorporate the terms and conditions required by Section 409A of the Code and this Article X.

10.2. Distributions under a Section 409A Award .

(a) Subject to subsection (b), any shares of Common Stock, cash or other property or amounts to be paid or distributed upon the grant, issuance, vesting, exercise or payment of a Section 409A Award shall be distributed in accordance with the requirements of Section 409A(a)(2) of the Code, and shall not be distributed earlier than:

(i) the Holder’s separation from service, as determined by the Secretary of the Treasury,

(ii) the date the Holder becomes disabled,

(iii) the Holder’s death,

(iv) a specified time (or pursuant to a fixed schedule) specified under the Award Agreement at the date of the deferral of such compensation,

(v) to the extent provided by the Secretary of the Treasury, a change in the ownership or effective control of the Company or a Subsidiary, or in the ownership of a substantial portion of the assets of the Company or a Subsidiary, or

(vi) the occurrence of an unforeseeable emergency with respect to the Holder.

(b) In the case of a Holder who is a specified employee, the requirement of paragraph (a)(i) shall be met only if the distributions with respect to the Section 409A Award may not be made before the date which is six months after the Holder’s separation from service (or, if earlier, the date of the Holder’s death). For purposes of this subsection (b), a Holder shall be a specified employee if such Holder is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of a corporation any stock of which is publicly traded on an established securities market or otherwise, as determined under Section 409A(a)(2)(B)(i) of the Code and the Treasury Regulations thereunder.

(c) The requirement of paragraph (a)(vi) shall be met only if, as determined under Treasury Regulations under Section 409A(a)(2)(B)(ii) of the Code, the amounts distributed with respect to the unforeseeable emergency do not exceed the amounts necessary to satisfy such unforeseeable emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such unforeseeable emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Holder’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

(d) For purposes of this Section, the terms specified therein shall have the respective meanings ascribed thereto under Section 409A of the Code and the Treasury Regulations thereunder.

10.3. Prohibition on Acceleration of Benefits . The time or schedule of any distribution or payment of any shares of Common Stock, cash or other property or amounts under a Section 409A Award shall not be accelerated, except as otherwise permitted under Section 409A(a)(3) of the Code and the Treasury Regulations thereunder.

10.4. Elections under Section 409A Awards .

(a) Any deferral election provided under or with respect to an Award to any Employee, Independent Director or Consultant, or to the Holder of a Section 409A Award, shall satisfy the requirements of Section 409A(a)(4)(B) of the Code, to the extent applicable, and, except as otherwise permitted under paragraph (i) or (ii), any such deferral election with respect to compensation for services performed during a taxable year shall be made not later than the close of the preceding taxable year, or at such other time as provided in Treasury Regulations.

(i) In the case of the first year in which an Employee, Independent Director or Consultant, or the Holder, becomes eligible to participate in the Plan, any such deferral election may be made with respect to services to be performed subsequent to the election with thirty (30) days after the date the Employee, Independent Director or Consultant, or the Holder, becomes eligible to participate in the Plan, as provided under Section 409A(a)(4)(B)(ii) of the Code.

(ii) In the case of any performance-based compensation based on services performed by an Employee, Independent Director or Consultant, or the Holder, over a period of at least twelve (12) months, any such deferral election may be made no later than six months before the end of the period, as provided under Section 409A(a)(4)(B)(iii) of the Code.

(b) In the event that a Section 409A Award permits, under a subsequent election by the Holder of such Section 409A Award, a delay in a distribution or payment of any shares of Common Stock, cash or other property or amounts under such Section 409A Award, or a change in the form of distribution or payment, such subsequent election shall satisfy the requirements of Section 409A(a)(4)(C) of the Code, and:

(i) such subsequent election may not take effect until at least twelve (12) months after the date on which the election is made,

(ii) in the case such subsequent election relates to a distribution or payment not described in Section 10.2(a)(ii), (iii) or (vi), the first payment with respect to such election may be deferred for a period of not less than five years from the date such distribution or payment otherwise would have been made, and

(iii) in the case such subsequent election relates to a distribution or payment described in Section 10.2(a)(iv), such election may not be made less than twelve (12) months prior to the date of the first scheduled distribution or payment under Section 10.2(a)(iv).

10.5. Compliance in Form and Operation . A Section 409A Award, and any election under or with respect to such Section 409A Award, shall comply in form and operation with the requirements of Section 409A of the Code and the Treasury Regulations thereunder.

ARTICLE XI.

ADMINISTRATION

11.1. Compensation Committee . The Compensation Committee (or another committee or a subcommittee of the Board assuming the functions of the Committee under the Plan) shall consist solely of two or more Independent Directors appointed by and holding office at the pleasure of the Board, each of whom is both a “non-employee director” as defined by Rule 16b-3, an “outside director” for purposes of Section 162(m) of the Code and an “independent director” under the rules of any securities exchange or automated quotation system on which the shares are listed, quoted or traded. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee may be filled by the Board.

11.2. Duties and Powers of Committee . It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan and the Award Agreements, and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith, to interpret, amend or revoke any such rules and to amend any Award Agreement provided that the rights or obligations of the Holder of the Award that is the subject of any such Award Agreement are not affected adversely by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Article X, Section 12.6 or Section 12.7. Any such grant or award under the Plan need not be the same with respect to each Holder. Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee. Notwithstanding the foregoing, the full Board, acting by a majority of its members in office, shall conduct the general administration of the Plan with respect to Awards granted to Independent Directors.

11.3. Majority Rule; Unanimous Written Consent . The Committee shall act by a majority of its members in attendance at a meeting at which a quorum is present or by a memorandum or other written instrument signed by all members of the Committee.

11.4. Compensation; Professional Assistance; Good Faith Actions . Members of the Committee shall receive such compensation, if any, for their services as members as may be determined by the Board. All expenses and liabilities which members of the Committee incur in connection with the administration of the Plan shall be borne by the Company. The Committee may, with the approval of the Board, employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Committee, the Company and the Company’s officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee or the Board in good faith shall be final and binding upon all Holders, the Company and all other interested persons. No members of the Committee or Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or Awards, and all members of the Committee and the Board shall be fully protected by the Company in respect of any such action, determination or interpretation.

11.5. Delegation of Authority to Grant Awards . The Committee may, but need not, delegate from time to time some or all of its authority to grant Awards under the Plan to a committee consisting of one or more members of the Committee or of one or more officers of the Company, to the extent permitted by applicable law and rules of any securities exchange or automated quotation system on which the shares are listed; provided , however , that the Committee may not delegate its authority to grant Awards to individuals: (a) who are subject on the date of the grant to the reporting rules under Section 16(a) of the Exchange Act, (b) who are Section 162(m) Participants, or (c) who are officers of the Company who are delegated authority by the Committee hereunder. Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation of authority and may be rescinded at any time by the Committee. At all times, any committee appointed under this Section 11.5 shall serve in such capacity at the pleasure of the Committee.

11.6 Authority of Administrator . Subject to the Company’s memorandum and articles of association, the Committee’s charter, any specific designation in the Plan and any delegation of authority permitted under the Plan or applicable law, the Committee (or its delegate, as permitted under the Plan and applicable law) has the exclusive power, authority and sole discretion to:

(a) Designate Employees, Directors and Consultants eligible to receive Awards;

(b) Determine the type or types of Awards to be granted to each eligible Employee, Director and Consultant;

(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, purchase price, any Performance Criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;

(e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(f) Prescribe the form of each Award Agreement, which need not be identical for each Holder;

(g) Decide all other matters that must be determined in connection with an Award;

(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement;

(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan; and

ARTICLE XII.

MISCELLANEOUS PROVISIONS

12.1. Transferability of Awards .

(a) Except as otherwise provided in Section 12.1(b):

(ii) No Option, Restricted Stock award, Deferred Stock award, Stock Appreciation Right, Dividend Equivalent award, Stock Payment award, or Restricted Stock Unit award, or any interest or right therein, shall be liable for the debts, contracts or engagements of the Holder or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence; and

(iii) During the lifetime of the Holder, only the Holder may exercise an Option or other Award (or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Holder, any exercisable portion of an Option or other Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Award Agreement, be exercised by his personal representative or by any person empowered to do so under the deceased Holder’s will or under the then applicable laws of descent and distribution.

(b) Notwithstanding Section 12.1(a), the Administrator, in its sole discretion, may determine to permit a Holder to transfer a Non-Qualified Stock Option to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (i) a Non-Qualified Stock Option transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) any Non-Qualified Stock Option which is transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Non-Qualified Stock Option as applicable to the original Holder (other than the ability to further transfer the Non-Qualified Stock Option); and (iii) the Holder and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal and state securities laws and (C) evidence the transfer. For purposes of this Section 12.1(b), “Permitted Transferee” shall mean, with respect to a Holder, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Holder’s household (other than a tenant or employee), a trust in which these persons (or the Holder) control the management of assets, and any other entity in which these persons (or the Holder) own more than fifty percent of the voting interests, or any other transferee specifically approved by the Administrator after taking into account any state or federal tax or securities laws applicable to transferable Non-Qualified Stock Options.

12.2. Amendment, Suspension or Termination of the Plan . Except as otherwise provided in this Section 12.2, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board. However, without approval of the Company’s shareholders given within twelve (12) months before or after the action by the Board, no action of the Board may, except as provided in Section 12.3, (i) increase the limits imposed in Section 2.1 on the maximum number of shares which may be issued under the Plan, or the maximum number of shares which may be granted or issued as Restricted Stock awards, Restricted Stock Unit awards, Dividend Equivalent awards, Deferred Stock awards, or Stock Payment awards, (ii) expand the classes of persons to whom Awards may be granted under the Plan, or (iii) reduce the exercise price per share of any outstanding Option or Stock Appreciation Right granted under the Plan or take any action prohibited under Section 12.6, or (iv) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the

Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying shares. Except as provided in Article X, Section 12.6 or Section 12.7, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, alter or impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides. No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and in no event may any Award be granted under the Plan after the first to occur of the following events:

(a) The expiration of ten (10) years from the date this Plan is adopted by the Board; or

(b) The expiration of ten (10) years from the date this Plan is approved by the Company’s shareholders under Section 12.4.

12.3. Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.

(a) Subject to Section 12.3(f), in the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event affects the Common Stock, in each case other than an Equity Restructuring, then the Administrator shall equitably adjust any or all of the following in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award:

(i) The number and kind of shares of Common Stock (or other securities or property) with respect to which Awards may be granted or awarded (including, but not limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued under the Plan, and the maximum number and kind of shares which may be granted or issued as Restricted Stock awards, Restricted Stock Unit awards, Dividend Equivalent awards, Deferred Stock awards or Stock Payment awards, adjustments of the Award Limit, and adjustments of the manner in which shares subject to Full Value Awards will be counted);

(ii) The number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards; and

(iii) The grant or exercise price with respect to any Award.

(b) Subject to Sections 12.3(c), 12.3(d) and 12.3(f), in the event of any transaction or event described in Section 12.3(a) or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate, or of changes in applicable laws, regulations or accounting principles, the Administrator, in its sole and absolute discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

(i) To provide for either the purchase of any such Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Holder’s rights had such Award been currently exercisable or payable or fully vested or the replacement of such Award with other rights or property selected by the Administrator in its sole discretion;

(ii) To provide that the Award cannot vest, be exercised or become payable after such event;

(iii) To provide that such Award shall be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in Section 5.3 or the provisions of such Award;

(iv) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; and

(v) To make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Awards, and/or in the terms and conditions of (including the grant, exercise or purchase price), and the criteria included in, outstanding options, rights and awards and options, rights and awards which may be granted in the future.

(vi) To provide that, for a specified period of time prior to such event, the restrictions imposed under an Award Agreement upon some or all shares of Restricted Stock, Restricted Stock Units or Deferred Stock may be terminated, and, in the case of Restricted Stock, some or all shares of such Restricted Stock may cease to be subject to repurchase under Section 7.5 or forfeiture under Section 7.4 after such event.

(i) Notwithstanding any other provision of the Plan, in the event of a Change in Control, each outstanding Award shall remain outstanding, or shall be assumed or a Qualified Substitute Award shall be provided by the successor corporation, or a parent or subsidiary of the successor corporation. Solely for Awards granted on or after the Closing Date, or which become effective on or after the Closing Date, if the Award continues to be outstanding following the effective date of a Change in Control, then in the event of a Qualified Termination of the Holder’s employment with the Company or any of its subsidiaries during the two (2) year period following the Change in Control and prior to the full vesting of the Award granted prior to the Change in Control, all outstanding unvested Awards granted to the Holder prior to the Change in Control shall immediately become fully vested and exercisable to the extent permitted by law, notwithstanding any provisions of the Plan or of the applicable Award Agreement to the contrary.

(ii) In the event that the successor corporation, or a parent or subsidiary of the successor corporation, with respect to the Change in Control transaction refuses to assume or provide a Qualified Substitute Award for the Award, the Holder shall have the right to exercise the Award as to all of the shares subject thereto, including shares as to which such Award otherwise would not be exercisable, and the Holder shall have the right to vest in, and received a distribution of, such Award, with respect to all of the shares subject thereto. If an Award becomes exercisable in lieu of assumption or substitution with a Qualified Substitute Award by the successor corporation, or a parent or subsidiary corporation, with respect to a Change in Control transaction, the Administrator shall notify the Holder that the Award shall be fully exercisable for a period of not less than fifteen (15) days from the date of such notice prior to the Change in Control transaction, and the Award shall terminate upon the expiration of such period. For purposes of this Section 12.3(c), the Award shall be assumed if, following the Change in Control transaction, the Award confers on the Holder the right to purchase or receive, for each share subject to the Award immediately prior to the Change in Control transaction, the consideration (whether in stock, cash, or other securities or property, or a combination thereof) received or to be received for each share of Common Stock in the Change in Control transaction on the effective date of the Change in Control transaction (and if holders of shares of Common Stock were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the issued or outstanding shares of Common Stock); provided, however, that, if such consideration received in the Change in Control transaction was not solely common stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation or its parent, provide for the consideration to be received upon the exercise, vesting or distribution of the assumed Award, for each share subject to the Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by the holders of Common Stock in the Change in Control transaction.

(d) In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 12.3(a) and 12.3(b):

(i) The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or

(ii) The Administrator shall make such equitable adjustments, if any, as the Administrator, in its sole discretion, may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Sections 3.1 and 3.3 on the maximum number and kind of shares which may be issued under the Plan, and adjustments of the Award Limit, and adjustments of the manner in which shares subject to Full Value Awards will be counted). The adjustments provided under this Section 12.3(d) shall be nondiscretionary and shall be final and binding on the affected Holder and the Company.

(e) Subject to Sections 12.3(f), 3.2 and 3.3, the Administrator may, in its discretion, include such further provisions and limitations in any Award or Award Agreement as it may deem equitable and in the best interests of the Company.

(f) With respect to Awards which are granted to Section 162(m) Participants and are intended to qualify as performance-based compensation under Section 162(m)(4)(C), no adjustment or action described in this Section 12.3 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause such Award to fail to so qualify under Section 162(m)(4)(C), or any successor provisions thereto, unless the Administrator determines that the Award should not so qualify. No adjustment or action described in this Section 12.3 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Administrator determines that the Award is not to comply with such exemptive conditions. The number of shares of Common Stock subject to any Award shall always be rounded to the next whole number.

(g) The existence of the Plan, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

(h) No action shall be taken under this Section 12.3 which shall cause an Award to fail to comply with Section 409A of the Code or the Treasury Regulations thereunder, to the extent applicable to such Award.

12.4. Approval of Plan by Shareholders . The Plan must be submitted for approval by the Company’s stockholders within twelve (12) months of July 1, 2014 (the date the Board adopted the Plan in its current form). Other Cash-Based Awards may be awarded prior to such stockholder approval; provided that such Awards shall not be exercisable, shall not vest and the restrictions thereon shall not lapse and no payments shall be made pursuant thereto prior to the time when the Plan is approved by the stockholders. If stockholder approval of the Plan has not been obtained at the end of said twelve (12) month period, all Other Cash-Based Awards previously awarded under the Plan shall thereupon be canceled and become null and void and Section 8.6 and the other provisions of the Plan relating to Other Cash-Based Awards shall cease to be effective with respect to Other Cash-Based Awards. For the avoidance of doubt, any Award other than an Other Cash-Based Award awarded on or after the date the Board adopted the Plan and prior to such stockholder approval shall remain in full force and effect if stockholder approval of the Plan has not been obtained at the end of said twelve (12) month period. The Company’s stockholders approved the Plan on June 5, 2015.

12.5. Tax Withholding . The Company shall be entitled to require payment in cash or deduction from other compensation payable to each Holder of any sums required by federal, state or local tax law to be withheld with respect to the grant, issuance, vesting, exercise or payment of any Award. The Administrator may in its discretion and in satisfaction of the foregoing requirement allow such Holder to elect to have the Company withhold shares of Common Stock otherwise issuable under such Award (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of shares of Common Stock which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Holder of such Award within six months after such shares of Common Stock were acquired by the Holder from the Company) in order to satisfy the Holder’s federal and state income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal and state tax income and payroll tax purposes that are applicable to such supplemental taxable income.

12.6. Prohibition on Repricing . Subject to Section 12.3, the Administrator shall not, without the approval of the shareholders of the Company, (a) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per share, or (b) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying shares. Subject to Section 12.3, the Administrator shall have the authority, without the approval of the shareholders of the Company, to amend any outstanding Award to increase the price per share or to cancel and replace an Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award.

12.7. Forfeiture and Clawback Provisions . Pursuant to its general authority to determine the terms and conditions applicable to Awards and the Award Agreements under the Plan, the Administrator shall have the right to provide, in the terms of Awards made under the Plan, or to require a Holder to agree by separate written instrument, that (a) Any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Common Stock underlying the Award, must be paid to the Company, and (b) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (i) a Termination of Employment, Termination of Directorship or Termination of Consultancy occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (ii) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Administrator or (iii) the Holder incurs a Termination of Employment, Termination of Directorship or Termination of Consultancy for “cause” (as such term is defined in the sole and absolute discretion of the Committee, or as set forth in a written agreement relating to such Award between the Company and the Holder).

12.8. Effect of Plan upon Options and Compensation Plans . The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Subsidiary. Nothing in the Plan shall be construed to limit the right of the Company: (a) to establish any other forms of incentives or compensation for Employees, Directors or Consultants of the Company or any Subsidiary, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including but not by way of limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

12.9. Compliance with Laws . The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of shares of Common Stock and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

12.10. Titles . Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

12.11. Governing Law . The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the New Jersey without regard to conflicts of laws thereof.

12.12 Paperless Administration . In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system.

12.13 Unfunded Status of Awards . The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Subsidiary.

12.14 Indemnification . To the extent allowable pursuant to applicable law, each member of the Committee or of the Board (or the delegates of the Committee or the Board as permitted under the Plan and applicable law) shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s memorandum and articles of association, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

12.15 Relationship to other Benefits . No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934

I, Brenton L. Saunders, President and Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Allergan plc and Warner Chilcott Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2016

By:	/s/ BRENTON L. SAUNDERS
	Brenton L. Saunders
	President and Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934

I, Maria Teresa Hilado, Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Allergan plc and Warner Chilcott Limited;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2016

By:	/s/ MARIA TERESA HILADO
	Maria Teresa Hilado
	Chief Financial Officer
	(Principal Financial Officer)

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. of Section 1350, as Adopted by

Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned officer of Allergan plc and Warner Chilcott Limited (the “Companies”), hereby certifies, to such officer’s knowledge, that:

(i) the Quarterly Report on Form 10-Q of the Companies for the quarter ended June 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.


Date: August 8, 2016

By:		/s/ BRENTON L. SAUNDERS
		Brenton L. Saunders
		President and Chief Executive Officer
		(Principal Executive Officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. of Section 1350, as Adopted by

Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned officer of Allergan plc and Warner Chilcott Limited (the “Companies”), hereby certifies, to such officer’s knowledge, that:

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.


Date: August 8, 2016

By:		/s/ MARIA TERESA HILADO
		Maria Teresa Hilado
		Chief Financial Officer
		(Principal Financial Officer)