Ireland
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N/A
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Ordinary shares, €0.001 par value
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PRGO
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New York Stock Exchange
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Yes
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☒
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No
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☐
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act.
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Yes
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☐
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No
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☒
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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.
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Yes
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☒
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No
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☐
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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Yes
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☒
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No
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☐
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
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Yes
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☐
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No
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☒
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Page No.
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Part I.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Additional Item.
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Part II.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV.
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Item 15.
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ITEM 1.
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BUSINESS
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•
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Consumer Self-Care Americas ("CSCA"), formerly Consumer Healthcare Americas, comprises our consumer self-care business (OTC, contract manufacturing, infant formula, and oral self-care categories and our divested animal health category) in the U.S., Mexico and Canada.
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Consumer Self-Care International ("CSCI"), formerly Consumer Healthcare International, comprises our branded consumer self-care business primarily in Europe and Australia, our consumer-focused business in the United Kingdom and parts of Asia, and our liquid licensed products business in the United Kingdom.
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Prescription Pharmaceuticals ("RX") comprises our prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel, which were previously in our CSCI segment.
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On February 20, 2020, we entered into a definitive agreement to acquire the oral care assets of High Ridge Brands for cash of $113.0 million. The transaction is expected to close in the first quarter of 2020 subject to bankruptcy court approval in connection with High Ridge Brands’ Chapter 11 cases, as well as other customary closing conditions. This transaction, in combination with our existing children’s oral self-care portfolio, provides a new platform for disruptive product innovation in the form of exclusive store and value brand programs that challenge current national brand oral care offerings.
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On January 3, 2020, we acquired Steripod®, a leading toothbrush accessory brand and innovator in the toothbrush protector market, from Bonfit America Inc. The acquisition, which includes a portfolio of antibacterial toothbrush protectors, kids’ toothbrush protectors and tongue cleaners, complements our current portfolio of oral self-care products, and leverages our manufacturing and marketing platform. Operating results attributable to the products will be included in our CSCA segment. Total consideration paid was $24.7 million, subject to customary post-closing adjustments (refer to Item 8. Note 22).
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On November 29, 2019, we acquired the branded OTC rights to Prevacid®24HR from GlaxoSmithKline for $61.5 million. The acquisition of Prevacid®24HR expands our U.S. OTC presence with a leading brand in our digestive health product category (refer to Item 8. Note 3).
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During the three months ended September 28, 2019, after worldwide regulatory bodies announced that Ranitidine may potentially contain N-nitrosodimethylamine ("NDMA"), a known environmental contaminant, we promptly began testing our externally-sourced Ranitidine API and Ranitidine-based products. On October 8, 2019, we halted shipments of the product based upon preliminary results. Based on the totality of data gathered, we made the decision to conduct a voluntary retail market withdrawal, which resulted in a decrease in net sales of $7.4 million and a decrease in gross profit of $15.5 million in our CSCA segment.
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On July 8, 2019, we completed the sale of our animal health business to PetIQ for cash consideration of $182.5 million, which resulted in a pre-tax gain of $71.7 million recorded in Other (income) expense, net on the Consolidated Statements of Operations (refer to Item 8. Note 3).
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On July 1, 2019, we acquired Ranir, a privately-held leading global supplier of private label and branded oral self-care products, for $747.7 million. This transaction advances our transformation to a consumer-focused, self-care company while enhancing our position as a global leader in consumer self-care solutions (refer to Item 8. Note 3).
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On April 1, 2019, we purchased the ANDAs and other records and registrations of Budesonide Nasal Spray, a generic equivalent of Rhinocort Allergy® and Triamcinolone Nasal Spray, a generic equivalent of Nasacort Allergy®, from Barr Laboratories, Inc., a subsidiary of Teva Pharmaceuticals, for a total of $14.0 million in cash (refer to Item 8. Note 3).
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Product Category
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Description
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Pain and sleep-aids
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Products comprised of pain relievers, fever reducers and sleep-aids.
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Upper respiratory
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Products that relieve upper respiratory symptoms, including cough suppressants, expectorants, and sinus relief.
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Digestive health
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Products such as antacids, anti-diarrheal, and anti-heartburn that relieve symptoms associated with digestive issues.
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Nutrition
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Infant formulas and nutritional beverages.
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Healthy lifestyle
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Products that help consumers live a healthy lifestyle such as smoking cessation, diabetes care, and well-being products.
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Skincare and personal hygiene
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Products for the face and body such as dermatological care, scar management, lice treatment, and other products for various skin conditions.
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Oral self-care
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Products used for oral care, including toothbrushes, toothbrush replacement heads, floss, flossers, and whitening products.
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Vitamins, minerals and supplements ("VMS")
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Vitamins, minerals, and supplements.
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Other
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Diagnostic products and other miscellaneous self-care products.
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•
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During the three months ended December 31, 2019, following commercial launch delays relating to certain pain relief products that we licensed from a third party, the licensor determined that it would not extend the license agreement upon expiration. As a result, we recorded an asset impairment of $9.7 million relating to this license, which we had reported as a definite-lived intangible asset (refer to Item 8. Note 4 and Note 7).
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During the three months ended September 28, 2019, after worldwide regulatory bodies announced that Ranitidine may potentially contain NDMA, a known environmental contaminant, we promptly began testing our externally sourced Ranitidine API and Ranitidine-based products. On October 8, 2019, we halted shipments of the product based upon preliminary results. Based on the totality of data gathered, we made the decision to conduct a voluntary retail market withdrawal, which resulted in a decrease in net sales of $1.8 million and a decrease in gross profit of $2.9 million in our CSCI segment.
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On July 1, 2019, we acquired Ranir, a privately-held leading global supplier of private label and branded oral self-care products, for $747.7 million. This transaction advances our transformation to a consumer-focused, self-care company while enhancing our position as a global leader in consumer self-care solutions. Ranir's non-U.S. operations are located primarily in the United Kingdom, France, Germany, and China (refer to Item 8. Note 3).
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Product Category
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Description
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Focus Brands
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Pain and sleep-aids
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Products comprised of pain relievers, fever reducers and sleep-aids.
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Solpadeine®
Nytol®
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Upper respiratory
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Products that relieve upper respiratory symptoms, including cough suppressants, expectorants, and sinus relief.
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Bittner®
Bronchenolo®/Bronchostop®
Physiomer®
Phytosun®
Coldrex®
Prevalin®/Beconase®
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Digestive health
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Products such as antacids, anti-diarrheal, and anti-heartburn that relieve symptoms associated with digestive issues.
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Healthy lifestyle
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Products that help consumers live a healthy lifestyle such as smoking cessation, weight management, diabetes care, and well-being products.
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Niquitin®
XLS (Medical)®
Yokebe®
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Skincare and personal hygiene
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Products for the face and body such as dermatological care, sun protection, scar management, lice treatment, insect repellents, and other products for various skin conditions.
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ACO®
Biodermal® Canoderm®
Dermalex®
Lactacyd® Wartner®
Jungle Formula®
Paranix®
Pencivir®
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Oral self-care
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Products used for oral care, including toothbrushes, toothbrush replacement heads, floss, flossers, and whitening products.
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Plackers®
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Vitamins, minerals and supplements ("VMS")
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Vitamins, minerals, and supplements.
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Abtei®
Arterin®
Davitamon® Granufink® |
Other
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Diagnostic products and other miscellaneous self-care products.
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•
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Although pricing pressure is showing some signs of moderation, during 2019 we continued to experience a significant year-over-year reduction in pricing in our RX segment due to competitive pressure. We expect softness in pricing to continue to impact the segment for the foreseeable future.
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On February 24, 2020, along with our partner Catalent Pharma Solutions, we received approval from the FDA on our abbreviated new drug application for generic albuterol sulfate inhalation aerosol, the first AB-rated generic version of ProAir® HFA. Shortly after approval, we launched with limited commercial quantities and anticipate that we will be in a position to provide a steady supply of this product by the fourth quarter of 2020.
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During the three months ended December 31, 2019, we tested our RX U.S. reporting unit for impairment. The impairment indicators related to a combination of industry and market factors that led to reduced projections of future cash flows. We determined the reporting unit was impaired and recorded an impairment charge of $109.2 million (refer to Item 8. Note 4 and Note 7).
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During the three months ended December 31, 2019, we identified impairment indicators on a definite-lived intangible asset related to our clindamycin and benzoyl peroxide topical gel (generic equivalent to Benzaclin®). Increases in competition caused price erosion that lowered our long-range revenue forecast, which indicated the asset was no longer recoverable and was partially impaired. We recorded an asset impairment of $21.2 million (refer to Item 8. Note 4 and Note 7).
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On July 2, 2019, we purchased the ANDA for a generic gel product for $49.0 million in cash, which we capitalized as a developed product technology intangible asset. We launched the product during the third quarter of 2019 (refer to Item 8. Note 3).
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During the three months ended September 28, 2019, we identified impairment indicators related to our Evamist® branded product, which is a definite-lived intangible asset. The indicators related to a decline in sales volume and a corresponding reduction in our long-range revenue forecast. We recorded an asset impairment of $10.8 million (refer to Item 8. Note 4 and Note 7).
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On May 17, 2019, we purchased the ANDA for a generic product used to relieve pain for $15.7 million in cash, which we capitalized as a developed product technology intangible asset. We launched the product during the third quarter of 2019 (refer to Item 8. Note 3).
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During the three months ended June 29, 2019, we identified impairment indicators for a certain definite-lived asset related to changes in pricing and competition in the market, which lowered the projected cash flows we expect to generate from the asset. We recorded an asset impairment of $27.8 million (refer to Item 8. Note 4 and Note 7).
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Generic Name (1)
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Comparative Brand-Name Drug
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Acyclovir cream
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Zovirax®
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Alogliptin tabs
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Nesina®
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Bacitracin ophthalmic ointment
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N/A
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Betamethasone calcipotriene ointment
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Taclonex®
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Clindamycin phosphate topical
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Cleocin T®
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Erythromycin ophthalmic ointment
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N/A
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Hydrocortisone pramoxine cream
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Pramosone®
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Ketoconazole shampoo
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Nizoral®
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Mesalamine rectal
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Rowasa®
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Permethrin cream
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Elimite®
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Tacrolimus
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Protopic®
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Testosterone 1.62% gel
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Androgel®
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Testosterone cypionate injection
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Depo®, Testosterone
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Tretinoin cream and gel
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Retin-A®
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Triamcinolone cream/ointment
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Triderm™/Kenalog™
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Year Ended
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December 31,
2019 |
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December 31,
2018 |
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December 31,
2017 |
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13.0
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%
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12.8
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%
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13.0
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%
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Providing "Quality, Affordable Self-Care Products™";
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Environmental stewardship;
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Employee diversity, health and well-being;
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Community engagement; and
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Human rights.
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Physician Payment Sunshine Act and Similar State Laws - This act and similar state laws require certain pharmaceutical manufacturers to engage in extensive tracking of payments or transfers of value to physicians and teaching hospitals, maintenance of a payment database and public reporting of the payment data.
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Foreign Corrupt Practices Act of 1977 ("FCPA") - This act and other similar anti-bribery laws prohibit companies and their intermediaries from providing money or anything of value to officials of foreign governments, foreign political parties or international organizations with the intent to obtain or retain business or seek a business advantage.
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Federal Trade Commission ("FTC") - This agency oversees the advertising and other promotional practices of consumer products marketers. The FTC considers whether a product’s claims are substantiated, truthful and not misleading. The FTC also reviews mergers and acquisitions of companies exceeding specified thresholds and investigates certain business practices relevant to the healthcare industry.
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International Organization for Standardization ("ISO") - The ISO Standards specify requirements for a Quality Management System that demonstrates the ability to consistently provide products that meet customer and applicable regulatory standards and includes processes to ensure continuous improvement. Our infant formula manufacturing sites are ISO 9001-2008 Certified for Quality Management Systems. ISO inspections are conducted at least annually.
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United States Pharmacopeial Convention, Inc. ("USP") - The USP is a non-governmental, standard-setting organization. By reference, the FFDCA incorporates the USP quality and testing standards and monographs as the standard that must be met for the listed drugs, unless compliance with those standards is specifically disclaimed on the product’s labeling. USP standards exist for most Rx and OTC pharmaceuticals and many nutritional supplements. The FDA typically requires USP compliance as part of cGMP compliance.
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Health Insurance Portability and Accountability Act ("HIPAA") - HIPAA is a set of regulations designed to protect personal information and data collected and stored in medical records. It established a national standard to be used in all doctors' offices, hospitals and other businesses where personal medical information is stored. In addition to protecting personal medical information, HIPAA also gives patients the right to view their medical records and request changes if the data is incorrect. We could be subject to criminal penalties if we knowingly obtain individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or for aiding and abetting the violation of HIPAA.
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Consumer Product Safety Commission ("CPSC") - The CPSC has published regulations requiring child resistant packaging on certain products including pharmaceuticals and dietary supplements. The manufacturer of any product that is subject to any CPSC rule, ban, standard or regulation must certify that, based on a reasonable testing program, the product complies with CPSC requirements.
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California Safe Drinking Water and Toxic Enforcement Act ("Prop 65") - Prop 65 is a toxic right-to-know warnings law that allows the state attorney general and private enforcers to sue on behalf of the public claiming the products in question sold in California violate the law by exposing consumers to chemicals in levels above those allowed by regulation without carrying warnings.
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Other State Agencies - We are subject to regulation by numerous other state health departments, insurance departments, boards of pharmacy, state controlled substance agencies, state consumer health and safety regulations, and other comparable state agencies, each of which have license requirements and fees that vary by state.
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Privacy Regulations - We are subject to numerous global laws and regulations designed to protect personal data, such as the European Union General Data Protection Regulation (“GDPR”). The GDPR introduced more stringent data protection requirements in the EU, as well as substantial fines for breaches of the data protection rules. The GDPR increased our responsibility and potential liability in relation to personal data that we process, and we have put in place additional mechanisms to comply with the GDPR.
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Transparency Laws - In various jurisdictions in which we operate, we are subject to the laws and regulations aimed at increasing transparency of financial relationships between healthcare professionals and pharmaceutical/medical device manufacturers. These acts require certain pharmaceutical manufacturers to engage in extensive tracking of payments or transfers of value to healthcare professionals.
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Anti-Bribery Laws - Various jurisdictions in which we operate have laws and regulations, including the U.K. Bribery Act 2010 and the Irish Criminal Justice (Corruption Offenses) Act 2018, aimed at preventing and penalizing corrupt and anticompetitive behavior.
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Rules and Regulations Infant Formula - Outside of the U.S., country-specific regulations define the requirements that we must comply with regarding the manufacturing, testing, labeling, packaging, storage, distribution, and promotion of infant formula. We are subject to ongoing periodic inspection through these complex regulations, including by the FDA and other regulatory agencies such as the Canadian Food Inspection Agency ("CFIA").
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ITEM 1A.
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RISK FACTORS
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INDEX TO RISK FACTORS
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PAGE NO.
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As a manufacturer of generic versions of brand-name drugs through our CSCA and RX segments, we experience competition from brand-name drug companies that may try to prevent, discourage or delay the use of generic versions through various measures, including introduction of new branded products, legislative initiatives, changing dosage forms or dosing regimens, regulatory processes, filing new patents or patent extensions, lawsuits, citizens’ petitions, and negative publicity prior to introduction of a generic product. In addition, brand-name competitors may lower their prices to compete with generic products, increase advertising, or launch, either through an affiliate or licensing arrangements with another company, an authorized generic at or near the time the first generic product is launched, depriving the generic product of potential market exclusivity.
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Our CSCA and RX segments may experience increased price competition as other generic companies produce the same product, sometimes for dramatically lower margins in order to gain market share. Other companies may introduce new drugs and/or drug delivery techniques that make our current products less desirable. A drug may be subject to competition from alternative therapies during the period of patent protection or regulatory exclusivity, and thereafter, we may be subject to further competition from generic products and OTC pharmaceuticals or biosimilars.
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We develop and distribute branded products through our CSCA and CSCI segments. We experience competition from other brand-name companies, many of which are larger and have more resources to devote to advertising and marketing. These direct competitors may be able to adapt more quickly to changes in customer requirements. Our current and future competitors may develop products comparable or superior to those offered by us at more competitive prices.
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Our CSCA and RX segments also experience competition from generic drug manufacturers, some of whom are significantly larger than we are, who may develop their products more rapidly or complete regulatory approval processes sooner, or may market their products earlier than we do.
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We maintain a diversified product line to function as a primary supplier for our customers. Capital investments are driven by growth, technological advancements, cost improvement and the need for manufacturing flexibility. Our future capital expenditures could vary materially due to the uncertainty of these factors. In addition, if we fail to stay current with the latest manufacturing, information and packaging technology, we may be unable to competitively support the launch of new product introductions.
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Our product margins may decline over time due to our products' aging life cycles, changes in consumer choice, changes in competition for our existing products, or the introduction of next generation innovative products; therefore, new product introductions are necessary to maintain our current financial condition. If we are unable to continue to create new products, we may lose market share or experience pricing pressure, and our net sales may be negatively impacted.
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We must prove that the regulated generic drug products in our CSCA and RX segments are bioequivalent to their branded counterparts, which may require bioequivalence studies, and in the case of topical products, even more extensive clinical endpoint trials to demonstrate their efficacy. The development and commercialization process, particularly with respect to innovative products, is both time consuming and costly, and subject to a high degree of business risk. Products currently under development may require re-design to meet evolving FDA standards, may not perform as expected, may not pass required bioequivalence studies, or may be the subject of intellectual property challenges. Necessary regulatory approvals may not be obtained in a timely manner, if at all. Any of these events may negatively impact our net sales.
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Even if we are successful in developing a product, our customers' failure to launch one of our products successfully, or delays in manufacturing developed products, could adversely affect our operating results. In addition, the FDA or similar regulatory agency could impose higher standards and additional requirements, such as requiring more supporting data and clinical data than previously required, in order to gain regulatory clearance to launch new formulations into the market, which could negatively impact our future net sales.
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The future growth and stability of U.S. store brand market share can be impacted, in part, by general economic conditions, which can influence consumers to switch to and from store brand products. Our CSCA segment sales could be negatively affected if economic conditions improve and consumers return to purchasing higher-priced brand-name products. Conversely, while store brand products present an alternative to higher-priced branded products, if economic conditions deteriorate, our CSCA segment sales could be negatively impacted if consumers forgo obtaining healthcare or reduce their healthcare spending.
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Our CSCI segment's success is dependent on the continued growth in demand for its healthy lifestyle products, which includes products for weight management and well-being and smoking cessation. If demand for products in this category decreases, our CSCI segment's results of operations would be negatively impacted.
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Our CSCA customers may request changes in packaging to meet consumer demands, which could cause us to incur inventory obsolescence charges and redesign costs, which in turn would negatively impact our CSCA segment's results of operations.
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Our nutritional product category within our CSCA segment is subject to changing consumer preferences and health and nutrition-related concerns. Our business depends, in part, on consumer preferences and choices, including the number of mothers who choose to use infant formula products rather than breastfeed their babies. To the extent that private, public, and government sources may promote the benefits of breastfeeding over the use of infant formula, there could be a reduced demand for infant formula products. We could also be adversely impacted by an increase in the number of families that are provided with infant formula by the U.S. federal government through the Women, Infants and Children program, as we do not participate in this program.
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We must obtain approval from the appropriate regulatory agencies in order to manufacture and sell our products in the regions in which we operate. Obtaining this approval can be time consuming and costly. There can be no assurance that, in the event we submit an application for a marketing authorization to any global regulatory agency, we will obtain the approval to market a product and/or that we will obtain it on a timely basis. Laws unique to the U.S. regulatory framework encourage generic competition by providing eligibility for first generic marketing exclusivity if certain conditions are met. If we are granted generic exclusivity, the exclusivity may be shared with other generic companies, including authorized generics; or it is possible that we may forfeit 180-day exclusivity if we do not obtain regulatory approval or begin marketing the product within the statutory requirements. Finally, if we are not the first to file our ANDA, the FDA may grant 180-day exclusivity to another company, thereby effectively delaying the launch of our product and/or possibly reducing our market share.
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Global regulatory agencies regularly inspect our manufacturing facilities and the facilities of our third-party suppliers. The failure of one of our facilities, or a facility of one of our third-party suppliers, to comply with applicable laws and regulations may lead to a breach of representations made to our customers, or to regulatory or government action against us related to the products made in that facility. Such action could include suspension of or delay in regulatory approvals. If the compliance violations are severe, agencies of the government may initiate product seizure, injunction, recall, suspension of production or distribution of our products, loss of certain licenses or other governmental penalties, or civil or criminal prosecution, thereby impacting the reputation of all of our products.
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In the U.S., the DSCSA requires development of an electronic pedigree to track and trace each prescription drug at the salable unit level through the distribution system, which is being implemented incrementally over a 10-year period beginning on January 1, 2015, for manufacturers, wholesale distributors, and re-packagers, and on July 1, 2015 for dispensers. Compliance with the U.S. electronic pedigree requirements has and will continue to increase our operational expenses and impose significant administrative burdens.
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The European Commission passed legislation requiring new product packaging ‘safety features’ to prevent falsification of medicinal products primarily within the prescription medicines sector. All marketing authorization holders in the EU member states and EEA members Norway, Iceland, Liechtenstein and Switzerland were required to introduce the necessary changes by February 9, 2019 (or risk forfeiting their product licenses). However, manufacturers based out of Greece, Belgium and Italy have an extended timeline until February 9, 2025 to implement the serialization guidelines as they already feature similar requirements on their current drug packages. Compliance with the EU electronic pedigree requirements has and will continue to increase our operational expenses and impose significant administrative burdens.
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•
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Global regulatory agencies highly scrutinize any product application submitted to switch a product from physician prescribed Rx to unsupervised OTC use by the general public. The expansion of Rx-to-OTC
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•
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Our infant formula products may be subject to barriers or sanctions imposed by countries or international organizations limiting international trade and dictating the specific content of infant formula products. Governments could enhance regulations on the industry aimed at ensuring the safety and quality of dairy products, including but not limited to, compulsory batch-by-batch inspection and testing for additional safety and quality issues. Such inspections and testing may increase our operating costs related to infant formula products.
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•
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If we are unable to successfully obtain the necessary quota for controlled substances and List I chemicals, we risk having delayed product launches or failing to meet commercial supply obligations. If we are unable to comply with regulatory requirements for controlled substances and List I chemicals, the DEA, or similar regulatory agency, may take regulatory actions, resulting in temporary or permanent interruption of distribution of our products, withdrawal of our products from the market, or other penalties.
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•
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In order to commercially distribute our medical device products in the EU, they need to conform with the requirements of applicable EU directives. The method of assessing conformity varies depending on the class of the product, but normally involves a combination of self-assessment by the manufacturer and a third-party assessment by a notified body, an organization accredited by a member state, which includes an audit of the manufacturer’s quality system and, for some products, specific product testing. If our products fail to meet the applicable EU directives, then we may not meet our projected growth targets and/or incur fines and penalties.
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•
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Complying with the legislative framework for cosmetics and food supplements in the EU remains challenging as a result of changing EU regulations, diverging national regulations from EU regulations, and diverging regulations between EU member states. If our products fail to meet the applicable EU and/or national regulations, then we may not meet our projected growth targets and/or incur fines and penalties.
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•
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Beginning on May 26, 2024, all medical devices sold in the EU will need to be approved under the MDR. Only notified bodies that have been designated under the MDR can carry out conformity assessment procedures, and only for certain types of devices listed by the product codes in their designation. This designation process is a lengthy and costly process, resulting in a shortage of certified notified bodies. If we fail to secure a notified body certified under MDR, this will impact our ability to keep our medical devices in the EU market. Without required approval for our medical devices under MDR, we are not permitted to sell such medical devices in the EU.
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Our operations extend to numerous countries outside the U.S. and are subject to the risks inherent in conducting business globally and under the laws, regulations, and customs of various jurisdictions. These risks include compliance with a variety of national and local laws of countries in which we do business, such as restrictions on the import and export of certain intermediates, drugs, technologies and marking of the country of origin on products imported to the U.S. We must also comply with a variety of U.S. laws related to doing business outside of the U.S., including but not limited to, Office of Foreign Asset Controls; United Nations and EU sanctions; the Iran Threat Reduction and Syria Human Rights Act of 2012; rules relating to the use of certain “conflict minerals” under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and regulations enforced by the U.S. Customs and Border Patrol. Further changes in laws, regulations, and practices affecting the pharmaceutical industry and the healthcare system, including imports, exports, manufacturing, quality, cost, pricing, reimbursement, approval, inspection, and delivery of healthcare, may affect our business and operations.
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By their nature, these programs require us to provide discounts and rebates and therefore reduce our net product revenue. Further, because the amounts of these discounts are based on our commercial sales practices and can be adversely affected by both significant discounts and price increases, it is important that we maintain pricing practices that appropriately take into account these government pricing programs.
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We are required to report pricing data to CMS, including AMP, on a monthly and quarterly basis and BP and ASP on a quarterly basis. We also are required to report quarterly and annual Non-FAMPs to the VA. If we fail to submit required information on a timely basis, make misrepresentations, or knowingly submit false information to the government as to AMP, ASP, or BP, we may be liable for substantial civil monetary penalties or subject to other enforcement actions, such as under the False Claims Act, and CMS may terminate our Medicaid drug rebate agreement. In that event, U.S. federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.
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Because many of our products may be subject to Medicaid FULs or CMS’s Medicaid “actual acquisition cost” payment methodology standard, our products may be subject to reimbursement pressures, and in some cases, those pressures may result from practices outside of our control, including how our competitors price their equivalent products. States are continuing to evaluate their payment methods, and we cannot predict how the FUL or state payment methodologies will affect our pharmacy customers or to what extent these customers may seek additional discounts in light of reimbursement changes in the future. We also cannot predict how the sharing of FUL data and retail survey prices may impact competition in the marketplace in the future.
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Under the 340B program, if we fail to provide required discounts to covered entities, including in connection with the revision of AMP or BP data, we may be subject to refund claims or civil monetary penalties under that program pursuant to new program regulations that became effective January 1, 2019.
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If we inadvertently overcharge the government in connection with our FSS contract or TriCare Agreement, whether due to a misstated FCP or otherwise, we would be required to refund the difference. Failure to make necessary disclosures and/or to identify contract overcharges can result in False Claims Act allegations or potential violations of other laws and regulations. Unexpected refunds to the government, and responses to a government investigation or enforcement action, are expensive and time-consuming, and
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Our reporting and payment obligations under the Medicaid rebate program and other governmental purchasing and rebate programs are complex and may involve subjective decisions. Our calculations and methodologies are subject to review by the governmental agencies, and it is possible that these reviews could result in challenges to our submissions. If we do not comply with those reporting and payment obligations, we could be subject to civil and/or criminal sanctions, including fines, penalties, and possible exclusion from U.S. federal healthcare programs.
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We maintain several single-source supplier relationships, either because alternative sources are not available or because the relationship is advantageous due to regulatory, performance, quality, support, or price considerations. Unavailability or delivery delays of single-source components or products could adversely affect our ability to ship the related product in a timely manner. The effect of unavailability or delivery delays would be more severe if associated with our higher-volume or more profitable products. Even where alternative sources of supply are available, qualifying the alternate suppliers and establishing reliable supplies could cost more or result in delays and a loss of net sales. Additionally, global regulatory requirements for obtaining product approvals could substantially lengthen the approval of an alternate material source. As a result, the loss of a single-source supplier could have a material adverse effect on our results of operations.
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The rapid increase in cost of many raw materials from inflationary forces, such as increased energy costs, and our ability or inability to pass on these increases to our customers could have a negative material impact on our financial results.
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Our infant formula products require certain key raw ingredients that are derived from raw milk, such as skim milk powder, whey protein powder, and lactose. Our supply of milk-based ingredients may be limited by the ability of individual dairy farmers and cooperatives to provide raw milk in the amount and quality we deem necessary. Raw milk production is influenced by factors beyond our control including seasonal and environmental factors, governmental agricultural and environmental policy, and global demand. We cannot guarantee that there will be sufficient supplies of these key ingredients necessary to produce infant formula.
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Our products, and the raw materials used to make the products mentioned above, generally have limited shelf lives. Our inventory levels are based, in part, on expectations regarding future sales. We may experience build-ups in inventory if sales slow. Any significant shortfall in sales may result in higher inventory levels of raw materials and finished products, thereby increasing the risk of inventory spoilage and corresponding inventory write-downs and write-offs. Cargo thefts and/or diversions and economically or maliciously motivated product tampering on store shelves may occur, causing unexpected shortages and harm to our reputation, which may have a material impact on our operations.
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We rely on third parties to source many of our raw materials, as well as to manufacture certain dosage forms such as sterile, injectable products that we distribute. We maintain a strict program of verification and product testing throughout the ingredient sourcing and manufacturing process to identify potential counterfeit ingredients, adulterants, and toxic substances. Nevertheless, discovery of previously unknown problems with the raw materials or product manufacturing processes, or new data suggesting an unacceptable safety risk associated therewith, could result in a voluntary or mandatory withdrawal of the contaminated product from the marketplace, either temporarily or permanently. Any future recall or removal would result in additional costs and lost revenue, harm our reputation, and may give rise to product liability litigation.
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Changes in regulation could impact the supply of the API and certain other raw materials used in our products. For example, the EU recently promulgated new standards requiring all API imported into the EU be certified as complying with GMP established by the EU. The regulations placed the certification
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Ransomware attacks, other cyber breaches or disruptions that impair our ability to develop products, meet regulatory approval requirements or deadlines, produce or ship products, take or fulfill orders, and/or collect or make payments on a timely basis;
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System issues, whether as a result of an intentional breach or a natural disaster, that damage our reputation and cause us to lose customers, experience lower sales volume, and/or incur significant liabilities;
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Significant expense to remediate the results of any attacks or breaches and to ensure compliance with any required disclosures mandated by the numerous global privacy and security laws and regulations; and
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Interruptions, security breaches, or loss, misappropriation, or unauthorized access, use or disclosure of confidential information,
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Companies working to develop new therapies or alternative formulations of products for multiple sclerosis that, if successfully developed, would compete with, or could gain greater acceptance than, Tysabri® and damage its market share. For example, in February 2016, a competitor's pipeline product, Ocrevus®, received breakthrough therapy designation from the FDA, and this product was launched in 2017. The
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Biogen is the owner of the patents on Tysabri®. The loss of protection of these patents, such as a patent invalidation, could adversely affect the royalty stream from Tysabri®. In addition, once the Tysabri® patents expire, other generic companies may introduce products similar to Tysabri® that could adversely affect the royalty stream;
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Foreign currency movement, which could have a negative impact on Royalty Pharma's Tysabri® sales, thereby reducing the royalties;
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Any negative developments relating to Tysabri®, such as safety, efficacy, or reimbursement issues, could reduce demand for Tysabri®; and
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Adverse regulatory or legislative developments could limit or prohibit the sale of Tysabri®, such as restrictions on the use of Tysabri® or safety-related label changes, including enhanced risk management programs, which may significantly reduce expected royalty revenue and require significant expense and management time to address the associated legal and regulatory issues.
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Our products involve risks such as product contamination, spoilage, mislabeling, and tampering that could require us to recall one or more of our products. Serious product quality concerns could also result in governmental actions against us that, among other things, could result in the suspension of production or distribution of our products, product seizures, loss of certain licenses, delays in the issuance of governmental approvals for new products, or other governmental penalties, all of which could be detrimental to our reputation and reduce demand for our products.
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We cannot guarantee that counterfeiting, imitation or other tampering with our products will not occur or that we will be able to detect and resolve it. Any counterfeiting or contamination of any products could negatively impact our reputation and sales, particularly if counterfeit or imitation products cause death or injury to consumers.
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Many of the brands we acquired from Omega Pharma Invest N.V ("Omega") have European recognition. This recognition is the result of the large investments Omega made (and we continue to make) in its products over many years. The quality and safety of the products are critical to our business. If we are unable to effectively manage real or perceived issues, including concerns about safety, quality, efficacy, or similar matters, sentiments toward us and our products could be negatively impacted.
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Our CSCI segment's financial success is dependent on the success of its brands, and the success of these brands can suffer if marketing plans or product initiatives do not have the desired impact on a brand’s image or its ability to attract consumers, and the performance of the segment may be negatively impacted if spending on such plans and initiatives does not generate the returns we anticipate. In addition, given the association of individual products within the commercial network of our CSCI segment, an issue with one of our products could negatively affect the reputation of other products, thereby potentially hurting our financial results.
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Powdered infant formula products are not sterile. All of our infant formula products must be prepared and maintained according to label instruction to retain their flavor and nutritional value and avoid contamination or deterioration. Depending on the product, a risk of contamination or deterioration may exist at each stage of the production cycle, including the purchase and delivery of raw materials, the processing and packaging of food products, and the use and handling by consumers, hospital personnel, and healthcare professionals. If certain of our infant formula products are found or alleged to have suffered contamination or deterioration, whether or not under our control, our reputation and our infant formula product category sales could be materially adversely affected.
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To the extent that we seek to use social media tools to communicate about our products and/or business, there are uncertainties as to the rules that apply to such communications, or as to the interpretations that authorities will apply to the rules that exist. As a result, despite our efforts to monitor evolving social media communication guidelines and comply with applicable rules, there is risk that our use of social media for such purposes may cause us to be found in violation of them. A violation of such guidelines may damage our reputation as well as cause potential lawsuits and adversely affect our operating activities.
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Our employees may knowingly or inadvertently make use of social media tools in ways that may not be aligned with our social media strategy, may give rise to liability, or could lead to the loss of trade secrets or other intellectual property, or public exposure of personal information (including sensitive personal information) of our employees, clinical trial patients, customers, and others.
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Negative posts or comments about us, store brands or generic pharmaceuticals, or our products in social media could seriously damage our reputation and could adversely affect our business. In addition, negative posts or comments about our products could result in increased pharmacovigilance reporting requirements, which may give rise to liability if we fail to fully comply with such requirements.
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Difficulty involved with managing the expanded operations of the respective parties, as well as identifying the extent of all weaknesses, risks, and contingent and other liabilities;
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Uncertainties involved in assessing the value, strengths, and potential profitability of the respective parties, as well as identifying the extent of all weaknesses, risks, and contingent and other liabilities of acquisition targets;
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Unanticipated changes in the business, industry, market or general economic conditions different from the assumptions underlying our rationale for pursuing the transaction;
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Difficulties due to a lack of, or limited experience in, any new product or geographic markets we enter;
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Inability to achieve identified operating and financial synergies, or return on investment, from an acquisition in the amounts or on the time frame anticipated;
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Substantial demands on our management, operational resources, technology, and financial and internal control systems, which could lead to dissatisfaction and potential loss of key customers, management, or employees;
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Integration activities that may detract attention from our day-to-day business, and substantial costs associated with the transaction process or other material adverse effects as a result of these integration efforts; and
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Difficulties, restrictions or increased costs associated with raising future capital in connection with an acquisition may impact our liquidity, credit ratings and financial position, thereby making it more difficult, restrictive or expensive to raise future capital. In addition, the issuance of equity to pay a portion of the purchase price for an acquisition would dilute our existing shareholders.
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Our ability to effectively transfer liabilities, contracts, facilities and personnel to any purchaser;
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Fees for legal and transaction-related services;
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Diversion of management resources; and
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Loss of key personnel and reduction in revenue.
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Unexpected changes in regulatory requirements;
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Problems related to markets with different cultural biases or political systems;
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Possible difficulties in enforcing agreements;
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Longer payment cycles and shipping lead-times;
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Difficulties obtaining export or import licenses;
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Changes to U.S. and foreign trade policies, including the enactment of tariffs on goods imported into the U.S., including but not limited to, goods imported from China; and
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Imposition of withholding or other taxes.
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Certain countries and international organizations have refused to do business with companies with Israeli operations. We are also precluded from marketing our products to certain countries due to U.S. and Israeli regulatory restrictions. International economic sanctions and boycotts of our products could negatively impact our sales and ability to export our products.
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Our facilities in Israel are within a conflict zone. If terrorist acts or military actions were to result in substantial damage to our facilities, our business activities would be disrupted since, with respect to most products, we would need to obtain prior regulatory agency approval for a change in manufacturing site.
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The U.S. Department of State and other governments have at times issued advisories regarding travel to certain countries in which we do business. As a result, regulatory agencies have, at various times, curtailed or prohibited their inspectors from traveling to inspect facilities. If these inspectors are unable to inspect our facilities, the regulatory agencies could withhold approval for new products intended to be produced at those facilities.
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Our international operations may be subject to interruption due to travel restrictions, war, terrorist acts, and other armed conflicts. Also, further threats of armed hostilities in certain countries could limit or disrupt markets and our operations, including disruptions resulting from the cancellation of contracts or the loss of assets. These events could have a material adverse effect on our international business operations.
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On June 23, 2016, the UK electorate voted in a referendum to voluntarily depart from the EU, known as "Brexit". Following the formation of a majority Conservative government in December 2019, the UK approved the withdrawal agreement and left the EU on January 31, 2020. The terms of the UK's final withdrawal remain subject to ongoing negotiation until December 31, 2020, during which current EU regulations will continue to apply in the UK. The UK Parliament banned extensions to the transition period, so the UK must finalize new trading agreements with the EU by December 31, 2020. Trade negotiations are expected to begin in early March 2020, but the nature of the economic relationship between the EU and UK remains uncertain, and there is no guarantee that both parties will be able to reach an agreement before the transition period expires. Additionally, the UK will likely negotiate trade deals with other partners, including the United States. Brexit has created significant instability and volatility in the global financial markets, has led to significant weakening of the British pound compared to the U.S. dollar and other currencies, and could adversely affect European or worldwide economic or market conditions. Although it is unknown what the future trading terms with the EU will be, they may impair the ability of our operations in the EU to transact business in the future in the UK, and similarly the ability of our UK operations to transact business in the future in the EU. Specifically, it is possible that there will be greater restrictions on imports and exports, including possible tariffs, between the UK and EU countries, increased restrictions on freedom of movement for employees, and increased regulatory complexities. Future trading terms between the UK and other trading partners are also unknown. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace or replicate. We are actively monitoring Brexit updates from a government and regulatory perspective. We are preparing for a “hard (no confirmed trading deal with the EU) Brexit", which is intended to ensure we meet both applicable EU and UK regulatory requirements as well as stock-builds to secure supply continuity. There can be no assurances, however, that these preparations will be sufficient or that the final exit terms will be as we anticipate. Any of the above mentioned effects of Brexit, and others we cannot anticipate, could adversely affect our business, business opportunities, operations, and financial results.
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While the challenging global economic environment has not had a material impact on our liquidity or capital resources, there can be no assurance that possible future changes in global financial markets and global economic conditions will not affect our liquidity or capital resources, impact our ability to obtain financing, or decrease the value of our assets.
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The challenging economic conditions have also impacted the movements in exchange rates, which have experienced significant recent volatility. Uncertainty regarding the future growth rates between countries, the influence of central bank actions, and the changing political environment globally may contribute to continued high levels of exchange rate volatility, which could have an adverse impact on our results.
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Our customers could be adversely impacted if U.S. economic conditions worsen. Our CSCA segment does not advertise our store brand products like national brand companies and thus is largely dependent on retailer promotional activities to drive sales volume and increase market share. If our customers do not have the ability to invest in store brand promotional activities, our sales may suffer. Additionally, while we actively review the credit worthiness of our customers and suppliers, we cannot fully predict to what extent they may be negatively impacted by slowing economic growth.
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We may be subject to liability if our products violate applicable laws or regulations in the jurisdictions where our products are distributed. The successful assertion of product liability or other product-related claims against us could result in potentially significant monetary damages, and we could incur substantial legal expenses. Even if a product liability or consumer fraud claim is unsuccessful, not merited, or not fully pursued, we may still incur substantial legal expenses defending against such a claim, and our reputation may suffer.
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We may face environmental exposures including, for example, those relating to discharges from and materials handled as part of our operations, the remediation of soil and groundwater contaminated by hazardous substances or wastes, and the health and safety of our employees. We may in the future face liability for the costs of investigation, removal or remediation of certain hazardous substances or petroleum products on, under or in our currently or formerly owned property, or from a third-party disposal facility that we may have used, without regard to whether we knew of, or caused, the presence of the contaminants. The actual or alleged presence of these substances, or the failure to remediate them, could have adverse effects, including, for example, substantial investigative or remedial obligations and limitations on our ability to sell or rent affected property or to borrow funds using affected property as collateral. There can be no assurance that environmental liabilities and costs will not have a material adverse effect on us. See Item 1. Business - Information Applicable to All Reportable Segments - Environmental for more information.
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Our CSCI and CSCA segments regularly make advertising claims regarding the effectiveness of their products, which we are responsible for defending. An unsuccessful defense of a product-related claim could result in potentially significant monetary damages and substantial legal expenses. Even if a claim is unsuccessful, not merited, or not fully pursued, we may still incur substantial legal expenses defending against such a claim, and our reputation could suffer.
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Additionally, we are the target of claims asserting violations of securities fraud and derivative actions, or other litigation proceedings, and may be in the future.
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As a manufacturer of generic pharmaceutical products, the ability of our CSCA, CSCI, and RX segments to bring new products to market is often limited by third-party patents or proprietary rights and regulatory exclusivity periods awarded on products. Launching new products prior to resolution of intellectual property issues may result in us incurring legal liability if the related litigation is later resolved against us. The cost and time for us to develop prescription and Rx-to-OTC switch products is significantly greater than the rest of the new products that we introduce. Any failure to bring new products to market in a timely manner could cause us to lose market share, and our operating results could suffer.
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We could have to defend against charges that we violated patents or proprietary rights of third parties. This could require us to incur substantial expense and could divert significant effort of our technical and management personnel. If we are found to have infringed on the rights of others, we could lose our right to develop or manufacture some products or could be required to pay monetary damages or royalties to license proprietary rights from third parties. Additionally, if we choose to settle a dispute through licensing or similar arrangements, the costs associated with these arrangements may be substantial and could include ongoing royalties. An adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling a number of our products.
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At times, our CSCA or RX segments may seek approval to market drug products before the expiration of patents for those products, based upon our belief that such patents are invalid, unenforceable or would not be infringed by our products. In these cases, we may face significant patent litigation. Depending upon a complex analysis of a variety of legal and commercial factors, we may, in certain circumstances, elect to market a generic pharmaceutical product while litigation is pending, before any court decision, or while an appeal of a lower court decision is pending, known as an "at risk" launch. The risk involved in an "at risk" launch can be substantial because, if a patent holder ultimately prevails, the remedies available to the patent holder may include, among other things, damages measured by the profits lost by the holder, which are often significantly higher than the profits we make from selling the generic version of the product. By electing to proceed in this manner, we could face substantial damages if we receive an adverse final court decision. In the case where a patent holder is able to prove that our infringement was "willful" or "exceptional," under applicable law, the patent holder may be awarded up to three times the amount of its actual damages or we may be required to pay attorneys’ fees.
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We have been issued patents covering certain of our products, and we have filed, and expect to continue to file, patent applications seeking to protect newly developed technologies and products in various countries. Any existing or future patents issued to or licensed by us may not provide us with any significant competitive advantages for our products or may even be challenged, invalidated, or circumvented by competitors. In addition, patent rights may not prevent our competitors from developing, using, or commercializing non-infringing products that are similar or functionally equivalent to our products.
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We also rely on trade secrets, unpatented proprietary know-how, and continuing technological innovation that we seek to protect, in part by confidentiality agreements with licensees, suppliers, employees, and consultants. If these agreements are breached, we may not have adequate remedies for any such breach. Disputes may arise concerning the ownership of intellectual property or the applicability of confidentiality agreements. Furthermore, trade secrets and proprietary technology may otherwise become known or be independently developed by competitors or, if patents are not issued with respect to products arising from research, we may not be able to maintain the value of such intellectual property rights.
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Insurance costs could increase significantly, or the availability of insurance may decrease, either of which could adversely impact our financial condition;
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Deductible or retention amounts could increase, or our coverage could be reduced in the future and to the extent losses occur, there could be an adverse effect on our financial results depending on the nature of the loss and the level of insurance coverage we maintained;
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Insurance may not be available to us at an economically reasonable cost or our insurance may not adequately cover our liability in connection with claims brought against us; and
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As our business inherently exposes us to claims, we may become subject to claims for which we are not adequately insured. Unanticipated payment of a large claim may have a material adverse effect on our business.
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Changes to the inversion rules in section 7874 of the Code, the IRS Treasury regulations promulgated thereunder, or other IRS guidance; and
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Legislative proposals aimed at expanding the scope of U.S. corporate tax residence.
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Transition Toll Tax;
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BEAT;
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GILTI;
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Foreign tax credit computations;
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The full expensing of fixed assets placed in service in 2018;
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Interest expense limitations under Section 163(j);
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Deductibility of interest and/or royalty payments made by U.S. corporate taxpayers to foreign related parties in so-called “hybrid mismatch” arrangements under Section 267A; and
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The limitation of deductions for key executive compensation as determined under Section 162(m).
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Changes to tax laws or the interpretation of such tax laws (including additional proposals for fundamental international tax reform in a number of jurisdictions globally);
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Income tax rate changes by governments;
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The jurisdictions in which our profits are determined to be earned and taxed;
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Changes in the valuation of our deferred tax assets and liabilities;
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Adjustments to estimated taxes upon finalization of various tax returns;
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Adjustments to our interpretation of transfer pricing standards, treatment or characterization of intercompany transactions, changes in available tax credits, grants and other incentives;
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Changes in stock-based compensation expense;
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Changes in U.S. generally accepted accounting principles;
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Expiration or the inability to renew tax rulings or tax holiday incentives; and
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Divestitures of current operations.
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Our senior credit facilities, the agreements governing our senior notes, and agreements governing our other indebtedness contain a number of restrictions and covenants that limit our ability to make distributions or other payments to our investors and creditors unless certain financial tests or other criteria are satisfied.
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We also must comply with certain specified financial ratios and tests. These restrictions could affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities, such as acquisitions. If we do not comply with the covenants and restrictions contained in our senior credit facilities, agreements governing our senior notes, and agreements governing our other indebtedness, we could be in default under those agreements, and the debt, together with accrued interest, could then be declared immediately due and payable.
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Any default under our senior credit facilities or agreements governing our senior notes or other indebtedness could lead to an acceleration of debt under other debt instruments that contain cross-acceleration or cross-default provisions. If our indebtedness is accelerated, there can be no assurance that we would be able to repay or refinance our debt or obtain sufficient new financing.
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Downgrades to our credit ratings may limit our access to capital and materially increase borrowing costs on current or future financing, including via trade payables with vendors. Customers' inclination to purchase goods from us may also be affected by the publicity associated with deterioration of our credit ratings.
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There are various maturity dates associated with our credit facilities, senior notes, and other debt facilities. There is no assurance that cash, future borrowings or equity financing will be available for the payment or refinancing of our indebtedness. Further, there is no assurance that future refinancing or renegotiation of our senior credit facilities, senior notes or other debt facilities, or additional agreements will not have materially different or more stringent terms (refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations).
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Under Irish law, our authorized share capital can be increased by an ordinary resolution of our shareholders, and the directors may issue new ordinary or preferred shares up to a maximum amount equal to the authorized but unissued share capital, without shareholder approval, once authorized to do so by the articles of association or by an ordinary resolution of our shareholders.
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Subject to specified exceptions, Irish law grants statutory preemption rights to existing shareholders to subscribe for new issuances of shares for cash, but allows shareholders to authorize the waiver of the statutory preemption rights either in our articles of association or by way of a special resolution. Such disapplication of these preemption rights can either be generally applicable or be in respect of a particular allotment of shares.
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At our annual general meeting of shareholders in April 2019, our shareholders authorized our Board of Directors to issue up to a maximum of 33% of our issued ordinary capital on that date for a period of 18 months from the passing of the resolution. At the annual general meeting, our shareholders also authorized our Board of Directors to issue ordinary shares on a nonpreemptive basis in the following circumstances: (i) an issuance of shares in connection with any rights issuance and (ii) an issuance of shares for cash, if the issuance is limited to up to 5% of the Company’s issued ordinary share capital (with the possibility of issuing an additional 5% of the Company’s issued ordinary share capital provided the Company uses it only in connection with an acquisition or a specified capital investment that is announced contemporaneously with the issuance, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issuance), bringing the total acceptable limit to 10% of the Company’s issued ordinary share capital. Once these authorizations expire, we cannot provide any assurance that they will be renewed by the shareholders at subsequent annual general meetings, which could limit our ability to issue equity and thereby adversely affect the holders of our securities.
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Under Irish law, the duties of directors and officers of a company are generally owed to the company only. As a result, shareholders of Irish companies do not have the right to bring an action against the directors or officers of a company, except in limited circumstances.
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Depending on the circumstances, shareholders may be subject to different or additional tax consequences under Irish law as a result of the acquisition, ownership and/or disposition of ordinary shares, including, but not limited to, Irish stamp duty, dividend withholding tax, Irish income tax, and capital acquisitions tax.
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There is no treaty between Ireland and the U.S. providing for the reciprocal enforcement of foreign judgments. Before a foreign judgment would be deemed enforceable in Ireland, the judgment must be (i) for a definite sum, (ii) provided by a court of competent jurisdiction and (iii) final and conclusive. An Irish High Court may exercise its right to refuse to recognize and enforce a foreign judgment if the foreign judgment was obtained by fraud, if it violated Irish public policy, if it is in breach of natural justice, or if it is irreconcilable with an earlier judgment.
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An Irish High Court may stay proceedings if concurrent proceedings are being brought elsewhere. Judgments of U.S. courts of liabilities predicated upon U.S. federal securities laws may not be enforced by Irish High Courts if deemed to be contrary to public policy in Ireland.
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It could be more difficult for us to obtain shareholder approval for a merger or negotiated transaction than if we were a U.S. company because the shareholder approval requirements for certain types of transactions differ, and in some cases are greater, under Irish law.
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Our ability to receive cash dividends and distributions from our subsidiaries;
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Compliance with applicable laws and debt covenants;
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Our financial condition, results of operations, capital requirements, general business conditions, and other factors that our Board of Directors may deem relevant; and
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The availability of Perrigo Company plc's distributable reserves, being profits of the company available for distribution to shareholders.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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Country
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Number of Facilities
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Segment(s) Supported
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Ireland
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2
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CSCA, CSCI, RX
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United States
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48
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|
CSCA, CSCI, RX
|
Mexico
|
|
10
|
|
CSCA
|
United Kingdom
|
|
8
|
|
CSCI
|
France
|
|
6
|
|
CSCI
|
Australia
|
|
4
|
|
CSCI
|
Belgium
|
|
4
|
|
CSCI
|
Austria
|
|
3
|
|
CSCI
|
Israel
|
|
3
|
|
CSCA, RX
|
India
|
|
3
|
|
CSCA, CSCI
|
Germany
|
|
2
|
|
CSCI
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
|
|
Title and Business Experience
|
|
Age
|
Svend Andersen
|
|
Mr. Andersen was named Executive Vice President and President, Consumer Self-Care International in February 2017. Prior to joining Perrigo in May 2016, Mr. Andersen served as Executive Vice President - Europe for LEO-Pharma from December 2015 to May 2016. Prior to that, he was Regional President and Corporate officer at Hospira, Inc.’s Europe, Middle East and Africa (“EMEA”) business for five years, was Executive Vice President responsible for the Western European division’s pharmaceuticals, generics, OTC and hospital products businesses at Actavis from 2008 to 2015 including leading Alpharma’s EMEA businesses prior to its acquisition by Actavis, and prior to that, spent 10 years with Ferrosan (A Novo Nordisk Subsidiary) specialized in OTC and consumer health products as Vice President for Global Commercial Operations.
|
|
58
|
James E. Dillard III
|
|
James E. Dillard III was named Executive Vice President and Chief Scientific Officer in January 2019. Mr. Dillard joined Perrigo from Altria Group, Inc., where he served as Senior Vice President, Research, Development and Sciences and Chief Innovation Officer from January 2009 to May 2018. During his tenure with Altria Group, Mr. Dillard led the creation of the Regulatory Affairs function in 2009 and also served as Chief Innovation Officer for Altria Client Services and Senior Vice President of Research, Development & Regulatory Affairs for Altria Group. He held science and technology leadership roles with U.S. Smokeless Tobacco Company, an Altria Group Inc. operating company, from 2001 to 2009. Mr. Dillard worked for the U.S. Food and Drug Administration between 1987 and 2001 as Director of the Division of Cardiovascular and Respiratory Devices, as well as in various leadership roles in the Center for Devices and Radiological Health and the Office of Device Evaluation.
|
|
56
|
Thomas M. Farrington
|
|
Mr. Farrington was named Executive Vice President and Chief Information Officer in November 2015. He formerly served as Senior Vice President and Chief Information Officer from October 2006 to November 2015.
|
|
62
|
Ronald C. Janish
|
|
Mr. Janish was named Chief Transformation Officer in January 2019 and Executive Vice President of Global Operations and Supply Chain in October 2015. He served as Senior Vice President of International and Rx Operations from 2012 until 2015 and as Managing Director of Perrigo’s Australian operations from 2010 to 2012. Previously, he held Senior Vice President roles for Perrigo in International Market Development, China Business Development and Global Procurement.
|
|
54
|
Murray S. Kessler
|
|
Mr. Kessler was appointed President, Chief Executive Officer and Board Member of Perrigo Company plc, effective October 8, 2018. Before joining Perrigo, Mr. Kessler served as the Chairman of the Board of Directors, President and CEO of Lorillard, Inc. (2010-2015). He served as Vice Chair of Altria, Inc. (2009) and President and CEO of UST, Inc. (2000-2009), a wholly owned subsidiary. Previous to his time at UST, Mr. Kessler had over 18 years of consumer packaged goods experience with companies including Vlasic Foods International, Campbell Soup and The Clorox Company. Since 2015, Mr. Kessler has served as voluntary President of the United States Equestrian Federation, a non-profit national governing body.
|
|
60
|
Todd W. Kingma
|
|
Mr. Kingma was named Executive Vice President, General Counsel and Secretary in May 2006. He served as Vice President, General Counsel and Secretary from August 2003 to May 2006.
|
|
60
|
Sharon Kochan
|
|
Mr. Kochan was named Executive Vice President and President, RX Pharmaceuticals in October 2018. He served as Executive Vice President and President, Branded Consumer Healthcare International from February 2017 to October 2018. He served as Executive Vice President and General Manager, Consumer Healthcare International from August 2012 to February 2017. He served as Executive Vice President, General Manager of Prescription Pharmaceuticals from March 2007 to July 2012 and as Senior Vice President of Business Development and Strategy from March 2005 to March 2007. Mr. Kochan was Vice President, Business Development of Agis Industries (1983) Ltd. from July 2001 until the acquisition of Agis by the Company in March 2005.
|
|
51
|
Jeffrey R. Needham
|
|
Mr. Needham was named Executive Vice President and President of Consumer Self-Care Americas in October 2009. He served as Senior Vice President of Commercial Business Development for Consumer Healthcare from March 2005 through October 2009. Previously, he served as Senior Vice President of International from November 2004 to March 2005. He served as Managing Director of Perrigo’s U.K. operations from May 2002 to November 2004 and as Vice President of Marketing from 1993 to 2002.
|
|
63
|
Grainne Quinn
|
|
Dr. Quinn was named Executive Vice President in July 2016 and has served as Chief Medical Officer since November 2015. Prior to that she served as Vice President and Head of Global Patient Safety from January 2014 until November 2015. Dr. Quinn was Vice President and Head of Global Pharmacovigilance and Risk Management for Elan from April 2009 until December 2013 when the Company acquired Elan.
|
|
50
|
|
|
|
|
|
|
|
Title and Business Experience
|
|
Age
|
Raymond P. Silcock
|
|
Mr. Silcock was named Executive Vice President and Chief Financial Officer in March 2019. Prior to joining Perrigo, Mr. Silcock served as CFO at INW Holdings from 2018 to 2019 and as EVP and CFO of CTI Foods from 2016 to 2018. In March 2019, CTI Foods filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court in Delaware. From 2013 until the company’s sale in 2016, Mr. Silcock was EVP and CFO of Diamond Foods, Inc. and previously held CFO roles at UST, Inc., Swift & Co. and Cott Corporation. He also served on the board of Pinnacle Foods, Inc. from 2008 until the company was sold in 2018. His early career was highlighted by an 18-year tenure in positions of increasing responsibility at Campbell Soup Company. Mr. Silcock is a Fellow of the Chartered Institute of Management Accountants (UK).
|
|
69
|
Robert Willis
|
|
Mr. Willis was named Executive Vice President and Chief Human Resources Officer in March 2019 after serving as Vice President of Human Resources Global Businesses for nearly six years. Prior to joining Perrigo, Mr. Willis gained more than 20 years of experience in Human Resources leadership through roles with Fawaz Alhokair Group in the Middle East, GE Capital in the UK and Ireland, DoubleClick in North America and internationally, and Norkom Technologies in Europe and North America. He also was a Partner and Founding Member of the Black & White Group.
|
|
51
|
ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
*
|
$100 invested on December 31, 2014 in stock or index - including reinvestment of dividends. Indexes calculated on month-end basis.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Year Ended
|
|
Six Months Ended
|
||||||||||||||||||||
(in millions, except per share amounts)
|
December 31, 2019(1)
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016(2)
|
|
December 31, 2015(3)
|
|
December 27, 2014(4)
|
||||||||||||
Statements of Operations Data
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
4,837.4
|
|
|
$
|
4,731.7
|
|
|
$
|
4,946.2
|
|
|
$
|
5,280.6
|
|
|
$
|
2,632.2
|
|
|
$
|
1,844.7
|
|
Cost of sales
|
3,064.1
|
|
|
2,900.2
|
|
|
2,966.7
|
|
|
3,228.8
|
|
|
1,553.3
|
|
|
1,170.9
|
|
||||||
Gross profit
|
1,773.3
|
|
|
1,831.5
|
|
|
1,979.5
|
|
|
2,051.8
|
|
|
1,078.9
|
|
|
673.8
|
|
||||||
Operating expenses
|
1,568.5
|
|
|
1,595.0
|
|
|
1,381.3
|
|
|
4,051.5
|
|
|
1,011.3
|
|
|
384.1
|
|
||||||
Operating income (loss)
|
$
|
204.8
|
|
|
$
|
236.5
|
|
|
$
|
598.2
|
|
|
$
|
(1,999.7
|
)
|
|
$
|
67.6
|
|
|
$
|
289.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
$
|
146.1
|
|
|
$
|
131.0
|
|
|
$
|
119.6
|
|
|
$
|
(4,012.8
|
)
|
|
$
|
42.5
|
|
|
$
|
180.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted earnings (loss) from continuing operations per share
|
$
|
1.07
|
|
|
$
|
0.95
|
|
|
$
|
0.84
|
|
|
$
|
(28.01
|
)
|
|
$
|
0.29
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Dividends declared per share
|
$
|
0.82
|
|
|
$
|
0.76
|
|
|
$
|
0.64
|
|
|
$
|
0.58
|
|
|
$
|
0.25
|
|
|
$
|
0.21
|
|
(1)
|
Includes the results of operations for assets acquired from Ranir Global Holdings, LLC for the six months ended December 31, 2019.
|
(2)
|
Includes the results of operations for assets acquired from Barr Laboratories, Inc. and assets acquired from Matawan Pharmaceuticals, LLC for the five months and eleven months and one week ended December 31, 2016, respectively.
|
(3)
|
Includes the results of operations of Naturwohl and the GSK, ScarAway®, and Entocort® asset acquisitions for the two and a half months, three months, three months, and two weeks ended December 31, 2015, respectively.
|
(4)
|
Includes the results of operations for assets acquired from Lumara Health, Inc. for the two months ended December 27, 2014.
|
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31,
2015 |
|
December 27,
2014 |
||||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
354.3
|
|
|
$
|
551.1
|
|
|
$
|
678.7
|
|
|
$
|
622.3
|
|
|
$
|
417.8
|
|
|
$
|
3,596.1
|
|
Total assets
|
$
|
11,301.4
|
|
|
$
|
10,983.4
|
|
|
$
|
11,628.8
|
|
|
$
|
13,870.1
|
|
|
$
|
19,349.6
|
|
|
$
|
16,508.4
|
|
Long-term debt, less current portion
|
$
|
3,365.8
|
|
|
$
|
3,052.2
|
|
|
$
|
3,270.8
|
|
|
$
|
5,224.5
|
|
|
$
|
4,971.6
|
|
|
$
|
4,439.4
|
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Consumer Self-Care Americas ("CSCA"), formerly Consumer Healthcare Americas, comprises our consumer self-care business (OTC, contract manufacturing, infant formula, and oral self-care categories and our divested animal health category) in the U.S., Mexico and Canada.
|
•
|
Consumer Self-Care International ("CSCI"), formerly Consumer Healthcare International, comprises our branded consumer self-care business primarily in Europe and Australia, our consumer-focused business in the United Kingdom and parts of Asia, and our liquid licensed products business in the United Kingdom.
|
•
|
Prescription Pharmaceuticals ("RX") comprises our prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel, which were previously in our CSCI segment.
|
•
|
High quality;
|
•
|
Superior customer service;
|
•
|
Leading innovation;
|
•
|
Best cost; and
|
•
|
Empowered people,
|
•
|
Leadership in first-to-market product development and product life cycle management;
|
•
|
Turn-key regulatory and promotional capabilities;
|
•
|
Management of supply chain complexity and utilizing economies of scale;
|
•
|
Quality and cost effectiveness throughout the supply chain creating a sustainable, low-cost network;
|
•
|
Deep understanding of consumer needs and customer strategies;
|
•
|
Industry leading e-commerce support; and
|
•
|
Expansive pan-European commercial infrastructure, brand-building capabilities, and a diverse product portfolio.
|
•
|
We previously announced a plan to separate our RX business, which, when completed, will enable us to focus on expanding our consumer-focused businesses. In 2019, we continued preparations related to our planned separation, which may include a possible sale, spin-off, merger or other form of separation. While we remain committed to transforming to a consumer-focused business, we have not committed to a specific date or form for the separation. In connection with the proposed separation, we have incurred significant preparation costs and will continue to incur costs that when completed will be in the range of $45.0 million to $80.0 million, excluding restructuring expenses and transaction costs, depending on the final timing and structure of the transaction.
|
•
|
On July 8, 2019, we completed the sale of our animal health business to PetIQ for cash consideration of $182.5 million, which resulted in a pre-tax gain of $71.7 million recorded in Other (income) expense, net on the Consolidated Statements of Operations.
|
•
|
On July 1, 2019, we acquired 100% of the outstanding equity interest in Ranir Global Holdings, LLC ("Ranir"), a privately-held leading global supplier of private label and branded oral self-care products. After post-closing adjustments, total cash consideration paid was $747.7 million, net of $11.5 million cash acquired. This transaction advances our transformation to a consumer-focused, self-care company while enhancing our position as a global leader in consumer self-care solutions.
|
•
|
During the year ended December 31, 2018, our divested financial asset Tysabri® met the 2018 global net sales threshold resulting in a $170.1 million gain. We received the $250.0 million royalty payment on February 22, 2019.
|
•
|
During the year ended December 31, 2018, we repurchased $400.0 million worth of shares as part of our authorized share repurchase plan.
|
|
Year Ended
|
||||||||||
(in millions)
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Net sales
|
$
|
4,837.4
|
|
|
$
|
4,731.7
|
|
|
$
|
4,946.2
|
|
Gross profit
|
$
|
1,773.3
|
|
|
$
|
1,831.5
|
|
|
$
|
1,979.5
|
|
Gross profit %
|
36.7
|
%
|
|
38.7
|
%
|
|
40.0
|
%
|
|||
Operating income
|
$
|
204.8
|
|
|
$
|
236.5
|
|
|
$
|
598.2
|
|
Operating income %
|
4.2
|
%
|
|
5.0
|
%
|
|
12.1
|
%
|
*
|
Total net sales by geography is derived from the location of the entity that sells to a third party.
|
•
|
$279.4 million, or a 6%, net increase due to new product sales of $230.5 million, an increase of $151.4 million due to our acquisition of Ranir, and an overall increase in demand for existing products, partially offset by normal levels of competition-driven pricing pressure primarily in our RX segment and a $59.0 million decrease due to discontinued products; partially offset by
|
•
|
$173.7 million decrease due to:
|
◦
|
$86.4 million decrease due primarily to unfavorable Euro foreign currency translation;
|
◦
|
$50.2 million decrease due to our divested animal health business;
|
◦
|
$27.9 million decrease due to our exited infant foods business; and
|
◦
|
$9.2 million decrease due to the retail market withdrawal of Ranitidine products.
|
•
|
$58.2 million decrease in gross profit, or a 200 basis point decrease in gross profit as a percentage of net sales, due primarily to normal levels of competition-driven pricing pressure in our RX segment, the retail market withdrawal of Ranitidine products and unfavorable product mix; partially offset by
|
•
|
$26.5 million decrease in operating expenses due primarily to:
|
◦
|
$39.9 million decrease in impairment charges due primarily to the absence of $221.9 million in impairment charges related to animal health goodwill and intangible assets and certain in-process research and development ("IPR&D") taken in the prior year period; partially offset by $184.5 million in current year impairments primarily for our RX U.S. reporting unit goodwill and certain definite-lived intangible assets in our RX and CSCI segments; and
|
◦
|
$31.1 million decrease in R&D expenses primarily related to the absence of a $50.0 million upfront license fee payment to enter into a license agreement with Merck Sharp & Dohme Corp in the prior year period, partially offset by current year innovation investments and pre-commercialization R&D costs for generic albuterol sulfate inhalation aerosol, the generic version of ProAir® HFA; partially offset by
|
◦
|
$17.8 million increase due to the absence of an insurance recovery received in the prior year; and
|
◦
|
$20.6 million increase in selling and administrative expenses due primarily to restored employee incentive compensation, increased acquisition and integration-related charges due to the Ranir acquisition; partially offset by favorable Euro foreign currency translation.
|
•
|
$159.3 million, or a 3%, net decrease due primarily to normal levels of competition-driven pricing pressure primarily in our RX segment, discontinued products of $66.4 million, and a decrease in volume in most segments, partially offset by $169.8 million increase due to new product sales; and
|
•
|
$55.2 million decrease due to:
|
◦
|
$88.7 million decrease due to our divested Russian business and Israel API business; partially offset by
|
◦
|
$33.5 million increase due primarily to favorable Euro foreign currency translation.
|
•
|
$148.0 million decrease in gross profit, or a 130 basis point decrease in gross profit as a percentage of net sales, due primarily to pricing pressure in our CSCA and RX segments, unfavorable product mix, and operating variances and increased input costs; partially offset by favorable pricing and benefits from continued insourcing initiatives in our CSCI segment; and
|
•
|
$213.7 million increase in operating expenses due primarily to:
|
◦
|
$176.9 million increase in impairment charges related primarily to animal health goodwill and intangible assets in 2018; partially offset by 2017 impairment charges related to certain definite-lived intangible assets and IPR&D;
|
◦
|
$50.9 million increase in R&D expense primarily related to a $50.0 million upfront license fee payment to enter into a license agreement with Merck Sharp & Dohme Corp;
|
◦
|
$38.0 million increase due to the absence of a gain for the sale of certain ANDAs recognized in 2017, and the absence of a gain related to contingent consideration adjustments; partially offset by
|
◦
|
$32.4 million decrease in restructuring expense due primarily to the cost reduction initiatives and strategic organizational enhancements taken in 2017; and
|
◦
|
$17.8 million decrease due primarily to an insurance recovery.
|
|
Year Ended
|
||||||||||||||
|
December 31, 2019
|
||||||||||||||
|
CSCA
|
|
CSCI(1)
|
|
RX(2)
|
|
Total
|
||||||||
Goodwill
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
109.2
|
|
|
$
|
109.2
|
|
Definite-lived intangible assets
|
—
|
|
|
9.7
|
|
|
59.8
|
|
|
69.5
|
|
||||
IPR&D
|
4.1
|
|
|
0.1
|
|
|
1.6
|
|
|
5.8
|
|
||||
|
$
|
4.1
|
|
|
$
|
9.8
|
|
|
$
|
170.6
|
|
|
$
|
184.5
|
|
|
Year Ended
|
||||||||||
|
December 31, 2018
|
||||||||||
|
CSCA(1)
|
|
CSCI
|
|
Total
|
||||||
Goodwill
|
$
|
136.7
|
|
|
$
|
—
|
|
|
$
|
136.7
|
|
Indefinite-lived intangible assets
|
27.7
|
|
|
—
|
|
|
27.7
|
|
|||
Definite-lived intangible assets
|
48.9
|
|
|
0.7
|
|
|
49.6
|
|
|||
Assets held-for-sale
|
0.6
|
|
|
1.1
|
|
|
1.7
|
|
|||
IPR&D
|
8.7
|
|
|
—
|
|
|
8.7
|
|
|||
|
$
|
222.6
|
|
|
$
|
1.8
|
|
|
$
|
224.4
|
|
|
Year Ended
|
||||||||||||||||||
|
December 31, 2017
|
||||||||||||||||||
|
CSCA(1)
|
|
CSCI(2)
|
|
RX(3)
|
|
Other(4)
|
|
Total
|
||||||||||
Definite-lived intangible assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19.7
|
|
|
$
|
—
|
|
|
$
|
19.7
|
|
Assets held-for-sale
|
—
|
|
|
3.7
|
|
|
—
|
|
|
3.3
|
|
|
7.0
|
|
|||||
IPR&D
|
—
|
|
|
1.1
|
|
|
11.6
|
|
|
—
|
|
|
12.7
|
|
|||||
Property, plant, and equipment
|
4.5
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
8.1
|
|
|||||
|
$
|
4.5
|
|
|
$
|
4.8
|
|
|
$
|
34.9
|
|
|
$
|
3.3
|
|
|
$
|
47.5
|
|
•
|
On February 20, 2020, we entered into a definitive agreement to acquire the oral care assets of High Ridge Brands for cash of $113.0 million. The transaction is expected to close in the first quarter of 2020 subject to bankruptcy court approval in connection with High Ridge Brands’ Chapter 11 cases, as well as other customary closing conditions. This transaction, in combination with our existing children’s oral self-care portfolio, provides a new platform for disruptive product innovation in the form of exclusive store and value brand programs that challenge current national brand oral care offerings.
|
•
|
On January 3, 2020, we acquired Steripod®, a leading toothbrush accessory brand and innovator in the toothbrush protector market, from Bonfit America Inc. The acquisition, which includes a portfolio of antibacterial toothbrush protectors, kids’ toothbrush protectors and tongue cleaners, complements our current portfolio of oral self-care products, and leverages our manufacturing and marketing platform. Operating results attributable to the products will be included in our CSCA segment. Total consideration paid was $24.7 million, subject to customary post-closing adjustments
|
•
|
On November 29, 2019, we acquired the branded OTC rights to Prevacid®24HR from GlaxoSmithKline for $61.5 million. The acquisition of Prevacid®24HR expands our U.S. OTC presence with a leading brand in our digestive health product category.
|
•
|
During the three months ended September 28, 2019, after regulatory bodies announced worldwide that Ranitidine may potentially contain N-nitrosodimethylamine ("NDMA"), a known environmental contaminant, we promptly began testing our externally-sourced Ranitidine API and Ranitidine-based products. On October 8, 2019, we halted shipments of the product based upon preliminary results. Based on the totality of data gathered, we made the decision to conduct a voluntary retail market withdrawal, which resulted in a decrease in net sales of $7.4 million and a decrease in gross profit of $15.5 million in our CSCA segment.
|
•
|
On July 8, 2019, we completed the sale of our animal health business to PetIQ for cash consideration of $182.5 million, which resulted in a pre-tax gain of $71.7 million recorded in Other (income) expense, net on the Consolidated Statements of Operations.
|
•
|
On July 1, 2019, we acquired Ranir, a privately-held leading global supplier of private label and branded oral self-care products, for $747.7 million. This transaction advances our transformation to a consumer-focused, self-care company while enhancing our position as a global leader in consumer self-care solutions.
|
•
|
On April 1, 2019, we purchased the ANDAs and other records and registrations of Budesonide Nasal Spray, a generic equivalent of Rhinocort Allergy® and Triamcinolone Nasal Spray, a generic equivalent of Nasacort Allergy®, from Barr Laboratories, Inc., a subsidiary of Teva Pharmaceuticals, for a total of $14.0 million in cash.
|
|
|||||||
|
Year Ended
|
||||||
(in millions)
|
December 31,
2019 |
|
December 31,
2018 |
||||
Net sales
|
$
|
2,487.7
|
|
|
$
|
2,411.6
|
|
Gross profit
|
$
|
798.9
|
|
|
$
|
789.0
|
|
Gross profit %
|
32.1
|
%
|
|
32.7
|
%
|
||
Operating income
|
$
|
414.0
|
|
|
$
|
174.4
|
|
Operating income %
|
16.6
|
%
|
|
7.2
|
%
|
•
|
$162.1 million, or 7%, net increase due primarily to an increase of $106.4 million due to our acquisition of Ranir, increased volume due to OTC category growth, market share gains from store brand competitors partly driven by $36.2 million of new product sales, growth in OTC e-commerce, and increased OTC store brand penetration versus national brand, partially offset by lower infant formula contract pack sales as several branded customers made the strategic decision to exit the category, lower net sales in the Mexico business, and competition-driven pricing pressure; partially offset by
|
•
|
$85.5 million decrease due to:
|
◦
|
$50.2 million decrease due to our divested animal health business;
|
◦
|
$27.9 million decrease due to our exited foods business; and
|
◦
|
$7.4 million decrease due to the retail market withdrawal of Ranitidine products.
|
•
|
$9.9 million increase in gross profit due primarily to increased net sales as described above, but a 60 basis point decrease in gross profit as a percentage of net sales, due primarily to pricing pressures, the retail market withdrawal of Ranitidine products, and unfavorable product mix; and
|
•
|
$229.7 million decrease in operating expenses due primarily to:
|
◦
|
$218.4 million decrease in impairment charges due primarily to the absence of $213.2 million in impairment charges related to animal health goodwill and intangible assets and a $5.0 million decrease in certain IPR&D impairments; and
|
◦
|
$34.5 million decrease in R&D expense due primarily to the absence of a $50.0 million upfront license fee payment to enter into a license agreement with Merck; partially offset by current year innovation investments; partially offset by
|
◦
|
$15.5 million increase in selling and administrative expenses due primarily to increased advertising and promotional spending to support product launches and eCommerce growth, an increase in employee-related expenses, and the acquisition of Ranir; and
|
◦
|
$7.1 million increase in other operating expenses due to an asset abandonment related to our operations in Vermont.
|
|
|||||||
|
Year Ended
|
||||||
(in millions)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Net sales
|
$
|
2,411.6
|
|
|
$
|
2,429.9
|
|
Gross profit
|
$
|
789.0
|
|
|
$
|
843.7
|
|
Gross profit %
|
32.7
|
%
|
|
34.7
|
%
|
||
Operating income
|
$
|
174.4
|
|
|
$
|
470.9
|
|
Operating income %
|
7.2
|
%
|
|
19.4
|
%
|
•
|
$14.9 million, or 1%, net decrease due to discontinued products of $32.1 million and a decrease of existing product sales due to lost distribution and channel dynamics in our animal health category and normal levels of competition-driven pricing pressure, partially offset by a $48.7 million increase due to new product sales; and
|
•
|
$3.4 million decrease due to unfavorable Mexican peso foreign currency translation.
|
•
|
$54.7 million decrease in gross profit, or a 200 basis point decrease in gross profit as a percentage of net sales, due primarily to operating variances and increased input costs, lower sales in the higher margin animal health business and pricing pressure; and
|
•
|
$241.8 million increase in operating expenses due primarily to:
|
◦
|
$218.0 million increase in impairment charges due primarily to animal health goodwill and intangible assets; and
|
◦
|
$44.8 million increase in R&D expense due primarily to a $50.0 million upfront license fee payment to enter into a license agreement with Merck; partially offset by
|
◦
|
$26.9 million decrease in restructuring expense related to the cost reduction initiatives taken in 2017.
|
•
|
During the three months ended December 31, 2019, we identified impairment indicators related to certain pain relief products that we licensed from a third party and reported as a definite-lived intangible asset. The impairment indicators related to commercial launch delays and a decision by the licensor to not extend the license agreement upon expiration. We determined the asset was fully impaired and recorded an asset impairment of $9.7 million.
|
•
|
During the three months ended September 28, 2019, after regulatory bodies announced worldwide that Ranitidine may potentially contain NDMA, a known environmental contaminant, we promptly began testing our externally sourced Ranitidine API and Ranitidine-based products. On October 8, 2019, we halted shipments of the product based upon preliminary results. Based on the totality of data gathered, we made the decision to conduct a voluntary retail market withdrawal, which resulted in a decrease in net sales of $1.8 million and a decrease in gross profit of $2.9 million in our CSCI segment.
|
•
|
On July 1, 2019, we acquired Ranir, a transaction that advances our transformation to a consumer-focused, self-care company while enhancing our position as a global leader in consumer self-care solutions. Ranir's non-U.S. operations are primarily in the United Kingdom, France, Germany, and China.
|
|
|||||||
|
Year Ended
|
||||||
(in millions)
|
December 31,
2019 |
|
December 31,
2018 |
||||
Net sales
|
$
|
1,382.2
|
|
|
$
|
1,399.3
|
|
Gross profit
|
$
|
639.5
|
|
|
$
|
668.7
|
|
Gross profit %
|
46.3
|
%
|
|
47.8
|
%
|
||
Operating income
|
$
|
19.6
|
|
|
$
|
6.8
|
|
Operating income %
|
1.4
|
%
|
|
0.5
|
%
|
•
|
$71.6 million, or 5%, net increase due to new product sales of $108.0 million driven by the launch of XLS-Medical Forte 5 and new products in the Phytosun® naturals portfolio, a $45.0 million increase due to our acquisition of Ranir, and volume increases in our UK store brand business, partially offset by lower net sales in France associated with restructuring the sales force and a $13.1 million decrease due to discontinued products; more than offset by
|
•
|
$88.7 million decrease due to:
|
◦
|
$86.9 million decrease due primarily to unfavorable Euro foreign currency translation; and
|
◦
|
$1.8 million decrease due to the retail market withdrawal of Ranitidine products.
|
•
|
$29.2 million decrease in gross profit due primarily to unfavorable Euro foreign currency translation, partially offset by the acquisition of Ranir and a 150 basis point decrease in gross profit as a percentage of net sales due primarily to improved performance in the UK store brand business and the acquisition of Ranir, both of which have relatively lower gross margins than the overall portfolio; more than offset by
|
•
|
$42.0 million decrease in operating expenses due primarily to:
|
◦
|
$42.4 million decrease in selling and administrative expenses due primarily to favorable Euro foreign currency translation, partially offset by an increase in employee-related expenses; and
|
◦
|
$7.7 million decrease in restructuring expenses due primarily to the absence of cost reduction initiatives that were taken in the prior year; partially offset by
|
◦
|
$7.9 million increase in impairment charges due primarily to a certain definite-lived intangible asset.
|
•
|
$11.2 million net decrease due primarily to lower sales in the healthy lifestyle and upper respiratory categories and $19.7 million decrease due to discontinued products, partially offset by new product sales of $76.6 million; partially offset by
|
•
|
$4.3 million increase due to:
|
◦
|
$37.3 million increase due to favorable Euro foreign currency translation; partially offset by
|
◦
|
$33.0 million decrease due to the exited Russian business and 2017 distribution phase out initiatives.
|
•
|
$17.5 million increase in gross profit, or a 150 basis point increase in gross profit as a percentage of net sales, due primarily to brand prioritization and exit of low margin businesses, improved pricing and benefits from continued insourcing initiatives; partially offset by
|
•
|
$8.0 million increase in operating expenses due primarily to $5.8 million increase in distribution expense, and $3.0 million increase in R&D expense due primarily to innovation investments and the effect of foreign currency translation.
|
•
|
Although pricing pressure is showing some signs of moderation, during 2019 we continued to experience a significant year-over-year reduction in pricing in our RX segment due to competitive pressure. We expect softness in pricing to continue to impact the segment for the foreseeable future.
|
•
|
On February 24, 2020, along with our partner Catalent Pharma Solutions, we received approval from the U.S. Food and Drug Administration on our abbreviated new drug application for generic albuterol sulfate inhalation aerosol, the first AB-rated generic version of ProAir® HFA. Shortly after approval, we launched with limited commercial quantities and anticipate that we will be in a position to provide a steady supply of this product by the fourth quarter of 2020.
|
•
|
During the three months ended December 31, 2019, we tested our RX U.S. reporting unit for impairment. The impairment indicators related to a combination of industry and market factors that led to reduced projections of future cash flows. We determined the reporting unit was impaired and recorded an impairment charge of $109.2 million.
|
•
|
During the three months ended December 31, 2019, we identified impairment indicators on a definite-lived intangible asset related to our clindamycin and benzoyl peroxide topical gel (generic equivalent to Benzaclin®). Increased competition caused price erosion that lowered our long-range revenue forecast, which indicated the asset was no longer recoverable and was partially impaired. We recorded an asset impairment of $21.2 million.
|
•
|
On July 2, 2019, we purchased the Abbreviated New Drug Application ("ANDA") for a generic gel product for $49.0 million in cash, which we capitalized as a developed product technology intangible asset. We launched the product during the third quarter of 2019.
|
•
|
During the three months ended September 28, 2019, we identified impairment indicators related to our Evamist® branded product, which is a definite-lived intangible asset. The indicators related to a decline in sales volume and a corresponding reduction in our long-range revenue forecast. We recorded an asset impairment of $10.8 million.
|
•
|
On May 17, 2019, we purchased the ANDA for a generic product used to relieve pain for $15.7 million in cash, which we capitalized as a developed product technology intangible asset. We launched the product during the third quarter of 2019.
|
•
|
During the three months ended June 29, 2019, we identified impairment indicators for a certain definite-lived asset related to changes in pricing and competition in the market, which lowered the projected cash flows we expect to generate from the asset. We recorded an asset impairment of $27.8 million.
|
|
|||||||
|
Year Ended
|
||||||
(in millions)
|
December 31,
2019 |
|
December 31,
2018 |
||||
Net sales
|
$
|
967.5
|
|
|
$
|
920.8
|
|
Gross profit
|
$
|
334.9
|
|
|
$
|
373.9
|
|
Gross profit %
|
34.6
|
%
|
|
40.6
|
%
|
||
Operating income
|
$
|
2.6
|
|
|
$
|
214.6
|
|
Operating income %
|
0.3
|
%
|
|
23.3
|
%
|
•
|
$87.5 million increase due to new product sales of $86.3 million driven mainly by Acyclovir cream (generic equivalent to Zovirax® cream), Testosterone Gel 1.62% (generic equivalent to Androgel®), and the Scopolamine Patch relaunch and higher volumes of existing product sales to meet the increased demand of our existing customers, partially offset by competition-driven pricing pressure; partially offset by
|
•
|
$41.8 million of discontinued products.
|
•
|
$39.0 million decrease in gross profit, or a 600 basis point decrease in gross profit as a percentage of net sales, due primarily to competition-driven pricing pressure, and unfavorable product mix; and
|
•
|
$173.0 million increase in operating expense due primarily to $170.7 million increase in impairment charges related to goodwill, certain definite-lived intangible assets and IPR&D, and a $4.8 million increase in R&D expense due primarily to pre-commercialization R&D costs for generic albuterol sulfate inhalation aerosol, the generic version of ProAir® HFA.
|
|
|||||||
|
Year Ended
|
||||||
(in millions)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Net sales
|
$
|
920.8
|
|
|
$
|
1,054.4
|
|
Gross profit
|
$
|
373.9
|
|
|
$
|
454.6
|
|
Gross profit %
|
40.6
|
%
|
|
43.1
|
%
|
||
Operating income
|
$
|
214.6
|
|
|
$
|
306.1
|
|
Operating income %
|
23.3
|
%
|
|
29.0
|
%
|
•
|
$176.8 million decrease due to $162.2 million decrease in sales of existing products due primarily to increased competition-driven pricing pressure and decreased sales volumes of certain products and $14.6 million decrease due to discontinued products; partially offset by
|
•
|
$43.2 million increase due to new product sales due primarily to Testosterone Gel 1.62% (generic equivalent to Androgel®).
|
•
|
$80.7 million decrease in gross profit, or a 250 basis point decrease in gross profit as a percentage of net sales, due primarily to pricing pressure and unfavorable product mix as a result of sales growth in lower margin products; and
|
•
|
$10.8 million increase in operating expense due primarily to:
|
◦
|
$23.0 million increase for the absence of the gain on the sale of certain ANDAs recognized in the prior year, $15.0 million increase for the absence of the gain related to contingent consideration adjustments, and $9.8 million increase in R&D expense due to timing of clinical trials; partially offset by
|
◦
|
$34.9 million decrease in impairment charges related to certain definite-lived intangible assets and IPR&D.
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
231.4
|
|
|
$
|
159.2
|
|
|
$
|
183.9
|
|
|
Year Ended
|
||||||||||
(in millions)
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Change in financial assets
|
$
|
(22.1
|
)
|
|
$
|
(188.7
|
)
|
|
$
|
24.9
|
|
Interest expense, net
|
$
|
121.7
|
|
|
$
|
128.0
|
|
|
$
|
168.1
|
|
Other (income) expense, net
|
$
|
(66.0
|
)
|
|
$
|
6.1
|
|
|
$
|
(10.1
|
)
|
Loss on extinguishment of debt
|
$
|
0.2
|
|
|
$
|
0.5
|
|
|
$
|
135.2
|
|
Year Ended
|
|||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
|||
14.6
|
%
|
|
54.9
|
%
|
|
57.3
|
%
|
•
|
$161.7 million decrease in cash due to the change in accounts receivable due primarily to timing of sales and receipt of payments primarily in RX and CSCI, and our acquisition of Ranir;
|
•
|
$142.6 million decrease in cash due to prior year tax payments made in the current year, current year estimated tax payments, and an Israeli withholding tax payment; and
|
•
|
$74.1 million decrease in cash due to the change in accrued customer programs due primarily to pricing dynamics in our RX segment, as well as timing of rebate and chargeback payments; partially offset by
|
•
|
$88.9 million increase in cash due to the change in net earnings after adjustments for items such as deferred income taxes, impairment charges, restructuring charges, changes in our financial assets, share-based compensation, amortization of debt premium, gain on sale of business, and depreciation and amortization;
|
•
|
$36.0 million increase in cash due primarily to changes in operating leases and litigation related settlements;
|
•
|
$31.6 million decrease in the use of cash primarily due to the continued build-up of inventory at a lower level than in the prior year to support customer demands and improved supply management in our CSCA and CSCI segments, and increased volumes in CSCI due to new product launches; and
|
•
|
$30.8 million decrease in the use of cash due to the change in accrued payroll and related taxes due primarily to an increase in employee incentive compensation expense.
|
•
|
$190.4 million decrease in cash due to the change in net earnings after adjustments for items such as deferred income taxes, impairment charges, restructuring charges, changes in our financial assets, loss on extinguishment of debt, and depreciation and amortization; and
|
•
|
$82.6 million decrease in cash due to the change in inventory due primarily to increased volumes and actions to improve customer service in our CSCA segment and increased volumes due to new product launches and changing market dynamics in our RX segment; partially offset by
|
•
|
$68.4 million increase in cash due to the change in accounts payable due primarily to timing of payments, mix of payment terms, and the absence of transactions related to the exited Russian business and prior year distribution phase out initiatives;
|
•
|
$74.2 million increase in cash due to the change in accrued income taxes due primarily to U.S. Federal tax obligation payments made in the prior year, offset by expected tax refunds;
|
•
|
$26.9 million increase in cash due to the change in accrued liabilities due primarily to the change in royalty and profit sharing accruals; and
|
•
|
$17.8 million increase in cash due to the change in accounts receivable due primarily to the discontinuation of our Belgium accounts receivable factoring program, more than offset by timing of sales and receipt of payments in our CSCA and RX segments.
|
•
|
•
|
$113.5 million decrease in cash used for other acquisitions, primarily for the branded OTC rights to Prevacid®24HR for $61.7 million, an ANDA for a generic gel product for $49.0 million, an ANDA for a generic product used to relieve pain for $15.7 million, and Budesonide Nasal Spray and Triamcinolone Nasal Spray for $14.0 million, partially offset by the absence of $35.6 million of prior year acquisitions primarily related to an ANDA for a generic topical cream (refer to Item 8. Note 3); and
|
•
|
$35.1 million decrease in cash used for capital spending, primarily to increase tablet and infant formula capacity and quality/regulation projects; partially offset by
|
•
|
$250.0 million receipt of the Royalty Pharma contingent milestone proceeds (refer to Item 8. Note 7); and
|
•
|
$177.3 million in proceeds received from divestitures, primarily from our animal health business (refer to Item 8. Note 3).
|
•
|
$2.2 billion absence of proceeds from the 2017 divestment of our Tysabri® financial asset to Royalty Pharma;
|
•
|
$149.4 million absence of 2017 net proceeds from sale of business and other assets;
|
•
|
$73.6 million decrease in proceeds from royalty rights; and
|
•
|
$35.6 million decrease in cash due primarily to the acquisition of an ANDA for a generic topical cream.
|
•
|
$400.0 million absence in share repurchases;
|
•
|
$169.0 million increase due to the issuance of long-term debt in our $600.0 million refinance of the 2018 Term Loan in the current period, offset by the absence of our $431.0 million refinance of the 2014 Term Loan; and
|
•
|
$4.9 million increase in the change in net borrowings (repayments) of revolving credit agreements and other financing; and
|
•
|
$6.5 million decrease in payments on long-term debt; partially offset by
|
•
|
$7.5 million increase in dividend payments.
|
•
|
$2.1 billion and $116.1 million decrease due to payments on long-term debt and premium on early debt retirement, respectively, related to debt extinguishment in 2017; and
|
•
|
$431.0 million increase in issuance of long-term debt in 2018; partially offset by
|
•
|
$208.5 million increase in share repurchases.
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Dividends paid (in millions)
|
$
|
112.4
|
|
|
$
|
104.9
|
|
|
$
|
91.1
|
|
Dividends paid per share
|
$
|
0.82
|
|
|
$
|
0.76
|
|
|
$
|
0.64
|
|
|
|
|
Year Ended
|
||||||
|
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Term loan
|
|
|
|
||||||
*
|
2018 Term loan due March 8, 2020
|
$
|
—
|
|
|
$
|
351.3
|
|
|
|
2019 Term loan due August 15, 2022
|
600.0
|
|
|
—
|
|
|||
|
Total term loans
|
600.0
|
|
|
351.3
|
|
|||
|
|
|
|
|
|
||||
Notes and bonds
|
|
|
|
||||||
|
Coupon
|
Due
|
|
|
|
||||
*
|
5.000%
|
May 23, 2019
|
—
|
|
|
137.6
|
|
||
|
3.500%
|
March 15, 2021
|
280.4
|
|
|
280.4
|
|
||
|
3.500%
|
December 15, 2021
|
309.6
|
|
|
309.6
|
|
||
*
|
5.105%
|
July 28, 2023
|
151.4
|
|
|
154.9
|
|
||
|
4.000%
|
November 15, 2023
|
215.6
|
|
|
215.6
|
|
||
|
3.900%
|
December 15, 2024
|
700.0
|
|
|
700.0
|
|
||
|
4.375%
|
March 15, 2026
|
700.0
|
|
|
700.0
|
|
||
|
5.300%
|
November 15, 2043
|
90.5
|
|
|
90.5
|
|
||
|
4.900%
|
December 15, 2044
|
303.9
|
|
|
303.9
|
|
||
|
Total notes and bonds
|
$
|
2,751.4
|
|
|
$
|
2,892.5
|
|
*
|
Debt denominated in euros subject to fluctuations in the euro-to-U.S. dollar exchange rate.
|
|
Payment Due
|
||||||||||||||||||
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
After 2024
|
|
Total
|
||||||||||
Short and long-term debt (1)
|
$
|
128.1
|
|
|
$
|
1,412.8
|
|
|
$
|
1,237.2
|
|
|
$
|
1,519.5
|
|
|
$
|
4,297.6
|
|
Capital lease obligations
|
4.1
|
|
|
8.1
|
|
|
3.0
|
|
|
14.2
|
|
|
29.4
|
|
|||||
Purchase obligations (2)
|
824.1
|
|
|
21.5
|
|
|
0.3
|
|
|
—
|
|
|
845.9
|
|
|||||
Operating leases (3)
|
37.2
|
|
|
47.6
|
|
|
26.9
|
|
|
41.5
|
|
|
153.2
|
|
|||||
Other contractual liabilities reflected on the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred compensation and benefits (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
104.8
|
|
|
104.8
|
|
|||||
Other (5)
|
50.4
|
|
|
6.6
|
|
|
1.8
|
|
|
—
|
|
|
58.8
|
|
|||||
Total
|
$
|
1,043.9
|
|
|
$
|
1,496.6
|
|
|
$
|
1,269.2
|
|
|
$
|
1,680.0
|
|
|
$
|
5,489.7
|
|
(1)
|
Short-term and long-term debt includes interest payments, which were calculated using the effective interest rate at December 31, 2019.
|
(2)
|
Consists of commitments for both materials and services.
|
(3)
|
Used in normal course of business, principally for warehouse facilities and computer equipment.
|
(4)
|
Includes amounts associated with non-qualified plans related to deferred compensation, executive retention and post employment benefits. Of this amount, we have funded $34.4 million, which is recorded in Other non-current assets on the balance sheet. These amounts are assumed payable after five years, although certain circumstances, such as termination, would require earlier payment.
|
(5)
|
Primarily includes consulting fees, legal settlements, contingent consideration obligations, restructuring accruals, insurance obligations, and electrical and gas purchase contracts, which were accrued in Other current liabilities and Other non-current liabilities at December 31, 2019 for all years.
|
|
RX
|
|
All Other Segments
|
|
|
||||||||||||||||||
|
Chargebacks
|
|
Medicaid
Rebates |
|
Sales Returns and Shelf Stock Allowances
|
|
Admin. Fees and Other Rebates
|
|
Rebates and Other Allowances
|
|
Total
|
||||||||||||
Balance at December 31, 2017
|
$
|
229.9
|
|
|
$
|
36.8
|
|
|
$
|
76.2
|
|
|
$
|
43.2
|
|
|
$
|
126.2
|
|
|
$
|
512.3
|
|
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|
(3.5
|
)
|
||||||
Provisions / Adjustments
|
1,754.4
|
|
|
58.3
|
|
|
17.0
|
|
|
99.6
|
|
|
270.3
|
|
|
2,199.6
|
|
||||||
Credits / Payments
|
(1,718.3
|
)
|
|
(58.7
|
)
|
|
(22.2
|
)
|
|
(98.3
|
)
|
|
(276.1
|
)
|
|
(2,173.6
|
)
|
||||||
Balance at December 31, 2018
|
$
|
266.0
|
|
|
$
|
36.4
|
|
|
$
|
71.0
|
|
|
$
|
44.5
|
|
|
$
|
116.9
|
|
|
$
|
534.8
|
|
Balances acquired in business acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|
5.7
|
|
||||||
Balances disposed of in business divestiture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
|
(4.1
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
(1.7
|
)
|
||||||
Provisions / Adjustments
|
2,127.2
|
|
|
47.9
|
|
|
33.9
|
|
|
116.5
|
|
|
224.6
|
|
|
2,550.1
|
|
||||||
Credits / Payments
|
(2,157.4
|
)
|
|
(56.7
|
)
|
|
(33.4
|
)
|
|
(126.3
|
)
|
|
(227.3
|
)
|
|
(2,601.1
|
)
|
||||||
Balance at December 31, 2019
|
$
|
235.8
|
|
|
$
|
27.6
|
|
|
$
|
71.5
|
|
|
$
|
34.7
|
|
|
$
|
114.1
|
|
|
$
|
483.7
|
|
|
Year Ended
|
||||
|
December 31, 2019
|
|
December 31,
2018 |
||
Volatility
|
30.0
|
%
|
|
30.0
|
%
|
Rate of return
|
7.92
|
%
|
|
8.05
|
%
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
PAGE NO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
1
|
||
|
|
|
2
|
||
|
|
|
3
|
||
|
|
|
4
|
||
|
|
|
5
|
||
|
|
|
6
|
||
|
|
|
7
|
||
|
|
|
8
|
||
|
|
|
9
|
||
|
|
|
10
|
||
|
|
|
11
|
||
|
|
|
12
|
||
|
|
|
13
|
||
|
|
|
14
|
||
|
|
|
15
|
||
|
|
|
16
|
||
|
|
|
17
|
||
|
|
|
18
|
||
|
|
|
19
|
||
|
|
|
20
|
||
|
|
|
21
|
||
|
|
|
22
|
||
|
|
|
|
|
Valuation of Goodwill for the RX U.S., BCS, and CSC UK and Australia Reporting Units
|
Description of the Matter
|
|
At December 31, 2019, the Company’s goodwill was $4,116.7 million. As discussed in Note 1 of the consolidated financial statements, goodwill is not amortized but rather is tested for impairment at least annually at the reporting unit level. The Company’s goodwill is initially assigned to its reporting units as of the acquisition date. The Company recorded a goodwill impairment charge of $109.2 million for the year ended December 31, 2019 in the RX U.S. reporting unit.
Auditing management’s annual goodwill impairment test is complex and highly judgmental due to the significant measurement uncertainty in determining the fair value of the reporting units. In particular, the fair value estimates for the RX U.S., Branded Consumer Self-Care (BCS) and Consumer Self-Care UK and Australia (CSC UK and Australia) reporting units were sensitive to significant assumptions such as revenue growth, operating margins, and discount rate, which are affected by expected future market or economic conditions.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment assessment process. For example, we tested controls over the Company’s forecast process as well as controls over management’s review of the significant assumptions discussed above in estimating the fair values of the reporting units.
To test the fair value of the Company’s reporting units, our audit procedures included, among others, assessing methodologies used and testing the significant assumptions discussed above as well as the completeness and accuracy of the underlying data used by the Company. For example, we compared the significant assumptions used by management to current industry and economic trends, changes in the Company’s business model, customer base or product mix and other relevant factors. We performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value of the reporting unit resulting from changes in the assumptions. We also reviewed the reconciliation of the fair value of the reporting units to the market capitalization of the Company and evaluated the implied control premium. We also assessed the historical accuracy of the significant assumptions used by management to determine the fair value of its reporting units. The evaluation of the Company’s methodology and significant assumptions was performed with the assistance of our valuation specialists.
|
|
|
Uncertain Tax Positions
|
Description of the Matter
|
|
As described in Note 15 to the consolidated financial statements, the Company operates in multiple jurisdictions with complex tax policy and regulatory environments and establishes reserves for uncertain tax positions in accordance with the accounting guidance governing uncertainty in income taxes. Uncertainty in a tax position may arise because tax laws are subject to interpretation. The Company uses significant judgment to (1) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition. At December 31, 2019, the Company had liabilities of $350.5 million, excluding interest and penalties, relating to uncertain tax positions.
Auditing the measurement of the Company’s tax contingencies was challenging because the evaluation of whether a tax position is more likely than not to be sustained and the measurement of the benefit of various tax positions can be complex, involves significant judgment, and is based on interpretations of tax laws and legal rulings.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting process for uncertain tax positions. For example, we tested controls over management’s identification of uncertain tax positions and its application of the recognition and measurement principles for uncertain tax positions.
Our audit procedures included, among others, assessing the Company’s correspondence with the relevant tax authorities and evaluating income tax opinions or other third-party advice obtained by the Company. To test the Company’s assessment and measurement of uncertain tax positions, we involved our tax professionals to assess whether the uncertain tax positions identified by the Company are more-likely-than-not to be sustained upon audit and, if so, to assist in testing the assumptions made by the Company in measuring the amount of tax benefit that qualifies for recognition. We also used our knowledge of, and experience with, the application of domestic and international income tax laws by the relevant income tax authorities to evaluate the Company’s assessments of whether the uncertain tax position is more-likely-than-not to be sustained and, if so, the potential outcomes that could occur upon an audit by a taxing authority. We tested the completeness and accuracy of the data and calculations used to determine the amount of tax benefit to recognize. We also evaluated the adequacy of the Company’s disclosures to the consolidated financial statements in relation to these matters.
|
|
|
Chargebacks and Product Returns
|
Description of the Matter
|
|
As described in Note 1 to the consolidated financial statements under the caption “Revenue,” net product sales include estimates of variable consideration for which accruals and allowances have been established. Variable consideration for product sales include chargebacks, which are recorded as Accrued customer programs, and product returns, which are recorded as a reduction to Accounts receivable.
Auditing the chargeback liability and product returns reserve was challenging because of the subjectivity of certain assumptions required to estimate these amounts. In particular, the accrual for chargebacks includes estimates for outstanding claims that have occurred but for which the related claim has not yet been paid and for future claims that will be made when the wholesaler inventory is sold to the indirect customer. These estimates are based on historical chargeback experience and estimated wholesaler inventory levels. In addition, the estimate of the product returns reserve is based on historical experience with actual returns and considers other factors such as levels of inventory in the distribution channel, product dating and expiration period, size and maturity of the market prior to a product launch, entrance into the market of additional competition, and changes in formulations.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls addressing the risks of material misstatement for chargebacks and product returns. This included, for example, testing controls over management’s review of the significant assumptions used to calculate the chargeback liabilities and product returns reserves discussed above.
To test the Company’s chargeback liability and product returns reserves, we performed audit procedures that included, among others, testing the accuracy and completeness of the underlying data used in the calculations and evaluating the significant assumptions used by management to estimate its reserves. We also tested the Company's retrospective review of the accuracy of the reserves for product returns, compared the results of the retrospective review to the current year and performed analytical procedures, based on Company and external data sources, to evaluate the completeness of the reserves.
|
|
|
Accounting for Acquisition of Ranir
|
Description of the Matter
|
|
As disclosed in Note 3 to the consolidated financial statements, the Company completed its acquisition of Ranir Global Holdings, LLC (Ranir) in 2019. The transaction was accounted for as a business combination.
The recognition and measurement of the Company’s acquisition of Ranir in the 2019 consolidated financial statements was considered especially challenging and required significant auditor judgment due to the complex determination by management of the appropriate assumptions, such as discount rates, revenue growth rates, and projected profit margins, for the valuation of acquired assets, including customer relationships.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls addressing the risks of material misstatement over its accounting for the Ranir acquisition. For example, we tested the effectiveness of controls over the estimation process supporting the recognition and measurement of consideration transferred and customer relationships. We also tested the effectiveness of controls over management’s review of the significant assumptions used in the valuation models.
To test the Company’s accounting for the Ranir acquisition, we performed audit procedures that included, among others, evaluating management’s identification of assets acquired and liabilities assumed and assessing significant assumptions used for the fair value measurements, including the discount rates, revenue growth rates and projected profit margins used in valuing the customer relationships. We involved our valuation specialists to assist with the evaluation of methodologies used by the Company and significant assumptions included in the fair value estimates. We also evaluated the Company’s disclosures to the consolidated financial statements.
|
|
Year Ended
|
||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31,
2017 |
||||||
Net sales
|
$
|
4,837.4
|
|
|
$
|
4,731.7
|
|
|
$
|
4,946.2
|
|
Cost of sales
|
3,064.1
|
|
|
2,900.2
|
|
|
2,966.7
|
|
|||
Gross profit
|
1,773.3
|
|
|
1,831.5
|
|
|
1,979.5
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses
|
|
|
|
|
|
||||||
Distribution
|
96.1
|
|
|
94.2
|
|
|
87.0
|
|
|||
Research and development
|
187.4
|
|
|
218.6
|
|
|
167.7
|
|
|||
Selling
|
567.0
|
|
|
595.7
|
|
|
598.4
|
|
|||
Administration
|
503.0
|
|
|
435.9
|
|
|
461.1
|
|
|||
Impairment charges
|
184.5
|
|
|
224.4
|
|
|
47.5
|
|
|||
Restructuring
|
26.3
|
|
|
21.0
|
|
|
61.0
|
|
|||
Other operating expense (income)
|
4.2
|
|
|
5.2
|
|
|
(41.4
|
)
|
|||
Total operating expenses
|
1,568.5
|
|
|
1,595.0
|
|
|
1,381.3
|
|
|||
|
|
|
|
|
|
||||||
Operating income
|
204.8
|
|
|
236.5
|
|
|
598.2
|
|
|||
|
|
|
|
|
|
||||||
Change in financial assets
|
(22.1
|
)
|
|
(188.7
|
)
|
|
24.9
|
|
|||
Interest expense, net
|
121.7
|
|
|
128.0
|
|
|
168.1
|
|
|||
Other (income) expense, net
|
(66.0
|
)
|
|
6.1
|
|
|
(10.1
|
)
|
|||
Loss on extinguishment of debt
|
0.2
|
|
|
0.5
|
|
|
135.2
|
|
|||
Income before income taxes
|
171.0
|
|
|
290.6
|
|
|
280.1
|
|
|||
Income tax expense
|
24.9
|
|
|
159.6
|
|
|
160.5
|
|
|||
Net income
|
$
|
146.1
|
|
|
$
|
131.0
|
|
|
$
|
119.6
|
|
|
|
|
|
|
|
||||||
Earnings per share
|
|
|
|
|
|
||||||
Basic
|
$
|
1.07
|
|
|
$
|
0.95
|
|
|
$
|
0.84
|
|
Diluted
|
$
|
1.07
|
|
|
$
|
0.95
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding
|
|
|
|
|
|
||||||
Basic
|
136.0
|
|
|
137.8
|
|
|
142.3
|
|
|||
Diluted
|
136.5
|
|
|
138.3
|
|
|
142.6
|
|
|
Year Ended
|
||||||||||
|
December 31, 2019
|
|
December 31,
2018 |
|
December 31,
2017 |
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
146.1
|
|
|
$
|
131.0
|
|
|
$
|
119.6
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
28.4
|
|
|
(156.1
|
)
|
|
328.5
|
|
|||
Change in fair value of derivative financial instruments
|
28.2
|
|
|
(5.7
|
)
|
|
9.7
|
|
|||
Change in fair value of investment securities
|
—
|
|
|
—
|
|
|
(14.1
|
)
|
|||
Change in post-retirement and pension liability
|
(1.8
|
)
|
|
(5.7
|
)
|
|
10.8
|
|
|||
Other comprehensive income (loss), net of tax
|
54.8
|
|
|
(167.5
|
)
|
|
334.9
|
|
|||
Comprehensive income (loss)
|
$
|
200.9
|
|
|
$
|
(36.5
|
)
|
|
$
|
454.5
|
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
354.3
|
|
|
$
|
551.1
|
|
Accounts receivable, net of allowance for doubtful accounts of $6.7 and $6.4, respectively
|
1,243.2
|
|
|
1,073.1
|
|
||
Inventories
|
967.3
|
|
|
878.0
|
|
||
Prepaid expenses and other current assets
|
192.1
|
|
|
400.0
|
|
||
Total current assets
|
2,756.9
|
|
|
2,902.2
|
|
||
Property, plant and equipment, net
|
902.8
|
|
|
829.1
|
|
||
Operating lease assets
|
129.9
|
|
|
—
|
|
||
Goodwill and indefinite-lived intangible assets
|
4,185.5
|
|
|
4,029.1
|
|
||
Definite-lived intangible assets, net
|
2,921.2
|
|
|
2,858.9
|
|
||
Deferred income taxes
|
5.4
|
|
|
1.2
|
|
||
Other non-current assets
|
399.7
|
|
|
362.9
|
|
||
Total non-current assets
|
8,544.5
|
|
|
8,081.2
|
|
||
Total assets
|
$
|
11,301.4
|
|
|
$
|
10,983.4
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Accounts payable
|
$
|
520.2
|
|
|
$
|
474.9
|
|
Payroll and related taxes
|
156.4
|
|
|
132.1
|
|
||
Accrued customer programs
|
394.4
|
|
|
442.4
|
|
||
Other accrued liabilities
|
229.2
|
|
|
201.3
|
|
||
Accrued income taxes
|
32.2
|
|
|
96.5
|
|
||
Current indebtedness
|
3.4
|
|
|
190.2
|
|
||
Total current liabilities
|
1,335.8
|
|
|
1,537.4
|
|
||
Long-term debt, less current portion
|
3,365.8
|
|
|
3,052.2
|
|
||
Deferred income taxes
|
280.6
|
|
|
282.3
|
|
||
Other non-current liabilities
|
515.1
|
|
|
443.4
|
|
||
Total non-current liabilities
|
4,161.5
|
|
|
3,777.9
|
|
||
Total liabilities
|
5,497.3
|
|
|
5,315.3
|
|
||
Commitments and contingencies - Refer to Note 17
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Controlling interests:
|
|
|
|
||||
Preferred shares, $0.0001 par value per share, 10 shares authorized
|
—
|
|
|
—
|
|
||
Ordinary shares, €0.001 par value per share, 10,000 shares authorized
|
7,359.9
|
|
|
7,421.7
|
|
||
Accumulated other comprehensive income
|
139.4
|
|
|
84.6
|
|
||
Retained earnings (accumulated deficit)
|
(1,695.5
|
)
|
|
(1,838.3
|
)
|
||
Total controlling interests
|
5,803.8
|
|
|
5,668.0
|
|
||
Noncontrolling interest
|
0.3
|
|
|
0.1
|
|
||
Total shareholders’ equity
|
5,804.1
|
|
|
5,668.1
|
|
||
Total liabilities and shareholders' equity
|
$
|
11,301.4
|
|
|
$
|
10,983.4
|
|
|
|
|
|
||||
Supplemental Disclosures of Balance Sheet Information
|
|
|
|
||||
Preferred shares, issued and outstanding
|
—
|
|
|
—
|
|
||
Ordinary shares, issued and outstanding
|
136.1
|
|
|
135.9
|
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2017 |
||||||
Cash Flows From (For) Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
146.1
|
|
|
$
|
131.0
|
|
|
$
|
119.6
|
|
Adjustments to derive cash flows:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
396.5
|
|
|
423.6
|
|
|
444.8
|
|
|||
Gain on sale of business
|
(71.7
|
)
|
|
—
|
|
|
—
|
|
|||
Share-based compensation
|
52.2
|
|
|
37.7
|
|
|
43.8
|
|
|||
Impairment charges
|
184.5
|
|
|
224.4
|
|
|
47.5
|
|
|||
Asset abandonments
|
11.0
|
|
|
—
|
|
|
—
|
|
|||
Change in financial assets
|
(22.1
|
)
|
|
(188.7
|
)
|
|
24.9
|
|
|||
Loss on extinguishment of debt
|
0.2
|
|
|
0.5
|
|
|
135.2
|
|
|||
Restructuring charges
|
26.3
|
|
|
21.0
|
|
|
61.0
|
|
|||
Deferred income taxes
|
(43.9
|
)
|
|
(17.9
|
)
|
|
(48.9
|
)
|
|||
Amortization of debt premium
|
(4.4
|
)
|
|
(8.1
|
)
|
|
(22.4
|
)
|
|||
Other non-cash adjustments, net
|
26.6
|
|
|
(11.1
|
)
|
|
(2.7
|
)
|
|||
Subtotal
|
701.3
|
|
|
612.4
|
|
|
802.8
|
|
|||
Increase (decrease) in cash due to:
|
|
|
|
|
|
||||||
Accounts receivable
|
(140.7
|
)
|
|
21.0
|
|
|
3.2
|
|
|||
Inventories
|
(67.0
|
)
|
|
(98.6
|
)
|
|
(16.0
|
)
|
|||
Accounts payable
|
17.0
|
|
|
28.8
|
|
|
(39.6
|
)
|
|||
Payroll and related taxes
|
(3.7
|
)
|
|
(34.5
|
)
|
|
(27.4
|
)
|
|||
Accrued customer programs
|
(48.6
|
)
|
|
25.5
|
|
|
34.6
|
|
|||
Accrued liabilities
|
(23.2
|
)
|
|
(20.9
|
)
|
|
(47.8
|
)
|
|||
Accrued income taxes
|
(74.5
|
)
|
|
68.1
|
|
|
(6.1
|
)
|
|||
Other, net
|
27.2
|
|
|
(8.8
|
)
|
|
(4.8
|
)
|
|||
Subtotal
|
(313.5
|
)
|
|
(19.4
|
)
|
|
(103.9
|
)
|
|||
Net cash from operating activities
|
387.8
|
|
|
593.0
|
|
|
698.9
|
|
|||
Cash Flows From (For) Investing Activities
|
|
|
|
|
|
||||||
Proceeds from royalty rights
|
2.9
|
|
|
13.7
|
|
|
87.3
|
|
|||
Acquisitions of businesses, net of cash acquired
|
(747.7
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||
Asset acquisitions
|
(149.1
|
)
|
|
(35.6
|
)
|
|
—
|
|
|||
Purchase of investment securities
|
—
|
|
|
(7.5
|
)
|
|
—
|
|
|||
Proceeds from the Royalty Pharma contingent milestone
|
250.0
|
|
|
—
|
|
|
—
|
|
|||
Additions to property, plant and equipment
|
(137.7
|
)
|
|
(102.6
|
)
|
|
(88.6
|
)
|
|||
Net proceeds from sale of business
|
182.5
|
|
|
5.2
|
|
|
154.6
|
|
|||
Proceeds from sale of the Tysabri® financial asset
|
—
|
|
|
—
|
|
|
2,200.0
|
|
|||
Other investing, net
|
3.0
|
|
|
—
|
|
|
(14.8
|
)
|
|||
Net cash from (for) investing activities
|
(596.1
|
)
|
|
(126.8
|
)
|
|
2,338.1
|
|
|||
Cash Flows From (For) Financing Activities
|
|
|
|
|
|
||||||
Borrowings (repayments) of revolving credit agreements and other financing, net
|
0.5
|
|
|
(4.4
|
)
|
|
6.8
|
|
|||
Issuances of long-term debt
|
600.0
|
|
|
431.0
|
|
|
—
|
|
|||
Payments on long-term debt
|
(476.0
|
)
|
|
(482.5
|
)
|
|
(2,611.0
|
)
|
|||
Premiums on early debt retirement
|
—
|
|
|
—
|
|
|
(116.1
|
)
|
|||
Deferred financing fees
|
(1.0
|
)
|
|
(2.4
|
)
|
|
(4.8
|
)
|
|||
Issuance of ordinary shares
|
0.9
|
|
|
1.3
|
|
|
0.7
|
|
|||
Repurchase of ordinary shares
|
—
|
|
|
(400.0
|
)
|
|
(191.5
|
)
|
|||
Cash dividends
|
(112.4
|
)
|
|
(104.9
|
)
|
|
(91.1
|
)
|
|||
Other financing, net
|
(10.2
|
)
|
|
(10.0
|
)
|
|
2.3
|
|
|||
Net cash from (for) financing activities
|
1.8
|
|
|
(571.9
|
)
|
|
(3,004.7
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
9.7
|
|
|
(21.9
|
)
|
|
24.1
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(196.8
|
)
|
|
(127.6
|
)
|
|
56.4
|
|
|||
Cash and cash equivalents, beginning of period
|
551.1
|
|
|
678.7
|
|
|
622.3
|
|
|||
Cash and cash equivalents, end of period
|
$
|
354.3
|
|
|
$
|
551.1
|
|
|
$
|
678.7
|
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Supplemental Disclosures of Cash Flow Information
|
|
|
|
|
|
||||||
Cash paid/received during the year for:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
136.8
|
|
|
$
|
133.8
|
|
|
$
|
187.6
|
|
Interest received
|
$
|
15.1
|
|
|
$
|
5.0
|
|
|
$
|
9.3
|
|
Income taxes paid
|
$
|
136.2
|
|
|
$
|
144.2
|
|
|
$
|
186.9
|
|
Income taxes refunded
|
$
|
28.0
|
|
|
$
|
5.1
|
|
|
$
|
3.6
|
|
|
Ordinary Shares
Issued |
|
Accumulated
Other Comprehensive Income |
|
Retained
Earnings (Accumulated Deficit) |
|
Total
|
|||||||||||
|
Shares
|
|
Amount
|
|||||||||||||||
Balance at December 31, 2016
|
143.4
|
|
|
$
|
8,135.0
|
|
|
$
|
(81.8
|
)
|
|
$
|
(2,095.1
|
)
|
|
$
|
5,958.1
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
119.6
|
|
|
119.6
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
334.9
|
|
|
—
|
|
|
334.9
|
|
||||
Issuance of ordinary shares under:
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock options
|
0.1
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||
Restricted stock plan
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Compensation for stock options
|
—
|
|
|
8.9
|
|
|
—
|
|
|
—
|
|
|
8.9
|
|
||||
Compensation for restricted stock
|
—
|
|
|
34.9
|
|
|
—
|
|
|
—
|
|
|
34.9
|
|
||||
Cash dividends, $0.64 per share
|
—
|
|
|
(91.1
|
)
|
|
—
|
|
|
—
|
|
|
(91.1
|
)
|
||||
Shares withheld for payment of employees'
withholding tax liability |
(0.1
|
)
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|
(4.0
|
)
|
||||
Repurchases of ordinary shares
|
(2.7
|
)
|
|
(191.5
|
)
|
|
—
|
|
|
—
|
|
|
(191.5
|
)
|
||||
Balance at December 31, 2017
|
140.8
|
|
|
7,892.9
|
|
|
253.1
|
|
|
(1,975.5
|
)
|
|
6,170.5
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Adoption of new accounting standards
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
6.2
|
|
|
5.2
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
131.0
|
|
|
131.0
|
|
||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
(167.5
|
)
|
|
—
|
|
|
(167.5
|
)
|
||||
Issuance of ordinary shares under:
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock options
|
0.1
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
||||
Restricted stock plan
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Compensation for stock options
|
—
|
|
|
8.1
|
|
|
—
|
|
|
—
|
|
|
8.1
|
|
||||
Compensation for restricted stock
|
—
|
|
|
29.6
|
|
|
—
|
|
|
—
|
|
|
29.6
|
|
||||
Cash dividends, $0.76 per share
|
—
|
|
|
(104.9
|
)
|
|
—
|
|
|
—
|
|
|
(104.9
|
)
|
||||
Shares withheld for payment of employees'
withholding tax liability |
(0.1
|
)
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
||||
Repurchases of ordinary shares
|
(5.1
|
)
|
|
(400.0
|
)
|
|
—
|
|
|
—
|
|
|
(400.0
|
)
|
||||
Balance at December 31, 2018
|
135.9
|
|
|
7,421.7
|
|
|
84.6
|
|
|
(1,838.3
|
)
|
|
5,668.0
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3
|
)
|
|
(3.3
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
146.1
|
|
|
146.1
|
|
||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
54.8
|
|
|
—
|
|
|
54.8
|
|
||||
Issuance of ordinary shares under:
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock options
|
—
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
||||
Restricted stock plan
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Compensation for stock options
|
—
|
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
||||
Compensation for restricted stock
|
—
|
|
|
50.6
|
|
|
—
|
|
|
—
|
|
|
50.6
|
|
||||
Cash dividends, $0.82 per share
|
—
|
|
|
(112.4
|
)
|
|
—
|
|
|
—
|
|
|
(112.4
|
)
|
||||
Shares withheld for payment of employees'
withholding tax liability |
(0.1
|
)
|
|
(5.6
|
)
|
|
—
|
|
|
—
|
|
|
(5.6
|
)
|
||||
Balance at December 31, 2019
|
136.1
|
|
|
$
|
7,359.9
|
|
|
$
|
139.4
|
|
|
$
|
(1,695.5
|
)
|
|
$
|
5,803.8
|
|
•
|
Consumer Self-Care Americas ("CSCA"), formerly Consumer Healthcare Americas, comprises our consumer self-care business (OTC, contract manufacturing, infant formula, and oral self-care categories and our divested animal health category) in the U.S., Mexico and Canada.
|
•
|
Consumer Self-Care International ("CSCI"), formerly Consumer Healthcare International, comprises our branded consumer self-care business primarily in Europe and Australia, our consumer-focused business in the United Kingdom and parts of Asia, and our liquid licensed products business in the United Kingdom.
|
•
|
Prescription Pharmaceuticals ("RX") comprises our prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel, which were previously in our CSCI segment.
|
•
|
Cash flow hedges included in the assessment of hedge effectiveness in Other Comprehensive Income ("OCI"). The amounts recorded in OCI will subsequently be reclassified to earnings in the same line item on the Consolidated Statements of Operations as impacted by the hedged item when the hedged item affects earnings; and
|
•
|
Fair value hedges included in the assessment of hedge effectiveness in the same line item on the Consolidated Statements of Operations that is used to present the earnings effect of the hedged item.
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Land
|
$
|
50.4
|
|
|
$
|
49.0
|
|
Buildings
|
578.7
|
|
|
552.3
|
|
||
Machinery and equipment
|
1,195.8
|
|
|
1,079.3
|
|
||
Gross property, plant and equipment
|
1,824.9
|
|
|
1,680.6
|
|
||
Less accumulated depreciation
|
(922.1
|
)
|
|
(851.5
|
)
|
||
Property, plant and equipment, net
|
$
|
902.8
|
|
|
$
|
829.1
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2017 |
||||||
$
|
142.8
|
|
|
$
|
159.2
|
|
|
$
|
145.3
|
|
Recently Issued Accounting Standards Not Yet Adopted
|
||||||
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial Statements or Other Significant Matters
|
ASU 2018-15: Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract
|
|
This guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred.
|
|
January 1, 2020
|
|
We currently plan to adopt the standard prospectively on the effective date. Upon adoption, no impact is currently expected, however, future hosting arrangements treated as service contracts will need to be evaluated for capitalizable costs during implementation. The Consolidated Financial Statement impact will align with the presentation of the underlying hosting contracts, which will be included within Operating expenses.
|
ASU 2018-13: Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement
|
|
This guidance amends ASC 820 to add, remove, and modify certain disclosure requirements for fair value measurements.
|
|
January 1, 2020
|
|
We currently plan to adopt the standard on the effective date. Upon adoption, we will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurement. We will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy.
|
ASU 2016-13: Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
ASU 2018-19: Codification Improvements for Topic 326: Measurement of Credit Losses on Financial Instruments
ASU 2019-05: Financial Instruments-Credit Losses: Targeted Transition Relief
ASU 2019-11: Codification Improvements for Topic 326: Measurement of Credit Losses on Financial Instruments
|
|
This guidance changes the impairment model for most financial assets and certain other instruments, replacing the current "incurred loss" approach with an "expected loss" credit impairment model, which will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, and off-balance sheet credit exposures such as letters of credit.
|
|
January 1, 2020
|
|
We currently plan to adopt the standard on the effective date. Upon adoption, we do not expect a material impact on the Consolidated Financial Statements.
|
ASU 2018-18: Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606
|
|
This guidance amends ASC 808 to clarify that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. The proposed guidance would be applied retrospectively to the date of initial adoption of Topic 606.
|
|
January 1, 2020
|
|
We currently plan to adopt the standard on the effective date. Upon adoption, we do not expect a material impact on the Consolidated Financial Statements.
|
|
|
|
|
|
|
|
Recently Issued Accounting Standards Not Yet Adopted (continued)
|
||||||
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial Statements or Other Significant Matters
|
ASU 2019-08: Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Share-Based Consideration Payable to a Customer
|
|
This guidance requires the application of guidance in Topic 718 when measuring and classifying share-based payments to a customer.
|
|
January 1, 2020
|
|
We currently plan to adopt the standard on the effective date. Upon adoption, we do not expect a material impact on the Consolidated Financial Statements.
|
ASU 2018-14: Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans
|
|
This guidance amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other post-retirement plans.
|
|
December 31, 2020
|
|
We are currently evaluating the implications of adoption on our Consolidated Financial Statements.
|
ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
|
|
This guidance enhances and simplifies various aspects of the income tax accounting guidance in ASC 740.
|
|
January 1, 2021
|
|
We are currently evaluating the implications of adoption on our Consolidated Financial Statements.
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
U.S.
|
$
|
3,225.6
|
|
|
$
|
3,098.3
|
|
|
$
|
3,272.3
|
|
Europe(2)
|
1,335.8
|
|
|
1,347.6
|
|
|
1,343.6
|
|
|||
All other countries(3)
|
276.0
|
|
|
285.8
|
|
|
330.3
|
|
|||
Total net sales
|
$
|
4,837.4
|
|
|
$
|
4,731.7
|
|
|
$
|
4,946.2
|
|
(2)
|
Includes Ireland net sales of $23.4 million, $25.7 million, and $30.4 million for the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively.
|
|
Year Ended
|
||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31,
2017 |
||||||
CSCA(1)
|
|
|
|
|
|
||||||
Upper respiratory
|
$
|
515.2
|
|
|
$
|
492.5
|
|
|
$
|
485.4
|
|
Digestive health
|
413.9
|
|
|
403.6
|
|
|
411.5
|
|
|||
Nutrition
|
394.4
|
|
|
432.4
|
|
|
423.6
|
|
|||
Pain and sleep-aids
|
383.6
|
|
|
388.1
|
|
|
364.8
|
|
|||
Healthy lifestyle
|
352.4
|
|
|
333.6
|
|
|
341.0
|
|
|||
Skincare and personal hygiene
|
182.9
|
|
|
164.1
|
|
|
163.5
|
|
|||
Oral self-care
|
106.4
|
|
|
—
|
|
|
—
|
|
|||
Animal health
|
43.7
|
|
|
93.9
|
|
|
141.3
|
|
|||
Vitamins, minerals, and supplements
|
28.6
|
|
|
26.1
|
|
|
38.0
|
|
|||
Other CSCA(2)
|
66.6
|
|
|
77.3
|
|
|
60.8
|
|
|||
Total CSCA
|
2,487.7
|
|
|
2,411.6
|
|
|
2,429.9
|
|
|||
CSCI
|
|
|
|
|
|
||||||
Skincare and personal hygiene
|
371.6
|
|
|
396.5
|
|
|
401.8
|
|
|||
Upper respiratory
|
276.8
|
|
|
276.5
|
|
|
270.8
|
|
|||
Vitamins, minerals, and supplements
|
180.2
|
|
|
187.2
|
|
|
177.9
|
|
|||
Healthy lifestyle
|
173.8
|
|
|
180.7
|
|
|
182.5
|
|
|||
Pain and sleep-aids
|
167.9
|
|
|
170.0
|
|
|
150.8
|
|
|||
Oral self-care
|
51.2
|
|
|
8.9
|
|
|
11.0
|
|
|||
Digestive health
|
27.1
|
|
|
29.5
|
|
|
29.2
|
|
|||
Other CSCI(3)
|
133.6
|
|
|
150.0
|
|
|
182.2
|
|
|||
Total CSCI
|
1,382.2
|
|
|
1,399.3
|
|
|
1,406.2
|
|
|||
RX
|
967.5
|
|
|
920.8
|
|
|
1,054.4
|
|
|||
Other
|
—
|
|
|
—
|
|
|
55.7
|
|
|||
Total net sales
|
$
|
4,837.4
|
|
|
$
|
4,731.7
|
|
|
$
|
4,946.2
|
|
(2)
|
Consists primarily of diagnostic products and other miscellaneous or otherwise uncategorized product lines and markets, none of which is greater than 10% of the segment net sales.
|
(3)
|
Consists primarily of liquid licensed products, our distribution business and other miscellaneous or otherwise uncategorized product lines and markets, none of which is greater than 10% of the segment net sales.
|
|
Balance Sheet Location
|
|
December 31,
2019 |
|
December 31,
2018 |
|
January 1,
2018 |
||||||
Short-term contract assets
|
Prepaid expenses and other current assets
|
|
$
|
26.3
|
|
|
$
|
25.5
|
|
|
$
|
20.5
|
|
|
Ranir
|
||
Purchase price paid
|
$
|
759.2
|
|
|
|
||
Assets acquired:
|
|
||
Cash and cash equivalents
|
$
|
11.5
|
|
Accounts receivable
|
40.6
|
|
|
Inventories
|
59.0
|
|
|
Prepaid expenses and other current assets
|
4.0
|
|
|
Property, plant and equipment, net
|
40.8
|
|
|
Operating lease assets
|
3.7
|
|
|
Goodwill
|
291.1
|
|
|
Definite-lived intangibles:
|
|
||
Developed product technology, formulations, and product rights
|
$
|
48.6
|
|
Customer relationships and distribution networks
|
260.0
|
|
|
Trademarks, trade names, and brands
|
41.0
|
|
|
Indefinite-lived intangibles:
|
|
||
In-process research and development
|
39.7
|
|
|
Total intangible assets
|
$
|
389.3
|
|
Other non-current assets
|
2.7
|
|
|
Total assets
|
$
|
842.7
|
|
Liabilities assumed:
|
|
||
Accounts payable
|
$
|
17.6
|
|
Other accrued liabilities
|
7.7
|
|
|
Payroll and related taxes
|
5.5
|
|
|
Accrued customer programs
|
5.7
|
|
|
Deferred income taxes
|
44.2
|
|
|
Other non-current liabilities
|
2.8
|
|
|
Total liabilities
|
$
|
83.5
|
|
Net assets acquired
|
$
|
759.2
|
|
|
Year Ended
|
||||||
(Unaudited)
|
December 31,
2019 |
|
December 31,
2018 |
||||
Net sales
|
$
|
4,975.6
|
|
|
$
|
5,018.9
|
|
Net income
|
$
|
159.3
|
|
|
$
|
96.8
|
|
|
CSCA
|
|
CSCI(1)
|
|
RX(2)
|
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
1,847.4
|
|
|
$
|
1,205.7
|
|
|
$
|
1,122.3
|
|
|
$
|
4,175.4
|
|
Impairments
|
(136.7
|
)
|
|
—
|
|
|
—
|
|
|
(136.7
|
)
|
||||
Currency translation adjustments
|
3.0
|
|
|
(54.4
|
)
|
|
(7.5
|
)
|
|
(58.9
|
)
|
||||
Balance at December 31, 2018
|
1,713.7
|
|
|
1,151.3
|
|
|
1,114.8
|
|
|
3,979.8
|
|
||||
Business divestitures
|
(42.2
|
)
|
|
—
|
|
|
—
|
|
|
(42.2
|
)
|
||||
Business acquisitions
|
223.0
|
|
|
68.1
|
|
|
—
|
|
|
291.1
|
|
||||
Impairments
|
—
|
|
|
—
|
|
|
(109.2
|
)
|
|
(109.2
|
)
|
||||
Currency translation adjustments
|
4.6
|
|
|
(15.7
|
)
|
|
8.3
|
|
|
(2.8
|
)
|
||||
Balance at December 31, 2019
|
$
|
1,899.1
|
|
|
$
|
1,203.7
|
|
|
$
|
1,013.9
|
|
|
$
|
4,116.7
|
|
|
Year Ended
|
||||||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Gross
|
|
Accumulated
Amortization
|
|
Gross
|
|
Accumulated
Amortization
|
||||||||
Indefinite-lived intangibles:
|
|
|
|
|
|
|
|
||||||||
Trademarks, trade names, and brands
|
$
|
18.8
|
|
|
$
|
—
|
|
|
$
|
18.1
|
|
|
$
|
—
|
|
In-process research and development
|
50.0
|
|
|
—
|
|
|
31.2
|
|
|
—
|
|
||||
Total indefinite-lived intangibles
|
$
|
68.8
|
|
|
$
|
—
|
|
|
$
|
49.3
|
|
|
$
|
—
|
|
Definite-lived intangibles:
|
|
|
|
|
|
|
|
||||||||
Distribution and license agreements and supply agreements
|
$
|
126.7
|
|
|
$
|
81.1
|
|
|
$
|
178.6
|
|
|
$
|
99.0
|
|
Developed product technology, formulations, and product rights
|
1,392.8
|
|
|
755.3
|
|
|
1,318.8
|
|
|
654.6
|
|
||||
Customer relationships and distribution networks
|
1,805.6
|
|
|
671.4
|
|
|
1,586.6
|
|
|
566.5
|
|
||||
Trademarks, trade names, and brands
|
1,353.5
|
|
|
250.1
|
|
|
1,282.4
|
|
|
188.5
|
|
||||
Non-compete agreements
|
6.5
|
|
|
6.0
|
|
|
12.9
|
|
|
11.8
|
|
||||
Total definite-lived intangibles
|
$
|
4,685.1
|
|
|
$
|
1,763.9
|
|
|
$
|
4,379.3
|
|
|
$
|
1,520.4
|
|
Total intangible assets
|
$
|
4,753.9
|
|
|
$
|
1,763.9
|
|
|
$
|
4,428.6
|
|
|
$
|
1,520.4
|
|
Amortizable Intangible Asset Category
|
|
Remaining Weighted-Average Useful Life (Years)
|
Distribution and license agreements and supply agreements
|
|
7
|
Developed product technology, formulations, and product rights
|
|
13
|
Customer relationships and distribution networks
|
|
17
|
Trademarks, trade names, and brands
|
|
16
|
Non-compete agreements
|
|
1
|
Year
|
|
Amount
|
||
2020
|
|
$
|
284.4
|
|
2021
|
|
255.5
|
|
|
2022
|
|
226.0
|
|
|
2023
|
|
211.9
|
|
|
2024
|
|
200.9
|
|
|
Thereafter
|
|
1,742.5
|
|
|
Year Ended
|
||||||
|
December 31,
2019 |
|
December 31,
2018 |
||||
Finished goods
|
$
|
530.3
|
|
|
$
|
444.9
|
|
Work in process
|
186.9
|
|
|
197.5
|
|
||
Raw materials
|
250.1
|
|
|
235.6
|
|
||
Total inventories
|
$
|
967.3
|
|
|
$
|
878.0
|
|
Level 1:
|
Quoted prices for identical instruments in active markets.
|
Level 2:
|
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
|
Level 3:
|
Valuations derived from valuation techniques in which one or more significant inputs are not observable.
|
|
|
Year Ended
|
||||||||||||||||||||||
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment securities
|
|
$
|
6.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|
—
|
|
||||||
Cross-currency swap
|
|
—
|
|
|
26.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Funds associated with Israeli severance liability
|
|
—
|
|
|
14.6
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|
—
|
|
||||||
Royalty Pharma contingent milestone
|
|
—
|
|
|
—
|
|
|
95.3
|
|
|
—
|
|
|
—
|
|
|
323.2
|
|
||||||
Total assets
|
|
$
|
6.6
|
|
|
$
|
45.2
|
|
|
$
|
95.3
|
|
|
$
|
9.4
|
|
|
$
|
16.8
|
|
|
$
|
323.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
8.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9.2
|
|
|
$
|
—
|
|
Contingent consideration payments
|
|
—
|
|
|
—
|
|
|
11.9
|
|
|
—
|
|
|
—
|
|
|
15.3
|
|
||||||
Total liabilities
|
|
$
|
—
|
|
|
$
|
8.4
|
|
|
$
|
11.9
|
|
|
$
|
—
|
|
|
$
|
9.2
|
|
|
$
|
15.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Measured at fair value on a non-recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,013.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42.2
|
|
Indefinite-lived intangible assets(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.5
|
|
||||||
Definite-lived intangible assets(3)
|
|
—
|
|
|
—
|
|
|
23.3
|
|
|
—
|
|
|
—
|
|
|
22.4
|
|
||||||
Total assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,036.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75.1
|
|
(1)
|
During the year ended December 31, 2019, goodwill with a carrying amount of $1,122.3 million was written down to a fair value of $1,013.1 million. As of December 31, 2018, goodwill with a carrying amount of $178.9 million was written down to a fair value of $42.2 million.
|
(2)
|
During the year ended December 31, 2018, indefinite-lived intangible assets with a carrying amount of $46.9 million were written down to a fair value of $10.5 million.
|
(3)
|
During the year ended December 31, 2019, definite-lived intangible assets with a carrying amount of $55.3 million were written down to a fair value of $23.3 million. As of December 31, 2018, definite-lived intangible assets with a carrying amount of $72.0 million were written down to a fair value of $22.4 million.
|
|
Year Ended
|
||||||
|
December 31,
2019 |
|
December 31,
2018 |
||||
Beginning balance
|
$
|
323.2
|
|
|
$
|
134.5
|
|
Payments received
|
(250.0
|
)
|
|
—
|
|
||
Change in fair value
|
22.1
|
|
|
188.7
|
|
||
Ending balance
|
$
|
95.3
|
|
|
$
|
323.2
|
|
|
Year Ended
|
||||
|
December 31, 2019
|
|
December 31,
2018 |
||
Volatility
|
30.0
|
%
|
|
30.0
|
%
|
Rate of return
|
7.92
|
%
|
|
8.05
|
%
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Beginning balance
|
$
|
15.3
|
|
|
$
|
22.0
|
|
|
$
|
69.9
|
|
Changes in value
|
(1.4
|
)
|
|
(1.5
|
)
|
|
(19.5
|
)
|
|||
Divestiture
|
—
|
|
|
—
|
|
|
(12.5
|
)
|
|||
Currency translation adjustments
|
—
|
|
|
(0.2
|
)
|
|
1.5
|
|
|||
Settlements and other adjustments
|
(2.0
|
)
|
|
(5.0
|
)
|
|
(17.4
|
)
|
|||
Ending balance
|
$
|
11.9
|
|
|
$
|
15.3
|
|
|
$
|
22.0
|
|
|
Year Ended
|
||||||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
||||||||||||
|
Level 1
|
|
|
Level 2
|
|
|
Level 1
|
|
Level 2
|
||||||
Public bonds
|
|
|
|
|
|
|
|
||||||||
Carrying value (excluding discount)
|
$
|
2,600.0
|
|
|
|
|
$
|
2,600.0
|
|
|
|
||||
Fair value
|
$
|
2,618.4
|
|
|
|
|
$
|
2,316.6
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Retail bond and private placement note
|
|
|
|
|
|
|
|
||||||||
Carrying value (excluding premium)
|
|
|
$
|
151.4
|
|
|
|
|
$
|
292.5
|
|
||||
Fair value
|
|
|
$
|
168.4
|
|
|
|
|
$
|
307.9
|
|
|
|
|
|
Year Ended
|
||||||
Measurement Category
|
|
Balance Sheet Location
|
|
December 31,
2019 |
|
December 31,
2018
|
||||
Fair value method
|
|
Prepaid expenses and other current assets
|
|
$
|
6.6
|
|
|
$
|
9.4
|
|
Fair value method(1)
|
|
Other non-current assets
|
|
$
|
2.3
|
|
|
$
|
4.4
|
|
Equity method
|
|
Other non-current assets
|
|
$
|
17.8
|
|
|
$
|
15.1
|
|
|
|
|
|
Year Ended
|
||||||||||
Measurement Category
|
|
Income Statement Location
|
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Fair value method
|
|
Other (income) expense, net
|
|
$
|
4.9
|
|
|
$
|
9.5
|
|
|
$
|
—
|
|
Equity method
|
|
Other (income) expense, net
|
|
$
|
(2.7
|
)
|
|
$
|
(2.7
|
)
|
|
$
|
(0.3
|
)
|
|
|
Notional Amount
|
||||||
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Israeli Shekel (ILS)
|
|
$
|
712.7
|
|
|
$
|
232.6
|
|
European Euro (EUR)
|
|
157.6
|
|
|
134.2
|
|
||
United States Dollar (USD)
|
|
92.4
|
|
|
39.3
|
|
||
British Pound (GBP)
|
|
86.9
|
|
|
90.2
|
|
||
Danish Krone (DKK)
|
|
51.7
|
|
|
56.5
|
|
||
Swedish Krona (SEK)
|
|
42.0
|
|
|
38.7
|
|
||
Canadian Dollar (CAD)
|
|
41.3
|
|
|
31.7
|
|
||
Polish Zloty (PLZ)
|
|
21.5
|
|
|
18.2
|
|
||
Chinese Yuan (CNY)
|
|
20.9
|
|
|
—
|
|
||
Mexican Peso (MPX)
|
|
9.7
|
|
|
25.9
|
|
||
Norwegian Krone (NOK)
|
|
6.6
|
|
|
6.2
|
|
||
Switzerland Franc (CHF)
|
|
4.1
|
|
|
2.6
|
|
||
Romanian New Leu (RON)
|
|
2.3
|
|
|
4.4
|
|
||
Other
|
|
7.5
|
|
|
6.1
|
|
||
Total
|
|
$
|
1,257.2
|
|
|
$
|
686.6
|
|
|
|
|
Asset Derivatives
|
||||||
|
|
|
Fair Value
|
||||||
|
|
|
Year Ended
|
||||||
|
Balance Sheet Location
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Designated derivatives
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Prepaid expenses and other current assets
|
|
$
|
1.0
|
|
|
$
|
2.0
|
|
Cross-currency swap
|
Prepaid expenses and other current assets
|
|
26.3
|
|
|
—
|
|
||
Total designated derivatives
|
|
|
$
|
27.3
|
|
|
$
|
2.0
|
|
Non-designated derivatives
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Prepaid expenses and other current assets
|
|
$
|
3.3
|
|
|
$
|
1.8
|
|
|
|
|
Liability Derivatives
|
||||||
|
|
|
Fair Value
|
||||||
|
|
|
Year Ended
|
||||||
|
Balance Sheet Location
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Designated derivatives
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other accrued liabilities
|
|
$
|
4.7
|
|
|
$
|
6.4
|
|
Non-designated derivatives
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other accrued liabilities
|
|
$
|
3.7
|
|
|
$
|
2.8
|
|
|
|
Year Ended
|
||||||||||||||
|
|
December 31, 2019
|
||||||||||||||
Instrument
|
|
Amount of Gain/(Loss) Recorded in OCI(1)
|
|
Classification of Gain/(Loss) Reclassified from AOCI into Earnings
|
|
Amount of Gain/(Loss) Reclassified from AOCI into Earnings
|
|
Classification of Gain/(Loss) Recognized into Earnings Related to Amounts Excluded from Effectiveness Testing
|
|
Amount of Gain/(Loss) Recognized in Earnings on Derivatives Related to Amounts Excluded from Effectiveness Testing
|
||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
||||||
Treasury locks
|
|
$
|
—
|
|
|
Interest expense, net
|
|
$
|
(0.1
|
)
|
|
Interest expense, net
|
|
$
|
—
|
|
Interest rate swap agreements
|
|
—
|
|
|
Interest expense, net
|
|
(1.8
|
)
|
|
Interest expense, net
|
|
—
|
|
|||
Foreign currency forward contracts
|
|
(1.2
|
)
|
|
Net sales
|
|
2.5
|
|
|
Net sales
|
|
(2.1
|
)
|
|||
|
|
|
|
Cost of sales
|
|
0.1
|
|
|
Cost of sales
|
|
(1.5
|
)
|
||||
|
|
$
|
(1.2
|
)
|
|
|
|
$
|
0.7
|
|
|
|
|
$
|
(3.6
|
)
|
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
||||||
Cross-currency swap
|
|
$
|
31.2
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
4.9
|
|
|
|
Year Ended
|
||||||||
|
|
December 31, 2018
|
||||||||
|
|
Effective Portion
|
||||||||
Instrument
|
|
Amount of Gain/(Loss) Recorded in OCI
|
|
Classification of Gain/(Loss) Reclassified from AOCI into Earnings
|
|
Amount of Gain/(Loss) Reclassified from AOCI into Earnings
|
||||
Treasury locks
|
|
$
|
—
|
|
|
Interest expense, net
|
|
$
|
(0.1
|
)
|
Interest rate swap agreements
|
|
—
|
|
|
Interest expense, net
|
|
(1.8
|
)
|
||
Foreign currency forward contracts
|
|
(9.1
|
)
|
|
Net sales
|
|
0.5
|
|
||
|
|
|
|
Cost of sales
|
|
1.9
|
|
|||
|
|
|
|
Interest expense, net
|
|
(4.8
|
)
|
|||
|
|
|
|
Other (income) expense, net
|
|
2.1
|
|
|||
|
|
$
|
(9.1
|
)
|
|
|
|
$
|
(2.2
|
)
|
|
|
Year Ended
|
||||||||
|
|
December 31, 2017
|
||||||||
|
|
Effective Portion
|
||||||||
Instrument
|
|
Amount of Gain/(Loss) Recorded in OCI
|
|
Classification of Gain/(Loss) Reclassified from AOCI into Earnings
|
|
Amount of Gain/(Loss) Reclassified from AOCI into Earnings
|
||||
Treasury locks
|
|
$
|
—
|
|
|
Interest expense, net
|
|
$
|
(0.1
|
)
|
Interest rate swap agreements
|
|
—
|
|
|
Interest expense, net
|
|
(2.1
|
)
|
||
|
|
|
|
Other (income) expense, net
|
|
(6.0
|
)
|
|||
Foreign currency forward contracts
|
|
9.4
|
|
|
Net sales
|
|
1.5
|
|
||
|
|
|
|
Cost of sales
|
|
5.6
|
|
|||
|
|
|
|
Interest expense, net
|
|
(2.6
|
)
|
|||
|
|
|
|
Other (income) expense, net
|
|
(1.5
|
)
|
|||
|
|
$
|
9.4
|
|
|
|
|
$
|
(5.2
|
)
|
|
|
|
|
Amount of Gain/(Loss) Recognized in Earnings
(Ineffective Portion) |
||
|
|
|
|
Year Ended
|
||
Designated Cash Flow Hedges
|
|
Income Statement Location
|
|
December 31,
2017 |
||
Foreign currency forward contracts
|
|
Net sales
|
|
$
|
0.2
|
|
|
|
Cost of sales
|
|
0.1
|
|
|
|
|
Other expense, net
|
|
1.0
|
|
|
|
|
|
|
$
|
1.3
|
|
|
|
|
|
Year Ended
|
||||||||||
Non-Designated Derivatives
|
|
Income Statement Location
|
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Foreign currency forward contracts
|
|
Other (income) expense, net
|
|
$
|
(25.4
|
)
|
|
$
|
7.6
|
|
|
$
|
12.6
|
|
|
|
Interest expense, net
|
|
1.8
|
|
|
(1.0
|
)
|
|
(5.3
|
)
|
|||
|
|
|
|
$
|
(23.6
|
)
|
|
$
|
6.6
|
|
|
$
|
7.3
|
|
|
|
Year Ended
|
||||||||||||||
|
|
December 31, 2019
|
||||||||||||||
|
|
Net Sales
|
|
Cost of Sales
|
|
Interest Expense, net
|
|
Other (Income) Expense, net
|
||||||||
Total amounts of income and expense line items presented on the Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded
|
|
$
|
4,837.4
|
|
|
$
|
3,064.1
|
|
|
$
|
121.7
|
|
|
$
|
(66.0
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
The effects of cash flow hedging:
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on cash flow hedging relationships
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
|
|
|
|
|
|
|
|
||||||||
Amount of gain or (loss) reclassified from AOCI into earnings
|
|
$
|
2.5
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach
|
|
$
|
(2.1
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Treasury locks
|
|
|
|
|
|
|
|
|
||||||||
Amount of gain or (loss) reclassified from AOCI into earnings
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
Interest rate swap agreements
|
|
|
|
|
|
|
|
|
||||||||
Amount of gain or (loss) reclassified from AOCI into earnings
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1.8
|
)
|
|
$
|
—
|
|
Assets
|
|
Balance Sheet Location
|
|
December 31,
2019 |
||
Operating
|
|
Operating lease assets
|
|
$
|
129.9
|
|
Finance
|
|
Other non-current assets
|
|
27.6
|
|
|
Total
|
|
|
|
$
|
157.5
|
|
Liabilities
|
|
Balance Sheet Location
|
|
December 31,
2019 |
||
Current
|
|
|
|
|
||
Operating
|
|
Other accrued liabilities
|
|
$
|
32.0
|
|
Finance
|
|
Current indebtedness
|
|
3.4
|
|
|
Non-Current
|
|
|
|
|
||
Operating
|
|
Other non-current liabilities
|
|
101.7
|
|
|
Finance
|
|
Long-term debt, less current portion
|
|
21.1
|
|
|
Total
|
|
|
|
$
|
158.2
|
|
|
|
Assets
|
|
Liabilities
|
||||||||||||
|
|
Operating
|
|
Financing
|
|
Operating
|
|
Financing
|
||||||||
|
|
December 31,
2019 |
|
December 31,
2019 |
|
December 31,
2019 |
|
December 31,
2019 |
||||||||
CSCA
|
|
$
|
22.4
|
|
|
$
|
16.8
|
|
|
$
|
22.8
|
|
|
$
|
16.6
|
|
CSCI
|
|
41.6
|
|
|
5.8
|
|
|
42.4
|
|
|
2.9
|
|
||||
RX
|
|
35.1
|
|
|
0.8
|
|
|
36.3
|
|
|
0.8
|
|
||||
Unallocated
|
|
30.8
|
|
|
4.2
|
|
|
32.2
|
|
|
4.2
|
|
||||
Total
|
|
$
|
129.9
|
|
|
$
|
27.6
|
|
|
$
|
133.7
|
|
|
$
|
24.5
|
|
|
|
Year Ended
|
||
|
|
December 31,
2019 |
||
Operating leases(1)
|
|
$
|
43.7
|
|
|
|
|
||
Finance leases
|
|
|
||
Amortization
|
|
$
|
3.2
|
|
Interest
|
|
0.6
|
|
|
Total finance leases
|
|
$
|
3.8
|
|
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
2020
|
|
$
|
37.2
|
|
|
$
|
4.1
|
|
|
$
|
41.3
|
|
2021
|
|
27.4
|
|
|
5.4
|
|
|
32.8
|
|
|||
2022
|
|
20.2
|
|
|
2.7
|
|
|
22.9
|
|
|||
2023
|
|
15.0
|
|
|
1.7
|
|
|
16.7
|
|
|||
2024
|
|
11.9
|
|
|
1.3
|
|
|
13.2
|
|
|||
After 2024
|
|
41.5
|
|
|
14.2
|
|
|
55.7
|
|
|||
Total lease payments
|
|
153.2
|
|
|
29.4
|
|
|
182.6
|
|
|||
Less: Interest
|
|
19.5
|
|
|
4.9
|
|
|
24.4
|
|
|||
Present value of lease liabilities
|
|
$
|
133.7
|
|
|
$
|
24.5
|
|
|
$
|
158.2
|
|
|
|
December 31,
2019 |
|
Weighted-average remaining lease term (in years)
|
|
|
|
Operating leases
|
|
6.56
|
|
Finance leases
|
|
10.33
|
|
Weighted-average discount rate
|
|
|
|
Operating leases
|
|
4.11
|
%
|
Finance leases
|
|
3.47
|
%
|
|
|
Year Ended
|
||
|
|
December 31,
2019 |
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows for operating leases
|
|
$
|
43.9
|
|
Operating cash flows for finance leases
|
|
$
|
0.6
|
|
Financing cash flows for finance leases
|
|
$
|
3.0
|
|
|
|
|
||
Leased assets obtained in exchange for new finance lease liabilities
|
|
$
|
20.2
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
|
$
|
10.3
|
|
|
|
|
Year Ended
|
||||||
|
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Term loan
|
|
|
|
||||||
*
|
2018 Term loan due March 8, 2020
|
$
|
—
|
|
|
$
|
351.3
|
|
|
|
2019 Term loan due August 15, 2022
|
600.0
|
|
|
—
|
|
|||
|
Total term loans
|
600.0
|
|
|
351.3
|
|
|||
|
|
|
|
|
|
||||
Notes and bonds
|
|
|
|
||||||
|
Coupon
|
Due
|
|
|
|
||||
*
|
5.000%
|
May 23, 2019(3)
|
—
|
|
|
137.6
|
|
||
|
3.500%
|
March 15, 2021(4)
|
280.4
|
|
|
280.4
|
|
||
|
3.500%
|
December 15, 2021(1)
|
309.6
|
|
|
309.6
|
|
||
*
|
5.105%
|
July 28, 2023(3)
|
151.4
|
|
|
154.9
|
|
||
|
4.000%
|
November 15, 2023(2)
|
215.6
|
|
|
215.6
|
|
||
|
3.900%
|
December 15, 2024(1)
|
700.0
|
|
|
700.0
|
|
||
|
4.375%
|
March 15, 2026(4)
|
700.0
|
|
|
700.0
|
|
||
|
5.300%
|
November 15, 2043(2)
|
90.5
|
|
|
90.5
|
|
||
|
4.900%
|
December 15, 2044(1)
|
303.9
|
|
|
303.9
|
|
||
|
Total notes and bonds
|
2,751.4
|
|
|
2,892.5
|
|
|||
Other financing
|
24.6
|
|
|
2.8
|
|
||||
Unamortized premium (discount), net
|
7.3
|
|
|
12.2
|
|
||||
Deferred financing fees
|
(14.1
|
)
|
|
(16.4
|
)
|
||||
Total borrowings outstanding
|
3,369.2
|
|
|
3,242.4
|
|
||||
|
Current indebtedness
|
(3.4
|
)
|
|
(190.2
|
)
|
|||
Total long-term debt less current portion
|
$
|
3,365.8
|
|
|
$
|
3,052.2
|
|
(1)
|
Discussed below collectively as the "2014 Notes"
|
(2)
|
Discussed below collectively as the "2013 Notes"
|
(3)
|
Debt assumed from Omega
|
(4)
|
Discussed below collectively as the "2016 Notes"
|
*
|
Debt denominated in euros subject to fluctuations in the euro-to-U.S. dollar exchange rate.
|
•
|
€135.0 million ($147.0 million) in aggregate principal amount of 5.105% senior notes due 2023 (the "2023 Notes"); and
|
•
|
€120.0 million ($130.7 million) in aggregate principal amount of 5.000% retail bonds due 2019 which was repaid on May 23, 2019 in full (collectively, the "Retail Bonds").
|
Payment Due
|
|
Amount
|
||
2020
|
|
$
|
3.4
|
|
2021
|
|
594.2
|
|
|
2022
|
|
604.2
|
|
|
2023
|
|
371.2
|
|
|
2024
|
|
704.2
|
|
|
Thereafter
|
|
1,098.8
|
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
146.1
|
|
|
$
|
131.0
|
|
|
$
|
119.6
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares outstanding for basic EPS
|
136.0
|
|
|
137.8
|
|
|
142.3
|
|
|||
Dilutive effect of share-based awards
|
0.5
|
|
|
0.5
|
|
|
0.3
|
|
|||
Weighted average shares outstanding for diluted EPS
|
136.5
|
|
|
138.3
|
|
|
142.6
|
|
|||
|
|
|
|
|
|
||||||
Anti-dilutive share-based awards excluded from computation of diluted EPS
|
1.5
|
|
|
1.4
|
|
|
0.8
|
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Dividends paid (in millions)
|
$
|
112.4
|
|
|
$
|
104.9
|
|
|
$
|
91.1
|
|
Dividends paid (per share)
|
$
|
0.82
|
|
|
$
|
0.76
|
|
|
$
|
0.64
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
52.2
|
|
|
$
|
37.7
|
|
|
$
|
43.8
|
|
|
Number of
Options |
|
Weighted-Average
Exercise Price Per Share |
|
Weighted-
Average Remaining Term in Years |
|
Aggregate
Intrinsic Value |
|||||
Options outstanding at December 31, 2017
|
1,072
|
|
|
$
|
94.90
|
|
|
|
|
|
||
Granted
|
521
|
|
|
$
|
82.43
|
|
|
|
|
|
||
Exercised
|
(33
|
)
|
|
$
|
42.06
|
|
|
|
|
|
||
Forfeited or expired
|
(26
|
)
|
|
$
|
97.82
|
|
|
|
|
|
||
Options outstanding at December 31, 2018
|
1,534
|
|
|
$
|
91.56
|
|
|
6.9
|
|
$
|
0.1
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Exercised
|
(27
|
)
|
|
$
|
34.30
|
|
|
|
|
|
||
Forfeited or expired
|
(43
|
)
|
|
$
|
99.58
|
|
|
|
|
|
||
Options outstanding December 31, 2019
|
1,464
|
|
|
$
|
92.33
|
|
|
5.8
|
|
$
|
—
|
|
Options exercisable
|
1,012
|
|
|
$
|
98.27
|
|
|
5.3
|
|
$
|
—
|
|
Options expected to vest
|
437
|
|
|
$
|
79.11
|
|
|
7.0
|
|
$
|
—
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
0.5
|
|
|
$
|
1.1
|
|
|
$
|
1.7
|
|
|
Year Ended
|
||||
|
December 31,
2018 |
|
December 31,
2017 |
||
Dividend yield
|
0.8
|
%
|
|
0.9
|
%
|
Volatility, as a percent
|
31.2
|
%
|
|
30.0
|
%
|
Risk-free interest rate
|
2.8
|
%
|
|
1.8
|
%
|
Expected life in years
|
5.6
|
|
|
5.4
|
|
|
Number of
Non-vested Service- Based Share Units |
|
Weighted-
Average Grant Date Fair Value Per Share |
|
Weighted-
Average Remaining Term in Years |
|
Aggregate
Intrinsic Value |
|||||
Non-vested service-based share units outstanding at December 31, 2017
|
599
|
|
|
$
|
107.26
|
|
|
|
|
|
||
Granted
|
385
|
|
|
$
|
81.51
|
|
|
|
|
|
||
Vested
|
(204
|
)
|
|
$
|
121.10
|
|
|
|
|
|
||
Forfeited
|
(52
|
)
|
|
$
|
107.31
|
|
|
|
|
|
||
Non-vested service-based share units outstanding at December 31, 2018
|
728
|
|
|
$
|
89.47
|
|
|
1.4
|
|
$
|
28.2
|
|
Granted
|
818
|
|
|
$
|
47.48
|
|
|
|
|
|
||
Vested
|
(269
|
)
|
|
$
|
95.09
|
|
|
|
|
|
||
Forfeited
|
(66
|
)
|
|
$
|
71.03
|
|
|
|
|
|
||
Non-vested service-based share units outstanding at December 31, 2019
|
1,211
|
|
|
$
|
60.96
|
|
|
1.4
|
|
$
|
62.5
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
47.48
|
|
|
$
|
81.51
|
|
|
$
|
70.55
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
25.6
|
|
|
$
|
24.6
|
|
|
$
|
14.5
|
|
|
Number of
Non-vested Performance- Based Share Units |
|
Weighted-
Average Grant Date Fair Value Per Share |
|
Weighted-
Average Remaining Term in Years |
|
Aggregate
Intrinsic Value |
|||||
Non-vested performance-based share units outstanding at December 31, 2017
|
303
|
|
|
$
|
93.65
|
|
|
|
|
|
||
Granted
|
207
|
|
|
$
|
85.01
|
|
|
|
|
|
||
Vested
|
(13
|
)
|
|
$
|
176.59
|
|
|
|
|
|
||
Forfeited
|
(55
|
)
|
|
$
|
85.94
|
|
|
|
|
|
||
Non-vested performance-based share units outstanding at December 31, 2018
|
442
|
|
|
$
|
86.61
|
|
|
1.5
|
|
$
|
17.2
|
|
Granted
|
298
|
|
|
$
|
47.54
|
|
|
|
|
|
||
Vested
|
(68
|
)
|
|
$
|
116.35
|
|
|
|
|
|
||
Forfeited
|
(19
|
)
|
|
$
|
72.83
|
|
|
|
|
|
||
Non-vested performance-based share units outstanding at December 31, 2019
|
653
|
|
|
$
|
61.44
|
|
|
1.5
|
|
$
|
33.7
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
47.54
|
|
|
$
|
85.01
|
|
|
$
|
70.34
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
8.0
|
|
|
$
|
2.4
|
|
|
$
|
3.8
|
|
|
Year Ended
|
|||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
|||
Dividend yield
|
1.6
|
%
|
|
0.9
|
%
|
|
0.9
|
%
|
Volatility, as a percent
|
40.2
|
%
|
|
35.3
|
%
|
|
36.1
|
%
|
Risk-free interest rate
|
1.9
|
%
|
|
2.4
|
%
|
|
1.4
|
%
|
Expected life in years
|
2.4
|
|
|
2.8
|
|
|
2.6
|
|
|
Number of
Non-vested RTSR Performance Share Units |
|
Weighted-
Average Grant Date Fair Value Per Share |
|
Weighted-
Average Remaining Term in Years* |
|
Aggregate
Intrinsic Value |
|||||
Non-vested RTSR performance share units outstanding at December 31, 2017
|
39
|
|
|
$
|
64.82
|
|
|
|
|
|
||
Granted
|
38
|
|
|
$
|
101.13
|
|
|
|
|
|
||
Forfeited
|
(15
|
)
|
|
$
|
101.13
|
|
|
|
|
|
||
Non-vested RTSR performance share units outstanding at December 31, 2018
|
62
|
|
|
$
|
78.35
|
|
|
1.7
|
|
$
|
2.4
|
|
Granted
|
80
|
|
|
$
|
55.61
|
|
|
|
|
|
||
Vested
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Non-vested RTSR performance share units outstanding at December 31, 2019
|
142
|
|
|
$
|
63.02
|
|
|
1.5
|
|
$
|
7.3
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
$
|
55.61
|
|
|
$
|
101.13
|
|
|
$
|
64.82
|
|
|
Fair Value of Derivative Financial Instruments, net of tax
|
|
Foreign Currency Translation Adjustments
|
|
Fair Value of Investment Securities, net of tax
|
|
Post-Retirement and Pension Liability Adjustments, net of tax
|
|
Total AOCI
|
||||||||||
Balance at December 31, 2017
|
$
|
(9.8
|
)
|
|
$
|
260.6
|
|
|
$
|
1.0
|
|
|
$
|
1.3
|
|
|
$
|
253.1
|
|
ASU 2016-01 adoption impact
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
|||||
Balance at December 31, 2017 after adoption impact
|
(9.8
|
)
|
|
260.6
|
|
|
—
|
|
|
1.3
|
|
|
252.1
|
|
|||||
OCI before reclassifications
|
(7.5
|
)
|
|
(156.1
|
)
|
|
—
|
|
|
0.2
|
|
|
(163.4
|
)
|
|||||
Amounts reclassified from AOCI
|
1.8
|
|
|
—
|
|
|
—
|
|
|
(5.9
|
)
|
|
(4.1
|
)
|
|||||
Other comprehensive (loss)
|
(5.7
|
)
|
|
(156.1
|
)
|
|
—
|
|
|
(5.7
|
)
|
|
(167.5
|
)
|
|||||
Balance at December 31, 2018
|
(15.5
|
)
|
|
104.5
|
|
|
—
|
|
|
(4.4
|
)
|
|
84.6
|
|
|||||
OCI before reclassifications
|
26.8
|
|
|
28.4
|
|
|
—
|
|
|
4.9
|
|
|
60.1
|
|
|||||
Amounts reclassified from AOCI
|
1.4
|
|
|
—
|
|
|
—
|
|
|
(6.7
|
)
|
|
(5.3
|
)
|
|||||
Other comprehensive income (loss)
|
28.2
|
|
|
28.4
|
|
|
—
|
|
|
(1.8
|
)
|
|
54.8
|
|
|||||
Balance at December 31, 2019
|
$
|
12.7
|
|
|
$
|
132.9
|
|
|
$
|
—
|
|
|
$
|
(6.2
|
)
|
|
$
|
139.4
|
|
|
Year Ended
|
||||||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Pre-tax income (loss):
|
|
|
|
|
|
||||||
Ireland
|
$
|
(300.3
|
)
|
|
$
|
(109.0
|
)
|
|
$
|
(454.0
|
)
|
United States
|
(291.9
|
)
|
|
(428.6
|
)
|
|
(144.9
|
)
|
|||
Other foreign
|
763.2
|
|
|
828.2
|
|
|
879.0
|
|
|||
Total pre-tax income
|
171.0
|
|
|
290.6
|
|
|
280.1
|
|
|||
|
|
|
|
|
|
||||||
Current provision (benefit) for income taxes:
|
|
|
|
|
|
||||||
Ireland
|
(2.2
|
)
|
|
22.7
|
|
|
(8.1
|
)
|
|||
United States
|
51.0
|
|
|
66.4
|
|
|
100.4
|
|
|||
Other foreign
|
16.1
|
|
|
75.1
|
|
|
46.1
|
|
|||
Subtotal
|
64.9
|
|
|
164.2
|
|
|
138.4
|
|
|||
Deferred provision (benefit) for income taxes:
|
|
|
|
|
|
||||||
Ireland
|
—
|
|
|
(13.9
|
)
|
|
13.1
|
|
|||
United States
|
(30.2
|
)
|
|
7.3
|
|
|
7.8
|
|
|||
Other foreign
|
(9.8
|
)
|
|
2.0
|
|
|
1.2
|
|
|||
Subtotal
|
(40.0
|
)
|
|
(4.6
|
)
|
|
22.1
|
|
|||
Total provision for income taxes
|
$
|
24.9
|
|
|
$
|
159.6
|
|
|
$
|
160.5
|
|
|
Year Ended
|
|||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
|||
Provision at statutory rate
|
12.5
|
%
|
|
12.5
|
%
|
|
12.5
|
%
|
Foreign rate differential
|
3.1
|
|
|
(7.1
|
)
|
|
(93.3
|
)
|
State income taxes, net of federal benefit
|
2.7
|
|
|
3.0
|
|
|
(1.4
|
)
|
Provision to return
|
0.8
|
|
|
(1.0
|
)
|
|
9.3
|
|
Tax credits
|
(2.7
|
)
|
|
(1.3
|
)
|
|
(0.6
|
)
|
Change in tax law
|
(1.1
|
)
|
|
(6.2
|
)
|
|
10.3
|
|
Change in valuation allowance
|
(29.1
|
)
|
|
51.0
|
|
|
17.0
|
|
Change in unrecognized taxes
|
(4.7
|
)
|
|
13.8
|
|
|
22.2
|
|
Permanent differences
|
31.2
|
|
|
(14.1
|
)
|
|
61.8
|
|
Taxes on unremitted earnings
|
3.6
|
|
|
3.9
|
|
|
17.3
|
|
Other
|
(1.7
|
)
|
|
0.4
|
|
|
2.2
|
|
Effective income tax rate
|
14.6
|
%
|
|
54.9
|
%
|
|
57.3
|
%
|
|
Year Ended
|
||||||
|
December 31,
2019 |
|
December 31,
2018 |
||||
Deferred income tax asset (liability):
|
|
|
|
||||
Depreciation and amortization
|
$
|
(366.7
|
)
|
|
$
|
(371.2
|
)
|
Investment in partnership
|
(38.1
|
)
|
|
—
|
|
||
Right of use assets
|
(30.5
|
)
|
|
—
|
|
||
Unremitted earnings
|
(29.0
|
)
|
|
(8.3
|
)
|
||
Inventory basis differences
|
32.7
|
|
|
27.8
|
|
||
Accrued liabilities
|
91.3
|
|
|
87.1
|
|
||
Lease obligations
|
30.5
|
|
|
—
|
|
||
Share-based compensation
|
23.2
|
|
|
19.6
|
|
||
Federal benefit of unrecognized tax positions
|
20.7
|
|
|
18.2
|
|
||
Loss and credit carryforwards
|
373.3
|
|
|
359.2
|
|
||
R&D credit carryforwards
|
54.1
|
|
|
58.8
|
|
||
Interest carryforwards
|
60.5
|
|
|
76.1
|
|
||
Other, net
|
4.1
|
|
|
9.5
|
|
||
Subtotal
|
$
|
226.1
|
|
|
$
|
276.8
|
|
Valuation allowance (1)
|
(501.3
|
)
|
|
(557.9
|
)
|
||
Net deferred income tax liability:
|
$
|
(275.2
|
)
|
|
$
|
(281.1
|
)
|
|
Year Ended
|
||||||
|
December 31,
2019 |
|
December 31,
2018 |
||||
Assets
|
$
|
5.4
|
|
|
$
|
1.2
|
|
Liabilities
|
(280.6
|
)
|
|
(282.3
|
)
|
||
Net deferred income tax liability
|
$
|
(275.2
|
)
|
|
$
|
(281.1
|
)
|
|
Unrecognized
Tax Benefits
|
||
Balance at December 31, 2017
|
$
|
347.9
|
|
Additions:
|
|
||
Positions related to the current year
|
39.4
|
|
|
Positions related to prior years
|
6.8
|
|
|
Reductions:
|
|
||
Settlements with taxing authorities
|
(6.5
|
)
|
|
Lapse of statutes of limitation
|
(1.1
|
)
|
|
Decrease in prior year positions
|
(6.4
|
)
|
|
Cumulative translation adjustment
|
(3.0
|
)
|
|
Balance at December 31, 2018
|
377.1
|
|
|
Additions:
|
|
||
Positions related to the current year
|
8.2
|
|
|
Positions related to prior years
|
3.1
|
|
|
Reductions:
|
|
||
Settlements with taxing authorities
|
(3.0
|
)
|
|
Lapse of statutes of limitation
|
(23.5
|
)
|
|
Decrease in prior year positions
|
(12.1
|
)
|
|
Cumulative translation adjustment
|
0.7
|
|
|
Balance at December 31, 2019
|
$
|
350.5
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31,
2018 |
|
December 31, 2017
|
||||||
$
|
26.6
|
|
|
$
|
25.2
|
|
|
$
|
25.5
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
Year Ended
|
|
Year Ended
|
||||||||||||
|
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2019 |
|
December 31, 2018
|
||||||||
Projected benefit obligation at beginning of period
|
$
|
168.6
|
|
|
$
|
174.0
|
|
|
$
|
5.6
|
|
|
$
|
6.2
|
|
Curtailment
|
(2.5
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
||||
Service costs
|
2.5
|
|
|
3.0
|
|
|
0.6
|
|
|
0.6
|
|
||||
Interest cost
|
3.8
|
|
|
3.8
|
|
|
0.2
|
|
|
0.2
|
|
||||
Actuarial loss (gain)
|
22.7
|
|
|
(1.6
|
)
|
|
0.3
|
|
|
(1.3
|
)
|
||||
Amendments
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
||||
Contributions paid
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(1.6
|
)
|
|
(1.6
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||
Settlements
|
(3.8
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
||||
Foreign currency translation
|
(3.1
|
)
|
|
(7.6
|
)
|
|
—
|
|
|
—
|
|
||||
Projected benefit obligation at end of period
|
$
|
186.9
|
|
|
$
|
168.6
|
|
|
$
|
3.7
|
|
|
$
|
5.6
|
|
Fair value of plan assets at beginning of period
|
151.9
|
|
|
162.5
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
19.8
|
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(1.6
|
)
|
|
(1.6
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||
Settlements
|
(3.8
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
2.0
|
|
|
1.2
|
|
|
0.1
|
|
|
0.1
|
|
||||
Contributions paid
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency translation
|
(3.2
|
)
|
|
(6.9
|
)
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of period
|
$
|
165.4
|
|
|
$
|
151.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Unfunded status
|
$
|
(21.5
|
)
|
|
$
|
(16.7
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(5.6
|
)
|
|
|
|
|
|
|
|
|
||||||||
Presented as:
|
|
|
|
|
|
|
|
||||||||
Other non-current assets
|
$
|
15.8
|
|
|
$
|
15.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other non-current liabilities
|
$
|
(37.3
|
)
|
|
$
|
(32.4
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2017 |
||||||
$
|
2.6
|
|
|
$
|
1.3
|
|
|
$
|
0.3
|
|
Year Ended
|
||||||||||
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2017 |
||||||
$
|
6.2
|
|
|
$
|
4.4
|
|
|
$
|
(1.3
|
)
|
Payment Due
|
|
Pension Benefits
|
|
Other Benefits
|
||||
2020
|
|
$
|
2.0
|
|
|
$
|
0.1
|
|
2021
|
|
1.9
|
|
|
0.2
|
|
||
2022
|
|
2.4
|
|
|
0.2
|
|
||
2023
|
|
2.3
|
|
|
0.2
|
|
||
2024
|
|
3.3
|
|
|
0.2
|
|
||
Thereafter
|
|
22.8
|
|
|
1.3
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||
|
Year Ended
|
|
Year Ended
|
||||||||||||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
Service cost
|
$
|
2.5
|
|
|
$
|
3.0
|
|
|
$
|
4.5
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Interest cost
|
3.8
|
|
|
3.8
|
|
|
3.3
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
||||||
Expected return on assets
|
(4.9
|
)
|
|
(5.3
|
)
|
|
(4.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Settlement
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Curtailment
|
(2.5
|
)
|
|
(1.2
|
)
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net actuarial loss
|
0.8
|
|
|
0.6
|
|
|
0.8
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||
Net periodic pension cost
|
$
|
0.6
|
|
|
$
|
0.9
|
|
|
$
|
3.6
|
|
|
$
|
0.5
|
|
|
$
|
0.7
|
|
|
$
|
0.7
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||
|
Year Ended
|
|
Year Ended
|
||||||||||||||
|
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2017 |
|
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2017 |
||||||
Discount rate
|
1.06
|
%
|
|
2.04
|
%
|
|
1.91
|
%
|
|
4.25
|
%
|
|
3.59
|
%
|
|
3.59
|
%
|
Inflation
|
1.18
|
%
|
|
1.45
|
%
|
|
1.45
|
%
|
|
|
|
|
|
|
|||
Expected return on assets
|
2.54
|
%
|
|
2.94
|
%
|
|
2.90
|
%
|
|
|
|
|
|
|
Equities
|
5.9
|
%
|
Bonds
|
1.8
|
%
|
Absolute return fund
|
4.0
|
%
|
Insurance contracts
|
2.5
|
%
|
Other
|
1.5
|
%
|
Equities
|
20%-30%
|
Bonds
|
30%-40%
|
Absolute return
|
40%-50%
|
|
Year Ended
|
||||||||||||||||||||||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Equities
|
$
|
0.1
|
|
|
$
|
24.5
|
|
|
$
|
—
|
|
|
$
|
24.6
|
|
|
$
|
0.1
|
|
|
$
|
16.2
|
|
|
$
|
—
|
|
|
$
|
16.3
|
|
Bonds
|
1.1
|
|
|
32.7
|
|
|
—
|
|
|
33.8
|
|
|
1.0
|
|
|
28.6
|
|
|
—
|
|
|
29.6
|
|
||||||||
Insurance contracts
|
—
|
|
|
—
|
|
|
56.1
|
|
|
56.1
|
|
|
—
|
|
|
—
|
|
|
49.9
|
|
|
49.9
|
|
||||||||
Absolute return fund
|
—
|
|
|
44.9
|
|
|
—
|
|
|
44.9
|
|
|
—
|
|
|
50.5
|
|
|
—
|
|
|
50.5
|
|
||||||||
Other
|
—
|
|
|
6.0
|
|
|
|
|
6.0
|
|
|
—
|
|
|
5.6
|
|
|
—
|
|
|
5.6
|
|
|||||||||
Total
|
$
|
1.2
|
|
|
$
|
108.1
|
|
|
$
|
56.1
|
|
|
$
|
165.4
|
|
|
$
|
1.1
|
|
|
$
|
100.9
|
|
|
$
|
49.9
|
|
|
$
|
151.9
|
|
|
Year Ended
|
||||||
|
December 31,
2019 |
|
December 31, 2018
|
||||
Assets at beginning of year
|
$
|
49.9
|
|
|
$
|
50.8
|
|
Actual return on plan assets
|
8.1
|
|
|
0.6
|
|
||
Purchases, sales and settlements, net
|
(0.5
|
)
|
|
0.4
|
|
||
Foreign exchange
|
(1.4
|
)
|
|
(1.9
|
)
|
||
Assets at end of year
|
$
|
56.1
|
|
|
$
|
49.9
|
|
Balance at December 31, 2016
|
$
|
19.7
|
|
Additional charges
|
61.0
|
|
|
Payments
|
(59.6
|
)
|
|
Non-cash adjustments
|
0.3
|
|
|
Balance at December 31, 2017
|
21.4
|
|
|
Additional charges
|
21.0
|
|
|
Payments
|
(18.8
|
)
|
|
Non-cash adjustments
|
0.4
|
|
|
Balance at December 31, 2018
|
24.0
|
|
|
Additional charges
|
25.3
|
|
|
Payments
|
(29.4
|
)
|
|
Non-cash adjustments
|
(0.3
|
)
|
|
Balance at December 31, 2019
|
$
|
19.6
|
|
|
CSCA
|
|
CSCI
|
|
RX
|
|
Other(1)
|
|
Unallocated
|
|
Total
|
||||||||||||
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
2,487.7
|
|
|
$
|
1,382.2
|
|
|
$
|
967.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,837.4
|
|
Operating income (loss)
|
$
|
414.0
|
|
|
$
|
19.6
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
(231.4
|
)
|
|
$
|
204.8
|
|
Operating margin
|
16.6
|
%
|
|
1.4
|
%
|
|
0.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.2
|
%
|
||||||
Total assets
|
$
|
3,990.2
|
|
|
$
|
4,682.7
|
|
|
$
|
2,628.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,301.4
|
|
Capital expenditures
|
$
|
98.4
|
|
|
$
|
18.8
|
|
|
$
|
20.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137.7
|
|
Property, plant and equipment, net
|
$
|
599.8
|
|
|
$
|
149.9
|
|
|
$
|
153.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
902.8
|
|
Depreciation/amortization
|
$
|
97.4
|
|
|
$
|
194.3
|
|
|
$
|
104.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
396.5
|
|
Change in financial assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(22.1
|
)
|
|
$
|
(22.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
2,411.6
|
|
|
$
|
1,399.3
|
|
|
$
|
920.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,731.7
|
|
Operating income (loss)
|
$
|
174.4
|
|
|
$
|
6.8
|
|
|
$
|
214.6
|
|
|
$
|
—
|
|
|
$
|
(159.3
|
)
|
|
$
|
236.5
|
|
Operating margin
|
7.2
|
%
|
|
0.5
|
%
|
|
23.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
5.0
|
%
|
||||||
Total assets
|
$
|
3,571.7
|
|
|
$
|
4,613.0
|
|
|
$
|
2,798.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,983.4
|
|
Capital expenditures
|
$
|
65.0
|
|
|
$
|
19.1
|
|
|
$
|
18.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
102.7
|
|
Property, plant and equipment, net
|
$
|
530.3
|
|
|
$
|
154.8
|
|
|
$
|
144.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
829.1
|
|
Depreciation/amortization
|
$
|
104.8
|
|
|
$
|
219.2
|
|
|
$
|
99.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
423.6
|
|
Change in financial assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(188.7
|
)
|
|
$
|
(188.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
2,429.9
|
|
|
$
|
1,406.2
|
|
|
$
|
1,054.4
|
|
|
$
|
55.7
|
|
|
$
|
—
|
|
|
$
|
4,946.2
|
|
Operating income (loss)
|
$
|
470.9
|
|
|
$
|
(2.7
|
)
|
|
$
|
306.1
|
|
|
$
|
8.7
|
|
|
$
|
(184.8
|
)
|
|
$
|
598.2
|
|
Operating margin
|
19.4
|
%
|
|
(0.2
|
)%
|
|
29.0
|
%
|
|
15.6
|
%
|
|
—
|
%
|
|
12.1
|
%
|
||||||
Total assets
|
$
|
3,786.8
|
|
|
$
|
4,908.3
|
|
|
$
|
2,933.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,628.8
|
|
Capital expenditures
|
$
|
39.5
|
|
|
$
|
23.4
|
|
|
$
|
25.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
88.6
|
|
Property, plant and equipment, net
|
$
|
512.8
|
|
|
$
|
169.7
|
|
|
$
|
150.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
833.1
|
|
Depreciation/amortization
|
$
|
115.2
|
|
|
$
|
219.9
|
|
|
$
|
103.9
|
|
|
$
|
5.8
|
|
|
$
|
—
|
|
|
$
|
444.8
|
|
Change in financial assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24.9
|
|
|
$
|
24.9
|
|
(1)
|
Includes our former Specialty Sciences segment.
|
|
Year Ended
|
||||||
|
December 31,
2019 |
|
December 31,
2018 |
||||
U.S.
|
$
|
614.5
|
|
|
$
|
548.7
|
|
Europe(1)
|
146.8
|
|
|
152.3
|
|
||
Israel
|
86.1
|
|
|
77.6
|
|
||
All other countries
|
55.4
|
|
|
50.5
|
|
||
|
$
|
902.8
|
|
|
$
|
829.1
|
|
Year Ended
|
|||||||
December 31,
2019 |
|
December 31, 2018
|
|
December 31,
2017 |
|||
13.0
|
%
|
|
12.8
|
%
|
|
13.0
|
%
|
|
First
Quarter(2) |
|
Second
Quarter (3) |
|
Third
Quarter (4) |
|
Fourth
Quarter(5) |
||||||||
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,174.5
|
|
|
$
|
1,149.0
|
|
|
$
|
1,191.1
|
|
|
$
|
1,322.8
|
|
Gross profit
|
$
|
448.8
|
|
|
$
|
430.8
|
|
|
$
|
412.8
|
|
|
$
|
480.9
|
|
Change in financial assets
|
$
|
(10.4
|
)
|
|
$
|
(5.5
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
(3.6
|
)
|
Net income (loss)
|
$
|
63.9
|
|
|
$
|
9.0
|
|
|
$
|
92.2
|
|
|
$
|
(19.0
|
)
|
Earnings (loss) per share(1):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.47
|
|
|
$
|
0.07
|
|
|
$
|
0.68
|
|
|
$
|
(0.14
|
)
|
Diluted
|
$
|
0.47
|
|
|
$
|
0.07
|
|
|
$
|
0.67
|
|
|
$
|
(0.14
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
135.9
|
|
|
136.0
|
|
|
136.0
|
|
|
136.1
|
|
||||
Diluted
|
136.2
|
|
|
136.5
|
|
|
136.8
|
|
|
137.0
|
|
(2)
|
Includes change in financial assets of $10.4 million.
|
(3)
|
Includes impairment charges of $27.8 million and restructuring charges and other termination benefits of $12.2 million.
|
|
First
Quarter |
|
Second
Quarter (2) |
|
Third
Quarter (3) |
|
Fourth
Quarter |
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,217.0
|
|
|
$
|
1,186.4
|
|
|
$
|
1,133.1
|
|
|
$
|
1,195.2
|
|
Gross profit
|
$
|
492.7
|
|
|
$
|
471.0
|
|
|
$
|
424.8
|
|
|
$
|
443.0
|
|
Change in financial assets
|
$
|
9.6
|
|
|
$
|
(0.6
|
)
|
|
$
|
(74.9
|
)
|
|
$
|
(122.8
|
)
|
Net income (loss)
|
$
|
80.8
|
|
|
$
|
36.2
|
|
|
$
|
(67.5
|
)
|
|
$
|
81.5
|
|
Earnings (loss) per share(1):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.57
|
|
|
$
|
0.26
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.60
|
|
Diluted
|
$
|
0.57
|
|
|
$
|
0.26
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.60
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
140.8
|
|
|
138.1
|
|
|
137.4
|
|
|
135.9
|
|
||||
Diluted
|
141.4
|
|
|
138.7
|
|
|
137.4
|
|
|
136.3
|
|
(2)
|
Includes acquisition-related charges and contingent consideration adjustments of $53.2 million.
|
(3)
|
Includes impairment charges of $221.8 million and restructuring charges and other termination benefits of $18.0 million.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
(a)
|
The following documents are filed or incorporated by reference as part of this Form 10-K:
|
1.
|
All financial statements. See Index to Consolidated Financial Statements.
|
2.
|
Financial Schedules.
|
3.
|
Exhibits:
|
2.1
|
|
|
|
2.2
|
|
|
|
2.3+
|
|
|
|
2.4
|
|
|
|
2.5
|
|
|
|
2.6
|
|
|
|
2.7
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
4.8
|
|
|
|
4.9
|
|
|
|
4.10
|
|
|
|
4.11
|
|
|
|
4.12
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
10.6
|
|
|
|
10.7*
|
|
|
|
10.8*
|
|
|
|
10.9*
|
|
|
|
10.10*
|
|
|
|
10.11*
|
|
|
|
10.12*
|
|
|
|
10.13*
|
|
|
|
10.14*
|
|
|
|
10.15*
|
|
|
|
10.16*
|
|
|
|
10.17*
|
|
|
|
10.18*
|
|
|
|
10.19*
|
|
|
|
10.20*
|
|
|
|
10.21*
|
|
|
|
10.22*
|
|
|
|
10.23*
|
|
|
|
10.24*
|
|
|
|
10.25*
|
|
|
|
10.26*
|
|
|
|
10.27*
|
|
|
|
10.28*
|
|
|
|
10.29*
|
|
|
|
10.30*
|
|
|
|
10.31*
|
|
|
|
10.32*
|
|
|
|
10.33*
|
|
|
|
10.34*
|
|
|
|
10.35*
|
|
|
|
10.36*
|
|
|
|
10.37*
|
|
|
|
10.38*
|
|
|
|
10.39*
|
|
|
|
10.40*
|
|
|
10.41*
|
|
|
|
10.42*
|
|
|
|
10.43*
|
|
|
|
10.44*
|
|
|
|
10.45*
|
|
|
|
10.46*
|
|
|
|
10.47*
|
|
|
|
10.48*
|
|
|
|
10.49*
|
|
|
|
10.50*
|
|
|
|
10.51*
|
|
|
|
10.52*
|
|
|
|
10.53*
|
|
|
|
10.54*
|
|
|
|
10.55*
|
|
|
|
10.56*
|
|
|
|
10.57*
|
|
|
|
10.58*
|
|
|
|
10.59*
|
|
|
|
10.60*
|
|
|
|
10.61*
|
|
|
|
10.62*
|
|
|
|
10.63*
|
|
|
|
10.64*
|
|
|
|
10.65*
|
|
|
|
10.66*
|
|
|
|
10.67*
|
|
|
|
10.68*
|
|
|
|
10.69*
|
|
|
|
10.70*
|
|
|
|
10.71*
|
|
|
|
10.72*
|
|
|
|
10.73*
|
|
|
|
10.74*
|
|
|
|
10.75*
|
|
|
|
10.76*
|
|
|
|
10.77*
|
|
|
|
10.78*
|
|
|
|
10.79*
|
|
|
|
10.80*
|
|
|
|
10.81*
|
|
|
|
10.82*
|
|
|
|
21
|
|
|
|
23
|
|
|
|
24
|
|
|
|
31
|
|
|
|
32
|
|
|
|
101.INS
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
104
|
Cover Page Interactive Data File, formatted in Inline XBRL (contained in Exhibit 101.INS).
|
|
|
+
|
Confidential treatment has been requested for portions of this agreement. A completed copy of the agreement, including the redacted portions, has been filed separately with the SEC.
|
*
|
Denotes management contract or compensatory plan or arrangement.
|
(b)
|
Exhibits.
|
(c)
|
Financial Statement Schedules.
|
|
|
Year Ended
|
||||||||||
|
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||
Allowance for doubtful accounts
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
6.4
|
|
|
$
|
6.2
|
|
|
$
|
6.3
|
|
Net bad debt expenses(1)
|
|
0.8
|
|
|
—
|
|
|
1.4
|
|
|||
Additions/(deductions)(2)
|
|
(0.5
|
)
|
|
0.2
|
|
|
(1.5
|
)
|
|||
Balance at end of period
|
|
$
|
6.7
|
|
|
$
|
6.4
|
|
|
$
|
6.2
|
|
(1)
|
Includes effects of changes in foreign exchange rates.
|
(2)
|
Uncollectible accounts written off, net of recoveries. Also includes effects of changes in foreign exchange rates.
|
PERRIGO COMPANY PLC
|
|
|
|
By:
|
/s/ Murray S. Kessler
|
|
Murray S. Kessler
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
|
|
/s/ Murray S. Kessler
|
|
President and Chief Executive Officer and Director
|
Murray S. Kessler
|
|
(Principal Executive Officer)
|
|
|
|
/s/ Raymond P. Silcock
|
|
Chief Financial Officer
|
Raymond P. Silcock
|
|
(Principal Accounting and Financial Officer)
|
|
|
|
/s/ Rolf A. Classon
|
|
Chairman of the Board
|
Rolf A. Classon
|
|
|
|
|
|
/s/ Erica L. Mann
|
|
Director
|
Erica L. Mann
|
|
|
|
|
|
/s/ Bradley A. Alford
|
|
Director
|
Bradley A. Alford
|
|
|
|
|
|
/s/ Adriana Karaboutis
|
|
Director
|
Adriana Karaboutis
|
|
|
|
|
|
/s/ Jeffrey B. Kindler
|
|
Director
|
Jeffrey B. Kindler
|
|
|
|
|
|
/s/ Donal O'Connor
|
|
Director
|
Donal O'Connor
|
|
|
|
|
|
/s/ Geoffrey M. Parker
|
|
Director
|
Geoffrey M. Parker
|
|
|
|
|
|
/s/ Theodore R. Samuels
|
|
Director
|
Theodore R. Samuels
|
|
|
|
|
|
•
|
amending the objects or memorandum of association of Perrigo;
|
•
|
amending the articles of association of Perrigo;
|
•
|
approving a change of name of Perrigo;
|
•
|
authorizing the entering into of a guarantee or provision of security in connection with a loan, quasi-loan or credit transaction to a director or connected person;
|
•
|
opting out of preemption rights on the issuance of new shares for cash;
|
•
|
re-registration of Perrigo from a public limited company to a private company;
|
•
|
variation of class rights attaching to classes of shares (where the articles of association do not provide otherwise);
|
•
|
purchase of own shares off-market;
|
•
|
reduction of issued share capital;
|
•
|
resolving that Perrigo be wound up by the Irish courts;
|
•
|
resolving in favor of a shareholders’ voluntary winding-up;
|
•
|
re-designation of shares into different share classes; and
|
•
|
setting the re-issue price of treasury shares.
|
•
|
a court-approved scheme of arrangement under the Companies Act. A scheme of arrangement requires a court order from the Irish High Court and the approval of a majority in number representing 75% in value of each class of shareholder present and voting in person or by proxy at a meeting called to approve the scheme;
|
•
|
through a tender or takeover offer by a third party for all of the shares of Perrigo. Where the holders of 80% or more of Perrigo’s ordinary shares have accepted an offer for their shares in Perrigo, the remaining shareholders may also be statutorily required to transfer their shares. If the bidder does not exercise its “squeeze out” right, then the non-accepting shareholders also have a statutory right to require the bidder to acquire their shares on the same terms. If shares of Perrigo were to be listed on Euronext Dublin or another regulated stock exchange in the European Union, this threshold would be increased to 90%; and
|
•
|
by way of a merger with a company incorporated in the European Economic Area (“EEA”) under EU Directive 2017/1132 of the European Parliament and of the Council of 14 June 2017 as implemented in Ireland by the European Communities (Cross- Border Mergers) Regulations 2008 (as amended) or with another Irish company under the Companies Act. Such a merger must be approved by a special resolution. Shareholders also may be entitled to have their shares acquired for cash. See “Appraisal Rights.”
|
•
|
any transfer of those shares, or in the case of unissued shares any transfer of the right to be issued with shares and any issue of shares, shall be void;
|
•
|
no voting rights shall be exercisable in respect of those shares;
|
•
|
no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder of those shares; and
|
•
|
no payment shall be made of any sums due from Perrigo on those shares, whether in respect of capital or otherwise.
|
•
|
in the event of an offer, all holders of security of the target company should be afforded equivalent treatment and, if a person acquires control of a company, the other holders of securities must be protected;
|
•
|
the holders of the securities in the target company must have sufficient time and information to enable them to reach a properly informed decision on the offer; where it advises the holders of securities, the board of the target company must give its views on the effects of implementation of the offer on employment, conditions of employment and the locations of the target company’s places of business;
|
•
|
the board of the target company must act in the interests of the company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the offer;
|
•
|
false markets must not be created in the securities of the target company, the bidder or of any other company concerned by the offer in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted;
|
•
|
a bidder must announce an offer only after ensuring that he or she can fulfill in full, any cash consideration, if such is offered, and after taking all reasonable measures to secure the implementation of any other type of consideration;
|
•
|
a target company must not be hindered in the conduct of its affairs for longer than is reasonable by an offer for its securities; and
|
•
|
a substantial acquisition of securities (whether such acquisition is to be effected by one transactions or a series of transaction) shall take place only at an acceptable speed and shall be subject to adequate and timely disclosure.
|
•
|
the action is approved by Perrigo’s shareholders at a general meeting; or
|
•
|
the Panel has given its consent, where:
|
◦
|
it is satisfied the action would not constitute frustrating action;
|
◦
|
Perrigo shareholders that hold 50% of the voting rights state in writing that they approve the proposed action and would vote in favor of it at a general meeting;
|
◦
|
the action is taken in accordance with a contract entered into prior to the announcement of the offer; or
|
◦
|
the decision to take such action was made before the announcement of the offer and either has been at least partially implemented or is in the ordinary course of business.
|
•
|
by the affirmative vote of two-thirds of the board of Perrigo;
|
•
|
with respect to election at an annual general meeting, by any shareholder who holds ordinary shares or other shares carrying the general right to vote at general meetings of Perrigo, who is a shareholder or group of shareholders at the time of the giving of the notice and at the time of the relevant annual general meeting and who timely complies with the notice procedures set out in the articles of association;
|
•
|
with respect to election at an extraordinary general meeting requisitioned in accordance with section 178 of the Companies Act 2014, by a shareholder or shareholders who hold ordinary shares or other shares carrying the general right to vote at general meetings of Perrigo and who make such nomination in the written requisition of the extraordinary general meeting; or
|
•
|
by holders of any class or series of shares in Perrigo then in issue having special rights to nominate or appoint directors in accordance with the terms of issue of such class or series, but only to the extent provided in such terms of issue.
|
•
|
by shareholders by ordinary resolution at the annual general meeting in each year or at any extraordinary general meeting called for the purpose, except that, if resolutions are passed in respect of the election of directors which would result in the maximum number of directors being exceeded, then those directors, in such number as exceeds such maximum number, receiving at that meeting the lowest number of votes will not be elected;
|
•
|
by the board in accordance with the articles of association; or
|
•
|
so long as there is in office a sufficient number of directors to constitute a quorum of the board, the directors shall have the power at any time and from time to time to appoint any person to be director, either to fill a vacancy in the board or as an addition to the existing directors but so that the total number of directors shall not at any time exceed the maximum number provided for in the articles of association.
|
•
|
use the prevailing exchange rate published by the Commonwealth Bank of Australia (Prevailing Exchange Rate); or
|
•
|
contact your local Human Resources representative who will advise you of the Option Price in equivalent Australian dollars, as soon as possible following receipt of any request for such information.
|
(a)
|
the vesting conditions for your Option may not be satisfied for reasons beyond the Company and your control;
|
(b)
|
you are not permitted to transfer your Option unless permitted under this Agreement and the Plan;
|
(c)
|
if your Option vests and you subsequently receive Ordinary Shares:
|
(i)
|
the value of those Ordinary Shares may rise and fall according to investor sentiment, general economic conditions and outlook, international and local stock markets, employment, inflation, interest rates, government policy, taxation and regulation; and
|
(ii)
|
there is no guarantee that an active trading market for the Ordinary Shares will exist or that the price of the Ordinary Shares will increase. There may be relatively few potential buyers or sellers of the Ordinary Shares on the NYSE, NASDAQ, TASE or any other applicable market at any time and this may increase the volatility of the market price of the shares. It may also affect the prevailing market price at which you may be able to sell your Ordinary Shares.
|
(i)
|
Participation in the Plan does not constitute an acquired right;
|
(ii)
|
The Plan and participation in the Plan is offered by the Company on a wholly discretionary basis;
|
(iii)
|
Participation in the Plan is voluntary; and
|
(iv)
|
The Company and any Parent, Subsidiary or Affiliates are not responsible for any decrease in the value of the shares underlying the options.
|
(i)
|
La participación en el Plan no constituye un derecho adquirido;
|
(ii)
|
El plan y la participación en el mismo, son ofrecidos por la Compañía de manera totalmente discrecional;
|
(iii)
|
La participación en el Plan es voluntaria; y
|
(iv)
|
La Compañía, y cualquier Sociedad controladora, Subsidiaria o Filiales no son responsables por ningún decremento en el valor de las Acciones.
|
(a)
|
the vesting conditions for your PSUs may not be satisfied for reasons beyond the Company’s or your control;
|
(b)
|
you are not permitted to transfer your PSUs unless permitted under this Agreement or the Plan;
|
(c)
|
if your PSUs vest and you subsequently receive Ordinary Shares:
|
(i)
|
the value of those shares may rise and fall according to investor sentiment, general economic conditions and outlook, international and local stock markets, employment, inflation, interest rates, government policy, taxation and regulation; and
|
(ii)
|
there is no guarantee that an active trading market for the shares will exist or that the price of the shares will increase. There may be relatively few potential buyers or sellers of the shares on the NYSE, NASDAQ, TASE or any other applicable market at any time and this may increase the volatility of the market price of the shares. It may also affect the prevailing market price at which you may be able to sell your shares.
|
(i)
|
Participation in the Plan does not constitute an acquired right;
|
(ii)
|
The Plan and participation in the Plan is offered by the Company on a wholly discretionary basis;
|
(iii)
|
Participation in the Plan is voluntary; and
|
(iv)
|
The Company and any Parent, Subsidiary or Affiliates are not responsible for any decrease in the value of the shares.
|
(i)
|
La participación en el Plan no constituye un derecho adquirido;
|
(ii)
|
El plan y la participación en el mismo, son ofrecidos por la Compañía de manera totalmente discrecional;
|
(iii)
|
La participación en el Plan es voluntaria; y
|
(iv)
|
La Compañía, y cualquier Sociedad controladora, Subsidiaria o Filiales no son responsables por ningún decremento en el valor de las Acciones.
|
(d)
|
the vesting conditions for your PSUs may not be satisfied for reasons beyond the Company’s or your control;
|
(e)
|
you are not permitted to transfer your PSUs unless permitted under this Agreement or the Plan;
|
(f)
|
if your PSUs vest and you subsequently receive Ordinary Shares:
|
(i)
|
the value of those shares may rise and fall according to investor sentiment, general economic conditions and outlook, international and local stock markets, employment, inflation, interest rates, government policy, taxation and regulation; and
|
(ii)
|
there is no guarantee that an active trading market for the shares will exist or that the price of the shares will increase. There may be relatively few potential buyers or sellers of the shares on the NYSE, NASDAQ, TASE or any other applicable market at any time and this may increase the volatility of the market price of the shares. It may also affect the prevailing market price at which you may be able to sell your shares.
|
(v)
|
Participation in the Plan does not constitute an acquired right;
|
(vi)
|
The Plan and participation in the Plan is offered by the Company on a wholly discretionary basis;
|
(vii)
|
Participation in the Plan is voluntary; and
|
(viii)
|
The Company and any Parent, Subsidiary or Affiliates are not responsible for any decrease in the value of the shares.
|
(v)
|
La participación en el Plan no constituye un derecho adquirido;
|
(vi)
|
El plan y la participación en el mismo, son ofrecidos por la Compañía de manera totalmente discrecional;
|
(vii)
|
La participación en el Plan es voluntaria; y
|
(viii)
|
La Compañía, y cualquier Sociedad controladora, Subsidiaria o Filiales no son responsables por ningún decremento en el valor de las Acciones.
|
(a)
|
the vesting conditions for your RSUs may not be satisfied for reasons beyond the Company or your control;
|
(b)
|
you are not permitted to transfer their RSUs unless permitted under this Agreement or the Plan;
|
(c)
|
if your RSUs vest and you subsequently receive Shares:
|
(i)
|
the value of those shares may rise and fall according to investor sentiment, general economic conditions and outlook, international and local stock markets, employment, inflation, interest rates, government policy, taxation and regulation; and
|
(ii)
|
there is no guarantee that an active trading market for the shares will exist or that the price of the shares will increase. There may be relatively few potential buyers or sellers of the shares on the NYSE, NASDAQ ,TASE or any other applicable market at any time and this may increase the volatility of the market price of the shares. It may also affect the prevailing market price at which you may be able to sell your Shares.
|
(i)
|
Participation in the Plan does not constitute an acquired right;
|
(ii)
|
The Plan and participation in the Plan is offered by the Company on a wholly discretionary basis;
|
(iii)
|
Participation in the Plan is voluntary; and
|
(iv)
|
The Company and any Parent, Subsidiary or Affiliates are not responsible for any decrease in the value of the shares.
|
(i)
|
La participación en el Plan no constituye un derecho adquirido;
|
(ii)
|
El plan y la participación en el mismo, son ofrecidos por la Compañía de manera totalmente discrecional;
|
(iii)
|
La participación en el Plan es voluntaria; y
|
(iv)
|
La Compañía, y cualquier Sociedad controladora, Subsidiaria o Filiales no son responsables por ningún decremento en el valor de las Acciones.
|
(1)
|
Perrigo Holding NV, with registered office at Venecoweg 26, 9810 Nazareth, represented by Patrick O’Sullivan and Brandracer BVBA-Geert Cools, duly authorised, organised and existing under the laws of Belgium, registered with the Central Enterprise Register under number BE 0431.676.229, hereinafter referred to as the Company;
|
(2)
|
Svend Andersen, residing at Skovmosevej 8, 3220 Denmark, hereinafter referred to as the Manager,
|
(A)
|
The Manager has the required experience for the performance of the mandate of daily manager for the benefit of the Company.
|
(B)
|
The Manager has been duly appointed as managing director of the Company.
|
(C)
|
Parties wish to determine in this agreement (the Agreement) the terms and conditions of the performance of services by the Manager in the framework of his activities as a daily manager.
|
1.
|
Agreement to provide services of daily management
|
1.1
|
Subject to the terms and conditions of this Agreement, the Company hereby contracts the Manager and the Manager agrees to provide the Company with the activities of daily management (dagelijks bestuur/gestion journalière), within the meaning of article 7:121 of the Belgian Companies Code.
|
1.2
|
The Manager shall provide such daily management services and perform such duties for the Company as are consistent with its position as daily manager (dagelijks bestuurder/délégué à la gestion journalière) of the Company.
|
(a)
|
the Manager together with the other members of the Company's management board (i) will undertake full responsibility for the daily management all in conformity with the strategy set out by the Company’s management board and (ii) will advise the Company in the strategic
|
(b)
|
the Manager will, in the performance of his duties, promote the interests, business and reputation of the Company and shall perform all such duties as are essential or conducive to the efficient management thereof in accordance with the rules and policies of the Company from time to time and without limitation, as set out in the Agreement. The Manager shall diligently, faithfully and honestly serve the Company during the continuance of this Agreement and shall use its best endeavours and such reasonable and diligent efforts, as may be required to promote the interests of the Company as a whole; and
|
(c)
|
any other tasks entrusted to him from time to time.
|
1.3
|
The Manager performs his activities in a manner that he determines and according to the time scheme that he applies. All documents and correspondence conducted between the Company and the Manager must be considered as necessary work instruments in order to allow Parties to perform their tasks according to their obligations. Under no circumstances may these documents be construed as an indication which would lead to an employee relationship.
|
1.4
|
Taking into account the needs and organization of the business he is responsible for under this Agreement, the Manager will organize the activities under this Agreement in a free and independent manner and shall report on the accomplished results or activities which are performed under this Agreement. The Manager shall only be required to report on or account for his business approach and planning by which these results were achieved or failed to be achieved to the Group-CEO and to the Board of Directors of the Company.
|
2.
|
Term
|
2.1
|
Parties agree that this Agreement is concluded for an indefinite period, it shall enter into force with effect on 1 January 2020 (the Commencement Date).
|
2.2
|
From the Commencement Date until 15 January 2020, the Manager will participate in the Perrigo Company PLC Executive Committee Severance Policy (as amended and restated effective February 13, 2019) (the Policy), during which time the Policy will prevail and exclusively apply pursuant to the terms and conditions of the Policy.
|
2.3
|
After 15 January 2020:
|
2.4
|
The Company may at any time terminate this Agreement, for just cause and without any indemnity being due, by giving written notice by registered mail to the Manager of the termination of this Agreement. For the purpose of this clause, just cause shall include, but not be limited to, the following:
|
(a)
|
The Manager commits a criminal offence, is guilty of serious misconduct or conduct prejudicial to the Company’s business, or breaches any of its fiduciary duties as manager to the Company;
|
(b)
|
The Manager is guilty of a breach or non-observance of any of the material terms or conditions of the Agreement and this breach or non-observance
|
3.
|
Fixed fee
|
3.1
|
The Company will pay to the Manager a fixed fee of €43,453.17 per month that actual services are rendered, VAT excluded (the Fixed Fee). (The equivalent of €521,438 annually).
|
3.2
|
The Fixed Fee is to be paid by bank transfer, after deduction of the necessary tax and social security withholdings (if applicable), into the Manager’s designated account, or into any other account that for this purpose has been duly and timely communicated by the Manager to the Company.
|
4.
|
Variable fee
|
4.1
|
At the discretion of the Company, the Manager may be granted an annual variable fee (the Variable Fee). The actual Variable Fee award will depend on the achievement of performance targets as defined by the Company. Eligibility and entitlement in one year does not create a right to any similar eligibility or entitlement in subsequent years.
|
4.2
|
In the event the Agreement is terminated or notice is served before the end of the reference period of the Variable Fee, the Manager will be entitled to a proportional annual Variable Fee, unless if the termination of this Agreement was the result of a just cause as referred to under clause 2.4.
|
5.
|
Additional Fee
|
5.1
|
In addition to the Fixed Fee and the potential Variable Fee, the Company will pay the Manager an annual fee of €85,000.00 per year which will be paid in twelve equal monthly instalments (the Additional Fee).
|
5.2
|
The payment of this Additional Fee is at the entire discretion of the Company which is free to decide to revoke the Manager’s entitlement to this Additional Fee at any point in time or to adjust its amount.
|
5.3
|
The Manager will not be entitled to a proportional Additional Fee in the event the Agreement is terminated or notice is served before the end of a given calendar year.
|
6.
|
Place of work
|
6.1
|
Given the nature of his mandate and the tasks under this Agreement, the place where the Manager mainly performs his mandate is the headquarters in Nazareth, Belgium. All decisions regarding significant matters will be made in Nazareth.
|
6.2
|
The Manager is prepared to accept all travel associated with the work that would be assigned to the Manager.
|
7.
|
Effects of Termination
|
7.1
|
The termination of this Agreement shall not relieve the Manager from his obligations of confidentiality and non-competition nor relieve the Manager from any liability arising from this mandate as manager or from any breach of this Agreement.
|
8.
|
Independent relationship
|
8.1
|
It is explicitly agreed that the Manager shall not be in any subordinate relationship vis-a-vis the Company. Therefore, the Manager shall not receive any direct or indirect order or instructions from the Company, nor shall the Company exercise an employer’s control or authority over the Manager, without prejudice however to the supervision powers of the Company’s management board pursuant the Belgian company laws.
|
8.2
|
The Manager will organise its activities on a free and independent basis and will only be liable for the final result of its activities and the performance of its duties by virtue of his mandate and this Agreement.
|
9.
|
Non-Competition
|
9.1
|
The Manager undertakes that it will not, either on its own account or jointly with or on behalf of any person or entity other than the Company or a Group Company, directly or indirectly:
|
(a)
|
carry on any similar activity or be engaged, concerned or interested in any business competing with the business of the Company, a Group Company or any of their (direct or indirect) shareholders, with which the Manager has been involved during the term of the Agreement, during the term of the Agreement and for a period of 12 months following the End Date unless this Agreement is terminated by the Company;
|
(b)
|
solicit, induce, recruit or encourage any person employed by the Company or a Group Company in whatever capacity (be it as service provider, employee or self-employed) to leave their employment, or take away such workers, or attempt to solicit, induce, recruit, encourage or take away workers of the Company or a Group Company, either for itself or for any other person or entity, during the term of the Agreement and for a period of 24 months following the End Date.
|
(c)
|
solicit or take away any suppliers or customers of the Company, a Group Company or any of their (direct or indirect) shareholders, with which the
|
9.2
|
In the event of any breach by the Manager, the Manager will pay the Company or any of the Group Companies liquidated damages in the sum of €50,000, without prejudice to the Company’s right or the right of any Group Company to claim compensation for the actual suffered damages and to take any other legal action against the Manager or whatever third-party to end this breach.
|
10.
|
Intellectual property
|
10.1
|
All systems, computer programs (object code and source code), documents, drawings, plans, designs, models, topographies of semiconductors, documentation, databases, texts, manuals, reports, working plans, algorithms, analyses, technologies, trade secrets, trade names, trade-marks, domain names, working procedures, inventions, methods, developments and any other work that the Manager creates or develops, alone or in cooperation with others, in the framework of the performance of this Agreement, will be referred to as a Deliverable or Deliverables and remain or become the exclusive property of the Company. This exclusivity includes, amongst others, the transfer to the Company of the ownership of all intellectual property rights in the Deliverables.
|
10.2
|
The Manager hereby irrevocably and exclusively assigns to the Company, all intellectual property rights and all other rights in the Deliverables, including but not limited to the copyrights, neighbouring rights, rights in databases, trade mark rights, rights on trade names, logos, designs and models, patent rights, rights on topographies of semiconductors, rights on computer programs, that have arisen or, that will arise during or at the occasion of the performance of the Agreement, as from their accrual (the Assigned IPRs).
|
10.3
|
The (intellectual property) rights transferred under this Clause are transferred for the whole term of their protection, if any, and for all countries in the world. The transfer of the intellectual property rights remains applicable after the termination of the Agreement, for the period of their protection.
|
10.4
|
The Manager shall hold the Company harmless against any claim submitted against it based on the allegation that the use of the Deliverables infringes intellectual property rights or exclusive usage rights. The Company will inform the Manager immediately of such a claim.
|
10.5
|
The Manager undertakes:
|
(a)
|
whenever requested to do so by the Company, and in any event upon termination of this Agreement, promptly to deliver to the Company all correspondence, documents, papers and records on all media (and all copies or abstracts of them), recording or relating to any part of the Deliverable and the process of their creation which are in their possession, custody or power;
|
(b)
|
not to register nor attempt to register any of the Assigned IPRs in the Deliverables, unless requested to do so by the Company; and
|
(c)
|
at the expense of the Company, at any time, to execute all documents, make all applications, give all assistance and do all acts and things as may, in the opinion of the Company or its representatives, be necessary or desirable to vest the Assigned IPRs in, and to register them in, the name of the Company and to defend the Company against all claims that works embodying the Assigned IPRs infringe third part rights, and otherwise to protect and maintain the Assigned IPRs.
|
10.6
|
The Manager warrants to the Company that:
|
(a)
|
the Manager has not given or will not give permission to any third party to use any of the Deliverables or the Assigned IPRs;
|
(b)
|
the Manager is not aware of any use by any third party of any of the Deliverables or Assigned IPRs; and
|
(c)
|
the use of the Deliverables or the Assigned IPRs by the Company will not infringe the rights of any third party.
|
10.7
|
The Manager waives any moral rights in the Deliverables to the largest extent permitted by law, which means, among others, that the Company has the right not to mention the name of the Manager as well as the right to modify the works
|
10.8
|
The Parties acknowledge that the compensation of the transfers of ownership referred to in clauses 10.1 and 10.2 is included in the fee paid by the Company to the Manager in the framework of this Agreement and that no further fees or compensation are due or may become due to the Manager in respect of the performance of their obligations under this clause 10.
|
10.9
|
The Manager irrevocably appoints the Company to be his attorney in his name and on his behalf to execute documents, use his name and do all things which are necessary or desirable for the Company to obtain for itself or its nominee the full benefit of this clause 10.
|
11.
|
Health and Safety
|
11.1
|
The Manager undertakes to strictly comply with the obligations in relation to the wellbeing of the workers in the performance of their work, as applicable within the Company.
|
11.2
|
If the Manager does not (fully) comply with these obligations, the Company may automatically take all appropriate measures, in all instances at the Manager’s expense and risk. Moreover, the Manager shall indemnify the Company for all damage that it has directly or indirectly suffered from the non- or insufficient compliance with the aforementioned obligations.
|
12.
|
Miscellaneous
|
12.1
|
This Agreement represents the entire agreement between the Parties with respect to the management services and replaces and supersedes any other agreement, oral or in writing, which may have existed between the Parties.
|
12.2
|
This Agreement may only be amended in writing.
|
12.3
|
The provisions of this Agreement are separate and divisible. In the event that any of the provisions contained in this Agreement were found to be illegal, invalid or unenforceable, in whole or in part, for any reasons whatsoever, such illegality, invalidity or unenforceability shall not affect the legality, validity or enforceability of the remaining provisions.
|
12.4
|
Unless otherwise agreed to by the Parties, each of the Parties shall keep confidential all information acquired from the other Party pursuant to this Agreement.
|
12.5
|
No Party under this Agreement may assign or delegate any of its rights, duties, powers or responsibilities under this Agreement without the prior written consent of the other Party.
|
12.6
|
Unless otherwise indicated herein, notices provided under this Agreement, to be given by any Party to another shall be in writing and shall be posted by prepaid registered mail, return receipt requested, addressed to the other Party at his/its address as indicated above (or at such other address as has been last notified by the latter) and will take effect the second day after they have been sent.
|
12.7
|
This Agreement shall be governed by and construed in accordance with the laws of Belgium
|
12.8
|
Any dispute concerning the validity, interpretation, enforcement, performance or termination of the Agreement shall be submitted to the exclusive jurisdiction of the courts of Brussels.
|
SIGNED
|
|
)
|
|
|
by
|
)
|
|
|
|
SVEND ANDERSEN
|
|
)
|
|
|
|
|
|
|
|
|
|
Signature:
|
/s/ Svend Andersen
|
|
|
|
|
|
|
|
|
Name:
|
Svend Andersen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SIGNED
|
|
)
|
|
|
for and on behalf of
|
|
)
|
|
|
PERRIGO HOLDING NV
|
|
)
|
|
|
|
|
|
|
|
|
|
Signature:
|
/s/ Patrick O'Sullivan
|
|
|
|
|
|
|
|
|
Name:
|
Patrick O’Sullivan
|
|
|
|
|
|
|
|
|
Signature:
|
/s/ Geert Cools
|
|
|
|
|
|
|
|
|
Name:
|
Brandracer BVBA -Geert Cools
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Svend Andersen of 126 Harley Street, Flat 4, Marylebone, W2G 7JS, London, UK (the “Executive”); and
|
2.
|
Wrafton Laboratories Limited incorporated and registered in England and Wales with company number 2638733 whose registered office is Braunton, North Devon, EX33 2DL (the “Company”).
|
Executed as a deed by the
|
/s/ Robert Willis
|
Company acting by Robert Willis,
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[SIGNATURE OF DIRECTOR]
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a director:
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Director
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|
|
Signed as a deed by Svend
|
|
Andersen:
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/s/ Svend Andersen
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[SIGNATURE OF EXECUTIVE]
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|
9/12/19
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SECTION 1
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INTRODUCTION
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SECTION 2
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TERMS OF SEVERANCE PROGRAMME
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SECTION 3
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WHAT HAPPENS TO ALL BENEFITS
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SECTION 4
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REDUNDANCY TAXATION
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SECTION 5
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SOCIAL WELFARE ENTITLEMENTS
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SECTION 6
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OTHER INFORMATION/ADVICE
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SECTION 7
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PRACTICAL “TO DO” LIST UPON LEAVING PERRIGO
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SECTION 8
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USEFUL FUTURE CONTACT DETAILS
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IMPORTANT NOTICES
1. The information in this Booklet, and indeed any individual advice that you may receive from the Company (or the advisors it retained at a later stage), is based on the Company’s understanding of current legislation, particularly in the tax, pension and social welfare areas. It will, of course, be up to the relevant authorities to determine your exact tax position and your Social Welfare entitlements. Pension benefits will be determined in accordance with and subject to the relevant pension deeds and rules as well as Revenue limits. You should take appropriate advice on the information contained in the Booklet.
2. This Severance Programme contains the entire terms of severance for employees of Perrigo and all previous programmes, plans, agreements, understandings, assurances, statements, promises, warranties, representations (whether written or oral) provided by Elan or Perrigo are
superseded by this Severance Programme.
|
1.
|
INTRODUCTION
|
1.
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made redundant; or
|
2.
|
terminated without cause; or
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3.
|
relocated from your existing place of work; or
|
4.
|
subject to a material diminution of your authority, duties or responsibilities; or
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5.
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subject to a material diminution in your salary,
|
•
|
the financial terms and conditions of the Programme;
|
•
|
details of how it will operate in practice, and
|
•
|
the support services made available to you.
|
•
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Your estimated tax position;
|
•
|
Your pension entitlements; and
|
•
|
Outplacement service for career planning and guidance.
|
2.
|
TERMS OF SEVERANCE PROGRAMME
|
2.1
|
Statutory Redundancy
|
Terms
|
Employees with 104 weeks or more weeks’ continuous service with the Company are eligible for a statutory redundancy payment.
Statutory Redundancy is calculated on the basis of: -
a. Two weeks pay for each year of service
plus
b. One week’s additional pay.
|
Eligible Pay
|
Statutory Redundancy is calculated by reference to your continuous years of service and is based on your actual gross weekly wage at the date of your notification of redundancy.
There is a statutory ceiling of €600 per week; any excess of this limit is not included in the calculation of your statutory redundancy payment – e.g. if an employee’s basic pay is €650 per week the €600 amount is used.
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Service
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Statutory Payment is based on years of reckonable service. If the total amount of reckonable service is not an exact number of years, the “excess” days are credited as a proportion of a year. Reckonable service includes the following:
v All or part of a week an employee is at work
v Period of up to 52 consecutive weeks absence due to occupational injury
v Period of up to 26 weeks due to illness or non occupational injury
v Any authorised absences by the employer which includes holidays, compassionate leave, career break or short-time
v Any periods whilst an employee is on protected leave – including maternity, additional maternity leave, parental leave, carer’s leave and adoptive leave.
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2.2
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Discretionary Ex-Gratia Payment
|
Terms
|
Each affected employee with 2 or more year’s continuous reckonable service will receive 6 WEEKS PAY PER EACH YEAR OF SERVICE (exclusive of Statutory) plus 1 additional week.
Employees with 1.5 years of continuous reckonable service but less than 2 years of continuous reckonable service the ex-gratia payment will receive 12 weeks pay plus 1 additional week.
Employees with less than 1.5 years of continuous reckonable service will receive 8 weeks pay plus 1 additional week.
The maximum ex-gratia payment will be 79 weeks of pay i.e. 78 weeks plus 1 additional week.
|
Eligible Pay
|
The Discretionary Ex-Gratia lump sum will be based on your actual gross weekly wage at the date of your notification of redundancy.
Calculation of ex-gratia payments does not include potential amounts available under any discretionary Company bonus programme (‘bonuses’), fixed allowances or amounts ‘in lieu of benefits’ such as Company cars.
The cap of €600 per week does not apply in respect of the Company’s additional Ex-Gratia payment.
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Service
|
The Discretionary Ex-Gratia Payment is based on years of reckonable service. If the total amount of reckonable service is not an exact number of years, part-years of 6 months or more will count as an additional year (e.g. 5 years & 7 months service will be rounded to 6 years) “
|
Employment
Classification
|
Discretionary Ex-Gratia Terms for
Bands A or higher
|
Band A (VP)
|
Seventy-eight (78) Weeks of Pay plus an amount equal to the Eligible Employee’s target annual bonus for the year in which the Severance date occurs.
|
Band A (SVP)
|
Two times (2x) the sum of (a) fifty-two weeks (52) Weeks of Pay (prior to any reduction due to a Significant reduction in Scope or Base Compensation, is applicable) and (b) the Eligible Employee’s target annual bonus for the year in which the Severance Date occurs. Furthermore, the Eligible Employee will be entitled to the benefits of the Excise Tax Gross-Up Payment, if applicable.
|
EVP
|
Two and one half times (2.5x) the sum of (a) fifty-two weeks (52) Weeks of Pay (prior to any reduction due to a Significant reduction in Scope or Base Compensation, if applicable) and (b) the Eligible Employee’s target annual bonus for the year in which the Severance Date occurs. Furthermore, the Eligible Employee, will be entitled to the benefits of the Excise Tax Gross Up Payment if applicable.
|
2.3
|
Notice Periods
|
3.
|
WHAT HAPPENS TO ALL BENEFITS
|
•
|
VHI Healthcare – Krystle Fitzpatrick 01 887 1749
|
•
|
Laptop Computers
|
•
|
Blackberry/IPhone/other cell phone
|
•
|
Computer & printer hardware
|
•
|
ID Badges
|
•
|
Company Credit Cards
|
•
|
Phone Cards
|
4.
|
REDUNDANCY TAXATION
|
a)
|
Basic Exemption, or
|
b)
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Increased Exemption, or
|
c)
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Standard Capital Superannuation Benefit
|
a)
|
Basic Exemption:
|
b)
|
Increased Exemption:
|
•
|
Any tax-free lump sum from the pension scheme to which you may be immediately entitled or
|
•
|
The present day value at the date of leaving employment of any tax-free lump sum which may be receivable from the pension scheme in the future.
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c)
|
SCSB (Standard Capital Superannuation Benefit):
|
5.
|
SOCIAL WELFARE ENTITLEMENTS
|
Postal Districts
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Office
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Phone Number
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Opening Hours
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Athlone
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Barrack Street
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090 649 2066
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Mon – Fri
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9.30 – 12.00
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2.00 – 4.00
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Dublin 1
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North Cumberland Street
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01 889 9500
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Mon – Fri
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9.15 – 12.00
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2.00 – 4.00
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Dublin 2
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Pearse Street
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01 636 9300
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Mon – Fri
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|
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9.15 – 12.00
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2.00 – 4.00
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Other Regional Offices
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|||
Dublin 1
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Amiens Street
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01 704 3000
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Dublin 5
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Greendale Road
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01 806 3800
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Dublin 7
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Navan Road
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01 882 3100
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Dublin 8
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Ballyfermott
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01 616 0300
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Dublin 11
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Ballymun
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01 816 5100
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Dublin 11
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Finglas
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01 864 0480
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Dublin 14
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Nutgrove
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01 493 5266
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Dublin 15
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Blanchardstown
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01 824 6300
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Dublin 22
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Clondalkin
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01 403 0000
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Dublin 24
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Tallaght
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01 452 7019
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Co. Dublin
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Balbriggan
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01 802 0050
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Co. Dublin
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Dun Laoghaire
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01 280 0288
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Co. Dublin
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Malahide
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01 806 1040
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6.
|
OTHER INFORMATION/ADVICE
|
6.1
|
Individual Value of Severance Terms
|
•
|
The terms of the agreement as they relate to you (i.e. your Eligible Pay for the purpose of the lump sum calculation)
|
6.2
|
Individual Advice Sessions
|
6.3
|
Outplacement Advice
|
6.4
|
References
|
7.
|
PRACTICAL “TO DO LIST” UPON LEAVING PERRIGO
|
Ö
|
Consider your pension options (they do not need to be entered immediately). You may wish to delay this decision until you find alternate employment.
|
Ö
|
Review your need to replace Risk Benefits (e.g. life assurance, etc.) which will cease when you leave Perrigo.
|
8.
|
USEFUL FUTURE CONTACT DETAILS
|
PERRIGO CONTACT LIST
|
||
Payroll
|
|
|
Valerie Healy
|
01 709 4623
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valerie.healy@perrigo.com
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Compensation & Benefits
|
||
John Castanos
|
01 709 4028
|
john.castanos@perrigo.com
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HR
|
|
|
Louise Milner
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01 709 4427
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Louise.milner@perrigo.com
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BENEFIT CONTACTS
|
||
Pension & Risk Benefits
|
||
Mercer - 1 6039877
|
|
john.redmond@mercer.com
|
Health Insurance
|
|
|
Krystle Fitzpatrick
|
01 887 1749
|
krystle.fitzpatrick@vhi.ie
|
Employee Assistance Program
|
||
Optum
|
1800 409 476
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|
Name of Subsidiary
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State/Country of Incorporation
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Chefaro Ireland Designated Activity Company
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Ireland
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Perrigo Corporation Designated Activity Company
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Ireland
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Perrigo Holdings Unlimited Company
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Ireland
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Perrigo International Finance Designated Activity Company
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Ireland
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Perrigo Company plc
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Ireland
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Perrigo Pharma International Designated Activity Company
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Ireland
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Perrigo Science One Designated Activity Company
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Ireland
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Habsont Unlimited Company
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Ireland
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Irish Biosciences Venture Capital Fund
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Ireland
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Perrigo Ireland 1 Designated Activity Company
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Ireland
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Perrigo Ireland 2 Designated Activity Company
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Ireland
|
Perrigo Ireland 3 Designated Activity Company
|
Ireland
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Perrigo Ireland 4 Designated Activity Company
|
Ireland
|
Perrigo Ireland 5 Designated Activity Company
|
Ireland
|
Perrigo Ireland 6 Designated Activity Company
|
Ireland
|
Perrigo Ireland 7 Designated Activity Company
|
Ireland
|
Perrigo Ireland 8 Designated Activity Company
|
Ireland
|
Perrigo Ireland Management Designated Activity Company
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Ireland
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Omega Teknika Designated Activity Company
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Ireland
|
Perrigo Science Eight Unlimited Company
|
Ireland
|
Perrigo Finance Unlimited Company
|
Ireland
|
Perrigo Ireland 9 Unlimited Company
|
Ireland
|
Perrigo Ireland 10 Unlimited Company
|
Ireland
|
Perrigo Ireland 11 DAC
|
Ireland
|
Perrigo Ireland 12 Designated Activity Company
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Ireland
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Perrigo Ireland 13 Designated Activity Company
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Ireland
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PMI Branded Pharmaceuticals, Inc.
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Michigan
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Perrigo Company
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Michigan
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Perrigo Company Charitable Foundation
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Michigan
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Perrigo Management Company
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Michigan
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L. Perrigo Company
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Michigan
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Perrigo Pharmaceuticals Company
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Michigan
|
Perrigo International, Inc.
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Michigan
|
Perrigo Company of South Carolina, Inc.
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Michigan
|
Perrigo Sales Corporation
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Michigan
|
Perrigo International Holdings, LLC
|
Michigan
|
Perrigo Research & Development Company
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Michigan
|
Perrigo Sourcing Solutions, Inc.
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Michigan
|
P2C, Inc.
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Michigan
|
Athena Neurosciences, LLC
|
Delaware
|
Elan Pharmaceuticals, LLC
|
Delaware
|
Perrigo New York, Inc.
|
Delaware
|
Perrigo International Holdings II, Inc.
|
Delaware
|
Perrigo LLC
|
Delaware
|
Perrigo China Business Trustee, LLC
|
Delaware
|
Perrigo Diabetes Care, LLC
|
Delaware
|
Perrigo Mexico Investment Holdings, LLC
|
Delaware
|
Perrigo Oral Health Care Holdings, Inc.
|
Delaware
|
PBM Holdings, LLC
|
Delaware
|
PBM Nutritionals, LLC
|
Delaware
|
PBM Products, LLC
|
Delaware
|
PBM Foods, LLC
|
Delaware
|
PBM International Holdings, LLC
|
Delaware
|
PBM Canada Holdings, LLC
|
Delaware
|
PBM Mexico Holdings, LLC
|
Delaware
|
PBM China Holdings, LLC
|
Delaware
|
Paddock Laboratories, LLC
|
Delaware
|
Cobrek Pharmaceuticals, Inc.
|
Delaware
|
Brush Buddies, LLC
|
Delaware
|
CP Kayak Holdings, Inc.
|
Delaware
|
Ranir Global Holdings, LLC
|
Delaware
|
Ranir, LLC
|
Delaware
|
Perrigo Company of Tennessee
|
Tennessee
|
Perrigo Florida, Inc.
|
Florida
|
Geiss, Destin & Dunn, Inc
|
Georgia
|
NewcoGen-Elan, LLC
|
Massachusetts
|
Arginet Investments and Property (2003) Ltd.
|
Israel
|
Pharma Clal (1983) Ltd.
|
Israel
|
Perrigo Israel Holdings Ltd
|
Israel
|
Perrigo Israel Pharmaceuticals Ltd.
|
Israel
|
Perrigo Israel Opportunities II Ltd.
|
Israel
|
Perrigo Israel Agencies Ltd
|
Israel
|
Perrigo Israel Enterprises & Investments Ltd.
|
Israel
|
Perrigo Israel Trading Limited Partnership
|
Israel
|
Wrafton Laboratories Limited
|
United Kingdom
|
Perrigo UK Acquisition Limited
|
United Kingdom
|
Perrigo Ventures Limited Partnership
|
United Kingdom
|
Perrigo UK Finco Limited Partnership
|
United Kingdom
|
Galpharm Healthcare Limited
|
United Kingdom
|
Galpharm International Limited
|
United Kingdom
|
Kiteacre Limited
|
United Kingdom
|
Perrigo Holdings Limited
|
United Kingdom
|
Perrigo Pharma Limited
|
United Kingdom
|
Rosemont Pharmaceuticals Limited
|
United Kingdom
|
Ranir (Holdings) Limited
|
United Kingdom
|
Ranir Limited
|
United Kingdom
|
Omega Pharma Limited
|
United Kingdom
|
The Learning Pharmacy Limited
|
United Kingdom
|
Solent Oral Care Limited
|
United Kingdom
|
Perrigo de Mexico S.A. de C.V.
|
Mexico
|
Quimica y Farmacia S.A. de C.V.
|
Mexico
|
Laboratorios DIBA S.A.
|
Mexico
|
Perrigo Mexico Holdings S.A. de C.V.
|
Mexico
|
PBM Products Mexico S de R.L. de C.V.
|
Mexico
|
Servicios PBM S. de R.L. de C.V.
|
Mexico
|
Gelcaps Exportadora de Mexico, S.A. de C.V.
|
Mexico
|
Cinetic Laboratories Argentina SA
|
Argentina
|
Perrigo Australian Holding Company II PTY Limited
|
Australia
|
Orion Laboratories PTY Limited
|
Australia
|
Aurora Pharmaceuticals Pty Ltd
|
Australia
|
Omega Pharma Australia Pty Ltd
|
Australia
|
Rubicon Healthcare Holdings Pty Ltd
|
Australia
|
Orion Laboratories (NZ) Ltd.
|
New Zealand
|
Perrigo Laboratories India Private Limited
|
India
|
Omega Pharma Austria Healthcare GmbH
|
Austria
|
Omega Pharma GmbH
|
Austria
|
Richard Bittner AG
|
Austria
|
Elan International Services Limited
|
Bermuda
|
Perrigo International Insurance Limited
|
Bermuda
|
Perrigo Do Brasil Serviços E Participações LTDA.
|
Brazil
|
Perrigo Danmark A/S
|
Denmark
|
Perrigo Denmark Holdings K/S
|
Denmark
|
Elan Europa Finance S.á r.l.
|
Luxembourg
|
Hud SA
|
Luxembourg
|
Omega Pharma Luxembourg SarL
|
Luxembourg
|
Promedent SA
|
Luxembourg
|
Luxembourg Investment Company 289 Sàrl
|
Luxembourg
|
Monksland Holdings B.V.
|
Netherlands
|
Perrigo Netherlands B.V.
|
Netherlands
|
Perrigo Ireland Holding Company B.V.
|
Netherlands
|
Perrigo Israel Holdings II B.V.
|
Netherlands
|
Perrigo Netherlands Finco 1 Coöperatief U.A.
|
Netherlands
|
Perrigo Netherlands Finco 2 B.V.
|
Netherlands
|
Perrigo Netherlands International Partnership C.V.
|
Netherlands
|
Bional Nederland B.V.
|
Netherlands
|
Insect Repellents B.V.
|
Netherlands
|
Oce-Bio Nederland B.V.
|
Netherlands
|
Omega Pharma Holding (Nederland) B.V.
|
Netherlands
|
Omega Pharma Nederland B.V.
|
Netherlands
|
Samenwerkende Apothekers Nederland B.V.
|
Netherlands
|
Wartner Europe B.V.
|
Netherlands
|
Ymea B.V.
|
Netherlands
|
P-Direct NL B.V.
|
Netherlands
|
Interdelta S.A.
|
Switzerland
|
JLR Pharma S.A.
|
Switzerland
|
Perrigo China Business Trust
|
China
|
Perrigo Trading (Shanghai) Co., Ltd.
|
China
|
Zibo Xinhua - Perrigo Pharmaceutical Company Ltd.
|
China
|
Ranir Changshu Oral Care CO., Ltd.
|
China
|
Solent Dental Company Limited
|
Hong Kong
|
Perrigo Asia Holding Company Ltd.
|
Mauritius
|
Perrigo Ukraine LLC
|
Ukraine
|
Belgian Cycling Company NV
|
Belgium
|
Biover NV
|
Belgium
|
Jaico R.D.P. NV
|
Belgium
|
Medgenix Benelux NV
|
Belgium
|
Oce Bio BV
|
Belgium
|
Omega Pharma Belgium NV
|
Belgium
|
Omega Pharma Capital NV
|
Belgium
|
Omega Pharma Innovation & Development NV
|
Belgium
|
Omega Pharma International NV
|
Belgium
|
Omega Pharma Trading NV
|
Belgium
|
Perrigo Belgium Holding 1 NV
|
Belgium
|
Perrigo Europe Invest NV
|
Belgium
|
Perrigo Holding NV
|
Belgium
|
Vianatura NV
|
Belgium
|
Newbridge Pharmaceuticals Ltd.
|
British Virgin Islands
|
Totalcare International Corp
|
British Virgin Islands
|
Perrigo Bulgaria OOD
|
Bulgaria
|
Omega Alpharm Cyprus Ltd.
|
Cyprus
|
Omega Pharma AS
|
Czech Republic
|
Perrigo Suomi Oy
|
Finland
|
Bioxydiet France SAS
|
France
|
Cosmediet - Biotechnie SAS
|
France
|
Laboratoire de la Mer SAS
|
France
|
Laboratoires Omega Pharma France SAS
|
France
|
Perrigo France SAS
|
France
|
Ranir, SAS
|
France
|
Naturwohl Pharma GmbH
|
Germany
|
Abtei Omega Pharma GmbH
|
Germany
|
Omega Pharma Deutschland GmbH
|
Germany
|
Omega Pharma Manufacturing GmbH & Co. KG
|
Germany
|
Omega Pharma Manufacturing Verwaltungs GmbH
|
Germany
|
Paracelsia Pharma GmbH
|
Germany
|
Ranir GmbH
|
Germany
|
Omega Pharma Hellas SA Health and Beauty Products
|
Greece
|
Despharma Kft.
|
Hungary
|
Omega Pharma Hungary Kft.
|
Hungary
|
Perrigo Italia S.r.l
|
Italy
|
Oralys Italia Societa A Responsabilita Limita
|
Italy
|
Omega Pharma Baltics SIA
|
Latvia
|
Perrigo Norge AS
|
Norway
|
Omega Pharma Poland Sp.z.o.o.
|
Poland
|
Perrigo Portugal LDA
|
Portugal
|
SC Hipocrate 2000 SRL
|
Romania
|
Adriatic Distribution doo Beograd
|
Serbia
|
Omega Pharma s.r.o.
|
Slovakia
|
Adriatic BST Trgovina in Storitve D.o.o.
|
Slovenia
|
OmegaLabs (Pty) Ltd
|
South Africa
|
Perrigo España SA
|
Spain
|
Aco Hud Nordic AB
|
Sweden
|
Perrigo Sverige AB
|
Sweden
|
Perrigo Kişisel Bakım Ürünleri Sanayi ve Ticaret Limited Şirketi
|
Turkey
|
(1)
|
Registration Statement (Form S-8 No. 333-192946) pertaining to the Perrigo Company 2013 Long-Term Incentive Plan, the Perrigo Company 2008 Long-Term Incentive Plan, the Perrigo Company 2003 Long-Term Incentive Plan and the Perrigo Company Profit-Sharing and Investment Plan, and
|
(2)
|
Registration Statement (Form S-8 No. 333-234536) pertaining to the Perrigo Company plc 2019 Long-Term Incentive Plan and the Perrigo Company Profit-Sharing and Investment Plan;
|
1.
|
I have reviewed this annual report on Form 10-K of Perrigo Company plc;
|
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 fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
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:
|
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.
|
|
/s/ Murray S. Kessler
|
Murray S. Kessler
|
Chief Executive Officer and President
|
|
1.
|
I have reviewed this annual report on Form 10-K of Perrigo Company plc;
|
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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
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5.
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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:
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a.
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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
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b.
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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.
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/s/ Raymond P. Silcock
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Raymond P. Silcock
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Chief Financial Officer
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(i)
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this annual Report on Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
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(ii)
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the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Perrigo Company plc.
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Date:
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February 27, 2020
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/s/ Murray S. Kessler
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Murray S. Kessler
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Chief Executive Officer and President
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Date:
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February 27, 2020
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/s/ Raymond P. Silcock
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Raymond P. Silcock
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Chief Financial Officer
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