UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X]☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2017April 3, 2021

OR
[  ]☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-36353

Perrigo Company plc
(Exact name of registrant as specified in its charter)

IrelandNot Applicable
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland-
(Address of principal executive offices)(Zip Code)

The Sharp Building, Hogan Place, Dublin 2, Ireland D02 TY74
+353 1 7094000
(Registrant’sAddress, including zip code, and telephone number, including
area code)code, of registrant’s principal executive offices)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
________________________________________ Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary sharesPRGONew York Stock Exchange
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 report)reports), and (2) has been subject to such filing requirements for the past 90 days.    YES [X]    NO  [ ]Yes  ☒    No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  [X]   NO [ ]Yes  ☒   No ☐
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 definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
Large accelerated filer[X]Accelerated filer[ ]Non-accelerated filer[ ](Do not check if smaller reporting company)
Smaller reporting company[ ]Emerging growth company[ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.[ ]☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   [ ]  YES  [X] NO
☐  Yes  ☒ No
As of November 3, 2017,May 7, 2021, there were 140,840,721133,549,064 ordinary shares outstanding.




PERRIGO COMPANY PLC
FORM 10-Q
INDEX
PAGE
NUMBER
1
PART I. FINANCIAL INFORMATION
Condensed Consolidated Statements of Operations
2
Condensed Consolidated Statements of Comprehensive Income
3
Condensed Consolidated Balance Sheets
4
Condensed Consolidated Statements of Shareholders' Equity
5
Condensed Consolidated Statements of Cash Flows
6
Notes to the Condensed Consolidated Financial Statements
1
7
2
8
3
10
4
13
5
13
6
14
7
15
8
16
9
18
10
22
11
24
12
25
13
25
14
26
15
29
16
43
17
43
44
56
56
PART II. OTHER INFORMATION
57
57
58
59


 
PAGE
NUMBER
Cautionary Note Regarding Forward-Looking Statements
1
  
PART I. FINANCIAL INFORMATION 
   
Item 1. Financial Statements (Unaudited)
 
   
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and October 1, 2016
2
   
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017 and October 1, 2016
3
   
Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
4
   
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and October 1, 2016
5
   
Notes to the Condensed Consolidated Financial Statements
 
   
1
Summary of Significant Accounting Policies
6
   
2
Divestitures
10
   
3
Goodwill and Other Intangible Assets
10
   
4
Accounts Receivable Factoring
12
   
5
Inventories
12
   
6
Fair Value Measurements
12
   
7
Investments
17
   
8
Derivative Instruments and Hedging Activities
18
   
9
Assets Held For Sale
21
   
10
Indebtedness
22
   
11
Earnings per Share and Shareholders' Equity
24
   
12
Accumulated Other Comprehensive Income (Loss)
25
   
13
Income Taxes
25
   
14
Commitments and Contingencies
26
   
15
Restructuring Charges
30
   
16
Segment Information
30
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
31
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk
52
   
Item 4. Controls and Procedures
52
   
PART II. OTHER INFORMATION 
   
Item 1. Legal Proceedings
55
   
Item 1A. Risk Factors
55
   
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
57
   
Item 5. Other Information
57
   
Item 6. Exhibits
58
   
SIGNATURES
59


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our, or our industry’s actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this report, including certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” "forecast," “predict,” “potential” or the negative of those terms or other comparable terminology.


Please see Item 1A of our Form 10-K for the year ended December 31, 2016 for a discussion of certain important risk factors that relate to forward-looking statements contained in this report and Part II, Item 1A of this Form 10-Q.    We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control, including: the effect of the novel coronavirus (COVID-19) pandemic and the associated economic downturn and supply chain impacts on the Company's business; the timing, amount and cost of any share repurchases; future impairment charges; the success of management transition; customer acceptance of new products; competition from other industry participants, some of whom have greater marketing resources or larger market shares in certain product categories than we do; pricing pressures from customers and consumers; resolution of uncertain tax positions, including the Company's appeal of the Notice of Assessment ("NoA") issued by the Irish Office of the Revenue Commissioners (“Irish Revenue”) and the Notices of Proposed Adjustment ("NOPAs") issued by the U.S. Internal Revenue Service and the impact that an adverse result in any such proceeding could have on operating results, cash flows and liquidity; potential third-party claims and litigation, including litigation relating to our restatement of previously-filed financial information;alleged price-fixing in the generic pharmaceutical industry, alleged class action and individual securities law claims, and alleged product liability claims and litigation relating to uncertain tax positions, including the NoA and NOPAs; developments relating to ongoing or future settlement discussions relating to any such claims or litigation; potential impacts of ongoing or future government investigations and regulatory initiatives; resolutionpotential costs and reputational impact of uncertain tax positions;product recalls and sales halts; the impact of U.S. tax reform legislation;legislation and healthcare policy; general economic conditions; fluctuations in currency exchange rates and interest rates; the occurrence of any event, change or other circumstance that could delay or prevent the consummation of the sale of the RX business ("the RX sale"), including the risk that any required regulatory approvals may not be obtained within the expected time frame or at all; failure to realize the expected benefits of the RX sale; potential costs or liabilities incurred in connection with the RX sale that may exceed the Company's estimates or adversely affect the Company's business and operations; the consummation and success of other announced acquisitions or dispositions, and our ability to realize the desired benefits thereof; and theour ability to execute and achieve the desired benefits of announced cost-reduction efforts, and strategic and other initiatives. In addition, we may identify and be unableAn adverse result with respect to remediate one or more material weaknesses in our internal control over financial reporting. Furthermore, we and/or our subsidiaries may incur additional tax liabilities in respect of 2016 and prior years as a resultappeal of any restatementmaterial outstanding tax assessments or may be foundlitigation, could ultimately require the use of corporate assets to have breached certain provisionspay such assessments, damages from third-party claims, and related interest and/or penalties, and any such use of Irish company legislation in respect of prior financial statements and if so may incur additional expenses and penalties.corporate assets would limit the assets available for other corporate purposes. These and other important factors, including those discussed in our Form 10-K for the year ended December 31, 2016, in2020, this report under “Risk Factors” and in any subsequent filings with the United States Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this report are made only as of the date hereof, and unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.


TRADEMARKS, TRADE NAMES AND SERVICE MARKS


This report contains trademarks, trade names and service marks that are the property of Perrigo Company plc, as well as, for informational purposes, trademarks, trade names, and service marks that are the property of other organizations. Solely for convenience, certain trademarks, trade names, and service marks referred to in this report appear without the ®,™ and SM symbols, but those references are not intended to indicate that we or the applicable owner, as the case may be, will not assert, to the fullest extent under applicable law, our or their rights to such trademarks, trade names, and service marks.

1
Perrigo Company plc - Item 1

PART I.     FINANCIAL INFORMATION


ITEM 1.        FINANCIAL STATEMENTS (UNAUDITED)


PERRIGO COMPANY PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)
 Three Months Ended
 April 3,
2021		March 28,
2020
Net sales$1,010.0 $1,083.3 
Cost of sales641.6 689.6 
Gross profit368.4 393.7 
Operating expenses
Distribution21.6 20.2 
Research and development31.1 27.9 
Selling135.5 139.6 
Administration127.1 119.6 
Restructuring1.7 0 
Total operating expenses317.0 307.3 
Operating income51.4 86.4 
Change in financial assets0 (1.6)
Interest expense, net32.0 28.9 
Other (income) expense, net2.4 1.7 
Income from continuing operations before income taxes17.0 57.4 
Income tax expense (benefit)14.2 (0.2)
Income from continuing operations2.8 57.6 
Income from discontinued operations, net of tax35.3 48.8 
Net income$38.1 $106.4 
Earnings per share
Basic
Continuing operations$0.02 $0.42 
Discontinued operations0.27 0.36 
Basic earnings per share$0.29 $0.78 
Diluted
Continuing operations$0.02 $0.42 
Discontinued operations0.26 0.35 
Diluted earnings per share$0.28 $0.77 
Weighted-average shares outstanding
Basic133.2 136.2 
Diluted134.6 137.3 
 Three Months Ended Nine Months Ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Net sales$1,231.3
 $1,261.6
 $3,663.1
 $3,949.3
Cost of sales733.5
 777.1
 2,196.4
 2,385.2
Gross profit497.8
 484.5
 1,466.7
 1,564.1
        
Operating expenses       
Distribution21.5
 21.6
 64.2
 65.9
Research and development38.4
 50.2
 120.8
 142.5
Selling143.5
 154.6
 454.1
 506.9
Administration123.3
 105.4
 326.9
 317.2
Impairment charges7.8
 1,614.4
 47.4
 2,028.8
Restructuring3.8
 6.6
 54.7
 17.9
Other operating income(2.9) —
 (41.0) —
Total operating expenses335.4
 1,952.8
 1,027.1
 3,079.2
        
Operating income (loss)162.4
 (1,468.3) 439.6
 (1,515.1)
        
Change in financial assets2.6
 377.4
 24.2
 1,492.6
Interest expense, net34.7
 54.6
 133.1
 163.2
Other (income) expense, net(3.6) 1.0
 (1.1) 32.4
Loss on extinguishment of debt—
 0.7
 135.2
 1.1
Income (loss) before income taxes128.7
 (1,902.0) 148.2
 (3,204.4)
Income tax expense (benefit)84.2
 (311.8) 101.8
 (550.7)
Net income (loss)$44.5
 $(1,590.2) $46.4
 $(2,653.7)
        
Earnings (loss) per share       
Basic0.31
 (11.10) $0.33
 $(18.53)
Diluted$0.31
 $(11.10) $0.32
 $(18.53)
        
Weighted-average shares outstanding       
Basic141.3
 143.3
 142.5
 143.2
Diluted141.7
 143.3
 142.8
 143.2
        
Dividends declared per share$0.160
 $0.145
 $0.480
 $0.435


See accompanying Notes to the Condensed Consolidated Financial StatementsStatements.
2
Perrigo Company plc - Item 1

PERRIGO COMPANY PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
(unaudited)
Three Months Ended
Three Months Ended Nine Months EndedApril 3,
2021		March 28,
2020
September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Net income (loss)$44.5
 $(1,590.2) $46.4
 $(2,653.7)
Other comprehensive income:       
Net incomeNet income$38.1 $106.4 
Other comprehensive income (loss):Other comprehensive income (loss):
Foreign currency translation adjustments69.9
 27.5
 289.9
 71.5
Foreign currency translation adjustments(111.6)(92.2)
Change in fair value of derivative financial instruments, net of tax0.1
 3.6
 8.7
 (3.5)Change in fair value of derivative financial instruments, net of tax(6.0)(9.4)
Change in fair value of investment securities, net of tax(8.1) 9.8
 (24.4) 18.4
Change in post-retirement and pension liability, net of tax(1.2) (0.2) (1.2) 0.4
Change in post-retirement and pension liability, net of tax(0.7)(1.9)
Other comprehensive income, net of tax60.7
 40.7
 273.0
 86.8
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax(118.3)(103.5)
Comprehensive income (loss)$105.2
 $(1,549.5) $319.4
 $(2,566.9)Comprehensive income (loss)$(80.2)$2.9 
See accompanying Notes to the Condensed Consolidated Financial StatementsStatements.


3
Perrigo Company plc - Item 1

PERRIGO COMPANY PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share amounts)
(unaudited)

September 30,
2017		 December 31,
2016		April 3,
2021		December 31,
2020
Assets   Assets
Cash and cash equivalents$775.9
 $622.3
Cash and cash equivalents$470.9 $631.5 
Accounts receivable, net of allowance for doubtful accounts of $6.2 million and $6.3 million, respectively1,076.6
 1,176.0
Accounts receivable, net of allowance for credit losses of $9.1 and $6.5, respectivelyAccounts receivable, net of allowance for credit losses of $9.1 and $6.5, respectively641.0 593.5 
Inventories821.9
 795.0
Inventories1,136.1 1,059.4 
Prepaid expenses and other current assets297.4
 212.0
Prepaid expenses and other current assets251.5 182.2 
Current assets held for saleCurrent assets held for sale1,989.1 666.9 
Total current assets2,971.8
 2,805.3
Total current assets4,488.6 3,133.5 
Property, plant and equipment, net822.3
 870.1
Property, plant and equipment, net860.0 864.6 
Financial assets—
 2,350.0
Goodwill and other indefinite-lived intangible assets4,255.4
 4,163.9
Other intangible assets, net3,347.4
 3,396.8
Non-current deferred income taxes22.4
 72.1
Operating lease assetsOperating lease assets149.7 154.7 
Goodwill and indefinite-lived intangible assetsGoodwill and indefinite-lived intangible assets3,059.3 3,102.7 
Definite-lived intangible assets, netDefinite-lived intangible assets, net2,366.3 2,481.5 
Deferred income taxesDeferred income taxes57.3 40.6 
Non-current assets held for saleNon-current assets held for sale0 1,364.0 
Other non-current assets423.3
 211.9
Other non-current assets343.6 346.8 
Total non-current assets8,870.8
 11,064.8
Total non-current assets6,836.2 8,354.9 
Total assets$11,842.6
 $13,870.1
Total assets$11,324.8 $11,488.4 
Liabilities and Shareholders’ Equity   Liabilities and Shareholders’ Equity
Accounts payable$477.1
 $471.7
Accounts payable$430.3 $451.6 
Payroll and related taxes133.4
 115.8
Payroll and related taxes110.9 152.9 
Accrued customer programs368.8
 380.3
Accrued customer programs134.5 128.5 
Accrued liabilities274.6
 263.3
Other accrued liabilitiesOther accrued liabilities267.9 183.1 
Accrued income taxes61.5
 32.4
Accrued income taxes17.4 9.0 
Current indebtedness417.1
 572.8
Current indebtedness35.8 37.3 
Current liabilities held for saleCurrent liabilities held for sale450.0 419.6 
Total current liabilities1,732.5
 1,836.3
Total current liabilities1,446.8 1,382.0 
Long-term debt, less current portion3,275.7
 5,224.5
Long-term debt, less current portion3,525.3 3,527.6 
Non-current deferred income taxes357.7
 389.9
Deferred income taxesDeferred income taxes261.4 276.2 
Non-current liabilities held for saleNon-current liabilities held for sale0 108.3 
Other non-current liabilities434.9
 461.8
Other non-current liabilities533.3 539.2 
Total non-current liabilities4,068.3
 6,076.2
Total non-current liabilities4,320.0 4,451.3 
Total liabilities5,800.8
 7,912.5
Total liabilities5,766.8 5,833.3 
Commitments and contingencies - Note 14   
Commitments and contingencies - Refer to Note 15Commitments and contingencies - Refer to Note 1500
Shareholders’ equity   Shareholders’ equity
Controlling interest:   
Preferred shares, $0.0001 par value, 10 million shares authorized—
 —
Ordinary shares, €0.001 par value, 10 billion shares authorized7,900.1
 8,135.0
Accumulated other comprehensive income (loss)191.2
 (81.8)
Controlling interests:Controlling interests:
Preferred shares, $0.0001 par value per share, 10 shares authorizedPreferred shares, $0.0001 par value per share, 10 shares authorized0 0 
Ordinary shares, €0.001 par value per share, 10,000 shares authorizedOrdinary shares, €0.001 par value per share, 10,000 shares authorized7,101.3 7,118.2 
Accumulated other comprehensive incomeAccumulated other comprehensive income276.7 395.0 
Retained earnings (accumulated deficit)(2,049.6) (2,095.1)Retained earnings (accumulated deficit)(1,820.0)(1,858.1)
Total controlling interest6,041.7
 5,958.1
Noncontrolling interest0.1
 (0.5)
Total shareholders’ equity6,041.8
 5,957.6
Total shareholders’ equity5,558.0 5,655.1 
Total liabilities and shareholders' equity$11,842.6
 $13,870.1
Total liabilities and shareholders' equity$11,324.8 $11,488.4 
   
Supplemental Disclosures of Balance Sheet Information   Supplemental Disclosures of Balance Sheet Information
Ordinary shares, issued and outstanding (in millions)140.8
 143.4
Preferred shares, issued and outstandingPreferred shares, issued and outstanding0 0 
Ordinary shares, issued and outstandingOrdinary shares, issued and outstanding133.5 133.1 


See accompanying Notes to the Condensed Consolidated Financial StatementsStatements.
4
Perrigo Company plc - Item 1

PERRIGO COMPANY PLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in millions, except per share amounts)
(unaudited)
 Ordinary Shares
Issued		Accumulated
Other
Comprehensive
Income		Retained
Earnings
(Accumulated Deficit)		Total
 SharesAmount
Balance at December 31, 2019136.1 $7,359.9 $139.4 $(1,695.5)$5,803.8 
Net income— — — 106.4 106.4 
Other comprehensive loss— — (103.5)— (103.5)
Restricted stock plan0.3 — — — — 
Compensation for stock options— 0.8 — — 0.8 
Compensation for restricted stock— 15.4 — — 15.4 
Cash dividends, $0.23 per share— (30.9)— — (30.9)
Shares withheld for payment of employees' withholding tax liability(0.1)(5.6)— — (5.6)
Balance at March 28, 2020136.3 $7,339.6 $35.9 $(1,589.1)$5,786.4 

 Ordinary Shares
Issued		Accumulated
Other
Comprehensive
Income		Retained
Earnings
(Accumulated Deficit)		Total
 SharesAmount
Balance at December 31, 2020133.1 $7,118.2 $395.0 $(1,858.1)$5,655.1 
Net income— — — 38.1 38.1 
Other comprehensive loss— — (118.3)— (118.3)
Restricted stock plan0.6 — — — — 
Compensation for stock options— 0.4 — — 0.4 
Compensation for restricted stock— 24.6 — — 24.6 
Cash dividends, $0.24 per share— (32.6)— — (32.6)
Shares withheld for payment of employees' withholding tax liability(0.2)(9.3)— — (9.3)
Balance at April 3, 2021133.5 $7,101.3 $276.7 $(1,820.0)$5,558.0 

See accompanying Notes to the Condensed Consolidated Financial Statements.
5
Perrigo Company plc - Item 1
PERRIGO COMPANY PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended
 April 3,
2021		March 28,
2020
Cash Flows From (For) Operating Activities
Net income$38.1 $106.4 
Adjustments to derive cash flows:
Depreciation and amortization90.4 93.1 
Share-based compensation25.0 16.2 
Change in financial assets0 (1.6)
Restructuring charges1.7 0 
Deferred income taxes(21.9)6.7 
Amortization of debt premium(0.7)(0.7)
Other non-cash adjustments, net7.9 (14.0)
Subtotal140.5 206.1 
Increase (decrease) in cash due to:
Accounts receivable(30.3)(67.6)
Inventories(83.2)36.5 
Prepaid expenses(14.7)(33.4)
Accounts payable18.5 53.8 
Payroll and related taxes(45.9)(18.4)
Accrued customer programs(42.7)(13.6)
Accrued liabilities8.5 11.1 
Accrued income taxes27.0 3.8 
Other, net22.5 (6.5)
Subtotal(140.3)(34.3)
Net cash from (for) operating activities0.2 171.8 
Cash Flows From (For) Investing Activities
Proceeds from royalty rights1.4 1.8 
Acquisitions of businesses, net of cash acquired0 (11.3)
Asset acquisitions(70.3)(32.7)
Additions to property, plant and equipment(45.4)(33.8)
Other investing, net0.3 1.2 
Net cash from (for) investing activities(114.0)(74.8)
Cash Flows From (For) Financing Activities
Borrowings (repayments) of revolving credit agreements and other financing, net0 102.0 
Cash dividends(32.6)(30.9)
Other financing, net(10.7)(6.4)
Net cash from (for) financing activities(43.3)64.7 
Effect of exchange rate changes on cash and cash equivalents(3.9)(5.6)
Net increase (decrease) in cash and cash equivalents(161.0)156.1 
Cash and cash equivalents of continuing operations, beginning of period631.5 344.5 
Cash and cash equivalents discontinued operations, beginning of period10.0 9.8 
Less cash and cash equivalents discontinued operations, end of period(9.6)(18.7)
Cash and cash equivalents of continuing operations, end of period$470.9 $491.7 
 Nine Months Ended
 September 30,
2017		 October 1,
2016
Cash Flows From (For) Operating Activities   
Net income (loss)$46.4
 $(2,653.7)
Adjustments to derive cash flows   
Depreciation and amortization333.1
 338.4
Share-based compensation28.1
 15.3
Impairment charges47.4
 2,028.8
Change in financial assets24.2
 1,492.6
Loss on extinguishment of debt135.2
 1.1
Restructuring charges54.7
 17.9
Deferred income taxes(16.3) (674.1)
Amortization of debt premium(18.4) (24.6)
Other non-cash adjustments, net(27.2) 34.5
Subtotal607.2
 576.2
Increase (decrease) in cash due to:   
Accounts receivable38.4
 113.0
Inventories(28.3) 25.1
Accounts payable(6.0) (57.7)
Payroll and related taxes(36.7) (40.0)
Accrued customer programs(15.8) (73.7)
Accrued liabilities(18.8) (90.0)
Accrued income taxes(61.5) 5.2
Other, net3.5
 (9.4)
Subtotal(125.2) (127.5)
Net cash from operating activities482.0
 448.7
Cash Flows From (For) Investing Activities   
Proceeds from royalty rights86.4
 259.5
Acquisitions of businesses, net of cash acquired—
 (436.8)
Asset acquisitions—
 (65.1)
Additions to property, plant and equipment(55.2) (84.6)
Net proceeds from sale of business and other assets46.7
 58.5
Proceeds from sale of the Tysabri® financial asset
2,200.0
 —
Other investing, net(5.8) (1.0)
Net cash from (for) investing activities2,272.1
 (269.5)
Cash Flows From (For) Financing Activities   
Issuances of long-term debt—
 1,190.3
Payments on long-term debt(2,243.7) (545.8)
Borrowings (repayments) of revolving credit agreements and other financing, net—
 (803.6)
Deferred financing fees(4.2) (2.8)
Premium on early debt retirement(116.1) (0.6)
Issuance of ordinary shares0.5
 8.2
Repurchase of ordinary shares(191.5) —
Cash dividends(68.7) (62.4)
Other financing2.7
 (17.4)
Net cash (for) financing activities(2,621.0) (234.1)
Effect of exchange rate changes on cash and cash equivalents20.5
 (0.2)
Net increase (decrease) in cash and cash equivalents153.6
 (55.1)
Cash and cash equivalents, beginning of period622.3
 417.8
Cash and cash equivalents, end of period$775.9
 $362.7


See accompanying Notes to the Condensed Consolidated Financial StatementsStatements.
6
Perrigo Company plc - Item 1
Note 1





NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


General Information


The Company


Perrigo Company plc was incorporated under the laws of Ireland on June 28, 2013 and became the successor registrant of Perrigo Company, a Michigan corporation, on December 18, 2013 in connection with the acquisition of Elan Corporation, plc ("Elan"). Unless the context requires otherwise, the terms "Perrigo," the "Company," "we," "our," "us," and similar pronouns used herein refer to Perrigo Company plc, its subsidiaries, and all predecessors of Perrigo Company plc and its subsidiaries.


We are a leading global healthcare company, delivering value     Our vision is to our customers and consumersmake lives better by providingbringing Quality, Affordable HealthcareSelf-Care Products® that consumers trust everywhere they are sold. Founded in 1887 as a packager of home remedies, we have built a unique business model that is best described as the convergence of a fast-moving consumer goods company, a high-quality pharmaceutical manufacturing organization and a world-class supply chain network. We believe we are one of the world's largest manufacturers of over-the-counter (“OTC”) healthcare products and suppliers of infant formulas for the store brand market. We also are a leading provider of branded OTC products throughout Europeover-the-counter ("OTC") health and the U.S., as well as a leading producer of generic standard topical products such as creams, lotions, and gels, as well as inhalants and injections ("extended topical") prescription drugs. We are headquartered in Ireland, and sell our products primarily in North America and Europe, as well as in other markets, including Australia, Israel and China.wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed.


Basis of Presentation


The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statementsConsolidated Financial Statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2016.2020. In the opinion of management, all adjustments (consisting of normal recurring accruals and other adjustments) considered necessary for a fair presentation of the unaudited Condensed Consolidated Financial Statements have been included and include our accounts and the accounts of all majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.



On March 1, 2021, we announced a definitive agreement to sell our generic RX Pharmaceuticals business ("RX business") to Altaris Capital Partners, LLC ("Altaris"). The financial results of our RX business, which were previously reported in our Prescription Pharmaceuticals ("RX") segment, have been classified as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. The assets and liabilities of our RX business are reflected as assets and liabilities held for sale in the Condensed Consolidated Balance Sheets for all periods presented. Refer to Note 8 for additional information regarding discontinued operations. Unless otherwise noted, amounts and disclosures throughout the Notes to the unaudited Condensed Consolidated Financial Statements relate to our continuing operations.

Segment Reporting

    Our reporting and operating segments are as follows:

•Consumer Self-Care Americas ("CSCA") comprises our consumer self-care business (OTC, infant formula, and oral self-care categories, and contract manufacturing) in the U.S., Mexico and Canada.
•Consumer Self-Care International ("CSCI") comprises our consumer self-care business primarily branded in Europe and Australia, our store brand business in the United Kingdom and parts of Europe and Asia, and our liquid licensed products business in the United Kingdom until it was disposed on June 19, 2020.

0Allowance for Credit Losses
    Expected credit losses on trade receivables and contract assets are measured collectively by geographic location. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and for reasonable and supportable forecasts. Historical credit loss experience provides the primary basis for estimation of expected credit losses. Adjustments to historical loss information may be made for significant changes in a geographic location’s economic conditions. Receivables that do not share risk characteristics are evaluated on an individual basis. These receivables are not included in the collective evaluation.
7
Perrigo Company plc - Item 1
Note 1



    The allowance for credit losses is a valuation account that is deducted from the instruments’ cost basis to present the net amount expected to be collected. Trade receivables and contract assets are charged off against the allowance when the balance is no longer deemed collectible.
Recent Accounting Standard Pronouncements    The following table presents the allowance for credit losses activity (in millions):
Three Months Ended
April 3,
2021		March 28,
2020
Beginning balance$6.5 $6.0 
Provision for credit losses, net2.9 0.4 
Receivables written-off0 0 
Recoveries collected(0.2)0 
Currency translation adjustment(0.1)(0.2)
Ending balance$9.1 $6.2 

NOTE 2 – REVENUE RECOGNITION

    Revenue is recognized when or as a customer obtains control of promised products. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these products.

Disaggregation of Revenue

    We generated net sales in the following geographic locations(1) (in millions):
Three Months Ended
April 3,
2021		March 28,
2020
U.S.$611.3 $670.7 
Europe(2)
355.3 372.6 
All other countries(3)
43.4 40.0 
Total net sales$1,010.0 $1,083.3 

(1) Derived from the location of the entity that sells to a third party.
(2) Includes Ireland net sales of $4.5 million and $3.8 million for the three months ended April 3, 2021, and March 28, 2020, respectively.
(3) Includes net sales generated primarily in Mexico, Australia and Canada.
8
Perrigo Company plc - Item 1
Note 2


Product Category
        
Below    The following is a summary of our net sales by category (in millions):
Three Months Ended
April 3,
2021		March 28,
2020
CSCA(1)
Upper respiratory$114.0 $154.6 
Digestive health113.5 106.9 
Pain and sleep-aids92.4 120.4 
Nutrition92.0 102.2 
Healthy lifestyle75.5 85.8 
Oral self-care73.7 55.3 
Skincare and personal hygiene53.3 46.7 
Vitamins, minerals, and supplements7.8 6.4 
Other CSCA(2)
18.3 22.3 
Total CSCA640.5 700.6 
CSCI
Skincare and personal hygiene107.0 94.7 
Vitamins, minerals, and supplements59.0 48.5 
Healthy lifestyle50.3 43.6 
Pain and sleep-aids49.0 46.8 
Upper respiratory42.9 84.1 
Oral self-care25.5 23.2 
Digestive health8.5 6.0 
Other CSCI(3)
27.3 35.8 
Total CSCI369.5 382.7 
Total net sales$1,010.0 $1,083.3 

(1) Includes net sales from our OTC contract manufacturing business.
(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 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.

While the majority of revenue is recognized at a point in time, certain of our product revenue is recognized on an over time basis. Predominately, over time customer contracts exist in contract manufacturing arrangements, which occur in both the CSCA and CSCI segments. Contract manufacturing revenue was $63.1 million and $49.2 million for the three months ended April 3, 2021, and March 28, 2020, respectively.

    We also recognize a portion of the store brand OTC product revenues in the CSCA segment on an over time basis; however, the timing difference between over time and point in time revenue recognition for store brand contracts is not significant due to the short time period between the customization of the product and shipment or delivery.

Contract Balances

    The following table provides information about contract assets from contracts with customers (in millions):
Balance Sheet LocationApril 3,
2021		December 31,
2020
Short-term contract assetsPrepaid expenses and other current assets$18.4 $19.7 

9
Perrigo Company plc - Item 1
Note 3

NOTE 3 – ACQUISITIONS
Acquisitions Accounted for as a Business Combination During the Year Ended December 31, 2020

Eastern European OTC Dermatological Brands Acquisition
On October 30, 2020, we acquired 3 Eastern European OTC dermatological brands ("Eastern European Brands"), skincare brands Emolium® and Iwostin® and hair loss treatment brand Loxon®, from Sanofi. The transaction closed for €53.3 million ($62.3 million). We capitalized $52.5 million as brand-named intangible assets and allocated the remainder of the purchase price to goodwill, inventory, customer relationships and deferred tax assets.

The addition of these market-leading OTC brands complements our already robust skincare portfolio and adds scale to our Eastern European business. The acquisition also serves as another step for Perrigo’s CSCI growth plans and provides new opportunities for self-care revenue synergy in the European markets. The operating results of the brands will be reported within our CSCI segment.

The acquisition of the Eastern European Brands was accounted for as a business combination and has been reported in our Consolidated Statements of Operations as of the acquisition date.

We are recentin the process of gathering significant relevant information needed to complete the valuation for the assets acquired and liabilities assumed. As a result, the initial accounting standard updatesfor the acquisition is incomplete. The provisional acquisition amounts recognized for assets acquired and liabilities assumed will be finalized as soon as possible but no later than one year from the acquisition date. The final determination may result in asset and liability fair values and tax bases that differ from the preliminary estimates and require changes to the preliminary amounts recognized.

The goodwill arising from the acquisition consists largely of the assembled workforce, and the cost and revenue synergies expected from integrating the business into the CSCI segment. The goodwill was allocated to our CSCI segment, none of which is deductible for income tax purposes. The definite-lived intangible assets acquired consisted of brands and customer relationships which are being amortized over a weighted average useful life of approximately 18.8 years. Both the brands and customer relationships were valued using the multi-period excess earnings method. Significant judgment was applied in estimating the fair value of the intangible assets acquired, which involved the use of significant estimates and assumptions with respect to the timing and amounts of cash flow projections, including revenue growth rates, projected profit margins, and discount rates.

Oral Care Assets of High Ridge Brands
On April 1, 2020, we acquired the oral care assets of High Ridge Brands ("Dr. Fresh") for total purchase consideration of $113.0 million, subject to customary adjustments, including a working capital settlement. After such adjustments as of December 31, 2020, total cash consideration paid was $106.2 million net of $2.0 million that we allocated as prepayment of contract consideration for transitional services to be received related to the transaction.

This acquisition includes the children’s oral care value brand, Firefly®, in addition to the REACH® and Dr. Fresh® brands, and a licensing portfolio. The U.S. operations, which represent a significant portion of the business, are still assessingreported in our CSCA segment and the non-U.S. operations are reported in our CSCI segment.
10
Perrigo Company plc - Item 1
Note 3

    The following table summarizes the consideration paid for Dr. Fresh and the amounts of the assets acquired and liabilities assumed (in millions):

Oral Care Assets of High Ridge Brands (Dr. Fresh)
Purchase price paid$106.2 
Assets acquired:
Accounts receivable13.1 
Inventories22.2 
Prepaid expenses and other current assets0.4 
Property, plant and equipment, net0.7 
Operating lease assets2.6 
Goodwill17.2 
Distribution and license agreements and supply agreements$2.2 
Developed product technology, formulations, and product rights0.1 
Customer relationships and distribution networks20.6 
Trademarks, trade names, and brands43.2 
Total intangible assets$66.1 
Total assets$122.3 
Liabilities assumed:
Accounts payable$6.1 
Other accrued liabilities3.8 
Payroll and related taxes0.7 
Accrued customer programs3.0 
Other non-current liabilities2.5 
Total liabilities$16.1 
Net assets acquired$106.2 

    The goodwill of $17.2 million arising from the acquisition consists largely of the anticipated growth from new product sales, sales to determinenew customers, the effectassembled workforce, and the synergies expected from combining the operations of Dr. Fresh into Perrigo. The goodwill is attributable to our CSCA segment and is tax deductible for income tax purposes. The definite-lived intangible assets acquired consisted of trademarks and trade names, license agreements, and customer relationships, which are being amortized over a weighted average useful life of approximately 17.8 years. Customer relationships were valued using the multi-period excess earnings method. Trademarks and trade names and developed technology were valued using the relief from royalty method. Significant judgment was applied in estimating the fair value of the intangible assets acquired, which involved the use of significant estimates and assumptions with respect to the timing and amounts of cash flow projections, including revenue growth rates, projected profit margins, and discount rates. The opening balance sheet is final.

11
Perrigo Company plc - Item 1
Note 3

Pro Forma Impact of Business Combinations

    The following table presents unaudited pro forma information as if the acquisitions of Dr. Fresh and the Eastern European Brands occurred on January 1, 2019, and had been combined with the results reported in our Condensed Consolidated Financial Statements. We do not believe that any other recently issued accounting standards could have a material effect on our Condensed Consolidated Financial Statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Statements of Operations for all periods presented (in millions):
Recently Issued Accounting Standards Adopted
StandardDescriptionThree Months EndedDate of adoptionEffect on the Financial Statements or Other Significant Matters
Clarifying the Definition of a BusinessThis update clarifies the definition of a business and addresses whether transactions should be accounted for as asset acquisitions or business combinations (or divestitures). The guidance includes an initial threshold that an acquired set of assets will not be considered a business if substantially all of the fair value of the assets acquired is concentrated in a single tangible or identifiable intangible asset (or group of similar assets). If the acquired set does not pass the initial threshold, then the guidance requires that, to be a business, the set must include an input and a substantive process that together significantly contribute to the ability to create outputs. Different factors are considered to determine whether the set includes a substantive process, such as the inclusion of an organized workforce. Further, the guidance removes language stating that a business need not include all of the inputs and processes that the seller used in operating the business.January 1, 2017
We early adopted this new standard and will apply it prospectively when determining whether transactions should be accounted for as asset acquisitions (divestitures) or business combinations (divestitures). During the nine months ended September 30, 2017, we applied the new guidance when determining whether certain product divestitures represented sales of assets or businesses.

Improvements to Employee Share-Based Payment Accounting
This guidance is intended to simplify several aspects of the accounting for share-based payment award transactions. It will require all income tax effects of awards to be recorded through the income statement when the awards vest or settle as opposed to certain amounts being recorded in additional paid-in capital. An entity will also have to elect whether to account for forfeitures as they occur or by estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change (as currently required). The guidance will also increase the amount an employer can withhold to cover income taxes on awards.January 1, 2017We adopted this standard as of January 1, 2017. We elected to estimate the number of awards expected to be forfeited and adjust the estimate when it is likely to change, consistent with past practice. We did not change the amounts that we withhold to cover income taxes on awards. As the requirement to record all income tax effects of vested or settled awards through the income statement is prospective in nature, there was no cumulative effect of adopting the standard on our balance sheet.

Perrigo Company plc - Item 1
Note 1


(Unaudited)March 28,
2020
Net sales$1,119.1 
Recently Issued Accounting Standards Not Yet Adopted
StandardDescriptionEffective DateEffect on the Financial Statements or Other Significant Matters
RevenueIncome from Contracts with Customerscontinuing operationsThe core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the entity satisfies a performance obligation. This guidance allows for two adoption methods, full retrospective approach or modified retrospective approach.January 1, 2018We continue to evaluate the implications of adoption of the new revenue standard on our Consolidated Financial Statements. We have completed an initial assessment and are in the process of quantifying the adoption impact, if any, related to certain topics identified through our evaluation process. Our assessment of the new revenue standard has been focused on, but has not been limited to, the concepts of over-time versus point-in-time revenue recognition patterns, variable consideration, and identification of performance obligations. We will not complete our final assessment and quantification of the impact of the new revenue standard on our Consolidated Financial Statements until the adoption date. Our analysis indicates that certain contract manufacturing and private label arrangements may require revenue recognition over-time in situations in which we produce products that have no alternative use and we have an enforceable right to payment for performance completed to date, inclusive of a reasonable profit margin. This may result in an acceleration of revenue recognition for certain contractual arrangements as compared to recognition under current accounting literature. We plan to adopt the new revenue standard effective January 1, 2018 using the modified retrospective method.
Intra-Entity Asset Transfers of Assets Other Than InventoryUnder the new guidance, the tax impact to the seller on the profit from the transfers and the buyer’s deferred tax benefit on the increased tax basis would be recognized when the transfers occur, resulting in the recognition of expense sooner than under historical guidance. The guidance excludes intra-entity transfers of inventory. For intra-entity transfers of inventory, the Financial Accounting Standards Board ("FASB") decided to retain current GAAP, which requires an entity to recognize the income tax consequences when the inventory has been sold to an outside party.January 1, 2018We are currently evaluating the implications of adoption on our Consolidated Financial Statements.
Financial Instruments - Recognition and Measurement of Financial Assets and LiabilitiesThe objective of this simplification update is to improve the decision usefulness of financial instrument reporting, and it principally affects accounting for equity investments currently classified as available for sale and financial liabilities where the fair value option has been elected. Entities will have to measure many equity investments at fair value and recognize changes in fair value in net income rather than other comprehensive income as required under current U.S. GAAP.January 1, 2018We have identified certain investments that will require an adjustment, however, at this time, we are unable to estimate the impact of adopting this standard as the significance of the impact will depend upon our equity investments as of the date of adoption.
Perrigo Company plc - Item 1
Note 1


$62.6 
Recently Issued Accounting Standards Not Yet Adopted (continued)
StandardDescriptionEffective DateEffect on the Financial Statements or Other Significant Matters
LeasesThis guidance was issued to increase transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. For leases with a term of 12 months or less, lessees are permitted to make an election to not recognize right-of-use assets and lease liabilities. Upon adoption, lessees will apply the new standard as of the beginning of the earliest comparative period presented in the financial statements, however lessees will be able to exclude leases that expire as of the implementation date. Early adoption is permitted.January 1, 2019We are currently evaluating the implications of adoption on our Consolidated Financial Statements and have commenced the first step of identifying a task force to take the lead in implementing the new Lease standard.
Derivatives and HedgingThis update was issued to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. In addition, the amendments simplify the application of hedge accounting in certain situations. Under the new rule, the entity’s ability to hedge non-financial and financial risk components is expanded. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and also eases certain documentation and assessment requirements. Early adoption is permitted.January 1, 2019
We are currently evaluating the implications of adoption on our Consolidated Financial Statements.

Measurement of Credit Losses on Financial InstrumentsThis 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. Early adoption is permitted.January 1, 2020We are currently evaluating the new standard for potential impacts on our receivables, debt, and other financial instruments.
Intangibles - Goodwill and Other Simplifying the Test for GoodwillThe objective of this update is to reduce the cost and complexity of subsequent goodwill accounting by simplifying the impairment test by removing the Step 2 requirement to perform a hypothetical purchase price allocation when the carrying value of a reporting unit exceeds its fair value. If a reporting unit’s carrying value exceeds its fair value, an entity would record an impairment charge based on that difference, limited to the amount of goodwill attributed to that reporting unit. The proposal would not change the guidance on completing Step 1 of the goodwill impairment test. The proposed guidance would be applied prospectively. Early adoption is permitted.January 1, 2020
We are currently evaluating the implications of adoption on our Consolidated Financial Statements.


Perrigo Company plc - Item 1
Note 2The unaudited pro forma information is presented for information purposes only and is not indicative of the results that would have been achieved if the acquisition had taken place at such time. The unaudited pro forma information presented above includes adjustments primarily for amortization charges for acquired intangible assets, depreciation of property, plant and equipment that have been revalued, certain acquisition-related charges, and related tax effects.



Acquisitions During the Three Months Ended March 28, 2020
NOTE 2 – DIVESTITURES

Dexsil®
Current Year Divestitures

On February 13, 2020, we acquired Dexsil®,a silicon supplement brand, from RXW Group Nv, for total cash consideration paid of approximately $8.0 million. The transaction was accounted for as an asset acquisition, in which we capitalized the consideration paid as a brand-named intangible asset. We began amortizing the brand intangible over a 25-year useful life. Operating results attributable to the product are included within our CSCI segment.

Steripod®

On January 3, 2017,2020, we sold certain Abbreviated New Drug Applications ("ANDAs")acquired Steripod®, a leading toothbrush accessory brand and innovator in the toothbrush protector market, from Bonfit America Inc. Total consideration paid was $26.0 million. The transaction was accounted for $15.0as an asset acquisition, in which we capitalized $25.1 million to a third party, which was recorded as a gain in Other operating income on the Condensed Consolidated Statements of Operations in our Prescription Pharmaceuticals ("RX") segment.

On February 1, 2017, we completed the salebrand-named intangible asset. The remainder of the animal health pet treats plant fixed assetspurchase price was allocated to working capital. We began amortizing the brand intangible asset over a 25-year useful life. Operating results attributable to Steripod® are included within our Consumer Healthcare Americas ("CHCA") segment, which were previously classified as held-for sale. We received $7.7 million in proceeds, which resulted in an immaterial loss.CSCA segment.     


On April 6, 2017, we completed the sale of our India Active Pharmaceutical Ingredients ("API") business to Strides Shasun Limited. We received $22.2 million of proceeds, inclusive of an estimated working capital adjustment, which resulted in an immaterial gain recorded in our Other segment. Prior to closing the sale, we determined that the carrying value of the India API business exceeded its fair value less the cost to sell, resulting in an impairment charge of $35.3 million, which was recorded in Impairment charges on the Consolidated Statements of Operations for the year ended December 31, 2016.
12

Perrigo Company plc - Item 1
On August 25, 2017, we completed the sale of our Russian business, which was previously classified as held-for-sale, to Alvogen Pharma LLC and Alvogen CEE Kft. The total sale price was €12.7 million ($15.1 million), inclusive of an estimated working capital adjustment, which resulted in an immaterial gain recorded in our Consumer Healthcare International ("CHCI") segment. Prior to closing the sale, we determined that the carrying value of the Russian business exceeded its fair value less the cost to sell, resulting in an impairment charge of $3.7 million, which was recorded in Impairment charges on the Condensed Consolidated Statements of Operations for the three months ended July 1, 2017.Note 4


Prior Year Divestitures

On August 5, 2016, we completed the sale of our U.S. Vitamins, Minerals, and Supplements ("VMS") business within our CHCA segment to International Vitamins Corporation ("IVC") for $61.8 million inclusive of an estimated working capital adjustment. Prior to closing the sale, we determined that the carrying value of the VMS business exceeded its fair value less the cost to sell, resulting in an impairment charge of $6.2 million, which was recorded in Impairment charges on the Condensed Consolidated Statements of Operations for the year ended December 31, 2016.

NOTE 34 – GOODWILL AND OTHER INTANGIBLE ASSETS


Goodwill


Changes in the carrying amount of goodwill, by reportable segment, were as follows (in millions):
Reporting Segments: December 31,
2016		 Business divestitures Re-class to assets held-for-sale Currency translation adjustment September 30,
2017
CHCA $1,810.6
 $—
 $—
 $2.9
 $1,813.5
CHCI 1,070.8
 (4.1) —
 122.3
 1,189.0
RX 1,086.6
 —
 —
 6.5
 1,093.1
Other 81.4
 —
 (32.6) 7.6
 56.4
Total goodwill $4,049.4
 $(4.1) $(32.6) $139.3
 $4,152.0


December 31,
2020		Purchase accounting adjustmentsCurrency translation adjustmentsApril 3,
2021
CSCA$1,905.0 $2.4 $(1.9)$1,905.5 
CSCI(1)
1,190.7 (2.4)(41.5)1,146.8 
Total goodwill$3,095.7 $0 $(43.4)$3,052.3 
As discussed in our Form 10-K for the year ended
(1) We had accumulated goodwill impairments of $868.4 million as of December 31, 2016, during the three months ended2020 and April 2, 2016 and October 1, 2016, we identified indicators of impairment for our Branded Consumer Healthcare - Rest of World ("BCH-ROW") reporting unit and recorded impairment charges of $130.5 million and $675.6 million, respectively. In addition, during the three months ended October 1, 2016, we identified impairment indicators in our Branded Consumer Healthcare - Belgium ("BCH-Belgium") reporting unit and recorded impairment charges of $62.3 million. The impairment charges for both reporting units were recorded within our CHCI segment.3, 2021.
Perrigo Company plc - Item 1
Note 3




Intangible Assets


Other intangible    Intangible assets and related accumulated amortization consisted of the following (in millions):
 April 3, 2021December 31, 2020
 GrossAccumulated
Amortization		GrossAccumulated
Amortization
Indefinite-lived intangibles:
Trademarks, trade names, and brands$4.3 $— $4.3 $— 
In-process research and development2.7 — 2.7 — 
Total indefinite-lived intangibles$7.0 $— $7.0 $— 
Definite-lived intangibles:
Distribution and license agreements and supply agreements$73.2 $55.1 $74.8 $55.4 
Developed product technology, formulations, and product rights301.8 180.5 303.3 177.3 
Customer relationships and distribution networks1,873.9 830.9 1,920.5 823.7 
Trademarks, trade names, and brands1,534.4 350.5 1,581.5 342.2 
Non-compete agreements2.4 2.4 2.9 2.9 
Total definite-lived intangibles$3,785.7 $1,419.4 $3,883.0 $1,401.5 
Total intangible assets$3,792.7 $1,419.4 $3,890.0 $1,401.5 
 September 30, 2017 December 31, 2016
 Gross Accumulated Amortization Gross Accumulated Amortization
Definite-lived intangibles:
       
Distribution and license agreements, supply agreements$310.2
 $157.5
 $305.6
 $120.4
Developed product technology, formulations, and product rights1,355.4
 568.8
 1,418.1
 526.0
Customer relationships and distribution networks1,623.7
 424.5
 1,489.9
 307.5
Trademarks, trade names, and brands1,317.5
 111.0
 1,189.3
 55.3
Non-compete agreements14.7
 12.3
 14.3
 11.2
Total definite-lived intangibles$4,621.5
 $1,274.1
 $4,417.2
 $1,020.4
Indefinite-lived intangibles:
       
Trademarks, trade names, and brands$52.0
 $—
 $50.5
 $—
In-process research and development51.4
 —
 64.0
 —
Total indefinite-lived intangibles103.4
 —
 114.5
 —
Total other intangible assets$4,724.9
 $1,274.1
 $4,531.7
 $1,020.4


Certain intangible assets are denominated in currencies other than the U.S. dollar; therefore, their gross and accumulated amortization balances are subject to foreign currency movements.

We recorded amortization expense of $88.5$53.2 million and $89.7$52.6 million for the three months ended September 30, 2017April 3, 2021 and October 1, 2016, respectively, and $261.3 million and $263.9 million for the nine months ended September 30, 2017 and October 1, 2016,March 28, 2020, respectively.


We recorded an impairment charge within our RX segment of $12.7 million on certain In Process Research and Development ("IPR&D") assets during the nine months ended September 30, 2017 due to changes in the projected development and regulatory timelines for various projects. During the nine months ended September 30, 2017, we recorded a decrease in the contingent consideration liability associated with certain IPR&D assets in Other operating income on the Condensed Consolidated Statements of Operations (refer to Note 6).

During the three months ended July 1, 2017, we identified impairment indicators for our Lumara Health, Inc. ("Lumara") product assets. The primary impairment indicators included the decline in our 2017 performance expectations and a reduction in our long-range revenue growth forecast. The assessment utilized the multi-period excess earnings method to determine fair value and resulted in an impairment charge of $18.5 million in Impairment charges on the Condensed Consolidated Statements of Operations within our RX segment, which represented the difference between the carrying amount of the intangible assets and their estimated fair value.

As discussed in our Form 10-K for the year ended December 31, 2016, during the three months ended April 2, 2016, we identified indicators of impairment associated with certain indefinite-lived intangible assets acquired in conjunction with our acquisition of Omega Pharma Invest N.V. ("Omega") and recorded an impairment charge of $273.4 million. In addition, during the three months ended October 1, 2016, we identified indicators of impairment associated with certain indefinite-lived and definite-lived intangible brand category assets acquired in conjunction with the Omega acquisition. As a result of these additional indicators, we recorded impairment charges of $575.7 million on our indefinite-lived assets and $290.9 million on our definite-lived assets. The impairment charges for both the indefinite-lived assets and definite-lived assets were recorded within our CHCI segment.

In addition, due to reprioritization of certain brands in the CHCI segment and change in performance expectations for the cough/cold/allergy, anti-parasite, personal care, lifestyle, and natural health brands, we
Perrigo Company plc - Item 1
Note 3


reclassified $364.5 million and $674.4 million of indefinite-lived assets to definite-lived assets with useful lives of 20 years, which we began amortizing during the second and third quarters of 2016, respectively.

NOTE 4 - ACCOUNTS RECEIVABLE FACTORING

We have multiple accounts receivable factoring arrangements with non-related third-party financial institutions (the “Factors”). Pursuant to the terms of the arrangements, we sell to the Factors certain of our accounts receivable balances on a non-recourse basis for credit approved accounts. An administrative fee ranging from 0.14% to 0.15% per invoice is charged on the gross amount of accounts receivables assigned to the Factors, and interest is calculated at the applicable EUR LIBOR rate plus 70 basis points. The total amount factored on a non-recourse basis and excluded from accounts receivable was $24.3 million and $50.7 million at September 30, 2017 and December 31, 2016, respectively.

NOTE 5 – INVENTORIES


Major components of inventory were as follows (in millions):
April 3,
2021		December 31,
2020
Finished goods$648.2 $574.1 
Work in process234.7 220.4 
Raw materials253.2 264.9 
Total inventories$1,136.1 $1,059.4 

13
 September 30,
2017		 December 31,
2016
Finished goods$471.4
 $431.1
Work in process146.8
 165.7
Raw materials203.7
 198.2
Total inventories$821.9
 $795.0
Perrigo Company plc - Item 1

Note 6

NOTE 6 – FAIR VALUE MEASUREMENTS


Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.    The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable.

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.

Perrigo Company plc - Item 1
Note 6


The following table below summarizes the valuation of our financial instruments carried at fair value and measured at fair value on a recurring and non-recurring basis by the aboveapplicable pricing categories (in millions):
April 3, 2021December 31, 2020
Level 1Level 2Level 3Level 1Level 2Level 3
Measured at fair value on a recurring basis:
Assets:
Investment securities$2.9 $0 $0 $2.5 $0 $0 
Foreign currency forward contracts0 7.2 0 0 9.8 0 
Cross-currency swap0 5.7 0 0 6.3 0 
Total assets$2.9 $12.9 $0 $2.5 $16.1 $0 
Liabilities:
Foreign currency forward contracts$0 $6.5 $0 $0 $7.9 $0 
Total liabilities$0 $6.5 $0 $0 $7.9 $0 
    Fair Value
  Fair Value Hierarchy September 30,
2017		 December 31,
2016
Measured at fair value on a recurring basis:      
Assets:      
Investment securities Level 1 $6.1
 $38.2
       
Foreign currency forward contracts Level 2 $13.1
 $3.8
Funds associated with Israeli severance liability Level 2 16.1
 15.9
Total level 2 assets   $29.2
 $19.7
       
Royalty Pharma contingent milestone payments Level 3 $143.2
 $—
Financial assets Level 3 —
 2,350.0
Total level 3 assets   $143.2
 $2,350.0
       
Liabilities:      
Foreign currency forward contracts Level 2 $3.3
 $5.0
       
Contingent consideration Level 3 $44.9
 $69.9
       
Measured at fair value on a non-recurring basis:      
Assets:      
Goodwill(1)
 Level 3 $—
 $1,148.4
Indefinite-lived intangible assets(2)
 Level 3 13.3
 0.3
Definite-lived intangible assets(3)
 Level 3 11.5
 758.0
Assets held for sale, net Level 3 95.1
 18.2
Total level 3 assets   $119.9
 $1,924.9


(1)
As of December 31, 2016, goodwill with a carrying amount of $2.2 billion was written down to its implied fair value of $1.1 billion.
(2)
As of September 30, 2017, indefinite-lived intangible assets with a carrying amount of $26.0 million were written down to a fair value of $13.3 million. As of December 31, 2016, indefinite-lived intangible assets with a carrying amount of $0.7 million were written down to a fair value of $0.3 million.
(3)
As of July 1, 2017, definite-lived intangible assets with a carrying amount of $31.1 million were written down to a fair value of $11.5 million. As of December 31, 2016, definite-lived intangible assets with a carrying amount of $2.3 billion were written down to a fair value of $758.0 million. Included in this balance are indefinite-lived intangible assets with a fair value of $364.5 million and $674.2 million that were reclassified to definite-lived assets at April 3, 2016 and October 2, 2016, respectively.

There were no0 transfers amongwithin Level 1, 2, and 3 fair value measurements during the three and nine months endedSeptember 30, 2017 April 3, 2021 or the year ended December 31, 2016. Our policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting period (refer to Note 7 for information on our investment securities and Note 8 for a discussion of derivatives).2020.

Perrigo Company plc - Item 1
Note 6


Foreign Currency Forward Contracts

The fair value of foreign currency forward contracts is determined using a market approach, which utilizes values for comparable derivative instruments.

Funds Associated with Israel Severance Liability

Israeli labor laws and agreements require us to pay benefits to employees dismissed or retiring under certain circumstances. Severance pay is calculated on the basis of the most recent employee salary levels and the length of employee service. Our Israeli subsidiaries also provide retirement bonuses to certain managerial employees. We make regular deposits to retirement funds and purchase insurance policies to partially fund these liabilities. The funds are determined using prices for recently traded financial instruments with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves, that are observable at commonly quoted intervals.

Royalty Pharma Contingent Milestone Payments and Financial AssetsReceipts


OnDuring the year ended December 18, 2013, we acquired Elan, which had a royalty agreement with Biogen Idec Inc. ("Biogen"), whereby Biogen conveyed the right to receive royalties that are typically payable on sales revenue generated by the sale, distribution or other use of the drug Tysabri®. Pursuant to the royalty agreement, we were entitled to royalty31, 2020, Royalty Pharma payments from Biogen based on itsfor Tysabri® sales, as defined in all indications and geographies. We received royalties of 12% on worldwide Biogen sales of Tysabri® from December 18, 2013 through April 30, 2014. From May 1, 2014, we received royalties of 18% on annual worldwide Biogen sales of Tysabri® up to $2.0 billion and 25% on annual sales above $2.0 billion.

We accounted for the Tysabri® royalty stream as a financial asset and elected to useagreement between the fair value option model. We made the election to account for the Tysabri® financial asset using the fair value option as we believed this method was most appropriate for an asset thatparties, did not have a par value, a stated interest stream, or a termination date. exceed the 2020 global net sales threshold. Therefore, we were not entitled to receive the remaining contingent milestone payment. As of December 31, 2020, there were 0 contingent milestone payments outstanding.

The financial asset acquired represented a single unit of accounting. Thetable below summarizes the change in fair value of the financial asset acquired was determined by using a discounted cash flow analysis related to the expected probability weighted future cash flows to be generated by the royalty stream. The financial asset was classified as a Level 3 asset within the fair value hierarchy, as our valuation utilized significant unobservable inputs, including industry analyst estimates for global Tysabri® sales, probability weighted as to the timing and amount of future cash flows along with certain discount rate assumptions. Cash flow forecasts included the estimated effect and timing of future competition, considering patents in effect for Tysabri® through 2024 and contractual rights to receive cash flows into perpetuity. The discounted cash flows were based upon the expected royalty stream forecasted into perpetuity using a 20-year discrete period with a declining rate terminal value.

In the first quarter of 2016, a competitor's pipeline product, Ocrevus®, received breakthrough therapy designation from the U.S. Food and Drug Administration ("FDA"). Breakthrough therapy designation is granted when a drug is intended alone or in combination with one or more other drugs to treat a serious or life threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. In June 2016, the FDA granted priority review with a target action date in December 2016. A priority review is a designation when the FDA will direct overall attention and resources to the evaluation of applications for drugs that, if approved, would be significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions when compared to standard applications. The product was approved late in the first quarter of 2017. The product is expected to compete with Tysabri®, and we expected it to have a significant negative impact on the Tysabri® royalty stream. Industry analysts believe that, based on released clinical study information, Ocrevus® will compete favorably against Tysabri® in the relapsing, remitting multiple sclerosis market segment due to its high efficacy and convenient dosage form.
Perrigo Company plc - Item 1
Note 6


Given the new market information for Ocrevus®, we used industry analyst estimates to reduce our first ten year growth forecasts from an average of growth of approximately 3.4% in the fourth calendar quarter of 2015 to an average decline of approximately minus 2.0% in the third and fourth calendar quarters of 2016. In November 2016, we announced we were evaluating strategic alternatives for the Tysabri® asset. As of December 31, 2016, the financial asset was adjusted based on the strategic review and sale process. These effects, combined with the change in discount rate each quarter, led to a reduction in fair value of $204.4 million, $910.8 million, $377.4 million and $1.1 billion in the first, second, third and fourth quarters of 2016, respectively.

On March 27, 2017, we announced the completed divestment of our Tysabri® financial asset to Royalty Pharma for up to $2.85 billion, which consists of $2.2 billion in cash and up to $250.0 million and $400.0 million in milestone payments if the royalties on global net sales of Tysabri® that are received by Royalty Pharma meet specific thresholds in 2018 and 2020, respectively. As a result of this transaction, we transferred the entire financial asset to Royalty Pharma and recorded a $17.1 million gain during the three months ended July 1, 2017. We elected to account for the contingent milestone payments using the fair value option method, and these were recorded at an estimated fair value of $143.2 million as of September 30, 2017. We chose the fair value option as we believe it will help investors understand the potential future cash flows we may receive associated with the two contingent milestones.(in millions):

Three Months Ended
March 28,
2020
Beginning balance$95.3 
Change in fair value1.6 
Ending balance$96.9 

We valued theour contingent milestone paymentspayment from Royalty Pharma using a modified Black-Scholes Option Pricing Model ("BSOPM"). Key inputs in the BSOPM are the estimated volatility and rate of return of royalties on global net sales of Tysabri® that are received by Royalty Pharma over time until payment of the contingent milestone payments is completed. Volatilitymilestones are resolved. As of March 28, 2020, volatility and the estimated fair value of the milestones havehad a positive relationship such that higher volatility translates to a higher estimated fair value of the contingent milestone payments. InRate of return and the valuationestimated fair value of contingent milestone payments performed, we assumed volatility of 30.0% andthe milestones had an inverse relationship, such that a lower rate of return correlates with a higher estimated fair value of 8.05% as of July 1, 2017 and volatility of 30.0% and a rate of return of 8.06% as of September 30, 2017.the contingent milestone payments. We assessassessed volatility and rate of return inputs quarterly by analyzing certain market volatility benchmarks and the risk associated with Royalty Pharma achieving the underlying projected royalties. The table below represents the volatility and rate of return:

Three Months Ended
March 28,
2020
Volatility35.0 %
Rate of return7.29 %

14
Perrigo Company plc - Item 1
Note 6

During the three and nine months ended September 30, 2017,March 28, 2020, the fair value of the Royalty Pharma contingent milestone payments decreased $2.9payment related to 2020 increased by $1.6 million and $42.1to $96.9 million, respectively, as a resultdriven by higher volatility, higher projected global net sales of Tysabri® compared to the decreaseestimates in the prior period, and the estimated projected Tysabri® revenues due toprobability of achieving the launchearn-out. As of Ocrevus® late in the first quarter of 2017.

Our accounts receivable balance at December 31, 2016 included $84.4 million related to the Tysabri® financial asset.

The table below presents a reconciliation for the Royalty Pharma2020, there were 0 contingent milestone payments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in millions). Change in fair value in the table wasoutstanding and, accordingly, no asset recorded in Change in financial assets on the Condensed Consolidated Statements of Operations.Balance Sheet.

 Three Months Ended Nine Months Ended
 September 30,
2017		 September 30,
2017
Royalty Pharma Contingent Milestone Payments   
Beginning balance$145.8
 $—
Additions—
 184.5
Foreign currency effect0.3
 0.8
Change in fair value(2.9) (42.1)
Ending balance$143.2
 $143.2
Non-recurring Fair Value Measurements


Contingent Consideration

Contingent consideration represents milestone payment obligations obtained through product acquisitions, which are valued using estimates based on probability-weighted outcomes, sensitivity analysis, and discount rates reflective of the risk involved.     The estimates are updated quarterly and the liabilities arenon-recurring fair values represent only those assets whose carrying values were adjusted to fair value depending on a number of assumptions, including the competitive landscape and regulatory approvals that may impact the future sales of a product. We reduced a contingent consideration liability associated with certain IPR&D assets (refer to Note 3) and recorded a corresponding gain of $17.0 million during the nine months ended September 30, 2017. The liability decrease relates to a reduction of the probability of achievement assumptions andreporting period.
Perrigo Company plc - Item 1
Note 6


anticipated cash flows. Purchases or additions for the nine months ended October 1, 2016 included contingent consideration associated with five transactions.

The table below presents a reconciliation for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in millions). Net realized losses in the table were recorded in Other (income) expense, net on the Condensed Consolidated Statements of Operations.
 Three Months Ended Nine Months Ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Contingent Consideration       
Beginning balance$49.7
 $44.9
 $69.9
 $17.9
Net realized losses(2.9) (0.4) (18.5) (4.0)
Purchases or additions—
 30.6
 —
 61.1
Foreign currency effect0.2
 —
 1.5
 0.1
Settlements(2.1) (0.1) (8.0) (0.1)
Ending balance$44.9
 $75.0
 $44.9
 $75.0

Goodwill and Indefinite-Lived Intangible Assets

We have seven reporting units for which we assess goodwill for impairment. We utilize a comparable company market approach, weighted equally with a discounted cash flow analysis, to determine the fair value of the reporting units. We utilize either a relief from royalty method or a multi-period excess earnings method ("MPEEM") to value our indefinite-lived intangible assets, and use a consistent set of projected financial information for the goodwill and indefinite-lived asset impairment tests. The discounted cash flow analysis that we prepared for goodwill impairment testing purposes for the year ended December 31, 2016 included long-term growth rates ranging from 2.0% to 3.0%. We also utilized discount rates ranging from 7.0% to 14.5%, which were deemed to be commensurate with the required investment return and risk involved in realizing the projected free cash flows of each reporting unit. In addition, we burdened projected free cash flows with the capital spending deemed necessary to support the cash flows of each reporting unit, and applied the tax rates that were applicable to the jurisdictions represented within each reporting unit. We recorded impairment charges on the Condensed Consolidated Statements of Operations related to goodwill in the BCH-ROW reporting unit and indefinite-lived intangible assets of $130.5 million and $273.4 million, respectively, for the three months ended April 2, 2016. For the three months ended October 1, 2016, we recorded impairment charges related to goodwill on the Condensed Consolidated Statements of Operations of $675.6 million in the BCH-ROW reporting unit and $62.3 million in the BCH-Belgium reporting unit, as well as indefinite-lived intangible asset impairments of $575.7 million (refer to Note 3).

Definite-Lived Intangible Assets

When assessing our definite-lived assets for impairment, we utilize either a MPEEM or a relief from royalty method to determine the fair value of the asset and use the forecasts that are consistent with those used in the reporting unit analysis. Below is a summary of the various metrics used in our valuations:
Nine Months Ended
September 30, 2017
Lumara
5-year average growth rate(4.1)%
Discount rate13.5%
Valuation methodMPEEM

Perrigo Company plc - Item 1
Note 6


 Year Ended
 December 31, 2016
 Omega - Lifestyle Omega - XLS 
Entocort® - Branded Products
 
Entocort® - AG Products
 Herron Trade Names and Trademarks
5-year average growth rate2.5% 3.2% (31.7)% (30.4)% 4.6%
Long-term growth rates2.0% NA (10.0)% (4.7)% 2.5%
Discount rate9.3% 9.5% 13.0% 10.5% 10.8%
Royalty rateNA 4.0% NA NA 11.0%
Valuation methodMPEEM Relief from Royalty MPEEM MPEEM Relief from Royalty

We recorded Impairment charges on the Condensed Consolidated Statements of Operations related to definite-lived intangible assets of $18.5 million and $290.9 million for the nine months ended September 30, 2017 and October 1, 2016, respectively (refer to Note 3).

Assets Held For Sale

When a group of assets is classified as held-for-sale, the book value is evaluated and adjusted to the lower of its carrying amount or fair value less the cost to sell (refer to Note 9).

Fixed Rate Long-term Debt


As of September 30, 2017 and December 31, 2016, our    Our fixed rate long-term debt consisted of public bonds, a private placement note, and retail bonds. As of September 30, 2017, the public bonds had a carrying value offollowing (in millions):
$2.6 billion and a fair value of $2.7 billion. As of December 31, 2016, the public bonds had a carrying value and fair value of $4.6 billion.
April 3,
2021		December 31,
2020
Level 1Level 2Level 1Level 2
Public Bonds
Carrying Value (excluding discount)$2,760.0 $— $2,760.0 $— 
Fair value$2,863.7 $— $3,031.1 $— 
Private placement note
Carrying value (excluding premium)$— $158.8 $— $164.9 
Fair value$— $176.6 $— $177.5 

    The fair values of our public bonds for bothall periods were based on quoted market prices
(Level 1).

As of September 30, 2017, our retail bonds and private placement note had a carrying value of $655.8 million (excluding a premium of $35.6 million) and a fair value of $699.2 million. As of December 31, 2016, our retail bonds and private placement note had a carrying value of $773.1 million (excluding a premium of $49.8 million) and a fair value of $825.0 million.prices. The fair values of our retail bonds and private placement note for bothall periods were based on interest rates offered for borrowings of a similar nature and remaining maturities (Level 2).maturities.


The carrying amounts of our other financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, short-term debt, revolving credit agreements, promissory notes related to our equity method investment in Kazmira, and variable rate long-term debt, approximate their fair value.


NOTE 7 – INVESTMENTS


Available for Sale Securities    The following table summarizes the measurement category, balance sheet location, and balances of our equity securities (in millions):
Measurement CategoryBalance Sheet LocationApril 3,
2021		December 31,
2020
Fair value methodPrepaid expenses and other current assets$2.9 $2.5 
Fair value method(1)
Other non-current assets$1.5 $1.9 
Equity methodOther non-current assets$69.1 $69.8 

(1)     Measured at fair value using the Net Asset Value practical expedient.

    The following table summarizes the expense (income) recognized in earnings of our equity securities (in millions):
Three Months Ended
Measurement CategoryIncome Statement LocationApril 3,
2021		March 28,
2020
Fair value methodOther (income) expense, net$0 $2.9 
Equity methodOther (income) expense, net$0.7 $(0.7)
    
15
Perrigo Company plc - Item 1
Note 8
NOTE 8 – Discontinued Operations

Our availablediscontinued operations primarily consist of our RX segment, which held our prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel (collectively, the “RX business”).

On March 1, 2021, we announced a definitive agreement to sell our RX business to Altaris for total consideration of $1.55 billion, including $1.5 billion in cash and the assumption of more than $50.0 million in potential R&D milestone payments and contingent purchase obligations with third-party Rx partners. On March 8, 2021, we purchased an Abbreviated New Drug Application ("ANDA") for a generic topical lotion for $53.3 million, which was the largest contingent purchase obligation to be assumed by Altaris and increased the cash consideration we will receive upon completion of the sale of the RX business to $1.55 billion. The transaction is subject to antitrust and other customary closing conditions and is expected to close in the third quarter of 2021.

As of March 1, 2021, we determined that the RX business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results have been reflected in our consolidated financial statements as a discontinued operation and its assets and liabilities have been classified as held for sale. We ceased recording depreciation and amortization on the RX business assets from March 1, 2021. We have not allocated any general corporate overhead to the discontinued operation.

Under the terms of the agreement, we will provide transition services for up to 24 months after the close of the transaction and also enter into a reciprocal supply agreement pursuant to which Perrigo will supply certain products to the RX business and the RX business will supply certain products to Perrigo. Under the agreed form, the supply agreements will have a term of four years, extendable up to seven years by the party who is the purchaser of the products under such agreement. We will also extend distribution rights to the RX business for certain OTC products owned and manufactured by Perrigo that may be fulfilled through pharmacy channels, in return for a share of the net profits.

The agreement provides that Perrigo will retain certain pre-closing liabilities arising out of antitrust (refer to Note 15 - Contingencies under the header "Price-Fixing Lawsuits") and opioid matters and the Company’s Albuterol recall, subject to, in each case, the buyer's obligation to indemnify the Company for 50 percent of these liabilities up to an aggregate cap on the buyer's obligation of $50.0 million.
16
Perrigo Company plc - Item 1
Note 8

Income from discontinued operations, net of tax was as follows (in millions):

 Three Months Ended
 April 3,
2021		March 28,
2020
Net sales$200.1 $257.7 
Cost of sales138.3 165.8 
Gross profit61.8 91.9 
Operating expenses
Distribution3.3 4.0 
Research and development13.4 13.6 
Selling7.4 7.3 
Administration18.2 6.5 
Other operating expense (income)(0.9)1.1 
Total operating expenses41.4 32.5 
Operating income$20.4 $59.4 
Interest expense, net0.6 1.4 
Other (income) expense, net(1.5)0.7 
Income before income taxes21.3 57.3 
Income tax expense (benefit)(14.0)8.5 
Income from discontinued operations, net of tax$35.3 $48.8 

During the three months ended April 3, 2021, we incurred $9.3 million of separation costs related to the sale of the RX business, which are recorded in administration expenses.

Select cash flow information related to discontinued operations was as follows (in millions):

Three Months Ended
 April 3,
2021		March 28,
2020
Cash flows from discontinued operations operating activities:
Depreciation and amortization$15.3 $24.0 
Cash flows from discontinued operations investing activities:
Asset acquisitions$(69.7)$(0.1)
Additions to property, plant and equipment$(3.2)$(2.9)

Asset acquisitions related to discontinued operations consisted of 2 ANDAs purchased under a contractual arrangement entered into on May 15, 2015 with a third party that specializes in research and development and obtaining approval for various drug candidates to develop specific products. On December 31, 2020, we purchased an ANDA for a generic topical gel for $16.4 million, which was subsequently paid during the three months ended April 3, 2021 and on March 8, 2021, we purchased an ANDA for a generic topical lotion for $53.3 million. The generic topical lotion acquisition is being assumed by Altaris in connection with the sale of the RX business.

17
Perrigo Company plc - Item 1
Note 8

The assets and liabilities classified as held for sale securities are reported in Prepaid expenses and other current assets. Unrealized investment gains/(losses) on available for sale securities were as follows (in millions):

 September 30,
2017		 December 31, 2016
Equity securities, at cost less impairments$15.5
 $16.5
Gross unrealized gains—
 21.7
Gross unrealized losses(9.4) —
Estimated fair value of equity securities$6.1
 $38.2
April 3,
2021		December 31,
2020
Cash and cash equivalents$9.6 $10.0 
Accounts receivable, net of allowance for credit losses of $1.1 and $1.1, respectively419.9 460.7 
Inventories136.8 140.8 
Prepaid expenses and other current assets29.7 55.4 
Current assets held for sale*666.9 
Property, plant and equipment, net126.4 131.4 
Operating lease assets29.6 31.3 
Goodwill and indefinite-lived intangible assets678.7 681.2 
Definite-lived intangible assets, net533.0 492.8 
Deferred income taxes3.0 3.6 
Other non-current assets22.4 23.7 
Non-current assets held for sale*1,364.0 
Total assets held for sale$1,989.1 $2,030.9 
Accounts payable$101.1 $92.2 
Payroll and related taxes16.7 22.3 
Accrued customer programs185.9 237.4 
Other accrued liabilities47.4 67.2 
Current indebtedness0.5 0.5 
Current liabilities held for sale*419.6 
Long-term debt, less current portion0.6 0.7 
Deferred income taxes2.9 3.1 
Other non-current liabilities94.9 104.5 
Non-current liabilities held for sale*108.3 
Total liabilities held for sale$450.0 $527.9 


The factors affecting*As of April 3, 2021, the assessmentnon-current assets and liabilities of impairments include both general financial market conditionsthe RX business have been reclassified to current assets and factors specific to a particular company. During the nine months ended October 1, 2016, we recorded an impairment charge of $1.8 million, which related to other-than-temporary impairments of marketable equity securitiesliabilities held for sale, respectively, due to prolonged losses incurred on eachthe expected completion of the investments.
Perrigo Company plc - Item 1
Note 7



We have evaluated the near-term prospectssale of the equity securitiesbusiness in relation to the severity and durationthird quarter of any impairments, and based on that evaluation, we have the ability and intent to hold these investments until a recovery of fair value.2021, as discussed above.


During the nine months ended September 30, 2017, we sold a number of our investment securities and recorded a gain of $1.6 million. The gain was reclassified out of Accumulated Other Comprehensive Income (loss) ("AOCI") and into earnings.     

Cost Method Investments

Our cost method investments totaled $7.2 million and $6.9 million at September 30, 2017 and
December 31, 2016, respectively, and are included in Other non-current assets.

Equity Method Investments

Our equity method investments totaled$4.8 million and $4.6 million at September 30, 2017 and December 31, 2016, respectively, and are included in Other non-current assets. We recorded net losses of $0.1 million and net gains of $0.2 million during the three and nine months ended September 30, 2017, respectively, and net gains of $0.1 million and net losses of $3.8 million during the three and nine months endedOctober 1, 2016, respectively, for our proportionate share of the equity method investment earnings or losses. The gains and losses were recorded in Other (income) expense, net on the Condensed Consolidated Statements of Operations.

During the nine months ended October 1, 2016, one of our equity method investments became publicly traded. As a result, we transferred the $15.5 million investment to available for sale and recorded an $8.7 million unrealized gain, net of tax in Other Comprehensive Income ("OCI"). In addition, due to significant and prolonged losses incurred on one of our equity method investments, we recorded a $22.3 million impairment charge in Other (income) expense, net on the Condensed Consolidated Statements of Operations.

NOTE 89 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES


We enter into certain derivative financial instruments, when available on a cost-effective basis, to mitigate our risk associated with changes in interest rates and foreign currency exchange rates as follows:Cross Currency Swaps


Interest rate risk management - We are exposed to the impact of interest rate changes through our cash investments and borrowings. We utilize a variety of strategies to manage the impact of changes in interest rates, including using a mix of debt maturities along with both fixed-rate and variable-rate debt. In addition, we may enter into treasury-lock agreements and interest rate swap agreements on certain investing and borrowing transactions to manage our exposure to interest rate changes and our overall cost of borrowing.

Foreign currency exchange risk management - We conduct business in several major currencies other than the U.S. dollar and are subject to risks associated with changing foreign exchange rates. Our objective is to reduce cash flow volatility associated with foreign exchange rate changes on a consolidated basis to allow management to focus its attention on business operations. Accordingly, we enter into various contracts that change in value as foreign exchange rates change to protect the value of existing foreign currency assets and liabilities, commitments, and anticipated foreign currency sales and expenses.
All derivative instruments are managed on a consolidated basis to efficiently net exposures and thus take advantage of any natural offsets. Gains and losses related to the derivative instruments are expected to be offset largely by gains and losses on the original underlying asset or liability. We do not use derivative financial instruments for speculative purposes.

     All of our designated derivatives were classified as cash flow hedges as of September 30, 2017 and December 31, 2016. Designated derivatives meet hedge accounting criteria, which means the fair value of the hedge is recorded in shareholders’ equity as a component of OCI, net of tax. The deferred gains and losses are recognized in income in the period in which the hedged item affects earnings. Any ineffective portion of the change
Perrigo Company plc - Item 1
Note 8


in fair value of the derivative is immediately recognized in earnings. All of our designated derivatives are assessed for hedge effectiveness quarterly.

We also have economic non-designated derivatives that do not meet hedge accounting criteria. These derivative instruments are adjusted to current market value at the end of each period through earnings. Gains or losses on these instruments are offset substantially by the remeasurement adjustment on the hedged item.    

Interest Rate Swaps and Treasury Locks

Interest rate swap agreements are contracts to exchange floating rate for fixed rate payments (or vice versa) over the life of the agreement without the exchange of the underlying notional amounts. The notional amounts of the interest rate swap agreements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense.

During the three months ended July 1, 2017, we repaid $584.4 million of senior notes with an interest rate of 4.000% due 2023 and $309.5 million of senior notes with an interest rate of 5.300% due 2043 (refer to Note 10). As a result of the senior note repayments on JuneOn August 15, 2017, the proportionate amount remaining in OCI related to the pre-issuance hedge was reclassified to earnings. Accordingly, we recorded a loss of $5.9 million in Other expense, net, on the Condensed Consolidated Statements of Operations during the three months ended July 1, 2017 for the amount remaining in OCI.

During the six months ended December 31, 2015,2019, we entered into a forward interest ratecross-currency swap to hedge against changes in the benchmark interest rate between the date the interest rate swap was entered into and the date of expected future debt issuance. The interest rate swap was designated as a cash flownet investment hedge and hadto hedge the EUR currency exposure of our net investment in European operations. This agreement is a contract to exchange floating-rate Euro payments for floating-rate U.S. dollar payments through August 15, 2022. The payments are based on a notional amount totaling $200.0 million. Thebasis of €450.0 million ($498.0 million) and settle quarterly.

Interest Rate Swaps

There were no active designated or non-designated interest rate swap was settled upon the issuanceswaps as of an aggregate $1.2 billion principal amount of senior notes on March 7, 2016 for a cumulative after-tax loss of $7.0 million in OCI during the three months ended April 2, 2016.3, 2021 or December 31, 2020.

18
Perrigo Company plc - Item 1
Note 9

Foreign Currency DerivativesForwards


We enter into foreignForeign currency forward contracts both designated and non-designated, in order to manage the impactwere as follows (in millions):
Notional Amount
April 3,
2021		December 31,
2020
European Euro (EUR)$270.7 $312.6 
Israeli Shekel (ILS)74.1 94.4 
United States Dollar (USD)63.4 101.5 
Chinese Yuan (CNY)50.4 49.1 
British Pound (GBP)44.8 92.3 
Danish Krone (DKK)44.0 65.2 
Swedish Krona (SEK)30.1 41.2 
Canadian Dollar (CAD)27.8 36.8 
Polish Zloty (PLZ)18.3 21.8 
Mexican Peso (MPX)14.8 15.6 
Norwegian Krone (NOK)9.7 7.8 
Australian Dollar (AUD)9.1 11.3 
Romanian New Leu (RON)4.8 3.6 
Switzerland Franc (CHF)4.6 8.2 
Turkish Lira (TRY)3.7 4.0 
Other2.4 2.3 
Total$672.7 $867.7 

    The maximum term of foreignour forward currency exchange fluctuations on expected future purchases and related payables denominated in a foreign currency, as well as to hedge the impact of foreign exchange fluctuations on expected future sales and related receivables denominated in a foreign currency. Both types of forward contracts have a maximum maturity date of 18is 60 months. The total notional amount for these contracts was $578.3 million and $533.5 million as of September 30, 2017 and December 31, 2016, respectively.


Effects of Derivatives on the Financial Statements

The below tables indicate the effects of all derivative instruments on the Condensed Consolidated Financial Statements. All amounts exclude income tax effects and are presented in millions.effects.


The balance sheet location and gross fair value of our outstanding derivative instruments were as follows:follows (in millions):
Asset Derivatives
Fair Value
Balance Sheet LocationApril 3,
2021		December 31,
2020
Designated derivatives:
Foreign currency forward contractsPrepaid expenses and other current assets$5.6 $5.0 
Foreign currency forward contractsOther non-current assets0.4 0.5 
Cross-currency swapOther non-current assets5.7 6.3 
Total designated derivatives$11.7 $11.8 
Non-designated derivatives:
Foreign currency forward contractsPrepaid expenses and other current assets$1.2 $4.3 

19
 Asset Derivatives
 Balance Sheet Location Fair Value
   September 30,
2017		 December 31,
2016
Designated derivatives:     
Foreign currency forward contractsOther current assets $4.6
 $3.1
Non-designated derivatives:     
Foreign currency forward contractsOther current assets $8.5
 $0.7
Perrigo Company plc - Item 1
Note 89



Liability Derivatives
Fair Value
Balance Sheet LocationApril 3,
2021		December 31,
2020
Designated derivatives:
Foreign currency forward contractsOther accrued liabilities$3.6 $5.5 
Non-designated derivatives:
Foreign currency forward contractsOther accrued liabilities$2.9 $2.4 

 Liability Derivatives
 Balance Sheet Location Fair Value
   September 30,
2017		 December 31,
2016
Designated derivatives:     
Foreign currency forward contractsAccrued liabilities $2.6
 $3.0
Non-designated derivatives:     
Foreign currency forward contractsAccrued liabilities $0.7
 $2.0
    The following tables summarize the effect of derivative instruments designated as hedging instruments in Accumulated Other Comprehensive Income ("AOCI") (in millions):

Three Months Ended
April 3, 2021
Instrument
Amount of Gain/(Loss) Recorded in OCI(1)
Classification of Gain/(Loss) Reclassified from AOCI into EarningsAmount of Gain/(Loss) Reclassified from AOCI into EarningsClassification of Gain/(Loss) Recognized into Earnings Related to Amounts Excluded from Effectiveness TestingAmount of Gain/(Loss) Recognized in Earnings on Derivatives Related to Amounts Excluded from Effectiveness Testing
Cash flow hedges:
Interest rate swap agreements$0 Interest expense, net$(0.5)Interest expense, net$0 
Foreign currency forward contracts1.7 Net sales(0.9)Net sales0 
Cost of sales(1.4)Cost of sales0.1 
Other (income) expense, net(0.1)
$1.7 $(2.8)$0 
Net investment hedges:
Cross-currency swap$(0.5)Interest expense, net$1.0 
The gains (losses) recorded in OCI for the effective portion
(1) Net loss of our designated cash flow hedges were as follows:
  Amount of Gain/(Loss) Recorded in OCI
(Effective Portion)
  Three Months Ended Nine Months Ended
Designated Cash Flow Hedges September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Interest rate swap agreements $—
 $—
 $—
 $(9.0)
Foreign currency forward contracts 1.1
 3.4
 6.3
 4.7
Total $1.1
 $3.4
 $6.3
 $(4.3)

The gains (losses) reclassified from AOCI into earnings for the effective portion of our designated cash flow hedges were as follows:
    Amount of Gain/(Loss) Reclassified from AOCI into Earnings
(Effective Portion)
    Three Months Ended Nine Months Ended
Designated Cash Flow Hedges Income Statement Location September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Treasury locks Interest expense, net $—
 $—
 $—
 $(0.1)
Interest rate swap agreements Interest expense, net (0.4) (0.6) (1.7) (1.7)
  Other (income) expense, net —
 —
 (5.9) —
Foreign currency forward contracts Net sales —
 (0.1) 0.9
 0.3
  Cost of sales 1.8
 0.9
 3.5
 1.8
  Interest expense, net (0.7) (0.4) (1.8) (1.3)
  Other (income) expense, net (1.2) (1.2) (1.7) 0.7
Total   $(0.5) $(1.4) $(6.7) $(0.3)

The net of tax amount$13.4 million is expected to be reclassified fromout of AOCI into earnings during the next 12 months is a $2.8 million gain.months.


20
Perrigo Company plc - Item 1
Note 89



Three Months Ended
March 28, 2020
InstrumentAmount of Gain/(Loss) Recorded in OCIClassification of Gain/(Loss) Reclassified from AOCI into EarningsAmount of Gain/(Loss) Reclassified from AOCI into EarningsClassification of Gain/(Loss) Recognized into Earnings Related to Amounts Excluded from Effectiveness TestingAmount of Gain/(Loss) Recognized in Earnings on Derivatives Related to Amounts Excluded from Effectiveness Testing
Cash flow hedges:
Interest rate swap agreements$0 Interest expense, net$(0.5)Interest expense, net$0 
Foreign currency forward contracts9.3 Net sales(0.4)Net sales0 
Cost of sales(1.0)Cost of sales0.4 
$9.3 $(1.9)$0.4 
Net investment hedges:
Cross-currency swap$(15.0)Interest expense, net$2.8 
The gains (losses)amounts of (income)/expense recognized againstin earnings for the ineffective portion of our designated cash flow hedges were as follows:
    Amount of Gain/(Loss) Recognized against Earnings
(Ineffective Portion)
    Three Months Ended Nine Months Ended
Designated Cash Flow Hedges 
Income Statement
Location
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Interest rate swap agreements Other (income) expense, net $—
 $—
 $—
 $(0.1)
Foreign currency forward contracts Net sales 0.2
 —
 0.1
 0.1
  Cost of sales 0.1
 —
 0.1
 —
  Other (income) expense, net —
 —
 1.0
 0.6
Total   $0.3
 $—
 $1.2
 $0.6

The effects ofrelated to our non-designated derivatives on the Condensed Consolidated Statements of Operations were as follows:follows (in millions):
Three Months Ended
Non-Designated DerivativesIncome Statement
Location		April 3,
2021		March 28,
2020
Foreign currency forward contractsOther (income) expense, net$(4.8)$6.2 
Interest expense, net1.2 0.9 
$(3.6)$7.1 
    Amount of Gain/(Loss) Recognized against Earnings
    Three Months Ended Nine Months Ended
Non-Designated Derivatives Income Statement Location September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Foreign currency forward contracts Other (income) expense, net $10.1
 $(0.2) $(3.8) $(8.7)
  Interest expense, net (1.8) (1.0) (2.9) (1.5)
Total   $8.3
 $(1.2) $(6.7) $(10.2)


NOTE 9 – ASSETS HELD FOR SALE

Our India API business was classified as held-for-sale beginning as    The classification and amount of December 31, 2015. We recorded an impairment charge totaling $6.3 million during the year ended December 31, 2016 after determining the carrying value of the India API business exceeded itsgain/(loss) recognized in earnings on fair value less the cost to sell. The India API business is reported in our Other segment. On April 6, 2017, we completed the sale of our India API business (refer to Note 2).and hedging relationships were as follows (in millions):

During the three months ended October 1, 2016, management committed to a plan to sell certain fixed assets associated with our animal health pet treats plant. Such assets were classified as held-for-sale beginning at October 1, 2016. On February 1, 2017, we completed the sale of our animal health pet treats plant fixed assets (refer to Note 2). We determined that the carrying value of the fixed assets associated with our animal health pet treats plant exceeded the fair value less the cost to sell. We recorded impairment charges totaling $3.7 million during the year ended December 31, 2016. The assets associated with our animal health pet treats plant are reported in our CHCA segment.

During the three months ended September 30, 2017, management committed to a plan to sell our Israel API business. The business was classified as held-for-sale beginning at September 30, 2017. We determined that the carrying value of the Israel API business exceeded its fair value less the cost to sell. We recorded impairment charges totaling $3.3 million during the three months ended September 30, 2017. The Israel API business is reported in our Other segment.

Three Months Ended
April 3, 2021
Net SalesCost of SalesInterest Expense, netOther (Income) Expense, net
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded$1,010.0 $641.6 $32.0 $2.4 
The effects of cash flow hedging:
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$(0.9)$(1.4)$0 $0 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$0 $0.1 $0 $(0.1)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$0 $0 $(0.5)$0 
21
Perrigo Company plc - Item 1
Note 9






Three Months Ended
March 28, 2020
Net SalesCost of SalesInterest Expense, netOther (Income) Expense, net
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded$1,083.3 $689.6 $28.9 $1.7 
The effects of cash flow hedging:
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$(0.4)$(1.0)$0 $0 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$0 $0.4 $0 $0 
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$0 $0 $(0.5)$0 

NOTE 10 – LEASES

The assets held-for-sale are reported within Prepaid expenses and other currentbalance sheet locations of our lease assets and liabilities held-for-sale are reported in Accrued liabilities. The amounts consist of the followingwere as follows (in millions):
AssetsBalance Sheet LocationApril 3,
2021		December 31,
2020
OperatingOperating lease assets$149.7 $154.7 
FinanceOther non-current assets32.2 29.8 
Total$181.9 $184.5 

LiabilitiesBalance Sheet LocationApril 3,
2021		December 31,
2020
Current
OperatingOther accrued liabilities$27.1 $28.3 
FinanceCurrent indebtedness5.2 6.7 
Non-Current
OperatingOther non-current liabilities128.2 132.5 
FinanceLong-term debt, less current portion24.3 20.2 
Total$184.8 $187.7 
    The below table shows our lease assets and liabilities by reporting segment (in millions):
AssetsLiabilities
OperatingFinancingOperatingFinancing
April 3,
2021		December 31,
2020		April 3,
2021		December 31,
2020		April 3,
2021		December 31,
2020		April 3,
2021		December 31,
2020
CSCA$74.2 $75.9 $16.3 $16.7 $73.9 $75.8 $16.7 $17.0 
CSCI32.9 34.4 8.7 5.9 33.7 35.2 5.5 2.5 
Unallocated42.6 44.4 7.2 7.2 47.7 49.8 7.3 7.4 
Total$149.7 $154.7 $32.2 $29.8 $155.3 $160.8 $29.5 $26.9 

22
Perrigo Company plc - Item 1
Note 10


 September 30,
2017		 December 31,
2016
 Other CHCA Other
Assets held for sale     
Current assets$44.0
 $—
 $5.1
Goodwill32.6
 —
 5.5
Intangible assets5.5
 —
 —
Property, plant and equipment45.9
 13.5
 33.2
Other assets3.1
 —
 3.8
Less: impairment reserves(3.3) (3.7) (35.3)
Total assets held for sale$127.8
 $9.8
 $12.3
Liabilities held for sale     
Current liabilities$7.6
 $0.1
 $1.9
Other liabilities25.1
 —
 1.9
Total liabilities held for sale$32.7
 $0.1
 $3.8
    Lease expense was as follows (in millions):

Three Months Ended
April 3,
2021		March 28,
2020
Operating leases(1)
$9.8 $9.6 
Finance leases
Amortization$1.5 $1.0 
Interest0.2 0.2 
Total finance leases$1.7 $1.2 

    (1) Includes short-term leases and variable lease costs, which are immaterial.
The annual future maturities of our leases as of April 3, 2021 are as follows (in millions):

Operating LeasesFinance LeasesTotal
2021$24.0 $4.5 $28.5 
202226.2 5.5 31.7 
202318.9 3.8 22.7 
202415.9 2.3 18.2 
202513.9 2.2 16.1 
After 202580.5 15.8 96.3 
Total lease payments179.4 34.1 213.5 
Less: Interest24.1 4.6 28.7 
Present value of lease liabilities$155.3 $29.5 $184.8 

Our weighted average lease terms and discount rates are as follows:
April 3,
2021		March 28,
2020
Weighted-average remaining lease term (in years)
Operating leases10.525.98
Finance leases9.3110.10
Weighted-average discount rate
Operating leases2.97 %3.97 %
Finance leases2.76 %3.42 %

Our lease cash flow classifications are as follows (in millions):
Three Months Ended
April 3,
2021		March 28,
2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$10.0 $8.9 
Operating cash flows for finance leases$0.2 $0.2 
Financing cash flows for finance leases$1.3 $0.9 
Leased assets obtained in exchange for new finance lease liabilities$4.2 $1.5 
Leased assets obtained in exchange for new operating lease liabilities$3.9 $4.9 

23
Perrigo Company plc - Item 1
Note 11

NOTE 1011 – INDEBTEDNESS


Total borrowings outstanding are summarized as follows (in millions):
April 3,
2021		December 31,
2020
Term loan
2019 Term loan due August 15, 2022$600.0 $600.0 
Notes and Bonds
CouponDue
5.105%
July 28, 2023(1)
158.8 164.9 
4.000%November 15, 2023215.6 215.6 
3.900%December 15, 2024700.0 700.0 
4.375%March 15, 2026700.0 700.0 
3.150%June 15, 2030750.0 750.0 
5.300%November 15, 204390.5 90.5 
4.900%December 15, 2044303.9 303.9 
Total notes and bonds2,918.8 2,924.9 
Other financing60.1 57.4 
Unamortized premium (discount), net(1.5)(0.3)
Deferred financing fees(16.3)(17.1)
Total borrowings outstanding3,561.1 3,564.9 
Current indebtedness(35.8)(37.3)
Total long-term debt less current portion$3,525.3 $3,527.6 
     September 30,
2017		 December 31,
2016
Term loans     
 2014 term loan due December 5, 2019
(1) 
 $428.3
 $420.7
Notes and Bonds     
 CouponDue     
 4.500%May 23, 2017
(1)(2) 
 —
 189.3
 5.125%December 12, 2017
(1)(2) 
 354.5
 315.6
 2.300%November 8, 2018
 —
 600.0
 5.000%May 23, 2019
(1)(2) 
 141.8
 126.2
 3.500%March 15, 2021
 280.4
 500.0
 3.500%December 15, 2021
 309.6
 500.0
 5.105%July 19, 2023
(1)(2) 
 159.5
 142.0
 4.000%November 15, 2023
 215.6
 800.0
 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
 400.0
 4.900%December 15, 2044
 303.9
 400.0
 Total notes and bonds  3,255.8
 5,373.1
Other financing2.9
 3.6
Unamortized premium (discount), net24.8
 33.0
Deferred financing fees(19.0) (33.1)
Total borrowings outstanding3,692.8
 5,797.3
 Current indebtedness(417.1) (572.8)
Total long-term debt less current portion$3,275.7
 $5,224.5


(1)Debt denominated in Euros    (1) Debt denominated in euros subject to fluctuations in the euro-to-U.S. dollar exchange rate.
(2)Debt assumed from Omega.

Perrigo Company plc - Item 1
Note 10


During the three months ended April 1, 2017, we entered into amendments to the 2014 Revolver (as defined below) and the 2014 term loan to modify provisions of such agreements necessary as a result of the correction in accounting related to the Tysabri® financial asset, as well as waivers of any default or event of default that may have arisen from any restatement of or deficiencies in our financial statements for the periods specified in such amendments and waivers.    We are in compliance with all covenants under our debt agreements as of September 30, 2017.April 3, 2021.


Revolving Credit Agreements


We have    On March 8, 2018, we entered into a $1.0 billion revolving credit agreement with a borrowing capacity of $1.0 billionmaturing on March 8, 2023 (the "2014"2018 Revolver"). There were no0 borrowings outstanding under the 20142018 Revolver as of September 30, 2017 andApril 3, 2021 or December 31, 2016.2020.


Other Financing


Overdraft Facilities

We have overdraft facilities available that we use to support our cash management operations. We report any balances outstanding in the above table under "Other financing". There were no balances0 borrowings outstanding under the facilities at September 30, 2017 andas of April 3, 2021 or December 31, 2016.2020.

Debt Repayments    On June 17, 2020, we incurred debt of $34.3 million related to our equity method investment in Kazmira pursuant to 2 Promissory Notes, with $3.7 million, $5.8 million and Related Extinguishment

During$24.8 million to be settled in November 2020, May 2021 and November 2021, respectively. On December 8, 2020, we repaid the nine months endedSeptember 30, 2017, we reduced our outstanding debt through a variety of transactions (in millions):
Date Series Transaction Type Principal Retired
April 1, 2017 2014 term loan due December 5, 2019 Scheduled quarterly payment $13.3
July 1, 2017 2014 term loan due December 5, 2019 Scheduled quarterly payment 14.3
September 30, 2017 2014 term loan due December 5, 2019 Scheduled quarterly payment 14.8
May 8, 2017 $600.0 2.300% senior notes due 2018 Early redemption 600.0
May 23, 2017 €180.0 4.500% retail bonds due 2017 Scheduled maturity 201.3
June 15, 2017 $500.0 3.500% senior notes due 2021 Tender offer 190.4
June 15, 2017 $500.0 3.500% senior notes due 2021 Tender offer 219.6
June 15, 2017 $800.0 4.000% senior notes due 2023 Tender offer 584.4
June 15, 2017 $400.0 5.300% senior notes due 2043 Tender offer 309.5
June 15, 2017 $400.0 4.900% senior notes due 2044 Tender offer 96.1
      $2,243.7

As a result$3.7 million balance due on the November 2020 portion of the ofPromissory Notes.

    We have financing leases that are reported in the early redemption and tender offer transactions discussed above we recorded a loss of $135.2 million during the three months ended July 1, 2017 in Loss on extinguishment of debt (in millions):table under "Other financing" (refer to Note 10).


24
Premium on debt repayment $116.1
Transaction costs 3.8
Write-off of deferred financing fees 10.6
Write-off of remaining discount on bond 4.7
Total loss on extinguishment of debt $135.2

Perrigo Company plc - Item 1
Note 1112



NOTE 1112 – EARNINGS PER SHARE AND SHAREHOLDERS' EQUITY


Earnings per Share


A reconciliation of the numerators and denominators used in the basic and diluted earnings per share ("EPS") calculation is as follows (in millions):
 Three Months Ended
 April 3,
2021		March 28,
2020
Numerator:
Income from continuing operations$2.8 $57.6 
Income from discontinued operations, net of tax35.3 48.8 
Net income$38.1 $106.4 
Denominator:
Weighted average shares outstanding for basic EPS133.2 136.2 
Dilutive effect of share-based awards1.4 1.1 
Weighted average shares outstanding for diluted EPS134.6 137.3 
Anti-dilutive share-based awards excluded from computation of diluted EPS1.8 1.7 
 Three Months Ended Nine Months Ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Numerator:       
Net income (loss)$44.5
 $(1,590.2) $46.4
 $(2,653.7)
        
Denominator:       
Weighted average shares outstanding for basic EPS141.3
 143.3
 142.5
 143.2
Dilutive effect of share-based awards*0.4
 —
 0.3
 —
Weighted average shares outstanding for diluted EPS141.7
 143.3
 142.8
 143.2
        
Anti-dilutive share-based awards excluded from
     computation of diluted EPS*
1.0
 —
 0.8
 —

* In the period of a net loss, diluted shares equal basic shares.


Shareholders' Equity

Shares

We issued shares related to the exercise and vesting of share-based compensation as follows:
Three Months Ended Nine Months Ended
September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
99,800
 185,000
 146,100
 283,000


Share Repurchases


On    In October 22, 2015,2018, our Board of Directors authorized up to $1.0 billion of share repurchases with no expiration date, subject to the Board of Directors approved aDirectors’ approval of the pricing parameters and amount that may be repurchased under each specific share repurchase plan of up to $2.0 billionprogram (the "2015"2018 Authorization"). During the three and nine months ended September 30, 2017, we repurchased 1.9 million and 2.7 million ordinary shares at an average repurchase price of $71.73 and $71.72 per share, for a total of $133.3 million and $191.5 million, respectively. As of September 30, 2017, there was $1.3 billion still available to be repurchased through December 31, 2018 under the 2015 Authorization. We did not0t repurchase any shares under the share repurchase plan during the ninethree months ended October 1, 2016.April 3, 2021 and March 28, 2020.
Perrigo Company plc - Item 1
Note 12


NOTE 1213 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)


Changes in our AOCI balances, net of tax were as follows (in millions):
Fair Value of Derivative Financial Instruments, net of taxForeign Currency Translation AdjustmentsPost-Retirement and Pension Liability Adjustments, net of taxTotal AOCI
Balance at December 31, 2020$(0.7)$407.3 $(11.6)$395.0 
OCI before reclassifications(8.8)(111.6)(0.7)(121.1)
Amounts reclassified from AOCI2.8 0 0 2.8 
Other comprehensive income (loss)$(6.0)$(111.6)$(0.7)$(118.3)
Balance at April 3, 2021$(6.7)$295.7 $(12.3)$276.7 
25
 Foreign currency translation adjustments Fair value of derivative financial instruments, net of tax Fair value of investment securities, net of tax Post-retirement and pension liability adjustments, net of tax Total AOCI
Balance at December 31, 2016$(67.9) $(19.5) $15.1
 $(9.5) $(81.8)
OCI before reclassifications289.9
 4.4
 (22.8) (1.2) 270.3
Amounts reclassified from AOCI—
 4.3
 (1.6) —
 2.7
Other comprehensive income (loss)289.9
 8.7
 (24.4) (1.2) 273.0
Balance at September 30, 2017$222.0
 $(10.8) $(9.3) $(10.7) $191.2
Perrigo Company plc - Item 1
Note 14

NOTE 1314 – INCOME TAXES


The effective tax rates were as follows:
Three Months Ended
April 3,
2021		March 28,
2020
84.0 %(0.4)%
Three Months Ended Nine Months Ended
September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
65.5% 16.4% 68.7% 17.2%


The effective tax rate for the ninethree months ended September 30, 2017 was negatively impacted by non-deductible fees relatedApril 3, 2021 increased compared to our debt cancellation, discrete tax items, and additional valuation allowances recorded against deferred tax assets.

Our tax rate is subject to adjustment over the balance of the fiscal yearprior period primarily due to among other things: the jurisdictions in which our profits are determinedprior period tax benefits for reductions to be earnedthe U.S. valuation allowance and taxed; changesthe U.S. Coronavirus Aid, Relief and Economic Security ("CARES") Act, enacted in the valuationfirst quarter of our deferred2020, plus the current period net tax assetsexpense on intra-entity transfers of intellectual property.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes." It removes certain exceptions to the general principles in ASC Topic 740 and liabilities; adjustments to estimated taxes upon finalizationimproves consistent application of various tax returns; adjustments based on differing interpretationsand simplifies GAAP for other areas of the applicable transfer pricing standards; changes in available tax credits, grantsASC Topic 740 by clarifying and other incentives; changes in stock-based compensation expense; changes in tax laws or the interpretation of such tax laws (for example, proposalsamending existing guidance. This guidance was effective for fundamental U.S. international tax reform); changes in U.S. GAAP;interim and expiration of or the inability to renew tax rulings or tax holiday incentives.

The total liability for uncertain tax positions was $454.9 million and $398.0 millionannual reporting periods beginning after December 15, 2020. We adopted this guidance as of September 30, 2017 and December 31, 2016, respectively, before considering the federal tax benefit of certain state and local items.

We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. The total amount accrued for interest and penalties in the liability for uncertain tax positions was $79.0 million and $63.5 million as of September 30, 2017 and December 31, 2016, respectively.

We file income tax returns in numerous jurisdictions and are therefore subject to audits by tax authorities. Our primary income tax jurisdictions are Ireland, the United States, Israel, Belgium, France,January 1, 2021, and the United Kingdom.impact on our Consolidated Financial Statements was immaterial.

On August 15, 2017, we filed a complaint in the United States District Court for the Western District of Michigan to recover $163.6 million of Federal income tax, penalties, and interest assessed and collected by the Internal Revenue Service (“IRS”Audits of Perrigo Company, a U.S. Subsidiary

    Perrigo Company, our U.S. subsidiary ("Perrigo U.S."), plus statutory interest thereon from the datesis engaged in a series of payment, for the fiscal years ended June 27, 2009, June 26, 2010, June 25, 2011, and June 30, 2012 (the “2009 tax year,” “2010 tax year,” “2011 tax year,” and “2012 tax year,” respectively). The IRS audits of those years culminateddisputes in the issuances of two statutory notices of deficiency: (1) on August 27, 2014 for the 2009 and 2010 tax years and (2) on April 20, 2017 for the 2011 and 2012 tax years. The statutory notices of deficiency both included un-agreed income adjustments related principallyU.S. relating primarily to transfer pricing adjustments regardingincluding income in connection with the purchase, distribution, and sale of store-brand OTC pharmaceutical products in the United States.States, including the heartburn medication omeprazole. On August 27, 2014, we received a statutory notice of deficiency from the IRS relating to our fiscal tax years ended June 27, 2009, and June 26, 2010 (the “2009 tax year” and “2010 tax year”, respectively). On April 20, 2017, we received a second statutory notice of deficiency from the IRS for the fiscal tax years ended June 25, 2011 and June 30, 2012 (the “2011 tax year” and “2012 tax year”, respectively). Specifically, both statutory notices proposed adjustments related to the offshore reporting of profits on sales of omeprazole in the United States resulting from the assignment of an omeprazole distribution contract to an affiliate. In addition to the transfer pricing adjustments, which applied to all four tax years, the statutory notice of deficiency for the 2011 and 2012 tax years included adjustments for the capitalization and amortization of certain expenses that were deducted when paid or incurred in defending
Perrigo Company plc - Item 1
Note 13


against certain patent infringement lawsuits. lawsuits related to ANDAs.

We fullydo not agree with the audit adjustments proposed by the IRS in either of the notices of deficiency. We paid the assessed amounts of tax, interest, and penalties set forth in the statutory notices and timely filed timely claims for refund on June 11, 2015 for the 2009 and 2010 tax years, and on June 7, 2017, for the 2009-20102011 and 2012 tax years and 2011-2012 tax years, respectively. Ouryears. On August 15, 2017, following disallowance of such refund claims, for refund were disallowed by certified letters dated August 18, 2015 and July 11, 2017,we timely filed a complaint in the United States District Court for the 2009-2010 tax years and 2011-2012 tax years, respectively. The complaint was timely, based upon the refund claim denials, and seeksWestern District of Michigan seeking refunds of tax, interest, and penalties of $37.2$27.5 million for the 2009 tax year, $61.5$41.8 million for the 2010 tax year, $40.2$40.1 million for the 2011 tax year, and $24.7 million for the 2012 tax year.year, for a total of $134.1 million, plus statutory interest thereon from the dates of payment. The amounts sought in the complaint for the 2009 and 2010 tax years were recorded as deferred charges in Other non-current assets on our balance sheet during the three months ended March 28, 2015, and the amounts sought in the complaint for the 2011 and 2012 tax years were recorded as deferred charges in Other non-current assets on our balance sheet during the three months ended July 1, 2017.


The previously scheduled trial date has been continued to May 25, 2021 for the refund case. The total amount of cumulative deferred charge that we are seeking to receive in this litigation is approximately $111.6 million, which reflects the impact of conceding that Perrigo U.S. should have received a 5.24% royalty on all omeprazole sales. That concession was previously paid and is the subject of the above refund claims. The issues outlined in the statutory notices of deficiency described above are continuing, and the IRS will likely carry forward the adjustments set forth therein as long as the drug is sold, in the case of the omeprazole issue, and for all post-2012 Paragraph IV filings that trigger patent infringement suits, in the case of the ANDA issue. On April 30, 2021, we filed a Notice of New Authority in our refund case in the Western District of Michigan alerting the court to a Tax Court decision in Mylan v. Comm'r that ruled in favor of the taxpayer on the identical ANDA issues we have before the court.
26
Perrigo Company plc - Item 1
Note 14


On January 13, 2021, the IRS issued a 30-day letter with respect to its audit of our fiscal tax years ended June 29, 2013 (the "2013 tax year"), June 28, 2014 (the "2014 tax year"), and June 27, 2015 (the "2015 tax year" and together with the 2013 tax year and the 2014 tax year, the "2013-2015 tax years"). The IRS letter proposed, among other modifications, carryforwards of the transfer pricing adjustments regarding our profits from the distribution of omeprazole in the aggregate amount of $141.6 million and ANDA adjustments in the aggregate amount of $21.9 million. The 30-day letter also set forth adjustments described in the next two paragraphs. We timely filed a protest to the 30-day letter for those additional adjustments, but noting that due to the pending litigation described above, IRS Appeals will not consider the merits of the omeprazole or ANDA matters. We believe that we should prevail on the merits on both carryforward issues and have reserved for taxes and interest payable on the 5.24% deemed royalty on omeprazole through the tax year ended December 22, 2016,31, 2018. Beginning with the tax year ended December 31, 2019, we began reporting income commensurate with the 5.24% deemed royalty. We have not reserved for the ANDA-related issue described above. While we believe we should prevail on the merits of this case, the outcome remains uncertain. If our litigation position on the omeprazole issue is not sustained, the outcome for the 2009–2012 tax years could range from a reduction in the refund amount to denial of any refund. In addition, we expect that the outcome of the refund litigation could effectively bind future tax years. In that event, an adverse ruling on the omeprazole issue could have a material impact on subsequent periods, with additional tax liability in the range of $24.0 million to $112.0 million, not including interest and any applicable penalties.

The 30-day letter for the 2013-2015 tax years also proposed to reduce Perrigo U.S.'s deductible interest expense for the 2014 tax year and the 2015 tax year on $7.5 billion in debts owed by it to Perrigo Company plc. The debts were incurred in connection with the Elan merger transaction in 2013. On May 7, 2020, the IRS issued a NOPA capping the interest rate on the debts for U.S. federal tax purposes at 130.0% of the Applicable Federal Rate ("AFR") (a blended rate reduction of 4.0% per annum), on the stated ground that the loans were not negotiated on an arms’-length basis. The NOPA proposes a reduction in gross interest expense of approximately $414.7 million for tax years 2014 and 2015. On January 13, 2021, we received a noticeRevenue Agent Report ("RAR"), together with the 30-day letter, requiring our filing of a written Protest to request IRS Appeals consideration. The Protest was filed with the IRS on February 26, 2021. On May 3, 2021, the IRS notified us that it will no longer pursue the 130% of AFR position reflected in its NOPA due to a change in IRS policy. The IRS will provide a new proposed adjustment in its rebuttal to our Protest, which we have not yet received. Because the IRS' revised adjustment is currently unknown and cannot be quantified, we are unable to determine the amount of gross interest expense that the IRS proposes to disallow, and we cannot estimate any increase in tax expense attributable to any such disallowance for the period under audit. In addition, we expect the IRS to seek similar revised adjustments for the tax years ended December 31, 2015 through December 31, 2018 with potential section 163(j) carryover impacts beyond December 2018. We cannot determine the amount, if any, of the estimated increase in tax expense attributable to any such adjustments. No further interest adjustments are expected beyond this period. We strongly disagree with the IRS position and we will pursue all available administrative and judicial remedies necessary. At this stage, we are unable to estimate any additional liability associated with this matter.

In addition, the 30-day letter for the 2013-2015 tax years expanded on a NOPA issued on December 11, 2019 and proposed to disallow adjustments to gross sales income on the sale of prescription products to wholesalers for accrued wholesale customer pipeline chargebacks where the prescription products were not re-sold by such wholesalers to covered retailers by the end of the tax year for the 2013-2015 tax years. The IRS' NOPA asserts that the reduction of gross sales income of such chargebacks is an impermissible method of accounting. The IRS proposed a change in accounting method that would defer the reduction in gross sales income until the year the prescription products were re-sold to covered retailers. The NOPA proposes an increase in sales revenue of approximately $99.5 million for the 2013-2015 tax years. We filed a protest on February 26, 2021 to request IRS Appeals consideration. If the IRS were to prevail in its proposed adjustment, we estimate a payment of approximately $18.0 million, excluding interest and penalties for the 2013-2015 tax years. In addition, we expect the IRS to seek similar adjustments for future years. If those future adjustments were to be sustained, based on preliminary calculations and subject to further analysis, our current best estimate is a payment that will not exceed $7.0 million through tax year ended December 31, 2020, excluding interest and penalties. We have fully reserved for this issue. We strongly disagree with the IRS’s proposed adjustment and will pursue all available administrative and judicial remedies necessary.

27
Perrigo Company plc - Item 1
Note 14

Internal Revenue Service Audit of Athena Neurosciences, Inc., a U.S. Subsidiary    

    On April 26, 2019, we received a revised NOPA from the IRS regarding transfer pricing positions related to the IRS audit of Athena Neurosciences, Inc. (“Athena”("Athena"), a subsidiary of Elan acquired in 1996, for the years ended December 31, 2011, December 31, 2012, and December 31, 2013. Perrigo acquiredThe NOPA carries forward the IRS's theory from its 2017 draft NOPA that when Elan took over the future funding of Athena's in-process research and development after acquiring Athena in 1996, Elan should have paid a substantially higher royalty rate for the right to exploit Athena’s intellectual property, rather than rates based on transfer pricing documentation prepared by Elan's external tax advisors. The NOPA proposes a payment of $843.0 million, which represents additional tax and a 40.0% penalty. This amount excludes consideration of offsetting tax attributes and any potential interest that may be imposed. We strongly disagree with the IRS position. On December 2013. This proposed adjustment relates to22, 2016, we also received a NOPA for these years denying the deductibility of litigation costs.settlement costs related to illegal marketing of Zonegran in the United States raised in a Qui Tam action. We strongly disagree with the IRS’sIRS' position assertedon this issue as well. Because we believe that any concession on these issues in Appeals would be contrary to our evaluation of the noticeissues, we pursued our remedies under the U.S. - Ireland Income Tax Treaty to alleviate double taxation. On April 14, 2020, we filed a request for Competent Authority Assistance with the IRS on the royalty issue, and it was accepted. On October 20, 2020, we amended our request for Competent Authority Assistance to include the Zonegran issue and this amendment was also accepted. On May 6, 2021, we had our opening conference with the IRS and discussed our submission, which continues to be reviewed by the IRS. Our opening conference with Irish Revenue is scheduled for July 23, 2021.

No payment of proposed adjustmentthe additional amounts is required until these two matters are resolved with finality under the treaty, or any additional administrative or judicial process if treaty negotiations are unsuccessful.
Irish Revenue Audit of Fiscal Years Ended December 31, 2012 and intend to contest it.December 31, 2013


On July 11, 2017,October 30, 2018, we received a draft noticean audit findings letter from the Irish Office of proposed adjustment associated with transfer pricing positionsthe Revenue Commissioners (“Irish Revenue”) for the IRS audit of Athena for thetax years ended December 31, 2011, December 31, 2012 and December 31, 2013. Athena wasThe audit findings letter relates to the originatortax treatment of the patents associated2013 sale of the Tysabri® intellectual property and related assets to Biogen Idec by Elan Pharma. The consideration paid by Biogen Idec to Elan Pharma took the form of an upfront payment and future contingent royalty payments. Elan Pharma recognized such receipts as trading income in its tax returns filed with Irish Revenue, consistent with Elan Pharma's historical practice relating to its active management of intellectual property rights.

In its audit findings letter, Irish Revenue proposed to charge Elan Pharma tax on the net chargeable gain realized by Elan Pharma on the Tysabri®transaction in 2013 at a rate of 33%, rather than the 12.5% tax rate applied to trading income. On November 29, 2018,Irish Revenue issued a Notice of Amended Assessment (“NoA”) for the tax year ended December 31, 2013, in the amount of €1,643 million, and claiming tax payable in the amount of €1,636 million, not including any interest or applicable penalties.

    We strongly disagree with this assessment and believe that the NoA is without merit and incorrect as a matter of law. We will pursue all available administrative and judicial avenues as may be necessary or appropriate. Accordingly, we filed an appeal of the NoA on December 27, 2018 with the Irish Tax Appeals Commission ("TAC") which is the statutory body charged with considering whether the NoA is properly founded as a matter of Irish tax law. Separately, we were also granted leave by the Irish High Court on February 25, 2019 to seek judicial review of the issuance of the NoA by Irish Revenue.

    On November 4, 2020, the High Court ruled that the Irish Revenue's decision to issue the NoA did not violate Elan Pharma's constitutional rights and legitimate expectations as a taxpayer. Importantly, the Irish High Court did not rule on the merits of the NoA under Irish tax law. The TAC will now consider whether the NoA is correct as a matter of Irish tax law. The tax appeal is scheduled to be heard in November 2021.

We strongly believe that Elan Pharma’s tax position is correct and would ultimately be confirmed through judicial process. However, in light of the risks and delays inherent in any litigation, representatives of Perrigo met with representatives of Irish Revenue on March 18, 2021 and April 14, 2021, to explore whether there may be a path forward toward resolving the dispute. On April 26, 2021, Perrigo, through its tax adviser, made a without prejudice written offer of settlement to Irish Revenue detailing a possible framework for such a resolution, which applied an alternative basis of taxation than the respective positions taken by Irish Revenue in the NoA and by Elan
28
Perrigo Company plc - Item 1
Note 14

Pharma in its tax returns. On May 11, 2021, a representative of Irish Revenue verbally indicated to Perrigo's tax adviser that the written settlement offer would not be accepted as presented and that a formal response would be transmitted in due course. Perrigo will review Irish Revenue's formal response to Perrigo's offer when received and expects further discussions and correspondence with Irish Revenue prior to the acquisition of Athena byTAC hearing in November.

    There can be no assurances that any settlement is possible on terms acceptable to Perrigo. Unless and until a final settlement is reached, Elan in 1996. The amount of adjustmentsPharma will vigorously pursue its tax appeal before the TAC, concurrently with any settlement discussions that may occur. No payment of any additional tax will be assertedrequired unless and until required by the IRS in thea settlement or other final noticedetermination.

Israel Tax Authority Audit of proposed adjustment cannot be quantified at this time; however, based on the draft notice received, the amount to be assessed may be material. We disagree with the IRS’s position as asserted in the draft notice of proposed adjustment and intend to contest it.

We have ongoing audits in multiple other jurisdictions the resolution of which remains uncertain. These jurisdictions include, but are not limited to, the United States, Israel and France. In addition to the matters discussed above, the IRS is currently auditing our fiscal years ended June 29, 2013, June 28, 2014, andFiscal Year Ended June 27, 2015. 2015 and Calendar Years Ended December 31, 2015 through December 31, 2017

The Israel Tax Authority is currently auditingaudited our fiscal years ended June 29, 2013income tax returns for the 2015 tax year, and June 28, 2014. The French Tax Authority is currently auditing thecalendar years ended December 2014,31, 2015, December 2015,31, 2016 and December 2016.31, 2017. On December 29, 2020, we received a Stage A assessment from the Israeli Tax Authority for the tax years ended December 31, 2015 through December 31, 2017 in the amount of $63.8 million relating to attribution of intangible income to Israel, income qualifying for a lower preferential rate of tax, exemption from capital gains tax, and deduction of certain settlement payments. Our protest was timely filed on March 11, 2021 to move the matter to Stage B of the assessment process. We strongly disagree with the assessment and will pursue all available administrative and judicial remedies necessary.

    Although we believe that our tax estimates are reasonable and that we prepare our tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audit and any related litigation could be materially different from our estimates or from our historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments.
    
    Based on the final resolution of tax examinations, judicial or administrative proceedings, changes in facts or law, expirations of statute of limitations in specific jurisdictions or other resolutions of, or changes in, tax positions - one or more of which may occur within the next twelve months - it is reasonably possible that unrecognized tax benefits for certain tax positions taken on previously filed tax returns may change materially from those recorded as of April 3, 2021. However, we are not able to estimate a reasonably possible range of how these events may impact our unrecognized tax benefits in the next twelve months.
NOTE 1415 – COMMITMENTS AND CONTINGENCIES


In view of the inherent difficulties of predicting the outcome of various types of legal proceedings, we cannot determine the ultimate resolution of the matters described below. We establish reserves for litigation and regulatory matters when losses associated with the claims become probable and the amounts can be reasonably estimated. The actual costs of resolving legal matters may be substantially higher or lower than the amounts reserved for those matters. For matters where the likelihood or extent of a loss is not probable or cannot be reasonably estimated as of September 30, 2017,April 3, 2021, we have not recorded a loss reserve. If certain of these matters are determined against us, there could be a material adverse effect on our financial condition, results of operations, or cash flows. We currently believe we have valid defenses to the claims in these lawsuits and intend to defend these lawsuits vigorously regardless of whether or not we have a loss reserve. Other than what is disclosed below, we do not expect the outcome of the litigation matters to which we are currently subject to have, individually or in the aggregate, to have a material adverse effect on our financial condition, results of operations, or cash flows.

Antitrust Violations
We have been named as a counterclaim co-defendant in the lawsuit Fera Pharmaceuticals, LLC v. Akorn, Inc., et al., in which Akorn, Inc. (“Akorn”) alleges tortious interference and antitrust violations against us and Fera Pharmaceuticals, LLC (“Fera”). This litigation arises from our acquisition of bacitracin ophthalmic ointment from Fera in 2013. Akorn asserts claims under Sections 1 and 2 of the Sherman Antitrust Act alleging that we and Fera conspired to monopolize, attempted to monopolize, and did unlawfully monopolize the market for sterile bacitracin ophthalmic ointment in the United States through the use of an exclusive agreement with a supplier of sterile bacitracin active pharmaceutical ingredient. The lawsuit is currently pending in the Southern District of New York. Trial was rescheduled from January 2018 to February 2018. Akorn seeks damages, injunctive relief, and attorney’s fees. Any award of antitrust damages would be subject to trebling under antitrust laws. An estimate of any possible loss cannot be determined at this time.
Perrigo Company plc - Item 1
Note 14



We believe the claims are without merit and intend to defend them vigorously. We have preserved our indemnification rights against Fera for potential liability, defense costs, and expenses incurred as a result of this litigation.


Price-Fixing Lawsuits

Perrigo is a defendant in several cases in the generic pricing multidistrict litigation MDL No. 2724 (United States District Court for Eastern District of Pennsylvania). This multidistrict litigation, which has many cases that do not include Perrigo, includes class action and opt-out cases for federal and state antitrust claims, as well as complaints filed by certain states alleging violations of state antitrust laws.

    On July 14, 2020, the court issued an order designating the following cases to proceed on a more expedited basis (as a bellwether) than the other cases in MDL No. 2724: (a) the May 2019 state case alleging an overarching
29
Perrigo Company plc - Item 1
Note 15

conspiracy involving more than 120 products (which does not name Perrigo a defendant) and (b) class actions alleging “single drug” conspiracies involving Clomipramine, Pravastatin, and Clobetasol. Perrigo is a defendant in the Clobetasol cases but not the others. On February 9, 2021, the court entered an order provisionally deciding to remove the May 2019 state case and the pravastatin class cases from the bellwether proceedings. On May 7, 2021, the Court ruled that the clobetasol end payer and direct purchaser class cases will remain part of the bellwether. The Court also ruled that the June 10, 2020 State Complaint against Perrigo and approximately 35 other manufacturers will move forward as a bellwether case. No schedule has been set for the bellwether cases.

Class Action Complaints

(a) Single Drug Conspiracy Class Actions

We have been named as a co-defendant with certain other generic pharmaceutical manufacturers in a number of casesclass actions alleging that we and other manufacturers of the same product engaged in anti-competitive behaviorsingle-product conspiracies to fix or raise the prices of certain drugs and/or allocate customers for those products starting, in some instances, as early as June 2013. The class actions were filed on behalf of putative classes of (a) direct purchasers, (b) end payors, and (c) indirect resellers. The products in question are Clobetasol gel, Desonide, and Econazole. TheseThe court denied motions to dismiss each of the complaints along withalleging “single drug” conspiracies involving Perrigo, and the cases are proceeding in discovery. As noted above, the Clobetasol cases have been designated to proceed on a more expedited schedule than the other cases. That schedule has not yet been set.

    (b) “Overarching Conspiracy” Class Actions

    The same 3 putative classes, including (a) direct purchasers, (b) end payors, and (c) indirect resellers, have filed 2 sets of class action complaints filed againstalleging that Perrigo and other companies alleging pricemanufacturers (and some individuals) entered into an “overarching conspiracy” that involved allocating customers, rigging bids and raising, maintaining, and fixing withprices for various products. Each class brings claims for violations of Sections 1 and 3 of the Sherman Antitrust Act as well as several state antitrust and consumer protection statutes.

    Filed in June 2018, and later amended in December 2018 (with respect to 15direct purchasers) and April 2019 (with respect to end payors and indirect resellers), the first set of “overarching conspiracy” class actions include allegations against Perrigo and approximately 27 other manufacturers involving 135 drugs have been consolidated for pretrial proceedings as partwith allegations dating back to March 2011. The allegations against Perrigo concern only 2 formulations (cream and ointment) of 1 of the products at issue, Nystatin. The court denied motions to dismiss the first set of “overarching conspiracy” class actions, and they are proceeding in discovery. NaN of these cases are included in the group of cases on a case captioned In re Generic Pharmaceuticals Pricing Antitrust Litigation, MDL No. 2724. Pursuantmore expedited schedule pursuant to the court’s schedule stagingJuly 14, 2020 order.

    In December 2019, both the end payor and indirect reseller class plaintiffs filed a second set of "overarching conspiracy” class actions against Perrigo, dozens of other manufacturers of generic prescription pharmaceuticals, and certain individuals dating back to July 2009 (end payors) or January 2010 (indirect resellers). The direct purchaser plaintiffs filed their second round overarching conspiracy complaint in February 2020 with claims dating back to July 2009. On March 11, 2020, the indirect reseller plaintiffs filed a motion to amend their second round December 2019 complaint, and that motion was granted. On September 4, 2020, and December 15, 2020, the end payor plaintiffs amended their second round complaint. On October 21, 2020, the direct purchaser plaintiffs amended their second round complaint. On December 15, 2020, the indirect reseller plaintiffs filed another complaint adding allegations for additional drugs that mirror the other class plaintiffs’ claims.

    This second set of overarching complaints allege conspiracies relating to the sale of various casesproducts that are not at issue in phases, we havethe earlier-filed overarching conspiracy class actions, the majority of which Perrigo neither makes nor sells. The amended indirect reseller complaint alleges that Perrigo conspired in connection with its sales of Betamethasone Dipropionate lotion, Imiquimod cream, Desonide cream and ointment, and Hydrocortisone Valerate cream. The December 2020 indirect reseller complaint alleges that Perrigo conspired in connection with its sales of Adapalene, Ammonium Lactate, Bromocriptine Mesylate, Calcipotriene, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Methazolamide, Mometasone Furoate, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.The amended end payor complaint alleges that Perrigo conspired in connection with its sale of the following drugs: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fenofibrate,
30
Perrigo Company plc - Item 1
Note 15

Fluocinonide, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Mometasone Furoate, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide. The amended direct purchaser complaint alleges that Perrigo conspired in connection with its sale of the following drugs: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Ciclopirox, Clindamycin Phosphate, Fenofibrate, Fluocinonide, Halobetasol Proprionate, Hydrocortisone Valerate, Methazolamide, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

    Perrigo has not yet responded to the second set of overarching conspiracy complaints, and responses are currently or will be stayed.
Opt-Out Complaints

    On January 22, 2018, Perrigo was named a co-defendant along with 35 other manufacturers in a complaint filed by 3 supermarket chains alleging that defendants conspired to fix prices of 31 generic prescription pharmaceutical products starting in 2013. On December 21, 2018, an amended complaint was filed that adds additional products and allegations against a total of 39 manufacturers for 33 products. The only allegations specific to Perrigo relate to Clobetasol, Desonide, Econazole, Nystatin cream, and Nystatin ointment. Perrigo moved to dismiss this complaint on February 21, 2019. The motion was denied on August 15, 2019. The case is proceeding in discovery. On February 3, 2020, the complaintsplaintiffs requested leave to file a second amended complaint. The proposed amended complaint adds dozens of additional products and allegations to the original complaint. Perrigo is discussed in connection with allegations concerning an additional drug, Fenofibrate. Defendants opposed the motion for leave to file a second amended complaint and the court has yet to rule on the issue.

    On August 3, 2018, a large managed care organization filed a complaint alleging price-fixing and customer allocation concerning 17 different products among 27 manufacturers including Perrigo. The only allegations specific to Perrigo concern Clobetasol. Perrigo moved to dismiss this complaint on February 21, 2019. Plaintiff filed a second amended complaint in April 2019 that adds additional products and allegations. The amended allegations that concern Perrigo include: Clobetasol, Desonide, Econazole, and Nystatin. The motion to dismiss was denied on August 15, 2019. The case is proceeding in discovery.

The same organization amended a different complaint that it had filed in October 2019, which did not name Perrigo, on December 15, 2020, adding Perrigo as a defendant and asserting new allegations of alleged antitrust violations involving Perrigo and dozens of other generic pharmaceutical manufacturers. The allegations relating to Perrigo concern: Adapalene, Betamethasone Dipropionate, Bromocriptine Mesylate, Ciclopirox, Clindamycin Phosphate, Fenofibrate, Fluocinonide, Halobetasol Proprionate, Hydrocortisone Valerate, Imiquimod, Permethrin, Prochlorperazine Maleate, and Triamcinolone Acetonide.

The same organization filed a third complaint on December 15, 2020, naming Perrigo and dozens of other manufacturers alleging antitrust violations concerning generic pharmaceutical drugs. The allegations relating to Perrigo concern: Ammonium Lactate, Calcipotriene Betamethasone Dipropionate, Erythromycin, Fluticasone Propionate, Hydrocortisone Acetate, Methazolamide, Promethazine HCL, and Tacrolimus.

    On January 16, 2019, a health insurance carrier filed a complaint in the U.S. District Court for the District of Minnesota alleging a conspiracy to fix prices of 30 products among 30 defendants. The only allegations specific to Perrigo concerned Clobetasol gel, Desonide, Econazole, Nystatin cream, and Nystatin ointment. Perrigo has not yet responded to the complaint, and responses are currently stayed. On December 15, 2020, the complaint was amended to add additional defendants and claims. The new allegations that concern Perrigo relate to Fluocinonide.

The same health insurance carrier filed a new complaint on December 15, 2020, naming Perrigo and dozens of other manufacturers alleging antitrust violations concerning generic pharmaceutical drugs. The allegations relating to Perrigo concern: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

31
Perrigo Company plc - Item 1
Note 15

    On July 18, 2019, 87 health plans filed a Praecipe to Issue Writ of Summons in Pennsylvania state court to commence an action against 53 generic pharmaceutical manufacturers and 17 individuals, alleging antitrust violations concerning generic pharmaceutical drugs. While Perrigo was named as a defendant, no complaint has been filed and the precise allegations and products at issue have not been identified. Proceedings in the case, including the filing of a complaint, have been stayed at the request of the plaintiffs.

    On December 11, 2019, a health care service company filed a complaint against Perrigo and 38 other pharmaceutical companies alleging an overarching conspiracy to fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other multi-district litigation ("MDL") complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin cream/ointment. Perrigo has not yet responded to the complaint, and responses are currently stayed. On December 15, 2020, the complaint was amended to add additional defendants and claims. The new allegations relating to Perrigo concern: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fenofibrate, Fluocinonide, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

    On December 16, 2019, a Medicare Advantage claims recovery company filed a complaint against Perrigo and 39 other pharmaceutical companies alleging an overarching conspiracy to fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, and Econazole. The complaint was originally filed in the District of Connecticut but has been consolidated into the MDL. Perrigo has not yet had the opportunity to respond to the complaint, and responses are currently stayed. On December 15, 2020, the complaint was amended to add additional defendants and claims. The new allegations relating to Perrigo concern: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Desoximetasone, Erythromycin, Fenofibrate, Fluocinonide, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

    On December 23, 2019, several counties in New York filed an amended complaint against Perrigo and 28 other pharmaceutical companies alleging an overarching conspiracy to fix, raise or stabilize prices of dozens products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin. The complaint was originally filed in New York State court but was removed to federal court and has been consolidated into the MDL. Perrigo has not yet responded to the complaint, and responses are currently stayed. On December 15, 2020, the complaint was amended to add additional defendants and claims. The new allegations relating to Perrigo concern: Adapalene, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Mometasone Furoate, Nystatin, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

    On December 27, 2019, a healthcare management organization filed a complaint against Perrigo and 25 other pharmaceutical companies alleging an overarching conspiracy to fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin. The complaint was filed originally in the Northern District of California but has been consolidated into the MDL. Perrigo has not yet responded to the complaint, and responses are currently stayed. On December 15, 2020, the complaint was amended to add additional defendants and claims. The new allegations relating to Perrigo concern: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fenofibrate, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

32
Perrigo Company plc - Item 1
Note 15

    On March 1, 2020, Harris County of Texas filed a complaint against Perrigo and 29 other pharmaceutical companies alleging an overarching conspiracy to fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The products at issue that plaintiffs claim Perrigo manufacturers or sells include: Adapalene, Betamethasone Dipropionate, Ciclopirox, Clindamycin, Clobetasol, Desonide, Econazole, Ethinyl Estradiol/Levonorgestrel, Fenofibrate, Fluocinolone, Fluocinonide, Gentamicin, Glimepiride, Griseofulvin, Halobetasol Propionate, Hydrocortisone Valerate, Ketoconazole, Mupirocin, Nystatin, Olopatadine, Permethrin, Prednisone, Promethazine, Scopolamine, and Triamcinolone Acetonide. The complaint was originally filed in the Southern District of Texas but has been transferred to the MDL. Harris County amended its complaint in May 2020. Perrigo has not yet responded to the complaint, and responses are currently stayed.

    In May 2020, 7 health plans filed a writ of summons in the Pennsylvania Court of Common Pleas in Philadelphia concerning an as-yet unfiled complaint against Perrigo, 3 dozen other manufacturers, and 17 individuals, concerning alleged antitrust violations in connection with the pricing and sale of generic prescription pharmaceutical products. No complaint has yet been filed, so the precise allegations and products at issue are not yet clear. In addition, Defendants are in the process of being served, and proceedings in the case will likely be stayed.

    On June 9, 2020, a health insurance carrier filed a complaint against Perrigo and 25 other manufacturers alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin. The complaint was filed in the Eastern District of Pennsylvania and has been transferred into the MDL. Perrigo has not yet responded to the complaint, and responses are currently stayed. On December 15, 2020, the complaint was amended to add additional defendants and claims. The new allegations relating to Perrigo concern: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fluocinonide, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

    On July 9, 2020, a drugstore chain filed a complaint against Perrigo and 39 other pharmaceutical companies alleging an overarching conspiracy to fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin. Perrigo is also listed in connection with Fenofibrate. The complaint was filed in the Eastern District of Pennsylvania and will be transferred into the MDL. Perrigo has not yet responded to the complaint, and responses are currently stayed. On December 15, 2020, the complaint was amended to add additional defendants and claims. The new allegations relating to Perrigo concern: Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fenofibrate, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide.

    On August 27, 2020, Suffolk County of New York filed a complaint against Perrigo and 35 other manufacturers alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin cream and ointment. The other products at issue that plaintiffs claim Perrigo manufacturers or sells include: Adapalene gel, Albuterol, Benazepril HCTZ, Clotrimazole, Diclofenac Sodium, Fenofibrate, Fluocinonide, Glimepiride, Ketoconazole, Meprobamate, Imiquimod, Triamcinolone Acetonide, Erythromycin/Ethyl Solution, Betamethasone Valerate, Ciclopirox Olamine, Terconazole, Hydrocortisone Valerate, Fluticasone Propionate, Desoximetasone, Clindamycin Phosphate, Halobetasol Propionate, Hydrocortisone Acetate, Promethazine HCL, Mometasone Furoate, and Amiloride HCTZ. The complaint was filed in the Eastern District of New York and has been transferred into the MDL. Perrigo has not yet responded to the complaint, and responses are currently stayed.

    On September 4, 2020, a drug wholesaler and distributor filed a complaint against Perrigo and 39 other manufacturers alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of
33
Perrigo Company plc - Item 1
Note 15

dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin, Clobetasol, Desonide, Econazole, Erythromycin, Fenofibrate, Fluticasone, Halobetasol, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Mometasone furoate, Nystatin, Prochlorperazine, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide. The complaint was filed in the Eastern District of Pennsylvania and will be transferred into the MDL. Perrigo has not yet responded to the complaint, and responses are currently stayed.

On December 11, 2020, a drugstore chain filed a complaint against Perrigo and 45 other manufacturers alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on Adapalene, Ammonium Lactate, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Clobetasol, Desonide, Econazole, Erythromycin, Fenofibrate, Fluticasone Propionate, Halobetasol, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Nystatin, Permethrin, Prochlorperazine, Promethazine HCL, Tacrolimus, and Triamcinolone. The complaint was filed in the Eastern District of Pennsylvania and will be transferred into the MDL.

On December 14, 2020, a supermarket chain filed a complaint against Perrigo and 45 other manufacturers (as well as certain individuals) alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on Betamethasone Dipropionate, Bromocriptine Mesylate, Ciclopirox, Clindamycin Phosphate, Clobetasol, Desonide, Econazole, Fenofibrate, Halobetasol, Hydrocortisone Valerate, Nystatin, Permethrin, and Triamcinolone Acetonide. The complaint was filed in the Eastern District of Pennsylvania and has been transferred into the MDL.

On December 15, 2020, a drugstore chain filed a complaint against Perrigo and 45 other manufacturers alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The complaint lists 63 drugs that the chain purchased from Perrigo, but the product conspiracies allegedly involving Perrigo focus on Adapalene, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Desonide, Econazole, Erythromycin, Fluocinonide, Fluticasone Propionate, Halobetasol, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Nystatin, Prochlorperazine, Promethazine HCL, Tacrolimus, and Triamcinolone. The complaint was filed in the Eastern District of Pennsylvania and has been transferred into the MDL.

On December 15, 2020, several counties in New York filed a complaint against Perrigo and 45 other pharmaceutical companies alleging an overarching conspiracy to fix, raise or stabilize prices of dozens products, most of which Perrigo neither makes nor sells. The allegations that concern Perrigo include: Adapalene, Betamethasone Dipropionate, Bromocriptine Mesylate, Calcipotriene Betamethasone Dipropionate, Ciclopirox, Clindamycin Phosphate, Erythromycin, Fluticasone Propionate, Halobetasol Proprionate, Hydrocortisone Acetate, Hydrocortisone Valerate, Imiquimod, Methazolamide, Mometasone Furoate, Nystatin, Permethrin, Prochlorperazine Maleate, Promethazine HCL, Tacrolimus, and Triamcinolone Acetonide. The complaint was originally filed in New York State court but has been removed to federal court and consolidated into the MDL.

State Attorney General Complaint

    On June 10, 2020, the Connecticut Attorney General’s office filed a lawsuit on behalf of Connecticut and 50 other states and territories against Perrigo, 35 other generic pharmaceutical manufacturers, and certain individuals (including 1 former and 1 current Perrigo employee), alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of eighty products. The allegations against Perrigo focus on the following drugs: Adapalene Cream, Ammonium Lactate cream and lotion, Betamethasone dipropionate lotion, Bromocriptine tablets, Calcipotriene Betamethasone Dipropionate Ointment, Ciclopirox cream and solution, Clindamycin solution, Desonide cream and ointment, Econazole cream, Erythromycin base alcohol solution, Fluticasone cream and lotion, Halobetasol cream and ointment, Hydrocortisone Acetate suppositories, Hydrocortisone Valerate cream, Imiquimod cream, Methazolamide tablets, Nystatin ointment, Prochlorperazine suppositories, Promethazine HCL suppositories, Tacrolimus ointment, and Triamcinolone cream and ointment. The Complaint was filed in the District of Connecticut, but has been transferred into the MDL. Perrigo has not yet responded to the complaint, and responses are currently stayed.
34
Perrigo Company plc - Item 1
Note 15

Canadian Class Action Complaint

    In June 2020, an end payor filed a class action in Ontario, Canada against Perrigo and 29 other manufacturers alleging an overarching conspiracy to allocate customers and/or fix, raise or stabilize prices of dozens of products, most of which Perrigo neither makes nor sells. The product conspiracies allegedly involving Perrigo focus on the same products as those involved in other MDL complaints naming Perrigo: Clobetasol, Desonide, Econazole, and Nystatin. In December 2020, Plaintiffs amended their complaint to add additional claims based on the State AG complaint of June 2020. On May 7, 2021, the Court ruled that this case will move forward as a bellwether case. Perrigo has not yet responded to the complaint, and no schedule has been set for such responses.

    At this stage, we cannot reasonably predictestimate the outcome of the liability if any, associated with these claims.the claims listed above.

Securities Litigation
 
In the United States (cases related to events in 2015-2017)


On May 18, 2016, a shareholder filed a securities case against us and our former CEO, Joseph Papa, in the U.S. District Court for the District of New Jersey (Roofers’ Pension Fund v. Papa, et al.). The plaintiff purported to represent a class of shareholders for the period from April 21, 2015 through May 11, 2016, inclusive. The original complaint alleged violations of Securities Exchange Act sections 10(b) (and Rule 10b‑5) and 14(e) against both defendants and 20(a) control person liability against Mr. Papa. In general, the allegations concerned the actions taken by us and the former executive to defend against the unsolicited takeover bid by Mylan in the period from April 21, 2015 through November 13, 2015. The plaintiff also alleged that the defendants provided inadequate disclosure concerning alleged integration problems related to the Omega acquisition in the period from April 21, 2015 through May 11, 2016. On July 19, 2016, a different shareholder filed a securities class action against us and our former CEO, Joseph Papa, also in the District of New Jersey (Wilson v. Papa, et al.al.). The plaintiff purported to represent a class of persons who sold put options on our shares between April 21, 2015 and May 11, 2016. In general, the allegations and the claims were the same as those made in the original complaint filed in the Roofers' Pension Fund case described above. On December 8, 2016, the court consolidated the Roofers' Pension Fund case and the Wilson case under the Roofers' Pension Fund case number. In February 2017, the court selected the lead plaintiffs for the consolidated case and the lead counsel to the putative class. In March 2017, the court entered a scheduling order.


On June 21, 2017, the court-appointed lead plaintiffs filed an amended complaint that superseded the original complaints in the Roofers’ Pension Fundcase and the Wilson case. TheIn the amended complaint, the lead plaintiffs seek to represent a class3 classes of shareholders: (i) shareholders forwho purchased shares during the period from April 21, 2015 through May 3, 2017 and identifies three subclasses - shareholders who traded during the entire period on the U.S. exchanges; (ii) shareholders who tradedpurchased shares during the entiresame period on the Tel Aviv exchange; and (iii) shareholders who traded during the period whileowned shares on November 12, 2015 and held such stock through at least 8:00 a.m. on November 13, 2015 (the final day of the Mylan tender offer was pending (April 21, 2015 through November 13, 2015).offer) regardless of whether the shareholders tendered their shares. The amended complaint names as defendants us and 11 current or former directors and officers of Perrigo (Mses. Judy Brown, Laurie Brlas, Jacqualyn Fouse, Ellen Hoffing, and Messrs. Joe Papa, Marc Coucke, Gary Cohen, Michael Jandernoa, Gerald Kunkle, Herman Morris, and Donal O’Connor). The amended complaint alleges violations of Securities Exchange Act sections 10(b) (and Rule 10b‑5) and 14(e) against all defendants and 20(a) control person liability against the 11 individuals. In general, the allegations concern the actions taken by us and the former executives to defend against the unsolicited takeover bid by Mylan in the period from April 21, 2015 through November 13, 2015 and the allegedly inadequate disclosure throughout the entire class period related to purported integration problems related to the Omega acquisition, alleges incorrect reporting of organic growth at the Company and at Omega, alleges price fixing activities with respect to six6 generic prescription pharmaceuticals, and alleges improper accounting for the Tysabri® royalty stream. The amended complaint does not include an estimate of damages. In AugustDuring 2017, the defendants filed motions to dismiss, which the amended complaint. The plaintiffs filed their oppositionopposed. On July 27, 2018, the court issued an opinion and order granting the defendants’ motions to dismiss in October 2017. The defendants filed replies in support ofpart and denying the motions to dismiss in November 2017.part. The court hasdismissed without prejudice defendants Laurie Brlas, Jacqualyn Fouse, Ellen Hoffing, Gary Cohen, Michael Jandernoa, Gerald Kunkle, Herman Morris, Donal O’Connor, and Marc Coucke. The court also dismissed without prejudice claims arising from the Tysabri® accounting issue described above and claims alleging incorrect disclosure of organic growth described above. The defendants who were not indicated whether theredismissed are Perrigo Company plc, Joe Papa, and Judy
35
Perrigo Company plc - Item 1
Note 15

Brown. The claims (described above) that were not dismissed relate to the integration issues regarding the Omega acquisition, the defense against the Mylan tender offer, and the alleged price fixing activities with respect to 6 generic prescription pharmaceuticals. The defendants who remain in the case (the Company, Mr. Papa, and Ms. Brown) have filed answers denying liability, and the discovery stage of litigation began in late 2018. Discovery in the class action ended on January 31, 2021. In early April 2021, the defendants filed various post-discovery motions, including summary judgment motions; the schedule provides that briefing will not be oral argument of the motions or whether the court will decide the motions on the papers.completed until early July 2021. We intend to defend the lawsuit vigorously.
Perrigo Company plc - Item 1
Note 14



On November 1,14, 2019, the court granted the lead plaintiffs’ motion and certified 3 classes for the case: (i) all those who purchased shares between April 21, 2015 through May 2, 2017 Carmignac Gestion, S.A.,inclusive on a U.S. exchange and were damaged thereby; (ii) all those who purchased shares between April 21, 2015 through May 2, 2017 inclusive on the Tel Aviv exchange and were damaged thereby; and (iii) all those who owned shares as of November 12, 2015 and held such stock through at least 8:00 a.m. on November 13, 2015 (whether or not a person tendered shares in response to the Mylan tender offer) (the "tender offer class"). Defendants filed a securities lawsuit against uspetition for leave to appeal in the Third Circuit challenging the certification of the tender offer class. On April 30, 2020, the Third Circuit denied leave to appeal. The District Court has approved the issuance of a notice of the pendency of the class action, and three individuals (former Chairman and CEO Joseph Papa, former CFO Judy Brown, and former Executive Vice President and Board member Marc Coucke). This lawsuitthe notice has been sent to shareholders who are eligible to participate in the classes.

Unless otherwise noted, each of the lawsuits discussed in the following sections is not a securities class action. The case is styled Carmignac Gestion, S.A. v. Perrigo Company plc, et al., and was filedpending in the U.S. District Court for the District of New Jersey.Jersey and has been assigned to the same judges hearing the Roofers’ Pension Fund case. The allegations in the complaints relate to events during certain portions of the 2015 through 2017 calendar years, including the period of the Mylan tender offer. All but one of these lawsuits allege violations of federal securities laws, but none are class actions. NaN lawsuit (Highfields) alleges only state law claims. Discovery in all these cases, except Highfields, is underway and currently scheduled to end in early October 2021. We intend to defend all these lawsuits vigorously.

Carmignac, First Manhattan and Similar Cases. The following 7 cases were filed by the same law firm and generally make the same factual assertions but, at times, differ as to which securities laws violations they allege:
CaseDate Filed
Carmignac Gestion, S.A. v. Perrigo Company plc, et al.11/1/2017
First Manhattan Co. v. Perrigo Company plc, et al.2/16/2018; amended 4/20/2018
Nationwide Mutual Funds, et al. v. Perrigo Company plc, et al.10/29/2018
Schwab Capital Trust, et al. v. Perrigo Company plc, et al.1/31/2019
Aberdeen Canada Funds -- Global Equity Fund, et al. v. Perrigo Company plc, et al.2/22/2019
Principal Funds, Inc., et al. v. Perrigo Company plc, et al.3/5/2020
Kuwait Investment Authority, et al. v. Perrigo Company plc, et al.3/31/2020

The original complaints in the Carmignac case and the First Manhattan case named Perrigo, Mr. Papa, Ms. Brown, and Mr. Coucke as defendants. Mr. Coucke was dismissed as a defendant after the plaintiffs agreed to apply the July 2018 ruling in the Roofers' Pension Fund case to these two cases. The complaints in each of the other cases name only Perrigo, Mr. Papa, and Ms. Brown as defendants.

Each complaint asserts claims under Securities Exchange Act sectionsSections 10(b) (and Rule 10b-5),10b-5 thereunder) and all cases except Aberdeen assert claims under Section 14(e), and 18 of the Securities Exchange Act against all defendants, as well as 20(a) control person liability under Section 20(a) of the Securities Exchange Act against the individual defendants. In general,The control person claims against the plaintiff’s allegations focus on events duringindividual defendants are limited to the period from April 2015 through April 2016. Plaintiff contends that2016 in the defendants providedCarmignac case. The complaints in the Carmignac and First Manhattan cases also assert claims under Section 18 of the Exchange Act.

Each complaint alleges inadequate disclosure throughout the perioddisclosures concerning the valuation and integration of Omega, the financial guidance we provided, by us during that period, our reporting about the generic prescription pharmaceutical business and its prospects, and the activities surrounding the efforts to defeat the Mylan tender offer during 2015.2015, and, in each of the cases other than Carmignac, alleged price fixing activities with respect to 6 generic prescription pharmaceuticals. The First Manhattan complaint also alleges improper accounting for the Tysabri® asset. With the exception of
36
Perrigo Company plc - Item 1
Note 15

Carmignac, each of these cases relates to events during the period from April 2015 through May 2017. Many of the allegations in this newly-filed casethese cases overlap with the allegations of the June 2017 amended complaint in the Roofers’ Pension Fund case, though the Nationwide Mutual, Schwab Capital, Aberdeen, Principal Funds and Kuwait complaints do not include the factual allegations that the court dismissed in the July 2018 ruling in the Roofers' Pension Fund case.

After the court issued its July 2018 opinion in the Roofers’ Pension Fund case, the parties in Carmignac and First Manhattan conferred and agreed that the ruling in the Roofers’ Pension Fund case would apply equally to the common allegations in their cases. The later filed cases adopted a similar posture. The defendants in the Carmignac and other cases listed above filed motions to dismiss addressing the additional allegations in such cases. On July 31, 2019, the court granted such motions to dismiss in part and denied them in part. That ruling applies to each of the above cases. The defendants have filed answers in each case denying liability. Each case is currently in the discovery phase.

Mason Capital, Pentwater and Similar Cases. The following 8 cases were filed by the same law firm and generally make the same factual allegations:
CaseDate Filed
Mason Capital L.P., et al. v. Perrigo Company plc, et al.1/26/2018
Pentwater Equity Opportunities Master Fund Ltd., et al.  v. Perrigo Company plc, et al.1/26/2018
WCM Alternatives: Event-Drive Fund, et al. v. Perrigo Co., plc, et al.11/15/2018
Hudson Bay Master Fund Ltd., et al. v. Perrigo Co., plc, et al.11/15/2018
Discovery Global Citizens Master Fund, Ltd., et al. v. Perrigo Co. plc, et al.12/18/2019
York Capital Management, L.P., et al. v. Perrigo Co. plc, et al.12/20/2019
Burlington Loan Management DAC v. Perrigo Co. plc, et al.2/12/2020
Universities Superannuation Scheme Limited v. Perrigo Co. plc, et al.3/2/2020

The complaints in the Mason Capital case and the Pentwater case originally named Perrigo and 11 current or former directors and officers of Perrigo as defendants. In the July 2018 Roofers’ Pension Fund ruling, the court dismissed without prejudice each of the defendants other than Perrigo, Mr. Papa and Ms. Brown from that case; these plaintiffs later agreed that this ruling would apply to their cases as well. The complaints in each of the other cases in the above table name only Perrigo, Mr. Papa, and Ms. Brown as defendants.

Each complaint asserts claims under Section 14(e) of the Securities Exchange Act against all defendants, as well as control person liability under Section 20(a) of the Securities Exchange Act against the individual defendants. The complaints in the WCM case and the Universities Superannuation Scheme case also assert claims under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Each complaint alleges inadequate disclosure during the tender offer period in 2015 and at various times concerning valuation and integration of Omega, the financial guidance provided by us during that period, alleged price fixing activities with respect to 6 generic prescription pharmaceuticals, and alleged improper accounting for the Tysabri® asset. The WCM complaint also makes these allegations for the period through May 2017 and the Universities Superannuation Scheme complaint also concerns certain times during 2016. Many of the factual allegations in these cases overlap with the allegations of the June 2017 amended complaint in the Roofers’ Pension Fund case, and the Mason Capital and Pentwater cases include factual allegations similar to those in the Carmignac case described above.

After the court issued its July 2018 opinion in the Roofers’ Pension Fund case, the parties in each of the above casesconferred and agreed that the ruling in the Roofers’ Pension Fund case would apply equally to the common allegations in their cases. The plaintiff doesdefendants in each of these cases have filed answers denying liability, and each of the cases is currently in the discovery phase.

Harel Insurance and TIAA-CREF Cases. The following 2 cases were filed by the same law firm and generally make the same factual allegations relating to the period from February 2014 through May 2017 (in the Harel case) and from August 2014 through May 2017 (in the TIAA-CREF case):
37
Perrigo Company plc - Item 1
Note 15

CaseDate Filed
Harel Insurance Company, Ltd., et al. v. Perrigo Company plc, et al.2/13/2018
TIAA-CREF Investment Management, LLC., et al. v. Perrigo Company plc, et al.4/20/2018

The complaints in the Harel and TIAA-CREF cases originally named Perrigo and 13 current or former directors and officers of Perrigo as defendants (adding 2 more individual defendants not provide an estimatesued in the other cases described in this section). In the July 2018 Roofers’ Pension Fund ruling, the court dismissed without prejudice 8 of damages. We intendthe 11 defendants other than Perrigo, Mr. Papa and Ms. Brown from that case. These plaintiffs later agreed that that ruling would apply to defendthese cases as well and also dismissed their claims against the two additional individuals that only these plaintiffs had named as defendants.

Each complaint asserts claims under Sections 10(b) and 14(e) of the Securities Exchange Act and Rule 10b-5 thereunder against all defendants, as well as control person liability under Section 20(a) of the Securities Exchange Act against the individual defendants. The complaint in the Harel case also asserts claims based on Israeli securities laws.

Each of the complaints alleges inadequate disclosure around the tender offer events in 2015 and at various times during the relevant periods concerning valuation and integration of Omega, the financial guidance provided by us during that period, alleged price fixing activities with respect to 6 generic prescription pharmaceuticals, and alleged improper accounting for the Tysabri® asset from February 2014 until the withdrawal of past financial statements in April 2017.

After the court issued its July 2018 opinion in the Roofers’ Pension Fund case, the parties in the Harel and TIAA-CREF cases conferred and agreed that such ruling would apply equally to the common allegations in their cases. The defendants in each of these cases have filed answers denying liability, and each of the cases is currently in the discovery phase.

Other Cases Related to Events in 2015-2017. Certain allegations in the following 3 cases also overlap with the allegations of the June 2017 amended complaint in the Roofers' Pension Fund case and with allegations in 1 or more of the other individual cases described in the sections above:
CaseDate Filed
Sculptor Master Fund (f/k/a OZ Master Fund, Ltd.), et al. v. Perrigo Company plc, et al.2/6/2019
Highfields Capital I LP, et al. v. Perrigo Company plc, et al.6/4/2020
BlackRock Global Allocation Fund, Inc., et al. v. Perrigo Co. plc, et al.4/21/2020
Starboard Value and Opportunity C LP, et al. v. Perrigo Company plc, et al.2/25/2021

Each of the above complaints names Perrigo, Mr. Papa, and Ms. Brown as defendants.

The Sculptor Master Fund (formerly OZ) complaint asserts claims under Sections 10(b) and 14(e) of the Securities Exchange Act and Rule 10b-5 thereunder against all defendants, as well as control person liability under Section 20(a) of the Securities Exchange Act against the individual defendants. The parties have agreed that the court's rulings in July 2018 in the Roofers' Pension Fund case and in July 2019 in the Carmignac and related cases will apply to this case as well. The defendants have filed answers denying liability. The plaintiffs are participating in the discovery proceedings in the Roofers' Pension Fund case and the various individual cases described above.

    The BlackRock Global complaint also asserts claims under Securities Exchange Act section 10(b) (and SEC Rule 10b-5) and section 14(e) against all defendants and section 20(a) control person claims against the individual defendants largely based on the same events during the period from April 2015 through May 2017. Plaintiffs contend that the defendants provided inadequate disclosure during the tender offer period in 2015 and point to disclosures at various times during the period concerning valuation and integration of Omega, the financial guidance provided by us during that period, alleged price fixing activities with respect to 6 generic prescription pharmaceuticals, alleged lower performance in the generic prescription drug business during 2015 and alleged improper accounting for the Tysabri® asset. The defendants have filed answers denying liability. The plaintiffs are
38
Perrigo Company plc - Item 1
Note 15

participating in the discovery proceedings in the Roofers' Pension Fund case and the various individual cases described above.

The Starboard Value and Opportunity C LP complaint also asserts claims under Securities Exchange Act section 10(b) (and SEC Rule 10b-5) against all defendants and section 20(a) control person claims against the individual defendants based on events related to alleged price fixing activities with respect to generic prescription drugs during periods that overlap to some extent with the period alleged in the various other cases described above. Plaintiffs contend that the defendants provided inadequate disclosure during 2016 about generic prescription drug business and those alleged matters. The lawsuit vigorously. was filed on February 25, 2021; no further activity has occurred.


The Highfields federal case complaint asserted claims under Sections 14(e) and 18 of the Securities Exchange Act against all defendants, as well as control person liability under Section 20(a) of the Securities Exchange Act against the individual defendants. As originally filed in the U.S. District Court for the District of Massachusetts, the Highfields complaint also alleged claims under the Massachusetts Unfair Business Methods Law (chapter 93A) and Massachusetts common law claims of tortious interference with prospective economic advantage, common law fraud, negligent misrepresentation, and unjust enrichment. The factual allegations generally were similar to the factual allegations in the Amended Complaint in the Roofers' Pension Fund case described above, except that the Highfields plaintiffs did not include allegations about alleged collusive pricing of generic prescription drugs. In March 2020, the District of Massachusetts court granted defendants’ motion and transferred the case to the U.S. District Court for the District of New Jersey so that the activities in the case could proceed in tandem with the other cases in the District of New Jersey described above. After the transfer, in June 2020, the Highfields plaintiffs voluntarily dismissed their federal lawsuit. The same Highfields plaintiffs the same day then filed a new lawsuit in Massachusetts State Court asserting the same factual allegations as in their federal lawsuit and alleging only Massachusetts state law claims under the Massachusetts Unfair Business Methods Law (chapter 93A) and Massachusetts common law claims of tortious interference with prospective economic advantage, common law fraud, negligent misrepresentation, and unjust enrichment. Defendants’ motion to dismiss was fully briefed as of late November 2020, argument occurred in early May 2021, and the motion is pending before the court.

In Israel (cases related to events in 2015-2017)


Because our shares are traded on the Tel Aviv exchange under a dual trading arrangement, we are potentially subject to securities litigation in Israel. ThreeNaN cases are currently pending.were filed; 1 was voluntarily dismissed in each of 2017 and 2018 and 1 was stayed in 2018. We are consulting with Israeli counsel about our response to these allegations and we intend to defend these casesthis case vigorously.


On May 22, 2016, shareholders filed a securities class action against us and five individual defendants: Our former CEO Mr. Papa, our former Executive Vice President and General Manager of the BCH segment Marc Coucke, our Chief Executive Officer John Hendrickson, our former Board member Gary Kunkle, Jr., and our Board member Laurie Brlas alleging violations of Israeli law in the District Court of Tel Aviv-Jaffa (Schweiger et al. v. Perrigo Company plc, et al.). On June 15, 2016, we filed a motion to stay the case pending the outcome of the securities class action pending in the New Jersey Federal Court. The plaintiffs did not oppose the motion. The Israeli court granted the motion on the same day, and the Schweiger action is stayed. We intend to defend the lawsuit vigorously when and if the stay is lifted. In October 2017, the Schweiger plaintiffs dismissed their claims without prejudice because of the pendency of another class action case filed in Israel (see discussion below of the Israel Elec. Corp. Employees’ Educ. Fund case). The court approved the voluntary dismissal. 

On March 29, 2017, plaintiff Eyal Keinan commenced an action in the District Court of Tel Aviv-Jaffa asserting securities claims against two defendants: Perrigo and its auditor Ernst & Young LLP ("EY"). The case is styled Keinan v. Perrigo Company plc, et al. The action seeks certification of a class of purchasers of Perrigo shares on the Israeli exchange beginning February 6, 2014. The proposed closing date for the class is not clear from the complaint though it appears to extend into 2017. In general, the plaintiff asserts that we improperly accounted for our stream of royalty income from two drugs: Tysabri® and Prialt. The court filings contend that the alleged improper accounting caused the audited financial results for Perrigo to be incorrect for the six month period ended December 31, 2015, and the years ended June 27, 2015 and June 28, 2014 and the other financial data released by us over those years and 2016 to also be inaccurate. The plaintiff maintains that the defendants are liable under Israeli securities law or, in the alternative, under U.S. securities law. The plaintiff indicates an initial, preliminary class damages estimate of 686.0 million NIS (approximately $192.0 million at 1 NIS = $0.28 cent). The response from the defendants is not yet due. We intend to defend the lawsuit vigorously.

On June 28, 2017, a plaintiff filed a complaint in Tel Aviv District Court styled Israel Elec. Corp. Employees’ Educ. Fund v. Perrigo Company plc, et al.The lead plaintiff seeks to represent a class of shareholders who traded inpurchased Perrigo stock on the Tel Aviv exchange during the period from April 24, 2015 through May 3, 2017.2017 and also a claim for those that owned shares on the final day of the Mylan tender offer (November 13, 2015). The amended complaint names as defendants the Company, EYErnst & Young LLP (the Company’s auditor), and 11 current or former directors and officers of Perrigo (Mses. Judy Brown, Laurie Brlas, Jacqualyn Fouse, Ellen Hoffing, and Messrs. Joe Papa, Marc Coucke, Gary Cohen, Michael Jandernoa, Gerald Kunkle, Herman Morris, and Donal O’Connor). The complaint alleges violations under U.S. securities laws of Securities Exchange Act sections 10(b) (and Rule 10b‑5) and 14(e) against all defendants and 20(a) control person liability against the 11 individuals or, in the alternative, under Israeli securities laws. In general, the allegations concern the actions taken by us and our former executives to defend against the unsolicited takeover bid by Mylan in the period from April 21, 2015 through November 13, 2015 and the allegedly inadequate disclosure concerning purported integration problems related to the Omega acquisition, alleges incorrect reporting of organic growth at the Company, alleges price fixing activities with respect to six
Perrigo Company plc - Item 1
Note 14


6 generic prescription pharmaceuticals, and alleges improper accounting for the Tysabri®Tysabri® royalty stream. The plaintiff indicates an initial, preliminary class damages estimate of 2.7 billion NIS (approximately $760.0 million at 1 NIS = $0.28 cent)0.28 cents). After the other 2 cases filed in Israel were voluntarily dismissed, the plaintiff in this case agreed to stay this case pending the outcome of the Roofers’ Pension Fund case in the U.S. (described above). The Israeli court approved the stay, and this case is now stayed. We intend to defend the lawsuit vigorously.


39
Perrigo Company plc - Item 1
Note 15

In the United States (cases related to Irish Tax events)

On July 12, 2017,January 3, 2019, a shareholder filed a complaint against the plaintiffCompany, our CEO Murray Kessler, and our former CFO Ronald Winowiecki in the U.S. District Court for the Southern District of New York (Masih v. Perrigo Company, et al.). Plaintiff purported to represent a class of shareholders for the period November 8, 2018 through December 20, 2018, inclusive. The complaint alleged violations of Securities Exchange Act section 10(b) (and Rule 10b‑5) against all defendants and section 20(a) control person liability against the individual defendants. In general the allegations contended that the Company, in its Form 10Q filed November 8, 2018, disclosed information about an October 31, 2018 audit finding letter received from Irish tax authorities but failed to disclose enough material information about that letter until December 20, 2018, when we filed a current report on Form 8‑K about Irish tax matters. The plaintiff did not provide an estimate of class damages. The court selected lead plaintiffs and changed the name of the case to In re Perrigo Company plc Sec. Litig. The lead plaintiffs filed an amended complaint on April 12, 2019, which named the same defendants, asserted the same class period, and invoked the same Exchange Act sections. The amended complaint generally repeated the allegations of the original complaint with a few additional details and adds that the defendants also failed to timely disclose the Irish tax authorities’ Notice of Amended Assessment received on November 29, 2018. Defendants filed a motion to dismiss on May 3, 2019. On May 31, 2019, the plaintiffs filed a second amended complaint, which asserted a longer class period (March 1, 2018 through December 20, 2018) and added 1 additional individual defendant, former CEO Uwe Roehrhoff. In general, the second amended complaint contends that Perrigo’s disclosures about the Irish tax audit were inadequate beginning with Perrigo’s 10-K filed on March 1, 2018 through December 20, 2018 and repeats many of the allegations of the April 2019 amended complaint. The second amended complaint alleges violations of Securities Exchange Act section 10(b) (and SEC Rule 10b-5) against all defendants and section 20(a) control person liability against the 3 individual defendants. All defendants filed a joint motion to dismiss, and the motion was fully briefed. On January 23, 2020, the court granted the motion to dismiss in part and denied it in part, dismissing Mr. Roehrhoff as a defendant and dismissing allegations of inadequate disclosures related to the audit by Irish Revenue during the period March 2018 through October 30, 2018. The court permitted the plaintiffs to pursue their claims against us, Mr. Kessler, and Mr. Winowiecki related to disclosures after Perrigo received the October 30, 2018 audit findings letter and later events through December 20, 2018. The defendants filed answers on February 13, 2020 denying liability, and the court issued a scheduling order on March 3, 2020 that has been subsequently modified. Discovery on the remaining issues ended in early March 2021. Plaintiffs filed a motion for class certification, which was granted in September 2020. In January 2021, class plaintiffs filed a motion for leave to file a third amended complaint in an effort to revive their claim that the disclosure of the audit during the period from March 1, 2018 to October 30, 2018 was also inadequate. The court denied the motion in February 2021. Defendants filed motions for summary judgement and other post discovery motions on March 31, 2021 and plaintiffs filed cross-motions of the same type on the same day. All motions are scheduled to be fully briefed by mid-May 2021. We intend to defend the lawsuit vigorously.

In Israel Elec. Corp. Employees’ Educ. Fund(case related to Irish Tax events)

    On December 31, 2018, a shareholder filed an action against the Company, our CEO Murray Kessler, and our former CFO Ronald Winowiecki in Tel Aviv District Court (Baton v. Perrigo Company plc, et al.et. al.). The case is a securities class action brought in Israel making similar factual allegations for the same period as those asserted in the In re Perrigo Company plc Sec. Litig case in New York federal court. This case alleges that persons who invested through the Tel Aviv stock exchange can assert claims under Israeli securities law that will follow the liability principles of Sections 10(b) and 20(a) of the U.S. Securities Exchange Act. The plaintiff does not provide an estimate of class damages. In 2019, the court granted 2 requests by Perrigo to stay the proceedings pending the resolution of proceedings in the United States. Perrigo filed a further request for a stay in February 2020, and the court granted the stay indefinitely. The plaintiff filed a motion to have all three cases pending in Israel either consolidated orlift the other two cases dismissed sostay then later agreed that the Israel Elec. Corp. Educ. Fund plaintiff can proceed as the sole plaintiff. That motion is pending.case should remain stayed through February 2021. In October 2017, the Schweiger plaintiffs (see description above) voluntarily dismissed their securities class action without prejudice as part of their response to the motionlate February 2021, Perrigo filed by the Israel Elec. Corp. Educ. Fund plaintiff. A variety of other procedural motions are also pending at this time having to do with the timing of any response by defendants. The court has scheduled an initial conference on November 9, 2017 to address the motion filed by the Israel Elec. Corp. Educ. Fund plaintiff. The court has indicated that other procedural motions will be addressed after it has decided the Israel Elec. Corp. Educ. Fund plaintiff’s motion.

Eltroxin

During October and November 2011, nine applications to certify a class action lawsuit were filed in various courts in Israel related to Eltroxin, a prescription thyroid medication manufactured by a third party and distributed in Israel by our subsidiary, Perrigo Israel Agencies Ltd. The respondents included our subsidiaries, Perrigo Israel Pharmaceuticals Ltd. and/or Perrigo Israel Agencies Ltd., the manufacturers of the product, and various healthcare providers who provide healthcare services as part of the compulsory healthcare system in Israel.

One of the applications was dismissed and the remaining eight applications were consolidated into one application. The applications arose from the 2011 launch of a reformulated version of Eltroxin in Israel. The consolidated application generally alleges that the respondents (a) failed to timely inform patients, pharmacists and physicians about the change in the formulation; and (b) failed to inform physicians about the need to monitor patients taking the new formulation in order to confirm patients were receiving the appropriate dose of the drug. As a result, claimants allege they incurred the following damages: (a) purchases of product that otherwise would not have been made by patients had they been aware of the reformulation; (b) adverse events to some patients resulting from an imbalance of thyroid functions that could have been avoided; and (c) harm resulting from the patients' lack of informed consent prior to the use of the reformulation.

Several hearings on whether or not to certify the consolidated application took place in December 2013 and January 2014. On May 17, 2015, the District Court certified the motion against Perrigo Israel Agencies Ltd. and dismissed it against the remaining respondents, including Perrigo Israel Pharmaceuticals Ltd.

On June 16, 2015, we submitted a motion for permission to appeal the decision to certify to the Israeli Supreme Court together with a motion to extend the stay the proceedings of the class action until the motion for permission to appeal is adjudicated. We have filed our statement of defensemid-May 2021, and plaintiff later agreed to the underlying proceedings.request. The parties are currently engaged in mediation in an attemptcourt extended the stay to settle the matter. The underlying proceedings have been stayed pending the outcome of the mediation process and, if necessary, a decision on the motion to appeal.

Tysabri® Product Liability Lawsuits

mid-May 2021. We and our collaborator Biogen are co-defendants in product liability lawsuits arising out of the occurrence of Progressive Multifocal Leukoencephalopathy, a serious brain infection, and serious adverse events, including deaths, which occurred in patients taking Tysabri®. Each co-defendant would be responsible for 50% of losses and expenses arising out of any Tysabri® product liability claims. During calendar year 2016, one case in the U.S. was settled and two others were dismissed with prejudice. In 2017, seven other cases were dismissed with prejudice. While we intend to vigorously defend the remaining lawsuits, management cannot predict how these cases will be resolved. Adverse results in one or more of these lawsuits could result in substantial judgments against us.lawsuit vigorously.

40
Perrigo Company plc - Item 1
Note 15


Claim Arising from the Omega Acquisition


On December 16, 2016, we and Perrigo Ireland 2 brought an arbitral claim ("Claim") against Alychlo NV ("Alychlo") and Holdco I BE NV ("Holdco") (together the Sellers)"Sellers") in accordance with clause 26.2 of the Share Purchase Agreement dated November 6, 2014 ("SPA") and the rules of the Belgian Centre for Arbitration and
Perrigo Company plc - Item 1
Note 14


Mediation ("CEPANI"). Our Claim relates to the accuracy and completeness of information about Omega provided by the Sellers as part of the sale process, the withholding of information by the Sellers during that process and breaches of Sellers’ warranties. We are seeking monetary damages from the Sellers. The Sellers served their respective responses to the Claim on February 20, 2017. In its response, Alychlo has asserted a counterclaim for monetary damages contending that we breached a warranty in the SPA and breached the duty of good faith in performing the SPA. Alychlo subsequently filed papers seeking permission to introduce an additional counterclaim theory of recovery related to the Irish tax issues disclosed by the Company such that if the position of the Irish tax authorities prevails, Alychlo would have further basis for its counterclaim against Perrigo. In June 2019, the Tribunal denied permission for Alychlo to introduce the additional counterclaim and dismissed certain aspects of the original Alychlo counterclaim. There can be no assurance that our Claim will be successful, and the Sellers deny liability for the Claim. WeTo the extent that aspects of Alychlo’s counterclaim survived the Tribunal’s ruling in June 2019, we deny that Alychlo is entitled to any relief (including monetary relief) under the counterclaim.. The arbitration proceedings are confidential as required by the SPA and the rules of the CEPANI.


Other Matters

Talcum Powder

    The Company has been named, together with other manufacturers, in product liability lawsuits in state courts in California, Florida, Missouri, New Jersey, Louisiana and Illinois alleging that the use of body powder products containing talcum powder causes mesothelioma and lung cancer due to the presence of asbestos. All but one of these cases involve legacy talcum powder products that have not been manufactured by the Company since 1999. One of the pending actions involves a current prescription product that contains talc as an excipient. As of April 13, 2021, the Company has been named in 51 individual lawsuits seeking compensatory and punitive damages and has accepted a tender for a portion of the defense costs and liability from a retailer for 1 additional matter. The Company has several defenses and intends to aggressively defend these lawsuits. Trials for these lawsuits are currently scheduled throughout 2021, 2022 and 2023, with the earliest to begin in May 2021.

Ranitidine

After regulatory bodies announced worldwide that ranitidine may potentially contain N-nitrosodimethylamine ("NDMA"), a known environmental contaminant, the Company promptly began testing its externally-sourced ranitidine API and ranitidine-based products. On October 8, 2019, the Company halted shipments of the product based upon preliminary results and on October 23, 2019, the Company made the decision to conduct a voluntary retail market withdrawal.

In February 2020, the resulting actions involving Zantac® and other ranitidine products were transferred for coordinated pretrial proceedings to a Multi-District Litigation (In re Zantac®/Ranitidine Products Liability Litigation MDL No. 2924) in the U.S. District Court for the Southern District of Florida. After the Company successfully moved to dismiss the first set of Master Complaints in the MDL, it now includes 3: 1) an Amended Master Personal Injury Complaint; 2) a Consolidated Amended Consumer Economic Loss Class Action Complaint; and 3) a Consolidated Medical Monitoring Class Action Complaint. All 3 name the Company. Plaintiffs appealed 1 of the original Master Complaints, the Third-Party Payor Complaint, and 2 individual plaintiffs appealed their individual personal injury claims on limited grounds. The Company is not named in the appeals.

As of April 11, 2021, the Company has been named in NaN of the MDL’s consolidated personal injury lawsuits tied to various federal courts alleging that plaintiffs developed various types of cancers or are placed at higher risk of developing cancer as a result of ingesting products containing ranitidine. The Company is named in these lawsuits with manufacturers of the national brand Zantac® and other manufacturers of ranitidine products, as well as distributors, repackagers, and/or retailers. Plaintiffs seek compensatory and punitive damages, and in some instances seek applicable remedies under state consumer protection laws.
41
Perrigo Company plc - Item 1
Note 15


The Company has also been named in a Complaint brought by the New Mexico Attorney General based on the following theories: violation of a New Mexico public nuisance statute, NMSA 30-8-1 to -14; common law nuisance; and negligence and gross negligence. The Company is named in this lawsuit with manufacturers of the national brand Zantac® and other manufacturers of ranitidine products and/or retailers. Brand name manufactures named in the lawsuit also face claims under the state’s Unfair Practices & False Advertising acts. Likewise, the Company has also been named in a Complaint brought by the Mayor and City Council of Baltimore, along with manufacturers of the national brand Zantac® and other manufacturers of ranitidine products and/or retailers. This action brings claims under the Maryland Consumer Protection Act against the brand name defendants only, as well as public nuisance and negligence for the remaining defendants. The Company was originally able to consolidate the New Mexico and Baltimore Actions to the MDL, however both actions were recently remanded to state court.

Some of the Company’s retailer customers are seeking indemnity from the Company for a portion of their defense costs and liability relating to these cases. We intend to defend all of these lawsuits vigorously.
Acetaminophen

    The Company has received requests for indemnification and defense of several consumer fraud claims involving its store brand infants’ and children’s acetaminophen products. In September 2020, the Company was directly named as a defendant in 1 suit filed in the Central District of California. The Company was recently named in a cross complaint by a retailer for contractual indemnity in California Superior Court, Alameda County. The Company has also received 16 different claims for indemnification or defense from 10 different retailers for lawsuits filed in California, Illinois, Florida and Pennsylvania, with nationwide class action allegations.

The Plaintiffs generally allege that the children’s and infants’ acetaminophen products have identical drug concentration amounts, yet the infants’ product costs more than the children’s product and consumers have been misled into purchasing the more expensive product. The Company will aggressively defend the suits in which it is named and is continuing to assess whether, or to what extent, the Company may contribute in the lawsuits filed against its retail customers.

Contingencies Accruals

As a result of the matters discussed in this Note, the Company has established a loss accrual for litigation contingencies where we believe a loss to be probable and for which an amount of loss can be reasonably estimated. However, we cannot determine a reasonable estimate of the maximum possible loss or range of loss for these matters given that they are at various stages of the litigation process and each case is subject to inherent uncertainties of litigation. At April 3, 2021, the loss accrual for litigation contingencies reflected on the balance sheet in Other accrued liabilities was approximately $65.0 million. The Company also recorded an insurance recovery receivable reflected on the balance sheet in Prepaid expenses and other current assets of approximately $65.0 million related to these litigation contingencies because it believes such amount is recoverable based on communications with its insurers to date; however, the Company may erode this insurance receivable as it incurs defense costs associated with defending this matter. The Company’s management believes these accruals for contingencies are reasonable and sufficient based upon information currently available to management; however, there can be no assurance that final costs related to these contingencies will not exceed current estimates or that all of the final costs related to these contingencies will be covered by insurance. In addition, we have other litigation matters pending for which we have not recorded any accruals because our potential liability for those matters is not probable or cannot be reasonably estimated based on currently available information. For those matters where we have not recorded an accrual but a loss is reasonably possible, we cannot determine a reasonable estimate of the maximum possible loss or range of loss for these matters given that they are at various stages of the litigation process and each case is subject to the inherent uncertainties of litigation.

42
Perrigo Company plc - Item 1
Note 16

NOTE 1516 – RESTRUCTURING CHARGES


We periodically take action to reduce redundant expenses and improve operating efficiencies. Restructuring activity includes severance, lease exit costs, and related consulting fees. The following reflects our restructuring activity (in millions):
Three Months Ended
April 3,
2021		March 28,
2020
Beginning balance$9.1 $19.5 
Additional charges1.8 0 
Payments(4.4)(3.5)
Non-cash adjustments(0.3)0 
Ending balance$6.2 $16.0 
 Three Months Ended Nine Months Ended
 September 30,
2017		 October 1,
2016		 September 30,
2017		 October 1,
2016
Beginning balance$39.7
 $12.2
 $19.7
 $20.7
Additional charges3.8
 6.6
 54.7
 17.9
Payments(17.8) (8.6) (47.6) (33.3)
Non-cash adjustments0.4
 0.1
 (0.7) 5.0
Ending balance$26.1
 $10.3
 $26.1
 $10.3


Restructuring activity includes severance, lease exit costs, and asset impairments.    The charges incurred during the three and nine months ended September 30, 2017April 3, 2021 were primarily associated with actions we tooktaken to streamline our organization as announced on February 21, 2017. Duringthe organization. There were 0 charges incurred during the three and nine months ended September 30, 2017, $3.8 million and $54.7 million of restructuring expenses were recorded, respectively. Of the amount recorded during the nine months ended September 30, 2017, $27.2 million was related to the CHCA segment.March 28, 2020.

    There were no other material restructuring programs that significantly impacted any other reportable segments.for the three months ended April 3, 2021. All charges are recorded in Restructuring expense on the Condensed Consolidated Statements of Operations. The remaining $22.4$6.2 million liability for employee severance benefits is expected to be paid within the next year, while the remaining $3.7 million liability for lease exit costs is expected to be incurred over the remaining terms of the applicable leases.year.


NOTE 1617 – SEGMENT INFORMATION
    
Our reporting segments are as follows:

CHCA,comprises our U.S., Mexico and Canada consumer healthcare business (OTC, contract, infant formula and animal health categories).
CHCI,comprises our legacy Branded Consumer Healthcare segment and now includes our consumer focused businesses in the U.K., Australia, and Israel. This segment also includes our U.K. liquid licensed products business.
RX,comprises our U.S. Prescription Pharmaceuticals business.

We also have an "Other" reporting segment that consists of our legacy API business, which does not meet the quantitative threshold required to be a separately reportable segment. Effective January 1, 2017, due to the sale of the Tysabri® financial asset, all legal expenses associated with the former Specialty Sciences segment were moved to unallocated expenses.    Our segments reflect the way in which our chiefmanagement makes operating decision maker reviews our operatingdecisions, allocates resources, and manages the growth and profitability of the Company. As discussed in Note 8, as of March 1, 2021, the financial results and allocates resources.assets and liabilities of the RX business are classified as discontinued operations in the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets. The RX business assets held-for-sale are included below in the summary of total assets.


Perrigo Company plc - Item 1
Note 16


The tables below tables show select financial measures by reporting segment (in millions):
Total Assets

April 3,
2021		December 31,
2020
CSCA$4,738.9 $4,585.1 
CSCI4,596.8 4,872.4 
Held-for-sale1,989.1 2,030.9 
Total$11,324.8 $11,488.4 

Three Months Ended
April 3, 2021March 28, 2020
Net
Sales		Operating Income (Loss)Intangible Asset AmortizationNet
Sales		Operating Income (Loss)Intangible Asset Amortization
CSCA$640.5 $95.6 $12.9 $700.6 $122.1 $14.3 
CSCI369.5 17.4 40.3 382.7 25.0 38.3 
Unallocated0 (61.6)0 0 (60.7)0 
Continuing Operations Total$1,010.0 $51.4 $53.2 $1,083.3 $86.4 $52.6 
43
Perrigo Company plc - Item 2
Executive Overview
  Total Assets
  September 30,
2017		 December 31,
2016
CHCA $3,833.7
 $3,351.3
CHCI 5,114.2
 4,795.2
RX 2,597.0
 2,646.4
Specialty Sciences —
 2,775.8
Other 297.7
 301.4
Total $11,842.6
 $13,870.1

 Three Months Ended
 September 30, 2017 October 1, 2016
 
Net
Sales
 Operating Income (Loss) Intangible Asset Amortization 
Net
Sales
 Operating Income (Loss) Intangible Asset Amortization
CHCA$598.8
 $124.3
 $16.9
 $611.2
 $99.0
 $17.6
CHCI365.4
 4.6
 50.2
 377.4
 (1,615.5) 44.4
RX250.6
 82.1
 21.0
 251.9
 74.4
 27.2
Specialty Sciences—
 —
 —
 —
 3.2
 —
Other16.5
 (0.4) 0.4
 21.1
 (1.5) 0.5
Unallocated—
 (48.2) —
 —
 (27.9) —
Total$1,231.3
 $162.4
 $88.5
 $1,261.6
 $(1,468.3) $89.7

 Nine Months Ended
 September 30, 2017 October 1, 2016
 
Net
Sales
 Operating Income (Loss) Intangible Asset Amortization 
Net
Sales
 Operating Income (Loss) Intangible Asset Amortization
CHCA$1,786.4
 $303.6
 $51.1
 $1,880.2
 $316.4
 $53.3
CHCI1,116.8
 8.7
 143.4
 1,232.7
 (2,011.3) 130.6
RX708.4
 239.6
 65.6
 776.9
 258.3
 78.6
Specialty Sciences—
 —
 —
 —
 (1.9) —
Other51.5
 9.4
 1.2
 59.5
 2.6
 1.4
Unallocated—
 (121.7) —
 —
 (79.2) —
Total$3,663.1
 $439.6
 $261.3
 $3,949.3
 $(1,515.1) $263.9

ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


EXECUTIVE OVERVIEW


This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements included in this Form 10-Q and our Form 10-K for the year ended December 31, 20162020 (the “2016“2020 Form 10-K”). These historical financial statements may not be indicative of our future performance. This discussion contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks referred to under “Risk Factors” in Item 1A of our 20162020 Form 10-K and Part II,II. Item 1A of this Form 10-Q.


Perrigo Company plc was incorporated under the laws of Ireland on June 28, 2013 and became the successor registrant of Perrigo Company, a Michigan corporation, on December 18, 2013 in connection with the acquisition of Elan Corporation, plc ("Elan"). Unless the context requires otherwise, the terms "Perrigo," the "Company," "we," "our," "us," and similar pronouns used herein refer to Perrigo Company plc, its subsidiaries, and all predecessors of Perrigo Company plc and its subsidiaries.
Perrigo Company plc - Item 2
Executive Overview




We are a leading global healthcare company that delivers value     Our vision is to our customers and consumersmake lives better by providingbringing Quality, Affordable HealthcareSelf-Care Products® that consumers trust everywhere they are sold. Founded in 1887 as a packager of home remedies, we have built a unique business model that is best described as the convergence of a fast-moving consumer goods company, a high-quality pharmaceutical manufacturing organization and a world-class supply chain network. We believe we are one of the world's largest manufacturers of over-the-counter (“OTC”) healthcare products and suppliers of infant formulas for the store brand market. We also are a leading provider of branded OTC products throughout Europeover-the-counter ("OTC") health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed.

In August 2018, we announced a plan to separate our RX business. On March 1, 2021, we announced a definitive agreement to sell our RX business to Altaris for total consideration of $1.55 billion, including $1.5 billion in cash and the U.S., as wellassumption of more than $50.0 million in potential R&D milestone payments and contingent purchase obligations with third-party Rx partners. On March 8, 2021, we purchased an ANDA for a generic topical lotion for $53.3 million, which was the largest contingent purchase obligation to be assumed by Altaris and increased the cash consideration we will receive upon completion of the sale of the RX business to $1.55 billion. The transaction is subject to antitrust and other customary closing conditions and is expected to close in the third quarter of 2021.

The sale of the RX business will establish Perrigo as a leading producerpure-play consumer self-care company, which is an important step in our transformation plan and consistent with our vision. The financial results of generic standard topical products suchthe RX business, which were previously reported as creams, lotions,part of our RX segment, have been classified as discontinued operations in the Condensed Consolidated Statements of Operations, and gels,its assets and liabilities have been classified as well as inhalantsheld for sale for all periods presented. Unless otherwise noted, amounts and injections ("extended topical") prescription drugs. We are headquartered in Ireland,disclosures throughout this Management’s Discussion and sellAnalysis relate to our products primarily in North Americacontinuing operations. Refer to Item 1. Note 8 for additional information regarding discontinued operations.

Our Segments

Our reporting and Europe, as well as in other markets, including Australia, Israel and China.

             Our reportingoperating segments are as follows:


•Consumer HealthcareSelf-Care Americas ("CHCA" ("CSCA"), comprises our consumer self-care business (OTC, infant formula, and oral self-care categories, and contract manufacturing) in the U.S., Mexico and Canada consumer healthcare business (OTC, contract, infant formula and animal health categories).
Canada.
•Consumer HealthcareSelf-Care International("CHCI" ("CSCI"),comprises our legacy Branded Consumer Healthcare segmentconsumer self-care business primarily branded in Europe and now includesAustralia, our consumer focused businessesstore brand business in the U.K., Australia,United Kingdom and Israel. This segment also includesparts of Europe and Asia, and our U.K. liquid licensed products business.
business in the United Kingdom until it was disposed on June 19, 2020.

Prescription Pharmaceuticals("RX"),comprises    Our segments reflect the way in which our U.S. Prescription Pharmaceuticals business.

We also have an "Other" reporting segment, which comprises our legacy Active Pharmaceutical Ingredients ("API") business,which does not meetmanagement makes operating decisions, allocates resources, and manages the quantitative threshold required to be a separately reportable segment. Effective January 1, 2017, due to the salegrowth and profitability of the Tysabri® financial asset, all legal expenses associated withCompany. Financial information related to our former Specialty Sciences segment were moved to unallocated expenses.business segments and geographic locations can be found in Item 1. Note 2 and Note 17. For results by segment, see "Segment Results" below and Item 1. Note 16.below.

2017 Year-to-Date Highlights

•
On March 27, 2017, we completed the sale of our Tysabri® financial asset, effective January 1, 2017, to Royalty Pharma for up to $2.85 billion, which consists of $2.2 billion in cash and up to $250.0 million and $400.0 million in milestone payments if the royalties on global net sales of Tysabri® that are received by Royalty Pharma meet specific thresholds in 2018 and 2020, respectively. As a result of this transaction, we derecognized the Tysabri® financial asset and recorded a $17.1 million gain (refer to Item 1. Note 6).

•
On April 6, 2017, we completed the sale of our India API business to Strides Shasun Limited for $22.2 million, inclusive of an estimated working capital adjustment. The sale did not have a material impact on our operations (refer to Item 1. Note 2).

•
On August 4, 2017, we signed a definitive agreement for the sale of our Israel API business to SK Capital for $110.0 million in cash, inclusive of a net debt adjustment. We expect to finalize the sale within the next three months. The sale is not expected to have a material impact on our operations (refer to Item 1. Note 9).

•
We completed $2.2 billion of debt repayments during the nine months ended September 30, 2017 (refer to Item 1. Note 10).

•
On August 25, 2017, we completed the sale of our Russian business to Alvogen Pharma LLC and Alvogen CEE Kft. for €12.7 million ($15.1 million), inclusive of an estimated working capital adjustment. The sale did not have a material impact on our operations (refer to Item 1. Note 2).


44
Perrigo Company plc - Item 2
Executive Overview


Highlights

Impact of COVID-19 Pandemic

We have been impacted by the coronavirus (COVID-19) global pandemic and the responses by government entities to combat the virus. We currently continue to operate in all our jurisdictions and are complying with the rules and guidelines prescribed in each jurisdiction. We are closely monitoring the impact of COVID-19 on all aspects of our business in all our global locations. Our first priority has been, and will continue to be, the safety of our employees who continue to come to work and are dedicated to keeping our essential products flowing into the market. We have taken extra precautions at our facilities, to help ensure the health and safety of our employees, that are in line with guidance from global and local health authorities. Among other precautions implemented, we have generally restricted access to our production facilities worldwide to essential employees only and permitted a limited number of nonessential employees into other facilities with a strict approval process, implemented a multi-step pre-screening access process before an employee can enter a facility, communicated regularly with employees and provided education and implemented controls related to physical distancing and hygiene measures, implemented remote work arrangements where appropriate, restricted business travel, and prioritized production of essential products for several months following the initial outbreak. To date, these arrangements have not materially affected our ability to maintain our business operations, including the operation of financial reporting systems, internal control over financial reporting, and disclosure controls and procedures.

    Both the outbreak of the disease and the actions to slow its spread have had an adverse impact on our operations by, among other things, increasing absenteeism, affecting the supply of raw materials and third party supplied finished goods, and preventing many of our employees from coming to work. We have responded to such impacts by, among other things, implementing protocols to protect the health of factory workers, adjusting production schedules, and seeking alternate suppliers where available, and so far, most of our facilities have continued to produce at high levels despite these challenges. However, while many jurisdictions are relaxing COVID-19 related restrictions, some jurisdictions have experienced new surges in COVID-19 cases or new strains of the virus and may implement new or renewed restrictions. In addition, as conditions worldwide continue to evolve, uncertainty remains about the timing of widespread availability and acceptance of vaccines and the efficacy of current vaccines against evolving strains of the virus. As such, if the pandemic continues or intensifies, it is possible that these or other challenges may begin having a larger impact on our operations. Additionally, concerns over the economic impact of COVID-19 have caused volatility in financial and other capital markets, which has adversely impacted, and may continue to adversely impact our stock price and our ability to access capital markets. The situation surrounding COVID-19 remains fluid, and we are actively managing our response and assessing potential impacts to our financial condition, supply chains and other operations, employees, results of operations, consumer demand for our products, and our ability to access capital. The magnitude of any such adverse impact cannot currently be determined due to a number of uncertainties surrounding COVID-19.

During the three months ended April 3, 2021, our segments continued to experience a decline in net sales for cough and cold products in our upper respiratory and pain and sleeps aids categories, due to the very low incidence of cough and cold related illness this year. We believe the low incidence of cough and cold related illness is due to the social distancing measures and mask mandates still in place to combat spreading of the COVID-19 virus. We currently expect this impact to continue through the first half of 2021.

    Also, during the three months ended April 3, 2021, we incurred additional operating costs related to COVID-19, due primarily to increased material costs and increased costs driven by pandemic-related global supply chain disruptions. These costs are in addition to the costs related to the ongoing precautions implemented in 2020 to keep our employees safe as well as known increased material costs carried over from 2020. We expect these costs will continue throughout calendar year 2021. Given our financial strength, we expect to continue to maintain sufficient liquidity as we continue to manage through the pandemic.

    Moving forward, it is uncertain if the consumer and customer behavior surrounding COVID-19 that has impacted net sales will continue or change and if our incremental operating costs will continue or change. Any change will likely depend on the duration and severity of the COVID-19 pandemic, including if new strains of the virus become more prevalent, contagious or harmful, and each individual country's response to the pandemic. In addition, the dynamics we are experiencing now may continue or change as COVID-19 vaccines continue to be distributed. The impact of the current vaccination efforts on the evolution of the pandemic globally continues to remain uncertain at this time.
45
Perrigo Company plc - Item 2
Consolidated



RESULTS OF OPERATIONS


CONSOLIDATED


Consolidated Financial Results

Three Month Comparison
 Three Months Ended
(in millions, except percentages)April 3,
2021		March 28,
2020
Net sales$1,010.0 $1,083.3 
Gross profit$368.4 $393.7 
Gross profit %36.5 %36.3 %
Operating income$51.4 $86.4 
Operating income %5.1 %8.0 %
prgo-20210403_g1.jpg
 Three Months Ended Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017		 October 1,
2016		 September 30,
2017
Net sales$1,261.6
 $1,231.3
 $3,949.3
 $3,663.1
Gross profit$484.5
 $497.8
 $1,564.1
 $1,466.7
Gross profit %38.4 % 40.4% 39.6 % 40.0%
Operating expenses$1,952.8
 $335.4
 $3,079.2
 $1,027.1
Operating expenses %154.8 % 27.2% 78.0 % 28.0%
Operating income (loss)$(1,468.3) $162.4
 $(1,515.1) $439.6
Operating income (loss) %(116.4)% 13.2% (38.4)% 12.0%
Change in financial assets$377.4
 $2.6
 $1,492.6
 $24.2
Interest and other, net$55.6
 $31.1
 $195.6
 $132.0
Loss on extinguishment of debt$0.7
 $—
 $1.1
 $135.2
Income tax expense (benefit)$(311.8) $84.2
 $(550.7) $101.8
Net income (loss)$(1,590.2) $44.5
 $(2,653.7) $46.4
cy17q110q_chart-47601a02.jpgcy17q210q_chart-39323a01.jpg
prgo-20210403_g2.jpg

* Total net sales by geography is derived from the location of the entity that sells to a third party.
The $30.3
Three Months Ended April 3, 2021 vs. Three Months Ended March 28, 2020

Net sales decreased $73.3 million, or 7%, due to:
•$84.2 million, or 8%, net decrease due primarily to:
◦$59.0 million net decrease in consolidated net sales for the three months ended September 30, 2017 as compared to the prior year period was due to discontinued products of $6.2 million, lower sales in the CHCACSCA segment due primarily to a decrease of $50.0 million resulting from the absence of $21.0 million of sales related to the U.S. Vitamins, Minerals, and Supplements ("VMS") business, lower salespandemic-related pantry load benefit in the CHCIprior year quarter. A further decrease of $35.0 million in sales of products in our upper respiratory and pain and sleep aids categories resulted from the very low incidence of cough and cold related illness this year. These declines were partially offset by an increase of $23.8 million in sales from our acquisition of Dr. Fresh in April of 2020.
◦$25.2 million net decrease in the CSCI segment due primarily to a decrease of $33.0 million in sales of products in our upper respiratory category resulting from the absencevery low incidence of $41.7cough and cold related illness this year. A further decrease of $23.0 million of sales as a result ofresulted from the cancellation of certain distribution contracts, and lower salespandemic-related pantry load benefit in the RX segment driven by lower net sales of Entocort® in the amount of $10.2 million and pricing pressures across the portfolio.prior year quarter. These decreases were partially offset by the incremental impact of new product sales, positive pricing, and $8.5 million of $55.4sales from the acquisitions of the three Eastern European Brands in October 2020 and Dr. Fresh in April 2020.

•$10.9 million andnet increase due primarily to:
•$25.2 million increase primarily from favorable Euro foreign currency translation of $13.0 million. translation; partially offset by
46
Perrigo Company plc - Item 2
Consolidated operating

•$14.3 million decrease due to our divested Rosemont pharmaceuticals business previously included in our CSCI segment.

Operating income for the three months ended September 30, 2017 increaseddecreased $35.0 million, or 41%, due primarily to:

•$25.3 million decrease in gross profit due primarily to the absence of asset impairment charges in the amount of $1.6 billion taken in the prior year period (refer to Item 1. Note 3).

The $286.2 million decrease in consolidated net sales for the nine months ended September 30, 2017 as compared to the prior year period was due to discontinued products of $18.4 million, lower sales in the CHCA segment due primarily to the absence of $110.1 million of sales related to the U.S. VMS business, lower sales in the CHCI segment due primarily to the absence of $118.4 million of sales as a result of the cancellation of certain distribution contracts, and lower sales in the RX segment driven by lower net sales of Entocort® in the amount of $61.4 million and pricing pressures across the portfolio. These decreases were partially offset by new product sales
Perrigo Company plc - Item 2
Consolidated


of $155.8 million. Consolidated operating income for the nine months ended September 30, 2017 increased due primarily to the absence of asset impairment charges in the amount of $2.0 billion taken in the prior year period (refer to Item 1. Note 3).

Further details and analysis of our financial results for the three and nine months endedSeptember 30, 2017 are described below by reporting segment and line item. Refer to the "Unallocated Expenses," "Interest, Other and Change in financial assets (Consolidated)," and "Income Taxes (Consolidated)" sections below for discussions related to our expenses.

Restructuring

On February 21, 2017, we approved a workforce reduction plan as part of a larger cost optimization strategy across the Company. We expect to reduce our global workforce by approximately 750 employees, which includes some actions already taken and 235 employees who have elected to participate in a voluntary early retirement program. This represents a reduction of approximately 14% of our global non-production workforce. The changes to our workforce will vary by country, based on legal requirements and required consultations with works councils and other employee representatives, as appropriate.

In connection with this plan, we estimate that we will recognize total pre-tax restructuring charges of approximately $55.0 million to $65.0 million, consisting of one-time termination benefits, severance arrangements, and other termination costs. We expect to incur the majority of the remaining charges in 2017, with the balance to be recognized during the first quarter of the year ending December 31, 2018. During the three and nine months ended September 30, 2017, we recognized $3.8 million and $54.7 million, respectively, of restructuring expenses due primarily to this cost optimization strategy.

Our cost optimization strategy is expected to yield approximately $130.0 million in savings per annum by mid-2018. This is in addition to the savings that our supply chain organization continues to generate for both our North American and International segments.

CONSUMER HEALTHCARE AMERICAS

Recent Trends and Developments

We continue to experience a reduction in pricing expectations within our CHCA segment, primarily in the cough/cold, animal health, and analgesics categories due to various factors, including increased focus from customers to capture supply chain productivity savings and competition in specific product categories. We expect this pricing environment to continue to impact our CHCA segment for the foreseeable future.

•
We completed the sale of the animal health pet treats plant fixed assets on February 1, 2017 and received $7.7 million in proceeds (refer to Item 1. Note 2).

Perrigo Company plc - Item 2
CHCA


Segment Results

Three Month Comparison
cy17q110q_chart-47252a02.jpg

 Three Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$611.2
 $598.8
Gross profit$199.2
 $206.1
Gross profit %32.6% 34.4%
Operating income$99.0
 $124.3
Operating income %16.2% 20.8%
Three Months Ended September 30, 2017 vs. Three Months Ended October 1, 2016

Net sales decreased $12.4 million, or 2%, over the prior year period due to:

•
New product sales of $13.2 million related primarily to the launches of Esomemprazole Magnesium (store brand equivalent to Nexium®); and
Favorable foreign currency translation movement of $1.4 million; more than offset by
•
The absence of $21.0 million in sales attributable to the U.S. VMS business, which was sold in August 2016 (refer to Item 1. Note 2);
A net decrease in sales of existing products of $3.2 million due primarily to:
Higher sales in the gastrointestinal and animal health categories and in our Mexico business;
Pricing pressures in the cough/cold, and analgesics categories; and
Lower volumes in the nicotine replacement category; and
Discontinued products of $2.7 million.

Operating income increased $25.3 million, or 26%, as a result of:

An increase of $6.9 million in gross profit due to:
Favorable product mix in certain categories; and
Positive contributions from supply chain efficiencies; offset partially by
•
The absence of $3.4 million in gross profit as a result of the sale of the U.S. VMS business (refer to Item 1. Note 2); and
Pricing pressures in certain categories as discussed above.

A decrease of $18.4 million in operating expenses due to:
•
Decreased restructuring expense of $4.8 million related primarily to the cost reduction initiatives taken in the prior year (refer to Item 1. Note 15);
Decreased selling and administrative expenses of $4.8 million due primarily to timing of promotions related to our animal health category and savings related to our previously announced strategic initiatives;
Decreased Research and Development ("R&D") expenses of $4.5 million due to timing of clinical trials; and
•
The absence of a $3.4 million impairment charge related to held-for-sale assets associated with our animal health pet treats plant (refer to Item 1. Note 9); offset partially by
•
A $2.0 million gain related to contingent consideration (refer to Item 1. Note 6).

Gross profit as a percentage of net sales was 1.8% higherincreased 20 basis points due primarily to favorable product mixmix; and supply chain efficiencies as discussed above.

Perrigo Company plc - Item 2
CHCA


Operating income as a percentage of net sales was 4.6% higher due primarily to favorable product mix as discussed above and decreased operating expenses.

Nine Month Comparison
cy17q210q_chart-39117a01.jpg

 Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$1,880.2
 $1,786.4
Gross profit$615.1
 $598.3
Gross profit %32.7% 33.5%
Operating income$316.4
 $303.6
Operating income %16.8% 17.0%
Nine Months Ended September 30, 2017 vs. Nine Months Ended October 1, 2016

Net sales decreased $93.8•$9.7 million or 5%, over the prior year period due to:

•
New product sales of $51.2 million related primarily to the launches of fluticasone nasal spray (store brand equivalent to Flonase®), smoking cessation products and Esomemprazole Magnesium (store brand equivalent to Nexium®); more than offset by
•
The absence of $110.1 million in sales attributable to the U.S. VMS business (refer to Item 1. Note 2);
A net decrease in sales of existing products of $22.6 million due to:
Higher sales in the cough/cold category and Mexico business; more than offset by
Lower sales in our infant nutrition and animal health categories;
Pricing pressures in the cough/cold, analgesics, and gastrointestinal categories; and
Lower volumes in the nicotine replacement category;
Discontinued products of $11.1 million; and
Unfavorable foreign currency translation movement of $1.1 million.

Operating income decreased $12.8 million, or 4%, as a result of:

A decrease of $16.8 million in gross profit due to:
Favorable product mix in certain categories; and
Positive contributions from supply chain efficiencies; more than offset by
•
The absence of $17.6 million in gross profit as a result of the sale of the U.S. VMS business (refer to Item 1. Note 2); and
Pricing pressures in certain categories as discussed above.

A decrease of $4.0 million in operating expenses due to:
Decreased selling and administrative expenses of $10.8 million due primarily to timing of promotions related to our animal health category and savings related to our cost reduction initiatives taken in the prior year;
•
The absence of a $9.6 million impairment charge related to the U.S. VMS business (refer to Item 1. Note 2) and held-for-sale assets associated with our animal health pet treats plant (refer to Item 1. Note 9); and
Decreased R&D expenses of $7.6 million due to timing of clinical trials, reduced spending on infant formula clinical trials and lower costs related to our cost reduction initiatives; offset partially by
•
A $2.9 million gain related to contingent consideration (refer to Item 1. Note 6);
•
Increased restructuring expenses of $21.5 million related primarily to strategic organizational enhancements (refer to Item 1. Note 15); and
A $4.1 million impairment charge recorded on idle property, plant and equipment.

Perrigo Company plc - Item 2
CHCI


CONSUMER HEALTHCARE INTERNATIONAL

Recent Trends and Developments

As part of our strategic initiatives, management continues to drive improvements and evaluate the overall cost structures within our CHCI segment in the following ways:

On December 8, 2016, we announced the cancellation of the unprofitable EuroGenerics NV distribution agreement in Belgium. The cancellation, combined with the exit of certain OTC distribution agreements, is expected to reduce net sales by approximately $210.0 million in 2017.

We continue to make progress on our previously announced restructuring plans to right-size the Omega business due to the impact of market dynamics on sales volumes. Management continues to evaluate the overall cost structure relative to current and expected market dynamics. During the three and nine months ended September 30, 2017, we recognized $3.6 million and $13.2 million of restructuring expense in the CHCI segment, respectively.

Management continues to evaluate the most effective business model for each country, aligning our sales infrastructure and actively integrating sales strategies with promotional programs.

•
On August 25, 2017, we completed the sale of our Russian business, which was previously classified as held-for-sale, to Alvogen Pharma LLC and Alvogen CEE Kft. The total sale price was €12.7 million ($15.1 million), inclusive of an estimated working capital adjustment, which resulted in an immaterial gain in the segment (refer to Item 1. Note 2).

The combination of these actions is expected to improve the segment's focus on higher value OTC products, reduce selling costs and improve operating margins in the segment.

Segment Results

Three Month Comparison

cy17q110q_chart-47491a02.jpg

 Three Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$377.4
 $365.4
Gross profit$155.2
 $165.9
Gross profit %41.1 % 45.4%
Operating income (loss)$(1,615.5) $4.6
Operating income (loss) %(428.1)% 1.2%
Three Months Ended September 30, 2017 vs. Three Months Ended October 1, 2016

Net sales decreased $12.0 million, or 3%, over the prior year period due primarily to:

Favorable foreign currency translation movement of $11.6 million;
New product sales of $11.4 million; and
A net increase in sales of existing products of $8.9 million due to increased sales primarily in the cough/cold, allergy, analgesics, and lifestyle categories; more than offset by
Perrigo Company plc - Item 2
CHCI


The absence of $41.7 million in sales attributable to the cancellation of unprofitable distribution contracts; and
Discontinued products of $3.2 million.

Operating income increased $1.6 billion, as a result of:

An increase of $10.7 million in gross profit due primarily to:
Favorable foreign currency translation movement;
Improved product mix for sales of existing products; and
Operational efficiencies across the organization.

A decrease of $1.6 billion in operating expenses due primarily to:
The absence◦$6.5 million increase in selling, administration and R&D expenses due primarily to unfavorable foreign currency translation and increased employee-related expenses, partially offset by a decrease in advertising and promotion expenses; and
◦$1.7 million increase in restructuring expenses associated with actions taken to streamline the organization.

Recent Developments

Irish Revenue Notice of $1.6 billion of impairment charges on certain indefinite-lived and definite-lived intangible brand category assets and goodwill impairmentsAmended Assessment

As described in the Branded Consumer Healthcare - Rest of World ("BCH-ROW") and Branded Consumer Healthcare - Belgium ("BCH-Belgium")
reporting units recordedmore detail in the prior year period (refer to Item 1. Note 314); and
A decrease, on November 29, 2018, Irish Revenue issued a Notice of $4.6 million in selling and administrative expenses due to previously announced strategic initiatives to better align promotional investments with sales and cost reduction initiatives taken in the current year; offset partially by
•
Increased restructuring charges totaling $1.2 million related to strategic organizational enhancements (refer to Item 1. Note 15Amended Assessment (“NoA”).

Gross profit as a percentage of net sales was 4.3% higher due primarily to improved product mix primarily driven by the cancellation of certain unprofitable distribution contracts, as described above.

•
Operating income as a percentage of net sales was 429.3% higher due primarily to the absence of $1.6 billion of intangible asset and goodwill impairment charges as discussed above (refer to Item 1. Note 3).

Nine Month Comparison

cy17q210q_chart-39013a01.jpg


 Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$1,232.7
 $1,116.8
Gross profit$542.1
 $509.4
Gross profit %44.0% 45.6%
Operating income (loss)$(2,011.3) $8.7
Operating income (loss) %(163.2)% 0.8%

Nine Months EndedSeptember 30, 2017 vs. Nine Months EndedOctober 1, 2016

Net sales decreased $115.9 million, or 9%, over the prior year period due primarily to:

New product sales of $50.4 million; more than offset by
The absence of $118.4 million in sales attributable to the cancellation of unprofitable distribution contracts;
Unfavorable foreign currency translation movement of $25.2 million;
A decrease in sales of existing products of $17.4 million primarily in the anti-parasites and vitamins categories; and
Discontinued products of $5.0 million.

Perrigo Company plc - Item 2
CHCI


Operating income increased $2.0 billion due to:

A decrease of $32.7 million in gross profit due primarily to:
Improved product mix for sales of existing products; and
Operational efficiencies across the organization; more than offset by
Lower margins in our U.K. store brand business; and
Unfavorable foreign currency translation movement.

A decrease of $2.1 billion in operating expenses due primarily to:
The absence of $2.0 billion of impairment charges on certain indefinite-lived and definite-lived intangible brand category assets and goodwill impairments in the BCH-ROW and BCH-Belgium
reporting units recorded in the prior year period (refer to Item 1. Note 3); and
A decrease in selling and administrative expenses of $48.5 million due to previously announced strategic initiatives to better align promotional investments with sales and cost reduction initiatives taken in the current year; offset partially by
•
A $4.8 million impairment charge recorded related to the Russian business (refer to Item 1. Note 2) and In-Process Research and Development ("IPR&D"); and
•
Increased restructuring expense of $2.8 million related to strategic organizational enhancements (refer to Item 1. Note 15).

Gross profit as a percentage of net sales was 1.6% higher due primarily to improved product mix primarily driven by the cancellation of certain unprofitable distribution contracts, as described above.

•
Operating income as a percentage of net sales was 164.0% higher due primarily to the absence of $2.0 billion of intangible asset and goodwill impairment charges as discussed above (refer to Item 1. Note 3).

PRESCRIPTION PHARMACEUTICALS

Recent Trends and Developments

We continue to experience a significant reduction in pricing expectations from historical levels in our RX segment due to industry and competitive pressures. This softness in pricing is attributable to various factors, including increased focus from customers to capture supply chain productivity savings, low raw material commodity pricing, competition in specific products, and consolidation of certain customers. We expect this softness to continue to impact the segment for the foreseeable future, and we are forecasting a high single digit pricing decline in this segment for the year ending December 31, 2017.

On November 10, 2016, we announced that as part of our portfolio review process we are conducting a comprehensive internal evaluation of the RX segment's market position, growth opportunities, and interdependencies with our manufacturing and shared service operations to determine if strategic alternatives should be explored.

•
During the three months ended December 31, 2016, the U.S. market for Entocort® (Budesonide) capsules, including both brand and authorized generic capsules, experienced significant and unexpected increased competition, which reduced our future revenue stream. We expect our net sales in the RX segment for the year ending December 31, 2017 will be negatively impacted by approximately $67.0 million.

During the nine months ended September 30, 2017, we sold various Abbreviated New Drug Applications ("ANDAs") for a total gain of $23.0 million.

Perrigo Company plc - Item 2
RX


Segment Results

Three Month Comparison
cy17q110q_chart-47343a02.jpg

 Three Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$251.9
 $250.6
Gross profit$120.9
 $116.7
Gross profit %48.0% 46.6%
Operating income$74.4
 $82.1
Operating income %29.5% 32.8%
Three Months Ended September 30, 2017 vs. Three Months Ended October 1, 2016

Net sales decreased $1.3 million, or 1%, due to:

•
New product sales of $30.8 million due primarily to the sale of Scopolamine and Testosterone 2% topical (store brand equivalent to Axiron®); more than offset by
Decreased sales of existing products of $21.5 million due primarily to pricing pressure across the portfolio; and
•
Lower Entocort® sales of $10.2 million.

Segment operating income increased $7.7 million, or 10%, as a result of:

A decrease of $4.2 million in gross profit due primarily to:
•
Lower Entocort® sales as discussed above; and
Pricing pressure as discussed above.

A decrease of $11.9 million in operating expenses due primarily to:
Decreased selling and administrative expenses of $8.4 million due primarily to the prior year specialty pharmaceuticals sales force restructuring initiative; and
Decreased R&D expenses of $7.3 million due to timing of clinical trials, lower legal spend, and lower ongoing costs on certain projects; offset partially by
A $4.0 million impairment charge on certain fixed assets in the current period.

•
Gross profit as a percentage of net sales was 1.4% lower due primarily to lower sales of Entocort® and pricing pressures.

•
Operating income as a percentage of net sales was 3.3% higher due primarily to decreased costs related to R&D spend and restructuring initiatives taken in the prior year; offset partially by lower sales of Entocort®.

Perrigo Company plc - Item 2
RX


Nine Month Comparison
cy17q210q_chart-38938a01.jpg


 Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$776.9
 $708.4
Gross profit$380.2
 $332.1
Gross profit %48.9% 46.9%
Operating income$258.3
 $239.6
Operating income %33.3% 33.8%
Nine Months Ended September 30, 2017 vs. Nine Months Ended October 1, 2016

Net sales decreased $68.5 million, or 9%, due to:

•
New product sales of $53.2 million due primarily to sales of Scopolamine and Testosterone 2% topical (store brand equivalent to Axiron®); more than offset by
•
Lower Entocort® sales of $61.4 million;
Decreased sales of existing products of $58.0 million due to decreased sales volume of certain products and pricing pressure across the portfolio; and
Discontinued products of $2.3 million.

Operating income decreased $18.7 million, or 7%, as a result of:

A decrease of $48.1 million in gross profit due primarily to:
•
Lower Entocort® sales as noted above; and
Pricing pressure as discussed above.

A decrease of $29.4 million in operating expenses due to:
A $23.0 million gain on sales of certain ANDAs;
•
A $17.0 million gain related to contingent consideration (refer to Item 1. Note 6);
Decreased selling and administrative expenses of $18.3 million due primarily to the prior year specialty pharmaceuticals sales force restructuring initiative; and
Decreased R&D expenses of $14.1 million due to timing of clinical trials, lower legal spend, and lower ongoing costs on certain projects; offset partially by
•
Impairment charges related to certain definite-lived intangible assets, certain fixed assets and IPR&D of $34.8 million (refer to Item 1. Note 3); and
•
Increased restructuring expenses of $5.9 million related to strategic organizational enhancements (refer to Item 1. Note 15).

•
Gross profit as a percentage of net sales was 2.0% lower due primarily to lower sales of Entocort® as discussed above.

Perrigo Company plc - Item 2
Other


OTHER

Recent Trends and Developments

On April 6, 2017, we completed the sale of our India API business to Strides Shasun Limited. We received $22.2 million of proceeds, inclusive of an estimated working capital adjustment, which resulted in an immaterial gain. Prior to closing the sale, we determined that the carrying value of the India API business exceeded its fair value less the cost to sell, resulting in an impairment charge of $35.3 million, which was recorded in Impairment charges on the Consolidated Statements of Operations for thetax year ended December 31, 2016 (refer2013, in the amount of €1,643 million, and claiming tax payable in the amount of €1,636 million, not including any interest or applicable penalties. The NoA relates to the tax treatment of the 2013 sale of the Tysabri® intellectual property and related assets to Biogen Idec by Elan Pharma. We strongly believe that Elan Pharma’s tax position is correct and would ultimately be confirmed through judicial process. However, in light of the risks and delays inherent in any litigation, representatives of Perrigo met with representatives of Irish Revenue on March 18, 2021 and April 14, 2021, to explore whether there may be a path forward toward resolving the dispute. On April 26, 2021, Perrigo, through its tax adviser, made a without prejudice written offer of settlement to Irish Revenue detailing a possible framework for such a resolution, which applied an alternative basis of taxation than the respective positions taken by Irish Revenue in the NoA and by Elan Pharma in its tax returns. On May 11, 2021, a representative of Irish Revenue verbally indicated to Perrigo's tax adviser that the written settlement offer would not be accepted as presented and that a formal response would be transmitted in due course. Perrigo will review Irish Revenue's formal response to Perrigo's offer when received and expects further discussions and correspondence with Irish Revenue prior to the TAC hearing in November. There can be no assurances that any settlement is possible on terms acceptable to Perrigo. Unless and until a final settlement is reached, Elan Pharma will vigorously pursue its tax appeal before the TAC, concurrently with any settlement discussions that may occur. No payment of any additional tax will be required unless and until required by a settlement or other final determination.

Internal Revenue Service Audits of Perrigo Company, a U.S. Subsidiary

    As described in more detail in Item 1. Note 214, Perrigo Company, our U.S. subsidiary ("Perrigo U.S.").

On August 4, 2017, we signed, is engaged in a definitive agreement for the saleseries of our Israel API business to SK Capital for $110.0 million in cash, inclusive of a net debt adjustment. We expect to finalize the sale within the next three months, and the sale is not expected to have a material impact on our operations (refer to Item 1. Note 9).

Segment Results

Three Month Comparison
cy17q110q_chart-47367a02.jpg
 Three Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$21.1
 $16.5
Gross profit$9.4
 $9.1
Gross profit %44.5 % 55.5 %
Operating income (loss)$(1.5) $(0.4)
Operating income (loss)%(7.4)% (2.4)%
Three Months Ended September 30, 2017 vs. Three Months Ended October 1, 2016

Net sales decreased $4.6 million due primarily to increased competition on certain products. Operating loss decreased $1.1 million due primarily to a $1.4 million decrease in operating expenses. The decrease in operating expenses related to the absence of a $6.5 million impairment charge recorded on the India API businesstax disputes in the prior year; offset partially by a $3.3 million impairment charge recorded on the Israel API business in the current period (refer to Item 1. Note 9).



Perrigo Company plc - Item 2
Other


Nine Month Comparison

cy17q210q_chart-38723a01.jpg


 Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017
Net sales$59.5
 $51.5
Gross profit$26.8
 $27.8
Gross profit %45.0% 54.1%
Operating income$2.6
 $9.4
Operating income %4.4% 18.2%
Nine Months Ended September 30, 2017 vs. Nine Months Ended October 1, 2016

Net sales decreased $8.0 million dueU.S. relating primarily to competition on certain products. Operating income increased $6.8 million due to a $1.0 million increase in gross profit driven by favorable product mix and a $5.8 million decrease in operating expenses. The decrease in operating expenses related primarily to the absence of a $10.8 million impairment charge recorded on the India API business in the prior year; offset partially by a $3.3 million impairment charge recorded on the Israel API business in the current period (refer to Item 1. Note 9).

Unallocated Expenses

Unallocated expenses are comprised of certain corporate services not allocated to our reporting segments and are recorded above Operating income on the Condensed Consolidated Statements of Operations. Unallocated expenses were as follows (in millions):
Three Months Ended Nine Months Ended
October 1,
2016		 September 30,
2017		 October 1,
2016		 September 30,
2017
$27.7
 $48.2
 $79.1
 $120.8

Effective January 1, 2017, due to the sale of the Tysabri® financial asset, all legal expenses associated with the former Specialty Sciences segment were moved to unallocated expenses.

The increase of $20.5 million in unallocated expenses during the three months ended September 30, 2017 compared to the prior year period was due primarily to an increase in share-based compensation expense of $4.7 million driven primarily by the resignation of certain executives, which had a favorable impact on the prior year period, and an increase of $15.6 million of administrative expenses driven by consulting fees and employee-related expenses.

The increase of $41.7 million in unallocated expenses during the nine months ended September 30, 2017 compared to the prior year period was due to an increase of $26.9 million of administrative expenses driven by consulting fees and employee-related expenses, $8.8 million in share-based compensation driven primarily by the resignation of certain executives, which had a favorable impact on the prior year period, and $5.9 million of restructuring expenses related to ourcost reduction initiatives.

Perrigo Company plc - Item 2
Unallocated, Interest, Other, and Taxes


Interest, Other and Change in financial assets (Consolidated)
 Three Months Ended Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017		 October 1,
2016		 September 30,
2017
Change in financial assets$377.4
 $2.6
 $1,492.6
 $24.2
Interest expense, net$54.6
 $34.7
 $163.2
 $133.1
Other (income) expense, net$1.0
 $(3.6) $32.4
 $(1.1)
Loss on extinguishment of debt$0.7
 $—
 $1.1
 $135.2

Change in Financial Assets

On December 18, 2013, we acquired Elan, which had a royalty agreement with Biogen Idec Inc. ("Biogen"), whereby Biogen conveyed the right to receive royalties that are typically payable on sales revenue generated by the sale, distribution or other use of the drug Tysabri®. Pursuant to the royalty agreement, we were entitled to royalty payments from Biogen based on its Tysabri® sales in all indications and geographies. We received royalties of 12% on worldwide Biogen sales of Tysabri® from December 18, 2013 through April 30, 2014. From May 1, 2014, we received royalties of 18% on annual worldwide Biogen sales of Tysabri® up to $2.0 billion and 25% on annual sales above $2.0 billion.

We accounted for the Tysabri® royalty stream as a financial asset and elected to use the fair value option model. We made the election to account for the Tysabri® financial asset using the fair value option as we believed this method was most appropriate for an asset that did not have a par value, a stated interest stream, or a termination date. The financial asset acquired represented a single unit of accounting. The fair value of the financial asset acquired was determined by using a discounted cash flow analysis related to the expected probability weighted future cash flows to be generated by the royalty stream. The financial asset was classified as a Level 3 asset within the fair value hierarchy, as our valuation utilized significant unobservable inputs, including industry analyst estimates for global Tysabri® sales, probability weighted as to the timing and amount of future cash flows along with certain discount rate assumptions. Cash flow forecasts included the estimated effect and timing of future competition, considering patents in effect for Tysabri® through 2024 and contractual rights to receive cash flows into perpetuity. The discounted cash flows were based upon the expected royalty stream forecasted into perpetuity using a 20-year discrete period with a declining rate terminal value.

In the first quarter of 2016, a competitor's pipeline product, Ocrevus®, received breakthrough therapy designation from the U.S. Food and Drug Administration ("FDA"). Breakthrough therapy designation is granted when a drug is intended alone or in combination with one or more other drugs to treat a serious or life threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. In June 2016, the FDA granted priority review with a target action date in December 2016. A priority review is a designation when the FDA will direct overall attention and resources to the evaluation of applications for drugs that, if approved, would be significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions when compared to standard applications. The product was approved late in the first quarter of 2017. The product is expected to compete with Tysabri®, and we expected it to have a significant negative impact on the Tysabri® royalty stream. Industry analysts believe that, based on released clinical study information, Ocrevus® will compete favorably against Tysabri® in the relapsing, remitting multiple sclerosis market segment due to its high efficacy and convenient dosage form.

Given the new market information for Ocrevus®, we used industry analyst estimates to reduce our first ten year growth forecasts from an average of growth of approximately 3.4% in the fourth calendar quarter of 2015 to an average decline of approximately minus 2.0% in the third and fourth calendar quarters of 2016. In November 2016, we announced we were evaluating strategic alternatives for the Tysabri® asset. As of December 31, 2016, the financial asset was adjusted based on the strategic review and sale process. These effects, combined with the change in discount rate each quarter, led to a reduction in fair value of $204.4 million, $910.8 million, $377.4 million and $1.1 billion in the first, second, third and fourth quarters of 2016, respectively.

On March 27, 2017, we announced the completed divestment of our Tysabri® financial asset to Royalty Pharma for up to $2.85 billion, which consists of $2.2 billion in cash and up to $250.0 million and $400.0 million in
Perrigo Company plc - Item 2
Unallocated, Interest, Other, and Taxes


milestone payments if the royalties on global net sales of Tysabri® that are received by Royalty Pharma meet specific thresholds in 2018 and 2020, respectively. As a result of this transaction, we transferred the entire financial asset to Royalty Pharma and recorded a $17.1 million gain during the three months ended July 1, 2017. We elected to account for the contingent milestone payments using the fair value option method, and these were recorded at an estimated fair value of $143.2 million as of September 30, 2017. We chose the fair value option as we believe it will help investors understand the potential future cash flows we may receive associated with the two contingent milestones.

We valued the contingent milestone payments using a modified Black-Scholes Option Pricing Model ("BSOPM"). Key inputs in the BSOPM are the estimated volatility and rate of return of royalties on global net sales of Tysabri® that are received by Royalty Pharma over time until payment of the contingent milestone payments is completed. Volatility and the estimated fair value of the milestones have a positive relationship such that higher volatility translates to a higher estimated fair value of the contingent milestone payments. In the valuation of contingent milestone payments performed, we assumed volatility of 30.0% and a rate of return of 8.05% as of July 1, 2017 and a volatility of 30.0% and a rate of return of 8.06% as of September 30, 2017. We assess volatility and rate of return inputs quarterly by analyzing certain market volatility benchmarks and the risk associated with Royalty Pharma achieving the underlying projected royalties. During the three and nine months ended September 30, 2017, the fair value of the Royalty Pharma contingent milestone payments decreased $2.9 million and $42.1 million, respectively, as a result of the decrease in the estimated projected Tysabri® revenues due to the launch of Ocrevus® late in the first quarter of 2017 (refer to Item 1. Note 6).

Interest Expense, Net

Interest expense, net was $34.7 million and $133.1 millionduring the three and nine months ended September 30, 2017, respectively, compared to $54.6 million and $163.2 million for the three and nine months ended October 1, 2016, respectively. The $19.9 million and $30.1 million decreases were the result of the early debt repayments made during the nine months ended September 30, 2017 (refer to the "Borrowings and Capital Resources" section below and Item 1. Note 10).

Other (Income) Expense, Net

Other (income) expense, net was $3.6 million income for the three months ended September 30, 2017, compared to $1.0 million expense for the three months ended October 1, 2016. The $4.6 million decrease in expense was due primarily to $2.6 million of favorable changes in revaluation of monetary assets and liabilities held in foreign currencies.

Other (income) expense, net was $1.1 million income during the nine months ended September 30, 2017, compared to $32.4 million expense for the nine months ended October 1, 2016. The $33.5 million decrease in expenses was due primarily to the absence of a $22.3 million equity investment impairment (refer to Item 1. Note 7), $6.7 million of favorable changes in revaluation of monetary assets and liabilities held in foreign currencies, and a $4.2 million reduction in equity method losses, partially offset by a $5.9 million loss related to the pre-issuance hedge reclassification (refer to Item 1. Note 8).

Loss on Extinguishment of Debt

During the nine months ended September 30, 2017, we recorded a $135.2 million loss on extinguishment of debt, which consisted of tender premium on debt repayments, transaction costs, write-off of deferred financing fees, and bond discounts related to the $500.0 million 3.500% senior notes due December 2021, $500.0 million 3.500% senior notes due March 2021, $400.0 million 4.900% senior notes due 2044, $800.0 million 4.000% senior notes due 2023, and $400.0 million 5.300% senior notes due 2043 (refer to Item 1. Note 10).

Perrigo Company plc - Item 2
Unallocated, Interest, Other, and Taxes


Income Taxes (Consolidated)

The effective tax rates were as follows:

Three Months Ended Nine Months Ended
October 1,
2016		 September 30,
2017		 October 1,
2016		 September 30,
2017
16.4% 65.5% 17.2% 68.7%

The effective tax rate for the nine months ended September 30, 2017 was negatively impacted by non-deductible fees related to our debt cancellation, discrete tax items, and additional valuation allowances recorded against deferred tax assets.

Our tax rate is subject to adjustment over the balance of the fiscal year due to, among other things: the jurisdictions in which our profits are determined to be earned and taxed; changes in the valuation of our deferred tax assets and liabilities; adjustments to estimated taxes upon finalization of various tax returns; adjustments based on differing interpretations of the applicable transfer pricing standards; changes in available tax credits, grants and other incentives; changes in stock-based compensation expense; changes in tax laws or the interpretation of such tax laws (for example, proposals for fundamental U.S. international tax reform); changes in U.S. GAAP; and expiration of or the inability to renew tax rulings or tax holiday incentives.

On August 15, 2017, we filed a complaint in the United States District Court for the Western District of Michigan to recover $163.6 million of Federal income tax, penalties, and interest assessed and collected by the Internal Revenue Service (“IRS”), plus statutory interest thereon from the dates of payment, for the fiscal years ended June 27, 2009, June 26, 2010, June 25, 2011, and June 30, 2012 (the “2009 tax year,” “2010 tax year,” “2011 tax year,” and “2012 tax year,” respectively). The IRS audits of those years culminated in the issuances of two statutory notices of deficiency: (1) on August 27, 2014 for the 2009 and 2010 tax years and (2) on April 20, 2017 for the 2011 and 2012 tax years. The statutory notices of deficiency both included un-agreed income adjustments related principally to transfer pricing adjustments regardingincluding income in connection with the purchase, distribution, and sale of store-brand OTC pharmaceutical products in the United States. In addition,States, including the statutory notice of deficiency for the 2011 and 2012 tax years included the capitalization of certain expenses that were deducted when paid or incurred in defending against certain patent infringement lawsuits. We fully paid the assessed amounts of tax, interest, and penalties set forth in the statutory notices and filed timely claims for refund on June 11, 2015 and June 7, 2017 for the 2009-2010 tax years and 2011-2012 tax years, respectively. Our claims for refund were disallowed by certified letters dated August 18, 2015 and July 11, 2017, for the 2009-2010 tax years and 2011-2012 tax years, respectively. The complaint was timely, based upon the refund claim denials, and seeks refunds of tax, interest, and penalties of $37.2 million for the 2009 tax year, $61.5 million for the 2010 tax year, $40.2 million for the 2011 tax year, and $24.7 million for the 2012 tax year. The amounts sought in the complaint for the 2009 and 2010 tax years were recorded as deferred charges on our balance sheet during the three months ended March 28, 2015, and the amounts sought in the complaint for the 2011 and 2012 tax years were recorded as deferred charges on our balance sheet during the three months ended July 1, 2017.heartburn medication omeprazole.


On December 22, 2016,May 7, 2020, we received a noticefinal Notices of proposed adjustment forProposed Adjustment ("NOPA") from the IRS regarding the deductibility of interest related to the IRS audit of Athena Neurosciences, Inc. (“Athena”), a subsidiary of Elan acquired in 1996,Perrigo U.S. for the years ended December 31, 2011, December 31, 2012,June 28, 2014 and December 31, 2013. Perrigo acquired ElanJune 27, 2015. The NOPA capped the interest rate on the debts for U.S. federal tax purposes at 130.0% of the Applicable Federal Rate (a blended rate reduction of 4.0% per annum) on the stated ground that the loans were not negotiated on an arms’-length basis. On May 3, 2021, the IRS notified us that it will no longer pursue the 130% of AFR position as indicated in December 2013. Thisthe NOPA due to a change in IRS policy. The new proposed adjustment, relatesif any, will be provided by the IRS in its rebuttal to the deductibilityour Protest which we filed on February 26, 2021.

Internal Revenue Service Audit of litigation costs.Athena Neurosciences, Inc., a U.S. Subsidiary

On July 11, 2017,April 26, 2019, we received a draft notice of proposed adjustment associated withrevised NOPA from the IRS regarding transfer pricing positions forrelated to the IRS audit of Athena for the years ended December 31, 2011, December 31, 2012 and December 31, 2013. AthenaOur request for Competent Authority Assistance with the IRS, which we made on April 14, 2020, was accepted. An opening conference with the originatorIRS was held on May 6, 2021, and an opening conference with Irish Revenue is
47
Perrigo Company plc - Item 2
Consolidated

scheduled for July 23, 2021 (refer to Item 1. Note 14).
Israeli Notice of Assessment

On December 29, 2020, we received a Stage A assessment from the Israeli Tax Authority for the tax years ended December 31, 2015 through December 31, 2017 in the amount of $63.8 million relating to attribution of intangible income to Israel, income qualifying for a lower preferential rate of tax, exemption from capital gains tax, and deduction of certain settlement payments. We timely filed our protest on March 11, 2021 to move the matter to Stage B of the patents associatedassessment process. We strongly disagree with Tysabrithe assessment and will pursue all available administrative and judicial remedies necessary (refer to Item 1. Note 14).

CONSUMER SELF-CARE AMERICAS

Recent Trends and Developments

•During the first quarter of 2021, net sales of cough and cold products decreased as a result of the very low incidence of cough and cold related illness this year. We believe the very low incidence of cough and cold related illness is attributed to social distancing and mask mandates put in place to combat the spread of COVID-19. With social distancing and mask mandates continuing, we currently anticipate that we will continue to experience lower demand for cough, cold and certain pain products through the first half of 2021. However, increased foot traffic at our retail customers suggests normalizing consumer purchasing routines could be expected in the second half of 2021.

Segment Financial Results

Three Month Comparison
 Three Months Ended
(in millions, except percentages)April 3,
2021		March 28,
2020
Net sales$640.5 $700.6 
Gross profit$194.5 $213.8 
Gross profit %30.4 %30.5 %
Operating income$95.6 $122.1 
Operating income %14.9 %17.4 %

Three Months Ended April 3, 2021 vs. Three Months Ended March 28, 2020

Net sales decreased $60.1 million, or 9%, due primarily to:

•$59.0 million, or 8%, net decrease due primarily to a decrease of $50.0 million resulting from the pandemic-related pantry load benefit in the prior year quarter. A further decrease of $35.0 million in sales of products in our upper respiratory and pain and sleep aids categories resulted from the very low incidence of cough and cold related illness this year. These declines were partially offset by an increase in sales of $23.8 million from our acquisition of Dr. Fresh in April of 2020.

◦In OTC, the net sales decrease of $71.9 million was due primarily to a decrease of $50.0 million resulting from the pandemic-related pantry load benefit in the prior year quarter. There was an additional $35.0 million decrease in sales of products in our upper respiratory and pain and sleep aids categories resulting from the very low incidence of cough and cold related illness this year. These decreases were partially offset by the following: strong e-commerce growth as consumers continued to shift purchases to online where we have greater market share than in-store, growth in the branded OTC product portfolio led by Prevacid® and ScarAway®, growth in the digestive health category due primarily to favorable consumer conversion to our OTC products and the incremental new product sales from Esomeprazole Mini, and higher demand in the minoxidil franchise driving growth in our skincare and personal hygiene category.
48
Perrigo Company plc - Item 2
CSCA

◦Nutrition net sales decreased $8.9 million due primarily to the pandemic-related pantry load benefit in the prior year quarter and an increase in governmental benefits that led to a decline in store brand market share. These declines were partially offset by growth in e-commerce and contract manufacturing sales.
◦Net sales in our oral self-care category increased $18.4 million due primarily to the acquisition of AthenaDr. Fresh in April 2020 of $23.8 million, growth in e-commerce activity, and the incremental impact of new product sales. These increases were more than offset by Elana decrease in 1996. The amountdemand for travel-related products related to COVID-19, and a decline in sales due to timing of adjustmentscustomer orders.

Operating income decreased $26.5 million, or 22%, due primarily to:

•$19.3 million decrease in gross profit due primarily to the decrease in net sales as described above, higher input costs on certain products, and unfavorable plant overhead absorption due primarily to lower production volumes compared to the prior year pandemic-related pantry load benefit. Gross profit as a percentage of net sales decreased 10 basis points due primarily to the unfavorable plant overhead absorption described above and normal pricing pressure, partially offset by favorable product mix; and
•$7.2 million increase in operating expenses due primarily to the inclusion of Dr. Fresh expenses, and an increase in R&D expense for continued innovation.

CONSUMER SELF-CARE INTERNATIONAL

Recent Trends and Developments

•During the first quarter of 2021, net sales of cough and cold products decreased as a result of the very low incidence of cough and cold related illness this year. We believe the very low incidence of cough and cold related illness is attributed to social distancing and mask mandates put in place to combat the spread of COVID-19. With social distancing and mask mandates continuing, we currently anticipate that may be assertedwe will continue to experience lower demand for cough and cold products through the first half of 2021.

Segment Financial Results

Three Month Comparison
 Three Months Ended
(in millions, except percentages)April 3,
2021		March 28,
2020
Net sales$369.5 $382.7 
Gross profit$173.9 $179.9 
Gross profit %47.1 %47.0 %
Operating income$17.4 $25.0 
Operating income %4.7 %6.5 %

Three Months Ended April 3, 2021 vs. Three Months Ended March 28, 2020

Net sales decreased $13.2 million, or 3%, due to:
•$25.2 million, or 7%, net decrease due primarily to a decrease of $33.0 million in sales of products in our upper respiratory category resulting from the very low incidence of cough and cold related illness this year. A further decrease of $23.0 million resulted from the pandemic-related pantry load benefit in the prior year quarter. Also, lower consumer demand for anti-parasite products in the skincare and personal hygiene category due primarily to COVID-19 related school closings and limited travel. These decreases were partially offset by the IRSfollowing: the incremental impact of new product sales, including line extensions in the final noticeACO dermatology product line and in the Davitamon and Granufink VMS product lines, as well as positive pricing, $8.5 million of proposed adjustment cannot be quantified at this time; however, basedsales related to the acquisitions of the three Eastern European Brands in October 2020 and Dr. Fresh in April 2020, and higher net sales in the pain and sleep aids category; partially offset by

•$11.9 million increase due primarily to:
49
Perrigo Company plc - Item 2
CSCI

◦$26.2 million increase from favorable foreign currency translation primarily related to the Euro; partially offset by
◦$14.3 million decrease due to our divested Rosemont pharmaceuticals business.

Operating income decreased $7.6 million, or 30%, due to:

•$6.0 million decrease in gross profit due primarily to the decrease in net sales as described above, partially offset by greater operating efficiencies. Gross profit as a percentage of net sales increased 10 basis points due primarily to greater operating efficiencies, partially offset by unfavorable product mix; and

•$1.6 million increase in operating expenses due primarily to unfavorable Euro foreign currency translation, and an increase in employee-related costs, partially offset by a decrease in advertising and promotion expenses.

Unallocated Expenses

    Unallocated expenses are comprised of certain corporate services not allocated to our reporting segments and are recorded in Operating income on the draft notice received,Condensed Consolidated Statements of Operations. Unallocated expenses were as follows (in millions):
Three Months Ended
April 3,
2021		March 28,
2020
$61.6 $60.7 

    The increase of $0.9 million in unallocated expenses during the amountthree months ended April 3, 2021 compared to be assessed may be material. We disagree with the IRS’s position as assertedprior year period was due primarily to an increase in employee-related expenses, partially offset by a decrease in expenses due to our current Project Momentum cost savings initiative and higher indirect costs in the draft noticeprior year period relating to the RX business.
Change in Financial Assets, Interest expense, net, and Other (income) expense (Consolidated)
Three Months Ended
(in millions)April 3,
2021		March 28,
2020
Change in financial assets$— $(1.6)
Interest expense, net$32.0 $28.9 
Other (income) expense, net$2.4 $1.7 

Change in Financial Assets

During the year ended December 31, 2020, Royalty Pharma payments from Biogen for Tysabri® sales, as defined in the agreement between the parties, did not exceed the 2020 global net sales threshold. Therefore, we were not entitled to receive the remaining contingent milestone payment. As of proposed adjustmentDecember 31, 2020, there are no contingent milestone payments outstanding.

    During the three months ended March 28, 2020, the fair value of the Royalty Pharma contingent milestone payment related to 2020 increased by $1.6 million to $96.9 million, driven by higher volatility, higher projected global net sales of Tysabri® compared to the estimates in the prior period, and intendthe estimated probability of achieving the earn-out (refer to contest it.Item 1. Note 6).



Interest Expense, Net

    The $3.1 million increase for the three months ended April 3, 2021, compared to the prior year period was due primarily to a reduction in interest income received.

50
Perrigo Company plc - Item 2
Unallocated, Interest, Other, and Taxes



Income Taxes (Consolidated)    
We have ongoing audits in multiple other jurisdictions
    The effective tax rates were as follows:
Three Months Ended
April 3,
2021		March 28,
2020
84.0 %(0.4)%

The effective tax rate for the resolution of which remains uncertain. These jurisdictions include, but are not limitedthree months ended April 3, 2021 increased compared to the United States, Israel and France. In additionprior period primarily due to the matters discussed above,prior period benefits for reductions to the IRS is currently auditing our fiscal years ended June 29, 2013, June 28, 2014,U.S. valuation allowance and June 27, 2015. The Israel Tax Authority is currently auditing our fiscal years ended June 29, 2013the U.S. Coronavirus Aid, Relief, and June 28, 2014. The French Tax Authority is currently auditingEconomic Security ("CARES") Act, enacted in the years ended December 2014, December 2015, and December 2016.first quarter of 2020, plus the current period net tax expense on intra-entity transfers of intellectual property.



FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES


We finance our operations with internally generated funds, supplemented by credit arrangements with third parties and capital market financing. We routinely monitor current and expected operational requirements and financial market conditions to evaluate other available financing sources including term and revolving bank credit and securities offerings. In determining our future capital requirements, we regularly consider, among other factors, known trends and uncertainties, such as the Notice of Assessment ("NoA") and the Notices of Proposed Adjustment ("NOPAs"), the current COVID-19 pandemic, and other contingencies. We note that no payment of the additional amounts assessed by Irish Revenue pursuant to the NoA or proposed by the IRS in the NOPAs is currently required, and no such payment is expected to be required, unless and until a settlement or other final determination of the matter is reached that is adverse to us (refer to Item 1. Note 14 for additional information on the NoA and NOPAs). Based on the foregoing, management believes that our operations and borrowing resources are sufficient to provide for our short-term and long-term capital requirements, as described below. However, an adverse result with respect to our appeal of any material outstanding tax assessments or litigation, including securities or drug pricing matters and product liability cases, damages resulting from third-party claims, and related interest and/or penalties, could ultimately require the use of corporate assets to pay such assessments and any such use of corporate assets would limit the assets available for other corporate purposes. As such, we continue to evaluate the impact of the above factors on liquidity and may determine that modifications to our capital structure are appropriate if market conditions deteriorate, favorable capital market opportunities become available, or any change in conditions relating to the NoA, the NOPAs, the COVID-19 pandemic or other contingencies have a material impact on our capital requirements. Furthermore, upon completion of the sale of the RX business, which we expect to occur in the third quarter of 2021, we will receive $1.55 billion in cash. We are currently evaluating alternative uses for the anticipated increase in cash.

51
Perrigo Company plc - Item 2
Financial Condition, Liquidity and Capital Resources

Cash and Cash Equivalents


cy17q110q_chart-47174a02.jpgprgo-20210403_g3.jpg
*Working capital represents current assets less current liabilities, excluding cash and cash equivalents, assets and liabilities held for sale, and excluding current indebtedness.


Cash, cash equivalents, cash flows from operations, and borrowings available under our credit facilities are expected to be sufficient to finance the known and/or foreseeableour liquidity and capital expenditures.expenditures in both the short and long term. Although our lenders have made commitments to make funds available to us in a timely fashion under our revolving credit agreements and overdraft facilities, if economic conditions worsen, including due to the COVID-19 pandemic, or new information becomes publicly available impacting the institutions’ credit rating or capital ratios, these lenders may be unable or unwilling to lend money pursuant to our existing credit facilities. Should our outlook on liquidity requirements change substantially from current projections, we may seek additional sources of liquidity in the future.


52
Perrigo Company plc - Item 2
Financial Condition, Liquidity and Capital Resources



Cash Generated by (Used in) Operating Activities
prgo-20210403_g4.jpg
 Nine Months Ended
(in millions)October 1,
2016		 September 30,
2017		 Increase/(Decrease)
Cash Flows From (For) Operating Activities     
Net income (loss)$(2,653.7) $46.4
 $2,700.1
Non-cash adjustments3,229.9
 560.8
 (2,669.1)
Subtotal576.2
 607.2
 31.0
      
Increase (decrease) in cash due to:     
Accounts receivable113.0
 38.4
 (74.6)
Inventories25.1
 (28.3) (53.4)
Accounts payable(57.7) (6.0) 51.7
Payroll and related taxes(40.0) (36.7) 3.3
Accrued customer programs(73.7) (15.8) 57.9
Accrued liabilities(90.0) (18.8) 71.2
Accrued income taxes5.2
 (61.5) (66.7)
Other, net(9.4) 3.5
 12.9
Subtotal$(127.5) $(125.2) $2.3
      
Net cash from operating activities$448.7
 $482.0

$33.3


    The $171.6 million decrease in operating cash inflow was due primarily to:
We generated $482.0
•$119.7 million ofdecrease in cash flow from operating activities during the nine months ended September 30, 2017, a $33.3 million increase overchange in inventory, due primarily to higher inventory levels from reduced first quarter sales in CSCA, CSCI and discontinued operations compared to the prior year period, due to the following:

Increased 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;

Changes in accrued liabilities due to deferred revenue associated with BCH-Belgium distribution contracts and the absence of accruals related to the sale of our U.S. VMS business;

Changes in accrued customer-related programs due primarily to the pricing dynamics in the RX segment; and

Changes in accounts payable due primarily to changes to the Omega accounts payable structure that occurred in the prior year period; offset primarily by

Changes in accounts receivable due primarily to timing of receipt of payments and the absence of receivables related to the sale of our U.S. VMS business;

Changes in inventory due to the build up of inventory levels to support customer demands in the current period; offset by improved inventoryCSCA and CSCI segments;
•$65.6 million decrease in cash flow from the change in net earnings after adjustments for items including deferred income taxes, restructuring charges, changes in our financial assets, share-based compensation, amortization of debt premium, and depreciation and amortization;
•$35.3 million decrease in cash flow from the change in accounts payable, due primarily to the timing of payments and mix of payment terms;
•$29.1 million decrease in cash flow from the change in accrued customer programs, due primarily to pricing dynamics as well as timing of rebate and chargeback payments related to our discontinued operations; and
•$27.5 million decrease in cash flow from the change in accrued payroll and related taxes, due primarily to the increase in annual management inand employee bonus payments compared to the comparable prior year period; andpartially offset by

•$37.3 million increase in cash flow from the change in accounts receivable, due primarily to timing of sales and receipt of payments;
•
Changes in accrued income taxes due primarily to a U.S. Federal tax obligation payment made in the current year period, offset by expected tax refunds (refer to Item 1. Note 13).
•$29.0 million increase in cash flow from the change in other current assets, due primarily to fair value changes in our hedging instruments;
•$23.2 million increase in cash flow from the change in accrued income taxes, due primarily to a refund received in the current year period; and
•$18.7 million increase in cash flow from the change in prepaid expenses, due primarily to a decrease in our directors and officers prepaid insurance and annual prepaid expenses compared to the prior year period.


53
Perrigo Company plc - Item 2
Financial Condition, Liquidity and Capital Resources



Cash Generated by (Used in) Investing Activities
prgo-20210403_g5.jpg
 Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017		 Increase/(Decrease)
Cash Flows From (For) Investing Activities
Proceeds from royalty rights$259.5
 $86.4
 $(173.1)
Acquisitions of businesses, net of cash acquired(436.8) —
 436.8
Asset acquisitions(65.1) —
 65.1
Additions to property, plant and equipment(84.6) (55.2) 29.4
Net proceeds from sale of business and other assets58.5
 46.7
 (11.8)
Proceeds from sale of the Tysabri® financial asset
—
 2,200.0
 2,200.0
Other investing, net(1.0) (5.8) (4.8)
Net cash from (for) investing activities$(269.5) $2,272.1
 $2,541.6
    The $39.2 million increase in cash used in investing cash flow was due primarily to:


Cash generated from investing activities totaled $2.3 billion•$37.6 million decrease in cash due to the increase in spending on asset acquisitions, primarily related to the payment for an ANDA for a generic topical gel for $16.4 million and the purchase of an ANDA for a generic topical lotion for $53.3 million, offset by prior year acquisitions for the nine months ended September 30, 2017, comparedSteripod® brand for $25.1 million and theDexsil® brand for approximately $8.0 million (refer to Item 1. Note 3); and

•$11.6 million decrease in cash useddue to the change in capital spending, primarily to increase tablet and infant formula capacity and for software and technology initiatives; partially offset by

•$11.3 million increase in cash due to the absence of $269.5the deposit paid for the acquisition of Dr. Fresh (refer to Item 1. Note 3).

Cash Generated by (Used in) Financing Activities
prgo-20210403_g6.jpg
    The $108.0 million decrease in financing cash flow was due primarily to:

•$102.0 million decrease due to the absence of the borrowing on the revolving credit agreement in the prior year period. The inflow in the current year was due primarily to the completed divestment of our Tysabri® financial asset to Royalty Pharma, for which we received $2.2 billion in cash at closing (refer toItem 1. Note 6). The outflow in the prior year was due primarily to the acquisition of a portfolio of generic dosage formsperiod; and strengths of Retin-A® ("Tretinoin"), a topical prescription acne treatment from Mattawan Pharmaceuticals, LLC, which used $416.4
•$1.7 million in cash. The prior year outflow was offset partially by proceeds from royalty rights of $259.5 million. Cash used for capital expenditures totaled $55.2 million during the nine months ended September 30, 2017 compared to $84.6 million in the prior year period. The decrease in cash used for capital expenditures was due primarily to the decreasean increase in the number of projects in the current year compared to the prior year period.dividend payments.


Dividends
Financing Activities
 Nine Months Ended
($ in millions)October 1,
2016		 September 30,
2017		 Increase/(Decrease)
Cash Flows From (For) Financing Activities
Issuances of long-term debt$1,190.3
 $—
 $(1,190.3)
Borrowings (repayments) of revolving credit agreements and other financing, net(803.6) —
 803.6
Payments on long-term debt(545.8) (2,243.7) (1,697.9)
Deferred financing fees(2.8) (4.2) (1.4)
Premium on early debt retirement(0.6) (116.1) (115.5)
Issuance of ordinary shares8.2
 0.5
 (7.7)
Repurchase of ordinary shares—
 (191.5) (191.5)
Cash dividends(62.4) (68.7) (6.3)
Other financing(17.4) 2.7
 20.1
Net cash (for) financing activities$(234.1) $(2,621.0) $(2,386.9)

Cash used for financing activities totaled $2.6 billion for the nine months ended September 30, 2017, compared to $234.1 million for the comparable prior year period. In the current year period, cash used for financing included $2.2 billion of repayments on long-term debt and $116.1 million of discounts on early debt retirement related to the current year debt extinguishment and $191.5 million in share repurchases, as discussed below. In the prior year period, the cash used for financing activities was due primarily to borrowings of $1.2 billion of long-term debt, more than offset by net repayments on our revolving credit agreements and other short-term financing of $803.6 million and net repayments on our long-term debt of $545.8 million (refer to "Borrowings and Capital Resources" below and Item 1. Note 10).

Perrigo Company plc - Item 2
Financial Condition, Liquidity and Capital Resources


The declaration and payment of dividends, if any, is subject to the discretion of our Board of Directors and will depend on our earnings, financial condition, availability of distributable reserves, capital and surplus requirements, and other factors our Board of Directors may consider relevant.

54
Perrigo Company plc - Item 2
OnFinancial Condition, Liquidity and Capital Resources


Share Repurchases

    In October 22, 2015,2018, our Board of Directors authorized up to $1.0 billion of share repurchases with no expiration date, subject to the Board of Directors approved aDirectors’ approval of the pricing parameters and amount that may be repurchased under each specific share repurchase plan of up to $2.0 billion (the "2015 Authorization"). During the three and nine months ended September 30, 2017, we repurchased 1.9 million and 2.7 million ordinary shares at an average repurchase price of $71.73 and $71.72 per share, for a total of $133.3 million and $191.5 million, respectively. As of September 30, 2017, there was $1.3 billion still available to be repurchased through December 31, 2018 under the 2015 Authorization.program. We did not repurchase any shares under the share repurchase plan during the ninethree months ended October 1, 2016.April 3, 2021 or March 28, 2020.


Borrowings and Capital Resources

prgo-20210403_g7.jpg
cy17q110q_chart-47327a02.jpg


prgo-20210403_g8.jpg
Revolving Credit Agreements

    On March 8, 2018, we entered into a $1.0 billion revolving credit agreement maturing on March 8, 2023 (the "2018 Revolver"). There were no borrowings outstanding under the 2018 Revolver as of April 3, 2021 or December 31, 2020.

Term Loans and Notes

We had $2.9 billion outstanding under our notes and bonds as of both April 3, 2021 and December 31, 2020. We had $600.0 million outstanding under our 2019 Term Loan as of both April 3, 2021 and December 31, 2020.

Other Financing

    On June 17, 2020, we incurred debt of $34.3 million related to our equity method investment in Kazmira pursuant to two Promissory Notes, with $3.7 million, $5.8 million and $24.8 million to be settled in November 2020, May 2021 and November 2021, respectively. On December 8, 2020, we repaid the $3.7 million balance due on the November 2020 portion of the Promissory Notes.

Overdraft Facilities


We have overdraft facilities available that we use to support our cash management operations. There were no balancesborrowings outstanding under the facilities at September 30, 2017as of April 3, 2021 or December 31, 2020.

Leases

    We had $184.8 million and $187.7 million of lease liabilities and $181.9 million and $184.5 million of lease assets as of April 3, 2021 and December 31, 2016.2020, respectively.


Accounts Receivable Factoring


We have multiple accounts receivable factoring arrangements with non-related third-party financial institutions (the “Factors”). Pursuant to the terms of the arrangements, we sell to the Factors certain of our accounts receivable balances on a non-recourse basis for credit approved accounts. An administrative fee ranging from 0.14% to 0.15% per invoice is charged on the gross amount of accounts receivables assigned to the Factors, and interest is calculated at the applicable EUR LIBOR rate plus 70 basis points.    The total amount factored on a non-recourse basis and excluded from accounts receivable was $24.3$3.4 million and $50.7$6.9 million at September 30, 2017April 3, 2021 and December 31, 2016,2020, respectively.

Revolving Credit Agreements

On December 9, 2015, our 100% owned finance subsidiary, Perrigo Finance Unlimited Company (formerly Perrigo Finance plc) ("Perrigo Finance"), entered into a $750.0 million revolving credit agreement (the "2015 Revolver"). On March 15, 2016, we used the proceeds of the long-term debt issuance described below to repay the $750.0 million then outstanding under the 2015 Revolver and terminated the facility.

On December 5, 2014, Perrigo Finance entered into a $600.0 million revolving credit agreement, which increased to $1.0 billion on March 30, 2015 (the "2014 Revolver"). On March 15, 2016, we used the proceeds of the long-term debt issuance described below to repay the $435.0 million then outstanding under the 2014 Revolver. There were no borrowings outstanding under the 2014 Revolver as of September 30, 2017.
55
Perrigo Company plc - Item 2
Financial Condition, Liquidity and Capital Resources




Term Loans and Notes

On March 7, 2016, Perrigo Finance issued $500.0 million in aggregate principal amount of 3.500% senior notes due 2021 and $700.0 million in aggregate principal amount of 4.375% senior notes due 2026 (together, the "2016 Notes") and received net proceeds of $1.2 billion after fees and market discount, which were used to repay the amounts outstanding under the 2015 Revolver and 2014 Revolver mentioned above.

We had $3.3 billion and $5.4 billion outstanding under our notes and bonds, and $428.3 million and $420.7 million outstanding under our term loan, as of September 30, 2017 and December 31, 2016, respectively. On September 29, 2016, we repaid the 1.300% senior notes due 2016 in full.

On December 5, 2014, Perrigo Finance entered into a term loan agreement consisting of a €500.0 million ($614.3 million) tranche, with the ability to draw an additional €300.0 million ($368.6 million) tranche, maturing December 5, 2019, and we entered into a $300.0 million term loan tranche maturing December 18, 2015, which we repaid in full on June 25, 2015.

Debt Repayments

During the nine months ended September 30, 2017, we reduced our outstanding debt through a variety of transactions (in millions):
Date Series Transaction Type Principal Retired
April 1, 2017 2014 term loan due December 5, 2019 Scheduled quarterly payment $13.3
July 1, 2017 2014 term loan due December 5, 2019 Scheduled quarterly payment 14.3
September 30, 2017 2014 term loan due December 5, 2019 Scheduled quarterly payment 14.8
May 8, 2017 $600.0 2.300% senior notes due 2018 Early redemption 600.0
May 23, 2017 €180.0 4.500% retail bonds due 2017 Scheduled maturity 201.3
June 15, 2017 $500.0 3.500% senior notes due 2021 Tender offer 190.4
June 15, 2017 $500.0 3.500% senior notes due 2021 Tender offer 219.6
June 15, 2017 $800.0 4.000% senior notes due 2023 Tender offer 584.4
June 15, 2017 $400.0 5.300% senior notes due 2043 Tender offer 309.5
June 15, 2017 $400.0 4.900% senior notes due 2044 Tender offer 96.1
      $2,243.7

As previously disclosed, during the three months ended April 1, 2017 we entered into amendments to the 2014 Revolver and the 2014 term loan to modify provisions of such agreements necessary as a result of the correction in accounting related to the Tysabri® financial asset, as well as waivers of any default or event of default that may have arisen from any restatement of or deficiencies in our financial statements for the periods specified in such amendments and waivers.    We are in compliance with all covenants under our debt agreements as of September 30, 2017.
See April 3, 2021 (refer to Item 1. Note 10 and Note 11 for more information on all of the above lease activity and debt facilities.facilities, respectively).


Credit Ratings
    
Our credit ratings on September 30, 2017April 3, 2021 were Baa3 (stable)(negative), BBB- (negative), and BBB- (stable)(negative) by Moody's Investors Service, and Standard and Poor'sS&P Global Ratings, and Fitch Ratings Inc., respectively.

Credit rating agencies review their ratings periodically and, therefore, the credit rating assigned to us by each agency may be subject to revision at any time. Accordingly, we are not able to predict whether current credit ratings will remain as disclosed above. Factors that can affect our credit ratings include changes in operating performance, the economic environment, our financial position, and changes in business strategy. If changes in our credit ratings were to occur, they could impact, among other things, future borrowing costs, access to capital markets, and vendor financing terms.
Perrigo Company plc - Item 2
Financial Condition, Liquidity
Off-Balance Sheet Arrangements
    We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material future effect on our financial condition, changes in financial condition, net sales or expenses, results of operations, liquidity, capital expenditures, or capital resources. We acquire and Capital Resourcescollaborate on potential products still in development and enter into R&D arrangements with third parties that often require milestone payments to the third-party contingent upon the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required contingent upon the successful achievement of an important point in the development life cycle of the product. Because of the contingent nature of these payments, they are not included in our table of contractual obligations.




Contractual Obligations and Commitments


Other than the obligations related to the changes to our debt structure in relation to the repayments, as discussed in Item 1. Note 10, there    There were no material changes in contractual obligations as of September 30, 2017April 3, 2021 from those provided in our 20162020 Form 10-K. See below for a revised schedule

Significant Accounting Policies

    Other than the adoption of ASU 2019-12: Income taxes (refer to Item 1. Note 14), there have been no material changes to the significant accounting policies as disclosed in our enforceable2020 Form 10-K.

Critical Accounting Estimates

    The determination of certain amounts in our financial statements requires the use of estimates. These estimates are based upon our historical experiences combined with management’s understanding of current facts and legally binding obligationscircumstances. Although the estimates are considered reasonable based on the currently available information, actual results could differ from the estimates we have used. There have been no material changes to the critical accounting estimates as of September 30, 2017 related todisclosed in our short and long-term debt arrangements.2020 Form 10-K.

 Payment Due by Period (in millions)
 
2017(1)
 2018 - 2019 2020 - 2021 After 2021 Total
Short and long-term debt(2)
$406.5
 $811.5
 $812.5
 $2,859.6
 $4,890.1

(1)Reflects remaining three months of 2017.
(2)
Short and long-term debt includes interest payments, which were calculated using the effective interest rate at September 30, 2017.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


There have been no material changes to our quantitative or qualitative disclosures found in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of our Annual Report on2020 Form 10-K for the year ended December 31, 2016.10-K.


ITEM 4.        CONTROLS AND PROCEDURES


Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures


Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act) as of September 30, 2017.April 3, 2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were notare effective as of September 30, 2017 because of thein ensuring that all material weaknessesinformation relating to us and our consolidated subsidiaries required to be
56
Perrigo Company plc - Item 4
Controls and Procedures

included in our internal control over financial reporting described below.

All systems of internal control, no matter how well designed, have inherent limitations. Therefore, evenperiodic SEC filings would be made known to them by others within those systems deemed to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. A material weakness is a deficiency, or combination of deficiencies,entities in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.manner and that no changes are required at this time.


Evaluation of the Effectiveness of Internal Control over Financial Reporting


We conducted an evaluation ofOur management assessed the effectiveness of our internal control over financial reporting based upon theas of April 3, 2021. The framework establishedused in carrying out our evaluation was the 2013 Internal Control - Integrated Framework issued published by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission (“COSO”).

Perrigo Company plc - Item 4
Controls and Procedures


Tysabri® Contingent Payments

We acquired the Tysabri® royalty stream inCommission. In evaluating our acquisition of Elan Pharmaceuticals plc (“Elan”) in December 2013, and at the timeinformation technology controls, we also used components of the acquisition,framework contained in the Control Objectives for Information and related Technology, which was developed by the Information Systems Audit and Control Association’s IT Governance Institute, as a complement to the COSO internal control framework. Management has concluded that the right to receive quarterly royalty payments from Biogen Idec Inc. should be an intangible asset and such payments recognized as revenue in our financial statements. As discussed in Item 4.02 of our Form 8-K filed on April 25, 2017, during the 2016 year-end close process, and in anticipation of our potential sale of the Tysabri® royalty rights and the 2018 adoption of ASC 606 Revenue from Contracts with Customers, we re-evaluated the historical classification of the Tysabri® royalty stream as an intangible asset and concluded that it should have been reflected in the financial statements as a financial asset as of its 2013 acquisition date. As part of this evaluation, management determined that its control over the review of the application of the accounting guidance in ASC 805 Business Combinations did not operate effectively in the appropriate identification of the assets acquired and liabilities assumed in connection with the Elan acquisition in December 2013.All of our originally filed financial statements through the filing of the Form 10-Q for the quarter ended October 1, 2016, as originally filed on November 10, 2016, included the disclosure of the Elan acquisition with the Tysabri® royalty stream presented as an intangible asset. In addition, due to the fact that the asset was historically classified as an intangible asset, we did not design or implement controls around the fair value accounting for the Tysabri® royalty stream as a financial asset, so these controls were not in place at any quarter end subsequent to the acquisition, including the date of the quarterly and annual assessment of internal control. Accordingly, management concluded that these control deficiencies represent material weaknesses. As discussed in our Form 10-Q for the quarter ended July 1, 2017, the material weakness related to the fair value accounting for the Tysabri® royalty stream as a financial asset was remediated during that period. See below for our discussion of the remediation efforts related to our acquisition of the Tysabri® royalty rights.

Income Taxes

Management has determined that we did not design or maintain effective management review controls related to our (1) evaluation of non-routine transactions that impact our effective tax rate on an annual and interim basis and (2) determination of our deferred taxes in connection with business combinations.

During our quarterly and annual fiscal 2016 close processes, management determined that the design and operating effectiveness of our controls around the evaluation of non-routine events did not operate appropriately. As disclosed in our Form 10-Q for the quarterly period ended April 2, 2016, our management review controls did not operate at a sufficient level of precision to ensure interim income taxes were properly recorded and disclosed in our condensed consolidated financial statements in connection with the recording of an indefinite-lived intangible asset impairment and estimated goodwill impairment as part of the Company’s controls to evaluate non-routine events that occur during a quarterly period and the related income tax impacts. These control deficiencies resulted in a material misstatement in income taxes in the preliminary financial statements for the quarter ended April 2, 2016. Additionally, these controls remained unremediated as of September 30, 2017, as they were in February 2017 when we identified that these controls did not appropriately evaluate the need for a valuation allowance. ASC 740, Income Taxes, requires a company to record a valuation allowance to reduce a deferred tax asset to its net realizable value. Our controls related to consideration of non-routine transactions or events were not designed and did not operate appropriately and identify whether a valuation allowance was needed as they did not identify that we entered into a three year cumulative loss and did not consider the positive and negative evidence in evaluating the potential sources of taxable income in determining whether a valuation allowance was required in the consolidated financial statements.

In February 2017, management identified the existence of tax basis in certain acquired intangible assets (“tax amortization benefits”) that existed at the time of the acquisition of Omega Pharma Invest N.V. (“Omega”) on March 30, 2015. Upon evaluating the tax amortization benefits, management concluded that the purchase accounting for Omega should have included the tax basis in the intangible assets in calculating the deferred tax liability in the opening balance sheet. This omission of existing tax basis in calculating the deferred tax liability on the acquisition date indicated that management’s review over the opening balance sheet deferred income tax accounts was not designed or operating appropriately.

Accordingly, management concluded that these control deficiencies represent material weaknesses.

Perrigo Company plc - Item 4
Controls and Procedures


Impairment

In connection with our long-lived asset impairment testing, management determined that the controls around the identification of the relevant asset group under ASC 360, Impairment and Disposal of Long-lived Assets, did not operate effectively. In determining the level to evaluate the long-lived assets in our animal health reporting unit for impairment testing, we inappropriately grouped the assets that constituted the asset group in applying the guidance in ASC 360.

Accordingly, management concluded that this control deficiency represented a material weakness.

Remediation Plan for the Material Weaknesses

We are committed to remediating the control deficiencies that gave rise to the material weaknesses described above. Management is responsible for implementing changes and improvements to internal control over financial reporting and for remediating the control deficiencies that gave rise to the material weaknesses.

Tysabri® Contingent Payments

To remediate the material weakness related to the acquisition of the Tysabri® royalty rights, we, with oversight from the Audit committee, designed certain controls around the identification of assets acquired and liabilities assumed in our business combination process. As part of the re-design of the controls, we: (1) considered our controls around the review of the related contracts and agreements and our application of ASC 805 to identify the type of assets acquired and liabilities assumed and (2) evaluated and enhanced management review controls related to business acquisitions. Based on the evaluation of the design and changes to our business acquisition process performed during the second and third quarters of 2017 on these newly implemented controls, we have concluded that these controls have been designed and implemented appropriately. As a result, we consider this material weakness to be remediated as of September 30, 2017.

Income Taxes

To remediate the material weaknesses in internal control over financial reporting related to income taxes, we have, with oversight from the Audit Committee, completed the review of the organizational structure, resources, processes and controls in place to measure and record income taxes to enhance the effectiveness of the design and operation of those controls. In addition, we continue to:

Evaluate the design and operating effectiveness of our controls related to income taxes for business acquisitions and non-routine transactions on an interim and annual basis;
Enhance monitoring activities related to income taxes; and
Evaluate and enhance the level of precision in the management review controls related to income taxes.

We have begun to implement the remediation actions and expect to complete the implementation as part of our 2017 fiscal year closing process. Until the remediation actions are fully implemented and the operational effectiveness of related internal controls is validated through testing, the material weaknesses related to income taxes described above will continue to exist.

Impairment

We, with oversight from the Audit Committee, designed and initiated certain controls around the financial reporting related to the identification of asset groups as part of our impairment testing. Controls we implemented include: (1) reviewing the design and operation of our controls related to asset group determination in our impairment process on an interim and annual basis and (2) evaluating and enhancing the management review controls related to impairment. Based on the testing performed during the second and third quarters of 2017 on these newly implemented controls around the identification of asset groups as part of our impairment testing, we have concluded that these controls have been designed appropriately and are operating effectively. As a result, we consider this material weakness to be remediated as of September 30, 2017.

Perrigo Company plc - Item 4
Controls and Procedures


We are committed to achieving and maintaining a strong internal control environment and believe the remediation measures will strengthen our internal control over financial reporting and remediate the material weaknesses identified. We continue to review the remaining un-remediated material weaknesses and intend to add resources and improvewas effective as of April 3, 2021. The results of management’s assessment have been reviewed with our processes to achieve and maintain a strong control environment. We will continue to monitor the effectiveness of our remediation measures and will make any changes and take such other actions that we deem appropriate given the circumstances.Audit Committee.


Changes in Internal Control over Financial Reporting

Other than as described above under "Remediation Plan for Material Weaknesses," there    There have been no changes in our internal control over financial reporting during the three months ended September 30, 2017April 3, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II.     OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS


Refer to Part I, Item 1. Note 14 and Item 1. Note 15 of the Notes to the Condensed Consolidated Financial Statements.


ITEM 1A.    RISK FACTORS


Our Annual Report on Form 10-K for the year ended December 31, 20162020 includes a detailed discussion of our risk factors. At the time of this filing, there have been no material changes to the risk factors that were included in the Form 10-K, other than described below.10-K.

We identified material weaknesses in our internal controls over financial reporting; failure to remediate the material weaknesses could negatively impact our business and the price of our ordinary shares.

In connection with our review of certain material misstatements related to the characterization of the Tysabri® royalty stream acquired in the Elan transaction, as well as material misstatements related to the calculation of deferred tax liabilities that existed at the time of the acquisition of Omega, and the evaluation of long-lived assets in our animal health reporting unit for impairment testing, in each case contained in certain of our historical financial statements, we concluded that there were material weaknesses in our internal control over financial reporting that contributed to those misstatements. As a result of the material weaknesses, which existed at December 31, 2016 and some of which remained at September 30, 2017, we have concluded that we did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2016, April 1, 2017, July 1, 2017 or September 30, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The failure to maintain effective control over financial reporting in turn resulted in material deficiencies in our disclosure controls and procedures.

We have identified and begun the implementation of actions, and continue to identify and implement, actions to improve the effectiveness of our internal control over financial reporting and disclosure controls and procedures, but there can be no assurance that such remediation efforts will be successful. We have also incurred and will continue to incur substantial accounting, legal, consulting, and other costs in connection with identifying and remediating the material weaknesses. Failure to remediate the material weaknesses could have a negative impact on our business and the market for our ordinary shares. For more information on our material weaknesses and the status of our remediation efforts, See Part I, Item 4 - Controls and Procedures.

We are currently involved in a search for a new Chief Executive Officer and a subsequent search for a permanent Chief Financial Officer. If these searches are delayed, our business could be negatively impacted.

On June 5, 2017, we announced the forthcoming retirement of John T. Hendrickson as our Chief Executive Officer. Mr. Hendrickson will continue to serve as our Chief Executive Officer and a member of our Board until such time as a successor has been appointed. Our Board of Directors has initiated a Chief Executive Officer search process and has retained an executive search and leadership advisory firm to assist with the process of identifying and evaluating candidates.
57
Perrigo Company plc - Item 1A
Risk Factors





In addition, on February 21, 2017, we announced the resignation of Judy L. Brown as our Executive Vice President, Business Operations and Chief Financial Officer, effective February 27, 2017. Since that time, Ronald L. Winowiecki has served as our acting Chief Financial Officer. Although Mr. Winowiecki remains a key candidate for our permanent Chief Financial Officer, our Board of Directors has suspended its Chief Financial Officer search during its search for Mr. Hendrickson’s successor as Chief Executive Officer. There are no assurances concerning the timing or outcome of our search for a new Chief Executive Officer or subsequent search for a permanent Chief Financial Officer. If there are any delays in this process, or if any transition is not successful, our business could be negatively impacted.

The resolution of uncertain tax positions could be unfavorable, which could have an adverse effect on our business.

Although we believe that our tax estimates are reasonable and that our tax filings are prepared in accordance with all applicable tax laws, the final determination with respect to any tax audit and any related litigation could be materially different from our estimates or from our historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on operating results or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties or interest assessments.

On August 15, 2017, we filed a complaint in the United States District Court for the Western District of Michigan to recover $163.6 million of Federal income tax, penalties, and interest assessed and collected by the Internal Revenue Service (“IRS”), plus statutory interest thereon from the dates of payment, for the fiscal years ended June 27, 2009, June 26, 2010, June 25, 2011, and June 30, 2012 (the “2009 tax year,” “2010 tax year,” “2011 tax year,” and “2012 tax year,” respectively). The IRS audits of those years culminated in the issuances of two statutory notices of deficiency: (1) on August 27, 2014 for the 2009 and 2010 tax years and (2) on April 20, 2017 for the 2011 and 2012 tax years. The statutory notices of deficiency both included un-agreed income adjustments related principally to transfer pricing adjustments regarding the purchase, distribution, and sale of store-brand OTC pharmaceutical products in the United States. In addition, the statutory notice of deficiency for the 2011 and 2012 tax years included the capitalization of certain expenses that were deducted when paid or incurred in defending against certain patent infringement lawsuits. We fully paid the assessed amounts of tax, interest, and penalties set forth in the statutory notices and filed timely claims for refund on June 11, 2015 and June 7, 2017 for the 2009-2010 tax years and 2011-2012 tax years, respectively. Our claims for refund were disallowed by certified letters dated August 18, 2015 and July 11, 2017, for the 2009-2010 tax years and 2011-2012 tax years, respectively. The complaint was timely, based upon the refund claim denials, and seeks refunds of tax, interest, and penalties of $37.2 million for the 2009 tax year, $61.5 million for the 2010 tax year, $40.2 million for the 2011 tax year and $24.7 million for the 2012 tax year. The amounts sought in the complaint for the 2009 and 2010 tax years were recorded as deferred charges on our balance sheet during the three months ended March 28, 2015, and the amounts sought in the complaint for the 2011 and 2012 tax years were recorded as deferred charges on our balance sheet in the second quarter of the year ending December 31, 2017.

On December 22, 2016, we received a notice of proposed adjustment for the IRS audit of Athena Neurosciences, Inc. (“Athena”), a subsidiary of Elan Corporation plc (“Elan”) acquired in 1996, for the years ended December 31, 2011, December 31, 2012 and December 31, 2013. We acquired Elan in December 2013. This proposed amendment relates to the deductibility of litigation costs. We disagree with the IRS’s position asserted in the notice of proposed adjustment and intend to contest it.

On July 11, 2017, we received a draft notice of proposed adjustment associated with transfer pricing positions for the IRS audit of Athena for the years ended December 31, 2011, December 31, 2012 and December 31, 2013. Athena was the originator of the patents associated with Tysabri® prior to the acquisition of Athena by Elan in 1996. The amount of adjustments that may be asserted by the IRS in the final notice of proposed adjustment cannot be quantified at this time; however, based on the draft notice received, the amount to be assessed may be material. We disagree with the IRS’s position as asserted in the draft notice of proposed adjustment and intend to contest it.

Perrigo Company plc - Item 1A
Risk Factors




There are numerous other income tax jurisdictions for which tax returns are not yet settled, none of which are individually significant. At this time, we cannot predict the outcome of any audit or related litigation. Unfavorable resolutions of the audit matters discussed above could have a material impact on our consolidated financial statements in future periods.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share repurchase activity during the three months ended September 30, 2017 was as follows:

 Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans 
Value of Shares Available for Purchase(1)
July 2 - July 31, 2017484,860
 $72.27
 484,860
  
August 1 - August 31, 20171,354,721
 $71.46
 1,354,721
  
September 1 - September 30, 201719,124
 $77.50
 19,124
  
Total1,858,705
     $1.30 billion

(1) The remaining $1.30 billion in the table represents the amount available to be repurchased under our 2015 Authorization as of September 30, 2017.

ITEM 5. OTHER INFORMATION
Our Board of Directors has established May 4, 2018 as the date of our 2018 Annual General Meeting of Shareholders (the “2018 Annual Meeting”). Because the date of the 2018 Annual Meeting will be more than 30 days before the anniversary of our 2017 Annual General Meeting of Shareholders, we are informing shareholders of the change in accordance with Rule 14a-5(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

For shareholders who wish to present a proposal to be considered for inclusion in our proxy materials for the 2018 Annual Meeting, we have set a new deadline for the receipt of those proposals in accordance with Rule 14a-8 under the Exchange Act. To be considered timely, shareholders must submit their proposals, in writing, to our Company Secretary at our principal executive offices located at Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland by December 19, 2017, which we have determined to be a reasonable time before we expect to begin to print and mail our proxy materials. Shareholder proposals must also comply with all applicable requirements of Rule 14a-8.

Because the 2018 Annual Meeting will be more than 30 days before the anniversary of the 2017 Annual General Meeting of Shareholders, our Articles of Association (the “Articles”) provide that shareholders who wish to bring a proposal or nominate a director at the 2018 Annual Meeting, but who are not requesting that the proposal or nomination be included in our proxy materials, must notify our Company Secretary, in writing, not earlier than the close of business on February 3, 2018 and not later than the close of business on February 23, 2018. Shareholders are advised to review the Articles, which contain additional requirements about advance notice of shareholder proposals and director nominations.

Perrigo Company plc - Part II - Item 6
Exhibits



ITEM 6.    EXHIBITS


Exhibit
Number
Description
3.1
3.2
10.1
10.2
10.231.1
10.3
Forms of Service-Based Restricted Stock Unit Award Agreements under the Company's 2013 Long-Term Incentive Plan (filed herewith).
10.4
Forms of Performance-Based Restricted Stock Unit Award Agreements under the Company's 2013 Long-Term Incentive Plan (filed herewith).
10.5
Forms of Nonqualified Stock Option Agreements under the Company's 2013 Long-Term Incentive Plan filed (herewith).
31.1
Rule 13a-14(a) Certification by John T. Hendrickson,Murray S. Kessler, Chief Executive Officer (filed herewith).
31.2
32
101.INS
101. INSXBRL Instance Document.Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Date File, formatted in Inline XBRL (contained in Exhibit 101).


58

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
PERRIGO COMPANY PLC
(Registrant)
Date:May 12, 2021PERRIGO COMPANY PLC/s/ Murray S. Kessler
(Registrant)Murray S. Kessler
Date:November 9, 2017By: /s/ John T. Hendrickson
John T. Hendrickson
Chief Executive Officer and President
(Principal Executive Officer)
Date:November 9, 2017May 12, 2021By: /s/ Ronald L. Winowiecki/s/ Raymond P. Silcock
Ronald L. WinowieckiRaymond P. Silcock
Acting Chief Financial Officer
(Principal Accounting and Financial Officer)



59