Endo International plc - Annual Report: 2019 (Form 10-K)

---

---

---

---

•

Branded Pharmaceuticals: Accelerating performance of organic growth drivers in our Specialty Products portfolio and expanding margin in our Established Products portfolio. As further described below under the heading “Select Development Projects,” management is also focused on investing in key pipeline life cycle management and other development opportunities, including in the areas of medical therapeutics and medical aesthetics.

•	Sterile Injectables: Focusing on developing branded injectable products with inherent scientific, regulatory, legal and technical complexities, expanding the product portfolio to include other dosages and technologies and developing or acquiring high-barrier-to-entry, generic injectable products that are difficult to manufacture.

•	Generic Pharmaceuticals: Focusing on developing or acquiring high-barrier-to-entry products, including first-to-file or first-to-market opportunities that are difficult to formulate or manufacture or face complex legal and regulatory challenges.

•	International Pharmaceuticals: Operating in regulated markets where physicians play a significant role in choosing the course of therapy and seeking to expand distribution of certain of our products outside of the U.S.

---

(1)	Products included within Other Specialty are NASCOBAL® Nasal Spray and AVEED®. Beginning with our first-quarter 2019 reporting, TESTOPEL®, which was previously included in Other Specialty, has been reclassified and is now included in the Established Products portfolio for all periods presented.

(2)	Products included within Other Established include, but are not limited to, LIDODERM®, EDEX® and VOLTAREN® Gel.

(3)	Individual products presented above represent the top two performing products in each product category for the year ended December 31, 2019 and/or any product having revenues in excess of $100 million during any of the years ended December 31, 2019, 2018 or 2017 or $25 million during any quarterly period in 2019 or 2018.

•

XIAFLEX®, which is the first and currently the only FDA-approved non-surgical treatment for DC (for adult patients with an abnormal buildup of collagen in the fingers that limits or disables hand function). It is also the first and currently the only FDA-approved non-surgical treatment for PD (for adult men with a collagen plaque and a penile curvature deformity of thirty degrees or greater at the start of therapy).

---

•	SUPPRELIN® LA, which is a soft, flexible 12-month hydrogel implant based on our hydrogel polymer technology that delivers histrelin acetate, a gonadotropin-releasing hormone agonist, and is indicated for the treatment of CPP in children.

•	NASCOBAL® Nasal Spray, which is a prescription medicine used as a supplement to treat vitamin B12 deficiency and is the only FDA-approved B12 nasal spray.

•	AVEED®, which is a novel, long-acting testosterone undecanoate for injection for the treatment of hypogonadism that is dosed only five times per year after the first month of therapy.

•	PERCOCET®, which is an opioid analgesic approved for the treatment of moderate-to-moderately-severe pain.

•	TESTOPEL®, which is a unique, long-acting implantable pellet indicated for TRT in conditions associated with a deficiency or absence of endogenous testosterone.

•	LIDODERM®, which is a topical patch product containing lidocaine that is approved for the relief of pain associated with post-herpetic neuralgia, a condition thought to result after nerve fibers are damaged during a case of herpes zoster (commonly known as shingles).

•	EDEX®, which is a penile injection used to treat erectile dysfunction caused by conditions affecting nerves, blood vessels, emotions and/or a combination of factors.

•	VOLTAREN® Gel, which is a topical prescription treatment for the relief of joint pain associated with osteoarthritis in the knees, ankles, feet, elbows, wrists and hands.

(1)	Products included within Other Sterile Injectables include ephedrine sulfate injection, treprostinil for injection and others.

(2)	Individual products presented above represent the top two performing products within the Sterile Injectables segment for the year ended December 31, 2019 and/or any product having revenues in excess of $100 million during any of the years ended December 31, 2019, 2018 or 2017 or $25 million during any quarterly period in 2019 or 2018.

•	VASOSTRICT®, which is indicated to increase blood pressure in adults with vasodilatory shock who remain hypotensive despite fluids and catecholamines. VASOSTRICT® is the first and currently the only vasopressin injection with an NDA approved by the FDA.

•	ADRENALIN®, which is a non-selective alpha and beta adrenergic agonist indicated for emergency treatment of certain allergic reactions, including anaphylaxis.

•	Ertapenem for injection, the authorized generic of Merck Sharp & Dohme Corp.’s (Merck) Invanz®, which is indicated for the treatment of certain moderate-to-severe infections.

•	APLISOL®, which is a sterile aqueous solution of a purified protein derivative for intradermal administration as an aid in the diagnosis of tuberculosis.

---

•	Ephedrine sulfate injection, which is an alpha and beta adrenergic agonist and a norepinephrine-releasing agent indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.

•	Treprostinil for injection, which is used for the treatment of pulmonary arterial hypertension.

---

---

---

(1)	Our license agreements for the patents in the table above extend to or beyond the patent expiration dates. See Note 11. License and Collaboration Agreements in the Consolidated Financial Statements included in Part IV, Item 15 of this report for additional discussion about certain license agreements.

(2)

The expiration of a basic product patent or loss of patent protection resulting from a legal challenge normally results in significant competition from generic products or biosimilars against the originally patented product and can result in a significant reduction in revenues for that product in a very short period of time. In some cases, however, we can continue to obtain commercial benefits from product manufacturing trade secrets, patents on uses for products, patents on processes and intermediates for the economical manufacture of the active ingredients or patents for special formulations of the product or delivery mechanisms.

---

•	completion of preclinical laboratory and animal testing and formulation studies in compliance with the FDA’s Good Laboratory Practice regulations;

•	submission to the FDA of an Investigational New Drug application for human clinical testing, which must become effective before human clinical trials may begin in the U.S.;

•	approval by an independent institutional review board before each trial may be initiated and continuing review during the trial;

•	performance of human clinical trials, including adequate and well-controlled clinical trials in accordance with good clinical practices to establish the safety and efficacy of the proposed product for each intended use;

•	submission to the FDA of an NDA or BLA for marketing approval, which must include data from preclinical testing and clinical trials;

•

satisfactory completion of an FDA pre-approval inspection of the product’s manufacturing processes and facility or facilities to assess compliance with the FDA’s current Good Manufacturing Practice (cGMP) regulations and/or review of the Chemistry, Manufacturing and Controls section of the NDA or BLA to assess whether the facilities, methods and controls are adequate to preserve the proposed product’s identity, strength, quality, purity and potency;

•	satisfactory completion of an FDA advisory committee review, if applicable; and

•	approval by the FDA of the NDA or BLA.

•	Phase 1 trials generally involve testing the product for safety, adverse effects, dosage, tolerance, absorption, distribution, metabolism, excretion and other elements of clinical pharmacology.

•	Phase 2 trials typically involve a small sample of the intended patient population to assess the efficacy of the compound for a specific indication, to determine dose tolerance and the optimal dose range and to gather additional information relating to safety and potential adverse effects.

•	Phase 3 trials are undertaken in an expanded patient population, typically at dispersed study sites, in order to determine the overall risk-benefit ratio of the compound and to provide an adequate basis for product labeling.

---

---

---

---

---

---

(1)

On November 4, 2019, Mr. Paul V. Campanelli notified the board of directors (the Board) of his intention to retire as the Company’s President and Chief Executive Officer. The Board appointed Mr. Campanelli as the Chairman of the Board on November 4, 2019. On February 19, 2020, the Board appointed Mr. Blaise Coleman as the Company’s President and Chief Executive Officer and Mr. Mark Bradley, Senior Vice President, Corporate Development & Treasurer, as the Company’s Executive Vice President and Chief Financial Officer. Both appointments are effective March 6, 2020 and Mr. Campanelli and Mr. Coleman will continue to serve in their current roles until such date.

---

---

---

---

•	the effectiveness, ease of use and safety of our products as compared to existing products;

•	customer demand and the willingness of physicians and customers to adopt our products over products with which they may have more loyalty or familiarity and overcoming any biases towards competitors’ products or against our products;

•	the cost of our products compared to alternative products and the pricing and commercialization strategies of our competitors;

•	the success of our launch and marketing efforts;

•	adverse publicity about us, our products, our competitors and their products or the industry as a whole or favorable publicity about competitors or their products;

•	the advent of new and innovative alternative products;

---

•	any unforeseen issues or adverse developments in connection with our products and any resulting litigation, regulatory scrutiny and/or harm to our reputation; and

•	other risks that may be out of our control, including the decision by a collaboration partner to make substantial changes to a product’s formulation or design, or a collaboration partner refusing to perform its obligations under our collaboration agreement, which may cause delays and additional costs in developing and marketing a product.

---

•	causing a substantial portion of our cash flows from operations to be dedicated to the payment of legal or related expenses and therefore unavailable for other purposes, including the payment of principal and interest on our indebtedness, our operations, capital expenditures and future business opportunities;

•	limiting our ability to adjust to changing market conditions, causing us to be more vulnerable to periods of negative or slow growth in the general economy or in our business, causing us to be unable to carry out capital spending that is important to our growth and placing us at a competitive disadvantage;

•	limiting our ability to attract and retain key personnel;

---

•

causing us to be unable to maintain compliance with or making it more difficult for us to satisfy our financial obligations under certain of our outstanding debt obligations, causing a downgrade of our debt and long-term corporate ratings (which could increase our cost of capital) and exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our or our subsidiaries’ outstanding indebtedness;

•	limiting our ability to incur additional borrowings under the covenants in our then-existing facilities or to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes, or to refinance our indebtedness; and/or

•	otherwise causing us to be unable to fund our operations and liquidity needs, such as future capital expenditures and payment of our indebtedness.

---

---

---

---

---

---

•	diversion of management’s attention to integration matters;

•	difficulties in achieving anticipated cost or tax savings, synergies, business opportunities and growth prospects from the combination of the businesses;

•	difficulties in the integration of operations and systems;

•	the impact of pre-existing legal and/or regulatory issues;

•	difficulties in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the companies;

•	difficulties in the assimilation of employees and retention of key personnel;

•	difficulties in managing the expanded operations of a larger and more complex company;

•	challenges in retaining existing customers and obtaining new customers;

•	potential unknown liabilities or larger liabilities than projected;

•	unforeseen increases to expenses or other adverse consequences associated with the transaction; and

•	difficulties in coordinating a geographically dispersed organization.

---

---

---

---

---

---

---

---

---

•	FDA approval or disapproval of any of the drug applications we have submitted;

•	the success or failure of our clinical trials;

•	new data or new analyses of older data that raise potential safety or effectiveness issues concerning our approved products;

•	product recalls or withdrawals;

•	competitors announcing technological innovations or new commercial products;

•	introduction of generic or compounded substitutes for our products, including the filing of ANDAs with respect to generic versions of our branded products;

•	developments concerning our or others’ proprietary rights, including patents;

•	competitors’ publicity regarding actual or potential products under development or other activities affecting our competitors or the industry in general;

•	regulatory developments in the U.S. and foreign countries, or announcements relating to these matters;

•	period-to-period fluctuations in our financial results;

•

new legislation, regulation, administrative guidance or executive orders, or changes in interpretation of existing legislation, regulation, administrative guidance or executive orders, including by virtue of new judicial decisions, that could affect the development, sale or pricing of pharmaceutical products, the number of individuals with access to affordable healthcare, the taxes we pay and/or other factors;

•	a determination by a regulatory agency that we are engaging or have engaged in inappropriate sales or marketing activities, including promoting off-label uses of our products;

•	social and political pressure to lower the cost of pharmaceutical products;

•	social and political scrutiny over increases in prices of shares of pharmaceutical companies that are perceived to be caused by a strategy of growth through acquisitions;

•	litigation against us or others;

•	reports of security analysts and rating agencies;

---

•	judgments or settlements or reports of settlement negotiations concerning opioid-related litigation or claims, and/or other companies commencing cases under Title 11 of the U.S. Code to address opioid-related litigation liabilities; and

•	changes in the political and regulatory environment and international relations as a result of events such as the exit of the United Kingdom from the EU (Brexit) and full or partial shutdowns of the U.S. federal government that may occur from time to time, the current U.S. administration and other external factors, including market speculation or disasters and other crises.

---

---

---

•	the imposition of additional U.S. and non-U.S. governmental controls or regulations;

•	the imposition of costly and lengthy new export licensing requirements;

•	the imposition of U.S. and/or international sanctions against a country, company, person or entity with whom we do business that would restrict or prohibit continued business with the sanctioned country, company, person or entity;

•	economic and political instability or disruptions, including local and regional instability, or disruptions due to natural disasters, such as severe weather and geological events, disruptions due to civil unrest and hostilities, rioting, military activity, terror attacks or armed hostilities;

•	changes in duties and tariffs, license obligations and other non-tariff barriers to trade;

•	the imposition of new trade restrictions including foreign exchange controls;

•	supply disruptions and increases in energy and transportation costs;

•	the imposition of restrictions on the activities of foreign agents, representatives and distributors;

•	changes in global tax laws and/or the imposition by tax authorities of significant fines, penalties and additional taxes;

•	pricing pressure that we may experience internationally;

•	fluctuations in foreign currency exchange rates;

•	competition from local, regional and international competitors;

•	difficulties and costs of staffing and managing foreign operations, including cultural differences and additional employment regulations, union workforce negotiations and potential disputes in the jurisdictions in which we operate;

•	laws and business practices favoring local companies;

•	difficulties in enforcing or defending intellectual property rights; and

•	exposure to different legal and political standards due to our conducting business in foreign countries.

---

•	make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on our indebtedness;

•	limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;

•	limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

•	expose us to the risk of rising interest rates with respect to the borrowings under our variable rate indebtedness;

•	require us to use a substantial portion of our cash on hand and/or from future operations to make debt service payments;

•	limit our flexibility to plan for, or react to, changes in our business and industry;

•	place us at a competitive disadvantage compared to our less leveraged competitors; and

•	increase our vulnerability to the impact of adverse economic and industry conditions.

---

•	incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;

•	issue redeemable stock and preferred stock;

•	pay dividends or distributions or redeem or repurchase capital stock;

•	prepay, redeem or repurchase debt;

•	make loans, investments and capital expenditures;

•	enter into agreements that restrict distributions from our subsidiaries;

•	sell assets and capital stock of our subsidiaries;

•	enter into certain transactions with affiliates; and

•	consolidate or merge with or into, or sell substantially all of our assets to, another person.

•	changes to U.S. federal tax rates;

•	expanded limitations on the deductibility of interest;

•	immediate expensing of capital expenditures;

•	the migration from a “worldwide” system of taxation to a “territorial” system;

---

•	the creation of an anti-base erosion minimum tax system; and

•	the modification or repeal of many business deductions and credits.

---

•	pursuing new patents for existing products which may be granted just before the expiration of earlier patents, which could extend patent protection for additional years;

•	using the Citizen Petition process (for example, under 21 C.F.R. § 10.30) to request amendments to FDA standards;

•	attempting to use the legislative and regulatory process to have products reclassified or rescheduled or to set definitions of abuse-deterrent formulations to protect patents and profits; and

•	engaging in state-by-state initiatives to enact legislation that restricts the substitution of some generic products.

---

•	the judgment must be for a definite sum;

•	the judgment must be final and conclusive; and

•	the judgment must be provided by a court of competent jurisdiction.

---

•	Branded Pharmaceuticals: This segment also conducts certain operations in the U.S. through leased and owned manufacturing properties in Pennsylvania, New York and New Jersey, as well as certain administrative and R&D functions through leased properties in Pennsylvania.

•	Sterile Injectables: This segment also conducts certain manufacturing, quality assurance, R&D and administration functions in the U.S. through owned and leased properties in Michigan, as well as certain R&D and administration functions in New York and in India in the same facilities as our Generic Pharmaceuticals segment, as discussed below.

•

Generic Pharmaceuticals: This segment also conducts certain manufacturing, distribution, quality assurance and administration functions, as well as certain R&D functions, through owned and leased properties throughout the U.S., including in New York and California. It also conducts significant R&D operations, as well as certain manufacturing and administrative functions, in India through owned and leased facilities in Chennai and Mumbai.

•	International Pharmaceuticals: This segment’s operations are currently conducted through Paladin’s leased headquarters in Montreal, Canada.

---

---

(1)

Pursuant to Article 11 of the Company’s Articles of Association, the Company has broad shareholder authority to conduct ordinary share repurchases by way of redemptions. As permitted by Irish Law and the Company’s Articles of Association, any ordinary shares redeemed shall be cancelled upon redemption. The Board has approved the 2015 Share Buyback Program that authorizes the Company to redeem, in the aggregate, $2.5 billion of its outstanding ordinary shares. Redemptions under this program may be made from time to time in open market or negotiated transactions or otherwise, as determined by the Board. This program does not obligate the Company to redeem any particular amount of ordinary shares. To date, the Company has redeemed and cancelled approximately 4.4 million of its ordinary shares under the 2015 Share Buyback Program for $250.0 million, not including related fees. We currently do not intend to conduct ordinary share repurchases in the foreseeable future. Future redemptions, if any, will depend on factors such as levels of cash generation from operations, cash requirements for investment in the Company’s business, repayment of future debt, if any, the then current share price, market conditions, legal limitations, sufficient distributable reserves and other factors. For example, the Companies Act requires Irish companies to have distributable reserves equal to or greater than the amount of any proposed ordinary share repurchase amount. Unless we are able to generate sufficient distributable reserves or create distributable reserves by reducing our share premium account, we will not be able to repurchase our ordinary shares. The 2015 Share Buyback Program may be suspended, modified or discontinued at any time.

---

---

•

Total revenues in 2019 decreased 1% to $2,914.4 million compared to $2,947.1 million in 2018 as strong performance from our Sterile Injectables segment and our Branded Pharmaceuticals segment’s Specialty Products portfolio was more than offset by declines in our Branded Pharmaceuticals segment’s Established Products portfolio and both our Generic Pharmaceuticals and International Pharmaceuticals segments.

•

Gross margin percentage in 2019 increased to 46.2% from 44.6% in 2018, reflecting the impact of changes in product mix to higher margin Sterile Injectables and Specialty Products from lower margin Generic Pharmaceuticals and Established Products, as well as reductions to amortization expense and expenses related to retention and separation benefits and other cost reduction initiatives, partially offset by the unfavorable impact of increased sales of certain lower margin authorized generic products launched in the third quarter of 2018.

•	Asset impairment charges in 2019 decreased to $526.1 million from $916.9 million in 2018.

•	Loss from continuing operations in 2019 was $360.6 million, compared to $961.8 million in 2018.

•	In November 2019, we announced the FDA’s acceptance for review of the original BLA for CCH for the treatment of cellulite in the buttocks. The BLA is supported by the results of the RELEASE-1 and RELEASE-2 Phase 3 studies, as well as a clinical program. The PDUFA date, or target action date, for the BLA has been set for July 6, 2020.

•

In March 2019, we completed a series of refinancing transactions that were intended to extend our debt maturity profile and provide greater covenant flexibility, which resulted in a net gain on extinguishment of debt of $119.8 million. These transactions are collectively referred to herein as the March 2019 Refinancing Transactions and are further described in Note 14. Debt in the Consolidated Financial Statements included in Part IV, Item 15 of this report.

•

As a result of the Company’s lawsuit against the FDA challenging its interim policy authorizing bulk compounding of pharmaceuticals, the FDA evaluated whether there is a clinical need to compound vasopressin under Section 503B of the FFDCA. In March 2019, the FDA determined that there is no such clinical need. As a result, the bulk compounding of vasopressin is impermissible under Section 503B of the FFDCA unless the FDA were to add vasopressin to its drug shortage list. The FDA’s decision was upheld by the U.S. District Court for the District of Columbia in August 2019. VASOSTRICT® remains the only vasopressin injection product with an NDA approved by the FDA.

---

---

•	the shelf life or expiration date of each product;

•	historical levels of expired product returns;

•	external data with respect to inventory levels in the wholesale distribution channel;

•	external data with respect to prescription demand for our products; and

•	the estimated returns liability to be processed by year of sale based on analysis of lot information related to actual historical returns.

•	recently implemented or announced price increases for our products; and

•	new product launches or expanded indications for our existing products.

---

•	declining sales trends based on prescription demand;

•	recent regulatory approvals to shorten the shelf life of our products, which could result in a period of higher returns related to older product still in the distribution channel;

•	introduction of new product or generic competition;

•	increasing price competition from generic competitors; and

•	changes to the National Drug Codes (NDCs) of our products, which could result in a period of higher returns related to product with the old NDC, as our customers generally permit only one NDC per product for identification and tracking within their inventory systems.

•	direct rebates;

•	indirect rebates;

•	governmental rebates, including those for Medicaid, Medicare and TRICARE, among others; and

•	managed-care rebates.

•	the average historical chargeback credits;

•	estimated future sales trends; and

---

•	an estimate of the inventory held by our wholesalers, based on internal analysis of a wholesaler’s historical purchases and contract sales.

•	the estimated number of competing products being launched as well as the expected launch date, which we determine based on market intelligence;

•	the estimated decline in the market price of our product, which we determine based on historical experience and customer input; and

•	the estimated levels of inventory held by our customers at the time of the anticipated decrease in market price, which we determine based upon historical experience and customer input.

---

---

---

---

(1)

Amortization expense fluctuates based on changes in the total amount of amortizable intangible assets and the rate of amortization in effect for each intangible asset, both of which can vary based on factors such as the amount and timing of acquisitions, dispositions, asset impairment charges, transfers between indefinite- and finite-lived intangibles assets, changes in foreign currency rates and changes in the composition of our intangible assets impacting the weighted average useful lives and amortization methodologies being utilized. The decrease in 2019 was primarily driven by asset impairment charges and decreases in the rate of amortization expense for certain assets, partially offset by the impact of certain in-process research and development assets put into service.

(2)	Amounts primarily relate to certain accelerated depreciation charges, employee separation costs, charges to increase excess inventory reserves related to restructurings and other cost reduction and restructuring charges. See Note 4. Restructuring in the Consolidated Financial Statements included in Part IV, Item 15 of this report for discussion of our material restructuring initiatives.

---

---

•	growth in the Specialty Products portfolio of our Branded Pharmaceuticals segment, primarily driven by increased revenues following continued investments in XIAFLEX®;

•	growth in the Sterile Injectables segment, driven by continued performance of VASOSTRICT®, partially offset by declines in certain other Sterile Injectables due to assumed competitive pressures; and

•

declines in the Generic Pharmaceuticals segment, the Established Products portfolio of the Branded Pharmaceuticals segment and the International Pharmaceuticals segment, primarily driven by competitive pressures impacting these product portfolios. The expected decline in the Generic Pharmaceuticals segment primarily relates to assumed competition for colchicine tablets, the authorized generic of Colcrys®. For more information, see the risk factor “If we fail to successfully identify and develop additional branded and generic pharmaceutical products, obtain and maintain exclusive marketing rights for our branded and generic products or fail to introduce branded and generic products on a timely basis, our revenues, gross margin and operating results may decline.”

---

(1)	Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.

---

(1)	Products included within Other Specialty are NASCOBAL® Nasal Spray and AVEED®. Beginning with our first-quarter 2019 reporting, TESTOPEL®, which was previously included in Other Specialty, has been reclassified and is now included in the Established Products portfolio for all periods presented.

(2)	Products included within Other Established include, but are not limited to, LIDODERM®, EDEX® and VOLTAREN® Gel.

(3)	Individual products presented above represent the top two performing products in each product category for the year ended December 31, 2019 and/or any product having revenues in excess of $100 million during any of the years ended December 31, 2019, 2018 or 2017 or $25 million during any quarterly period in 2019 or 2018.

(1)	Products included within Other Sterile Injectables include ephedrine sulfate injection, treprostinil for injection and others.

(2)	Individual products presented above represent the top two performing products within the Sterile Injectables segment for the year ended December 31, 2019 and/or any product having revenues in excess of $100 million during any of the years ended December 31, 2019, 2018 or 2017 or $25 million during any quarterly period in 2019 or 2018.

---

---

---

---

(1)

Includes minimum cash payments related to principal associated with our indebtedness as of December 31, 2019. A discussion of such indebtedness is included above under the caption “Indebtedness.” The amounts in this table do not reflect any potential early or accelerated principal payments such as the potential payments described in Note 14. Debt in the Consolidated Financial Statements included in Part IV, Item 15 of this report.

(2)	These amounts represent future cash interest payments related to our indebtedness as of December 31, 2019 based on interest rates specified in the associated debt agreements. Payments related to variable-rate debt are based on applicable market rates, estimated at December 31, 2019, plus the specified margin in the associated debt agreements for each period presented.

(3)

Refer to Note 8. Leases in the Consolidated Financial Statements included in Part IV, Item 15 of this report for additional information about our leases. We have entered into agreements to sublease certain properties. Most significantly, we sublease 140,000 square feet of our Malvern, Pennsylvania facility and substantially all of our Chesterbrook, Pennsylvania facility. As of December 31, 2019, we expect to receive approximately $24.7 million in future minimum rental payments over the remaining terms of the Malvern and Chesterbrook subleases from 2020 to 2024. Amounts of expected sublease income are not reflected in the table above.

(4)	Purchase obligations are enforceable and legally binding obligations for purchases of goods and services, including minimum inventory contracts.

---

(5)	The amounts included above represent contractual payments for mesh-related product liability settlements and reflect the earliest date that a settlement payment could be due and the largest amount that could be due on that date. These matters are described in more detail in Note 15. Commitments and Contingencies in the Consolidated Financial Statements included in Part IV, Item 15 of this report.

(6)	Other obligations and commitments relate to any agreements to purchase third-party assets, products and services and other minimum royalty obligations.

(7)	Total generally does not include contractual obligations already included in current liabilities on our Consolidated Balance Sheets, except for amounts related to the current portion of long-term debt, accrued interest, current lease obligations, mesh-related product liabilities and certain purchase obligations, which are discussed below.

---

---

---

1.	The Consolidated Financial Statements:

2.	Financial Statement Schedules

(1)	Represents the remeasurement of net deferred tax assets due to changes in statutory tax rates.

3.	Exhibits:

---

---

---

*	Confidential portions of this exhibit (indicated by asterisks) have been redacted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

•	direct rebates;

•	indirect rebates;

•	governmental rebates, including those for Medicaid, Medicare and TRICARE, among others; and

•	managed-care rebates.

---

---

---

•

Lease payments—Lease payments include fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. Lease payments exclude consideration that is not related to the transfer of goods and services to the Company.

•

Discount rate—The discount rate must be determined based on information available to the Company upon the commencement of a lease. Lessees are required to use the rate implicit in the lease whenever such rate is readily available; however, as the implicit rate in the Company’s leases is generally not readily determinable, the Company generally uses the hypothetical incremental borrowing rate it would have to pay to borrow an amount equal to the lease payments, on a collateralized basis, over a timeframe similar to the lease term.

---

---

---

---

---

---

---

---

(1)	Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada and, prior to the sale of Litha in July 2017 and Somar in October 2017, South Africa and Latin America.

(1)	Amounts include certain corporate overhead costs, such as headcount, facility and corporate litigation expenses and certain other income and expenses.

(2)

Amounts in 2019 include $14.7 million of costs associated with retention bonuses awarded to certain senior management of the Company. Other amounts in 2019 related primarily to our restructuring and other cost reduction initiatives. Such amounts included employee separation costs of $8.9 million and other charges of $11.0 million. Amounts in 2018 primarily relate to employee separation costs of $31.7 million, accelerated depreciation of $35.2 million, charges to increase excess inventory reserves of $2.9 million and other charges of $16.5 million, each of which related primarily to our restructuring initiatives. Amounts in 2017 primarily relate to employee separation costs of $53.0 million, accelerated depreciation of $123.7 million, charges to increase excess inventory reserves of $13.7 million and other charges of $22.0 million. These charges were related primarily to the 2017 Generic Pharmaceuticals Restructuring Initiative. See Note 4. Restructuring for discussion of our material restructuring initiatives.

(3)	Amounts include adjustments to our accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by our subsidiaries. Our material legal proceedings and other contingent matters are described in more detail in Note 15. Commitments and Contingencies.

(4)	Amounts primarily relate to charges to impair goodwill and intangible assets as further described in Note 10. Goodwill and Other Intangibles as well as charges to write down certain property, plant and equipment as further described in Note 4. Restructuring, Note 6. Fair Value Measurements and Note 9. Property, Plant and Equipment.

---

(5)	Amounts primarily relate to changes in the fair value of contingent consideration.

(6)

Amounts in 2019 include $17.5 million for contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment and $14.1 million for a premium associated with an extended reporting period endorsement on an expiring insurance program. The remaining amounts in 2019 and 2018 primarily relate to gains on sales of businesses and other assets, as further described in Note 19. Other Expense (Income), Net.

(1)	Products included within Other Specialty are NASCOBAL® Nasal Spray and AVEED®. Beginning with our first-quarter 2019 reporting, TESTOPEL®, which was previously included in Other Specialty, has been reclassified and is now included in the Established Products portfolio for all periods presented.

(2)	Products included within Other Established include, but are not limited to, LIDODERM®, EDEX® and VOLTAREN® Gel.

(3)	Individual products presented above represent the top two performing products in each product category for the year ended December 31, 2019 and/or any product having revenues in excess of $100 million during any of the years ended December 31, 2019, 2018 or 2017 or $25 million during any quarterly period in 2019 or 2018.

(4)	Products included within Other Sterile Injectables include ephedrine sulfate injection, treprostinil for injection and others.

(5)

The Generic Pharmaceuticals segment is comprised of a portfolio of products that are generic versions of branded products, are distributed primarily through the same wholesalers, generally have no intellectual property protection and are sold within the U.S. During 2019, colchicine tablets, which launched in July 2018, made up 6% of consolidated total revenue. During 2017, combined sales of ezetimibe tablets and quetiapine ER tablets, for which we lost temporary marketing exclusivity during the second quarter of 2017, made up 7% of consolidated total revenue. No other individual product within this segment has exceeded 5% of consolidated total revenues for the periods presented.

(6)	The International Pharmaceuticals segment, which accounted for 4%, 5% and 7% of consolidated total revenues in 2019, 2018 and 2017, respectively, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin. This segment also included Litha, which was sold in July 2017, and Somar, which was sold in October 2017.

---

(1)	These amounts are reported in our Consolidated Balance Sheets as Restricted cash and cash equivalents.

(2)	These amounts are reported in our Consolidated Balance Sheets as Other assets.

(3)	Approximately $242.8 million and $299.7 million of our restricted cash and cash equivalents are held in QSFs for mesh-related matters at December 31, 2019 and December 31, 2018, respectively. The remaining restricted cash and cash equivalents primarily relates to other litigation-related matters. See Note 15. Commitments and Contingencies for further information.

•	Level 1—Quoted prices in active markets for identical assets or liabilities.

•	Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•	Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

---

---

(1)	The change in fair value recorded in earnings includes the impact of certain competitive events occurring during 2019.

(1)	The fair value amounts are presented as of the date of the fair value measurement as these assets are not measured at fair value on a recurring basis. Such measurements generally occur in connection with our quarter-end financial reporting close procedures.

---

---

(1)	Amounts are included in the Consolidated Statements of Operations based on the function that the underlying leased asset supports. The following table presents the components of such aggregate amounts for the year ended December 31, 2019 (in thousands):

(2)	Amounts represent variable lease costs incurred that were not included in the initial measurement of the lease liability such as common area maintenance and utilities costs associated with leased real estate and certain costs associated with our automobile leases.

---

(1)	The Malvern, Pennsylvania location’s lease arrangement is included under Capital Leases.

---

(1)	Costs incurred during the construction or development of property, plant and equipment are initially recorded as additions to Assets under Construction. Once an asset has been placed into service, the cost of that asset is transferred from Assets under Construction to one of the other classes of assets.

(2)	Amounts include the effect of the Company’s January 1, 2019 adoption of ASC 842, which is further described in Note 2. Summary of Significant Accounting Policies.

---

(1)	This allocation relates to the change in segments described below under the heading “Impairments.” The amount of goodwill allocated was determined using a relative fair value methodology in accordance with U.S. GAAP.

---

(1)	Other adjustments relate to the removal of certain fully amortized intangible assets.

---

---

•	The former Generics reporting unit’s estimated fair value exceeded its carrying amount, resulting in no related goodwill impairment charge.

•	The new Sterile Injectables reporting unit’s estimated fair value exceeded its carrying amount, resulting in no related goodwill impairment charge.

•	The new Generic Pharmaceuticals reporting unit’s carrying amount exceeded its estimated fair value, resulting in a pre-tax non-cash goodwill impairment charge of $391.0 million.

---

---

(1)

At December 31, 2018, approximately $9.3 million of the contract asset amount is classified as a current asset and is included in Prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets. The remaining amount is classified as noncurrent and is included in Other assets. The net decrease in contract assets during the year ended December 31, 2019 was primarily due to reclassifications to accounts receivable following the resolution of certain conditions other than the passage of time affecting the Company’s rights to consideration for the sale of certain goods, as well as certain product discontinuation activities in our International Pharmaceuticals segment.

(2)

At December 31, 2019 and December 31, 2018, approximately $1.4 million and $1.7 million, respectively, of these contract liability amounts are classified as current liabilities and are included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheets. The remaining amounts are classified as noncurrent and are included in Other liabilities. During the year ended December 31, 2019, the Company entered into new contracts resulting in an increase to contract liabilities of approximately $4.0 million. This increase was more than offset by approximately $14.9 million in reductions following certain product discontinuation activities in our International Pharmaceuticals segment and approximately $1.2 million in revenue recognized during the period.

---

---

•

Until a date specified in each indenture (the Non-Call Period), the notes may be redeemed, in whole or in part, by paying the sum of: (i) 100% of the principal amount being redeemed, (ii) an applicable make-whole premium as described in each indenture and (iii) accrued and unpaid interest. As of December 31, 2019, the Non-Call Period has expired for each of our notes except for the 5.875% Senior Secured Notes due 2024, the 6.00% Senior Notes due 2025 and the 7.50% Senior Secured Notes due 2027.

•

After the Non-Call Period specified in each indenture, the notes may be redeemed, in whole or in part, at redemption prices set forth in each indenture, plus accrued and unpaid interest. The redemption prices for each of our notes vary over time. The redemption prices pursuant to this clause range from 100.000% to 105.625% of principal at December 31, 2019; however, these redemption prices generally decrease to 100% of the principal amount of the applicable notes over time as the notes approach maturity pursuant to a step-down schedule set forth in each of the indentures.

•

Until a date specified in each indenture, the notes may be redeemed, in part (up to 35% of the principal amount outstanding), with the net cash proceeds from specified equity offerings at redemption prices set forth in each indenture, plus accrued and unpaid interest. As of December 31, 2019, this clause has expired for each of our notes except for the 5.875% Senior Secured Notes due 2024 and the 7.50% Senior Secured Notes due 2027, for which the specified redemption premiums are 105.875% and 107.500%, respectively.

---

•	entry into an amendment (the Revolving Credit Facility Amendment) to the Company’s existing credit agreement, which was originally dated April 27, 2017 (the amended credit agreement is described above under the heading “Credit Agreement”);

•	issuance of $1,500.0 million of 7.50% Senior Secured Notes due 2027 (the 2027 Notes);

•	repurchase of $1,642.2 million aggregate principal amount of certain of the Company’s senior unsecured notes for $1,500.0 million in cash, excluding accrued interest (the Notes Repurchases); and

•	solicitation of consents from the holders of the existing 7.25% Senior Notes due 2022 and 5.75% Senior Notes due 2022 (together, the Consent Notes) to certain amendments to the indentures governing such notes, which eliminated substantially all of the restrictive covenants, certain events of default and other provisions contained in each such indenture.

•	Before April 1, 2022, the 2027 Notes may be redeemed, in whole or in part, by paying the sum of: (i) 100% of the principal amount being redeemed, (ii) an applicable make-whole premium as described in the indenture and (iii) accrued and unpaid interest.

•	On or after April 1, 2022, the 2027 Notes may be redeemed, in whole or in part, at redemption prices set forth in the indenture, plus accrued and unpaid interest. The redemption prices for the 2027 Notes vary over time pursuant to a step-down schedule set forth in the indenture, beginning at 105.625% of the principal amount redeemed and decreasing to 100% by April 1, 2025.

•	Before April 1, 2022, the 2027 Notes may be redeemed, in part (up to 35% of the principal amount outstanding), with the net cash proceeds from specified equity offerings at 107.500% of the principal amount redeemed, plus accrued and unpaid interest.

---

(1)

Certain amounts borrowed pursuant to the Credit Facilities will immediately mature if certain of our senior notes are not refinanced or repaid in full prior to the date that is 91 days prior to the respective stated maturity dates thereof. Accordingly, we may seek to repay or refinance certain senior notes prior to their stated maturity dates. The amounts in this maturities table do not reflect any such early repayment or refinancing; rather, they reflect stated maturity dates.

(2)	Based on the Company’s borrowings under the Revolving Credit Facility that were outstanding at December 31, 2019, $22.8 million will mature in 2022, with the remainder maturing in 2024.

---

---

(1)

Amounts deposited in the QSFs may earn interest, which is generally used to pay administrative costs of the fund and is reflected in the table above as an increase to the QSF and Mesh Liability Accrual balances. Any interest remaining after all claims have been paid will generally be distributed to the claimants who participated in that settlement. Also included within this line are foreign currency adjustments for settlements not denominated in U.S. dollars.

---

---

---

---

---

---

---

---

---

(1)	The intrinsic value of a stock option is the excess, if any, of the closing price of the Company’s ordinary shares on the last trading day of the fiscal year over the exercise price. The aggregate intrinsic values presented in the table above represent sum of the intrinsic values of all corresponding stock options that are “in-the-money,” if any.

---

(1)	The aggregate intrinsic values of RSUs and PSUs presented in the table above are calculated by multiplying the closing price of the Company’s ordinary shares on the last trading day of the fiscal year by the corresponding number of RSUs and PSUs.

(2)	As a result of the October 1, 2018 modification to the Company’s LTCI awards described above, modified LTCI awards are treated as RSUs for disclosure purposes; thus, the table above reflects an increase to the non-vested number of shares on the modification date.

---

(1)	Amounts in 2018 include a $12.5 million gain on the sale of the Company’s Huntsville, Alabama facilities, as further discussed in Note 4. Restructuring. Amounts in 2017 include a $10.1 million gain resulting from the sale of Litha, as further described in Note 3. Discontinued Operations and Divestitures. The remaining amounts primarily relate to the sales of various ANDAs.

(2)	Amounts relate to the remeasurement of the Company’s foreign currency denominated assets and liabilities.

(3)	Amounts relate to the income statement impacts of our investments in the equity of other companies, including investments accounted for under the equity method.

(4)	Amounts in 2019 primarily relate to $17.5 million of contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment.

---

---

---

---

---

---

(1)

Loss from continuing operations for the year ended December 31, 2019 was impacted by (i) acquisition-related and integration items, net of $(37.5) million, $(5.5) million, $16.0 million and $(19.1) million during the first, second, third and fourth quarters, respectively, which related primarily to changes in the fair value of contingent consideration, (ii) asset impairment charges of $165.4 million, $88.4 million, $4.8 million and $267.4 million during the first, second, third and fourth quarters, respectively, (iii) certain retention and separation benefits and other cost reduction initiatives incurred in connection with continued efforts to enhance the Company’s operations of $2.0 million, $2.1 million, $11.0 million and $19.4 million during the first, second, third and fourth quarters, respectively, (iv) amounts related to litigation-related and other contingent matters totaling $10.3 million, $(14.4) million and $15.3 million during the second, third and fourth quarters, respectively, and (v) amounts related to sales of businesses and other assets of $1.3 million, $(2.5) million, $(1.9) million and $(3.3) million during the first, second, third and fourth quarters, respectively.

---

(2)

Loss from continuing operations for the year ended December 31, 2018 was impacted by (i) acquisition-related and integration items, net of $6.8 million, $5.2 million, $1.3 million and $8.6 million during the first, second, third and fourth quarters, respectively, which related primarily to changes in the fair value of contingent consideration, (ii) asset impairment charges of $448.4 million, $22.8 million, $142.2 million and $303.5 million during the first, second, third and fourth quarters, respectively, (iii) certain retention and separation benefits and other cost reduction initiatives incurred in connection with continued efforts to enhance the Company’s operations of $49.0 million, $29.2 million, $4.0 million and $4.2 million during the first, second, third and fourth quarters, respectively, (iv) amounts related to litigation-related and other contingent matters totaling $(2.5) million, $19.6 million, $(1.8) million and $(1.6) million during the first, second, third and fourth quarters, respectively, and (v) amounts related to sales of businesses and other assets of $(2.4) million, $(24.6) million, $(2.9) million and $(15.3) million during the first, second, third and fourth quarters, respectively.