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Viatris Inc - Quarter Report: 2022 June (Form 10-Q)


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
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 001-39695
VIATRIS INC.
(Exact name of registrant as specified in its charter)
Delaware83-4364296
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
1000 Mylan Boulevard, Canonsburg, Pennsylvania 15317
(Address of principal executive offices)
(724) 514-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:Trading Symbol(s)Name of Each Exchange on Which Registered:
Common Stock, par value $0.01 per shareVTRSThe NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
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      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The number of shares of common stock outstanding, par value $0.01 per share, of the registrant as of August 3, 2022 was 1,212,580,940.


Table of Contents
VIATRIS INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
For the Quarterly Period Ended
June 30, 2022
  
Page
PART I — FINANCIAL INFORMATION
ITEM 1.Condensed Consolidated Financial Statements (unaudited)
ITEM 2.
ITEM 3.
ITEM 4.
PART II — OTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 6.

















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Glossary of Defined Terms

Unless the context requires otherwise, references to “Viatris,” “the Company,” “we,” “us” or “our” in this Form 10-Q (defined below) refer to Viatris Inc. and its subsidiaries. We also have used several other terms in this Form 10-Q, most of which are explained or defined below. Some amounts in this Form 10-Q may not add due to rounding.


2003 LTIPMylan N.V. Amended and Restated 2003 Long-Term Incentive Plan
2021 Form 10-K Viatris’ annual report on Form 10-K for the fiscal year ended December 31, 2021, as amended
Adjusted EBITDANon-GAAP financial measure that the Company believes is appropriate to provide information to investors - EBITDA (defined below) is further adjusted for share-based compensation expense, litigation settlements, and other contingencies, net, restructuring and other special items
ANDAAbbreviated New Drug Application
AOCEAccumulated other comprehensive earnings
APIsActive pharmaceutical ingredients
ARVAntiretroviral medicines
ASCAccounting Standards Codification
ASUAccounting Standards Update
BioconBiocon Limited
Biocon BiologicsBiocon Biologics Limited, a majority owned subsidiary of Biocon
Biocon Biologics Transaction
The pending transaction between Viatris and Biocon Biologics pursuant to which Viatris will contribute its biosimilars portfolio to Biocon Biologics
Biocon AgreementThe transaction agreement between Viatris and Biocon Biologics, dated February 27, 2022, relating to the Biocon Biologics Transaction
BiogenBiogen MA Inc. and Biogen International GmbH, collectively
Business Combination AgreementBusiness Combination Agreement, dated as of July 29, 2019, as amended from time to time, among Viatris, Mylan, Pfizer and certain of their affiliates
CATCompetition Appeals Tribunal
CJEUEuropean Court of Justice
clean energy investmentsUsed to define the three equity method investments the Company has in limited liability companies that own refined coal production plants whose activities qualify for income tax credits under Section 45 of the Code
CMACompetition and Markets Authority
CodeThe U.S. Internal Revenue Code of 1986, as amended
CombinationRefers to Mylan combining with Pfizer's Upjohn Business in a Reverse Morris Trust transaction to form Viatris on November 16, 2020
Commercial Paper ProgramThe $1.65 billion unsecured commercial paper program entered into as of November 16, 2020 by Viatris, as issuer, Mylan Inc., Utah Acquisition Sub Inc. and Mylan II B.V., as guarantors, and certain dealers from time to time
CommissionEuropean Commission
COVID-19Novel coronavirus disease of 2019
CP NotesUnsecured, short-term commercial paper notes issued pursuant to the Commercial Paper Program
DCGIDrug Controller General of India
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Developed Markets segmentViatris’ business segment that includes our operations primarily in the following markets: North America and Europe
DistributionPfizer's distribution to Pfizer stockholders all the issued and outstanding shares of Upjohn Inc.
DOJU.S. Department of Justice
DRIP
Dividend Reinvestment and Share Purchase Plan
EBITDANon-GAAP financial measure that the Company believes is appropriate to provide information to investors - U.S. GAAP net earnings (loss) adjusted for net contribution attributable to equity method investments, income tax provision (benefit), interest expense and depreciation and amortization
EDPAU.S. District Court for the Eastern District of Pennsylvania
Emerging Markets segmentViatris’ business segment that includes, but is not limited to, our operations primarily in the following markets: Parts of Asia, the Middle East, South and Central America, Africa, and Eastern Europe
ERP systemEnterprise resource planning system
EUEuropean Union
Exchange Act Securities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FCA
Financial Conduct Authority in the U.K.
FDAU.S. Food and Drug Administration
Form 10-QThis quarterly report on Form 10-Q for the quarterly period ended June 30, 2022
Greater China segmentViatris’ business segment that includes our operations primarily in the following markets: China, Taiwan and Hong Kong
GxGeneric drugs
IPRInter Partes review
IRSU.S. Internal Revenue Service
IRS Ruling
The private letter ruling issued by the IRS to Pfizer with respect to the Combination, dated as of March 17, 2020
ITInformation technology
JANZ segmentViatris’ business segment that includes our operations in the following markets: Japan, Australia and New Zealand
LIBORLondon Interbank Offered Rate
LillyEli Lilly and Company
maximum leverage ratio The maximum consolidated leverage ratio financial covenant requiring maintenance of a maximum ratio of consolidated total indebtedness as of the end of any quarter to consolidated EBITDA for the trailing four quarters as defined in the related credit agreements from time to time
MDLMultidistrict litigation
MPIMylan Pharmaceuticals Inc.
MylanMylan N.V. and its subsidiaries
Mylan IIMylan II B.V., a company incorporated under the laws of the Netherlands and an indirect wholly owned subsidiary of Viatris, in which legacy Mylan merged with and into
Mylan Inc. Euro NotesThe 2.125% Senior Notes due 2025 issued by Mylan Inc., which are fully and unconditionally guaranteed on a senior unsecured basis by Mylan II B.V., Viatris Inc. and Utah Acquisition Sub Inc.
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Mylan Inc. U.S. Dollar NotesThe 4.200% Senior Notes due 2023, 3.125% Senior Notes due 2023, 4.550% Senior Notes due 2028, 5.400% Senior Notes due 2043 and 5.200% Senior Notes due 2048 issued by Mylan Inc., which are fully and unconditionally guaranteed on a senior unsecured basis by Mylan II B.V., Viatris Inc. and Utah Acquisition Sub Inc.
Mylan SecuritizationMylan Securitization LLC
NASDAQThe NASDAQ Stock Market
NDANew drug application
NHSNational Health Services
Note Securitization FacilityThe note securitization facility entered into in July 2021 for borrowings up to $200 million and expiring in August 2022
OTCOver-the-counter
PfizerPfizer Inc.
PlanViatris Inc. 2020 Stock Incentive Plan
PMSPharmascience Inc.
PSUsPerformance awards
PTABU.S. Patent Trial and Appeal Board
R&DResearch and development
Receivables FacilityThe $400 million accounts receivable entered into in August 2020 and expiring in April 2025
Registered Upjohn Notes
The 1.650% Senior Notes due 2025, 2.300% Senior Notes due 2027, 2.700% Senior Notes due 2030, 3.850% Senior Notes due 2040 and 4.000% Senior Notes due 2050 originally issued on October 29, 2021 registered with the SEC in exchange for the corresponding Unregistered Upjohn U.S. Dollar Notes in a similar aggregate principal amount and with terms substantially identical to the corresponding Unregistered Upjohn U.S. Dollar Notes and fully and unconditionally guaranteed by Mylan Inc., Mylan II and Utah Acquisition Sub Inc.
respiratory delivery platformPfizer’s proprietary dry powder inhaler delivery platform
restricted stock awardsThe Company’s nonvested restricted stock and restricted stock unit awards, including PSUs
Revolving FacilityThe $4.0 billion revolving facility dated as of July 1, 2021, by and among Viatris, certain lenders and issuing banks from time to time party thereto and Bank of America, N.A., as administrative agent
RICORacketeer Influenced and Corrupt Organizations Act
RSUsThe Company's unvested restricted stock unit awards
SanofiSanofi-Aventis U.S., LLC
SARsStock Appreciation Rights
SDNYU.S. District Court for the Southern District of New York
SECU.S. Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
Senior U.S. Dollar NotesThe Upjohn U.S. Dollar Notes, the Utah U.S. Dollar Notes and the Mylan Inc. U.S. Dollar Notes, collectively
SeparationPfizer's transfer to Upjohn of substantially all the assets and liabilities comprising the Upjohn Business
Separation and Distribution AgreementSeparation and Distribution Agreement between Viatris and Pfizer, dated as of July 29, 2019, as amended from time to time
SG&ASelling, general and administrative expenses
SOFRSecured overnight financial rate
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Stock awardsStock options and SARs
TevaTeva Pharmaceutical Industries Ltd.
TSATransition service agreements
U.K.United Kingdom
U.S.United States
U.S. GAAPAccounting principles generally accepted in the U.S.
Unregistered Upjohn U.S. Dollar Notes
The 1.650% Senior Notes due 2025, 2.300% Senior Notes due 2027, 2.700% Senior Notes due 2030, 3.850% Senior Notes due 2040 and 4.000% Senior Notes due 2050 originally issued on June 22, 2020 by Upjohn Inc. (now Viatris Inc.) in a private offering exempt from the registration requirements of the Securities Act and fully and unconditionally guaranteed by Mylan Inc., Mylan II and Utah Acquisition Sub Inc.
UpjohnUpjohn Inc., a wholly owned subsidiary of Pfizer prior to the Distribution, that combined with Mylan and was renamed Viatris Inc.
Upjohn BusinessPfizer’s off-patent branded and generic established medicines business that, in connection with the Combination, was separated from Pfizer and combined with Mylan to form Viatris
Upjohn U.S. Dollar Notes
Senior unsecured notes denominated in U.S. dollars and originally issued by Upjohn Inc. or Viatris Inc. pursuant to an indenture dated June 22, 2020 and fully and unconditionally guaranteed by Mylan Inc., Mylan II B.V. and Utah Acquisition Sub Inc.
Utah Acquisition SubUtah Acquisition Sub Inc., a Delaware corporation and an indirect wholly owned subsidiary of Viatris
Utah Euro Notes
The 2.250% Senior Notes due 2024 and 3.125% Senior Notes due 2028 issued by Utah Acquisition Sub Inc., which are fully and unconditionally guaranteed on a senior unsecured basis by Mylan Inc., Viatris Inc. and Mylan II B.V.
Utah U.S. Dollar NotesThe 3.950% Senior Notes due 2026 and 5.250% Senior Notes due 2046 issued by Utah Acquisition Sub Inc., which are fully and unconditionally guaranteed on a senior unsecured basis by Mylan Inc., Viatris Inc. and Mylan II B.V.
ViatrisViatris Inc., formerly known as Upjohn Inc. prior to the completion of the Combination
YEN Term Loan Facility
The ¥40 billion term loan agreement dated as of July 1, 2021, by and among Viatris, MUFG Bank, Ltd. and Mizuho Bank, Ltd., as administrative agent
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PART I — FINANCIAL INFORMATION

VIATRIS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited; in millions, except per share amounts)
 Three Months EndedSix Months Ended
June 30,June 30,
 2022202120222021
Revenues:
Net sales$4,105.4 $4,561.7 $8,283.6 $8,961.8 
Other revenues11.4 16.1 24.9 46.3 
Total revenues4,116.8 4,577.8 8,308.5 9,008.1 
Cost of sales2,413.5 3,250.1 4,834.0 6,553.1 
Gross profit1,703.3 1,327.7 3,474.5 2,455.0 
Operating expenses:
Research and development162.6 147.7 304.9 331.8 
Selling, general and administrative981.1 1,204.8 1,896.4 2,391.3 
Litigation settlements and other contingencies, net10.9 23.0 17.1 45.9 
Total operating expenses1,154.6 1,375.5 2,218.4 2,769.0 
Earnings (loss) from operations548.7 (47.8)1,256.1 (314.0)
Interest expense145.9 167.1 292.1 336.1 
Other expense, net13.5 4.2 47.2 10.3 
Earnings (loss) before income taxes389.3 (219.1)916.8 (660.4)
Income tax provision75.4 60.1 203.7 656.4 
Net earnings (loss)$313.9 $(279.2)$713.1 $(1,316.8)
Earnings (loss) per share attributable to Viatris Inc. shareholders
Basic$0.26 $(0.23)$0.59 $(1.09)
Diluted$0.26 $(0.23)$0.59 $(1.09)
Weighted average shares outstanding:
Basic1,212.3 1,208.8 1,211.4 1,208.2 
Diluted1,217.1 1,208.8 1,215.1 1,208.2 


See Notes to Condensed Consolidated Financial Statements
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VIATRIS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited; in millions)
 Three Months EndedSix Months Ended
June 30,June 30,
 2022202120222021
Net earnings (loss)$313.9 $(279.2)$713.1 $(1,316.8)
Other comprehensive (loss) earnings, before tax:
Foreign currency translation adjustment(1,149.9)160.7 (1,619.1)(560.5)
Change in unrecognized gain (loss) and prior service cost related to defined benefit plans0.5 72.5 (2.1)73.3 
Net unrecognized gain on derivatives in cash flow hedging relationships17.6 12.4 17.8 15.7 
Net unrecognized gain (loss) on derivatives in net investment hedging relationships384.4 (77.4)585.7 150.0 
Net unrealized (loss) gain on marketable securities(1.0)0.2 (2.7)(0.7)
Other comprehensive (loss) earnings, before tax(748.4)168.4 (1,020.4)(322.2)
Income tax provision (benefit)89.8 (12.2)134.5 24.8 
Other comprehensive (loss) earnings, net of tax(838.2)180.6 (1,154.9)(347.0)
Comprehensive loss$(524.3)$(98.6)$(441.8)$(1,663.8)



See Notes to Condensed Consolidated Financial Statements
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VIATRIS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited in millions, except share and per share amounts)
June 30,
2022
December 31,
2021
ASSETS
Assets
Current assets:
Cash and cash equivalents$664.7 $701.2 
Accounts receivable, net3,736.2 4,266.4 
Inventories3,612.5 3,977.7 
Prepaid expenses and other current assets1,697.7 1,957.6 
Assets held for sale1,465.4 — 
Total current assets11,176.5 10,902.9 
Property, plant and equipment, net3,083.9 3,188.6 
Intangible assets, net24,101.1 26,134.2 
Goodwill10,523.0 12,113.7 
Deferred income tax benefit1,243.2 1,332.7 
Other assets997.4 1,170.7 
Total assets$51,125.1 $54,842.8 
LIABILITIES AND EQUITY
Liabilities
Current liabilities:
Accounts payable$1,670.1 $1,657.4 
Short-term borrowings1,019.7 1,493.0 
Income taxes payable125.7 236.9 
Current portion of long-term debt and other long-term obligations768.2 1,877.5 
Liabilities held for sale285.1 — 
Other current liabilities3,812.4 4,619.6 
Total current liabilities7,681.2 9,884.4 
Long-term debt19,206.4 19,717.1 
Deferred income tax liability2,617.9 2,815.0 
Other long-term obligations1,814.2 1,933.6 
Total liabilities31,319.7 34,350.1 
Equity
Viatris Inc. shareholders’ equity
Common stock: $0.01 par value, 3,000,000,000 shares authorized; shares issued and outstanding: 1,212,447,457 and 1,209,507,463, respectively
12.1 12.1 
Additional paid-in capital18,585.7 18,536.1 
Retained earnings4,106.8 3,688.8 
Accumulated other comprehensive loss(2,899.2)(1,744.3)
Total equity19,805.4 20,492.7 
Total liabilities and equity$51,125.1 $54,842.8 

See Notes to Condensed Consolidated Financial Statements
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VIATRIS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Equity
(Unaudited; in millions, except share amounts)
Additional Paid-In CapitalRetained
Earnings
Accumulated Other Comprehensive LossTotal
Equity
 Common StockTreasury Stock
 SharesCostSharesCost
Balance at March 31, 20221,212,323,483 $12.1 $18,555.1 $3,941.5 — $— $(2,061.0)$20,447.7 
Net earnings— — — 313.9 — — — 313.9 
Other comprehensive loss, net of tax— — — — — — (838.2)(838.2)
Issuance of restricted stock and stock options exercised, net 64,292 — — — — — — — 
Taxes related to the net share settlement of equity awards— — 0.5 — — — — 0.5 
Share-based compensation expense— — 29.4 — — — — 29.4 
Issuance of common stock59,682 — 0.7 — — — — 0.7 
Cash dividends declared, $0.12 per common share
— — — (148.6)— — — (148.6)
Balance at June 30, 20221,212,447,457 $12.1 $18,585.7 $4,106.8 — $— $(2,899.2)$19,805.4 
Additional Paid-In CapitalRetained
Earnings
Accumulated Other Comprehensive LossTotal
Equity
Common StockTreasury Stock
SharesCostSharesCost
Balance at December 31, 20211,209,507,463 $12.1 $18,536.1 $3,688.8 — $— $(1,744.3)$20,492.7 
Net earnings— — — 713.1 — — — 713.1 
Other comprehensive loss, net of tax— — — — — — (1,154.9)(1,154.9)
Issuance of restricted stock and stock options exercised, net 2,880,312 — — — — — — — 
Taxes related to the net share settlement of equity awards— — (8.8)— — — — (8.8)
Share-based compensation expense— — 57.7 — — — — 57.7 
Issuance of common stock59,682 — 0.7 — — — — 0.7 
Cash dividends declared, $0.24 per common share
— — — (295.1)— — — (295.1)
Balance at June 30, 20221,212,447,457 $12.1 $18,585.7 $4,106.8 — $— $(2,899.2)$19,805.4 
See Notes to Condensed Consolidated Financial Statements
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Additional Paid-In CapitalRetained
Earnings
Accumulated Other Comprehensive LossTotal
Equity
 Common StockTreasury Stock
 SharesCostSharesCost
Balance at March 31, 20211,208,530,970 $12.1 $18,464.6 $4,323.6 — $— $(1,385.6)$21,414.7 
Net loss— — — (279.2)— — — (279.2)
Other comprehensive earnings, net of tax— — — — — — 180.6 180.6 
Issuance of restricted stock and stock options exercised, net 681,368 — — — — — — — 
Taxes related to the net share settlement of equity awards— — (5.7)— — — — (5.7)
Share-based compensation expense— — 31.0 — — — — 31.0 
Cash dividends declared, $0.11 per common share
— — — (134.5)— — — (134.5)
Balance at June 30, 20211,209,212,338 $12.1 $18,489.9 $3,909.9 — $— $(1,205.0)$21,206.9 
Additional Paid-In CapitalRetained
Earnings
Accumulated Other Comprehensive LossTotal
Equity
Common StockTreasury Stock
SharesCostSharesCost
Balance at December 31, 20201,206,895,644 $12.1 $18,438.8 $5,361.2 — $— $(858.0)$22,954.1 
Net loss— — — (1,316.8)— — — (1,316.8)
Other comprehensive loss, net of tax— — — — — — (347.0)(347.0)
Issuance of restricted stock and stock options exercised, net 2,316,694 — — — — — — — 
Taxes related to the net share settlement of equity awards— — (12.6)— — — — (12.6)
Share-based compensation expense— — 63.7 — — — — 63.7 
Cash dividends declared, $0.11 per common share
— — — (134.5)— — — (134.5)
Balance at June 30, 20211,209,212,338 $12.1 $18,489.9 $3,909.9 — $— $(1,205.0)$21,206.9 


See Notes to Condensed Consolidated Financial Statements
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VIATRIS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited; in millions)
Six Months Ended
June 30,
 20222021
Cash flows from operating activities:
Net earnings (loss)$713.1 $(1,316.8)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization1,458.3 2,739.6 
Share-based compensation expense57.7 63.7 
Deferred income tax (benefit) expense(157.6)581.6 
Loss from equity method investments— 34.6 
Other non-cash items3.8 203.5 
Litigation settlements and other contingencies, net10.0 42.4 
Changes in operating assets and liabilities:
Accounts receivable(142.3)(114.7)
Inventories(270.1)(341.0)
Accounts payable254.5 (53.5)
Income taxes17.8 (337.7)
Other operating assets and liabilities, net(4.2)(93.5)
Net cash provided by operating activities1,941.0 1,408.2 
Cash flows from investing activities:
Cash received from acquisitions— 277.0 
Capital expenditures(148.4)(138.8)
Purchase of marketable securities(13.2)(19.5)
Proceeds from the sale of marketable securities12.8 19.2 
Payments for product rights and other, net(13.0)(17.3)
Proceeds from sale of assets and subsidiaries— 83.4 
Proceeds from sale of property, plant and equipment12.8 15.5 
Net cash (used in) provided by investing activities(149.0)219.5 
Cash flows from financing activities:
Proceeds from issuance of long-term debt795.4 900.1 
Payments of long-term debt(1,787.0)(2,250.7)
Change in short-term borrowings, net(473.5)199.7 
Taxes paid related to net share settlement of equity awards(13.2)(13.5)
Non-contingent payments for product rights— (456.0)
Contingent consideration payments(18.9)(28.6)
Payments of financing fees(1.3)(0.2)
Cash dividends paid(290.6)(133.0)
Issuance of common stock0.7 — 
Other items, net(0.2)(3.1)
Net cash used in financing activities(1,788.6)(1,785.3)
Effect on cash of changes in exchange rates(40.2)(13.3)
Net decrease in cash, cash equivalents and restricted cash(36.8)(170.9)
Cash, cash equivalents and restricted cash — beginning of period706.2 850.0 
Cash, cash equivalents and restricted cash — end of period$669.4 $679.1 
See Notes to Condensed Consolidated Financial Statements
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

1.General
The accompanying unaudited condensed consolidated financial statements (“interim financial statements”) of Viatris Inc. and subsidiaries were prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for reporting on Form 10-Q; therefore, as permitted under these rules, certain footnotes and other financial information included in audited financial statements were condensed or omitted. The interim financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the interim results of operations, comprehensive earnings, financial position, equity and cash flows for the periods presented.
These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in Viatris’ 2021 Form 10-K. The December 31, 2021 condensed consolidated balance sheet was derived from audited financial statements.
Turkey Highly Inflationary - Under ASC 830, Foreign Currency Matters (“ASC 830”), a highly inflationary economy is one that has cumulative inflation of approximately 100% or more over a three-year period. Effective April 1, 2022, we classified Turkey as highly inflationary. In accordance with ASC 830, starting with the second quarter of 2022, we began to utilize the U.S. dollar as our functional currency in Turkey, which historically utilized the Turkish lira as the functional currency. The impact of applying the guidance in ASC 830 did not have a material impact on our results of operations, comprehensive earnings, financial position, equity and cash flows for the three months ended June 30, 2022. The impacted net sales for the three months ended June 30, 2022 and total assets at June 30, 2022 represented less than 1% of our consolidated net sales and total assets, respectively.
The interim results of operations and comprehensive earnings for the three and six months ended June 30, 2022, and cash flows for the six months ended June 30, 2022, are not necessarily indicative of the results to be expected for the full fiscal year or any other future period.
2.Revenue Recognition and Accounts Receivable
The Company recognizes revenues in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes net revenue for product sales when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues are recorded net of provisions for variable consideration, including discounts, rebates, governmental rebate programs, price adjustments, returns, chargebacks, promotional programs and other sales allowances. Accruals for these provisions are presented in the condensed consolidated financial statements as reductions in determining net sales and as a contra asset in accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash).
Our net sales may be impacted by wholesaler and distributor inventory levels of our products, which can fluctuate throughout the year due to the seasonality of certain products, pricing, the timing of product demand, purchasing decisions and other factors. Such fluctuations may impact the comparability of our net sales between periods.
Consideration received from licenses of intellectual property is recorded as other revenues. Royalty or profit share amounts, which are based on sales of licensed products or technology, are recorded when the customer’s subsequent sales or usages occur. Such consideration is included in other revenues in the condensed consolidated statements of operations.
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
The following table presents the Company’s net sales by product category for each of our reportable segments for the three and six months ended June 30, 2022 and 2021, respectively:

(In millions)Three Months Ended June 30, 2022
Product CategoryDeveloped MarketsGreater ChinaJANZEmerging MarketsTotal
Brands$1,305.4 $546.3 $243.1 $388.3 $2,483.1 
Complex Gx and Biosimilars327.0 0.3 12.1 15.4 354.8 
Generics846.7 1.7 171.9 247.2 1,267.5 
Total$2,479.1 $548.3 $427.1 $650.9 $4,105.4 

(In millions)Six Months Ended June 30, 2022
Product CategoryDeveloped MarketsGreater ChinaJANZEmerging MarketsTotal
Brands$2,604.1 $1,116.0 $492.1 $825.0 $5,037.2 
Complex Gx and Biosimilars691.1 0.3 22.4 31.8 745.6 
Generics1,660.0 5.1 336.4 499.3 2,500.8 
Total$4,955.2 $1,121.4 $850.9 $1,356.1 $8,283.6 

(In millions)Three Months Ended June 30, 2021
Product CategoryDeveloped MarketsGreater ChinaJANZEmerging MarketsTotal
Brands$1,424.1 $549.2 $295.4 $433.0 $2,701.7 
Complex Gx and Biosimilars309.3 — 9.8 13.7 332.8 
Generics907.0 1.1 195.8 423.3 1,527.2 
Total$2,640.4 $550.3 $501.0 $870.0 $4,561.7 

(In millions)Six Months Ended June 30, 2021
Product CategoryDeveloped MarketsGreater ChinaJANZEmerging MarketsTotal
Brands$2,827.8 $1,140.1 $579.4 $879.0 $5,426.3 
Complex Gx and Biosimilars621.3 — 18.7 21.7 661.7 
Generics1,762.9 2.1 384.8 724.0 2,873.8 
Total$5,212.0 $1,142.2 $982.9 $1,624.7 $8,961.8 

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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
The following table presents net sales on a consolidated basis for select key products for the three and six months ended June 30, 2022 and 2021:
Three months ended June 30,
Six months ended June 30,
(In millions)2022202120222021
Select Key Global Products
Lipitor ®
$405.6 $398.3 $845.7 $862.9 
Norvasc ®203.0 209.8 410.8 437.5 
Lyrica ®155.8 192.5 327.4 380.3 
Viagra ®115.1 134.8 244.9 274.4 
EpiPen® Auto-Injectors106.5 104.1 195.3 207.8 
Celebrex ®
85.9 82.3 171.2 171.3 
Creon ®75.4 80.7 150.1 150.6 
Effexor ®
73.7 83.5 151.2 160.1 
Zoloft ®
62.5 70.9 135.6 147.5 
Xalabrands42.7 58.3 95.7 116.2 
Select Key Segment Products
Dymista ®$55.5 $54.6 $99.4 $94.9 
Yupelri ®49.1 41.8 92.7 78.7 
Amitiza ®44.1 52.1 85.9 98.0 
Xanax ®37.2 48.8 77.2 93.9 
____________
(a)The Company does not disclose net sales for any products considered competitively sensitive.
(b)Products disclosed may change in future periods, including as a result of seasonality, competition or new product launches.
(c)Amounts for the three and six months ended June 30, 2022 include the unfavorable impact of foreign currency translations compared to the prior year period.
Variable Consideration and Accounts Receivable
The following table presents a reconciliation of gross sales to net sales by each significant category of variable consideration during the three and six months ended June 30, 2022 and 2021, respectively:
Three Months EndedSix Months Ended
June 30,June 30,
(In millions)2022202120222021
Gross sales$7,008.7 $7,752.3 $14,207.0 $15,319.3 
Gross to net adjustments:
Chargebacks(1,594.2)(1,354.8)(3,178.4)(2,672.8)
Rebates, promotional programs and other sales allowances(1,075.3)(1,566.6)(2,281.2)(3,135.1)
Returns(82.7)(88.3)(165.3)(201.3)
Governmental rebate programs(151.1)(180.9)(298.5)(348.3)
Total gross to net adjustments$(2,903.3)$(3,190.6)$(5,923.4)$(6,357.5)
Net sales$4,105.4 $4,561.7 $8,283.6 $8,961.8 
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
No significant revisions were made to the methodology used in determining these provisions or the nature of the provisions during the three and six months ended June 30, 2022. Such allowances were comprised of the following at June 30, 2022 and December 31, 2021, respectively:
(In millions)June 30,
2022
December 31,
2021
Accounts receivable, net$1,742.9 $1,688.6 
Other current liabilities914.7 1,362.1 
Total$2,657.6 $3,050.7 
Accounts receivable, net was comprised of the following at June 30, 2022 and December 31, 2021, respectively:
(In millions)June 30,
2022
December 31,
2021
Trade receivables, net$3,182.9 $3,774.4 
Other receivables553.3 492.0 
Accounts receivable, net$3,736.2 $4,266.4 
Accounts Receivable Factoring Arrangements
We have entered into accounts receivable factoring agreements with financial institutions to sell certain of our non-U.S. accounts receivable. These transactions are accounted for as sales and result in a reduction in accounts receivable because the agreements transfer effective control over and risk related to the receivables to the buyers. Our factoring agreements do not allow for recourse in the event of uncollectibility, and we do not retain any interest in the underlying accounts receivable once sold. We derecognized $41.9 million and $29.6 million of accounts receivable as of June 30, 2022 and December 31, 2021, respectively, under these factoring arrangements.
3.Recent Accounting Pronouncements
Adoption of New Accounting Standard
In November 2021, the FASB issued Accounting Standards Update 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance (“ASU 2021-10”), which requires entities to provide annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. We adopted the ASU prospectively on January 1, 2022. The additional annual disclosures required are not expected to have a material impact on our consolidated financial statements.
There were no other significant changes in new accounting standards from those disclosed in Viatris’ 2021 Form 10-K. Refer to Viatris’ 2021 Form 10-K for additional information.
4.Share-Based Incentive Plan
Prior to the Distribution, Viatris adopted and Pfizer, in the capacity as Viatris’ sole stockholder at such time, approved the Plan which became effective as of the Distribution. In connection with the Combination, as of November 16, 2020, the Company assumed the 2003 LTIP, which had previously been approved by Mylan shareholders. The Plan and 2003 LTIP include (i) 72,500,000 shares of common stock authorized for grant pursuant to the Plan, which may include dividend payments payable in common stock on unvested shares granted under awards, (ii) 6,757,640 shares of common stock to be issued pursuant to the exercise of outstanding stock options granted to participants under the 2003 LTIP and assumed by Viatris in connection with the Combination and (iii) 13,535,627 shares of common stock subject to outstanding equity-based awards, other than stock options, assumed by Viatris in connection with the Combination, or that otherwise remain available for issuance under the 2003 LTIP.
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Under the Plan and 2003 LTIP, shares are reserved for issuance to key employees, consultants, independent contractors and non-employee directors of the Company through a variety of incentive awards, including: stock options, SARs, restricted stock and units, PSUs, other stock-based awards and short-term cash awards. Stock option awards are granted with an exercise price equal to the fair market value of the shares underlying the stock options at the date of the grant, generally become exercisable over periods ranging from three to four years, and generally expire in ten years.
The following table summarizes stock awards (stock options and SARs) activity under the Plan and 2003 LTIP:
Number of Shares Under Stock AwardsWeighted Average Exercise Price per Share
Outstanding at December 31, 20215,576,490 $37.19 
Forfeited(782,735)$30.69 
Outstanding at June 30, 20224,793,755 $38.25 
Vested and expected to vest at June 30, 20224,748,296 $38.43 
Exercisable at June 30, 20224,518,196 $39.43 
As of June 30, 2022, stock awards outstanding, stock awards vested and expected to vest and stock awards exercisable had average remaining contractual terms of 4.5 years, 4.5 years and 4.3 years, respectively. Also, as of June 30, 2022, stock awards outstanding, stock awards vested and expected to vest and stock awards exercisable had no aggregate intrinsic value.
A summary of the status of the Company’s nonvested restricted stock awards (restricted stock and restricted stock unit awards, including PSUs) as of June 30, 2022 and the changes during the six months ended June 30, 2022 are presented below:
Number of Restricted Stock AwardsWeighted Average Grant-Date Fair Value Per Share
Nonvested at December 31, 202116,858,128 $15.12 
Granted16,778,913 10.20 
Released(3,576,289)17.92 
Forfeited(730,250)12.85 
Nonvested at June 30, 202229,330,502 $12.01 
As of June 30, 2022, the Company had $238.6 million of total unrecognized compensation expense, net of estimated forfeitures, related to all of its stock-based awards, which we expect to recognize over the remaining weighted average vesting period of 1.8 years. The total intrinsic value of restricted stock units released during the six months ended June 30, 2022 and 2021 was $64.1 million and $71.9 million, respectively.
5.Pensions and Other Postretirement Benefits
Defined Benefit Plans
The Company sponsors various defined benefit pension plans in several countries. Benefits provided generally depend on length of service, pay grade and remuneration levels. Employees in the U.S., Puerto Rico and certain international locations are also provided retirement benefits through defined contribution plans.
The Company also sponsors other postretirement benefit plans including plans that provide for postretirement supplemental medical coverage. Benefits from these plans are provided to employees and their spouses and dependents who meet various minimum age and service requirements. In addition, the Company sponsors other plans that provide for life insurance benefits and postretirement medical coverage for certain officers and management employees.
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Net Periodic Benefit Cost
Components of net periodic benefit cost for the three and six months ended June 30, 2022 and 2021 were as follows:
Pension and Other Postretirement Benefits
Three Months EndedSix Months Ended
June 30,June 30,
(In millions)2022202120222021
Service cost$9.5 $10.9 $19.0 $21.7 
Interest cost10.4 8.7 20.8 17.2 
Expected return on plan assets(16.6)(16.7)(33.2)(33.2)
Amortization of prior service costs— (0.2)0.1 (0.3)
Recognized net actuarial losses0.1 0.5 0.1 0.8 
Settlement gain$— $(3.1)$— $(3.1)
Net periodic benefit cost$3.4 $0.1 $6.8 $3.1 
In the second quarter of 2021, the Company recognized a settlement gain as a result of cash payments from lump sum elections related to the U.S. and Puerto Rico pension plans.
The Company is making the minimum mandatory contributions to its defined benefit pension plans in the U.S. and Puerto Rico for the 2022 plan year. The Company expects to make total benefit payments of approximately $118.0 million from pension and other postretirement benefit plans in 2022. The Company anticipates making contributions to pension and other postretirement benefit plans of approximately $52.0 million in 2022.
6.Balance Sheet Components
Selected balance sheet components consist of the following:
Cash and restricted cash
(In millions)June 30,
2022
December 31,
2021
June 30, 2021
Cash and cash equivalents$664.7 $701.2 $673.9 
Restricted cash, included in prepaid expenses and other current assets4.7 5.0 5.2 
Cash, cash equivalents and restricted cash$669.4 $706.2 $679.1 
Inventories
(In millions)June 30,
2022
December 31,
2021
Raw materials$805.2 $922.4 
Work in process821.7 993.3 
Finished goods1,985.6 2,062.0 
Inventories$3,612.5 $3,977.7 
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Prepaid expenses and other current assets
(In millions)June 30,
2022
December 31, 2021
Prepaid expenses$274.0 $256.7 
Available-for-sale fixed income securities35.5 38.2 
Fair value of financial instruments201.1 144.6 
Equity securities41.7 51.0 
Other current assets1,145.4 1,467.1 
Prepaid expenses and other current assets$1,697.7 $1,957.6 
Prepaid expenses consist primarily of prepaid rent, insurance and other individually insignificant items.
Property, plant and equipment, net
(In millions)June 30,
2022
December 31, 2021
Machinery and equipment$2,820.9 $3,054.0 
Buildings and improvements1,548.1 1,808.5 
Construction in progress551.7 588.7 
Land and improvements120.7 137.9 
Gross property, plant and equipment5,041.4 5,589.1 
Accumulated depreciation1,957.5 2,400.5 
Property, plant and equipment, net$3,083.9 $3,188.6 
Other assets
(In millions)June 30,
2022
December 31, 2021
Operating lease right-of-use assets$275.1 $290.8 
Other long-term assets722.3 879.9 
Other assets$997.4 $1,170.7 
Accounts payable
(In millions)June 30,
2022
December 31, 2021
Trade accounts payable$1,050.7 $1,056.1 
Other payables619.4 601.3 
Accounts payable$1,670.1 $1,657.4 
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Other current liabilities
(In millions)June 30,
2022
December 31, 2021
Accrued sales allowances$914.7 $1,362.1 
Legal and professional accruals, including litigation accruals676.3 715.6 
Payroll and employee benefit liabilities541.0 741.9 
Contingent consideration73.8 66.7 
Accrued restructuring136.3 233.5 
Accrued interest75.7 86.6 
Equity method investments, clean energy investments4.3 10.9 
Fair value of financial instruments101.9 61.0 
Operating lease liability83.4 86.7 
Other1,205.0 1,254.6 
Other current liabilities$3,812.4 $4,619.6 
Other long-term obligations
(In millions)June 30,
2022
December 31, 2021
Employee benefit liabilities$832.6 $876.4 
Contingent consideration107.2 133.0 
Tax related items, including contingencies411.3 426.1 
Operating lease liability192.2 200.9 
Accrued restructuring51.2 64.3 
Other219.7 232.9 
Other long-term obligations$1,814.2 $1,933.6 
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Assets and liabilities held for sale
On February 27, 2022, the Company entered into an agreement to contribute its biosimilars portfolio to Biocon Biologics. Under the terms of the Biocon Agreement, at closing Viatris will receive an up-front cash payment of $2.0 billion, subject to certain adjustments, ownership of at least 12.9% of Biocon Biologics, on a fully diluted basis, in the form of convertible preferred equity which will have certain priority rights with respect to certain liquidity events, and $335 million as additional cash payments that are expected to be paid in 2024. Upon closing of the transaction, we expect to record a gain for the difference between the consideration received, including the fair value of the convertible preferred equity, and the carrying value of the biosimilars portfolio. The companies will also enter into a two-year transition services agreement, subject to extension in certain circumstances, during which time Viatris will provide certain commercial and administrative services for an applicable service fee. The transaction is expected to close in the second half of 2022 and is subject to various closing conditions (including regulatory approvals). Assets and liabilities associated with the biosimilars portfolio were reclassified as held for sale in the condensed consolidated balance sheets as of June 30, 2022.

The amounts associated with the biosimilars portfolio, as well as other assets classified as held for sale, consisted of the following:

As of
(In millions)June 30, 2022
Assets held for sale
Accounts receivable, net$179.1 
Inventories168.5 
Prepaid expenses and other current assets15.4 
Intangible assets, net59.9 
Goodwill936.9 
Other assets105.6 
Total assets held for sale$1,465.4 
Liabilities held for sale
Accounts payable$112.9 
Other current liabilities172.2 
Total liabilities held for sale$285.1 

For the three and six months ended June 30, 2022, total revenues relating to the biosimilars portfolio expected to be contributed to Biocon Biologics were approximately $166.9 million and $336.0 million, respectively.
7.Equity Method Investments
The law that provides for IRC Section 45 tax credits expired during the year ended December 31, 2021 for all three clean energy investments and all of the clean energy investments have wound down operations. Summarized financial information, in the aggregate, for the Company’s three equity method, clean energy investments on a 100% basis for the three and six months ended June 30, 2021 are as follows:
Three Months EndedSix Months Ended
(In millions)June 30, 2021June 30, 2021
Total revenues$90.0 $199.5 
Gross loss(1.2)(2.6)
Operating and non-operating expense4.0 8.9 
Net loss$(5.2)$(11.5)
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
The Company’s net losses from its equity method investments included amortization expense related to the excess of the cost basis of the Company’s investment over the underlying assets of each individual investee. For the three and six months ended June 30, 2021, the Company recognized net losses from equity method investments of $16.7 million and $34.6 million, respectively, which were recognized as a component of other expense, net in the condensed consolidated statements of operations. The Company recognized the income tax credits and benefits from the clean energy investments as part of its provision for income taxes.
8.Earnings (Loss) per Share
Basic earnings (loss) per share is computed by dividing net earnings (loss) by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net earnings (loss) by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding related to potentially dilutive securities or instruments, if the impact is dilutive.
Basic and diluted earnings (loss) per share attributable to Viatris Inc. are calculated as follows:
 Three Months EndedSix Months Ended
June 30,June 30,
(In millions, except per share amounts)2022202120222021
Basic earnings (loss) attributable to Viatris Inc. common shareholders
Net earnings (loss) attributable to Viatris Inc. common shareholders$313.9 $(279.2)$713.1 $(1,316.8)
Shares (denominator):
Weighted average shares outstanding1,212.3 1,208.8 1,211.4 1,208.2 
Basic earnings (loss) per share attributable to Viatris Inc. shareholders$0.26 $(0.23)$0.59 $(1.09)
Diluted earnings (loss) attributable to Viatris Inc. common shareholders
Net earnings (loss) attributable to Viatris Inc. common shareholders$313.9 $(279.2)$713.1 $(1,316.8)
Shares (denominator):
Weighted average shares outstanding1,212.3 1,208.8 1,211.4 1,208.2 
Share-based awards4.8 — 3.7 — 
Total dilutive shares outstanding1,217.1 1,208.8 1,215.1 1,208.2 
Diluted earnings (loss) per share attributable to Viatris Inc. shareholders$0.26 $(0.23)$0.59 $(1.09)
Additional stock awards and restricted stock awards were outstanding during the three and six months ended June 30, 2022 and 2021, but were not included in the computation of diluted earnings per share for each respective period because the effect would be anti-dilutive. Excluded shares at June 30, 2022 include certain share-based compensation awards whose performance conditions had not been fully met. Such excluded shares and anti-dilutive awards represented 9.8 million shares and 12.6 million shares for the three and six months ended June 30, 2022, respectively, and 10.0 million shares and 10.5 million shares for the three and six months ended June 30, 2021, respectively.
The Company paid quarterly dividends of $0.12 per share on the Company’s issued and outstanding common stock on March 16, 2022 and June 16, 2022. On August 4, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.12 per share on the Company’s issued and outstanding common stock, which will be payable on September 16, 2022 to shareholders of record as of the close of business on August 24, 2022. The declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the Board of Directors, and will depend upon factors, including but not limited to, the Company’s financial condition, earnings, capital requirements of its businesses, legal requirements, regulatory constraints, industry practice, and other factors that the Board of Directors deems relevant.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
On May 6, 2022, the Company announced that its Board of Directors had authorized a DRIP. The DRIP allows shareholders to automatically reinvest all or a portion of the cash dividends paid on their shares of the Company’s common stock and to make certain additional optional cash investments in the Company’s common stock.

On February 28, 2022, the Company announced that its Board of Directors had authorized a share repurchase program for the repurchase of up to $1.0 billion of the Company’s shares of common stock. The Company has not yet repurchased any shares of common stock under the share repurchase program and the share repurchase program does not obligate the Company to acquire any particular amount of common stock.

9.Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill for the six months ended June 30, 2022 are as follows:
(In millions)Developed MarketsGreater ChinaJANZEmerging MarketsTotal
Balance at December 31, 2021:
Goodwill$9,108.4 $969.5 $776.3 $1,644.5 $12,498.7 
Accumulated impairment losses(385.0)— — — (385.0)
8,723.4 969.5 776.3 1,644.5 12,113.7 
Reclassification to assets held for sale (1)
(746.0)(2.8)(33.2)(154.9)(936.9)
Foreign currency translation(525.5)(14.8)(53.8)(59.7)(653.8)
$7,451.9 $951.9 $689.3 $1,429.9 $10,523.0 
Balance at June 30, 2022:
Goodwill$7,836.9 $951.9 $689.3 $1,429.9 $10,908.0 
Accumulated impairment losses(385.0)— — — (385.0)
$7,451.9 $951.9 $689.3 $1,429.9 $10,523.0 
____________
(1)Primarily reflects goodwill relating to the biosimilars portfolio.

The Company reviews goodwill for impairment annually on April 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. As a result of the Biocon Biologics Transaction (refer to Note 6 Balance Sheet Components for additional information) and the decline in the Company’s share price during the first quarter of 2022, the Company performed an interim goodwill impairment test as of March 31, 2022. The Company performed the annual goodwill impairment test as of April 1, 2022. There were no significant changes from the interim goodwill test performed at March 31, 2022 and the results were consistent with the interim goodwill impairment test.
The Company performed both its interim and annual goodwill impairment tests on a quantitative basis for its five reporting units, North America, Europe, Emerging Markets, JANZ, and Greater China. In estimating each reporting unit’s fair value, the Company performed an extensive valuation analysis, utilizing both income and market-based approaches. The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions, utilizing Level 3 inputs, primarily include, but are not limited to, market multiples, control premiums, the discount rate, terminal growth rates, operating income before depreciation and amortization, and capital expenditures forecasts.
As of March 31, 2022 and April 1, 2022, the allocation of the Company’s total goodwill (prior to the reclassification of goodwill to assets held for sale) was as follows: North America $3.61 billion, Europe $4.95 billion, Emerging Markets $1.64 billion, JANZ $0.78 billion and Greater China $0.97 billion.
As of March 31, 2022 and April 1, 2022, the Company determined that the fair value of the North America and Greater China reporting units was substantially in excess of the respective unit’s carrying value.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
For the Europe reporting unit, the estimated fair value exceeded its carrying value by approximately $797 million or 5.3% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the Europe reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 0.5%. A terminal year value was calculated with a negative 1.0% revenue growth rate applied. The discount rate utilized was 9.5% and the estimated tax rate was 15.3%. Under the market-based approach, we utilized an estimated range of market multiples of 7.5 to 8.0 times EBITDA plus a control premium of 15.0%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 3.0% or an increase in discount rate by 1.5% would result in an impairment charge for the Europe reporting unit.

For the JANZ reporting unit, the estimated fair value exceeded its carrying value by approximately $231 million or 7.4% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the JANZ reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately negative 4.8%. A terminal year value was calculated assuming no revenue growth. The discount rate utilized was 6.0% and the estimated tax rate was 30.4%. Under the market-based approach, we utilized an estimated market multiple of 6.0 times EBITDA plus a control premium of 15.0%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 3.5% or an increase in discount rate by 2.0% would result in an impairment charge for the JANZ reporting unit.
For the Emerging Markets reporting unit, the estimated fair value exceeded its carrying value by approximately $816 million or 10.3% for both the interim and annual goodwill impairment tests. As it relates to the income approach for the Emerging Markets reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 1.6%. A terminal year value was calculated with a 0.8% revenue growth rate applied. The discount rate utilized was 10.5% and the estimated tax rate was 18.4%. Under the market-based approach, we utilized an estimated market multiple of 7.5 times EBITDA plus a control premium of 15.0%. If all other assumptions are held constant, a reduction in the terminal value growth rate by approximately 8.5% or an increase in discount rate by 3.0% would result in an impairment charge for the Emerging Markets reporting unit.
Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. In addition, changes in underlying assumptions, especially as they relate to the key assumptions detailed, could have a significant impact on the fair value of the reporting units.
Subsequent to the completion of the interim goodwill impairment test, the Company allocated goodwill of $926.9 million as of June 30, 2022 to its biosimilars portfolio using a relative fair value approach and then reclassified the amount to assets held for sale in conjunction with the Biocon Biologics Transaction.
Intangible Assets, Net
Intangible assets consist of the following components at June 30, 2022 and December 31, 2021:
(In millions)Weighted Average Life (Years)Original CostAccumulated AmortizationNet Book Value
June 30, 2022
Product rights, licenses and other (1)
15$37,498.2 $13,440.9 $24,057.3 
In-process research and development43.8 — 43.8 
$37,542.0 $13,440.9 $24,101.1 
December 31, 2021
Product rights, licenses and other (1)
15$39,006.2 $12,918.5 $26,087.7 
In-process research and development46.5 — 46.5 
$39,052.7 $12,918.5 $26,134.2 
____________
(1)Represents amortizable intangible assets. Other intangible assets consists principally of customer lists and contractual rights.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Amortization expense, which is classified primarily within cost of sales in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 totaled:
Three Months EndedSix Months Ended
June 30,June 30,
(In millions)2022202120222021
Intangible asset amortization expense$634.1 $681.6 $1,282.2 $1,366.0 
Intangible asset impairment charges— — — 83.4 
Total intangible asset amortization expense (including impairment charges)$634.1 $681.6 $1,282.2 $1,449.4 
On April 30, 2021, the Company completed an agreement to divest a group of OTC products in the U.S. As a result of this transaction, the Company recognized an intangible asset impairment charge of approximately $83.4 million during the six months ended June 30, 2021.
Intangible asset amortization expense over the remainder of 2022 and for the years ending December 31, 2023 through 2026 is estimated to be as follows:
(In millions)
2022$1,250 
20232,341 
20242,247 
20252,151 
20262,098 
10. Financial Instruments and Risk Management
The Company is exposed to certain financial risks relating to its ongoing business operations. The primary financial risks that are managed by using derivative instruments are foreign currency risk and interest rate risk.
Foreign Currency Risk Management
In order to manage certain foreign currency risks, the Company enters into foreign exchange forward contracts to mitigate risk associated with changes in spot exchange rates of mainly non-functional currency denominated assets or liabilities. The foreign exchange forward contracts are measured at fair value and reported as current assets or current liabilities in the condensed consolidated balance sheets. Any gains or losses on the foreign exchange forward contracts are recognized in earnings in the period incurred in the condensed consolidated statements of operations.
The Company has also entered into forward contracts to hedge forecasted foreign currency denominated sales from certain international subsidiaries and a portion of forecasted intercompany inventory sales denominated in Euro, Japanese Yen and Chinese Renminbi for up to eighteen months. These contracts are designated as cash flow hedges to manage foreign currency transaction risk and are measured at fair value and reported as current assets or current liabilities in the condensed consolidated balance sheets. Any changes in the fair value of designated cash flow hedges are deferred in AOCE and are reclassified into earnings when the hedged item impacts earnings.
Net Investment Hedges
The Company may hedge the foreign currency risk associated with certain net investment positions in foreign subsidiaries by either borrowing directly in foreign currencies and designating all or a portion of the foreign currency debt as a hedge of the applicable net investment position or entering into foreign currency swaps that are designated as hedges of net investments.
The Company has designated certain Euro and Yen borrowings as a hedge of its investment in certain Euro-functional and Yen-functional currency subsidiaries in order to manage foreign currency translation risk. Borrowings designated as net investment hedges are marked-to-market using the current spot exchange rate as of the end of the period, with gains and losses included in the foreign currency translation component of AOCE until the sale or substantial liquidation of the underlying net
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
investments. In addition, the Company manages the related foreign exchange risk of the Euro and Yen borrowings not designated as net investment hedges through certain Euro and Yen denominated financial assets and forward currency swaps.
The following table summarizes the principal amounts of the Company’s outstanding Euro and Yen borrowings and the notional amounts of the Euro and Yen borrowings designated as net investment hedges:
Notional Amount Designated as a Net Investment Hedge
(In millions)Principal AmountJune 30,
2022
December 31,
2021
2.250% Euro Senior Notes due 20241,000.0 1,000.0 1,000.0 
3.125% Euro Senior Notes due 2028750.0 750.0 750.0 
2.125% Euro Senior Notes due 2025500.0 500.0 500.0 
0.816% Euro Senior Notes due 2022 (1)
750.0 — 750.0 
1.023% Euro Senior Notes due 2024750.0 750.0 750.0 
1.362% Euro Senior Notes due 2027850.0 850.0 850.0 
1.908% Euro Senior Notes due 20321,250.0 1,250.0 1,250.0 
Total5,850.0 5,100.0 5,850.0 
Yen
YEN Term Loan¥40,000.0 ¥40,000.0 ¥40,000.0 
Yen Total¥40,000.0 ¥40,000.0 ¥40,000.0 
____________
(1)The Senior Notes were repaid at maturity during the second quarter of 2022.
At June 30, 2022, the principal amount of the Company’s outstanding Yen borrowings and the notional amount of the Yen borrowings designated as net investment hedge was $294.7 million.
Interest Rate Risk Management
The Company enters into interest rate swaps from time to time in order to manage interest rate risk associated with the Company’s fixed-rate and floating-rate debt. Interest rate swaps that meet specific accounting criteria are accounted for as fair value or cash flow hedges. All derivative instruments used to manage interest rate risk are measured at fair value and reported as current assets or current liabilities in the condensed consolidated balance sheets. For fair value hedges, the changes in the fair value of both the hedging instrument and the underlying debt obligations are included in interest expense. For cash flow hedges, the change in fair value of the hedging instrument is deferred through AOCE and is reclassified into earnings when the hedged item impacts earnings.
Credit Risk Management
The Company regularly reviews the creditworthiness of its financial counterparties and does not expect to incur a significant loss from the failure of any counterparties to perform under any agreements. The Company is not subject to any obligations to post collateral under derivative instrument contracts. Certain derivative instrument contracts entered into by the Company are governed by master agreements, which contain credit-risk-related contingent features that would allow the counterparties to terminate the contracts early and request immediate payment should the Company trigger an event of default on other specified borrowings. The Company records all derivative instruments on a gross basis in the condensed consolidated balance sheets. Accordingly, there are no offsetting amounts that net assets against liabilities.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
The following table summarizes the classification and fair values of derivative instruments in our condensed consolidated balance sheets:
Asset Derivatives Liability Derivatives
(In millions)Balance Sheet LocationJune 30, 2022 Fair ValueDecember 31, 2021 Fair ValueBalance Sheet LocationJune 30, 2022 Fair ValueDecember 31, 2021 Fair Value
Derivatives designated as hedges:
Foreign currency forward contractsPrepaid expenses & other current assets$70.6 $62.0 Other current liabilities$2.1 $4.3 
Total derivatives designated as hedges70.6 62.0 2.1 4.3 
Derivatives not designated as hedges:
Foreign currency forward contractsPrepaid expenses & other current assets130.5 82.6Other current liabilities99.8 56.7
Total derivatives not designated as hedges130.5 82.699.8 56.7
Total derivatives $201.1 $144.6 $101.9 $61.0 
The following table summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:

Amount of Gains/(Losses) Recognized in EarningsAmount of Gains/(Losses) Recognized in AOCE (Net of Tax) on DerivativesAmount of Gains/(Losses) Reclassified from AOCE into Earnings
Three months ended June 30,Three months ended June 30,Three months ended June 30,
(In millions)Location of Gain/(Loss)202220212022202120222021
Derivative Financial Instruments in Cash Flow Hedging Relationships (1) :
Foreign currency forward contracts
Net sales (3)
$— $— $33.1 $11.3 $28.1 $3.6 
Interest rate swaps
Interest expense (3)
— — (0.8)(0.9)(1.1)(1.0)
Derivative Financial Instruments in Net Investment Hedging Relationships:
Foreign currency borrowings and forward contracts— — 298.6 (59.6)— — 
Derivative Financial Instruments Not Designated as Hedging Instruments:
Foreign currency option and forward contracts
Other expense, net (2)
53.1 (14.9)— — — — 
Total$53.1 $(14.9)$330.9 $(49.2)$27.0 $2.6 
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Amount of Gains/(Losses) Recognized in EarningsAmount of Gains/(Losses) Recognized in AOCE (Net of Tax) on DerivativesAmount of Gains/(Losses) Reclassified from AOCE into Earnings
Six months ended June 30,Six months ended June 30,Six months ended June 30,
(In millions)Location of Gain/(Loss)202220212022202120222021
Derivative Financial Instruments in Cash Flow Hedging Relationships (1) :
Foreign currency forward contracts
Net sales (3)
$— $— $42.8 $16.9 $42.3 $9.7 
Interest rate swaps
Interest expense (3)
— — (1.7)(1.7)(2.2)(2.1)
Derivative Financial Instruments in Net Investment Hedging Relationships:
Foreign currency borrowings and forward contracts— — 454.9 199.0 — — 
Derivative Financial Instruments Not Designated as Hedging Instruments:
Foreign currency option and forward contracts
Other expense, net (2)
74.8 20.7 — — — — 
Total$74.8 $20.7 $496.0 $214.2 $40.1 $7.6 
____________
(1)At June 30, 2022, the Company expects that approximately $37.0 million of pre-tax net gains on cash flow hedges will be reclassified from AOCE into earnings during the next twelve months.
(2)Represents the location of the gain/(loss) recognized in earnings on derivatives.
(3)Represents the location of the gain/(loss) reclassified from AOCE into earnings.
Fair Value Measurement
Fair value is based on the price that would be received from the sale of an identical asset or paid to transfer an identical liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy has been established that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Financial assets and liabilities carried at fair value are classified in the tables below in one of the three categories described above:
 June 30, 2022December 31, 2021
(In millions)Level 1Level 2Level 3Level 1Level 2Level 3
Recurring fair value measurements
Financial Assets
Cash equivalents:
Money market funds$9.4 $— $— $50.9 $— $— 
Total cash equivalents9.4 — — 50.9 — — 
Equity securities:
Exchange traded funds41.5 — — 50.3 — — 
Marketable securities0.2 — — 0.7 — — 
Total equity securities41.7 — — 51.0 — — 
Available-for-sale fixed income investments:
Corporate bonds— 16.2 — — 16.6 — 
U.S. Treasuries— 11.9 — — 14.6 — 
Agency mortgage-backed securities— 3.2 — — 2.0 — 
Asset backed securities— 3.7 — — 4.6 — 
Other— 0.5 — — 0.4 — 
Total available-for-sale fixed income investments— 35.5 — — 38.2 — 
Foreign exchange derivative assets— 201.1 — — 144.6 — 
Total assets at recurring fair value measurement$51.1 $236.6 $— $101.9 $182.8 $— 
Financial Liabilities
Foreign exchange derivative liabilities— 101.9 — — 61.0 — 
Contingent consideration— — 181.0 — — 199.7 
Total liabilities at recurring fair value measurement$— $101.9 $181.0 $— $61.0 $199.7 

For financial assets and liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including the LIBOR yield curve, foreign exchange forward prices and bank price quotes. Below is a summary of valuation techniques for Level 1 and Level 2 financial assets and liabilities:
Cash equivalents — valued at observable net asset value prices.
Equity securities, exchange traded funds — valued at the active quoted market prices from broker or dealer quotations or transparent pricing sources at the reporting date. Unrealized gains and losses attributable to changes in fair value are included in other expense, net, in the condensed consolidated statements of operations.
Equity securities, marketable securities — valued using quoted stock prices from public exchanges at the reporting date. Unrealized gains and losses attributable to changes in fair value are included in other expense, net, in the condensed consolidated statements of operations.
Available-for-sale fixed income investments — valued at the quoted market prices from broker or dealer quotations or transparent pricing sources at the reporting date. Unrealized gains and losses attributable to changes in fair value, net of income taxes, are included in accumulated other comprehensive loss as a component of shareholders’ equity.
Foreign exchange derivative assets and liabilities — valued using quoted forward foreign exchange prices and spot rates at the reporting date. Counterparties to these contracts are highly rated financial institutions.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Contingent Consideration
The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for Pfizer’s respiratory delivery platform and certain other acquisitions. The measurement is calculated using unobservable inputs based on the Company’s own assumptions primarily related to the probability and timing of future development and commercial milestones and future profit sharing payments which are discounted using a market rate of return. At June 30, 2022 and December 31, 2021, discount rates ranging from 8.0% to 8.5% were utilized in the valuations. Significant changes in unobservable inputs could result in material changes to the contingent consideration liability.
A rollforward of the activity in the Company’s fair value of contingent consideration from December 31, 2021 to June 30, 2022 is as follows:
(In millions)
Current Portion (1)
Long-Term Portion (2)
Total Contingent Consideration
Balance at December 31, 2021$66.7 $133.0 $199.7 
Payments(36.0)— (36.0)
Reclassifications43.1 (43.1)— 
Accretion— 3.7 3.7 
Fair value loss (3)
— 13.6 13.6 
Balance at June 30, 2022$73.8 $107.2 $181.0 
____________
(1)Included in other current liabilities in the condensed consolidated balance sheets.
(2)Included in other long-term obligations in the condensed consolidated balance sheets.
(3)Included in litigation settlements and other contingencies, net in the condensed consolidated statements of operations.
Although the Company has not elected the fair value option for other financial assets and liabilities, any future transacted financial asset or liability will be evaluated for the fair value election.
11.Debt
For additional information, see Note 10 Debt in Viatris’ 2021 Form 10-K.
Short-Term Borrowings
The Company had $1.02 billion and $1.49 billion of short-term borrowings as of June 30, 2022 and December 31, 2021, respectively.
(In millions)June 30,
2022
December 31,
2021
Commercial paper notes$620.8 $1,173.4 
Receivables Facility198.7 318.5 
Note Securitization Facility200.0 — 
Other0.2 1.1 
Short-term borrowings$1,019.7 $1,493.0 
Receivables Facility
The Company has a $400 million Receivables Facility (the “Receivables Facility”), which originally was to expire on April 22, 2022. On April 22, 2022, the Company entered into an agreement to extend the expiration date of the Receivables Facility to April 22, 2025.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Under the terms of the Receivables Facility, our subsidiary, MPI, sells certain accounts receivable to Mylan Securitization LLC (“Mylan Securitization”), a wholly-owned special purpose entity which in turn sells a percentage ownership interest in the receivables to financial institutions and commercial paper conduits sponsored by financial institutions. Mylan Securitization’s assets have been pledged to MUFG Bank, Ltd., as agent, in support of its obligations under the Receivables Facility. Any amounts outstanding under the facility are recorded as borrowings and the underlying receivables are included in accounts receivable, net, in the condensed consolidated balance sheets.
Long-Term Debt
A summary of long-term debt is as follows:
($ in millions)Interest Rate as of June 30, 2022June 30,
2022
December 31,
2021
Current portion of long-term debt:
2022 Euro Senior Notes (a) ****
0.816 %$— $856.6 
2022 Senior Notes (b) ***
1.125 %— 1,002.9 
2023 Senior Notes (c) *
3.125 %758.3 — 
Other0.8 0.9 
Deferred financing fees(0.5)(0.1)
Current portion of long-term debt$758.6 $1,860.3 
Non-current portion of long-term debt:
2023 Senior Notes (c) *
3.125 %— 766.1 
2023 Senior Notes *
4.200 %499.7 499.6 
2024 Euro Senior Notes **
2.250 %1,047.5 1,135.8 
2024 Euro Senior Notes ****
1.023 %800.2 871.6 
2025 Euro Senior Notes *
2.125 %523.7 567.8 
2025 Senior Notes ***
1.650 %761.5 763.4 
2026 Senior Notes **
3.950 %2,242.3 2,241.4 
2027 Euro Senior Notes ****
1.362 %930.2 1,013.0 
2027 Senior Notes ***
2.300 %778.1 780.8 
2028 Euro Senior Notes **
3.125 %781.7 847.4 
2028 Senior Notes *
4.550 %748.8 748.7 
2030 Senior Notes ***
2.700 %1,516.7 1,520.5 
2032 Euro Senior Notes ****
1.908 %1,421.3 1,546.6 
2040 Senior Notes ***
3.850 %1,653.8 1,657.1 
2043 Senior Notes *
5.400 %497.4 497.3 
2046 Senior Notes **
5.250 %999.9 999.9 
2048 Senior Notes *
5.200 %747.8 747.8 
2050 Senior Notes ***
4.000 %2,202.9 2,205.1 
YEN Term Loan Facility294.7 347.6 
Revolving Facility795.0 — 
Other1.7 1.9 
Deferred financing fees(38.5)(42.3)
Long-term debt$19,206.4 $19,717.1 
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
____________
(a)    The 2022 Euro Senior Notes were repaid at maturity in the second quarter of 2022.
(b)    The 2022 Senior Notes were repaid at maturity in the second quarter of 2022.
(c)    In the first quarter of 2020, the Company terminated interest rate swaps designated as a fair value hedge resulting in net proceeds of approximately $45 million. The fair value adjustment is being amortized to interest expense over the remaining term of the notes.
*    Instrument was issued by Mylan Inc.
**    Instrument was originally issued by Mylan N.V.; now held by Utah Acquisition Sub Inc.
***     Instrument was issued by Viatris Inc.
****     Instrument was issued by Upjohn Finance B.V.

At June 30, 2022 and December 31, 2021, the aggregate fair value of the Company’s outstanding notes was approximately $15.58 billion and $22.01 billion, respectively. The fair values of the outstanding notes were valued at quoted market prices from broker or dealer quotations and were classified as Level 2 in the fair value hierarchy.
Mandatory minimum repayments remaining on the notional amount of outstanding long-term debt at June 30, 2022 were as follows for each of the periods ending December 31:
(In millions)Total
2022$— 
20231,250 
20241,835 
20251,274 
20263,340 
Thereafter11,688 
Total$19,387 
12.Comprehensive Loss
Accumulated other comprehensive loss, as reflected on the condensed consolidated balance sheets, is comprised of the following:
(In millions)June 30,
2022
December 31,
2021
Accumulated other comprehensive loss:
Net unrealized loss on marketable securities, net of tax$(2.1)$— 
Net unrecognized gain and prior service cost related to defined benefit plans, net of tax30.1 32.2 
Net unrecognized gain on derivatives in cash flow hedging relationships, net of tax22.7 9.2 
Net unrecognized gain on derivatives in net investment hedging relationships, net of tax471.6 16.7 
Foreign currency translation adjustment(3,421.5)(1,802.4)
$(2,899.2)$(1,744.3)









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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Components of accumulated other comprehensive loss, before tax, consist of the following, for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 2022
Gains and Losses on Derivatives in Cash Flow Hedging RelationshipsGains and Losses on Net Investment HedgesGains and Losses on Marketable SecuritiesDefined Pension Plan ItemsForeign Currency Translation AdjustmentTotals
(In millions)Foreign Currency Forward ContractsInterest Rate SwapsTotal
Balance at March 31, 2022, net of tax$9.4 $173.1 $(1.3)$29.4 $(2,271.6)$(2,061.0)
Other comprehensive earnings (loss) before reclassifications, before tax44.6 384.4 (1.0)0.4 (1,149.9)(721.5)
Amounts reclassified from accumulated other comprehensive earnings (loss), before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales(28.1)(28.1)(28.1)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense1.1 1.1 1.1 
Amortization of actuarial loss included in SG&A 0.1 0.1 
Net other comprehensive earnings (loss), before tax17.6 384.4 (1.0)0.5 (1,149.9)(748.4)
Income tax provision (benefit)4.3 85.9 (0.2)(0.2)— 89.8 
Balance at June 30, 2022, net of tax$22.7 $471.6 $(2.1)$30.1 $(3,421.5)$(2,899.2)
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Six Months Ended June 30, 2022
Gains and Losses on Derivatives in Cash Flow Hedging RelationshipsGains and Losses on Net Investment HedgesGains and Losses on Marketable SecuritiesDefined Pension Plan ItemsForeign Currency Translation AdjustmentTotals
(In millions)Foreign Currency Forward ContractsInterest Rate SwapsTotal
Balance at December 31, 2021, net of tax$9.2 $16.7 $— $32.2 $(1,802.4)$(1,744.3)
Other comprehensive earnings (loss) before reclassifications, before tax57.9 585.7 (2.7)(2.3)(1,619.1)(980.5)
Amounts reclassified from accumulated other comprehensive earnings (loss), before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales(42.3)(42.3)(42.3)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense2.2 2.2 2.2 
Amortization of prior service costs included in SG&A0.1 0.1 
Amortization of actuarial loss included in SG&A 0.1 0.1 
Net other comprehensive earnings (loss), before tax17.8 585.7 (2.7)(2.1)(1,619.1)(1,020.4)
Income tax provision (benefit)4.3 130.8 (0.6)— — 134.5 
Balance at June 30, 2022, net of tax$22.7 $471.6 $(2.1)$30.1 $(3,421.5)$(2,899.2)

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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Three Months Ended June 30, 2021
Gains and Losses on Derivatives in Cash Flow Hedging RelationshipsGains and Losses on Net Investment HedgesGains and Losses on Marketable SecuritiesDefined Pension Plan ItemsForeign Currency Translation AdjustmentTotals
(In millions)Foreign Currency Forward ContractsInterest Rate SwapsTotal
Balance at March 31, 2021, net of tax$(15.5)$(161.3)$0.2 $(26.3)$(1,182.7)$(1,385.6)
Other comprehensive earnings (loss) before reclassifications, before tax15.0 (77.4)0.2 72.2 160.7 170.7 
Amounts reclassified from accumulated other comprehensive earnings (loss), before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales(3.6)(3.6)(3.6)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense1.0 1.0 1.0 
Amortization of prior service costs included in SG&A (0.2)(0.2)
Amortization of actuarial loss included in SG&A 0.5 0.5 
Net other comprehensive earnings (loss), before tax12.4 (77.4)0.2 72.5 160.7 168.4 
Income tax provision (benefit)3.1 (17.9)— 2.6 — (12.2)
Balance at June 30, 2021, net of tax$(6.2)$(220.8)$0.4 $43.6 $(1,022.0)$(1,205.0)
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Six Months Ended June 30, 2021
Gains and Losses on Derivatives in Cash Flow Hedging RelationshipsGains and Losses on Net Investment HedgesGains and Losses on Marketable SecuritiesDefined Pension Plan ItemsForeign Currency Translation AdjustmentTotals
(In millions)Foreign Currency Forward ContractsInterest Rate SwapsTotal
Balance at December 31, 2020, net of tax$(18.0)$(353.6)$1.2 $(26.1)$(461.5)$(858.0)
Other comprehensive earnings (loss) before reclassifications, before tax23.3 150.0 (0.7)72.8 (560.5)(315.1)
Amounts reclassified from accumulated other comprehensive earnings (loss), before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales(9.7)(9.7)(9.7)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense2.1 2.1 2.1 
Amortization of prior service costs included in SG&A (0.3)(0.3)
Amortization of actuarial loss included in SG&A 0.8 0.8 
Net other comprehensive earnings (loss), before tax15.7 150.0 (0.7)73.3 (560.5)(322.2)
Income tax provision3.9 17.2 0.1 3.6 — 24.8 
Balance at June 30, 2021, net of tax$(6.2)$(220.8)$0.4 $43.6 $(1,022.0)$(1,205.0)
13.Segment Information
Viatris has four reportable segments: Developed Markets, Greater China, JANZ, and Emerging Markets. The Company reports segment information on the basis of markets and geography, which reflects its focus on bringing its broad and diversified portfolio of branded, complex generics and biosimilars, and generic products to people in markets everywhere. Our Developed Markets segment comprises our operations primarily in North America and Europe. Our Greater China segment includes our operations in China, Taiwan and Hong Kong. Our JANZ segment reflects our operations in Japan, Australia and New Zealand. Our Emerging Markets segment encompasses our presence in more than 125 countries with developing markets and emerging economies including in Asia, Africa, Eastern Europe, Latin America and the Middle East as well as the Company’s ARV franchise.
The Company’s chief operating decision maker is the Chief Executive Officer, who evaluates the performance of its segments based on total revenues and segment profitability.
Certain costs are not included in the measurement of segment profitability, such as costs, if any, associated with the following:
Intangible asset amortization expense and impairments of intangible assets;
R&D expense;
Net charges or net gains for litigation settlements and other contingencies;
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VIATRIS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Certain costs related to transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory and property, plant and equipment; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) other significant items, which are substantive and/or unusual, and in some cases recurring, items (such as restructuring) that are evaluated on an individual basis by management and that either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such special items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities.
Corporate and other unallocated costs associated with platform functions (such as digital, facilities, legal, finance, human resources, insurance, public affairs and procurement), patient advocacy activities and certain compensation and other corporate costs (such as interest income and expense, and gains and losses on investments, as well as overhead expenses associated with our manufacturing, which include manufacturing variances associated with production) and operations that are not directly assessed to an operating segment as business unit (segment) management does not manage these costs.
The Company does not report depreciation expense, total assets and capital expenditures by segment, as such information is not used by the chief operating decision maker.
The accounting policies of the segments are the same as those described in Note 2 Summary of Significant Accounting Policies included in the 2021 Form 10-K.
Presented in the table below is segment information for the periods identified and a reconciliation of segment information to total consolidated information.
Net Sales
Segment Profitability
Three Months Ended June 30, Three Months Ended June 30,
(In millions)2022202120222021
Reportable Segments:
Developed Markets$2,479.1 $2,640.4 $1,255.3 $1,319.9 
Greater China548.3 550.3 392.8 366.5 
JANZ427.1 501.0 158.1 185.4 
Emerging Markets650.9 870.0 301.0 384.7 
Total reportable segments$4,105.4 $4,561.7 $2,107.2 $2,256.5 
Reconciling items:
Intangible asset amortization expense(634.1)(681.6)
Globally managed research and development costs(162.6)(147.7)
Litigation settlements & other contingencies(10.9)(23.0)
Transaction related and other special items(227.1)(920.7)
Corporate and other unallocated(523.8)(531.3)
Earnings (loss) from operations$548.7 $(47.8)
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
Net Sales
Segment Profitability
Six Months Ended June 30, Six Months Ended June 30,
(In millions)2022202120222021
Reportable Segments:
Developed Markets$4,955.2 $5,212.0 $2,466.8 $2,605.3 
Greater China1,121.4 1,142.2 810.5 771.4 
JANZ850.9 982.9 332.4 369.6 
Emerging Markets1,356.1 1,624.7 646.3 722.0 
Total reportable segments$8,283.6 $8,961.8 $4,256.0 $4,468.3 
Reconciling items:
Intangible asset amortization expense(1,282.2)(1,366.0)
Intangible asset impairment charges— (83.4)
Globally managed research and development costs(304.9)(331.8)
Litigation settlements & other contingencies(17.1)(45.9)
Transaction related and other special items(412.7)(1,914.1)
Corporate and other unallocated(983.0)(1,041.1)
Earnings (loss) from operations$1,256.1 $(314.0)

14.Restructuring
2020 Restructuring Program
During the fourth quarter of 2020, Viatris announced a significant global restructuring program in order to achieve synergies and ensure that the organization is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers, and other stakeholders. As part of the restructuring, the Company is optimizing its commercial capabilities and enabling functions, and closing, downsizing or divesting certain manufacturing facilities globally that are deemed to be no longer viable either due to surplus capacity, challenging market dynamics or a shift in its product portfolio toward more complex products.
For the committed restructuring actions, the Company expects to incur total pre-tax charges of up to approximately $1.4 billion. Such charges are expected to include up to approximately $450 million of non-cash charges mainly related to accelerated depreciation and asset impairment charges, including inventory write-offs. The remaining estimated cash costs of up to approximately $950 million are expected to be primarily related to severance and employee benefits expense, as well as other costs, including those related to contract terminations and other plant disposal costs.

Charges for restructuring and ongoing cost reduction initiatives are recorded in the period the Company commits to a restructuring or cost reduction plan, or executes specific actions contemplated by the plan and all criteria for liability recognition have been met.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
The following table summarizes the restructuring charges and the reserve activity for the 2020 restructuring program from December 31, 2021 to June 30, 2022:
(In millions)Employee Related CostsOther Exit CostsTotal</