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Summary of Significant Accounting Policies
 9 Months Ended
Oct. 01, 2016
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Information

The Company

Perrigo Company plc was incorporated under the laws of Ireland on June 28, 2013 and became the successor registrant of Perrigo Company, a Michigan corporation, on December 18, 2013 in connection with the acquisition of Elan Corporation, plc ("Elan"). Unless the context requires otherwise, the terms "Perrigo," the "Company," "we," "our," "us," and similar pronouns used herein refer to Perrigo Company plc, its subsidiaries, and all predecessors of Perrigo Company plc and its subsidiaries. We are a leading global over-the-counter ("OTC") consumer goods and specialty pharmaceutical company, offering patients and customers high quality products at affordable prices. From our beginning in 1887 as a packager of home remedies, we have grown to become the world's largest manufacturer of OTC healthcare products and supplier of infant formulas for the store brand market. We are also a leading provider of generic extended topical prescription products, and we receive royalties from sales of the multiple sclerosis drug Tysabri®. We provide “Quality Affordable Healthcare Products®” across a wide variety of product categories and geographies, primarily in North America, Europe, and Australia, as well as in other markets, including Israel, China, and Latin America.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2016. In the opinion of management, all adjustments (consisting of normal recurring accruals and other adjustments) considered necessary for a fair presentation have been included. The Condensed Consolidated Financial Statements include our accounts and the accounts of all majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Our fiscal year previously consisted of a 52- or 53-week year ending on or around June 30 of each year with each quarter ending on the Saturday closest to each calendar quarter-end. Beginning on January 1, 2016, we changed our fiscal year to begin on January 1 and end on December 31 of each year. We will continue to cut off our quarterly accounting periods on the Saturday closest to the end of the calendar quarter, with the fourth quarter ending on December 31 of each year.

Restatement

In connection with our year-end financial statement close and preparation of our Annual Report on Form 10-K for 2016, we identified misstatements in our historical financial statements, including for the nine months ended October 1, 2016, six months ended December 31, 2015, and the years ended June 27, 2015 and June 28, 2014 (the "Restated Periods"). Accordingly, we have restated the Condensed Consolidated Financial Statements for the three and nine months ended October 1, 2016 and September 26, 2015 to reflect the correction of the misstatements, the most significant of which are described below. The segments predominantly affected by this restatement are Specialty Sciences and Consumer Healthcare International. Refer to Note 10 for additional information on how this restatement affects our debt covenants.

During the 2016 year-end financial statement close process, and in anticipation of our potential sale of our royalty rights, we evaluated the potential effects of the Tysabri® royalty stream sale accounting and the accounting and disclosures associated with the pending 2018 adoption of ASC 606 “Revenues from Contracts with Customers.” After an extensive evaluation of the facts and circumstances and the judgments required to determine the appropriate classification, it was determined that under existing U.S. GAAP the contingent payments from Elan's May 2013 sale of Tysabri® to Biogen (the "Tysabri® royalty stream") should have been recorded as a financial asset, rather than an intangible asset, on the date of our acquisition of Elan.

Our Tysabri® royalty stream is now accounted for in our financial statements for fiscal 2016 and prior restated periods as a financial asset using the fair value option. We made the election to account for the Tysabri® financial asset using the fair value option as we believe this method is most appropriate for an asset that does not have a par value, a stated interest stream, or a termination date. Accounting for the Tysabri® royalty stream as a financial asset required us to adjust our financial statements for the Restated Periods to (1) remove the Tysabri® royalty stream from net sales in our Condensed Consolidated Statements of Operations, (2) remove the amortization expense (reflected in cost of goods sold) associated with recording the Tysabri® royalty stream as an intangible asset, and (3) include the quarterly changes in fair value of the Tysabri® royalty stream as a component of other non-operating income/expense. The cash payments we received from the royalty stream are included in our Condensed Consolidated Statements of Cash Flows for the Restated Periods and reflect the cash received from the Tysabri® royalty stream as cash from investing activities, rather than as cash from operating activities.

In addition, in connection with the financial closing for the year ended December 31, 2016, we identified certain tax basis intangible assets that existed at the time of the acquisition of Omega Pharma Invest N.V. (“Omega”) on March 30, 2015, which reduced the deferred tax liabilities in acquired intangible assets and increased our valuation allowance resulting in a net change to our deferred taxes of approximately $236.3 million. The resulting balance sheet reclassification required a reduction of goodwill, offset by a corresponding reduction to net deferred taxes at the date of the Omega acquisition. Further, we have evaluated the accounting effect subsequent to the acquisition date related to the remeasured deferred tax liability, including the impairments of Omega goodwill recorded in 2016 and certain adjustments to valuation allowances, which have been reflected in the Restated Periods.

In restating our financial statements to correct the misstatement discussed above, we are also making adjustments for previously identified required corrections with respect to the three and nine months ended October 1, 2016 and September 26, 2015, which were recorded in our year ended December 31, 2016 and six months ended December 31, 2015 financial results. In conjunction with the restatement, we have determined that it would be appropriate within this Form 10-Q/A to reflect these adjustments in the three and nine months ended October 1, 2016 and September 26, 2015.

The Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Operations, Condensed Consolidated Comprehensive Income (Loss), and Condensed Consolidated Statement of Cash Flows, and Notes 2, 3, 4, 5, 6, 7, 8, 10, 11, 12, 13, and 17 in these financial statements were updated to reflect the restatement.

The tables below present the impact of the changes to our Condensed Consolidated Financial Statement line items in our Original Filing:

Condensed Consolidated Statement of Operations
(in millions, except per share amounts)
(unaudited)
 
Three Months Ended
 
October 1, 2016
 
 
 
Adjustments
 
 
 
Previously Reported
 
Tysabri®
 
Other
 
Restated
Net sales
$
1,354.9

 
$
(92.4
)
 
$
(0.9
)
 
$
1,261.6

Cost of sales
848.6

 
(72.5
)
 
1.0

 
777.1

Gross profit
506.3

 
(19.9
)
 
(1.9
)
 
484.5

 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
Distribution
21.6

 
—

 
—

 
21.6

Research and development
50.2

 
—

 
—

 
50.2

Selling
154.6

 
—

 
—

 
154.6

Administration
108.6

 
—

 
(3.2
)
 
105.4

Impairment charges
1,679.9

 
—

 
(65.5
)
(a)
1,614.4

Restructuring
6.6

 
—

 
—

 
6.6

Total operating expenses
2,021.5

 
—

 
(68.7
)
 
1,952.8

 
 
 
 
 
 
 
 
Operating loss
(1,515.2
)
 
(19.9
)
 
66.8

 
(1,468.3
)
 
 
 
 
 
 
 
 
Tysabri® royalty stream - change in fair value
—

 
377.4

 
—

 
377.4

Interest expense, net
54.6

 
—

 
—

 
54.6

Other expense, net
1.0

 
0.2

 
(0.2
)
 
1.0

Loss on extinguishment of debt
0.7

 
—

 
—

 
0.7

Loss before income taxes
(1,571.5
)
 
(397.5
)
 
67.0

 
(1,902.0
)
Income tax (benefit)
(316.3
)
 
(49.7
)
 
54.2

(a)(c)
(311.8
)
Net loss
$
(1,255.2
)
 
$
(347.8
)
 
$
12.8

 
$
(1,590.2
)
 
 
 
 
 
 
 
 
Loss per share
 
 
 
 
 
 
 
Basic
$
(8.76
)
 
$
(2.43
)
 
$
0.09

 
$
(11.10
)
Diluted
$
(8.76
)
 
$
(2.43
)
 
$
0.09

 
$
(11.10
)
 
 
 
 
 
 
 
 
Weighted-average shares outstanding
 
 
 
 
 
 
 
Basic
143.3

 
 
 
 
 
143.3

Diluted
143.3

 
 
 
 
 
143.3


(a)
Adjustments primarily related to certain tax basis intangible assets that existed at the time of the acquisition of Omega on March 30, 2015, which reduced the deferred tax liabilities in acquired intangible assets and increased our valuation allowance resulting in a net change to our deferred taxes. The resulting balance sheet reclassification required a reduction of goodwill, offset by a corresponding reduction to net deferred taxes at the date of the Omega acquisition. The adjustment made at the date of the Omega acquisition also had an impact on previously reported goodwill impairment charges. ("BCH Deferred Tax Matters"). (Income tax expense (benefits): $39.8 million)
(c)
Adjustment related to income tax expense (benefit) for interim period tax accounting required under ASC 740, Accounting for Income Taxes. (Income tax expense (benefit): $14.2 million)


Condensed Consolidated Statement of Operations
(in millions, except per share amounts)
(unaudited)
 
Nine Months Ended
 
October 1, 2016
 
 
 
Adjustments
 
 
 
Previously Reported
 
Tysabri®
 
Other
 
Restated
Net sales
$
4,219.1

 
$
(267.0
)
 
$
(2.8
)
(b)
$
3,949.3

Cost of sales
2,622.7

 
(217.5
)
 
(20.0
)
(b)
2,385.2

Gross profit
1,596.4

 
(49.5
)
 
17.2

 
1,564.1

 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
Distribution
65.9

 
—

 
—

 
65.9

Research and development
142.5

 
—

 
—

 
142.5

Selling
506.9

 
—

 
—

 
506.9

Administration
316.8

 
—

 
0.4

 
317.2

Impairment charges
2,127.1

 
—

 
(98.3
)
(a)
2,028.8

Restructuring
17.9

 
—

 
—

 
17.9

Total operating expenses
3,177.1

 
—

 
(97.9
)
 
3,079.2

 
 
 
 
 
 
 
 
Operating loss
(1,580.7
)
 
(49.5
)
 
115.1

 
(1,515.1
)
 
 
 
 
 
 
 
 
Tysabri® royalty stream - change in fair value
—

 
1,492.6

 
—

 
1,492.6

Interest expense, net
163.2

 
—

 
—

 
163.2

Other expense, net
34.1

 
0.4

 
(2.1
)
 
32.4

Loss on extinguishment of debt
1.1

 
—

 
—

 
1.1

Loss before income taxes
(1,779.1
)
 
(1,542.5
)
 
117.2

 
(3,204.4
)
Income tax (benefit)
(383.7
)
 
(192.8
)
 
25.8

(a)(b)(c)
(550.7
)
Net loss
$
(1,395.4
)
 
$
(1,349.7
)
 
$
91.4

 
$
(2,653.7
)
 
 
 
 
 
 
 
 
Loss per share
 
 
 
 
 
 
 
Basic
$
(9.74
)
 
$
(9.42
)
 
$
0.63

 
$
(18.53
)
Diluted
$
(9.74
)
 
$
(9.42
)
 
$
0.63

 
$
(18.53
)
 
 
 
 
 
 
 
 
Weighted-average shares outstanding
 
 
 
 
 
 
 
Basic
143.2

 
 
 
 
 
143.2

Diluted
143.2

 
 
 
 
 
143.2


(a)
Adjustments primarily related to the BCH Deferred Tax Matters as described above. (Income tax expense: $13.4 million)
(b)
Adjustments primarily related to certain contracts related to a specific Belgium distributor that were consignment in nature due to an option for the distributor to return the product if it was not sold timely. The characterization of the contracts as consignment impacted the timing of revenue recognition in the Condensed Consolidated Statement of Operations and, due to the impact on factoring arrangements, required a reclassification between accounts receivable and current liabilities for the amounts factored for these contracts.  (“BCH Belgium Distribution Contracts”) (Income tax expense (benefit): $3.5 million)
(c)
Adjustment related to income tax expense (benefit) for interim period tax accounting required under ASC 740, Accounting for Income Taxes. (Income tax expense (benefit): $6.2 million)


Condensed Consolidated Statement of Operations
(in millions, except per share amounts)
(unaudited)
 
Three Months Ended
 
September 26, 2015
 
 
 
Adjustments
 
 
 
Previously Reported
 
Tysabri®
 
Other
 
Restated
Net sales
$
1,344.7

 
$
(83.1
)
 
$
11.5

(b)
$
1,273.1

Cost of sales
795.9

 
(72.5
)
 
14.5

(b)
737.9

Gross profit
548.8

 
(10.6
)
 
(3.0
)
 
535.2

 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
Distribution
24.9

 
—

 
—

 
24.9

Research and development
41.6

 
—

 
—

 
41.6

Selling
167.9

 
—

 
—

 
167.9

Administration
123.6

 
—

 
(0.3
)
 
123.3

Restructuring
2.2

 
—

 
—

 
2.2

Total operating expenses
360.2

 
—

 
(0.3
)
 
359.9

 
 
 
 
 
 
 
 
Operating income
188.6

 
(10.6
)
 
(2.7
)
 
175.3

 
 
 
 
 
 
 
 
Tysabri® royalty stream - change in fair value
—

 
(173.8
)
 
—

 
(173.8
)
Interest expense, net
43.4

 
—

 
—

 
43.4

Other expense, net
13.0

 
0.7

 
(2.8
)
 
10.9

Loss on extinguishment of debt
—

 
—

 
—

 
—

Income before income taxes
132.2

 
162.5

 
0.1

 
294.8

Income tax expense
19.6

 
20.3

 
(6.0
)
(a)(c)
33.9

Net income
$
112.6

 
$
142.2

 
$
6.1

 
$
260.9

 
 
 
 
 
 
 
 
Income per share
 
 
 
 
 
 
 
Basic
$
0.77

 
$
0.97

 
$
0.04

 
$
1.78

Diluted
$
0.77

 
$
0.97

 
$
0.04

 
$
1.78

 
 
 
 
 
 
 
 
Weighted-average shares outstanding
 
 
 
 
 
 
 
Basic
146.3

 
 
 
 
 
146.3

Diluted
146.9

 
 
 
 
 
146.9


(a)
Adjustments primarily related to the BCH Deferred Tax Matters as described above. (Income tax expense (benefit): ($19.5) million)
(b)
Adjustments primarily related to BCH Belgium Distribution Contracts as described above.
(c)
Adjustment related to income tax expense (benefit) for interim period tax accounting required under ASC 740, Accounting for Income Taxes. (Income tax expense (benefit)): $13.6 million)

Condensed Consolidated Statement of Operations
(in millions, except per share amounts)
(unaudited)
 
Nine Months Ended
 
September 26, 2015
 
 
 
Adjustments
 
 
 
Previously Reported
 
Tysabri®
 
Other
 
Restated
Net sales
$
3,925.4

 
$
(244.6
)
 
$
(25.2
)
(b)
$
3,655.6

Cost of sales
2,369.7

 
(217.5
)
 
(2.2
)
(b)
2,150.0

Gross profit
1,555.7

 
(27.1
)
 
(23.0
)
 
1,505.6

 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
Distribution
63.3

 
—

 
—

 
63.3

Research and development
139.7

 
—

 
—

 
139.7

Selling
391.6

 
—

 
—

 
391.6

Administration
343.3

 
—

 
(0.2
)
 
343.1

Impairment charges
—

 
—

 
6.8

 
6.8

Restructuring
3.1

 
—

 
—

 
3.1

Total operating expenses
941.0

 
—

 
6.6

 
947.6

 
 
 
 
 
 
 
 
Operating income
614.7

 
(27.1
)
 
(29.6
)
 
558.0

 
 
 
 
 
 
 
 
Tysabri® royalty stream - change in fair value
—

 
(205.4
)
 
—

 
(205.4
)
Interest expense, net
132.7

 
—

 
—

 
132.7

Other expense, net
294.2

 
0.8

 
(10.2
)
 
284.8

Loss on extinguishment of debt
0.9

 
—

 
—

 
0.9

Income before income taxes
186.9

 
177.5

 
(19.4
)
 
345.0

Income tax expense
112.7

 
22.2

 
(6.3
)
(a)(b)(c)
128.6

Net income
$
74.2

 
$
155.3

 
$
(13.1
)
 
$
216.4

 
 
 
 
 
 
 
 
Income per share
 
 
 
 
 
 
 
Basic
$
0.51

 
$
1.08

 
$
(0.09
)
 
$
1.50

Diluted
$
0.51

 
$
1.08

 
$
(0.09
)
 
$
1.50

 
 
 
 
 
 
 
 
Weighted-average shares outstanding
 
 
 
 
 
 
 
Basic
144.4

 
 
 
 
 
144.4

Diluted
145.0

 
 
 
 
 
145.0


(a)
Adjustments primarily related to the BCH Deferred Tax Matters as described above. (Income tax expense (benefit): ($13.0) million)
(b)
Adjustments primarily related to BCH Belgium Distribution Contracts as described above. (Income tax expense (benefit): ($3.3) million)
(c)
Adjustment related to income tax expense (benefit) for interim period tax accounting required under ASC 740, Accounting for Income Taxes. (Income tax expense (benefit): $13.4 million)


Condensed Consolidated Balance Sheet
(in millions)
(unaudited)
 
October 1, 2016
 
 
 
Adjustments
 
 
 
 Previously Reported
 
Tysabri®
 
Other
 
Restated
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
362.7

 
$
—

 
$
—

 
$
362.7

Accounts receivable, net of allowance for doubtful accounts of $5.7 million
1,129.2

 
—

 
(5.1
)
 
1,124.1

Inventories
884.6

 
—

 
—

 
884.6

Prepaid expenses and other current assets
250.6

 
—

 
—

 
250.6

Total current assets
2,627.1

 
—

 
(5.1
)
 
2,622.0

Property, plant and equipment, net
881.3

 
—

 
—

 
881.3

Tysabri® royalty stream - at fair value
—

 
3,550.0

 
—

 
3,550.0

Goodwill and other indefinite-lived intangible assets
5,282.7

 
—

 
(137.1
)
(a)(b)
5,145.6

Other intangible assets, net
8,340.9

 
(4,994.7
)
 
(10.0
)
 
3,336.2

Non-current deferred income taxes
129.3

 
—

 
6.9

(a)(c)
136.2

Other non-current assets
206.3

 
—

 
10.5

 
216.8

Total non-current assets
14,840.5

 
(1,444.7
)
 
(129.7
)
 
13,266.1

Total assets
$
17,467.6

 
$
(1,444.7
)
 
$
(134.8
)
 
$
15,888.1

Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
Accounts payable
$
507.9

 
$
—

 
$
(5.0
)
 
$
502.9

Payroll and related taxes
106.8

 
—

 
—

 
106.8

Accrued customer programs
325.5

 
—

 
(1.2
)
 
324.3

Accrued liabilities
258.7

 
—

 
—

 
258.7

Accrued income taxes
76.2

 
—

 
(21.1
)
(a)(b)(c)
55.1

Current indebtedness
265.0

 
—

 
—

 
265.0

Total current liabilities
1,540.1

 
—

 
(27.3
)
 
1,512.8

Long-term debt, less current portion
5,638.0

 
—

 
—

 
5,638.0

Non-current deferred income taxes
1,169.3

 
(180.6
)
 
(190.7
)
(a)(b)(c)
798.0

Other non-current liabilities
448.9

 
—

 
7.8

 
456.7

Total non-current liabilities
7,256.2

 
(180.6
)
 
(182.9
)
 
6,892.7

Total liabilities
8,796.3

 
(180.6
)
 
(210.2
)
 
8,405.5

Commitments and contingencies - Note 14

 
 
 
 
 

Shareholders’ equity
 
 
 
 
 
 
 
Controlling interest:
 
 
 
 
 
 
 
Preferred shares, $0.0001 par value, 10 million shares authorized
—

 
—

 
—

 
—

Ordinary shares, €0.001 par value, 10 billion shares authorized
8,151.4

 
—

 
(2.8
)
 
8,148.6

Accumulated other comprehensive income
71.5

 
—

 
—

 
71.5

Retained earnings (accumulated deficit)
449.0

 
(1,264.1
)
 
78.2

 
(736.9
)
Total controlling interest
8,671.9

 
(1,264.1
)
 
75.4

 
7,483.2

Noncontrolling interest
(0.6
)
 
—

 
—

 
(0.6
)
Total shareholders’ equity
8,671.3

 
(1,264.1
)
 
75.4

 
7,482.6

Total liabilities and shareholders' equity
$
17,467.6

 
$
(1,444.7
)
 
$
(134.8
)
 
$
15,888.1


(a)
Adjustments primarily related to the BCH Deferred Tax Matters as described above. (Goodwill and other indefinite-lived intangible assets: $231.2 million, Non-current deferred income tax asset: $281.1 million, Non-current deferred income tax liability $83.7 million, and Accrued income taxes: ($20.9 million))
(b)
Adjustments primarily related to BCH Belgium Distribution Contracts as described above. (Goodwill and other indefinite-lived intangible assets: $5.4 million, Non-current deferred income tax liability: $0.1 million, and Accrued income taxes: $($5.5 million))
(c)
Adjustment related to income tax expense (benefit) for interim period tax accounting required under ASC 740, Accounting for Income Taxes. (Accrued income taxes: $6.1 million). The balance of the adjustment to deferred taxes relates to jurisdictional netting.
Condensed Consolidated Balance Sheet
(in millions)
 
December 31, 2015
 
 
 
Adjustments
 
 
 
Previously Reported
 
Tysabri®
 
Other
 
 Restated
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
417.8

 
$
—

 
$
—

 
$
417.8

Accounts receivable, net of allowance for doubtful accounts of $4.5 million
1,193.1

 
—

 
(4.1
)
(b)
1,189.0

Inventories
844.4

 
—

 
54.3

(b)
898.7

Prepaid expenses and other current assets
289.1

 
—

 
(3.0
)
 
286.1

Total current assets
2,744.4

 
—

 
47.2

 
2,791.6

Property, plant and equipment, net
886.2

 
—

 
—

 
886.2

Tysabri® royalty stream - at fair value
—

 
5,310.0

 
—

 
5,310.0

Goodwill and other indefinite-lived intangible assets
7,281.2

 
—

 
(212.2
)
(a)(b)
7,069.0

Other intangible assets, net
8,190.5

 
(5,212.2
)
 
(5.2
)
 
2,973.1

Non-current deferred income taxes
54.6

 
—

 
16.8

(a)(c)
71.4

Other non-current assets
237.0

 
—

 
11.3

 
248.3

Total non-current assets
16,649.5

 
97.8

 
(189.3
)
 
16,558.0

Total assets
$
19,393.9

 
$
97.8

 
$
(142.1
)
 
$
19,349.6

Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
Accounts payable
$
554.9

 
$
—

 
$
0.9

(b)
$
555.8

Payroll and related taxes
125.3

 
—

 
—

 
125.3

Accrued customer programs
398.0

 
—

 
(2.0
)
(b)
396.0

Accrued liabilities
308.4

 
—

 
43.5

(b)
351.9

Accrued income taxes
85.2

 
—

 
(22.5
)
(a)
62.7

Current indebtedness
1,018.3

 
—

 
42.2

(b)
1,060.5

Total current liabilities
2,490.1

 
—

 
62.1

 
2,552.2

Long-term debt, less current portion
4,971.6

 
—

 
—

 
4,971.6

Non-current deferred income taxes
1,563.7

 
12.2

 
(203.2
)
(a)(b)(c)
1,372.7

Other non-current liabilities
332.4

 
—

 
13.9

(a)
346.3

Total non-current liabilities
6,867.7

 
12.2

 
(189.3
)
 
6,690.6

Total liabilities
9,357.8

 
12.2

 
(127.2
)
 
9,242.8

Commitments and contingencies - Note 14


 
 
 
 
 


Shareholders’ equity
 
 
 
 
 
 
 
Controlling interest:
 
 
 
 
 
 
 
Preferred shares, $0.0001 par value, 10 million shares authorized
—

 
—

 
—

 
—

Ordinary shares, €0.001 par value, 10 billion shares authorized
8,144.6

 
—

 
(2.0
)
 
8,142.6

Accumulated other comprehensive (loss)
(15.5
)
 
—

 
0.2

(b)
(15.3
)
Retained earnings
1,907.6

 
85.6

 
(13.1
)
 
1,980.1

Total controlling interest
10,036.7

 
85.6

 
(14.9
)
 
10,107.4

Noncontrolling interest
(0.6
)
 
—

 
—

 
(0.6
)
Total shareholders’ equity
10,036.1

 
85.6

 
(14.9
)
 
10,106.8

Total liabilities and shareholders' equity
$
19,393.9

 
$
97.8

 
$
(142.1
)
 
$
19,349.6


(a)
Adjustments primarily related to the BCH Deferred Tax Matters as described above. (Goodwill and other indefinite-lived intangible assets:$(223.3) million, Non-current deferred income tax asset: $272.2 million, and Non-current deferred income tax liability $65.4 million)
(b)
Adjustments primarily related to BCH Belgium Distribution Contracts as described above. (Goodwill and other indefinite-lived intangible assets: $10.2 million and Non-current deferred income taxes: $8.7 million)
(c)
Adjustment related to income tax expense (benefit) for interim period tax accounting required under ASC 740, Accounting for Income Taxes. The balance of the adjustment to deferred taxes relates to jurisdictional netting.




Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
 
Nine Months Ended
 
October 1, 2016
 
 
 
Adjustments
 
 
 
Previously Reported
 
Tysabri®
 
Other
 
Restated
Cash Flows From (For) Operating Activities
 
 
 
 
 
 
 
Net income (loss)
$
(1,395.4
)
 
$
(1,349.7
)
 
$
91.4

 
$
(2,653.7
)
Adjustments to derive cash flows
 
 
 
 
 
 
 
Loss on extinguishment of debt
1.1

 
—

 
—

 
1.1

Restructuring charges
17.9

 
—

 
—

 
17.9

Depreciation and amortization
556.3

 
(217.5
)
 
(0.4
)
 
338.4

Impairment charges
2,127.1

 
—

 
(98.3
)
(a)
2,028.8

Tysabri® royalty stream - change in fair value
—

 
1,492.6

 
—

 
1,492.6

Share-based compensation
16.1

 
—

 
(0.8
)
 
15.3

Amortization of financing fees and debt premium
—

 
—

 
(24.6
)
 
(24.6
)
Deferred income taxes
(507.2
)
 
(192.8
)
 
25.9

(a)(b)
(674.1
)
Other non-cash adjustments
34.5

 
—

 
—

 
34.5

Subtotal
850.4

 
(267.4
)
 
(6.8
)
 
576.2

Increase (decrease) in cash due to:
 
 
 
 
 
 
 
Accounts receivable
113.6

 
9.5

 
(10.1
)
 
113.0

Inventories
(29.9
)
 
—

 
55.0

(b)
25.1

Accounts payable
(51.8
)
 
—

 
(5.9
)
 
(57.7
)
Payroll and related taxes
(40.0
)
 
—

 
—

 
(40.0
)
Accrued customer programs
(74.7
)
 
—

 
1.0

(b)
(73.7
)
Accrued liabilities
(42.8
)
 
—

 
(47.2
)
(b)
(90.0
)
Accrued income taxes
9.7

 
—

 
(4.5
)
(a)(b)(c)
5.2

Other
(31.0
)
 
—

 
21.6

 
(9.4
)
Subtotal
(146.9
)
 
9.5

 
9.9

 
(127.5
)
Net cash from (for) operating activities
703.5

 
(257.9
)
 
3.1

 
448.7

Cash Flows From (For) Investing Activities
 
 
 
 
 
 
 
Proceeds from royalty rights
—

 
257.9

 
1.6

 
259.5

Acquisitions of businesses, net of cash acquired
(432.1
)
 
—

 
(4.7
)
 
(436.8
)
Asset acquisitions
(65.1
)
 
—

 
—

 
(65.1
)
Additions to property, plant and equipment
(84.6
)
 
—

 
—

 
(84.6
)
Proceeds from sale of business
58.5

 
—

 
—

 
58.5

Other investing
(1.0
)
 
—

 
—

 
(1.0
)
Net cash from (for) investing activities
(524.3
)
 
257.9

 
(3.1
)
 
(269.5
)
Cash Flows From (For) Financing Activities
 
 
 
 
 
 
 
Issuances of long-term debt
1,190.3

 
—

 
—

 
1,190.3

Payments on long-term debt
(545.8
)
 
—

 
—

 
(545.8
)
Borrowings (repayments) of revolving credit agreements and other financing, net
(803.6
)
 
—

 
—

 
(803.6
)
Deferred financing fees
(2.8
)
 
—

 
—

 
(2.8
)
Premium on early debt retirement
(0.6
)
 
—

 
—

 
(0.6
)
Issuance of ordinary shares
8.2

 
—

 
—

 
8.2

Cash dividends
(62.4
)
 
—

 
—

 
(62.4
)
Other financing
(17.4
)
 
—

 
—

 
(17.4
)
Net cash from (for) financing activities
(234.1
)
 
—

 
—

 
(234.1
)
Effect of exchange rate changes on cash and cash receipts
(0.2
)
 
—

 
—

 
(0.2
)
Net increase (decrease) in cash and cash equivalents
(55.1
)
 
—

 
—

 
(55.1
)
Cash and cash equivalents, beginning of period
417.8

 
—

 
—

 
417.8

Cash and cash equivalents, end of period
$
362.7

 
$
—

 
$
—

 
$
362.7

(a)
Adjustments primarily related to the BCH Deferred Tax Matters as described above.
(b)
Adjustments primarily related to BCH Belgium Distribution Contracts as described above.
(c)
Adjustment related to income tax expense (benefit) for interim period tax accounting required under ASC 740, Accounting for Income Taxes.
Condensed Consolidated Statement of Cash Flows
(in millions)
(unaudited)
 
Nine Months Ended
 
September 26, 2015
 
 
 
Adjustments
 
 
 
Previously Reported
 
Tysabri®
 
Other
 
Restated
Cash Flows From (For) Operating Activities
 
 
 
 
 
 
 
Net income (loss)
$
74.2

 
$
155.3

 
$
(13.1
)
 
$
216.4

Adjustments to derive cash flows
 
 
 
 
 
 
 
Loss on extinguishment of debt
0.9

 
—

 
—

 
0.9

Restructuring charges
3.1

 
—

 
—

 
3.1

Depreciation and amortization
470.4

 
(217.5
)
 
—

 
252.9

Impairment charges
—

 
—

 
6.8

 
6.8

Tysabri® royalty stream - change in fair value
—

 
(205.4
)
 
—

 
(205.4
)
Share-based compensation
29.7

 
—

 
—

 
29.7

Loss on acquisition-related foreign currency derivatives
300.0

 
—

 
—

 
300.0

Amortization of financing fees and debt premium
—

 
—

 
(8.5
)
 
(8.5
)
Deferred income taxes
7.7

 
22.2

 
(16.8
)
(a)(b)
13.1

Other non-cash adjustments
15.3

 

 
(6.9
)
 
8.4

Subtotal
901.3

 
(245.4
)
 
(38.5
)
 
617.4

Increase (decrease) in cash due to:
 
 
 
 
 
 
 
Accounts receivable
(30.9
)
 
(3.1
)
 
25.6

(b)
(8.4
)
Inventories
(28.6
)
 
—

 
(0.3
)
(b)
(28.9
)
Accounts payable
(6.5
)
 
—

 
(21.6
)
(b)
(28.1
)
Payroll and related taxes
(26.6
)
 
—

 
—

 
(26.6
)
Accrued customer programs
17.7

 
—

 
8.2

(b)
25.9

Accrued liabilities
46.7

 
—

 
(5.6
)
 
41.1

Accrued income taxes
0.3

 
—

 
11.0

(a)
11.3

Other
(6.7
)
 
—

 
20.4

 
13.7

Subtotal
(34.6
)
 
(3.1
)
 
37.7

 
—

Net cash from (for) operating activities
866.7

 
(248.5
)
 
(0.8
)
 
617.4

Cash Flows From (For) Investing Activities
 
 
 
 
 
 
 
Proceeds from royalty rights
—

 
248.5

 
1.8

 
250.3

Acquisitions of businesses, net of cash acquired
(2,499.9
)
 
—

 
—

 
(2,499.9
)
Asset acquisitions
(4.0
)
 
—

 
—

 
(4.0
)
Settlement of acquisition-related foreign currency derivatives
(304.8
)
 
—

 
—

 
(304.8
)
Additions to property, plant and equipment
(127.6
)
 
—

 
—

 
(127.6
)
Other investing
(2.7
)
 
—

 
—

 
(2.7
)
Net cash from (for) investing activities
(2,939.0
)
 
248.5

 
1.8

 
(2,688.7
)
Cash Flows From (For) Financing Activities
 
 
 
 
 
 
 
Payments on long-term debt
(903.3
)
 
—

 
—

 
(903.3
)
Borrowings (repayments) of revolving credit agreements and other financing, net
28.6

 
—

 
(1.0
)
 
27.6

Deferred financing fees
(3.3
)
 
—

 
—

 
(3.3
)
Issuance of ordinary shares
6.2

 
—

 
—

 
6.2

Cash dividends
(54.2
)
 
—

 
—

 
(54.2
)
Other financing
(15.5
)
 
—

 
—

 
(15.5
)
Net cash from (for) financing activities
(941.5
)
 
—

 
(1.0
)
 
(942.5
)
Effect of exchange rate changes on cash and cash receipts
(75.8
)
 
—

 
—

 
(75.8
)
Net increase (decrease) in cash and cash equivalents
(3,089.6
)
 
—

 
—

 
(3,089.6
)
Cash and cash equivalents, beginning of period
3,596.1

 
—

 
—

 
3,596.1

Cash and cash equivalents, end of period
$
506.5

 
$
—

 
$
—

 
$
506.5


(a)
Adjustments primarily related to the BCH Deferred Tax Matters as described above.
(b)
Adjustments primarily related to BCH Belgium Distribution Contracts as described above.
The Condensed Consolidated Statement of Comprehensive Income (Loss) was adjusted primarily for a $335.0 million increase in net loss and $1.3 billion increase in net loss for the three and nine months ended October 1, 2016, respectively, and a $148.3 million increase in net income and $142.2 million increase in net income for the three and nine months ended September 26, 2015, respectively, as well as an adjustment in foreign currency translation of $0.5 million and $0.3 million for the three and nine months ended October 1, 2016, respectively, and $0.1 million for the three months ended September 26, 2015.

The accumulated effect on Shareholders' Equity at December 27, 2014 was a $41.7 million increase.

Recent Accounting Standard Pronouncements

Below are recent accounting standard updates that we are still assessing to determine the effect on our consolidated financial statements. We do not believe that any other recently issued accounting standards could have a material effect on our consolidated financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Recently Issued Accounting Standards Not Yet Adopted
Standard
 
Description
 
Effective Date
 
Effect on the Financial Statements or Other Significant Matters
Improvements to Employee Share-Based Payment Accounting

 
This guidance is intended to simplify several aspects of the accounting for share-based payment award transactions. It will require all income tax effects of awards to be recorded through the income statement when they vest or settle as opposed to certain amounts being recorded in additional paid-in capital. An entity will also have to elect whether to account for forfeitures as they occur or by estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change (as currently required). The guidance will also increase the amount an employer can withhold to cover income taxes on awards. Early adoption is permitted.
 
January 1, 2017
 
We are currently evaluating the implications of adoption on our consolidated financial statements.
Revenue from Contracts with Customers
 
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the entity satisfies a performance obligation. This guidance allows for two adoption methods, full retrospective approach or modified retrospective approach. Early adoption is not permitted.
 
January 1, 2018
 
We are currently evaluating the possible adoption methodologies and the implications of adoption on our consolidated financial statements.
Leases
 
This guidance was issued to increase transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. For leases with a term of 12 months or less, lessees are permitted to make an election to not recognize right-of-use assets and lease liabilities. Upon adoption, lessees will apply the new standard as of the beginning of the earliest comparative period presented in the financial statements, however lessees will be able to exclude leases that expire as of the implementation date. Early adoption is permitted.


 
January 1, 2019
 
We are currently evaluating the implications of adoption on our consolidated financial statements and considering whether to early adopt the standard.


Recently Issued Accounting Standards Not Yet Adopted (continued)
Standard
 
Description
 
Effective Date
 
Effect on the Financial Statements or Other Significant Matters
Measurement of Credit Losses on Financial Instruments
 
This guidance changes the impairment model for most financial assets and certain other instruments, replacing the current "incurred loss" approach with an "expected loss" credit impairment model, which will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, and off-balance sheet credit exposures such as letters of credit. Early adoption is permitted.


 
January 1, 2020
 
We are currently evaluating the new standard for potential impacts on our receivables, debt, and other financial instruments and considering whether to early adopt the standard.