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Discontinued Operations and Disposal Groups
 6 Months Ended
Jul. 03, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Assets Held for Sale DISCONTINUED OPERATIONS
Our discontinued operations primarily consist of our RX segment, which held our prescription pharmaceuticals business in the U.S. and our pharmaceuticals and diagnostic businesses in Israel (collectively, the “RX business”).

On March 1, 2021, we announced a definitive agreement to sell our RX business to Altaris. On July 6, 2021, we completed the sale of the RX business for aggregate consideration of $1.55 billion, subject to customary adjustments for cash, debt, working capital and certain transaction expenses. The consideration includes approximately $53.0 million of reimbursements which Altaris will be required to deliver in cash to Perrigo pursuant to the terms of the Agreement.
As of March 1, 2021, we determined that the RX business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results have been reflected in our consolidated financial statements as a discontinued operation and its assets and liabilities have been classified as held for sale. We ceased recording depreciation and amortization on the RX business assets from March 1, 2021. We have not allocated any general corporate overhead to the discontinued operation.

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

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

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

 Three Months EndedSix Months Ended
 July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net sales$204.5 $270.4 $404.5 $528.1 
Cost of sales119.9 180.6 258.2 346.4 
Gross profit84.6 89.8 146.3 181.7 
Operating expenses
Distribution2.8 3.8 6.1 7.8 
Research and development17.3 16.4 30.6 30.1 
Selling8.8 7.4 16.2 14.7 
Administration12.4 8.1 30.6 14.5 
Restructuring— 0.4 — 0.4 
Other operating expense (income)0.5 (0.9)(0.4)0.2 
Total operating expenses41.8 35.2 83.1 67.7 
Operating income (loss)$42.8 $54.6 63.2 114.0 
Interest expense, net0.2 1.1 0.8 2.5 
Other (income) expense, net(0.2)(2.9)(1.7)(2.1)
Income before income taxes42.8 56.4 64.1 113.6 
Income tax expense (benefit)(11.4)8.2 (25.4)16.7 
Income from discontinued operations, net of tax$54.2 $48.2 $89.5 $96.9 

During the three and six months ended July 3, 2021, we incurred $2.4 million and $11.7 million, respectively, of separation costs related to the sale of the RX business, which are recorded in administration expenses.
Select cash flow information related to discontinued operations was as follows (in millions):

Six Months Ended
 July 3,
2021		June 27,
2020
Cash flows from discontinued operations operating activities:
Depreciation and amortization$15.3 $48.2 
Cash flows from discontinued operations investing activities:
Asset acquisitions$(69.7)$(0.1)
Additions to property, plant and equipment$(6.1)$(5.6)

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

July 3,
2021		December 31,
2020
Cash and cash equivalents$9.3 $10.0 
Accounts receivable, net of allowance for credit losses of $1.0 and $1.1, respectively
496.4 460.7 
Inventories143.4 140.8 
Prepaid expenses and other current assets21.4 55.4 
Current assets held for sale*666.9 
Property, plant and equipment, net133.3 131.4 
Operating lease assets30.0 31.3 
Goodwill and indefinite-lived intangible assets680.0 681.2 
Definite-lived intangible assets, net532.9 492.8 
Deferred income taxes4.2 3.6 
Other non-current assets22.6 23.7 
Non-current assets held for sale*1,364.0 
Total assets held for sale$2,073.5 $2,030.9 
Accounts payable$91.6 $92.2 
Payroll and related taxes14.1 22.3 
Accrued customer programs235.6 237.4 
Other accrued liabilities27.4 67.2 
Accrued income taxes0.1 — 
Current indebtedness0.5 0.5 
Current liabilities held for sale*419.6 
Long-term debt, less current portion0.4 0.7 
Deferred income taxes3.2 3.1 
Other non-current liabilities64.6 104.5 
Non-current liabilities held for sale*108.3 
Total liabilities held for sale$437.5 $527.9 

*The non-current assets and liabilities of the RX business have been reclassified to current assets and liabilities held for sale, respectively, and the sale was completed on July 6, 2021.
ASSETS HELD FOR SALE
We classify assets as "held for sale" when, among other factors, management approves and commits to a formal plan of sale with the expectation the sale will be completed within one year. The net assets of the business held for sale are then recorded at the lower of their current carrying value and the fair market value, less costs to sell.

During the three months ended July 3, 2021, management committed to a plan to sell our Latin American businesses; as a result, such assets were classified as held for sale. The assets associated with this business were reported within our CSCA segment. The sale is expected to close in the second half of 2021. At July 3, 2021, we determined the carrying value of the net assets held for sale of this business exceeded their fair value less cost to sell, resulting in an impairment charge of $152.5 million. We also recorded a goodwill impairment charge of $6.1 million within our CSCA segment, related to the Latin American businesses (refer to Note 4), resulting in a total impairment charge of $158.6 million.

In addition to the assets and liabilities held for sale related to discontinued operations (refer to Note 8), the assets and liabilities held for sale related to the Latin American businesses were reported within Current assets held for sale and Current liabilities held for sale on the Condensed Consolidated Balance Sheets. Net of impairment
charges, the assets and liabilities of the Latin American businesses reported as held for sale as of July 3, 2021 totaled $15.8 million and $30.8 million, respectively.