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. The consideration includes a $53.3 million reimbursement related to an ANDA for a generic topical lotion which Altaris is required to deliver in

cash to Perrigo pursuant to the terms of the Agreement. The sale resulted in a pre-tax gain of $63.9 million recorded in Other (income) expense, net on the Statement of Operations for discontinued operations. The gain included a $160.0 million increase from the write-off of foreign currency translation adjustment from Accumulated other comprehensive income and a decrease from professional fees. The transaction gain is subject to final settlements under the Agreement, which we expect to finalize in the fourth quarter of 2021.

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

Under the terms of the agreement, we will provide transition services for up to 24 months after the close of the transaction and we entered 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 also extended 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.

During the three and nine months ended October 2, 2021, we recognized $3.6 million of income related to the transition services agreement ("TSA") in Other operating expense (income); $29.4 million of product sales and royalty income in Net sales related to the supply and distribution agreements with the RX business; and we purchased $9.5 million of inventories related to the supply arrangement with the RX business. No payments were made or received related to these agreements during the three and nine months ended October 2, 2021.

Additionally, under the TSA, we net settle any receipts received or payments made on behalf of the RX business’ customers or vendors. As of October 2, 2021, we recorded a receivable in the amount of $36.4 million in Prepaid expenses and other current assets for the reimbursement due to Perrigo.

In the transaction, Perrigo retained 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. We have not requested payments from the buyer related to the indemnity of these liabilities during the three and nine months ended October 2, 2021.


	Three Months Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales	$	0.5	$	210.7	$	405.1	$	738.8
Cost of sales	0.1		149.8		258.4		496.2
Gross profit	0.4		60.9		146.7		242.6

Operating expenses
Distribution	—		3.6		6.1		11.4
Research and development	0.2		11.9		30.8		42.1
Selling	0.1		7.6		16.3		22.3
Administration	4.9		8.7		35.6		23.2
Impairment charges	—		202.4		—		202.4
Restructuring	—		—		—		0.4
Other operating expense (income)	—		0.6		(0.4)		0.8
Total operating expenses	5.2		234.8		88.4		302.6

Operating income (loss)	(4.8)		(173.9)		58.3		(60.0)


Interest expense, net	—		0.7		0.8		3.2
Other (income) expense, net	(63.7)		1.5		(65.5)		(0.7)

Income before income taxes	58.9		(176.1)		123.0		(62.5)
Income tax expense (benefit)	63.9		4.9		38.5		21.5
Income (loss) from discontinued operations, net of tax	$	(5.0)	$	(181.0)	$	84.5	$	(84.0)

During the three and nine months ended October 2, 2021, we incurred $29.1 million and $40.8 million, respectively, of separation costs related to the sale of the RX business. The costs incurred during the three months ended October 2, 2021 included selling costs, which were reported in other (income) expense, net as part of the gain on sale of the RX business. Separation costs incurred in prior periods were included in administration expenses.


	Nine Months Ended
	October 2, 2021		September 26, 2020
Cash flows from discontinued operations operating activities:
Depreciation and amortization	$	15.3	$	72.4

Impairment charges	—		202.4

Loss (Gain) on sale of business	(63.9)		—



Cash flows from discontinued operations investing activities:
Asset acquisitions	$	(69.7)	$	(0.9)
Additions to property, plant and equipment	(6.6)		(10.0)
Net proceeds from sale of business	1,493.1		—

Asset acquisitions related to discontinued operations consisted of two Abbreviated New Drug Applications ("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. These ANDAs were acquired by Altaris as part of the RX business sale.


	December 31, 2020
Cash and cash equivalents	$	10.0

Accounts receivable, net of allowance for credit losses of $1.1	460.7
Inventories	140.8
Prepaid expenses and other current assets	55.4





Current assets held for sale	666.9

Property, plant and equipment, net	131.4
Operating lease assets	31.3

Goodwill and indefinite-lived intangible assets	681.2

Definite-lived intangible assets, net	492.8
Deferred income taxes	3.6
Other non-current assets	23.7
Non-current assets held for sale	1,364.0
Total assets held for sale	$	2,030.9

Accounts payable	$	92.2
Payroll and related taxes	22.3
Accrued customer programs	237.4
Other accrued liabilities	67.2


Current indebtedness	0.5
Current liabilities held for sale	419.6

Long-term debt, less current portion	0.7
Deferred income taxes	3.1
Other non-current liabilities	104.5
Non-current liabilities held for sale	108.3
Total liabilities held for sale	$	527.9

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 first half of 2022. 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. At October 2, 2021 we recorded an additional impairment charge of $2.6 million resulting in a total impairment charge of $155.1 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 $161.2 million.

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 October 2, 2021 totaled $13.4 million and $29.2 million, respectively.