agn-10q_20160930.htm

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:

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Number of shares of Allergan plc’s Ordinary Shares outstanding on October 26, 2016: 375,080,162. There is no trading market for securities of Warner Chilcott Limited, all of which are indirectly wholly owned by Allergan plc.

This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc. The information in this Quarterly Report on Form 10-Q is equally applicable to Allergan plc and Warner Chilcott Limited, except where otherwise indicated. Warner Chilcott Limited meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.

	September 30,			December 31,
	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	7,554.7		$	1,096.0
Marketable securities		19,837.6			9.3
Accounts receivable, net		2,398.5			2,125.4
Inventories		705.5			757.5
Prepaid expenses and other current assets		771.7			495.3
Current assets held for sale		455.9			4,095.6
Total current assets		31,723.9			8,579.1
Property, plant and equipment, net		1,566.3			1,531.3
Investments and other assets		341.1			408.7
Non current assets held for sale		207.2			10,713.3
Deferred tax assets		120.7			49.5
Product rights and other intangibles		63,022.7			67,836.2
Goodwill		46,625.8			46,465.2
Total assets	$	143,607.7		$	135,583.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	5,425.4		$	4,148.6
Income taxes payable		784.6			53.7
Current portion of long-term debt and capital leases		1,591.8			2,396.5
Current liabilities held for sale		223.7			1,693.2
Total current liabilities		8,025.5			8,292.0
Long-term debt and capital leases		31,178.2			40,133.9
Other long-term liabilities		1,022.7			1,262.0
Long-term liabilities held for sale		23.8			535.4
Other taxes payable		815.6			801.9
Deferred tax liabilities		12,811.5			7,968.8
Total liabilities		53,877.3			58,994.0
Commitments and contingencies (Refer to Note 20)
Equity:
Preferred shares, $0.0001 par value per share, 5.1 million shares authorized, 5.1 million and 5.1 million shares issued and outstanding, respectively	$	4,929.7		$	4,929.7
Ordinary shares; $0.0001 par value per share; 1,000.0 million shares authorized, 383.2 million and 394.5 million shares issued and outstanding, respectively		-			-
Treasury shares, at cost, 1.7 million shares pending and zero shares, respectively		(400.0	)		-
Additional paid-in capital		66,184.2			68,508.3
Retained earnings		18,412.7			3,647.5
Accumulated other comprehensive income / (loss)		599.3			(494.1	)
Total shareholders’ equity		89,725.9			76,591.4
Noncontrolling interest		4.5			(2.1	)
Total equity		89,730.4			76,589.3
Total liabilities and equity	$	143,607.7		$	135,583.3

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net revenues	$	3,622.2		$	3,469.5		$	10,706.3		$	9,081.2
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		462.2			710.3			1,381.1			2,150.0
Research and development		622.8			1,260.5			1,662.4			1,927.9
Selling and marketing		796.0			683.6			2,429.6			2,017.2
General and administrative		361.2			339.1			1,033.9			1,188.0
Amortization		1,609.1			1,557.8			4,831.9			3,858.9
In-process research and development impairments		42.0			300.0			316.9			497.6
Asset sales and impairments, net		(4.7	)		(4.4	)		(24.0	)		3.1
Total operating expenses		3,888.6			4,846.9			11,631.8			11,642.7
Operating (loss)		(266.4	)		(1,377.4	)		(925.5	)		(2,561.5	)

Interest income		18.1			3.5			23.5			7.6
Interest (expense)		(324.3	)		(340.2	)		(1,002.9	)		(852.0	)
Other (expense) income, net		33.6			0.2			184.2			(238.1	)
Total other (expense), net		(272.6	)		(336.5	)		(795.2	)		(1,082.5	)
(Loss) before income taxes and noncontrolling interest		(539.0	)		(1,713.9	)		(1,720.7	)		(3,644.0	)
(Benefit) for income taxes		(158.9	)		(838.9	)		(825.8	)		(1,491.0	)
Net (loss) from continuing operations, net of tax		(380.1	)		(875.0	)		(894.9	)		(2,153.0	)
Income from discontinued operations, net of tax		15,601.9			6,177.6			15,873.2			6,701.7
Net income		15,221.8			5,302.6			14,978.3			4,548.7
(Income) attributable to noncontrolling interest		(1.8	)		(1.4	)		(4.3	)		(2.6	)
Net income attributable to shareholders		15,220.0			5,301.2			14,974.0			4,546.1
Dividends on preferred shares		69.6			69.6			208.8			162.4
Net income attributable to ordinary shareholders	$	15,150.4		$	5,231.6		$	14,765.2		$	4,383.7

(Loss) / income per share attributable to ordinary shareholders - basic:
Continuing operations	$	(1.15	)	$	(2.40	)	$	(2.81	)	$	(6.46	)
Discontinued operations		39.73			15.69			40.25			18.67
Net income per share - basic	$	38.58		$	13.29		$	37.44		$	12.21
(Loss) / income per share attributable to ordinary shareholders - diluted:
Continuing operations	$	(1.15	)	$	(2.40	)	$	(2.81	)	$	(6.46	)
Discontinued operations		39.73			15.69			40.25			18.67
Net income per share - diluted	$	38.58		$	13.29		$	37.44		$	12.21

Weighted average shares outstanding:
Basic		392.7			393.6			394.4			358.9
Diluted		392.7			393.6			394.4			358.9

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net income	$	15,221.8		$	5,302.6		$	14,978.3		$	4,548.7
Other comprehensive income / (loss)
Foreign currency translation (losses) / gains		(19.1	)		(42.4	)		173.8			409.0
Impact of Teva Transaction		1,544.8			-			1,544.8			-
Unrealized gains (losses) / gains, net of tax		(609.3	)		7.5			(625.2	)		11.1
Reclassification for gains included in net income, net of tax		-			-			-			-
Total other comprehensive income / (loss), net of tax		916.4			(34.9	)		1,093.4			420.1
Comprehensive income		16,138.2			5,267.7			16,071.7			4,968.8
Comprehensive (income) attributable to noncontrolling interest		(1.8	)		(1.4	)		(4.3	)		(2.6	)
Comprehensive income attributable to ordinary shareholders	$	16,136.4		$	5,266.3		$	16,067.4		$	4,966.2

	Nine Months Ended September 30,
	2016			2015
Cash Flows From Operating Activities:
Net income	$	14,978.3		$	4,548.7
Reconciliation to net cash provided by operating activities:
Depreciation		117.6			183.9
Amortization		4,836.7			4,192.8
Provision for inventory reserve		162.7			108.6
Share-based compensation		269.9			510.5
Deferred income tax benefit		(517.1	)		(7,470.9	)
Pre-tax gain sale of generics business		(24,203.1	)		-
Non-cash tax effect of gain on sale of generics business		5,749.9			-
In-process research and development impairments		316.9			497.6
Loss / (gain) on asset sales and impairments, net		(24.0	)		57.2
Amortization of inventory step-up		42.4			1,019.8
Amortization of deferred financing costs		44.6			289.2
Contingent consideration adjustments, including accretion		76.7			89.2
Excess tax benefit from stock-based compensation		(26.6	)		(54.0	)
Other, net		(16.0	)		54.9
Changes in assets and liabilities (net of effects of acquisitions):
Decrease / (increase) in accounts receivable, net		(40.4	)		(364.0	)
Decrease / (increase) in inventories		(221.6	)		(270.1	)
Decrease / (increase) in prepaid expenses and other current assets		158.9			(3.3	)
Increase / (decrease) in accounts payable and accrued expenses		331.9			(290.6	)
Increase / (decrease) in income and other taxes payable		(131.6	)		(103.4	)
Increase / (decrease) in other assets and liabilities		(397.5	)		(21.6	)
Net cash provided by operating activities		1,508.6			2,974.5
Cash Flows From Investing Activities:
Additions to property, plant and equipment		(250.5	)		(350.7	)
Additions to product rights and other intangibles		-			(91.1	)
Sale of generics business		33,304.5			-
Additions to investments		(15,445.5	)		(27.0	)
Proceeds from sale of investments and other assets		40.0			855.8
Proceeds from sales of property, plant and equipment		33.3			133.6
Acquisitions of businesses, net of cash acquired		(74.5	)		(35,242.7	)
Net cash provided by / (used in) investing activities		17,607.3			(34,722.1	)
Cash Flows From Financing Activities:
Proceeds from borrowings of long-term indebtedness		-			26,456.4
Proceeds from borrowings on credit facility and other		1,050.0			2,882.0
Debt issuance and other financing costs		-			(310.8	)
Payments on debt, including capital lease obligations and credit facility		(10,831.0	)		(4,326.7	)
Proceeds from issuance of preferred shares		-			4,929.7
Proceeds from issuance of ordinary shares		-			4,071.1
Proceeds from stock plans		138.0			195.8
Payments of contingent consideration		(77.7	)		(138.3	)
Repurchase of ordinary shares		(2,758.6	)		(108.2	)
Dividends		(208.8	)		(138.4	)
Excess tax benefit from stock-based compensation		26.6			54.0
Net cash (used in) / provided by financing activities		(12,661.5	)		33,566.6
Effect of currency exchange rate changes on cash and cash equivalents		4.3			(5.1	)
Net increase in cash and cash equivalents		6,458.7			1,813.9
Cash and cash equivalents at beginning of period		1,096.0			250.0
Cash and cash equivalents at end of period	$	7,554.7		$	2,063.9
Supplemental Disclosure of Cash Flow Information
Taxes paid in connection with the sale of the generics business	$	2,571.7		$	-
Schedule of Non-Cash Investing and Financing Activities:
Dividends accrued	$	24.2		$	24.0
Receipt of Teva Pharmaceutical Industries Ltd. ordinary shares in connection with the sale of the generics business	$	5,038.6		$	-
Non-cash equity issuance for the Acquisition of Allergan net assets	$	-		$	34,687.2

	September 30,		December 31,
	2016		2015
ASSETS
Current assets:
Cash and cash equivalents	$	7,522.8	$	1,036.2
Marketable securities		19,837.6		9.3
Accounts receivable, net		2,398.5		2,125.4
Receivables from Parents		2,828.7		457.3
Inventories		705.5		757.5
Prepaid expenses and other current assets		769.6		492.8
Current assets held for sale		455.9		4,095.6
Total current assets		34,518.6		8,974.1
Property, plant and equipment, net		1,566.3		1,531.3
Investments and other assets		341.1		408.7
Non current receivables from Parents		3,985.0		-
Non current assets held for sale		207.2		10,713.3
Deferred tax assets		120.7		49.5
Product rights and other intangibles		63,022.7		67,836.2
Goodwill		46,625.8		46,465.2
Total assets	$	150,387.4	$	135,978.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	4,995.8	$	4,094.5
Payables to Parents		6,202.2		1,466.8
Income taxes payable		784.6		53.7
Current portion of long-term debt and capital leases		1,591.8		2,396.5
Current liabilities held for sale		223.7		1,693.2
Total current liabilities		13,798.1		9,704.7
Long-term debt and capital leases		31,178.2		40,133.9
Other long-term liabilities		1,022.7		1,262.0
Long-term payables to Parents		419.0		-
Long-term liabilities held for sale		23.8		535.4
Other taxes payable		815.6		801.9
Deferred tax liabilities		12,811.5		7,968.8
Total liabilities		60,068.9		60,406.7
Commitments and contingencies
Equity:
Members' capital		72,935.1		72,935.1
Retained earnings		16,779.6		3,132.7
Accumulated other comprehensive income / (loss)		599.3		(494.1	)
Total members’ equity		90,314.0		75,573.7
Noncontrolling interest		4.5		(2.1	)
Total equity		90,318.5		75,571.6
Total liabilities and equity	$	150,387.4	$	135,978.3

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net revenues	$	3,622.2		$	3,469.5		$	10,706.3		$	9,081.2
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		462.2			710.3			1,381.1			2,150.0
Research and development		622.8			1,260.5			1,662.4			1,927.9
Selling and marketing		796.0			683.6			2,429.6			2,017.2
General and administrative		312.2			333.8			966.2			1,174.9
Amortization		1,609.1			1,557.8			4,831.9			3,858.9
In-process research and development impairments		42.0			300.0			316.9			497.6
Asset sales and impairments, net		(4.7	)		(4.4	)		(24.0	)		3.1
Total operating expenses		3,839.6			4,841.6			11,564.1			11,629.6
Operating (loss)		(217.4	)		(1,372.1	)		(857.8	)		(2,548.4	)
Non-operating income (expense):
Interest income		18.1			3.5			23.5			7.6
Interest (expense)		(324.3	)		(340.2	)		(1,002.9	)		(852.0	)
Other (expense) / income, net		33.6			0.2			34.2			(238.1	)
Total other (expense), net		(272.6	)		(336.5	)		(945.2	)		(1,082.5	)
(Loss) before income taxes and noncontrolling interest		(490.0	)		(1,708.6	)		(1,803.0	)		(3,630.9	)
(Benefit) for income taxes		(158.9	)		(838.9	)		(825.8	)		(1,491.0	)
Net (loss) from continuing operations, net of tax		(331.1	)		(869.7	)		(977.2	)		(2,139.9	)
Income from discontinued operations, net of tax		15,601.9			6,177.6			15,873.2			6,701.7
Net income		15,270.8			5,307.9			14,896.0			4,561.8
(Income) attributable to noncontrolling interest		(1.8	)		(1.4	)		(4.3	)		(2.6	)
Net income attributable to members	$	15,269.0		$	5,306.5		$	14,891.7		$	4,559.2

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net income	$	15,270.8		$	5,307.9		$	14,896.0		$	4,561.8
Other comprehensive income / (loss)
Foreign currency translation (losses) / gains		(19.1	)		(42.4	)		173.8			409.0
Impact of Teva Transaction		1,544.8			-			1,544.8			-
Unrealized (losses) / gains, net of tax		(609.3	)		7.5			(625.2	)		11.1
Reclassification for gains included in net income, net of tax		-			-			-			-
Total other comprehensive income / (loss), net of tax		916.4			(34.9	)		1,093.4			420.1
Comprehensive income		16,187.2			5,273.0			15,989.4			4,981.9
Comprehensive (income) attributable to noncontrolling interest		(1.8	)		(1.4	)		(4.3	)		(2.6	)
Comprehensive income attributable to ordinary shareholders	$	16,185.4		$	5,271.6		$	15,985.1		$	4,979.3

	Nine Months Ended September 30,
	2016			2015
Cash Flows From Operating Activities:
Net income	$	14,896.0		$	4,561.8
Reconciliation to net cash provided by operating activities:
Depreciation		117.6			183.9
Amortization		4,836.7			4,192.8
Provision for inventory reserve		162.7			108.6
Share-based compensation		269.9			510.5
Deferred income tax benefit		(517.1	)		(7,470.9	)
Pre-tax gain sale of generics business		(24,203.1	)		-
Non-cash tax effect of gain on sale of generics business		5,749.9			-
In-process research and development impairments		316.9			497.6
Loss / (gains) on asset sales and impairments, net		(24.0	)		57.2
Amortization of inventory step-up		42.4			1,019.8
Amortization of deferred financing costs		44.6			289.2
Contingent consideration adjustments, including accretion		76.7			89.2
Other, net		(16.0	)		54.9
Changes in assets and liabilities (net of effects of acquisitions):
Decrease / (increase) in accounts receivable, net		(40.4	)		(363.3	)
Decrease / (increase) in inventories		(221.6	)		(270.1	)
Decrease / (increase) in prepaid expenses and other current assets		156.8			(3.2	)
Increase / (decrease) in accounts payable and accrued expenses		361.5			(257.5	)
Increase / (decrease) in income and other taxes payable		(131.6	)		(103.4	)
Increase / (decrease) in other assets and liabilities, including receivable / payable with Parents		(1,899.4	)		6.5
Net cash (used in) / provided by operating activities		(21.5	)		3,103.6
Cash Flows From Investing Activities:
Additions to property, plant and equipment		(250.5	)		(350.7	)
Additions to product rights and other intangibles		-			(91.1	)
Sale of generics business		33,304.5			-
Additions to investments		(15,445.5	)		(27.0	)
Proceeds from the sale of investments and other assets		40.0			855.8
Proceeds from sales of property, plant and equipment		33.3			133.6
Acquisitions of businesses, net of cash acquired		(74.5	)		(35,242.7	)
Net cash provided by / (used in) investing activities		17,607.3			(34,722.1	)
Cash Flows From Financing Activities:
Proceeds from borrowings of long-term indebtedness		-			26,456.4
Proceeds from borrowings on credit facility and other		1,050.0			2,882.0
Debt issuance and other financing costs		-			(310.8	)
Payments on debt, including capital lease obligations and credit facility		(10,831.0	)		(4,326.7	)
Payments of contingent consideration		(77.7	)		(138.3	)
Dividend to Parent		(1,244.8	)		(138.4	)
Contribution from Parent		-			9,000.8
Net cash (used in) / provided by financing activities		(11,103.5	)		33,425.0
Effect of currency exchange rate changes on cash and cash equivalents		4.3			(5.1	)
Net increase in cash and cash equivalents		6,486.6			1,801.4
Cash and cash equivalents at beginning of period		1,036.2			244.3
Cash and cash equivalents at end of period	$	7,522.8		$	2,045.7

Allergan plc is focused on developing, manufacturing and commercializing innovative branded pharmaceuticals (“brand”, “branded” or “specialty brand”) and select over-the-counter (“OTC”) products. Prior to completing the Teva Transaction (defined below), the Company also sold high-quality generic and OTC medicines and biologic products for patients around the world.

Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women's health, urology, and anti-infective therapeutic categories, and operated the world's third-largest global generics business, providing patients around the globe with increased access to affordable, high-quality medicines. Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry.

With commercial operations in over 100 countries, Allergan is committed to working with physicians, healthcare providers and patients to deliver innovative and meaningful treatments that help people around the world live longer, healthier lives. Warner Chilcott Limited is a wholly-owned subsidiary of Allergan plc and has the same principal business activities. As a result of the Allergan Acquisition (defined below) which closed on March 17, 2015, the Company expanded its franchises to include ophthalmology, neurosciences and medical aesthetics/dermatology/plastic surgery, which complemented the Company’s existing central nervous system, gastroenterology, women’s health and urology franchises. The combined company benefits significantly from Allergan, Inc’s. (“Legacy Allergan”) global brand equity and consumer awareness of key products, including Botox^® and Restasis^®. The Allergan Acquisition also expanded our presence and market and product reach across many international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.

On July 26, 2015 we entered into a master purchase agreement (the “Teva Agreement”), under which Teva Pharmaceutical Industries Ltd. (“Teva”) agreed to acquire our global generic pharmaceuticals business and certain other assets (the “Teva Transaction”). Upon the closing of the Teva Transaction on August 2, 2016, we received $33.3 billion in cash, net of cash acquired by Teva, which includes estimated working capital and other contractual adjustments, and 100.3 million unregistered Teva ordinary shares (or American Depository Shares with respect thereto), which approximated $5.0 billion in value using the closing date Teva opening stock price discounted at a rate of 5.9 percent due to the lack of marketability. The Company recognized a gain on the sale of our global generics business of $15,881.5 million as well as deferred liabilities relating to other elements of our arrangements with Teva of $518.9 million.

As part of the Teva Agreement, Teva acquired our global generics business, including the United States (“U.S.”) and international generic commercial units, our third-party supplier Medis, our global generic manufacturing operations, our global generic research and development (“R&D”) unit, our international OTC commercial unit (excluding OTC eye care products) and certain established international brands.

On October 3, 2016, the Company completed the divestiture of the Anda Distribution business to Teva for an additional $500.0 million. Teva acquired our Anda Distribution business, which distributes generic, brand, specialty and OTC pharmaceutical products from more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the U.S.

As a result of the Teva Transaction and the divestiture of the Company’s Anda Distribution business, and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) number 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, the Company is accounting for the assets and liabilities divested as held for sale. Further, the financial results of the businesses held for sale have been reclassified to discontinued operations for all periods presented in our consolidated financial statements. The results of our discontinued operations include the results of our generic product development, manufacturing and distribution of off-patent pharmaceutical products, certain established international brands marketed similarly to generic products and out-licensed generic pharmaceutical products primarily in Europe through our Medis third-party business through August 2, 2016, as well as our Anda Distribution business.

The accompanying consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2015 (“Annual Report”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have

been condensed or omitted from the accompanying consolidated financial statements. The accompanying year end consolidated balance sheet was derived from the audited financial statements included in the Annual Report as revised for discontinued operations treatment of our Anda Distribution business. The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s consolidated financial position, results of operations, comprehensive income and cash flows for the periods presented. Unless otherwise noted, all such adjustments are of a normal, recurring nature. All intercompany transactions and balances have been eliminated in consolidation. The Company’s results of operations, comprehensive income and cash flows for the interim periods are not necessarily indicative of the results of operations, comprehensive income and cash flows that it may achieve in future periods.

In connection with the Allergan Acquisition, the Company changed its name from Actavis plc to Allergan plc. Actavis plc’s ordinary shares were traded on the NYSE under the symbol “ACT” until the opening of trading on June 15, 2015, at which time Actavis plc changed its corporate name to “Allergan plc” and changed its ticker symbol to “AGN.” Pursuant to Rule 12g-3(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Allergan plc is the successor issuer to Actavis plc’s ordinary shares which are deemed to be registered under Section 12(b) of the Exchange Act, and Allergan plc is subject to the informational requirements of the Exchange Act, and the rules and regulations promulgated thereunder.

References throughout to “we,” “our,” “us,” the “Company” or “Allergan” refer to financial information and transactions of Allergan plc. References to “Warner Chilcott Limited” refer to Warner Chilcott Limited, the Company’s indirect wholly-owned subsidiary, and, unless the context otherwise requires, its subsidiaries.

NOTE 2 – Reconciliation of Warner Chilcott Limited results to Allergan plc results

Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc (together with other Warner Chilcott Limited parents, the “Parent”), the ultimate parent of the group. The results of Warner Chilcott Limited are consolidated into the results of Allergan plc. Due to the deminimis activity between Allergan plc and Warner Chilcott Limited, references throughout this filing relate to both Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited representations relate only to itself and not to any other company.

Except where otherwise indicated, and excluding certain insignificant cash and non-cash transactions at the Allergan plc level, these notes relate to the consolidated financial statements for both separate registrants, Allergan plc and Warner Chilcott Limited. In addition to certain inter-company payable and receivable amounts between the entities, the following is a reconciliation of the financial position and results of operations of Warner Chilcott Limited to Allergan plc ($ in millions):

	Three Months Ended September 30, 2016									Nine Months Ended September 30, 2016
	Allergan plc			Warner Chilcott Limited			Difference			Allergan plc			Warner Chilcott Limited			Difference
General and administrative expenses	$	361.2		$	312.2		$	49.0		$	1,033.9		$	966.2		$	67.7
Operating (loss)		(266.4	)		(217.4	)		(49.0	)		(925.5	)		(857.8	)		(67.7	)
Other income / (expense)		33.6			33.6			-			184.2			34.2			150.0
(Loss) before income taxes and noncontrolling interest		(539.0	)		(490.0	)		(49.0	)		(1,720.7	)		(1,803.0	)		82.3
Net (loss) from continuing operations, net of tax		(380.1	)		(331.1	)		(49.0	)		(894.9	)		(977.2	)		82.3
Net income		15,221.8			15,270.8			(49.0	)		14,978.3			14,896.0			82.3
Dividends on preferred stock		69.6			-			69.6			208.8			-			208.8
Net income attributable to ordinary shareholder/members		15,150.4			15,269.0			(118.6	)		14,765.2			14,891.7			(126.5	)

	Three Months Ended September 30, 2015									Nine Months Ended September 30, 2015
	Allergan plc			Warner Chilcott Limited			Difference			Allergan plc			Warner Chilcott Limited			Difference
General and administrative expenses	$	339.1		$	333.8		$	5.3		$	1,188.0		$	1,174.9		$	13.1
Operating (loss)		(1,377.4	)		(1,372.1	)		(5.3	)		(2,561.5	)		(2,548.4	)		(13.1	)
(Loss) before income taxes and noncontrolling interest		(1,713.9	)		(1,708.6	)		(5.3	)		(3,644.0	)		(3,630.9	)		(13.1	)
Net (loss) from continuing operations, net of tax		(875.0	)		(869.7	)		(5.3	)		(2,153.0	)		(2,139.9	)		(13.1	)
Net income		5,302.6			5,307.9			(5.3	)		4,548.7			4,561.8			(13.1	)
Dividends on preferred stock		69.6			-			69.6			162.4			-			162.4
Net income attributable to ordinary shareholder/members		5,231.6			5,306.5			(74.9	)		4,383.7			4,559.2			(175.5	)

The difference between accounts payable and accrued liabilities as of September 30, 2016 primarily relates to accruals for the Company’s share repurchase program and dividends payable which are held by Allergan plc. The difference between general and administrative expenses in the three and nine months ended September 30, 2016 and 2015 were due to corporate related expenses incurred at Allergan plc as well as transaction costs. Movements in equity are due to historical differences in the results of operations of the companies and differences in equity awards.

The following are interim updates to certain of the policies described in “Note 4” of the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2015 included in the Annual Report.

In April 2015, the FASB issued guidance which changes the classification of debt issuance costs from being an asset on the balance sheet to netting the costs against the carrying value of the debt. As a result, the Company reclassified debt issuance costs as of December 31, 2015 by decreasing “prepaid expenses and other current assets” and “current portion of long-term debt and capital leases” by $36.3 million as well as decreasing “investments and other assets” and “long-term debt and capital leases” by $159.5 million. In addition, the Company made certain presentation reclassifications relating to segment results and guarantor financial statements.

Revenue from product sales is recognized when title and risk of loss to the product transfers to the customer, which is based on the transaction shipping terms. Recognition of revenue also requires reasonable assurance of collection of sales proceeds, the seller’s price to the buyer to be fixed or determinable and the completion of all performance obligations. The Company warrants products against defects and for specific quality standards, permitting the return of products under certain circumstances. Product sales are recorded net of all sales-related deductions including, but not limited to: chargebacks, trade discounts, sales returns and allowances, commercial and government rebates, customer loyalty programs and fee-for-service arrangements with certain distributors, which we refer to in the aggregate as “SRA” allowances.

Royalty and commission revenue is recognized as a component of net revenues in accordance with the terms of their respective contractual agreements when collectability is reasonably assured and when revenue can be reasonably measured.

As is customary in the pharmaceutical industry, our gross product sales are subject to a variety of deductions in arriving at reported net product sales. When the Company recognizes gross revenue from the sale of products, an estimate of SRA is recorded, which reduces the product revenues. Accounts receivable and/or accrued liabilities are also reduced and/or increased by the SRA amount depending on whether we have the right of offset with the customer. These provisions are estimated based on historical payment experience, historical relationship of the deductions to gross product revenues, government regulations, estimated utilization

or redemption rates, estimated customer inventory levels and current contract sales terms. The estimation process used to determine our SRA provision has been applied on a consistent basis and no material revenue adjustments have been necessary to increase or decrease our reserves for SRA as a result of a significant change in underlying estimates. The Company uses a variety of methods to assess the adequacy of the SRA reserves to ensure that our financial statements are fairly stated.

Chargebacks — A chargeback represents an amount payable in the future to a wholesaler for the difference between the invoice price paid by our wholesale customer for a particular product and the negotiated contract price that the wholesaler’s customer pays for that product. The chargeback provision and related reserve varies with changes in product mix, changes in customer pricing and changes to estimated wholesaler inventories. The provision for chargebacks also takes into account an estimate of the expected wholesaler sell-through levels to indirect customers at certain contract prices. The Company validates the chargeback accrual quarterly through a review of the inventory reports obtained from our largest wholesale customers. This customer inventory information is used to verify the estimated liability for future chargeback claims based on historical chargeback and contract rates. These large wholesalers represent the vast majority of the recipients of the Company’s chargeback payments. We continually monitor current pricing trends and wholesaler inventory levels to ensure the liability for future chargebacks is fairly stated.

Rebates — Rebates include volume related incentives to direct and indirect customers, third-party managed care and Medicare Part D rebates, Medicaid rebates and other government rebates. Rebates are accrued based on an estimate of claims to be paid for product sold into trade by the Company. Volume rebates are generally offered to customers as an incentive to use the Company’s products and to encourage greater product sales. These rebate programs include contracted rebates based on customers’ purchases made during an applicable monthly, quarterly or annual period. The provision for third-party rebates is estimated based on our customers’ contracted rebate programs and the Company’s historical experience of rebates paid. Any significant changes to our customer rebate programs are considered in establishing the provision for rebates. The provisions for government rebates are based, in part, upon historical experience of claims submitted by the various states / authorities, contractual terms and government regulations. We monitor legislative changes to determine what impact such legislation may have on our provision.

Cash Discounts — Cash discounts are provided to customers that pay within a specific period. The provision for cash discounts is estimated based upon invoice billings and historical customer payment experience. The Company’s experience of payment history is fairly consistent and most customer payments qualify for the cash discount.

Returns and Other Allowances — The Company’s provision for returns and other allowances include returns, promotional allowances and loyalty cards.

Consistent with industry practice, the Company maintains a returns policy that allows customers to return product for a credit. In accordance with the Company’s policy, credits for customer returns of products are applied against outstanding account activity or are settled in cash. Product exchanges are not permitted. Customer returns of product are generally not resalable. The Company’s estimate of the provision for returns is based upon historical experience and current trends of actual customer returns. Additionally, we consider other factors when estimating the current period returns provision, including levels of inventory in the distribution channel, as well as significant market changes which may impact future expected returns.

Promotional allowances are credits that are issued in connection with a product launch or as an incentive for customers to carry our product. The Company establishes a reserve for promotional allowances based upon contractual terms.

Loyalty cards allow the end user patients a discount per prescription and are accrued based on historical experience, contract terms and the volume of product and cards in the distribution channel.

Accounts receivable balances in the Company’s consolidated financial statements are presented net of SRA estimates. SRA balances in accounts receivable were $243.8 million and $245.2 million at September 30, 2016 and December 31, 2015, respectively. SRA balances within accounts payable and accrued expenses were $1,797.3 million and $1,570.0 million at September 30, 2016 and December 31, 2015, respectively. The movements in the SRA reserve balances for continuing operations in the nine months ended September 30, 2016 are as follows ($ in millions):

The provisions recorded to reduce gross product sales to net product sales, excluding discontinued operations, were as follows ($ in millions):

The Company’s divested generics business also had the following type of SRA’s:

The Company’s SRA reserves relating to discontinued operations were $15.5 million and $1,738.7 million as of September 30, 2016 and December 31, 2015, respectively.

The Company tests goodwill and intangible assets with indefinite-lives for impairment annually in the second quarter by comparing the fair value of each of the Company’s reporting units to the respective carrying value of the reporting units. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

Goodwill is considered impaired if the carrying amount of the net assets exceeds the fair value of the reporting unit. Impairment, if any, would be recorded in operating income and this could result in a material impact to net income / (loss) and earnings / (loss) per share.

Acquired in-process research and development (“IPR&D”) intangible assets represent the value assigned to acquired research and development projects that, as of the date acquired, represent the right to develop, use, sell and/or offer for sale a product or other intellectual property that the Company has acquired with respect to products and/or processes that have not been completed or approved. The IPR&D intangible assets are subject to impairment testing until completion or abandonment of each project. Upon abandonment, the assets are impaired. Impairment testing requires the development of significant estimates and assumptions involving the determination of estimated net cash flows for each year for each project or product (including net revenues, cost of sales, research and development (“R&D”) costs, selling and marketing costs and other costs which may be allocated), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, and competitive trends impacting the asset and each cash flow stream as well as other factors. The major risks and uncertainties associated with the timely and successful completion of the IPR&D projects include legal risk, market risk and regulatory risk. Changes in these assumptions could result in future impairment charges. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change or the timely completion of each project to commercial success will occur. For these and other reasons, actual results may vary significantly from estimated results.

Upon successful completion of each project and approval of the product, we will make a separate determination of the useful life of the intangible, transfer the amount to currently marketed products (“CMP”) and amortization expense will be recorded over the estimated useful life.

In connection with the realignment of the Company’s operating segments in the second quarter of 2016, goodwill was reallocated to reporting units under the new segment structure. The Company evaluated goodwill for six reporting units during the second quarter of 2016. The Company performed its annual impairment test utilizing long-term growth rates for its reporting units ranging from 0% to 2.5% in its estimation of fair value and discount rates ranging from 8.0% to 9.5%. The factors used in evaluating goodwill for impairment are subject to change and are tracked against historical results by management. Changes in the key assumptions by management can change the results of testing. The Company determined there was no impairment associated with goodwill.

During 2016, the Company tested its indefinite-lived trade name intangible assets for impairment noting no impairment.

The Company performed its annual IPR&D impairment test during 2016 noting the impairment of an international eye care pipeline project of $35.0 million based on a decrease in projected cash flows due to market conditions as well as an impairment of $20.0 million for a specified indication of a Botox therapeutic product based on a decrease in projected cash flows due to a decline in market demand assumptions. In addition, during the nine months ended September 30, 2016, the Company impaired IPR&D projects relating to women’s healthcare for $24.0 million and osteoarthritis for approximately $190.0 million based on clinical results and during the three and nine months ended September 30, 2016, the Company impaired a gastroenterology project for $42.0 million based on the lack of future availability of active pharmaceutical ingredients.

During the nine months ended September 30, 2015, the Company recorded a $197.6 million impairment related to IPR&D for select projects as the Company revised its sales forecast of certain assets as well as the timing of the launch of certain projects in connection with the Company’s annual review. In addition, during the three and nine months ended September 30, 2015, the Company made the decision to abandon a select IPR&D asset (acquired in connection with the Allergan Acquisition) based on review of research studies, resulting in an impairment of the full asset value of $300.0 million.

The Company is involved in various legal proceedings in the normal course of its business, including product liability litigation, intellectual property litigation, employment litigation and other litigation. Additionally, the Company, in consultation with its counsel, assesses the need to record a liability for contingencies on a case-by-case basis in accordance with FASB Accounting Standards Codification (“ASC”) Topic 450 “Contingencies” (“ASC 450”). Accruals are recorded when the Company determines that a loss related to a matter is both probable and reasonably estimable. These accruals are adjusted periodically as assessment efforts progress or as additional information becomes available. Acquired contingencies in business combinations are recorded at fair value to the extent determinable, otherwise in accordance with ASC 450. Refer to “NOTE 20 — Commitments and Contingencies” for more information.

The Company computes EPS in accordance with ASC Topic 260, “Earnings Per Share” (“ASC 260”) and related guidance, which requires two calculations of EPS to be disclosed: basic and diluted. Basic EPS is computed by dividing net (loss) / income by the weighted average ordinary shares outstanding during a period. Diluted EPS is based on the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the exercise of stock options and restricted stock units. Diluted EPS also includes the impact of ordinary share equivalents to be issued upon the mandatory conversion of the Company’s preferred shares. Ordinary share equivalents have been excluded where their inclusion would be anti-dilutive.

A reconciliation of the numerators and denominators of basic and diluted EPS consisted of the following ($ in millions, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net (loss) / income:
Net (loss) attributable to ordinary shareholders excluding income from discontinued operations, net of tax	$	(451.5	)	$	(946.0	)	$	(1,108.0	)	$	(2,318.0	)
Income from discontinued operations, net of tax		15,601.9			6,177.6			15,873.2			6,701.7
Net income attributable to ordinary shareholders	$	15,150.4		$	5,231.6		$	14,765.2		$	4,383.7

Basic weighted average ordinary shares outstanding		392.7			393.6			394.4			358.9

Basic EPS:
Continuing operations	$	(1.15	)	$	(2.40	)	$	(2.81	)	$	(6.46	)
Discontinued operations	$	39.73		$	15.69		$	40.25		$	18.67
Net income per share	$	38.58		$	13.29		$	37.44		$	12.21

Diluted weighted average ordinary shares outstanding		392.7			393.6			394.4			358.9

Diluted EPS:
Continuing operations	$	(1.15	)	$	(2.40	)	$	(2.81	)	$	(6.46	)
Discontinued operations	$	39.73		$	15.69		$	40.25		$	18.67
Net income per share	$	38.58		$	13.29		$	37.44		$	12.21

Stock awards to purchase 4.4 million and 4.7 million ordinary shares for the three and nine months ended September 30, 2016, respectively, were outstanding, but not included in the computation of diluted EPS, because the awards were anti-dilutive for continuing operations and as such the treatment for discontinued operations is also anti-dilutive. The weighted average impact of ordinary share equivalents of 17.6 million for the three and nine months ended September 30, 2016, respectively, which are anticipated to result from the mandatory conversion of the Company’s preferred shares were not included in the calculation of diluted EPS as their impact would be anti-dilutive. As of September 30, 2016, the Company has repurchased 12.8 million shares under the Company’s share repurchase program. The impact of the share repurchase on basic EPS was 3.2 million weighted average shares and 1.1 million weighted average shares for the three and nine months ended September 30, 2016, respectively. Refer to “NOTE 16 –Shareholder’s Equity” for further discussion on the Company’s Share Repurchase Program.

Stock awards to purchase 5.1 million and 5.2 million ordinary shares during the three and nine months ended September 30, 2015, respectively, were outstanding, but not included in the computation of diluted EPS, because the impact of the awards were anti-dilutive for continuing operations and as such the treatment for discontinued operations is also anti-dilutive. The weighted average impact of ordinary share equivalents of 17.6 million and 13.6 million for the three and nine months ended September 30, 2015, respectively, which are anticipated to result from the mandatory conversion of the Company’s preferred shares were not included in the calculation of diluted EPS as their impact would be anti-dilutive.

The Company records liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred. In accordance with existing benefit arrangements, employee severance costs are accrued when the restructuring actions are probable and estimable. Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period. The Company also incurs costs with contract terminations and costs of transferring products as part of restructuring activities. Refer to “NOTE 19 — Business Restructuring Charges” for more information.

On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), with an effective date for annual reporting periods beginning after December 15, 2016, including interim periods within

that reporting period, for public business entities, certain not-for-profit entities, and certain employee benefit plans. The effective date for ASU 2014-09 was deferred by one year through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In January 2016, the FASB issued Accounting Standards Update 2016-01, which changes the requirement to require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this guidance is not anticipated to have a material impact on the Company’s financial position or results of operations.

In February 2016, the FASB issued Accounting Standards Update 2016-02, which states that a lessee should recognize the assets and liabilities that arise from leases. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In March 2016, the FASB issued ASU No. 2016-07: Simplifying the Transition to the Equity Method of Accounting. This guidance eliminates the requirement to retroactively adopt the equity method of accounting when there is an increase in the level of ownership interest or degree of influence. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Management believes that the adoption of this guidance will not have a material impact on our financial statements.

In March 2016, the FASB has issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606 Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the entity is an agent). The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The effective date and transition of these amendments is the same as the effective date and transition requirements in Topic 606. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period. The Company is evaluating the impact the pronouncement will have on our financial positions and results of operations.

In April 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients, which include assessing the specific collectability criterion and accounting for contracts that do not meet the criteria for Step 1 to determine whether a contract is valid and represents a genuine transaction; presentation of sales taxes and other similar taxes collected from customers; noncash consideration; contract modifications at transition; and completed contracts at transition. The amendments also clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption, however, an entity is still required to disclose the effect of the changes on any prior periods retrospectively adjusted. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements for Topic 606. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets including trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating the impact, if any, the pronouncement will have on our financial positions and results of operations.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on specific cash flow issues including: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and (9) Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is evaluating the impact, if any, the pronouncement will have on our statement of cash flows.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes in GAAP. The amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. Two common examples of assets included in the scope of the amendments are intellectual property and property, plant, and equipment. The amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities in the first interim period if an entity issues interim financial statements. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is evaluating the impact the pronouncement will have on our financial positions and results of operations.

During the nine months ended September 30, 2015, the Company acquired material assets and businesses. The pro forma results of the businesses acquired that materially impacted the reported results of the Company are as follows (unaudited; $ in millions except per share information):

The following are the significant transactions that were completed in the nine months ended September 30, 2016. Refer to “NOTE 5 – Discontinued Operations” for material divestitures that were completed / entered into in the nine months ended September 30, 2016.

On September 23, 2016, the Company acquired ForSight VISION 5 (“ForSight’), a privately held, clinical-stage biotechnology company focused on eye care, in an all cash transaction of approximately $95.0 million. Under the terms of the agreement, the Company acquired ForSight for an acquisition accounting purchase price of $74.5 million plus the payment of outstanding indebtedness of $14.8 million and other miscellaneous charges. ForSight shareholders are eligible to receive contingent consideration of up to $125.0 million, which has an initial estimated fair value of $79.8 million, relating to commercialization milestones (the “ForSight Acquisition”). The Company acquired ForSight for its lead development program, a peri-ocular ring designed for extended drug delivery and reducing elevated intraocular pressure (“IOP”) in glaucoma patients.

The ForSight Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date ($ in millions):

IPR&D intangible assets represent the value assigned to acquired R&D projects that, as of the acquisition date, had not established technological feasibility and had no alternative future use. The IPR&D intangible assets are capitalized and accounted for as indefinite-lived intangible assets and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project and launch of the product, the Company will make a separate determination of the estimated useful life of the IPR&D intangible asset and the related amortization will be recorded as an expense over the estimated useful life (“IPR&D Acquisition Accounting”).

The estimated fair value of the IPR&D intangible assets was determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, R&D costs, selling and marketing costs and working capital/asset contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream as well as other factors (the “IPR&D and Intangible Asset Valuation Technique”).

The fair value of the IPR&D intangible assets was determined using the IPR&D and Intangible Asset Valuation Technique. The discount rate used to arrive at the present value for IPR&D intangible assets was 13.0% to reflect the internal rate of return and incremental commercial uncertainty in the cash flow projections. The discount rate of the acquisition was driven by the early stage of the product and the therapeutic indication. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results.

Among the reasons the Company acquired ForSight and the factors that contributed to the preliminary recognition of goodwill was the expansion of the Company’s pipeline of eye care products. Goodwill from the ForSight Acquisition of $54.2 million was assigned to the US Specialized Therapeutics segment and is non-deductible for tax purposes.

As part of the acquisition, the Company is required to pay the former shareholders of ForSight up to $125.0 million based on the timing of the first commercial sale, if any. The Company estimated the fair value of the contingent consideration to be $79.8 million using a probability weighted average approach that considered the possible outcomes of scenarios related to the specified product.

Long-term deferred tax liabilities and other tax liabilities result from identifiable intangible assets’ fair value adjustments. These adjustments create excess book basis over the tax basis which is multiplied by the statutory tax rate for the jurisdiction in which the deferred taxes exist.

On September 6, 2016, the Company acquired certain assets of RetroSense Therapeutics LLC (“RetroSense”), a private, clinical-stage biotechnology company focused on novel gene therapy approaches to restore vision in patients suffering from blindness. Under the terms of the transaction, RetroSense received approximately $60.0 million upfront, and is eligible to receive up to $495.0 million in contingent regulatory and commercialization milestone payments related to its lead development program, RST-001, a novel gene therapy for the treatment of Retinitis Pigmentosa (the “RetroSense Transaction”). The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront net payment of $59.7 million was expensed as a component of R&D expense and the future milestones will be recorded if the corresponding events become probable.

On August 26, 2016, the Company acquired Akarna Therapeutics, Ltd (“Akarna”), a biopharmaceutical company developing novel small molecule therapeutics that target inflammatory and fibrotic diseases. Under the terms of the transaction, Akarna shareholders received approximately $50.0 million upfront and are eligible to receive contingent development and commercialization milestones of up to $1,015.0 million (the “Akarna Transaction”). The Company concluded based on the stage of development of the assets as well as a lack of certain other inputs and processes that the transaction did not qualify as a business. The total upfront net payment of $48.2 million was expensed as a component of R&D expense and the future milestones will be recorded if the corresponding events become probable.

On April 21, 2016, the Company acquired Topokine Therapeutics (“Topokine”), a privately held, clinical-stage biotechnology company focused on development stage topical medicines for fat reduction. Under the terms of the agreement, Topokine shareholders received an upfront payment of approximately $85.0 million and are eligible to receive contingent development and commercilization milestones of up to $260.0 million for XAF5, a first-in-class topical agent in development for the treatment of steatoblepharon, also known as undereye bags (the “Topokine Transaction”). The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront net payment of approximately $85.0 million was expensed as a component of R&D expense and the future milestones will be recorded if the corresponding events become probable.

On April 6, 2016, the Company entered into an agreement with Heptares Therapeutics (“Heptares”), under which the Company licensed exclusive global rights to a portfolio of novel subtype-selective muscarinic receptor agonists in development for the treatment of major neurological disorders, including Alzheimer's disease. Under the terms of the agreement, Heptares received an upfront payment of $125.0 million and is eligible to receive contingent milestone payments of up to approximately $665.0 million contingent upon the successful Phase 1, 2 and 3 clinical development and launch of the first three licensed compounds for multiple indications and up to approximately $2.575 billion associated with achieving certain annual sales thresholds during the several years following launch (the “Heptares Transaction”). In addition, Heptares is eligible to receive contingent tiered royalties on net sales of all products resulting from the partnership. The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront payment of approximately $125.0 million was expensed as a component of R&D expense and the future milestones will be recorded when the event becomes probable.

On January 6, 2016, the Company acquired Anterios, Inc. (“Anterios”), a clinical stage biopharmaceutical company developing a next generation delivery system and botulinum toxin-based prescription products. Under the terms of the agreement, Anterios shareholders received an upfront net payment of approximately $90.0 million and are eligible to receive contingent development and commercialization milestone payments up to $387.5 million related to an investigational topical formulation of botulinum toxin type A in development for the potential treatment of hyperhidrosis, acne, and crow’s feet lines and the related NDS™, Anterios' proprietary platform delivery technology that enables local, targeted delivery of neurotoxins through the skin without the need for injections (“the Anterios Transaction”). The Company concluded based on the stage of development of the assets, the lack of acquired employees as well as certain other inputs and processes that the transaction did not qualify as a business. The total upfront net payment of approximately $90.0 million was expensed as a component of R&D expense and the future milestones will be recorded if the corresponding events become probable.

The following are the significant transactions that were completed in the year ended December 31, 2015.

On October 16, 2015, the Company acquired AqueSys, Inc. (“AqueSys”), a private, clinical-stage medical device company focused on developing ocular implants that reduce IOP associated with glaucoma, in an all-cash transaction. Under the terms of the agreement, the Company acquired AqueSys for an acquisition accounting purchase price of $298.9 million, including $193.5 million for the estimated fair value of contingent consideration relating to the regulatory approval and commercialization milestone payments. The Company acquired AqueSys for its development program, including XEN45, a soft shunt that is implanted in the sub conjunctival space in the eye through a minimally invasive procedure with a single use, pre-loaded proprietary injector (the “AqueSys Acquisition”).

The AqueSys Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date ($ in millions):

On October 1, 2015, the Company acquired Kythera Biopharmaceuticals (“Kythera”) for $75.00 per share, or an acquisition accounting purchase price of $2,089.5 million (the “Kythera Acquisition”). Kythera was focused on the discovery, development and commercialization of novel prescription aesthetic products. Kythera’s lead product, Kybella^® injection, is the first and only Food and Drug Administration (“FDA”) approved, non-surgical treatment for moderate to severe submental fullness, commonly referred to as double chin.

The Kythera Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date ($ in millions):

On March 17, 2015, the Company acquired Legacy Allergan for approximately $77.0 billion including outstanding indebtedness assumed of $2.2 billion, cash consideration of $40.1 billion and equity consideration of $34.7 billion, which includes outstanding equity awards (the “Allergan Acquisition”). Under the terms of the agreement, Legacy Allergan shareholders received 111.2 million of the Company’s ordinary shares, 7.0 million of the Company’s non-qualified stock options and 0.5 million of the Company’s share units. The addition of Legacy Allergan’s therapeutic franchises in ophthalmology, neurosciences and medical aesthetics/dermatology/plastic surgery complements the Company’s existing central nervous system, gastroenterology, women’s health and urology franchises. The combined company also benefited significantly from Legacy Allergan’s global brand equity and consumer awareness of key products, including Botox^® and Restasis^®. The transaction expanded our presence and market and product reach across many international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.

The fair value of inventories acquired included an acquisition accounting fair market value step-up of $923.9 million. In the nine months ended September 30, 2016, the Company recognized $21.6 million as a component of cost of sales as the inventory acquired was sold to the Company’s customers.

In the three and nine months ended September 30, 2015, the Company recognized $274.5 million and $778.9 million, respectively, as a component of cost of sales as the inventory acquired was sold to the Company’s customers.

As a result of the Allergan Acquisition, the Company incurred the following transaction and integration costs in the three months ended September 30, 2016 and 2015, respectively ($ in millions):

As a result of the Allergan Acquisition, the Company incurred the following transaction and integration costs in the nine months ended September 30, 2016 and 2015, respectively ($ in millions):

On August 28, 2015, the Company acquired certain products in early stage development of Naurex, Inc. (“Naurex”) in an all-cash transaction of $571.7 million (the “Naurex Transaction”) plus future contingent payments of up to $1,150.0 million, which was accounted for as an asset acquisition. The Company recognized the upfront consideration of $571.7 million as a component of R&D expenses in the three and nine months ended September 30, 2015. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing as well as certain other inputs and processes that the transaction did not qualify as a business. The Naurex Transaction expands our pipeline with Naurex’s two leading product candidates GLYX-13 and NRX-1074, two compounds that utilize NMDA modulation as a potential new approach to the treatment of Major Depressive Disorder (“MDD”), a disease that can lead to suicidality among the most severe patients.

On August 17, 2015, the Company entered into an agreement with Merck & Co. (“Merck”) under which the Company acquired the exclusive worldwide rights to Merck’s early development stage investigational small molecule oral calcitonin gene-related peptide receptor antagonists, which are being developed for the treatment and prevention of migraines (the “Merck Transaction”). The Merck Transaction was accounted for as an asset acquisition. The Company acquired these rights for an upfront charge of $250.0 million that was recorded as a component of R&D expense in the three and nine months ended September 30, 2015. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing as well as certain other inputs and processes that the transaction did not qualify as a business. The Company paid $125.0 million of the initial charge in the year ended December 31, 2015 and the remaining $125.0 million was paid in April 2016. In the quarter ended September 30, 2016, the Company incurred $100.0 million of milestones under the agreement, which were included as a component of R&D expense. Additionally, Merck is owed additional contingent payments based on commercial and development milestones of up to $865.0 million as well as royalties.

As part of the Forest Acquisition (defined below), we acquired certain assets that comprised Legacy Forest’s branded respiratory business in the U.S. and Canada (the “Respiratory Business”). During the year ended December 31, 2014, we held for sale respiratory assets of $734.0 million, including allocated goodwill to this unit of $309.1 million. On March 2, 2015, the Company sold the Respiratory Business to AstraZeneca plc (“AstraZeneca”) for consideration of $600.0 million upon closing, additional funds to be received for the sale of certain of our inventory to AstraZeneca and low single-digit royalties above a certain revenue threshold. AstraZeneca also paid Allergan an additional $100.0 million and Allergan has agreed to a number of contractual consents and approvals, including certain amendments to the ongoing collaboration agreements between AstraZeneca and Allergan (the “Respiratory Sale”). As a result of the final terms of the agreement, in the nine months ended September 30, 2015, the Company recognized an incremental charge in cost of sales (including the acquisition accounting fair value mark-up of inventory) relating to inventory that will not be sold to AstraZeneca of $35.3 million. The Company recognized a loss in other (expense) income, net of the sale of the business for $5.3 million in the nine months ended September 30, 2015.

The following are the significant transactions that were completed in the year ended December 31, 2014.

On November 17, 2014, the Company completed its tender offer to purchase all of the outstanding shares of Durata Therapeutics, Inc. (“Durata”), an innovative pharmaceutical company focused on the development and commercialization of novel therapeutics for patients with infectious diseases and acute illnesses (the “Durata Acquisition”). The Company purchased all outstanding shares of Durata, which were valued at approximately $724.5 million, including the assumption of debt. Additionally, there is one contingent value right (“CVR”) per share, entitling the holder to receive additional cash payments of up to $5.00 per CVR if certain regulatory or commercial milestones related to Durata’s lead product Dalvance^® are achieved. The CVR had an acquisition date fair value of $49.0 million.

At the time of the Durata Acquisition, additional consideration was conditionally due to the seller based upon the approval of Dalvance^® in Europe, the approval of a single dose indication and the product reaching certain sales milestones. The Company estimated the acquisition accounting fair value of the contingent consideration to be $49.0 million using a probability weighted approach that considered the possible outcomes based on assumptions related to the timing and probability of the product launch date, discount rates matched to the timing of the payment, and probability of success rates and discount adjustments on the related cash flows. On March 2, 2015, the Company announced that the European Commission had granted Allergan’s subsidiary Durata Therapeutics International B.V., marketing authorization for Xydalba™ (dalbavancin) for the treatment of acute bacterial skin and skin structure infections (ABSSSI) in adults. The approval triggered the first CVR payment in the quarter ended March 31, 2015 of $30.9 million. In January 2016, the Company received approval from the FDA for an expanded label that will include a single dose of Dalvance^®, which triggered a second CVR payment of $30.9 million in the quarter ended March 31, 2016. The difference between the probability weighted fair value and the final payments are recorded as a component of cost of sales.

On July 1, 2014, the Company acquired Forest Laboratories, Inc. (“Legacy Forest”) for $30.9 billion including outstanding indebtedness assumed of $3.3 billion, equity consideration of $20.6 billion, which includes outstanding equity awards, and cash consideration of $7.1 billion (the “Forest Acquisition”). Under the terms of the transaction, Legacy Forest shareholders received 89.8 million Allergan plc ordinary shares, 6.1 million Allergan plc non-qualified stock options and 1.1 million Allergan plc share units. Legacy Forest was a leading, fully integrated, specialty pharmaceutical company largely focused on the United States market. Legacy Forest marketed a portfolio of branded drug products and developed new medicines to treat patients suffering from diseases principally in the following therapeutic areas: central nervous system, cardiovascular, gastrointestinal, respiratory, anti-infective, and cystic fibrosis. A portion of the assets acquired were divested as part of the Teva Transaction.

The fair value of inventories acquired included an acquisition accounting fair market value step-up of $1,036.3 million. In the nine months ended September 30, 2016, the Company recognized $20.1 million as a component of cost of sales as the inventory acquired on July 1, 2014 was sold to the Company’s customers.

In the three and nine months ended September 30, 2015, the Company recognized $15.4 million and $202.0 million, respectively, as a component of cost of sales as the inventory acquired on July 1, 2014 was sold to the Company’s customers in addition to a write-off associated with the Respiratory Sale. A portion of these amounts are included in discontinued operations in the nine months ended September 30, 2015.

As a result of the Forest Acquisition, the Company incurred the following transaction and integration costs in the three months ended September 30, 2016 and 2015, respectively ($ in millions):

As a result of the Forest Acquisition, the Company incurred the following transaction and integration costs in the three and nine months ended September 30, 2016 and 2015, respectively ($ in millions):

On July 27, 2015, the Company announced that it entered into the Teva Transaction, which closed on August 2, 2016. Under the Teva Agreement, Teva acquired Allergan's global generics business, including the U.S. and international generic commercial units, our third-party supplier Medis, our global generic manufacturing operations, our global generic R&D unit, our international OTC commercial unit (excluding OTC eye care products) and some established international brands. Allergan retained its global branded pharmaceutical and medical aesthetics businesses, as well as its biosimilars development programs, and certain OTC products. The Company will also have continuing involvement with Teva after the close of the transaction. As a result of the Teva Transaction, the Company holds equity in Teva and purchases product manufactured by Teva for sale in our US General Medicine segment as part of ongoing transitional service and contract manufacturing agreements.

The Company notes the following reconciliation of the proceeds received in the Teva Transaction to the gain recognized in income from discontinued operations ($ in millions):

In October 2016, pursuant to the Teva Agreement, Teva provided its proposed estimated adjustment to the closing date working capital balance to the Company. The final amount of any agreed contractual adjustment could vary materially from the adjustment calculated by the Company at the time of the closing of the Teva Transaction and any agreed adjustment to the Company’s proceeds from the Teva Transaction could have a material adverse effect on the Company’s results of operations and cash flows. The Company expects the amount of the adjustment will be determined in accordance with and subject to the terms of the Teva Agreement.

The Teva Shares are recorded within “Marketable securities” on the Company’s Consolidated Balance Sheet. During the three and nine months ended September 30, 2016, the Company recorded a $664.2 million unrealized loss on the Teva Shares due to movements in the share price, which was recorded as a component of “Other comprehensive income.”

On October 3, 2016, the Company completed the divestiture of the Anda Distribution business for an additional $500.0 million. Teva acquired our Anda Distribution business, which distributes generic, brand, specialty and OTC pharmaceutical products from

more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the United States.

Financial results of the global generics business through August 2, 2016 and the Anda Distribution business are presented as “Income from discontinued operations” on the Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015; and assets and liabilities of the businesses are presented as “Current assets held for sale”, “Non current assets held for sale”, “Current liabilities held for sale” and “Long term liabilities held for sale” on the Consolidated Balance Sheet as applicable.

The following table presents key financial results of the businesses included in "Income from discontinued operations" for the three and nine months ended September 30, 2016 and 2015 ($ in millions):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016		2015
Net revenues	$	756.5	$	1,984.8		$	4,504.3	$	6,362.3
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		531.0		1,243.3			2,798.3		3,647.1
Research and development		37.3		98.9			269.6		317.4
Selling and marketing		69.1		159.3			352.6		542.2
General and administrative		90.3		204.0			399.4		528.3
Amortization		-		36.1			4.8		333.9
Asset sales and impairments, net		-		3.2			-		54.1
Total operating expenses		727.7		1,744.8			3,824.7		5,423.0
Operating income		28.8		240.0			679.6		939.3
Other (expense) income, net		15,881.5		(0.3	)		15,881.1		(8.4	)
Provision / (benefit) for income taxes		308.4		(5,937.9	)		687.5		(5,770.8	)
Net income from discontinued operations	$	15,601.9	$	6,177.6		$	15,873.2	$	6,701.7

“Other (expense) income, net” included the gain on sale of the generics business to Teva.

For the nine months ended September 30, 2015, the Company recorded a deferred tax benefit of $5,985.4 million related to investments in certain subsidiaries. The recognition of this benefit has been reflected in “Income from discontinued operations, net of tax” with the deferred tax asset reflected in non-current “Deferred tax liabilities” on the December 31, 2015 balance sheet as adjusted for activity in the fourth quarter of 2015. For the nine months ended September 30, 2016, the Company recorded a deferred tax expense of $474.7 million to adjust its deferred tax asset related to investments in certain subsidiaries. The recognition of this expense has been reflected in “Income from discontinued operations, net of tax.” Upon the closing of the Teva Transaction, the Company recorded the reversal of the corresponding deferred tax asset of $5,273.9 million against the current income taxes payable in continuing operations.

The following table presents the aggregate carrying amounts of the major classes of assets and liabilities related to the businesses ($ in millions):

Depreciation and amortization was ceased upon the determination that the held for sale criteria were met, which was the announcement date of the Teva Transaction and June 30, 2016 for the Anda Distribution business. The depreciation, amortization and significant operating and investing non-cash items of the discontinued operations were as follows ($ in millions):

On November 23, 2015, the Company announced that it entered into a definitive merger agreement (the “Pfizer Agreement”) under which Pfizer Inc. (“Pfizer”), a global innovative biopharmaceutical company, and Allergan plc would merge in a stock and cash transaction. On April 6, 2016, the Company announced that its merger agreement with Pfizer was terminated by mutual agreement. In connection with the termination of the merger agreement, Pfizer has paid Allergan plc $150.0 million for expenses associated with the transaction which is included as a component of other income (expense) in the nine months ended September 30, 2016. In addition, as part of the then pending Pfizer Agreement, the Company incurred transaction related expenses of $18.0 million and $92.9 million in the three and nine months ended September 30, 2016, respectively.

As a result of the Teva Transaction, the Company acquired 100.3 million Teva ordinary shares. During the three and nine months ended September 30, 2016, the Company received dividend income of $34.1 million.

The Company recognizes compensation expense for all share-based compensation awards made to employees and directors based on the fair value of the awards on the date of grant. A summary of the Company’s share-based compensation plans is presented below.

The Company has adopted several equity award plans which authorize the granting of options, restricted shares, restricted stock units and other forms of equity awards of the Company’s ordinary shares, subject to certain conditions.

Option award plans require options to be granted at the fair value of the shares underlying the options at the date of the grant and generally become exercisable over periods ranging from three to five years. Each option granted expires ten years from the date of the grant. Restricted stock awards are grants that entitle the holder to ordinary shares, subject to certain terms. Restricted stock unit awards are grants that entitle the holder the right to receive an ordinary share, subject to certain terms. Restricted stock and restricted stock unit awards (both time-based vesting and performance-based vesting) generally have restrictions lapsed over a one to four year vesting period. Restrictions generally lapse for non-employee directors after one year. Certain restricted stock units are performance-based awards issued at a target number with the actual number of ordinary shares issued ranging based on achievement of the performance criteria. The Company’s equity awards include the acquired awards from the Allergan and Kythera acquisitions (“2015 Acquired Awards”).

All restricted stock and restricted stock units (whether time-based vesting or performance-based vesting), are granted and expensed, using the fair value per share on the applicable grant date, over the applicable vesting period. Non-qualified options to purchase ordinary shares are granted to employees at exercise prices per share equal to the closing market price per share on the date of grant. The fair value of non-qualified options is determined on the applicable grant dates using the Black-Scholes method of valuation and that amount is recognized as an expense over the vesting period. Using the Black-Scholes valuation model, the fair value of options is based on the following assumptions:

Share-based compensation expense recognized in the Company’s results of operations for the three months ended September 30, 2016 and 2015 were as follows ($ in millions):

Included in the table above is stock-based compensation relating to discontinued operations of $3.2 million and $7.9 million for the three months ended September 30, 2016 and 2015, respectively.

Share-based compensation expense recognized in the Company’s results of operations for the nine months ended September 30, 2016 and 2015 were as follows ($ in millions):

Included in the table above is stock-based compensation relating to discontinued operations of $16.0 million and $27.4 million for the nine months ended September 30, 2016 and 2015, respectively.

Included in the equity-based compensation awards for the three and nine months ended September 30, 2016 and 2015 is the impact of accelerations and step-ups relating to the acquisition accounting treatment of outstanding awards acquired in the Allergan and Forest acquisitions as follows ($ in millions):

Unrecognized future stock-based compensation expense was $554.3 million as of September 30, 2016, including $178.2 million from the Allergan Acquisition and $44.4 million from the Forest Acquisition. This amount will be recognized as an expense over a remaining weighted average period of 1.4 years. Stock-based compensation is being amortized and charged to operations over the same period as the restrictions are eliminated for the participants, which is generally on a straight-line basis.

The following is a summary of equity award activity for unvested restricted stock and stock units in the period from December 31, 2015 through September 30, 2016:

The following is a summary of equity award activity for non-qualified options to purchase ordinary shares in the period from December 31, 2015 through September 30, 2016:

During 2016, Allergan announced a realignment of its businesses to streamline operations. Prior to the realignment, the Company operated and managed its business as four distinct operating segments: US Brands, US Medical Aesthetics, International and Anda Distribution. Under the new organizational structure being reported, and the decision to sell our Anda Distribution business, the Company organized its businesses into the following segments: US Specialized Therapeutics, US General Medicine and International. In addition, certain revenues and shared costs, and the results of corporate initiatives, are managed outside of the three segments. Prior period results have been recast to align to the current segment presentation.

The Company evaluates segment performance based on segment contribution. Segment contribution for our segments represents net revenues less cost of sales (defined below), selling and marketing expenses, and select general and administrative expenses. Included in segment revenues are products’ sales that are sold through the Anda Distribution business once the Anda Distribution business has sold the product to a third party customer. These sales are included in segment results and are reclassified into revenues from discontinued operations through a reduction of Corporate revenues which eliminates the sales made by our Anda Distribution business from results of continuing operations. Cost of sales for these products in discontinued operations is equal to our average third party cost of sales for third party branded products distributed by Anda Distribution. The Company does not evaluate the following items at the segment level:

The Company defines segment net revenues as product sales and other revenue derived from branded products or licensing agreements. In March 2015, as a result of the Allergan Acquisition, we began to promote Restasis^®, Lumigan^®/Ganfort^®, Alphagan^®/Combigan^®, Botox^®, Fillers, other aesthetic products and other eye care products.

Cost of sales within segment contribution includes standard production and packaging costs for the products we manufacture, third party acquisition costs for products manufactured by others, profit-sharing or royalty payments for products sold pursuant to licensing agreements and finished goods inventory reserve charges. Cost of sales included within segment contribution does not include non-standard production costs, such as non-finished goods inventory obsolescence charges, manufacturing variances and excess capacity utilization charges, where applicable. Cost of sales does not include amortization or impairment costs for acquired product rights or other acquired intangibles.

Selling and marketing expenses consist mainly of personnel-related costs, product promotion costs, distribution costs, professional service costs, insurance, depreciation and travel costs.

General and administrative expenses consist mainly of personnel-related costs, facilities costs, transaction costs, insurance, depreciation, litigation and settlement costs and professional services costs which are general in nature and attributable to the segment.

Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the three months ended September 30, 2016 and 2015 ($ in millions):

	Three Months Ended September 30, 2016
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,453.2		$	1,488.1		$	697.8		$	3,639.1

Operating expenses:
Cost of sales⁽¹⁾		69.2			215.1			95.1			379.4
Selling and marketing		292.4			292.8			188.2			773.4
General and administrative		41.2			42.3			28.0			111.5
Segment Contribution	$	1,050.4		$	937.9		$	386.5		$	2,374.8
Contribution margin		72.3	%		63.0	%		55.4	%		65.3	%
Corporate											372.0
Research and development											622.8
Amortization											1,609.1
In-process research and development impairments											42.0
Asset sales and impairments, net											(4.7	)
Operating (loss)										$	(266.4	)
Operating margin											(7.3	)%

	Three Months Ended September 30, 2015
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	1,296.6		$	1,552.0		$	660.6		$	3,509.2

Operating expenses:
Cost of sales⁽¹⁾		71.6			227.5			108.3			407.4
Selling and marketing		236.2			262.8			155.8			654.8
General and administrative		17.2			17.5			33.3			68.0
Segment Contribution	$	971.6		$	1,044.2		$	363.2		$	2,379.0
Contribution margin		74.9	%		67.3	%		55.0	%		67.8	%
Corporate											642.5
Research and development											1,260.5
Amortization											1,557.8
In-process research and development impairments											300.0
Asset sales and impairments, net											(4.4	)
Operating (loss)										$	(1,377.4	)
Operating margin											(39.3	)%

The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the three months ended September 30, 2016 and 2015 ($ in millions):

No country outside of the United States represents ten percent or more of net revenues. The US Specialized Therapeutics and US General Medicine segments are comprised solely of sales within the United States.

Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the nine months ended September 30, 2016 and 2015 ($ in millions):

	Nine Months Ended September 30, 2016
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	4,240.8		$	4,390.9		$	2,128.1		$	10,759.8

Operating expenses:
Cost of sales⁽¹⁾		215.0			649.6			309.3			1,173.9
Selling and marketing		844.8			902.8			582.7			2,330.3
General and administrative		126.4			128.2			86.5			341.1
Segment Contribution	$	3,054.6		$	2,710.3		$	1,149.6		$	6,914.5
Contribution margin		72.0	%		61.7	%		54.0	%		64.3	%
Corporate											1,052.8
Research and development											1,662.4
Amortization											4,831.9
In-process research and development impairments											316.9
Asset sales and impairments, net											(24.0	)
Operating (loss)											(925.5	)
Operating margin											(8.6	)%

	Nine Months Ended September 30, 2015
	US Specialized			US General
	Therapeutics			Medicine			International			Total
Net revenues	$	2,889.6		$	4,803.7		$	1,496.4		$	9,189.7

Operating expenses:
Cost of sales⁽¹⁾		160.2			674.0			243.8			1,078.0
Selling and marketing		525.0			917.1			394.2			1,836.3
General and administrative		46.1			88.8			75.7			210.6
Segment Contribution	$	2,158.3		$	3,123.8		$	782.7		$	6,064.8
Contribution margin		74.7	%		65.0	%		52.3	%		66.0	%
Corporate											2,338.8
Research and Development											1,927.9
Amortization											3,858.9
In-process research and development impairments											497.6
Asset sales and impairments, net											3.1
Operating (loss)											(2,561.5	)
Operating margin											(27.9	)%

The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the nine months ended September 30, 2016 and 2015 ($ in millions):

The following tables present global net revenues for the top products of the Company for the three and nine months ended September 30, 2016 and 2015 ($ in millions):

	Three Months Ended September 30,
	Global						U.S.						International
	2016			2015			2016			2015			2016		2015
Botox^®	$	689.7		$	604.4		$	496.3		$	435.6		$	193.4	$	168.8
Restasis^®		371.8			328.3			356.4			312.8			15.4		15.5
Fillers		201.8			167.6			105.0			89.7			96.8		77.9
Linzess^®/Constella^®		168.7			118.6			164.4			117.5			4.3		1.1
Lumigan^®/Ganfort^®		164.9			157.9			78.3			71.7			86.6		86.2
Bystolic^®		164.4			155.7			163.9			155.3			0.5		0.4
Namenda XR^®		146.9			214.5			146.9			214.5			-		-
Alphagan^®/Combigan^®		134.7			120.8			93.4			81.4			41.3		39.4
Lo Loestrin^®		105.7			90.8			105.7			89.8			-		1.0
Estrace^® Cream		98.6			87.4			98.6			87.4			-		-
Viibryd^®/Fetzima^®		87.6			84.5			87.6			84.5			-		-
Breast Implants		86.7			85.5			51.1			50.9			35.6		34.6
Asacol^®/Delzicol^®		86.4			157.2			72.2			141.9			14.2		15.3
Minastrin^® 24		84.9			74.4			84.9			74.4			-		-
Aczone^®		69.0			48.0			69.0			48.0			-		-
Ozurdex^®		64.3			51.6			20.9			17.6			43.4		34.0
Carafate^®/Sulcrate^®		57.0			52.9			56.4			52.9			0.6		-
Namenda^® IR		2.9			54.9			2.9			54.9			-		-
Other Products Revenues **		859.9			857.9			694.2			671.5			165.7		186.4
Less product sold through Anda Distribution business		(23.7	)		(43.4	)		(23.7	)		(43.4	)		-		-
Total Net Revenues **	$	3,622.2		$	3,469.5		$	2,924.4		$	2,808.9		$	697.8	$	660.6

** Includes an adjustment of $31.7 million recorded in the three months ended September 30, 2015 related to International other product revenues for the six months ended June 30, 2015 that were reported in discontinued operations instead of continuing operations during the six months ended June 30, 2015. The impact of this out-of-period adjustment is not material to the six months ended June 30, 2015 or the three months ended September 30, 2015, and had no impact on the nine months ended September 30, 2015.

	Nine Months Ended September 30,
	Global						U.S.						International
	2016			2015			2016			2015			2016		2015
Botox^®	$	2,046.9		$	1,319.8		$	1,454.0		$	926.4		$	592.9	$	393.4
Restasis^®		1,076.1			683.2			1,026.4			651.4			49.7		31.8
Fillers		629.5			388.2			325.3			206.7			304.2		181.5
Lumigan^®/Ganfort^®		509.6			355.6			240.4			165.9			269.2		189.7
Namenda XR^®		486.5			569.8			486.5			569.8			-		-
Bystolic^®		479.1			476.9			477.8			476.1			1.3		0.8
Linzess^®/Constella^®		464.7			328.0			452.0			325.1			12.7		2.9
Alphagan^®/Combigan^®		401.6			272.3			274.3			184.9			127.3		87.4
Asacol^®/Delzicol^®		338.4			455.6			297.9			407.8			40.5		47.8
Lo Loestrin^®		296.0			253.3			296.0			251.7			-		1.6
Estrace^® Cream		276.4			229.4			276.4			229.4			-		-
Breast Implants		261.7			198.4			149.2			112.8			112.5		85.6
Viibryd^®/Fetzima^®		252.7			244.8			252.6			244.8			0.1		-
Minastrin^® 24		248.9			195.9			247.5			195.3			1.4		0.6
Ozurdex^®		192.0			109.6			61.8			36.9			130.2		72.7
Carafate^®/Sulcrate^®		169.4			153.4			167.7			153.4			1.7		-
Aczone^®		156.1			114.3			156.1			114.3			-		-
Namenda^® IR		12.8			532.9			12.8			532.9			-		-
Other Products Revenues		2,487.9			2,313.6			2,003.5			1,913.0			484.4		400.6
Less product sold through Anda Distribution business		(80.0	)		(113.8	)		(80.0	)		(113.8	)		-		-
Total Net Revenues	$	10,706.3		$	9,081.2		$	8,578.2		$	7,584.8		$	2,128.1	$	1,496.4

Unless included above, no product represents ten percent or more of total net revenues.

The following table presents top product sales and net revenues for the US Specialized Therapeutics segment for the three and nine months ended September 30, 2016 and 2015 ($ in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Total Eye Care	$	608.5	$	539.9	$	1,777.6	$	1,213.2
Restasis^®		356.4		312.8		1,026.4		651.4
Alphagan^®/Combigan^®		93.4		81.4		274.3		184.9
Lumigan^®/Ganfort^®		78.3		71.7		240.4		165.9
Ozurdex^®		20.9		17.6		61.8		36.9
Eye Drops		50.2		45.3		140.1		131.8
Other Eye Care		9.3		11.1		34.6		42.3
Total Medical Aesthetics		388.9		340.1		1,182.6		761.4
Facial Aesthetics		293.7		249.0		893.3		547.9
Botox^® Cosmetics		174.5		159.3		529.8		341.2
Fillers		105.0		89.7		325.3		206.7
Kybella^®		14.2		-		38.2		-
Plastic Surgery		52.2		54.3		153.1		122.5
Breast Implants		51.1		50.9		149.2		112.8
Other Plastic Surgery		1.1		3.4		3.9		9.7
Skin Care		43.0		36.8		136.2		91.0
SkinMedica^®		25.8		23.0		81.5		51.6
Latisse^®		17.2		13.8		54.7		39.4
Total Medical Dermatology		116.1		107.8		282.2		249.4
Aczone^®		69.0		48.0		156.1		114.3
Tazorac^®		27.5		27.6		68.0		65.7
Botox^® Hyperhidrosis		16.3		15.0		48.9		35.5
Other Medical Dermatology		3.3		17.2		9.2		33.9
Total Neuroscience and Urology		330.7		291.4		963.8		637.2
Botox^® Therapeutics		305.5		261.3		875.3		549.7
Rapaflo^®		25.2		30.1		87.6		87.5
Other Neuroscience and Urology		-		-		0.9		-
Other Revenues		9.0		17.4		34.6		28.4
Net revenues	$	1,453.2	$	1,296.6	$	4,240.8	$	2,889.6

The following table presents top product sales and revenues for the US General Medicine segment for the three and nine months ended September 30, 2016 and 2015 ($ in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Total Central Nervous System (CNS)	$	325.5	$	406.7	$	964.6	$	1,485.1
Namenda XR^®		146.9		214.5		486.5		569.8
Viibryd^®/Fetzima^®		87.6		84.5		252.6		244.8
Saphris^®		40.8		51.1		123.6		134.3
Vraylar^™		32.4		-		51.1		-
Namzaric^®		14.9		1.7		38.0		3.3
Namenda^® IR		2.9		54.9		12.8		532.9
Total Gastrointestinal (GI)		431.4		398.6		1,277.0		1,138.4
Linzess^®		164.4		117.5		452.0		325.1
Asacol^®/Delzicol^®		72.2		141.9		297.9		407.8
Carafate^®/Sulcrate^®		56.4		52.9		167.7		153.4
Zenpep^®		52.5		43.1		145.1		121.5
Canasa^®/Salofalk^®		47.2		34.6		135.0		102.2
Viberzi^®		30.9		-		55.3		-
Other GI		7.8		8.6		24.0		28.4
Total Women's Health		305.3		268.0		865.1		716.7
Lo Loestrin^®		105.7		89.8		296.0		251.7
Estrace^® Cream		98.6		87.4		276.4		229.4
Minastrin^® 24		84.9		74.4		247.5		195.3
Liletta^®		4.4		5.8		15.0		10.7
Other Women's Health		11.7		10.6		30.2		29.6
Total Anti-Infectives		52.5		52.3		167.1		138.3
Teflaro^®		33.3		35.8		101.9		105.3
Dalvance^®		10.3		4.9		26.7		11.3
Avycaz^®		4.8		7.5		26.9		12.9
Other Anti-Infectives		4.1		4.1		11.6		8.8
Established Brands		319.3		400.5		1,038.8		1,267.7
Bystolic^®		163.9		155.3		477.8		476.1
Armour Thyroid		39.1		34.7		121.8		88.9
Savella^®		28.1		29.0		74.1		80.6
Lexapro^®		15.6		17.8		50.8		53.6
Enablex^®		1.9		17.2		14.7		51.5
PacPharma		6.2		27.4		49.7		56.6
Other Established Brands		64.5		119.1		249.9		460.4
Other Revenues		54.1		25.9		78.3		57.5
Net revenues	$	1,488.1	$	1,552.0	$	4,390.9	$	4,803.7

The following table presents top product sales and net revenues for the International segment for the three and nine months ended September 30, 2016 and 2015 ($ in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Total Eye Care	$	294.2	$	281.5	$	904.4	$	623.7
Lumigan^®/Ganfort^®		86.6		86.2		269.2		189.7
Alphagan^®/Combigan^®		41.3		39.4		127.3		87.4
Ozurdex^®		43.4		34.0		130.2		72.7
Optive^®		25.6		23.2		75.7		51.9
Restasis^®		15.4		15.5		49.7		31.8
Other Eye Drops		42.1		44.0		131.2		99.5
Other Eye Care		39.8		39.2		121.1		90.7
Total Medical Aesthetics		251.0		214.8		780.0		509.9
Facial Aesthetics		212.6		176.5		658.7		416.4
Botox^® Cosmetics		115.3		98.6		352.9		234.9
Fillers		96.8		77.9		304.2		181.5
Belkyra^® (Kybella^®)		0.5		-		1.6		-
Plastic Surgery		35.8		34.6		112.9		85.6
Breast Implants		35.6		34.6		112.5		85.6
Earfold^™		0.2		-		0.4		-
Skin Care		2.6		3.7		8.4		7.9
Botox^® Therapeutics and Other		134.6		155.5		399.0		321.5
Botox^® Therapeutics		78.1		70.2		240.0		158.5
Asacol^®/Delzicol^®		14.2		15.3		40.5		47.8
Constella^®		4.3		1.1		12.7		2.9
Other Products **		38.0		68.9		105.8		112.3
Other Revenues		18.0		8.8		44.7		41.3
Net revenues **	$	697.8	$	660.6	$	2,128.1	$	1,496.4

Inventories consist of finished goods held for sale and distribution, raw materials and work-in-process. Inventories are stated at the lower of cost (first-in, first-out method) or market (net realizable value). The Company writes down inventories to net realizable value based on forecasted demand, market conditions or other factors, which may differ from actual results.

Included in finished goods was $46.1 million related to the fair-value step-up of acquired inventory as of December 31, 2015.

Investments in marketable securities, including those classified in cash and cash equivalents due to the maturity term of the instrument, other investments and other assets consisted of the following ($ in millions):

	Investments in Securities as of September 30, 2016:
Level 1	Carrying amount		Unrecognized gain		Unrecognized loss			Estimated fair value		Cash & cash equivalents		Marketable securities
Money market funds	$	4,649.4	$	-	$	-		$	4,649.4	$	4,649.4	$	-
Commercial paper		1,357.7		-		-			1,357.7		1,357.7		-
Certificates of deposit		250.0		-		-			250.0		250.0		-
Total	$	6,257.1	$	-	$	-		$	6,257.1	$	6,257.1	$	-

Level 2	Carrying amount		Unrecognized gain		Unrecognized loss			Estimated fair value		Cash & cash equivalents		Marketable securities
Commercial paper		11,155.1		6.9		-			11,162.0		-		11,162.0
Investment in Teva ordinary shares		5,038.6		-		(664.2	)		4,374.4		-		4,374.4
Certificates of deposit		4,301.0		0.2		-			4,301.2		-		4,301.2
Total	$	20,494.7	$	7.1	$	(664.2	)	$	19,837.6	$	-	$	19,837.6

Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. Fair values determined based on Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined based on Level 2 inputs utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active. Fair values determined based on Level 3 inputs utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity. A financial asset or liability’s classification within the above hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Marketable securities and investments consist of available-for-sale investments in U.S. treasury and agency securities and publicly traded equity securities for which market prices are readily available. Unrealized gains or losses on marketable securities and investments are recorded in accumulated other comprehensive (loss) / income. Realized gains or losses on marketable securities and investments are recorded in interest income. The Company’s marketable securities and other long-term investments are classified as available-for-sale and are recorded at fair value based on quoted market prices using the specific identification method. These investments are classified as either current or non-current, as appropriate, in the Company’s consolidated balance sheets. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and maturity management.

The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to

any one issuer. The policy requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio.

Accounts payable and accrued expenses consisted of the following ($ in millions):

	September 30, 2016		December 31, 2015
Accrued expenses:
Accrued third-party rebates	$	1,513.6	$	1,281.6
Accrued payroll and related benefits		446.2		401.0
Contractual commitments related to the Teva Transaction		501.6		-
Accrued stock repurchases		400.0		-
Accrued pharmaceutical fees		388.1		162.2
Current portion of contingent consideration obligations		349.1		79.9
Accrued returns		283.7		288.4
Interest payable		170.4		312.0
Royalties payable		167.2		119.1
Litigation-related reserves and legal fees		139.9		191.7
Accrued R&D expenditures		111.7		384.1
Accrued severance, retention and other shutdown costs		83.7		108.5
Accrued non-provision taxes		47.2		98.1
Accrued selling and marketing expenditures		29.6		127.2
Dividends payable		24.2		24.0
Other accrued expenses		472.7		354.9
Total accrued expenses	$	5,128.9	$	3,932.7
Accounts payable		296.5		215.9
Total Accounts Payable and Accrued Expenses	$	5,425.4	$	4,148.6

During 2016, there was a strategic shift in the business to streamline our operations. Under the new organizational structure being reported, the Company organized its business into the following segments: US Specialized Therapeutics, US General Medicine and International. The Company recast goodwill by segment as a result of this change.

As of September 30, 2016 and December 31, 2015, the gross balance of goodwill, pre-impairments, was $46,643.1 million and $46,482.5 million, respectively. Goodwill in discontinued operations was $86.3 million and $6,096.0 million as of September 30, 2016 and December 31, 2015, respectively.

The following items had a significant impact on goodwill in the nine months ended September 30, 2016:

Product rights and other intangible assets consisted of the following ($ in millions):

Cost Basis	Balance as of December 31, 2015		Acquisitions		Impairments			IPR&D to CMP Transfers			Disposals/ Held for Sale/ Other			Foreign Currency Translation		Balance as of September 30, 2016
Intangibles with definite lives:
Product rights and other related intangibles	$	64,366.0	$	41.6	$	-		$	1,342.4		$	(194.6	)	$	108.6	$	65,664.0
Trade name		690.0		-		-			-			-			-		690.0
Total definite-lived intangible assets	$	65,056.0	$	41.6	$	-		$	1,342.4		$	(194.6	)	$	108.6	$	66,354.0
Intangibles with indefinite lives:
IPR&D	$	11,128.2	$	158.0	$	(316.9	)	$	(1,342.4	)	$	-		$	15.9	$	9,642.8
Total indefinite-lived intangible assets	$	11,128.2	$	158.0	$	(316.9	)	$	(1,342.4	)	$	-		$	15.9	$	9,642.8
Total product rights and related intangibles	$	76,184.2	$	199.6	$	(316.9	)	$	-		$	(194.6	)	$	124.5	$	75,996.8

The following items had a significant impact on net product rights and other intangibles in the three and nine months ended September 30, 2016:

The following items had a significant impact on net product rights and other intangibles in the nine months ended September 30, 2016:

Assuming no additions, disposals or adjustments are made to the carrying values and/or useful lives of the intangible assets, annual amortization expense on product rights and other related intangibles as of September 30, 2016 over the remainder of 2016 and each of the next five years is estimated to be as follows ($ in millions):

The above amortization expense is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, finalization of preliminary fair value estimates, potential impairments, accelerated amortization or other events.

	Balance As of						Fair Market Value As of
	September 30, 2016			December 31, 2015			September 30, 2016		December 31, 2015
Senior Notes:
Floating Rate Notes
$500.0 million floating rate notes due September 1, 2016	$	-		$	500.0		$	-	$	500.5
$500.0 million floating rate notes due March 12, 2018		500.0			500.0			504.0		499.6
$500.0 million floating rate notes due March 12, 2020		500.0			500.0			509.0		496.2
		1,000.0			1,500.0			1,013.0		1,496.3
Fixed Rate Notes
$800.0 million 5.750% notes due April 1, 2016		-			800.0			-		808.4
$1,000.0 million 1.850% notes due March 1, 2017		1,000.0			1,000.0			1,002.3		1,001.5
$500.0 million 1.300% notes due June 15, 2017		500.0			500.0			499.6		496.3
$1,200.0 million 1.875% notes due October 1, 2017		1,200.0			1,200.0			1,204.2		1,196.0
$3,000.0 million 2.350% notes due March 12, 2018		3,000.0			3,000.0			3,031.0		3,004.6
$250.0 million 1.350% notes due March 15, 2018		250.0			250.0			248.9		244.9
$1,050.0 million 4.375% notes due February 1, 2019		1,050.0			1,050.0			1,105.8		1,099.5
$500.0 million 2.450% notes due June 15, 2019		500.0			500.0			508.2		494.4
$400.0 million 6.125% notes due August 14, 2019		400.0			400.0			447.4		444.2
$3,500.0 million 3.000% notes due March 12, 2020		3,500.0			3,500.0			3,614.5		3,505.1
$650.0 million 3.375% notes due September 15, 2020		650.0			650.0			680.3		656.6
$750.0 million 4.875% notes due February 15, 2021		750.0			750.0			830.2		807.4
$1,200.0 million 5.000% notes due December 15, 2021		1,200.0			1,200.0			1,345.6		1,299.4
$3,000.0 million 3.450% notes due March 15, 2022		3,000.0			3,000.0			3,149.5		3,006.8
$1,700.0 million 3.250% notes due October 1, 2022		1,700.0			1,700.0			1,759.6		1,669.6
$350.0 million 2.800% notes due March 15, 2023		350.0			350.0			348.1		327.7
$1,200.0 million 3.850% notes due June 15, 2024		1,200.0			1,200.0			1,274.0		1,202.6
$4,000.0 million 3.800% notes due March 15, 2025		4,000.0			4,000.0			4,227.2		3,984.6
$2,500.0 million 4.550% notes due March 15, 2035		2,500.0			2,500.0			2,653.1		2,462.2
$1,000.0 million 4.625% notes due October 1, 2042		1,000.0			1,000.0			1,066.8		956.1
$1,500.0 million 4.850% notes due June 15, 2044		1,500.0			1,500.0			1,653.0		1,483.6
$2,500.0 million 4.750% notes due March 15, 2045		2,500.0			2,500.0			2,739.8		2,452.7
		31,750.0			32,550.0			33,389.1		32,604.2
Total Senior Notes Gross		32,750.0			34,050.0			34,402.1		34,100.5
Unamortized premium		182.8			225.9			-		-
Unamortized discount		(98.7	)		(107.4	)		-		-
Total Senior Notes Net		32,834.1			34,168.5			34,402.1		34,100.5
Term Loan Indebtedness:
WC Term Loan
WC Three Year Tranche variable rate debt maturing October 1, 2016		-			191.5
WC Five Year Tranche variable rate debt maturing October 1, 2018		-			498.8
		-			690.3
ACT Term Loan
2017 Term Loan variable rate debt maturing October 31, 2017		-			572.1
2019 Term Loan variable rate debt maturing July 1, 2019		-			1,700.0
		-			2,272.1
AGN Term Loan
AGN Three Year Tranche variable rate debt maturing March 17, 2018		-			2,750.0
AGN Five Year Tranche variable rate debt maturing March 17, 2020		-			2,543.8
		-			5,293.8
Total Term Loan Indebtedness		-			8,256.2
Other Indebtedness
Revolver Borrowings		-			200.0
Debt Issuance Costs		(151.5	)		(195.8	)
Other		85.2			97.4
Total Other Borrowings		(66.3	)		101.6
Capital Leases		2.2			4.1
Total Indebtedness	$	32,770.0		$	42,530.4

Fair market value in the table above is determined in accordance with ASC Topic 820 “Fair Value Measurement” (“ASC 820”) under Level 2 based upon quoted prices for similar items in active markets. The book value of the outstanding term loan indebtedness approximates fair value as the debt is at variable interest rates and re-prices frequently.

Unless otherwise indicated, the remaining loan balances after the quarterly required payments are due upon maturity.

On March 4, 2015, Actavis Funding SCS, a limited partnership (société en commandite simple) organized under the laws of the Grand Duchy of Luxembourg and an indirect wholly-owned subsidiary of Allergan plc, issued floating rate notes due 2016 (the “2016 Floating Rate Notes”), floating rate notes due 2018 (the “2018 Floating Rate Notes”), floating rate notes due 2020 (the “2020 Floating Rate Notes”), 1.850% notes due 2017 (the “1.850% 2017 Notes”), 2.350% notes due 2018 (the “2.350% 2018 Notes”), 3.000% notes due 2020 (the “3.000% 2020 Notes”), 3.450% notes due 2022 (the “3.450% 2022 Notes”), 3.800% notes due 2025 (the “3.800% 2025 Notes”), 4.550% notes due 2035 (the “4.550% 2035 Notes”) and 4.750% notes due 2045 (the “4.750% 2045 Notes”). The notes are fully and unconditionally guaranteed by Actavis Funding SCS’s indirect parents, Warner Chilcott Limited and Actavis Capital S.a.r.l. (“Actavis Capital”), and by Actavis Finance, LLC (formerly known as Actavis, Inc.), a subsidiary of Actavis Capital, on an unsecured and unsubordinated basis. Allergan plc has not guaranteed the notes.

The 2016 Floating Rate Notes were fully repaid on September 1, 2016 and bore interest at the three-month LIBOR plus 0.875%. The 2018 Floating Rate Notes and the 2020 Floating Rate Notes bear interest at a floating rate equal to three-month LIBOR plus 1.080% and 1.255% per annum, respectively. Interest on the 2018 Floating Rate Notes and the 2020 Floating Rate Notes is payable quarterly on March 12, June 12, September 12 and December 12 of each year, and began on June 12, 2015.

The Company has issued fixed rate notes over multiple issuances for various business needs. Interest on the various notes is generally payable semi-annually with various payment dates.

On March 17, 2015 in connection with the Allergan Acquisition, the Company acquired, and subsequently guaranteed, along with Warner Chilcott Limited, the indebtedness of Allergan, Inc. comprised of the $350.0 million 2.800% senior notes due 2023, the $650.0 million 3.375% senior notes due 2020, the $250.0 million 1.350% senior notes due 2018 and the $800.0 million 5.750% senior notes due 2016. Interest payments are due on the $350.0 million senior notes semi-annually on the principal amount of the notes at a rate of 2.80% per annum, and are redeemable at any time at the Company’s option, subject to a make-whole provision based on the present value of remaining interest payments at the time of the redemption, if the redemption occurs prior to December 15, 2022 (three months prior to the maturity of the 2023 senior notes). If the redemption occurs on or after December 15, 2022, then such redemption is not subject to the make-whole provision. Interest payments are due on the $650.0 million senior notes semi-annually on the principal amount of the notes at a rate of 3.375% per annum, and are redeemable at any time at the Company’s option, subject to a make-whole provision based on the present value of remaining interest payments at the time of the redemption. Interest payments are due on the $250.0 million senior notes semi-annually on the principal amount of the notes at a rate of 1.350% per annum, and are redeemable at any time at the Company’s option, subject to a make-whole provision based on the present value of remaining interest payments at the time of the redemption. Interest payments were due on the $800.0 million senior notes semi-annually on the principal amount of the notes at a rate of 5.750% per annum. The fair value of the acquired senior notes was determined to be $2,087.5 million as of March 17, 2015. As such, as part of acquisition accounting, the company recorded a premium of $37.5 million to be amortized as contra interest over the life of the notes.

The $800.0 million 5.750% senior notes were paid in full on April 1, 2016 with proceeds from the first quarter of 2016 borrowings under the revolving credit facility of $900.0 million.

On August 2, 2016, the Company repaid the remaining balances of all outstanding term-loan indebtedness and terminated its then existing revolving credit facility with proceeds from the Teva Transaction.

On December 17, 2014, Allergan plc and certain of its subsidiaries entered into a second amendment agreement (the “WC Term Loan Amendment”) among Allergan plc, Warner Chilcott Limited, Warner Chilcott Finance, LLC, Actavis WC 2 S.à r.l. (“Actavis WC 2”), Warner Chilcott Company, LLC (“WCCL”), Warner Chilcott Corporation (“WC Corporation” and together with Actavis WC 2 and WCCL, the “WC Borrowers”), Bank of America, N.A. (“BofA”), as administrative agent, and the lenders party thereto. The WC Term Loan Amendment amended and restated Allergan plc’s existing amended and restated WC term loan credit and guaranty agreement, dated as of June 9, 2014 (such agreement, prior to its amendment and restatement pursuant to the WC Term Loan Amendment, the “2014 WC Term Loan”), among the WC Borrowers, Allergan plc, Warner Chilcott Limited, Warner Chilcott Finance, LLC, the lenders from time to time party thereto and BofA, as administrative agent, which amended and restated Allergan plc’s existing WC term loan credit and guaranty agreement, dated as of August 1, 2013 (such agreement, prior to its amendment and restatement pursuant to the 2014 WC Term Loan Amendment, the “Existing WC Term Loan”) among the WC Borrowers, Warner Chilcott Finance, LLC, Actavis Limited, BofA, as administrative agent and a syndicate of banks participating as lenders.

Pursuant to the Existing WC Term Loan, on October 1, 2013 (the “WC Closing Date”), the lenders party thereto provided term loans in a total aggregate principal amount of $2.0 billion, comprised of (i) a $1.0 billion tranche that would have matured on October 1, 2016 (the “WC Three Year Tranche”) and (ii) a $1.0 billion tranche that would have matured on October 1, 2018 (the “WC Five Year Tranche”). The proceeds of borrowings under the Existing WC Term Loan Agreement, together with $41.0 million of cash on hand, were used to finance the repayment in full of all amounts outstanding under Warner Chilcott’s then-existing Credit Agreement, dated as of March 17, 2011, as amended by Amendment No. 1 on August 20, 2012, among the WC Borrowers, Warner Chilcott Holdings Company III, Limited, BofA, as administrative agent and a syndicate of banks participating as lenders.

Borrowings under the WC Term Loan Agreement bore interest at the applicable borrower’s choice of a per annum rate equal to either (a) a base rate plus an applicable margin per annum varying from (x) 0.00% per annum to 0.75% per annum under the WC Three Year Tranche and (y) 0.125% per annum to 0.875% per annum under the WC Five Year Tranche, depending on the publicly announced debt ratings for non-credit-enhanced, senior unsecured long-term indebtedness of Allergan plc (such applicable debt rating the “Debt Rating”) or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 1.75% per annum under the WC Three Year Tranche and (y) 1.125% per annum to 1.875% per annum under the WC Five Year Tranche, depending on the Debt Rating.

On December 17, 2014, Allergan plc and certain of its subsidiaries entered into a third amendment agreement (the “ACT Term Loan Amendment”) among Allergan plc, Warner Chilcott Limited, Actavis Capital, Actavis Finance LLC, Actavis Funding SCS, BofA, as administrative agent, and the lenders party thereto. The ACT Term Loan Amendment amends and restates Allergan plc’s existing second amended and restated Allergan term loan credit and guaranty agreement, dated as of March 31, 2014 (such agreement, prior to its amendment and restatement pursuant to the ACT Term Loan Amendment, the “2014 ACT Term Loan Agreement” and together with the Existing ACT Term Loan Agreement (defined below), the “ACT Term Loan”) among Actavis Capital, Allergan plc, Warner Chilcott Limited, Actavis Finance, LLC, Actavis Funding SCS, BofA, as administrative agent, and the lenders from time to time party thereto, which amended and restated Allergan plc’s existing amended and restated Allergan term loan credit and guaranty agreement, dated as of October 1, 2013 (such agreement, prior to its amendment and restatement pursuant to the ACT Term Loan Amendment, the “Existing ACT Term Loan Agreement”) among Actavis Capital, Allergan plc, Actavis Finance, LLC, BofA, as administrative agent, and the lenders from time to time party thereto.

The Existing ACT Term Loan Agreement amended and restated Actavis Finance, LLC’s $1,800.0 million senior unsecured term loan credit facility, dated as of June 22, 2012. At the closing of the Existing ACT Term Loan Agreement, an aggregate principal amount of $1,572.5 million was outstanding (the “2017 Term Loan”).

On March 31, 2014, Allergan plc, Actavis Capital, Actavis Finance, LLC, BofA, as Administrative Agent, and a syndicate of banks participating as lenders entered into the 2014 ACT Term Loan Agreement to amend and restate the Existing ACT Term Loan Agreement. On July 1, 2014, in connection with the Forest Acquisition, the Company borrowed $2.0 billion of term loan indebtedness under tranche A-2 of the 2014 ACT Term Loan Agreement, which was due July 1, 2019 (the “2019 Term Loan”).

Loans under the ACT Term Loan bore interest, at the Company’s choice, of a per annum rate equal to either (a) a base rate, plus an applicable margin per annum varying from (x) 0.00% per annum to 1.00% per annum with respect to the 2017 term-loan and (y) 0.125% per annum to 0.875% per annum with respect to the 2019 term-loan, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 2.00% per annum with respect to the 2017 term-loan and (y) 1.125% per annum to 1.875% per annum with respect to the 2019 term-loan, depending on the Debt Rating.

On December 17, 2014, Allergan, Inc., and certain of its subsidiaries entered into a senior unsecured term loan credit agreement (the “AGN Term Loan”), among Actavis Capital, as borrower, Allergan plc, Warner Chilcott Limited, Actavis Finance, LLC, Actavis Funding SCS, the lenders from time to time party thereto (the “Term Lenders”), JPMorgan Chase Bank, N.A. (“JPMCB”), as administrative agent and the other financial institutions party thereto. Under the AGN Term Loan, the Term Lenders provided (i) a $2.75 billion tranche maturing on March 17, 2018 (the “AGN Three Year Tranche”) and (ii) a $2.75 billion tranche and maturing on March 17, 2020 (the “AGN Five Year Tranche”). The proceeds of borrowings under the AGN Term Loan were used to finance, in part, the cash component of the Allergan Acquisition consideration and certain fees and expenses incurred in connection with the Allergan Acquisition.

Borrowings under the AGN Term Loan bore interest at our choice of a per annum rate equal to either (a) a base rate plus an applicable margin per annum varying from (x) 0.00% per annum to 1.00% per annum under the AGN Three Year Tranche and (y) 0.125% per annum to 1.250% per annum under the AGN Five Year Tranche, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 2.00% per annum under the AGN Three Year Tranche and (y) 1.125% per annum to 2.250% per annum under the AGN Five Year Tranche, depending on the Debt Rating. The outstanding principal amount of loans under the AGN Three Year Tranche was not subject to quarterly amortization and was payable in full on the maturity date. The outstanding principal amount of loans under the AGN Five Year Tranche was payable in equal quarterly amounts of 2.50% per quarter prior to March 17, 2020, with the remaining balance payable on March 17, 2020.

On March 11, 2015, Allergan and certain of its subsidiaries entered into a 60-day senior unsecured bridge credit agreement (the “Cash Bridge Loan Facility”), among Actavis Capital, as borrower, Allergan plc, Warner Chilcott Limited, Actavis Finance, LLC, Actavis Funding SCS, the lenders from time to time party thereto (the “Cash Bridge Lenders”), JPMCB, as administrative agent and the other financial institutions party thereto. Under the Cash Bridge Loan Facility, the Cash Bridge Lenders committed to provide, subject to certain conditions, unsecured bridge financing, of which $2.8 billion was drawn to finance the Allergan Acquisition on March 17, 2015. The outstanding balance of the Cash Bridge Loan Facility was repaid on April 9, 2015.

Borrowings under the Cash Bridge Loan Facility bore interest at our choice of a per annum rate equal to either (a) a base rate plus an applicable margin per annum varying from 0.00% per annum to 1.00% per annum, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from 1.00% per annum to 2.00% per annum, depending on the Debt Rating.

As of September 30, 2016, annual debt maturities were as follows ($ in millions):

Amounts represent total anticipated cash payments assuming scheduled repayments.

The Company’s effective tax rate for the nine months ended September 30, 2016 was 48.0% compared to 40.9% for the nine months ended September 30, 2015. The effective tax rate for the nine months ended September 30, 2016 was impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. Additionally, the tax benefit for the nine months ended September 30, 2016 included, but is not limited to, the following items: an expense of $179.5 million primarily related to a change in a valuation allowance on a portion of U.S. capital loss carryforwards resulting from restructuring associated with the sale of the global generics business, a benefit of $48.2 million related to the change in tax rates applicable to certain temporary differences, a benefit of $40.3 million for the recognition of previously unrecognized tax benefits and a benefit of $37.9 million for the New Jersey Grow income tax credit.

The effective tax rate for the nine months ended September 30, 2015 was impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. Additionally, the tax benefit for the nine months ended September 30, 2015 included, but is not limited to, the following items: a benefit of $318.9 million for the reversal of a valuation allowance on a portion of U.S. capital loss carryforwards resulting from restructuring associated with the sale of the generics business, a benefit of $36.8 million for the recognition of previously unrecognized tax benefits, a benefit of $41.3 million for certain IPR&D impairments and a benefit of $44.0 million for acquired tax attributes.

The increase in the effective tax rate for the period ended September 30, 2016 as compared to the period ended September 30, 2015 is primarily the result of a decrease in acquisition related expenses benefited at lower tax rates.

During the third quarter, the United States Department of the Treasury issued final and temporary regulations under Section 385 of the Internal Revenue Code which are applicable to the federal income tax treatment of certain related party debt. The Company does not expect the regulations to have a material impact on its consolidated financial statements.

During the period ended September 30, 2016 the Company’s non-current deferred tax liability increased by $4,842.7 million primarily due to the reversal of deferred tax assets related to investments in certain U.S. subsidiaries of $5,273.9 million partially offset by the reversal of deferred tax liabilities of $673.9 million related to investments in certain non-U.S. subsidiaries. Refer to “NOTE 5 – Discontinued Operations” for further discussion and additional disclosures related to our income tax provision reported as part of discontinued operations.

The Company conducts business globally and, as a result, it files U.S. federal, state and foreign tax returns. The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for amounts it believes are in accordance with the accounting standard, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the consolidated financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations with tax authorities, identification of new issues and issuance of new legislation, regulations or case law.

The Company has several concurrent audits still pending with the IRS as set forth below:

A summary of the changes in shareholders’ equity for the nine months ended September 30, 2016 consisted of the following ($ in millions):

During the nine months ended September 30, 2016, the Company announced that the Board of Directors approved a $10.0 billion share repurchase program. As of September 30, 2016, the Company has repurchased/accrued for $3,089.9 million of ordinary shares. The Company completed the initial $5.0 billion share repurchase program during the fourth quarter of 2016.

For most of the Company’s international operations, the local currency has been determined to be the functional currency. The results of its non-U.S. dollar based operations are translated to U.S. dollars at the average exchange rates during the period. Assets and liabilities are translated at the rate of exchange prevailing on the balance sheet date. Equity is translated at the prevailing rate of exchange at the date of the equity transaction. Translation adjustments are reflected in shareholders’ equity and are included as a component of other comprehensive income / (loss). The effects of converting non-functional currency assets and liabilities into the functional currency are recorded as transaction gains/losses in general and administrative expenses in the consolidated statements of operations.

The movements in accumulated other comprehensive income / (loss) for the three and nine months ended September 30, 2016 were as follows ($ in millions):

The movements in accumulated other comprehensive (loss) / income for the three and nine months ended September 30, 2015 were as follows ($ in millions):

The Company’s revenue, earnings, cash flows and fair value of its assets and liabilities can be impacted by fluctuations in foreign exchange risks and interest rates, as applicable. The Company manages the impact of foreign exchange risk and interest rate movements through operational means and through the use of various financial instruments, including derivative instruments such as foreign currency derivatives.

Overall, the Company is a net recipient of currencies other than the U.S. dollar and, as such, benefits from a weaker dollar and is adversely affected by a stronger dollar relative to major currencies worldwide. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may negatively affect the Company’s consolidated revenues and favorably impact operating expenses in U.S. dollars.

The Company enters into foreign currency derivatives to reduce current and future earnings and cash flow volatility associated with foreign exchange rate changes to allow management to focus its attention on its core business issues. Accordingly, the Company enters into various contracts which change in value as foreign exchange rates change to economically offset the effect of changes in the value of foreign currency assets and liabilities, commitments and anticipated foreign currency denominated sales and operating

expenses. The Company enters into foreign currency derivatives in amounts between minimum and maximum anticipated foreign exchange exposures. The Company does not designate the current derivative instruments as accounting hedges.

The Company uses foreign currency derivatives, which provide for the sale or purchase or the option to sell or purchase foreign currencies to economically hedge the currency exchange risks associated with probable but not firmly committed transactions that arise in the normal course of the Company’s business. Probable but not firmly committed transactions are comprised primarily of sales of products and purchases of raw materials in currencies other than the U.S. dollar. The foreign currency derivatives are entered into to reduce the volatility of earnings generated in currencies other than the U.S. dollar. While these instruments are subject to fluctuations in value, such fluctuations are anticipated to offset changes in the value of the underlying exposures.

The Company recognized realized and unrealized gains on such contracts of $9.1 million and $5.7 million during the three and nine months ended September 30, 2016, respectively. The Company recognized realized and unrealized losses on such contracts of $6.4 million and $5.8 million during the three and nine months ended September 30, 2015, respectively.

The fair value of outstanding foreign currency derivatives are recorded in “Prepaid expenses and other current assets” or “Investments and other assets” or “Accounts payable and accrued expenses.” At September 30, 2016 and December 31, 2015, foreign currency derivative assets associated with the foreign exchange option contracts of $23.2 million and $25.0 million, respectively, were included in “Prepaid expenses and other current assets.” At September 30, 2016 and December 31, 2015, foreign currency derivative assets associated with the foreign exchange option contracts of $28.8 million and $48.5 million, respectively, were included in “Investments and other assets.” At December 31, 2015, there were $0.3 million in foreign currency derivative liabilities associated with the foreign exchange forward contracts included in “Accounts payable and accrued expenses.”

Assets and liabilities measured at fair value or disclosed at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 consisted of the following ($ in millions):

Commission File Number	Exact name of registrant as specified in its charter, principal office and address and telephone number	State of incorporation or organization	I.R.S. Employer Identification No.
001-36867	Allergan plc Clonshaugh Business and Technology Park Coolock, Dublin, D17 E400, Ireland (862) 261-7000	Ireland	98-1114402

001-36887	Warner Chilcott Limited Cannon’s Court 22	Bermuda	98-0496358
	Victoria Street
	Hamilton HM 12
	Bermuda
	(441) 295-2244

Allergan plc		YES ☒		NO ☐
Warner Chilcott Limited		YES ☒		NO ☐

Allergan plc		YES ☒		NO ☐
Warner Chilcott Limited		YES ☒		NO ☐

Allergan plc	Large accelerated filer	☒	Accelerated filer	☐
	Non-accelerated filer (Do not check if a smaller reporting company)	☐	Smaller reporting company	☐

Warner Chilcott Limited	Large accelerated filer	☐	Accelerated filer	☐
	Non-accelerated filer (Do not check if a smaller reporting company)	☒	Smaller reporting company	☐

Allergan plc		YES ☐		NO ☒
Warner Chilcott Limited		YES ☐		NO ☒

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)	3
	Consolidated Balance Sheets of Allergan plc as of September 30, 2016 and December 31, 2015	3
	Consolidated Statements of Operations of Allergan plc for the three and nine months ended September 30, 2016 and September 30, 2015	4
	Consolidated Statements of Comprehensive Income of Allergan plc for the three and nine months ended September 30, 2016 and September 30, 2015	5
	Consolidated Statements of Cash Flows of Allergan plc for the nine months ended September 30, 2016 and 2015	6
	Consolidated Balance Sheets of Warner Chilcott Limited as of September 30, 2016 and December 31, 2015	7
	Consolidated Statements of Operations of Warner Chilcott Limited for the three and nine months ended September 30, 2016 and September 30, 2015	8
	Consolidated Statements of Comprehensive Income of Warner Chilcott Limited for the three and nine months ended September 30, 2016 and September 30, 2015	9
	Consolidated Statements of Cash Flows of Warner Chilcott Limited for the nine months ended September 30, 2016 and 2015	10
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	80
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	116
Item 4.	Controls and Procedures	118
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	119
Item 1A.	Risk Factors	119
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	119
Item 6.	Exhibits	119
	Signatures	120

	As of September 30, 2016						As of December 31, 2015
	Allergan plc		Warner Chilcott Limited		Difference		Allergan plc		Warner Chilcott Limited		Difference
Cash and cash equivalents	$	7,554.7	$	7,522.8	$	31.9	$	1,096.0	$	1,036.2	$	59.8
Prepaid expenses and other current assets		771.7		769.6		2.1		495.3		492.8		2.5
Accounts payable and accrued liabilities		5,425.4		4,995.8		429.6		4,148.6		4,094.5		54.1

Balance as of December 31, 2015	$	1,815.2
Provision to reduce gross product sales to net product sales		5,153.0
Payments and other		(4,927.1	)
Balance as of September 30, 2016	$	2,041.1

	Nine Months Ended September 30, 2015
	As reported		Allergan Acquisition		Pro Forma
Net Revenue	$	9,081.2	$	1,523.0	$	10,604.2
Net income attributable to ordinary shareholders	$	4,383.7	$	377.7	$	4,761.4
Net (loss) per share
Basic	$	12.21			$	11.58
Diluted	$	12.21			$	11.58

	Amount
Cash and cash equivalents	$	1.0
IPR&D intangible asset		158.0
Goodwill		54.2
Current liabilities		(15.8	)
Contingent consideration		(79.8	)
Deferred tax liabilities, net		(43.1	)
Net assets acquired	$	74.5

	Amount
Cash and cash equivalents	$	6.2
Current assets		1.2
IPR&D intangible assets		302.0
Intangible assets		221.0
Goodwill		138.5
Current liabilities		(6.9	)
Contingent consideration		(193.5	)
Deferred tax liabilities, net		(169.6	)
Net assets acquired	$	298.9

	Three Months Ended September 30, 2016			Three Months Ended September 30, 2015
Cost of sales
Stock-based compensation acquired for Legacy Allergan employees	$	2.2		$	4.7
Acquisition, integration and restructuring related charges		6.6			0.3
Research and development
Stock-based compensation acquired for Legacy Allergan employees		9.3			16.6
Acquisition, integration and restructuring related charges		6.8			17.5
Selling and marketing
Stock-based compensation acquired for Legacy Allergan employees		15.8			23.6
Acquisition, integration and restructuring related charges		(1.2	)		5.4
General and administrative
Stock-based compensation acquired for Legacy Allergan employees		9.9			16.8
Acquisition, integration and restructuring related charges		50.4			65.7
Total transaction and integration costs	$	99.8		$	150.6

Net cash proceeds received	$	33,304.5
August 2, 2016 fair value of Teva shares		5,038.6
Total Proceeds	$	38,343.1
Net assets sold to Teva, excluding cash		(12,076.7	)
Other comprehensive income disposed		(1,544.8	)
Deferral of proceeds relating to additional elements of agreements with Teva		(518.9	)
Pre-tax gain on sale of generics business	$	24,202.7
Income taxes		(8,321.2	)
Net gain on sale of generics business	$	15,881.5

	September 30, 2016		December 31, 2015
Assets:
Accounts receivable, net	$	164.3	$	2,365.9
Inventories		270.8		1,390.7
Prepaid expenses and other current assets		16.3		329.7
Property, plant and equipment, net		23.6		1,398.2
Investments and other assets		6.6		42.2
Non-current deferred tax assets		-		162.1
Product rights and other intangibles		90.7		3,014.8
Goodwill		86.3		6,096.0
Total assets	$	658.6	$	14,799.6

Liabilities:
Accounts payable and accrued expenses	$	223.7	$	1,656.7
Income taxes payable		-		34.4
Debt and capital leases		-		5.8
Other long-term liabilities		3.9		92.0
Other taxes payable		-		69.0
Long-term deferred tax liabilities		19.9		370.7
Total liabilities	$	247.5	$	2,228.6

	2016 Grants	2015 Grants	2015 Acquired Awards
Dividend yield	0%	0%	0%
Expected volatility	27.0%	26.0-29.0%	26.0-27.0%
Risk-free interest rate	1.3%-1.6%	1.9-2.1%	0.1-2.1%
Expected term (years)	7.0	7.0 - 7.5	up to 6.9

	Three Months Ended				Nine Months Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Allergan Acquisition	$	26.8	$	44.6	$	86.8	$	269.8
Forest Acquisition		10.3		18.2		37.5		89.1
Total	$	37.1	$	62.8	$	124.3	$	358.9

(in millions, except per share data)	Shares			Weighted Average Grant Date Fair Value			Weighted Average Remaining Contractual Term (Years)		Aggregate Grant Date Fair Value
Restricted shares / units outstanding at December 31, 2015		2.0		$	209.90			1.7	$	419.8
Granted		0.6			281.26					168.8
Vested		(0.7	)		(168.55	)				(118.0	)
Forfeited		(0.3	)		(228.53	)				(70.1	)
Restricted shares / units outstanding at September 30, 2016		1.6		$	254.37			1.7	$	400.5

(in millions, except per share data)	Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2015		10.5		$	149.11			6.7	$	1,707.8
Granted		0.2			280.72
Exercised		(1.2	)		(113.07	)
Cancelled		(0.2	)		(153.42	)
Outstanding, September 30, 2016		9.3		$	112.17			6.0	$	1,098.8
Vested and expected to vest at September 30, 2016		8.8		$	112.89			6.0	$	1,036.1

	September 30, 2016		December 31, 2015
Marketable securities:
U.S. Treasury and agency securities — maturing within one year	$	15,463.2	$	9.3
Teva shares		4,374.4		-
Total marketable securities	$	19,837.6	$	9.3
Investments and other assets:
Legacy Allergan deferred executive compensation investments	$	114.3	$	118.1
Equity method investments		13.0		17.3
Cost method investments		15.0		16.7
Other long-term investments		70.5		78.2
Taxes receivable		41.4		39.6
Other assets		86.9		138.8
Total investments and other assets	$	341.1	$	408.7

	US Specialized Therapeutics		US General Medicine			International		Total
Balance as of December 31, 2015	$	18,347.2	$	21,340.5		$	6,777.5	$	46,465.2
Additions through acquisitions		54.2		-			-		54.2
Foreign exchange and other adjustments		-		(26.6	)		133.0		106.4
Balance as of September 30, 2016	$	18,401.4	$	21,313.9		$	6,910.5	$	46,625.8

Accumulated Amortization	Balance as of December 31, 2015			Amortization			Disposals/ Held for Sale/ Other		Foreign Currency Translation		Balance as of September 30, 2016
Intangibles with definite lives:
Product rights and other related intangibles	$	(8,288.5	)	$	(4,773.6	)	$	176.9	$	28.9	$	(12,856.3	)
Trade name		(59.5	)		(58.3	)		-		-		(117.8	)
Total definite-lived intangible assets	$	(8,348.0	)	$	(4,831.9	)	$	176.9	$	28.9	$	(12,974.1	)
Total product rights and related intangibles	$	(8,348.0	)	$	(4,831.9	)	$	176.9	$	28.9	$	(12,974.1	)
Net Product Rights and Other Intangibles	$	67,836.2									$	63,022.7

	Amortization Expense
2016 remaining	$	1,610.9
2017	$	6,474.4
2018	$	5,964.4
2019	$	5,857.4
2020	$	5,606.1
2021	$	4,732.6

	Total Payments
2016 remaining	$	-
2017		2,700.0
2018		3,750.0
2019		1,950.0
2020		4,650.0
2021		1,950.0
2022 and after		17,750.0
	$	32,750.0
Capital leases		2.2
Debt issuance costs		(151.5	)
Other short-term borrowings		85.2
Unamortized premium		182.8
Unamortized discount		(98.7	)
Total Indebtedness	$	32,770.0

IRS Audits		Tax Years
Actavis W.C. Holding, Inc.		2013 and 2014
Forest Laboratories, Inc.		2010, 2011, 2012, 2013 and 2014
Warner Chilcott Corporation		2010, 2011, 2012 and 2013
Durata Therapeutics Inc.		2012
Allergan, Inc.		2009, 2010, 2011, 2012 and 2013

	Allergan plc
Shareholders’ equity as of December 31, 2015	$	76,591.4
Increase in additional paid in capital for share-based compensation plans		269.9
Net income attributable to ordinary shareholders		14,765.2
Proceeds from stock plans		138.0
Excess tax benefit from employee stock plans		26.6
Other comprehensive income of the Teva Transaction		1,544.8
Repurchase of ordinary shares, including accrued repurchases, under the Share Repurchase Program		(3,089.9	)
Repurchase of ordinary shares		(68.7	)
Other comprehensive income		(451.4	)
Shareholders’ equity as of September 30, 2016	$	89,725.9

	Warner Chilcott Limited
Members' equity as of December 31, 2015	$	75,573.7
Net income attributable to members		14,891.7
Dividend to Parent		(1,244.8	)
Other comprehensive income		(451.4	)
Other comprehensive income of the Teva Transaction		1,544.8
Members' equity as of September 30, 2016	$	90,314.0

	Foreign Currency Translation Items			Unrealized (losses) / gains net of tax			Total Accumulated Other Comprehensive Income / (Loss)
Balance as of December 31, 2015	$	(564.3	)	$	70.2		$	(494.1	)
Other comprehensive gain / (loss) before reclassifications into general and administrative		192.9			(15.9	)		177.0
Total other comprehensive income / (loss)		192.9			(15.9	)		177.0
Balance as of June 30, 2016	$	(371.4	)	$	54.3		$	(317.1	)
Other comprehensive gain / (loss) before reclassifications into general and administrative		(19.1	)		54.9			35.8
Impact of Teva Transaction		1,540.6			4.2			1,544.8
Investment in Teva ordinary shares fair value movement		-			(664.2	)		(664.2	)
Total other comprehensive income / (loss)		1,521.5			(605.1	)		916.4
Balance as of September 30, 2016	$	1,150.1		$	(550.8	)	$	599.3

	Foreign Currency Translation Items			Unrealized gains net of tax			Total Accumulated Other Comprehensive Income / (Loss)
Balance as of December 31, 2014	$	(434.4	)	$	(31.0	)	$	(465.4	)
Other comprehensive income before reclassifications into general and administrative		451.4			3.6			455.0
Total other comprehensive income		451.4			3.6			455.0
Balance as of June 30, 2015	$	17.0		$	(27.4	)	$	(10.4	)
Other comprehensive (loss) / income before reclassifications into general and administrative		(42.4	)		7.5			(34.9	)
Total other comprehensive (loss) / income		(42.4	)		7.5			(34.9	)
Balance as of September 30, 2015	$	(25.4	)	$	(19.9	)	$	(45.3	)

	Fair Value Measurements as of September 30, 2016 Using:
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	6,257.1	$	6,257.1	$	-	$	-
Marketable securities		15,463.2		-		15,463.2		-
Deferred executive compensation investments		114.3		92.0		22.3		-
Foreign currency derivatives		52.0		-