agn-10q_20200331.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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Number of shares of Allergan plc’s Ordinary Shares outstanding on May 1, 2020: 329,805,791. 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.

	March 31,		December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	999.5	$	2,503.3
Marketable securities		1,618.8		3,411.6
Accounts receivable, net of allowances for doubtful accounts and credit losses of $144.8 and $110.8		2,800.6		3,192.3
Inventories		1,199.9		1,133.1
Prepaid expenses and other current assets		855.3		886.4
Total current assets		7,474.1		11,126.7
Property, plant and equipment, net		1,915.4		1,926.5
Right of use asset - operating leases		481.0		490.4
Investments and other assets		430.7		408.0
Non current assets held for sale		31.7		31.7
Deferred tax assets		597.9		576.9
Product rights and other intangibles		36,266.2		37,890.6
Goodwill		41,229.2		42,248.3
Total assets	$	88,426.2	$	94,699.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	5,289.5	$	6,348.7
Income taxes payable		73.4		65.1
Current portion of long-term debt		1,950.7		4,532.5
Current portion of lease liability - operating		119.8		124.4
Total current liabilities		7,433.4		11,070.7
Long-term debt		17,599.0		18,116.5
Lease liability - operating		438.3		446.1
Other long-term liabilities		787.4		800.9
Other taxes payable		1,690.4		1,704.8
Deferred tax liabilities		2,456.2		4,363.7
Total liabilities		30,404.7		36,502.7
Commitments and contingencies (Refer to Note 15)
Equity:
Ordinary shares; $0.0001 par value per share; 1,000.0 million shares authorized, 329.7 million and 328.6 million shares issued and outstanding, respectively	$	-	$	-
Additional paid-in capital		56,036.2		55,974.9
Retained earnings		882.5		991.5
Accumulated other comprehensive income		1,079.0		1,207.2
Total shareholders’ equity		57,997.7		58,173.6
Noncontrolling interest		23.8		22.8
Total equity		58,021.5		58,196.4
Total liabilities and equity	$	88,426.2	$	94,699.1

	Three Months Ended March 31,
	2020			2019
Net revenues	$	3,604.4		$	3,597.1
Operating expenses:
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)		623.1			497.8
Research and development		430.0			435.0
Selling and marketing		972.1			804.0
General and administrative		401.3			308.3
Amortization		1,416.4			1,399.4
Goodwill impairments		913.0			2,467.0
Asset sales and impairments, net		148.1			(5.2	)
Total operating expenses		4,904.0			5,906.3
Operating (loss) / income		(1,299.6	)		(2,309.2	)

Interest income		21.2			21.3
Interest (expense)		(184.5	)		(201.8	)
Other income / (expense), net		(24.9	)		13.8
Total other (expense), net		(188.2	)		(166.7	)
(Loss) before income taxes and noncontrolling interest		(1,487.8	)		(2,475.9	)
(Benefit) for income taxes		(1,866.8	)		(68.6	)
Net income / (loss)		379.0			(2,407.3	)
(Income) attributable to noncontrolling interest		(1.0	)		(0.7	)
Net Income / (loss) attributable to shareholders	$	378.0		$	(2,408.0	)

Income / (Loss) per share attributable to shareholders
Basic	$	1.15		$	(7.25	)
Diluted	$	1.14		$	(7.25	)

Weighted average shares outstanding:
Basic		329.1			332.0
Diluted		331.9			332.0

	Three Months Ended March 31,
	2020			2019
Cash Flows From Operating Activities:
Net income / (loss)	$	379.0		$	(2,407.3	)
Reconciliation to net cash provided by operating activities:
Depreciation		56.8			47.5
Amortization		1,416.4			1,399.4
Provision for inventory reserve		28.4			18.8
Share-based compensation		51.6			52.3
Deferred income tax benefit		(1,931.1	)		(229.7	)
Goodwill impairments		913.0			2,467.0
(Gain) / loss on asset sales and impairments, net		148.1			(5.2	)
Non-cash extinguishment of debt		-			0.3
Amortization of deferred financing costs		4.1			4.6
Non-cash lease expense		35.9			30.1
Contingent consideration adjustments, including accretion		26.6			18.7
Other, net		65.2			(10.3	)
Changes in assets and liabilities (net of effects of acquisitions):
Decrease / (increase) in accounts receivable, net		330.2			132.4
Decrease / (increase) in inventories		(126.3	)		(128.3	)
Decrease / (increase) in prepaid expenses and other current assets		(20.1	)		36.2
Increase / (decrease) in accounts payable and accrued expenses		(1,242.9	)		(199.8	)
Increase / (decrease) in income and other net taxes payable		2.1			60.0
Increase / (decrease) in other assets and liabilities		(20.5	)		(52.7	)
Net cash provided by operating activities		116.5			1,234.0
Cash Flows From Investing Activities:
Additions to property, plant and equipment		(60.4	)		(64.8	)
Additions to product rights and other intangibles		(57.6	)		(7.5	)
Additions to investments		(5.0	)		(538.2	)
Proceeds from sale of investments and other assets		1,800.0			569.1
Proceeds from sales of property, plant and equipment		2.1			17.2
Acquisitions of businesses, net of cash acquired		-			(80.6	)
Net cash (used in) / provided by investing activities		1,679.1			(104.8	)
Cash Flows From Financing Activities:
Payments on debt, including finance lease obligations and credit facility		(3,031.8	)		(159.4	)
Payments of contingent consideration and other financing		(2.8	)		(2.0	)
Proceeds from stock plans		64.4			9.7
Repurchase of ordinary shares		(54.7	)		(829.2	)
Dividends paid		(243.5	)		(246.1	)
Net cash (used in) financing activities		(3,268.4	)		(1,227.0	)
Effect of currency exchange rate changes on cash and cash equivalents		(31.0	)		5.9
Net increase / (decrease) in cash and cash equivalents		(1,503.8	)		(91.9	)
Cash and cash equivalents at beginning of period		2,503.3			880.4
Cash and cash equivalents at end of period	$	999.5		$	788.5
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Income taxes other, net of refunds	$	68.7		$	105.4
Interest	$	237.6		$	252.0
Schedule of Non-Cash Investing and Financing Activities:
Dividends accrued	$	244.5		$	1.4

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	Bermuda	98-0496358
	Victoria Place, 5^th Floor
	Hamilton HM 10
	Bermuda
	(441) 295-2244

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Allergan plc Ordinary Shares, $0.0001 par value	AGN	New York Stock Exchange
Floating rate notes due 2020	AGN20A	New York Stock Exchange
0.500% notes due 2021	AGN21	New York Stock Exchange
1.500% notes due 2023	AGN 23A	New York Stock Exchange
1.250% notes due 2024	AGN 24A	New York Stock Exchange
2.625% notes due 2028	AGN28	New York Stock Exchange
2.125% notes due 2029	AGN29	New York Stock Exchange

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Allergan plc Ordinary Shares, $0.0001 par value	AGN	New York Stock Exchange

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	☐	Smaller reporting company	☐
	Emerging growth company	☐

Warner Chilcott Limited	Large accelerated filer	☐	Accelerated filer	☐
	Non-accelerated filer	☒	Smaller reporting company	☐
	Emerging growth 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 March 31, 2020 and December 31, 2019	3
	Consolidated Statements of Operations of Allergan plc for the three months ended March 31, 2020 and March 31, 2019	4
	Consolidated Statements of Comprehensive Income / (Loss) of Allergan plc for the three months ended March 31, 2020 and March 31, 2019	5
	Consolidated Statements of Cash Flows of Allergan plc for the three months ended March 31, 2020 and March 31, 2019	6
	Consolidated Statements of Equity of Allergan plc for the three months ended March 31, 2020 and March 31, 2019	7
	Consolidated Balance Sheets of Warner Chilcott Limited as of March 31, 2020 and December 31, 2019	8
	Consolidated Statements of Operations of Warner Chilcott Limited for the three months ended March 31, 2020 and March 31, 2019	9
	Consolidated Statements of Comprehensive Income / (Loss) of Warner Chilcott Limited for the three months ended March 31, 2020 and March 31, 2019	10
	Consolidated Statements of Cash Flows of Warner Chilcott Limited for the three months ended March 31, 2020 and March 31, 2019	11
	Consolidated Statements of Equity of Warner Chilcott Limited for the three months ended March 31, 2020 and March 31, 2019	12
	Notes to the Consolidated Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	54
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	70
Item 4.	Controls and Procedures	71
PART II. OTHER INFORMATION		73
Item 1.	Legal Proceedings	73
Item 1A.	Risk Factors	73
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 6.	Exhibits	75
	Signatures	76