10-Q 1 endp-3312016x10q.htm 10-Q 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549  
_______________________________
FORM 10-Q
_______________________________ 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2016
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM              TO
Commission file number: 001-36326   
____________________________________________________________________________________________
ENDO INTERNATIONAL PLC
(Exact Name of Registrant as Specified in Its Charter)  
____________________________________________________________________________________________
Ireland
68-0683755
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
 
 
First Floor, Minerva House, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland
Not applicable
(Address of Principal Executive Offices)
(Zip Code)
011-353-1-268-2000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per share
The NASDAQ Global Market, The Toronto Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
____________________________________________________________________________________________
Indicate by check whether the registrant: (1) has filed all reports required to be filed by Sections 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.    Yes x    No   o
Indicate by check 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).    Yes x     No   o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
Accelerated filer
o
 
 
 
 
Non-accelerated filer
o  (Do not check if a smaller reporting company)
Smaller reporting company
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES  o    NO   x
Indicate the number of shares outstanding of each of the issuer’s classes of ordinary shares, as of the latest practical date.
Ordinary shares, $0.0001 par value
Number of ordinary shares outstanding as of
April 29, 2016
:
222,661,344





ENDO INTERNATIONAL PLC

INDEX
 
 
Page
Forward-Looking Statements
 
 
PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
Condensed Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015
 
Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 2016 and 2015
 
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) Three Months Ended March 31, 2016 and 2015
 
Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2016 and 2015
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
 
 
 
PART II. OTHER INFORMATION
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
 
 
 
Signatures
Exhibit Index
 




FORWARD-LOOKING STATEMENTS
Statements contained or incorporated by reference in this document contain information that includes or is based on “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements, including estimates of future revenues, future expenses, future net income and future net income per share, contained in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in this document, are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed results of operations. We have tried, whenever possible, to identify such statements by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plan,” “projected,” “forecast,” “will,” “may” or similar expressions. We have based these forward-looking statements on our current expectations and projections about the growth of our business, our financial performance and the development of our industry. Because these statements reflect our current views concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption “Risk Factors” in Item 1A. of this document and in Part I, Item 1A. under the caption “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2015, supplement, and as otherwise enumerated herein, could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained or incorporated by reference in this document.
We do not undertake any obligation to update our forward-looking statements after the date of this document for any reason, even if new information becomes available or other events occur in the future, except as may be required under applicable securities law. You are advised to consult any further disclosures we make on related subjects in our reports filed with the Securities and Exchange Commission (SEC) and with securities regulators in Canada on the System for Electronic Document Analysis and Retrieval (SEDAR). Also note that, in Item 1A. of this document and in Part I, Item 1A. under the caption “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2015, we provide a cautionary discussion of the risks, uncertainties and possibly inaccurate assumptions relevant to our business. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. We note these factors for investors as permitted by Section 27A of the Securities Act and Section 21E of the Exchange Act. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this to be a complete discussion of all potential risks or uncertainties.


i


PART I. FINANCIAL INFORMATION
Item 1.        Financial Statements
ENDO INTERNATIONAL PLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share data)
 
March 31,
2016
 
December 31,
2015
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
221,968

 
$
272,348

Restricted cash and cash equivalents
521,968

 
585,379

Marketable securities
39

 
34

Accounts receivable
867,829

 
1,014,808

Inventories, net
670,454

 
752,493

Prepaid expenses and other current assets
47,728

 
55,052

Income taxes receivable
749,917

 
735,901

Assets held for sale (NOTE 3)

 
36,522

Total current assets
$
3,079,903

 
$
3,452,537

MARKETABLE SECURITIES
2,441

 
3,855

PROPERTY, PLANT AND EQUIPMENT, NET
674,097

 
675,624

GOODWILL
7,424,782

 
7,299,354

OTHER INTANGIBLES, NET
7,354,386

 
7,828,942

DEFERRED INCOME TAXES
8,937

 
10,423

OTHER ASSETS
92,254

 
79,601

TOTAL ASSETS
$
18,636,800

 
$
19,350,336

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
$
303,290

 
$
347,503

Accrued expenses
987,976

 
1,162,612

Current portion of legal settlement accrual
1,571,448

 
1,606,726

Current portion of long-term debt
335,579

 
328,705

Income taxes payable
8,674

 
8,551

Liabilities held for sale (NOTE 3)

 
20,215

Total current liabilities
$
3,206,967

 
$
3,474,312

DEFERRED INCOME TAXES
659,323

 
871,040

LONG-TERM DEBT, LESS CURRENT PORTION, NET
8,229,191

 
8,251,657

LONG-TERM LEGAL SETTLEMENT ACCRUAL, LESS CURRENT PORTION, NET
377,880

 
549,098

OTHER LIABILITIES
239,293

 
236,253

COMMITMENTS AND CONTINGENCIES (NOTE 12)


 


SHAREHOLDERS’ EQUITY:
 
 
 
Euro deferred shares, $0.01 par value; 4,000,000 shares authorized and issued
46

 
43

Ordinary shares, $0.0001 par value; 1,000,000,000 shares authorized; 222,657,468 and 222,124,282 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
22

 
22

Additional paid-in capital
8,703,520

 
8,693,385

Accumulated deficit
(2,475,084
)
 
(2,341,215
)
Accumulated other comprehensive loss
(304,358
)
 
(384,205
)
Total Endo International plc shareholders’ equity
$
5,924,146

 
$
5,968,030

Noncontrolling interests

 
(54
)
Total shareholders’ equity
$
5,924,146

 
$
5,967,976

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
18,636,800

 
$
19,350,336

See Notes to Condensed Consolidated Financial Statements.

1


ENDO INTERNATIONAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
 
Three Months Ended March 31,
 
2016
 
2015
 TOTAL REVENUES
$
963,539

 
$
714,128

 COSTS AND EXPENSES:
 
 
 
Cost of revenues
688,705

 
384,266

Selling, general and administrative
178,355

 
211,578

Research and development
41,692

 
17,897

Litigation-related and other contingencies, net
5,200

 
13,000

Asset impairment charges
129,625

 
7,000

Acquisition-related and integration items
12,554

 
34,640

 OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS
$
(92,592
)
 
$
45,747

 INTEREST EXPENSE, NET
116,793

 
73,139

 LOSS ON EXTINGUISHMENT OF DEBT

 
980

 OTHER INCOME, NET
(1,907
)
 
(11,995
)
 LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX
$
(207,478
)
 
$
(16,377
)
 INCOME TAX BENEFIT
(118,715
)
 
(166,869
)
 (LOSS) INCOME FROM CONTINUING OPERATIONS
$
(88,763
)
 
$
150,492

 DISCONTINUED OPERATIONS, NET OF TAX (NOTE 3)
(45,108
)
 
(226,210
)
 CONSOLIDATED NET LOSS
$
(133,871
)
 
$
(75,718
)
 Less: Net loss attributable to noncontrolling interests
(2
)
 

 NET LOSS ATTRIBUTABLE TO ENDO INTERNATIONAL PLC
$
(133,869
)
 
$
(75,718
)
 NET LOSS PER SHARE ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS—BASIC:
 
 
 
Continuing operations
$
(0.40
)
 
$
0.89

Discontinued operations
(0.20
)
 
(1.34
)
Basic
$
(0.60
)
 
$
(0.45
)
 NET LOSS PER SHARE ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS—DILUTED:
 
 
 
Continuing operations
$
(0.40
)
 
$
0.85

Discontinued operations
(0.20
)
 
(1.28
)
Diluted
$
(0.60
)
 
$
(0.43
)
 WEIGHTED AVERAGE SHARES:
 
 
 
Basic
222,302

 
169,653

Diluted
222,302

 
176,825

See Notes to Condensed Consolidated Financial Statements.

2


ENDO INTERNATIONAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(In thousands)
 
Three Months Ended March 31,
 
2016
 
2015
 CONSOLIDATED NET LOSS
 
 
$
(133,871
)
 
 
 
$
(75,718
)
 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
 
 
 
 
 
 
 
 Net unrealized (loss) gain on securities:
 
 
 
 
 
 
 
Unrealized (loss) gain arising during the period
$
(860
)
 
 
 
$
1,513

 
 
Less: reclassification adjustments for loss (gain) realized in net loss

 
(860
)
 

 
1,513

Foreign currency translation gain (loss)


 
80,763

 


 
(131,348
)
 OTHER COMPREHENSIVE INCOME (LOSS)
 
 
$
79,903

 
 
 
$
(129,835
)
 CONSOLIDATED COMPREHENSIVE LOSS
 
 
$
(53,968
)
 
 
 
$
(205,553
)
Less: Net loss attributable to noncontrolling interests
 
 
(2
)
 
 
 

Less: Other comprehensive income (loss) attributable to noncontrolling interests
 
 
56

 
 
 
(606
)
 COMPREHENSIVE LOSS ATTRIBUTABLE TO ENDO INTERNATIONAL PLC
 
 
$
(54,022
)
 
 
 
$
(204,947
)
See Notes to Condensed Consolidated Financial Statements.

3


ENDO INTERNATIONAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
Three Months Ended March 31,
 
2016
 
2015
OPERATING ACTIVITIES:
 
 
 
Consolidated net loss
$
(133,871
)
 
$
(75,718
)
Adjustments to reconcile consolidated net loss to Net cash used in operating activities:
 
 
 
Depreciation and amortization
236,089

 
119,590

Inventory step-up
61,370

 
37,554

Share-based compensation
14,967

 
13,837

Amortization of debt issuance costs and discount
6,373

 
5,947

Provision for bad debts
7,311

 
232

Deferred income taxes
(161,301
)
 
(164,535
)
Net loss on disposal of property, plant and equipment
527

 
52

Change in fair value of contingent consideration
(10,688
)
 
(808
)
Loss on extinguishment of debt

 
980

Asset impairment charges
150,804

 
229,753

Gain on sale of business and other assets
(525
)
 

Changes in assets and liabilities which (used) provided cash:
 
 
 
Accounts receivable
142,153

 
(39,941
)
Inventories
18,483

 
(10,166
)
Prepaid and other assets
17,648

 
7,388

Accounts payable
(44,254
)
 
6,267

Accrued expenses
(192,075
)
 
80,034

Other liabilities
(146,938
)
 
(223,415
)
Income taxes payable/receivable
(15,898
)
 
(76,859
)
Net cash used in operating activities
$
(49,825
)
 
$
(89,808
)
INVESTING ACTIVITIES:
 
 
 
Purchases of property, plant and equipment
(25,998
)
 
(17,189
)
Proceeds from sale of intellectual property and property, plant and equipment
2,313

 

Acquisitions, net of cash acquired

 
(911,892
)
Proceeds from notes receivable

 
17

Patent acquisition costs and license fees
(13,000
)
 

Proceeds from sale of business, net
4,108

 
4,712

Increase in restricted cash and cash equivalents
(121,031
)
 
(172,900
)
Decrease in restricted cash and cash equivalents
184,678

 
166,768

Net cash provided by (used in) investing activities
$
31,070

 
$
(930,484
)

4


 
Three Months Ended March 31,
 
2016
 
2015
FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of notes

 
1,200,000

Principal payments on term loans
(20,750
)
 
(11,375
)
Principal payments on other indebtedness, net
(1,109
)
 
(270
)
Repurchase of convertible senior subordinated notes

 
(149,068
)
Deferred financing fees
(500
)
 
(20,482
)
Payment for contingent consideration
(9,405
)
 
(4,723
)
Tax benefits of share awards
4,058

 
16,797

Payments of tax withholding for restricted shares
(10,272
)
 
(11,930
)
Exercise of options
1,952

 
18,470

Issuance of ordinary shares related to the employee stock purchase plan
1,434

 
1,118

Payments related to the issuance of ordinary shares

 
(2,068
)
Cash buy-out of noncontrolling interests

 
(39,608
)
Net cash (used in) provided by financing activities
$
(34,592
)
 
$
996,861

Effect of foreign exchange rate
$
2,967

 
$
(7,861
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
$
(50,380
)
 
$
(31,292
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
272,348

 
408,753

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
221,968

 
$
377,461

SUPPLEMENTAL INFORMATION:
 
 
 
Cash paid into Qualified Settlement Funds for mesh legal settlements
$
120,919

 
$
170,739

Cash paid out of Qualified Settlement Funds for mesh legal settlements
$
184,678

 
$
127,160

Other cash distributions for mesh legal settlements
$
1,561

 
$
3,815

SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
 
 
Purchases of property, plant and equipment financed by capital leases
$

 
$
54

Accrual for purchases of property, plant and equipment
$
1,897

 
$
3,179

Acquisition financed by ordinary shares
$

 
$
1,519,318

Repurchase of convertible senior subordinated notes financed by ordinary shares
$

 
$
408,585

See Notes to Condensed Consolidated Financial Statements.

5


ENDO INTERNATIONAL PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2016

NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements of Endo International plc and its subsidiaries have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements of Endo International plc and its subsidiaries, which are unaudited, include all normal and recurring adjustments necessary to a fair statement of the Company’s financial position as of March 31, 2016 and the results of our operations and our cash flows for the periods presented. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The year-end Condensed Consolidated Balance Sheets data as of December 31, 2015 was derived from the audited financial statements.
Unless otherwise indicated or required by the context, references throughout to “Endo”, the “Company”, “we”, “our” or “us” refer to financial information and transactions of Endo International plc and its subsidiaries.
Endo International plc is an Ireland-domiciled, global specialty pharmaceutical company focused on branded and generic pharmaceuticals. Our goal is to be the premier partner to healthcare professionals and payment providers, delivering an innovative suite of branded and generic drugs to meet patients’ needs.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2015.
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards update (ASU) No. 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those goods or services. This ASU sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”, which deferred the effective date of ASU 2014-09 by one year, but permits entities to adopt one year earlier if they choose (i.e., the original effective date). As such, ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2017 and the Company currently plans to adopt it on January 1, 2018. In addition, during March and April 2016, the FASB issued ASU No. 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Consideration (Reporting Revenue Gross versus Net)” and ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”, respectively, which clarified the guidance on reporting revenue as a principal versus agent, identifying performance obligations and accounting for intellectual property licenses. The Company is currently evaluating the impact of this standard on the Company’s consolidated results of operations and financial position including possible transition alternatives.
In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (ASU 2015-11). ASU 2015-11 states that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For public entities, ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in this update should be applied prospectively and early application is permitted. The Company is currently evaluating the impact of ASU 2015-11 on the Company’s consolidated results of operations and financial position.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (ASU 2016-02). ASU 2016-02 establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This guidance results in a more faithful representation of the rights and obligations arising from operating and capital leases by requiring lessees to recognize the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions, such as information about variable lease payments and options to renew and terminate leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2016-02 on the Company’s consolidated results of operations and financial position.
In March 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-09 “Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). ASU 2016-09 will change how companies account for certain aspects of share-based payments

6


to employees including: (a) require all income tax effects of awards to be recognized in the income statement, rather than in additional paid in capital, when the awards vest or are settled, (b) eliminates the requirement that excess tax benefits be realized before companies can recognize them, (c) require companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity, (d) increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation, (e) require an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows and (f) elect whether to account for forfeitures of share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period but all of ASU 2016-09 must be adopted in the same period. The Company is currently evaluating the impact of ASU 2016-09 on the Company’s consolidated results of operations and financial position.
NOTE 3. DISCONTINUED OPERATIONS AND HELD FOR SALE
American Medical Systems
On February 24, 2015, the Board of Directors approved a plan to sell the Company’s American Medical Systems Holdings, Inc. (AMS) business, which comprised the entirety of our former Devices segment. The AMS business was comprised of the Men’s Health and Prostate Health business as well as the Women’s Health business (referred to herein as Astora). On August 3, 2015, the Company sold the Men’s Health and Prostate Health business to Boston Scientific Corporation (Boston Scientific) for $1.65 billion, with $1.60 billion paid upfront in cash and $50.0 million in cash contingent on Boston Scientific achieving certain product revenue milestones in the Men’s Health and Prostate Health business in 2016. In addition, Boston Scientific paid $60.0 million in exchange for 60,000 shares of American Medical Systems Holdings, Inc. Series B Non-Voting Preferred Stock (Series B Senior Preferred Stock) sold by our subsidiary Endo Pharmaceuticals Inc. (EPI). On December 11, 2015, the Company redeemed all 60,000 shares of the Series B Senior Preferred Stock from Boston Scientific for $61.6 million, including accrued and unpaid dividends.
In addition to selling the Men’s Health and Prostate Health business in 2015, as of December 31, 2015 and continuing into 2016, the Company was actively pursuing a sale of the Astora business with the Company in active negotiations with multiple potential buyers. The majority of the remaining assets and liabilities of the AMS business, which were related to the Astora business, were classified as held for sale in the Consolidated Balance Sheet as of December 31, 2015 in the Company’s Form 10-K filed with the SEC on February 29, 2016. Certain of AMS’s assets and liabilities, primarily with respect to its product liability accrual related to vaginal mesh cases, the related Qualified Settlement Funds and certain intangible and fixed assets, were not classified as held for sale based on management’s expectation that these assets and liabilities would remain with the Company.
On February 24, 2016, the Company’s Board of Directors resolved to wind down the Company’s Astora business as it did not align with the Company’s strategic direction and to reduce the additional exposure to mesh-related product liability. The Company conducted a wind down process to transition physicians to alternative products during the first quarter of 2016. The Company ceased business operations for Astora on March 31, 2016 and exited its AMS business. As a result, as of March 31, 2016, the remaining assets and liabilities of the AMS business, which were related to the Astora business, were no longer classified as held for sale in the Condensed Consolidated Balance Sheets. In accordance with applicable accounting guidance, the Company also reclassified the Astora assets and liabilities previously presented as held for sale as of December 31, 2015 to held and used on its Condensed Consolidated Balance Sheets.
The operating results of the AMS business are reported as Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for all periods presented.

7


The following table provides the operating results of the Discontinued operations of AMS, net of tax for the three months ended March 31, 2016 and 2015 (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Revenue
$
28,851

 
$
118,665

Litigation related and other contingencies, net
$
2,450

 
$
5,200

Asset impairment charges
$
21,179

 
$
222,753

Loss from discontinued operations before income taxes
$
(68,832
)
 
$
(229,858
)
Income tax benefit
$
(23,724
)
 
$
(3,648
)
Discontinued operations, net of tax
$
(45,108
)
 
$
(226,210
)
As a result of the Astora wind down initiative announced in the first quarter of 2016, the Company incurred asset impairment charges of $21.2 million. See below for discussion of our material wind down initiatives.
The following table provides the Depreciation and amortization and Purchases of property, plant and equipment of AMS for the three months ended March 31, 2016 and 2015 (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Cash flows from discontinued operating activities:
 
 
 
Net loss
$
(45,108
)
 
$
(226,210
)
Depreciation and amortization
$

 
$
11,555

Net cash used in discontinued investing activities:
 
 
 
Purchases of property, plant and equipment
$
(138
)
 
$
(934
)
Astora Restructuring
The wind down process includes a restructuring initiative implemented during the three months ended March 31, 2016, which includes the reduction of the Astora workforce consisting of approximately 250 employees. Under this restructuring initiative, separation costs are expensed over the requisite service period, if any, while retention is being expensed ratably over the respective retention period.
As a result of the Astora restructuring initiative, the Company incurred expenses of $60.7 million during the three months ended March 31, 2016, consisting of employee separation, retention and other benefit-related costs, asset impairment charges, contract termination charges and other general restructuring costs. There were no restructuring expenses related to this initiative during the three months ended March 31, 2015. The Company anticipates there will be additional pre-tax restructuring expenses of $12.8 million related to employee separation, retention and other benefit-related costs, contract termination charges, and other restructuring costs and the majority of these actions are expected to be completed by September 30, 2016, with substantially all cash payments made by the end of 2016. These restructuring costs are included in Discontinued operations in the Condensed Consolidated Statements of Operations.
A summary of expenses related to the Astora restructuring initiative is included below for the three months ended March 31, 2016 (in thousands):
 
Three Months Ended March 31, 2016
Employee separation, retention and other benefit-related costs
$
16,149

Asset impairment charges
21,179

Contract termination charges
10,224

Other wind down costs
13,121

Total
$
60,673


8


The liability related to the Astora restructuring initiative totaled $39.0 million as of March 31, 2016 and is included in Accrued expenses in the Condensed Consolidated Balance Sheets. Changes to this accrual during the three months ended March 31, 2016 were as follows (in thousands):
 
Employee Separation, Retention and Other Benefit-Related Costs
 
Contract Termination Charges
 
Other Restructuring Costs
 
Total
Liability balance as of January 1, 2016
$

 
$

 
$

 
$

Expenses
16,149

 
10,224

 
13,121

 
39,494

Cash distributions

 

 
(445
)
 
(445
)
Liability balance as of March 31, 2016
$
16,149

 
$
10,224

 
$
12,676

 
$
39,049

Other
During the three months ended March 31, 2016, the Company divested a component of its international business that was not individually material.
NOTE 4. RESTRUCTURING
U.S. Generic Pharmaceuticals Restructuring
2015 U.S Generic Pharmaceuticals Restructuring
In connection with the acquisition of Par Pharmaceutical Holdings, Inc. (Par) on September 25, 2015, we implemented cost-rationalization and integration initiatives to capture operating synergies and generate cost savings across the Company. These measures included realigning the Company’s U.S. Generic Pharmaceuticals segment sales, sales support, management activities and staffing, which resulted in separation benefits to certain U.S. Generic Pharmaceuticals employees. The cost reduction initiatives included a reduction in headcount of approximately 6% of the U.S. Generic Pharmaceuticals workforces. Under this restructuring initiative (the 2015 U.S. Generic Pharmaceuticals restructuring initiative), separation costs are expensed over the requisite service period, if any, while retention is being expensed ratably over the respective retention period.
As a result of the 2015 U.S. Generic Pharmaceuticals restructuring initiative, the Company incurred restructuring expenses of $3.5 million during the three months ended March 31, 2016, consisting of employee separation, retention and other benefit-related costs. There were no restructuring expenses related to this initiative during the three months ended March 31, 2015. The Company anticipates there will be additional pre-tax restructuring expenses of $1.6 million related to employee separation, retention and other benefit-related costs and these actions are expected to be completed by October 31, 2016, with substantially all cash payments made by the end of 2016. In addition, the Company anticipates there will be additional pre-tax restructuring expenses of $9.8 million related to accelerated depreciation on certain assets. These restructuring costs are allocated to the U.S. Generic Pharmaceuticals segment, and are primarily included in Selling, general and administrative costs and expenses in the Condensed Consolidated Statements of Operations.
The liability related to the 2015 U.S. Generic Pharmaceuticals restructuring initiative totaled $17.3 million and $17.9 million at March 31, 2016 and December 31, 2015, respectively. At March 31, 2016, this liability is included in Accrued expenses in the Condensed Consolidated Balance Sheets. Changes to this accrual during the three months ended March 31, 2016 were as follows (in thousands):
 
Total
Liability balance as of January 1, 2016
$
17,914

Expenses
3,464

Cash distributions
(4,056
)
Liability balance as of March 31, 2016
$
17,322

2016 U.S Generic Pharmaceuticals Restructuring
As part of the ongoing U.S. Generic Pharmaceuticals integration efforts, in May 2016 we announced a restructuring initiative to optimize our product portfolio and rationalize our manufacturing sites to expand product margins (the 2016 U.S. Generic Pharmaceuticals restructuring initiative). These measures include certain cost savings initiatives, including a reduction in headcount and the closing of the Charlotte, North Carolina manufacturing facility.
As a result of the 2016 U.S. Generic Pharmaceuticals restructuring initiative, the Company expects to incur total restructuring-related expenses of approximately $200 million, consisting of asset impairment charges, charges to increase excess inventory reserves, employee separation, retention and other benefit-related costs and certain other charges. The Company anticipates these actions will be

9


completed by September 2017, with substantially all cash payments made by the end of 2017. Under this restructuring initiative, separation costs will be expensed ratably over the requisite service period, if any. As a result of the 2016 U.S. Generic Pharmaceuticals restructuring initiative, the Company incurred pretax charges of $127.2 million during the three months ended March 31, 2016, consisting of certain intangible asset impairment charges of $100.3 million and charges to increase excess inventory reserves of $26.9 million. These charges are included in the U.S. Generic Pharmaceuticals segment, and are included in Asset impairment charges and Cost of revenues, respectively, in the Condensed Consolidated Statements of Operations.
Auxilium Restructuring
In connection with the acquisition of Auxilium Pharmaceuticals, Inc. (Auxilium) on January 29, 2015, the Company implemented cost-rationalization and integration initiatives to capture operating synergies and generate cost savings across the Company. These measures included realigning our sales, sales support, management activities and staffing, which included separation benefits to former Auxilium employees, in addition to the closing of duplicative facilities. The cost reduction initiatives included a reduction in headcount of approximately 40% of the former Auxilium workforce. For former Auxilium employees that agreed to continue employment with the Company for a merger transition period, the separation costs payable upon completion of their retention period was expensed over their respective retention period. The Company does not anticipate there will be additional material pre-tax restructuring expenses related to this initiative. The Company anticipates that substantially all employee separation, retention and other benefit-related costs cash payments relating to this initiative will be made by the end of 2016. The remainder of the cash payments will be made over the remaining lease term of Auxilium’s former corporate headquarters in Chesterbrook, Pennsylvania. These restructuring costs are included in the U.S. Branded Pharmaceuticals segment, and are primarily included in Selling, general and administrative costs and expenses in the Condensed Consolidated Statements of Operations.
The liability related to the Auxilium restructuring initiative totaled $8.7 million and $12.3 million at March 31, 2016 and December 31, 2015, respectively, and is included in Accrued expenses and Other liabilities in the Condensed Consolidated Balance Sheets. Changes to this accrual during the three months ended March 31, 2016 were as follows (in thousands):
 
Employee Separation, Retention and Other Benefit-Related Costs
 
Other Restructuring Costs
 
Total
Liability balance as of January 1, 2016
$
5,353

 
$
6,910

 
$
12,263

Cash distributions
(3,222
)
 
(377
)
 
(3,599
)
Liability balance as of March 31, 2016
$
2,131

 
$
6,533

 
$
8,664

NOTE 5. ACQUISITIONS
For each of the acquisitions described below, except for Auxilium, the estimated fair values of the net assets acquired are provisional as of March 31, 2016 and are based on information that is currently available to the Company. Additional information is being gathered to finalize these provisional measurements. Accordingly, the measurement of the assets acquired and liabilities assumed may change upon finalization of the Company’s valuations and completion of the purchase price allocations, all of which are expected to occur no later than one year from the respective acquisition dates.
Auxilium Pharmaceuticals, Inc.
On January 29, 2015 (the Auxilium Acquisition Date), the Company acquired all of the outstanding shares of common stock of Auxilium, a fully integrated specialty biopharmaceutical company emerging as a leader in the men’s healthcare sector with a strategically focused product portfolio and pipeline in orthopedics, dermatology and other therapeutic areas, in a transaction valued at $2.6 billion. The Company believed that Auxilium would be highly complementary to its branded pharmaceuticals business with significant opportunities to leverage Auxilium’s leading presence in men’s health, as well as the Company’s R&D capabilities and financial resources to accelerate the growth of Auxilium’s XIAFLEX® and its other products.
The operating results of Auxilium are included in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and the operating results from the acquisition date of January 29, 2015 are included in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2015.
The Company recognized no acquisition-related transaction costs associated with the Auxilium acquisition during the three months ended March 31, 2016. The Company recognized acquisition-related transaction costs associated with the Auxilium acquisition during the three months ended March 31, 2015 totaling $19.4 million. These costs, which related primarily to bank fees, legal and accounting services, and fees for other professional services, are included in Acquisition-related and integration items in the accompanying Condensed Consolidated Statements of Operations.

10


The amounts of Auxilium Revenue and Net loss attributable to Endo International plc included in the Company’s Condensed Consolidated Statements of Operations from and including January 29, 2015 to March 31, 2015 are as follows (in thousands, except per share data):
Revenue
$
66,796

Net loss attributable to Endo International plc
$
(50,907
)
Basic net loss per share
$
(0.30
)
Diluted net loss per share
$
(0.29
)
The following supplemental unaudited pro forma information presents the financial results as if the acquisition of Auxilium had occurred on January 1, 2015 for the three months ended March 31, 2015. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on January 1, 2015, nor are they indicative of any future results.
 
Three Months Ended March 31, 2015
Unaudited pro forma consolidated results (in thousands, except per share data):
 
Revenue
$
737,703

Net loss attributable to Endo International plc
$
(82,582
)
Basic net loss per share
$
(0.49
)
Diluted net loss per share
$
(0.47
)
These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Auxilium to reflect factually supportable adjustments that give effect to events that are directly attributable to the Auxilium acquisition assuming the Auxilium acquisition had occurred on January 1, 2015. These adjustments mainly include adjustments to interest expense and additional intangible amortization. The adjustments to interest expense, net of tax, related to borrowings to finance the acquisition increased the expense by $1.1 million for the three months ended March 31, 2015. In addition, the adjustments include additional intangible amortization, net of tax, which would have been charged assuming the Company’s estimated fair value of the intangible assets. An adjustment to the amortization expense for the three months ended March 31, 2015 increased the expense by $6.9 million.
Acquisition of Par Pharmaceutical Holdings, Inc.
On September 25, 2015 (Par Acquisition Date), the Company acquired Par, a specialty pharmaceutical company that develops, licenses, manufactures, markets and distributes innovative and cost-effective pharmaceuticals with a focus on high-barrier-to-entry products that are difficult to formulate, for total consideration of $8.14 billion, including the assumption of Par debt. The consideration included the Company’s 18,069,899 ordinary shares valued at $1.33 billion.
The operating results of Par are included in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2016. There are no results included in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2015

11


The following table summarizes the fair values of the assets acquired and liabilities assumed at the Par Acquisition Date, including measurement period adjustments since the fair values presented in the Company’s Form 10-K for the year ended December 31, 2015 filed with the SEC on February 29, 2016, (in thousands):
 
September 25, 2015
 
Measurement period adjustments
 
September 25, 2015
(As adjusted)
Cash and cash equivalents
$
215,612

 
$

 
$
215,612

Accounts and other receivables
530,664

 
(13,500
)
 
517,164

Inventories
330,406

 
(1,849
)
 
328,557

Prepaid expenses and other current assets
31,124

 

 
31,124

Deferred income tax assets, current
14,652

 
660

 
15,312

Property, plant and equipment
256,293

 
4,744

 
261,037

Intangible assets
3,627,000

 
(154,500
)
 
3,472,500

Other assets
8,477

 

 
8,477

Total identifiable assets
$
5,014,228

 
$
(164,445
)
 
$
4,849,783

Accounts payable and accrued expenses
$
551,614

 
$
(13,500
)
 
$
538,114

Deferred income tax liabilities
1,093,779

 
(53,515
)
 
1,040,264

Other liabilities
16,057

 

 
16,057

Total liabilities assumed
$
1,661,450

 
$
(67,015
)
 
$
1,594,435

Net identifiable assets acquired
$
3,352,778

 
$
(97,430
)
 
$
3,255,348

Goodwill
4,782,876

 
97,430

 
4,880,306

Net assets acquired
$
8,135,654

 
$

 
$
8,135,654

The estimated fair value of the Par assets acquired and liabilities assumed are provisional as of March 31, 2016 and are based on information that is currently available to the Company. Additional information is being gathered to finalize these provisional measurements, particularly with respect to property, plant and equipment, intangible assets, inventory, accrued expenses, deferred income taxes and income taxes payable. Accordingly, the measurement of the Par assets acquired and liabilities assumed may change significantly upon finalization of the Company’s valuations and completion of the purchase price allocation, both of which are expected to occur no later than one year from the acquisition date. During the three months ended March 31, 2016, the Company recorded a reduction of $3.8 million of expense, $3.1 million related to the amortization of intangible assets and $0.7 million related to the amortization of inventory step-up, as a result of the measurement period adjustments recorded above.

12


The valuation of the intangible assets acquired and related amortization periods are as follows:
 
Valuation (in millions) 
 
Amortization period (in years)  
Developed Technology:
 
 
 
VasostrictTM
$
556.0

 
8
Aplisol®
312.4

 
11
Developed - Other - Non-Partnered (Generic Non-Injectable)
230.4

 
7
Developed - Other - Partnered (Combined)
164.4

 
7
Nascobal®
118.3

 
9
Developed - Other - Non-Partnered (Generic Injectable)
116.4

 
10
Other
517.9

 
9
Total
$
2,015.8

 
 
In Process Research & Development (IPR&D):
 
 
 
IPR&D 2019 Launch
$
401.0

 
n/a
IPR&D 2018 Launch
283.8

 
n/a
Ezetimibe
147.6

 
n/a
IPR&D 2016 Launch
133.3

 
n/a
Ephedrine Sulphate
128.6

 
n/a
Neostigmine vial
118.6

 
n/a
Other
243.8

 
n/a
Total
$
1,456.7

 
n/a
Total other intangible assets
$
3,472.5

 
n/a
The preliminary fair values of the developed technology and IPR&D assets were estimated using a discounted present value income approach. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company used cash flows discounted at rates ranging from 9% to 10.5%, which were considered appropriate given the inherent risks associated with each type of asset. The Company believes that the level and timing of cash flows appropriately reflect market participant assumptions.
The goodwill recognized is attributable primarily to strategic and synergistic opportunities related to existing pharmaceutical businesses, the assembled workforce of Par and other factors. Approximately $34.2 million of goodwill is expected to be deductible for income tax purposes.
Deferred tax assets and liabilities are related primarily to the difference between the book basis and tax basis of identifiable intangible assets and inventory step-up.
The following supplemental unaudited pro forma information presents the financial results as if the acquisition of Par had occurred on January 1, 2015 for the three months ended March 31, 2015. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on January 1, 2015, nor are they indicative of any future results.
 
Three Months Ended March 31, 2015
Unaudited pro forma consolidated results (in thousands, except per share data):
 
Revenue
$
1,073,372

Net loss attributable to Endo International plc
$
(100,462
)
Basic net loss per share
$
(0.59
)
Diluted net loss per share
$
(0.57
)
These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Par to reflect factually supportable adjustments that give effect to events that are directly attributable to the Par acquisition assuming the Par acquisition had occurred on January 1, 2015. These adjustments mainly include adjustments to interest expense and additional intangible amortization. The adjustments to interest expense, net of tax, related to borrowings to finance the acquisition increased

13


the expense by $6.8 million for the three months ended March 31, 2015. In addition, the adjustments include additional intangible amortization, net of tax, that would have been charged assuming the Company’s estimated fair value of the intangible assets. An adjustment to the amortization expense for the three months ended March 31, 2015 increased the expense by $38.3 million.
Aspen Holdings
On October 1, 2015, the Company acquired a broad portfolio of branded and generic injectable and established products focused on pain, anti-infectives, cardiovascular and other specialty therapeutic areas from a subsidiary of Aspen Holdings, a leading publicly-traded South African company that supplies branded and generic products in more than 150 countries, and from GlaxoSmithKline plc (GSK) for total consideration of approximately $135.6 million. The transaction expanded the Company’s presence in South Africa.
The fair values of the net identifiable assets acquired totaled $128.7 million, resulting in goodwill of $6.9 million, which was assigned to our International Pharmaceuticals segment. The amount of net identifiable assets acquired in connection with the Aspen Holdings acquisition includes $118.4 million of intangible assets to be amortized over an average life of approximately 19 years, and inventory of $10.3 million.
The operating results of Aspen Holdings are included in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2016. There are no results included in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2015. The Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 reflect the acquisition of Aspen Holdings, effective October 1, 2015.
Pro forma results of operations have not been presented because the effect of the Aspen Holdings acquisition was not material.
NOTE 6. SEGMENT RESULTS
The reportable business segments in which the Company operates are: (1) U.S. Branded Pharmaceuticals, (2) U.S. Generic Pharmaceuticals and (3) International Pharmaceuticals. These segments reflect the level at which the chief operating decision maker regularly reviews financial information to assess performance and to make decisions about resources to be allocated. Each segment derives revenue from the sales or licensing of its respective products and is discussed in more detail below.
We evaluate segment performance based on each segment’s adjusted income (loss) from continuing operations before income tax, which we define as loss from continuing operations before income tax before certain upfront and milestone payments to partners; acquisition-related and integration items, including transaction costs, earn-out payments or adjustments, changes in the fair value of contingent consideration and bridge financing costs; cost reduction and integration-related initiatives such as separation benefits, retention payments, other exit costs and certain costs associated with integrating an acquired company’s operations; excess costs that will be eliminated pursuant to integration plans; asset impairment charges; amortization of intangible assets; inventory step-up recorded as part of our acquisitions; certain non-cash interest expense; litigation-related and other contingent matters; gains or losses from early termination of debt activities; foreign currency gains or losses on intercompany financing arrangements; and certain other items that the Company believes do not reflect its core operating performance.
Certain of the corporate general and administrative expenses incurred by the Company are not attributable to any specific segment. Accordingly, these costs are not allocated to any of the Company’s segments and are included in the results below as “Corporate unallocated”. The Company’s consolidated adjusted income from continuing operations before income tax is equal to the combined results of each of its segments less these unallocated corporate costs.
U.S. Branded Pharmaceuticals
Our U.S. Branded Pharmaceuticals segment includes a variety of branded prescription products related to treating and managing pain as well as our urology and men’s health, endocrinology and orthopedic products. The marketed products that are included in this segment include Lidoderm®, OPANA® ER, Voltaren® Gel, Percocet®, BELBUCA™, Aveed®, Supprelin® LA, and XIAFLEX®, among others.
U.S. Generic Pharmaceuticals
Our U.S. Generic Pharmaceuticals segment consists of a differentiated product portfolio including high barrier-to-entry products, first-to-file or first-to-market opportunities, which are difficult to formulate, difficult to manufacture or face complex legal and regulatory challenges. The product offerings of this segment include products in the pain management, urology, CNS disorders, immunosuppression, oncology, women’s health and cardiovascular disease markets, among others.
International Pharmaceuticals
Our International Pharmaceuticals segment includes a variety of specialty pharmaceutical products for the Canadian, Mexican, South African and world markets. Paladin, based in Canada, has a portfolio of products serving growing therapeutic areas, including

14


ADHD, pain, women’s health and oncology. Somar, based in Mexico, develops, manufactures and markets high-quality generic, branded generic and over-the-counter products across key market segments including dermatology and anti-infectives. Litha, based in South Africa, is a diversified healthcare group providing services, products and solutions to public and private hospitals, pharmacies, general and specialist practitioners, as well as government healthcare programs.
The following represents selected information for the Company’s reportable segments for the three months ended March 31, 2016 and 2015 (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Net revenues to external customers:
 
 
 
U.S. Branded Pharmaceuticals
$
308,813

 
$
284,507

U.S. Generic Pharmaceuticals
583,390

 
356,962

International Pharmaceuticals (1)
71,336

 
72,659

Total net revenues to external customers
$
963,539

 
$
714,128

 
 
 
 
Adjusted income from continuing operations before income tax:
 
 
 
U.S. Branded Pharmaceuticals
$
168,781

 
$
158,794

U.S. Generic Pharmaceuticals
$
211,768

 
$
183,457

International Pharmaceuticals
$
21,754

 
$
16,567

__________
(1)
Revenues generated by our International Pharmaceuticals segment are primarily attributable to Canada, Mexico and South Africa.
In 2015, we realigned certain costs between our International Pharmaceuticals segment, U.S. Branded Pharmaceuticals segment and corporate unallocated costs based on how our chief operating decision maker currently reviews segment performance. As a result of this realignment, certain expenses included in our consolidated adjusted income (loss) from continuing operations before income tax for the three months ended March 31, 2015 have been reclassified among our various segments to conform to current period presentation. The net impact of these reclassification adjustments increased U.S. Branded Pharmaceuticals segment and corporate unallocated costs by $0.6 million and $7.6 million, respectively, with an offsetting $8.2 million decrease to International Pharmaceuticals segment costs.    
There were no material revenues from external customers attributed to an individual country outside of the United States during the three months ended March 31, 2016, or 2015.

15


The table below provides reconciliations of our segment adjusted income from continuing operations before income tax to our consolidated loss from continuing operations before income tax, which is determined in accordance with U.S. GAAP, for the three months ended March 31, 2016 and 2015 (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Total segment adjusted income from continuing operations before income tax:
$
402,303

 
$
358,818

Corporate unallocated costs (1)
(153,073
)
 
(111,068
)
Upfront and milestone payments to partners
(1,417
)
 
(2,667
)
Asset impairment charges (2)
(129,625
)
 
(7,000
)
Acquisition-related and integration items (3)
(12,554
)
 
(34,640
)
Separation benefits and other cost reduction initiatives (4)
(38,456
)
 
(41,807
)
Amortization of intangible assets
(211,669
)
 
(95,269
)
Inventory step-up and certain manufacturing costs that will be eliminated pursuant to integration plans
(68,476
)
 
(39,916
)
Non-cash interest expense related to the 1.75% Convertible Senior Subordinated Notes

 
(1,379
)
Loss on extinguishment of debt

 
(980
)
Impact of Voltaren® Gel generic competition
7,750

 

Certain litigation-related charges, net (5)
(5,200
)
 
(13,000
)
Costs associated with unused financing commitments

 
(11,810
)
Acceleration of Auxilium employee equity awards at closing

 
(37,603
)
Foreign currency impact related to the remeasurement of intercompany debt instruments
(1,255
)
 
21,090

Other, net
4,194

 
854

Total consolidated loss from continuing operations before income tax
$
(207,478
)
 
$
(16,377
)
__________
(1)
Corporate unallocated costs include certain corporate overhead costs, interest expense, net, and certain other income and expenses.
(2)
Asset impairment charges primarily related to charges to write down intangible assets as further described in Note 9. Goodwill and Other Intangibles.
(3)
Acquisition-related and integration-items include costs directly associated with previous acquisitions of $23.2 million for the three months ended March 31, 2016 and $35.4 million for the comparable 2015 period. During 2016 and 2015, these costs are net of a benefit due to changes in the fair value of contingent consideration of $10.7 million and $0.8 million, respectively.
(4)
Separation benefits and other cost reduction initiatives include charges to increase excess inventory reserves of $26.9 million related to the 2016 U.S. Generic Pharmaceuticals restructuring initiative, employee separation costs of $6.8 million and other restructuring costs of $4.4 million for the three months ended March 31, 2016. Amounts in the comparable 2015 period include employee separation costs of $32.4 million and a $7.9 million charge recorded upon the cease use date of our Auxilium subsidiary’s former corporate headquarters, representing the liability for our remaining obligations under the respective lease agreement, net of estimated sublease income. These amounts were primarily recorded as Selling, general and administrative expense in our Condensed Consolidated Statements of Operations. See Note 4. Restructuring for discussion of our material restructuring initiatives.
(5)
These amounts include charges for Litigation-related and other contingencies, net as further described in Note 12. Commitments and Contingencies.
Interest income and expense are considered corporate items and included in Corporate unallocated. Asset information is not reviewed or included within our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.
NOTE 7. FAIR VALUE MEASUREMENTS
Financial Instruments
The financial instruments recorded in our Condensed Consolidated Balance Sheets include cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, marketable securities, equity and cost method investments, accounts payable and accrued expenses, acquisition-related contingent consideration and debt obligations. Included in cash and cash equivalents and restricted cash and cash equivalents are money market funds representing a type of mutual fund required by law to invest in low-risk securities (for example, U.S. government bonds, U.S. Treasury Bills and commercial paper). Money market funds are structured to maintain the fund’s net asset value at $1.00 per unit, which assists in providing adequate liquidity upon demand by the holder. Money

16


market funds pay dividends that generally reflect short-term interest rates. Thus, only the dividend yield fluctuates. Due to their short-term maturity, the carrying amounts of non-restricted and restricted cash and cash equivalents (including money market funds), accounts receivable, accounts payable and accrued expenses approximate their fair values.
Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Marketable Securities
Equity securities consist of investments in the stock of publicly traded companies, the values of which are based on quoted market prices and thus represent Level 1 measurements within the above-defined fair value hierarchy. These securities are not held to support current operations and are therefore classified as non-current assets. Equity securities are included in Marketable securities in the Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015.
At the time of purchase, we classify our marketable securities as either available-for-sale securities or trading securities, depending on our intent at that time. Available-for-sale and trading securities are carried at fair value with unrealized holding gains and losses recorded within other comprehensive income or net income, respectively. The Company reviews unrealized losses associated with available-for-sale securities to determine the classification as a “temporary” or “other-than-temporary” impairment. A temporary impairment results in an unrealized loss being recorded in other comprehensive income. An impairment that is viewed as other-than-temporary is recognized in net income. The Company considers various factors in determining the classification, including the length of time and extent to which the fair value has been less than the Company’s cost basis, the financial condition and near-term prospects of the issuer or investee, and the Company’s ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.
Equity and Cost Method Investments
As of March 31, 2016, we have investments that we account for using the equity or cost method of accounting totaling $9.8 million. The Company divested a joint venture investment owned through its Litha subsidiary during the three months ended March 31, 2016. The Company classified this joint venture investment as Assets held for sale as of December 31, 2015 in the accompanying Condensed Consolidated Balance Sheets.
With respect to our other equity or cost method investments, which are included in Other Assets in our Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015, the Company did not recognize any other-than-temporary impairments. We considered various factors, including the operating results of our equity method investments and the lack of an unrealized loss position on our cost method investments.

17


Acquisition-Related Contingent Consideration
The fair value of contingent consideration liabilities is determined using unobservable inputs. These inputs include the estimated amount and timing of projected cash flows, the probability of success (achievement of the contingent event) and the risk-adjusted discount rate used to present value the probability-weighted cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is remeasured at current fair value with changes recorded in earnings. Acquisition-related contingent consideration is measured at fair value on a recurring basis using unobservable inputs; hence these instruments represent Level 3 measurements within the above-defined fair value hierarchy. See Recurring Fair Value Measurements below for additional information on acquisition-related contingent consideration.
Recurring Fair Value Measurements
The Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015 were as follows (in thousands):
 
Fair Value Measurements at Reporting Date using:
March 31, 2016
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs (Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Money market funds
$
56,135

 
$

 
$

 
$
56,135

Equity securities
2,480

 

 

 
2,480

Total
$
58,615

 
$

 
$

 
$
58,615

Liabilities:
 
 
 
 
 
 
 
Acquisition-related contingent consideration—short-term
$

 
$

 
$
48,045

 
$
48,045

Acquisition-related contingent consideration—long-term

 

 
76,466

 
76,466

Total
$

 
$

 
$
124,511

 
$
124,511

At March 31, 2016, money market funds include $56.1 million in Qualified Settlement Funds to be disbursed to mesh-related product liability claimants. See Note 12. Commitments and Contingencies for further discussion of our product liability cases.
 
Fair Value Measurements at Reporting Date using:
December 31, 2015
Quoted Prices in
Active Markets
for Identical
Assets (Level 1) 
 
Significant Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs (Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Money market funds
$
51,145

 
$

 
$

 
$
51,145

Equity securities
3,889

 

 

 
3,889

Total
$
55,034

 
$

 
$

 
$
55,034

Liabilities:
 
 
 
 
 
 
 
Acquisition-related contingent consideration—short-term
$

 
$

 
$
65,265

 
$
65,265

Acquisition-related contingent consideration—long-term

 

 
78,237

 
78,237

Total
$

 
$

 
$
143,502

 
$
143,502

At December 31, 2015, money market funds include $51.1 million in Qualified Settlement Funds to be disbursed to mesh-related product liability claimants. See Note 12. Commitments and Contingencies for further discussion of our product liability cases.

18


Fair Value Measurements Using Significant Unobservable Inputs
The following table presents changes to the Company’s liability for acquisition-related contingent consideration, which was measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2016 and 2015 (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Beginning of period
$
143,502

 
$
46,005

Amounts acquired

 
148,100

Amounts settled
(9,474
)
 
(4,723
)
Transfers (in) and/or out of Level 3

 

Measurement period adjustments

 
(4,313
)
Changes in fair value recorded in earnings
(10,688
)
 
(808
)
Effect of currency translation
1,171

 

End of period
$
124,511

 
$
184,261

The fair value measurement of the contingent consideration obligations was determined using risk-adjusted discount rates ranging from 6.5% to 22.0%. Changes in fair value recorded in earnings related to acquisition-related contingent consideration are included in the Condensed Consolidated Statements of Operations as Acquisition-related and integration items, and amounts recorded for the short-term and long-term portions of acquisition related contingent consideration are included in Accrued expenses and Other liabilities, respectively, in the Condensed Consolidated Balance Sheets.
The following table presents changes to the Company’s liability for acquisition-related contingent consideration during the three months ended March 31, 2016 by acquisition (in thousands):
 
Balance as of December 31, 2015
 
Acquisitions
 
Fair Value Adjustments and Accretion
 
Payments and Other
 
Balance as of March 31, 2016
Qualitest acquisition
$
1,137

 
$

 
$
(1,137
)
 
$

 
$

Sumavel acquisition
631

 

 
55

 

 
686

Auxilium acquisition
26,435

 

 
3,157

 
(3,081
)
 
26,511

Lehigh Valley Technologies, Inc. acquisitions
97,003

 

 
(12,710
)
 
(6,393
)
 
77,900

Other
18,296

 

 
1,118

 

 
19,414

Total
$
143,502

 
$

 
$
(9,517
)
 
$
(9,474
)
 
$
124,511

The following is a summary of available-for-sale securities held by the Company at March 31, 2016 and December 31, 2015 (in thousands):
 
Available-for-sale
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses) 
 
Fair Value
March 31, 2016
 
 
 
 
 
 
 
Money market funds
$
56,135

 
$

 
$

 
$
56,135

Total included in cash and cash equivalents
$

 
$

 
$

 
$

Total included in restricted cash and cash equivalents
$
56,135

 
$

 
$

 
$
56,135

Equity securities
$
26

 
$
13

 
$

 
$
39

Total other short-term available-for-sale securities
$
26

 
$
13

 
$

 
$
39

Equity securities
$
1,766

 
$
675

 
$

 
$
2,441

Long-term available-for-sale securities
$
1,766

 
$
675

 
$

 
$
2,441



19


 
Available-for-sale
 
Amortized
Cost
 
Gross
Unrealized
Gains 
 
Gross
Unrealized
(Losses)
 
Fair Value
December 31, 2015
 
 
 
 
 
 
 
Money market funds
$
51,145

 
$

 
$

 
$
51,145

Total included in cash and cash equivalents
$
3

 
$

 
$

 
$
3

Total included in restricted cash and cash equivalents
$
51,142

 
$

 
$

 
$
51,142

Equity securities
$
24

 
$
10

 
$

 
$
34

Total other short-term available-for-sale securities
$
24

 
$
10

 
$

 
$
34

Equity securities
$
1,766

 
$
2,089

 
$

 
$
3,855

Long-term available-for-sale securities
$
1,766

 
$
2,089

 
$

 
$
3,855

Nonrecurring Fair Value Measurements
The Company’s financial assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2016 were as follows (in thousands):
 
Fair Value Measurements at Reporting Date using:
 
Total Expense for the Three Months Ended March 31, 2016
 
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3)
 
Assets:
 
 
 
 
 
 
 
Certain Astora property, plant and equipment (Note 3)
$

 
$

 
$

 
$
(4,892
)
Certain U.S. Generic Pharmaceuticals intangible assets (Note 9)

 

 
45,522

 
(129,625
)
Certain Astora intangible assets (Note 3)

 

 

 
(16,287
)
Total
$

 
$

 
$
45,522

 
$
(150,804
)
NOTE 8. INVENTORIES
Inventories consist of the following at March 31, 2016 and December 31, 2015 (in thousands):
 
March 31, 2016
 
December 31, 2015
Raw materials (1)
$
206,404

 
$
210,038

Work-in-process (1)
134,017

 
177,821

Finished goods (1)
330,033

 
364,634

     Total
$
670,454

 
$
752,493

(1) The components of inventory shown in the table above are net of allowance for obsolescence.
Inventory that is in excess of the amount expected to be sold within one year, which relates primarily to XIAFLEX® inventory, is classified as long-term inventory and is not included in the table above. At March 31, 2016 and December 31, 2015, $26.5 million and $24.9 million, respectively, of long-term inventory was included in Other assets in the Condensed Consolidated Balance Sheets.

20


NOTE 9. GOODWILL AND OTHER INTANGIBLES
Goodwill
Changes in the carrying amount of our goodwill for the three months ended March 31, 2016 were as follows (in thousands):
 
Carrying Amount
 
U.S. Branded Pharmaceuticals
 
U.S. Generic Pharmaceuticals
 
International Pharmaceuticals
 
Total
Balance as of December 31, 2015:
 
 
 
 
 
 
 
Goodwill
$
1,676,276

 
$
5,789,934

 
$
592,424

 
$
8,058,634

Accumulated impairment losses
(673,500
)
 

 
(85,780
)
 
(759,280
)
Balance as of December 31, 2015
$
1,002,776

 
$
5,789,934

 
$
506,644

 
$
7,299,354

Measurement period adjustments

 
97,430

 
435

 
97,865

Effect of currency translation on gross balance

 

 
29,485

 
29,485

Effect of currency translation on accumulated impairment

 

 
(1,922
)
 
(1,922
)
Balance as of March 31, 2016:
 
 
 
 
 
 
 
Goodwill
$
1,676,276

 
$
5,887,364

 
$
622,344

 
$
8,185,984

Accumulated impairment losses
(673,500
)
 

 
(87,702
)
 
(761,202
)
 
$
1,002,776

 
$
5,887,364

 
$
534,642

 
$
7,424,782


21



Other Intangible Assets
The following is a summary of other intangibles held by the Company at March 31, 2016 and December 31, 2015 (in thousands):
Cost basis:
Balance as of December 31, 2015
 
Acquisitions
(1)
 
Impairments
(2)
 
Other
(3)
 
Effect of Currency Translation
 
Balance as of March 31, 2016
Indefinite-lived intangibles:
 
 
 
 
 
 
 
 
 
 
 
In-process research and development
$
1,742,880

 
$
(114,200
)
 
$
(55,100
)
 
$
(3,821
)
 
$
3,027

 
$
1,572,786

Total indefinite-lived intangibles
$
1,742,880

 
$
(114,200
)
 
$
(55,100
)
 
$
(3,821
)
 
$
3,027

 
$
1,572,786

Definite-lived intangibles:
 
 
 
 
 
 
 
 
 
 
 
Licenses (weighted average life of 10 years)
$
676,867

 
$

 
$

 
$

 
$

 
$
676,867

Customer relationships (weighted average life of 15 years)
11,318

 

 
(11,318
)
 

 

 

Tradenames (weighted average life of 12 years)
7,537

 

 

 

 
(5
)
 
7,532

Developed technology (weighted average life of 12 years)
6,731,573

 
(32,300
)
 
(89,525
)
 
1,862

 
31,986

 
6,643,596

Total definite-lived intangibles (weighted average life of 11 years)
$
7,427,295

 
$
(32,300
)
 
$
(100,843
)
 
$
1,862

 
$
31,981

 
$
7,327,995

Total other intangibles
$
9,170,175

 
$
(146,500
)
 
$
(155,943
)
 
$
(1,959
)
 
$
35,008

 
$
8,900,781

 
 
 
 
 
 
 
 
 
 
 
 
Accumulated amortization:
Balance as of December 31, 2015
 
Amortization
 
Impairments
 
Other
 
Effect of Currency Translation
 
Balance as of March 31, 2016
Indefinite-lived intangibles:
 
 
 
 
 
 
 
 
 
 
 
In-process research and development
$

 
$

 
$

 
$

 
$

 
$

Total indefinite-lived intangibles
$

 
$

 
$

 
$

 
$

 
$

Definite-lived intangibles:
 
 
 
 
 
 
 
 
 
 
 
Licenses
$
(508,225
)
 
$
(14,881
)
 
$

 
$

 
$

 
$
(523,106
)
Customer relationships
(7,858
)
 

 
7,858

 

 

 

Tradenames
(6,544
)
 
(22
)
 

 

 

 
(6,566
)
Developed technology
(818,606
)
 
(196,766
)
 
2,173

 
322

 
(3,846
)
 
(1,016,723
)
Total definite-lived intangibles
$
(1,341,233
)
 
$
(211,669
)
 
$
10,031

 
$
322

 
$
(3,846
)
 
$
(1,546,395
)
Total other intangibles
$
(1,341,233
)
 
$
(211,669
)
 
$
10,031

 
$
322

 
$
(3,846
)
 
$
(1,546,395
)
Net other intangibles
$
7,828,942

 
 
 
 
 
 
 
 
 
$
7,354,386

__________
(1)
Includes measurement period adjustments relating to the Par acquisition, partially offset by the capitalization of payments relating to XIAFLEX®.
(2)
Includes the impairment of certain intangible assets of our U.S. Generic Pharmaceuticals segment of approximately $129.6 million, and the impairment of certain intangible assets in connection with the wind down of our Astora business, with a net impairment of approximately $16.3 million, which is reported as Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2016. See Note 3. Discontinued Operations and Held for Sale for further information relating to the Astora wind down.
(3)
Includes the sale of certain intangible assets in our International Pharmaceuticals segment, partially offset by certain IPR&D assets totaling $3.8 million being placed into service.

22


Amortization expense for the three months ended March 31, 2016 and 2015 totaled $211.7 million and $95.3 million, respectively. Estimated amortization of intangibles for the five fiscal years subsequent to December 31, 2015 is as follows (in thousands):
2016
$
807,613

2017
$
690,977

2018
$
609,018

2019
$
549,786

2020
$
522,080

Changes in the gross carrying amount of our other intangibles for the three months ended March 31, 2016 were as follows (in thousands):
 
Gross
Carrying
Amount
December 31, 2015
$
9,170,175

Impairment of certain Astora intangible assets
(26,318
)
Capitalization of payments relating to XIAFLEX®
8,000

Sale of certain International Pharmaceuticals intangible assets
(1,959
)
Impairment of certain U.S. Generic Pharmaceuticals intangible assets
(129,625
)
Measurement period adjustments relating to acquisitions closed during 2015
(154,500
)
Effect of currency translation
35,008

March 31, 2016
$
8,900,781

Impairments
U.S. Generic Pharmaceuticals Segment
During the three months ended March 31, 2016, the Company identified certain market and regulatory conditions impacting the commercial potential of certain indefinite and definite-lived intangible assets in our U.S. Generic Pharmaceuticals segment. Accordingly, we tested these assets for impairment and determined that the carrying value of certain of these assets was no longer fully recoverable, resulting in pre-tax, non-cash asset impairment charges of $29.3 million during the first quarter of 2016. In addition, the Company recognized pre-tax, non-cash asset impairment charges of $100.3 million related to the 2016 U.S. Generic Pharmaceuticals restructuring initiative, which resulted from the discontinuation of certain commercial products and the abandonment of certain IPR&D projects. See Note 4. Restructuring for discussion of our material restructuring initiatives.
NOTE 10. LICENSE AND COLLABORATION AGREEMENTS
Our subsidiaries have entered into certain license, collaboration and discovery agreements with third parties for product development. These agreements require our subsidiaries to share in the development costs of such products and the third parties grant marketing rights to our subsidiaries for such products.
The Company and its subsidiaries are generally required to make upfront payments as well as other payments upon successful completion of regulatory or sales milestones. In addition, these agreements generally require our subsidiaries to pay royalties on sales of the products arising from these agreements. These agreements generally permit termination by our subsidiaries with no significant continuing obligation.
Novartis AG, Novartis Consumer Health, Inc. and Sandoz, Inc.
The Company has exclusive U.S. marketing rights to Voltaren® Gel (Voltaren® Gel) pursuant to a License and Supply Agreement entered into in 2008 with and among Novartis AG and Novartis Consumer Health, Inc. (Novartis) (the 2008 Voltaren® Gel Agreement). Effective March 1, 2015, Novartis Consumer Health, Inc. assigned the 2008 Voltaren® Gel Agreement to its affiliate, Sandoz, Inc. On December 11, 2015, the Company, Novartis AG and Sandoz entered into a new License and Supply Agreement (as amended and in effect the 2015 Voltaren® Gel Agreement) effectively renewing our exclusive U.S. marketing and license rights to commercialize Voltaren® Gel (the Branded Licensed Product) and granting the Company the exclusive right to launch an authorized generic of Voltaren® Gel (the Generic Licensed Product, and, together with the Branded Licensed Product, the Licensed Product). Pursuant to the 2015 Voltaren® Gel Agreement, the former 2008 Voltaren® Gel Agreement will expire on June 30, 2016 in accordance with its terms. The 2015 Voltaren® Gel Agreement will become effective on July 1, 2016 and will be accounted for as a business combination as of the effective date. The initial term of the 2015 Voltaren® Gel Agreement will expire on June 30, 2023 with an automatic extension of the term for one year thereafter unless a written notice of non-extension is provided at least six months in

23


advance of termination. Voltaren® Gel royalties incurred during the three months ended March 31, 2016 and 2015 were $7.0 million and $7.5 million, respectively, representing minimum royalties pursuant to the 2008 Voltaren® Gel Agreement.
Under the 2008 Voltaren® Gel Agreement, the Company agreed (i) to make certain guaranteed minimum annual royalty payments beginning in the fourth year of the 2008 Voltaren® Gel Agreement (2008 Guaranteed Minimum Annual Royalty Payment), (ii) to expend a minimum amount of annual advertising and promotional expenses (A&P Expenditures) on the commercialization of Voltaren® Gel and (iii) to perform a minimum number of face-to-face one-on-one discussions with physicians and other health care practitioners (Details), each subject to certain limitations set forth in the 2008 Voltaren® Gel Agreement, including the requirement that a third party generic equivalent product is not launched. Under the 2015 Voltaren® Gel Agreement, the Company agreed to make certain guaranteed minimum annual royalty payments (2015 Guaranteed Minimum Annual Royalty Payment) subject to certain limitations set forth in the 2015 Voltaren® Gel Agreement, including the requirement that a third party generic equivalent product is not launched. In March 2016, Amneal Pharmaceuticals LLC (Amneal) launched a generic equivalent of Voltaren® Gel and, therefore, the Company’s obligations to make the 2008 Guaranteed Minimum Annual Royalty Payment, to expend A&P Expenditures and to perform Details for the remainder of the term of the 2008 Voltaren® Gel Agreement terminated as of the date of the launch of the generic equivalent product by Amneal.  In addition, the Company’s obligation to make the 2015 Guaranteed Minimum Annual Royalty Payment also terminated. Amounts incurred for such A&P Expenditures during the three months ended March 31, 2016 and 2015 were $2.2 million and $0.8 million, respectively.
BioSpecifics Technologies Corp.
The Company, through an affiliate, is party to a development and license agreement, as amended (the BioSpecifics Agreement) with BioSpecifics Technologies Corp. (BioSpecifics). The BioSpecifics Agreement was originally entered into by Auxilium in June 2004 to obtain exclusive worldwide rights to develop, market and sell certain products containing BioSpecifics’ enzyme, which we refer to as XIAFLEX®. Auxilium’s licensed rights concern the development and commercialization of products, other than dermal formulations labeled for topical administration, and currently, Auxilium’s licensed rights cover the indications of Dupuytren’s contracture (DC), Dupuytren’s Nodules, Peyronie’s Disease (PD), Adhesive Capsulitis, cellulite, canine lipomas, Plantar Fibromatosis and Lateral Hip Fat. Auxilium may further expand the BioSpecifics Agreement, at its option, to cover other indications as they are developed by Auxilium or BioSpecifics.
Under the BioSpecifics Agreement, we are responsible, at our own cost and expense, for developing the formulation and finished dosage form of products and arranging for the clinical supply of products. BioSpecifics is currently conducting exploratory clinical trials evaluating XIAFLEX® as a treatment for a number of conditions, including lipomas in humans and uterine fibroids. The Company has the option to license development and marketing rights to these indications based on a full analysis of the data from the clinical trials, which would transfer responsibility for the future development costs to the Company and trigger opt-in payments and potential future milestone and royalty payments to BioSpecifics.
The BioSpecifics Agreement extends, on a country-by-country and product-by-product basis, for the longer of the patent life, the expiration of any regulatory exclusivity period or twelve years from the effective date. Either party may terminate the BioSpecifics Agreement as a result of the other party’s breach or bankruptcy. We may terminate the BioSpecifics Agreement with 90 days’ written notice.
We must pay BioSpecifics on a country-by-country and product-by-product basis a specified percentage within a range of 5% to 15% of net sales for products covered by the BioSpecifics Agreement. This royalty applies to net sales by the Company or its sublicensees, including Actelion Pharmaceuticals Ltd (Actelion), Asahi Kasei Pharma Corporation (Asahi Kasei) and Swedish Orphan Biovitrum AB (Sobi). We are also obligated to pay a percentage of any future regulatory or commercial milestone payments received from such sublicensees. In addition, the Company and its affiliates pay BioSpecifics an amount equal to a specified mark-up on certain cost of goods related to supply of XIAFLEX® (which mark-up is capped at a specified percentage within the range of 5% to 15% of the cost of goods of XIAFLEX®) for products sold by the Company and its affiliates.
NOTE 11. DEBT
The following table presents the carrying amounts of the Company’s total indebtedness at March 31, 2016 and December 31, 2015 (in thousands):
 
March 31, 2016
 
December 31, 2015
 
Principal Amount
 
Unamortized Discount and Deferred Loan Costs
 
Principal Amount
 
Unamortized Discount and Deferred Loan Costs
7.25% Senior Notes due 2022
$
400,000

 
$
(12,127
)
 
$
400,000

 
$
(12,535
)
5.75% Senior Notes due 2022
700,000

 
(9,739
)
 
700,000

 
(10,088
)
5.375% Senior Notes due 2023
750,000

 
(10,206
)
 
750,000

 
(10,511
)
6.00% Senior Notes due 2023
1,635,000

 
(26,968
)
 
1,635,000

 
(27,694
)
6.00% Senior Notes due 2025
1,200,000

 
(22,245
)
 
1,200,000

 
(22,713
)
Term Loan A Facility Due 2019
1,003,750

 
(12,616
)
 
1,017,500

 
(13,831
)
Term Loan B Facility Due 2021
2,793,000

 
(48,213
)
 
2,800,000

 
(49,900
)
Revolving Credit Facility
225,000

 

 
225,000

 

Other debt
134

 

 
134

 

Total long-term debt, net
$
8,706,884

 
$
(142,114
)
 
$
8,727,634

 
$
(147,272
)
Less current portion, net
335,579

 

 
328,705

 

Total long-term debt, less current portion, net
$
8,371,305

 
$
(142,114
)
 
$
8,398,929

 
$
(147,272
)
The total fair value of the Company’s Total long-term debt, net at March 31, 2016 and December 31, 2015, was $8.4 billion and $8.6 billion, respectively.
The fair value of the Company’s long-term debt is estimated using the quoted market prices for the same or similar debt issuances. Based on this valuation methodology, we determined these debt instruments represent Level 2 measurements within the fair value hierarchy.
Credit Facility
There were $225.0 million in revolving loans at March 31, 2016. We have $773.0 million of remaining credit available through the revolving credit facilities as of March 31, 2016.
The Company’s credit agreement contains affirmative and negative covenants that the Company believes to be usual and customary for a senior secured credit facility. The negative covenants include, among other things, limitations on capital expenditures, asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with the Company’s affiliates. As of March 31, 2016, we were in compliance with all such covenants.
NOTE 12. COMMITMENTS AND CONTINGENCIES
Manufacturing, Supply and Other Service Agreements
Our subsidiaries contract with various third party manufacturers, suppliers and service providers to provide raw materials used in our subsidiaries’ products and semi-finished and finished goods, as well as certain packaging, labeling services, customer service support, warehouse and distribution services. These contracts include agreements with Novartis Consumer Health, Inc., Novartis AG, and Sandoz, Inc. (collectively, Novartis), Teikoku Seiyaku Co., Ltd., Noramco, Inc., Grünenthal GmbH, Sharp Corporation, UPS Supply Chain Solutions, Inc. and Jubilant HollisterStier Laboratories LLC. If, for any reason, we are unable to obtain sufficient quantities of any of the finished goods or raw materials or components required for our products or services needed to conduct our business, it could have an adverse effect on our business, financial condition, results of operations and cash flows.
In addition to the manufacturing and supply agreements described above, we have agreements with various companies for clinical development services. Although we have no reason to believe that the parties to these agreements will not meet their obligations, failure by any of these third parties to honor their contractual obligations may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Teikoku Seiyaku Co., Ltd.
Under the terms of the Company's agreement (the Teikoku Agreement) with Teikoku Seiyaku Co. Ltd. (Teikoku), during the three months ended March 31, 2016 and 2015, we recorded $3.8 million and $5.0 million of royalties to Teikoku, respectively. These

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amounts were included in our Condensed Consolidated Statements of Operations as Cost of revenues. At March 31, 2016, $3.8 million was recorded as a royalty payable and included in Accounts payable in the accompanying Condensed Consolidated Balance Sheets.
The Teikoku Agreement will not expire until December 31, 2021, unless terminated in accordance with its terms. After December 31, 2021, the Teikoku Agreement shall be automatically renewed on the first day of January each year unless terminated in accordance with its terms. Either party may terminate the Teikoku Agreement, following a 45-day cure period, in the event that the Company fails to issue firm purchase orders for the annual minimum quantity for each year after 2017. The Company is the exclusive licensee for any authorized generic for Lidoderm® until August 15, 2017.
Noramco, Inc.
Pursuant to the terms of the Company’s 2012 agreement with Noramco, the Company made payments to Noramco during the three months ended March 31, 2016 and 2015 totaling $8.4 million and $6.5 million, respectively. These payments are recorded in Cost of revenues in our Condensed Consolidated Statements of Operations.
Grünenthal GmbH
Pursuant to the terms of the Company’s December 2007 License, Development and Supply Agreement with Grünenthal, the Company made payments to Grünenthal during the three months ended March 31, 2016 and 2015 totaling $7.2 million and $7.5 million, respectively. These payments are recorded in Cost of revenues in our Condensed Consolidated Statements of Operations.
Legal Proceedings
We and certain of our subsidiaries are involved in various claims, legal proceedings and governmental investigations that arise from time to time in the ordinary course of our business, including those relating to product liability, intellectual property, regulatory compliance and commercial matters. These and other matters that are not being disclosed herein are, in the opinion of our management, immaterial both individually and in the aggregate with respect to our financial position, results of operations and cash flows. If and when such matters, in the opinion of our management, become material either individually or in the aggregate, we will disclose such matters. While we cannot predict the outcome of these legal proceedings and we intend to defend vigorously our position, an adverse outcome in any of these proceedings could have a material adverse effect on our current and future financial position, results of operations and cash flows.
As of March 31, 2016, our reserve for loss contingencies totaled $1.95 billion, of which $1.90 billion relates to our product liability accrual for vaginal mesh cases. We had previously announced that we had reached master settlement agreements with several of the leading plaintiffs’ law firms to resolve claims relating to vaginal mesh products sold by our AMS subsidiary. The agreements were entered into solely by way of compromise and settlement and are not in any way an admission of liability or fault. Although we believe there is a reasonable possibility that a loss in excess of the amount recognized exists, we are unable to estimate the possible loss or range of loss in excess of the amount recognized at this time.
Product Liability
We and certain of our subsidiaries have been named as defendants in numerous lawsuits in various U.S. federal and state courts, as well as in Canada and other countries, alleging personal injury resulting from the use of certain of our products and the products of our subsidiaries. These matters are described below in more detail.
We believe that certain settlements and judgments, as well as legal defense costs, relating to certain product liability matters are or may be covered in whole or in part under our product liability insurance policies with a number of insurance carriers. In certain circumstances, insurance carriers reserve their rights to contest or deny coverage. We intend to contest vigorously any and all such disputes with our insurance carriers and to enforce our rights under the terms of our insurance policies. Accordingly, we will record receivables with respect to amounts due under these policies only when the resolution of any dispute has been reached and realization of the potential claim for recovery is considered probable. Amounts recovered under our product liability insurance policies will likely be less than the stated coverage limits and may not be adequate to cover damages and/or costs relating to claims. In addition, there is no guarantee that insurers will pay claims or that coverage will otherwise be available.
Vaginal Mesh Cases. In October 2008, the FDA issued a Public Health Notification (October 2008 Public Health Notification) regarding potential complications associated with transvaginal placement of surgical mesh to treat pelvic organ prolapse (POP) and stress urinary incontinence (SUI). The notification provides recommendations and encourages physicians to seek specialized training in mesh procedures, to advise their patients about the risks associated with these procedures and to be diligent in diagnosing and reporting complications.
In July 2011, the FDA issued an update to the October 2008 Public Health Notification regarding mesh to further advise the public and the medical community of the potential complications associated with transvaginal placement of surgical mesh to treat POP and SUI. In the July 2011 update, the FDA stated that adverse events are not rare. Furthermore, the FDA questioned the relative effectiveness of transvaginal mesh as a treatment for POP as compared to non-mesh surgical repair. The July 2011 notification continued to encourage physicians to seek specialized training in mesh procedures, to consider and to advise their patients about the risks associated with these procedures and to be diligent in diagnosing and reporting complications. In January 2016, the FDA issued a

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statement reclassifying surgical mesh for transvaginal POP repair from Class II to Class III. Surgical mesh for SUI repair remains a Class II device.
In January 2012, the FDA ordered manufacturers of transvaginal surgical mesh used for POP and of single incision mini-slings for urinary incontinence, such as our AMS subsidiary, to conduct post-market safety studies and to monitor adverse event rates relating to the use of these products. AMS received a total of 19 class-wide post-market study orders regarding its pelvic floor repair and mini-sling products; however, the FDA agreed to place 16 of these study orders on hold for a variety of reasons. AMS commenced three of these post-market study orders; however, it recently notified the FDA of its termination of these studies and is in the process of winding them down in connection with the wind down of our Astora business.
Since 2008, we and certain of our subsidiaries, including AMS and/or Astora, have been named as defendants in multiple lawsuits in the U.S. in various state courts and in a multidistrict litigation (MDL) in the Southern District of West Virginia (MDL No. 2325), in Canada, where various class action and individual complaints are pending, and in other countries alleging personal injury resulting from the use of transvaginal surgical mesh products designed to treat POP and SUI. Plaintiffs in these suits allege various personal injuries including chronic pain, incontinence and inability to control bowel function and permanent deformities, and seek compensatory and punitive damages, where available.
We and certain plaintiffs’ counsel representing mesh-related product liability claimants have entered into various Master Settlement Agreements (MSAs) and other settlement agreements regarding settling up to approximately 49,000 filed and unfiled mesh claims handled or controlled by the participating counsel. These MSAs, which were executed at various times since June 2013, were entered into solely by way of compromise and settlement and are not in any way an admission of liability or fault by us or any of our subsidiaries. All MSAs are subject to a process that includes guidelines and procedures for administering the settlements and the release of funds. In certain cases, the MSAs provide for the creation of Qualified Settlement Funds (QSFs) into which funds may be deposited pursuant to certain schedules set forth in those agreements. All MSAs have participation thresholds requiring participation by the majority of claims represented by each law firm party to the MSA. If certain participation thresholds are not met, then we will have the right to terminate the settlement with that law firm. In addition, one agreement gives us a unilateral right of approval regarding which claims may be eligible to participate under that settlement. To the extent fewer claims than are authorized under an agreement participate, the total settlement payment under that agreement will be reduced by an agreed-upon amount for each such non-participating claim. Funds deposited in QSFs are included in restricted cash and cash equivalents in the Condensed Consolidated Balance Sheets.
Distribution of funds to any individual claimant is conditioned upon the receipt of documentation substantiating the validity of the claim, a full release and a dismissal of the entire action or claim as to all AMS parties and affiliates. Prior to receiving funds, an individual claimant shall represent and warrant that liens, assignment rights or other claims that are identified in the claims administration process have been or will be satisfied by the individual claimant. The amount of settlement awards to participating claimants, the claims evaluation process and procedures used in conjunction with award distributions, and the negotiations leading to the settlement, shall be kept confidential by all parties and their counsel.
We expect that valid claims under the MSAs will continue to be settled. However, we intend to vigorously contest pending and future claims that are invalid or in excess of the maximum claim amounts under the MSAs. We are also aware of a substantial number of additional claims or potential claims, some of which may be invalid or contested, for which we lack sufficient information to determine whether any potential liability is probable, and such claims have not been included in our estimated product liability accrual. We intend to contest these claims vigorously.
As of the date of this report, we believe that the current product liability accrual includes all known claims for which liability is probable and estimable. In order to evaluate whether a mesh claim is probable of a loss, we must obtain and evaluate certain information pertaining to each individual claim, including but not limited to the following items: the name and social security number of the plaintiff, evidence of an AMS implant, the date of implant, the date the claim was first asserted to AMS, the date that plaintiff’s counsel was retained, and most importantly, medical records establishing the injury alleged. Without access to at least this information and the opportunity to evaluate it, we are not in a position to determine whether a loss is probable for such claims. It is currently not possible to determine the validity or outcome of any additional or potential claims and such claims may result in additional losses that could have a material adverse effect on our business, financial condition, results of operations and cash flow. We will continue to monitor the situation, including with respect to any additional claims of which we may later become aware, and, if appropriate, make further adjustments to the product liability accrual based on new information.

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The following table presents the changes in the vaginal mesh QSFs and product liability balance during the three months ended March 31, 2016 (in thousands):
 
Qualified Settlement Funds
 
Product Liability
Balance as of December 31, 2015
$
578,970

 
$
2,086,176

Additional charges

 
2,450

Cash distributions to Qualified Settlement Funds
120,919

 

Cash distributions to settle disputes from Qualified Settlement Funds
(184,678
)
 
(184,678
)
Cash distributions to settle disputes

 
(1,561
)
Balance as of March 31, 2016
$
515,211

 
$
1,902,387

Approximately $1.53 billion of the total liability amount shown above is classified as Current portion of legal settlement accrual, with the remainder to be paid over time in accordance with the MSA agreements and classified as Long-term legal settlement accrual, less current portion, net in the March 31, 2016 Condensed Consolidated Balance Sheets. Charges related to vaginal mesh product liability for all periods presented are reported in Discontinued operations, net of tax in our Condensed Consolidated Statements of Operations.
We expect to fund the payments under all current settlement agreements over the course of the next two years, with completion by December 31, 2017. As the funds are disbursed out of the QSFs from time to time, the product liability accrual will be reduced accordingly with a corresponding reduction to restricted cash and cash equivalents. In addition, we may pay cash distributions to settle disputes separate from the QSFs, which will also decrease the product liability accrual but will not decrease restricted cash and cash equivalents.
In addition, we have been contacted regarding a civil investigation that has been initiated by a number of state attorneys general into mesh products, including transvaginal surgical mesh products designed to treat POP and SUI. In November 2013, we received a subpoena relating to this investigation from the state of California, and have subsequently received additional subpoenas from other states. We are currently cooperating with this investigation. At this time, we cannot predict or determine the outcome of this investigation or reasonably estimate the amount or range of amounts of fines or penalties, if any, that might result from a settlement or an adverse outcome from this investigation.
Testosterone Cases. We and certain of our subsidiaries, including EPI and Auxilium Pharmaceuticals, Inc. (Auxilium), along with other pharmaceutical manufacturers, have been named as defendants in lawsuits alleging personal injury resulting from the use of prescription medications containing testosterone, including Fortesta® Gel, Delatestryl®, Testim®, TESTOPEL® and Striant®. Plaintiffs in these suits allege various personal injuries, including pulmonary embolism, stroke and other vascular and/or cardiac injuries and seek compensatory and/or punitive damages, where available. In June 2014, an MDL was formed to include claims involving all testosterone replacement therapies filed against EPI, Auxilium, and other manufacturers of such products, and certain transferable cases pending in federal court were coordinated in the Northern District of Illinois as part of MDL No. 2545. In addition to the federal cases filed against EPI and Auxilium that have been transferred to the Northern District of Illinois as tag-along actions to MDL No. 2545, litigation has also been filed against EPI in the Court of Common Pleas Philadelphia County and in certain other state courts. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions, and cases brought in federal court will be transferred to the Northern District of Illinois as tag-along actions to MDL No. 2545. However, we cannot predict the timing or outcome of any such litigation, or whether any such additional litigation will be brought against us. We intend to contest the litigation vigorously and to explore all options as appropriate in our best interest. As of April 29, 2016, approximately 1,111 cases are currently pending against us; some of which may have been filed on behalf of multiple plaintiffs, and including a class action complaint filed in Canada.
In November 2015, the U.S. District Court for the Northern District of Illinois entered an order granting defendants’ motion to dismiss claims involving certain testosterone products that were approved pursuant to abbreviated new drug applications, including TESTOPEL®. Plaintiffs filed a motion for reconsideration and clarification of this order. In March 2016, the District Court granted plaintiffs’ motion in part and entered an order permitting certain claims to go forward to the extent they are based on allegations of fraudulent off-label marketing.
In November 2014, a civil class action complaint was filed in the Northern District of Illinois against EPI, Auxilium, and various other manufacturers of testosterone products on behalf of a proposed class of health insurance companies and other third party payers that had paid for certain testosterone products, alleging that the marketing efforts of EPI, Auxilium, and other defendant manufacturers with respect to certain testosterone products constituted racketeering activity in violation of 18 U.S.C. §1962(c), and other civil Racketeer Influenced and Corrupt Organizations Act claims. Further, the complaint alleges that EPI, Auxilium, and other defendant manufacturers violated various state consumer protection laws through their marketing of certain testosterone products and raises other state law claims. In March 2015, defendants filed a motion to dismiss the complaint and plaintiffs responded by filing amended complaints. In February 2016, the District Court granted in part and denied in part defendants’ motion to dismiss. The

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District Court declined to dismiss plaintiffs’ claims for conspiracy to commit racketeering activity in violation of 18 U.S.C. §1962(d) and claims for negligent misrepresentation. In April 2016, plaintiffs filed a third amended complaint. In October 2015, a similar civil class action complaint was filed against EPI and other defendant manufacturers in the Northern District of Illinois. Similar litigation may be brought by other plaintiffs. We are unable to predict the outcome of this matter or the ultimate legal and financial liability, if any, and at this time cannot reasonably estimate the possible loss or range of loss for this matter, if any, but we will explore all options as appropriate in our best interest.
Qualitest Pharmaceuticals Civil Investigative Demands
In April 2013, our subsidiaries, EPI and Qualitest, received Civil Investigative Demands (CIDs) from the U.S. Attorney’s Office for the Southern District of New York. The CIDs request documents and information regarding the manufacture and sale of chewable fluoride tablets and other products sold by Qualitest. EPI and Qualitest reached a resolution of potential claims of the federal government and numerous states related to the manufacture and sale of certain chewable fluoride tablets that were the subject of these CIDs. In December 2015, that settlement with the federal government was approved by the U.S. District Court for the Southern District of New York. In February 2016, the settlement with the states was approved by the District Court. All settlement amounts pursuant to these agreements have been paid as of March 31, 2016.
Unapproved Drug Litigation
In September 2013, the State of Louisiana filed a Petition for Damages against certain of our subsidiaries, EPI, Qualitest and Boca, and over 50 other pharmaceutical companies alleging the defendants or their subsidiaries marketed products that were not approved by the FDA. See State of Louisiana v. Abbott Laboratories, Inc., et al., C624522 (19th Jud. Dist. La.). The State of Louisiana sought damages, fines, penalties, attorneys’ fees and costs under various causes of action. In October 2015, the court ordered judgment for Defendants on their exception for no right of action. The case is currently on appeal to the Louisiana Court of Appeals, First District.
We intend to contest the above case vigorously and to explore other options as appropriate in our best interest. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. However, we cannot predict the timing or outcome of any such litigation, or whether any such litigation will be brought against us. We are unable to predict the outcome of this matter or the ultimate legal and financial liability, if any, and at this time cannot reasonably estimate the possible loss or range of loss for this matter, if any.
Opioid-Related Litigations, Subpoenas and Document Requests
In June 2014, Corporation Counsel for the City of Chicago filed suit in Illinois state court against multiple defendants, including our subsidiaries, Endo Health Solutions Inc. (EHSI) and EPI, for alleged violations of city ordinances and other laws relating to defendants’ alleged opioid sales and marketing practices. In June 2014, the case was removed to the U.S. District Court for the Northern District of Illinois. In December 2014, defendants moved to dismiss the Amended Complaint and in May 2015, the District Court issued an order granting that motion in part, dismissing the case as to EHS and EPI. In August 2015, plaintiff filed its Second Amended Complaint against multiple defendants, including EPI and ESHI. In November 2015, defendants moved to dismiss the Second Amended Complaint.
In May 2014 and in June 2014, a lawsuit was filed in California Superior Court (Orange County) in the name of the People of the State of California, acting by and through County Counsel for Santa Clara County and the Orange County District Attorney, against multiple defendants, including our subsidiaries EHSI and EPI. The complaint asserts violations of California’s statutory Unfair Competition and False Advertising laws, as well as asserting a claim for public nuisance, based on alleged misrepresentations in connection with sales and marketing of opioids, including OPANA®. Plaintiff seeks declaratory relief, restitution, civil penalties (including treble damages), abatement, an injunction, and attorneys’ fees and costs. Defendants, which include our subsidiaries, filed various motions attacking the pleadings, including one requesting that the Superior Court refrain from proceeding under the doctrines of primary jurisdiction and equitable abstention. That motion was granted in August 2015, and the case has been stayed pending further proceedings and findings by the FDA.
In December 2015, a lawsuit was filed in the Chancery Court of the First Judicial District of Hinds County, Mississippi by the State of Mississippi against multiple defendants, including our subsidiaries EHSI and EPI. The complaint alleges violations of Mississippi’s Consumer Protection Act and various other claims arising out of defendants’ alleged opioid sales and marketing practices. Plaintiff seeks declaratory relief, restitution, civil penalties, abatement, an injunction, and attorneys’ fees and costs. In March 2016, defendants moved to dismiss the complaint.
In September 2013, our subsidiaries EPI and EHSI received a subpoena from the State of New York Office of Attorney General seeking documents and information regarding the sales and marketing of OPANA®. In February 2016, EPI and EHSI agreed with the State of New York Office of Attorney General to an Assurance of Discontinuance pursuant to the provisions of New York law, whereby EPI and EHSI agreed to modify certain business practices related to the marketing and sale of OPANA®, as well as to pay certain monetary penalties. The cost of those penalties has been incorporated into our legal loss contingency reserve.

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In September 2014, our subsidiaries EPI and EHSI received a Request for Information from the State of Tennessee Office of the Attorney General and Reporter seeking documents and information regarding the sales and marketing of opioids, including OPANA