Stockholders’ Equity and Redeemable Non-Controlling Interests

6 Months Ended

Jun. 30, 2020

Stockholders’ Equity and Redeemable Non-Controlling Interests

Non-Controlling Interests

Under the terms of the Limited Liability Company Agreement, Amneal is obligated to make tax distributions to its members. For the three and six months ended June 30, 2020, a tax distribution of $1 million was recorded as a reduction of non-controlling interests. For the three and six months ended June 30, 2019, no tax distribution was recorded due to tax losses incurred. As of June 30, 2020, a $1 million liability was included in related-party payables for the tax distribution.

During December 2018, the Company acquired the non-controlling interests in one of Amneal's non-public subsidiaries for approximately $3 million. As of December 31, 2018, the Company recorded a $3 million related party payable for this transaction which was paid in full in 2019.

Redeemable Non-Controlling Interests

As discussed in Note 3. Acquisitions and Divestitures, the Company acquired a 65.1% interest in Rondo on January 31, 2020. The sellers of AvKARE, LLC and R&S hold the remaining 34.9% interest as Rondo Class B Units. Beginning on January 1, 2026, the holders of the Rondo Class B Units have the right (“Put Right”) to require the Company to acquire the Rondo Class B Units for a purchase price that is based on a multiple of Rondo’s earnings before income taxes, depreciation, and amortization (EBITDA) if certain financial targets and other conditions are met. Additionally, beginning on January 31, 2020, the Company has the right to acquire the Rondo Class B Units based on the same value and conditions as the Put Right. The Rondo Class B Units are also redeemable by the holders upon a change in control.

Since the redemption of the Rondo Class B Units is outside of the Company's control, the units have been presented outside of stockholders' equity as redeemable non-controlling interests. Upon closing of the Acquisitions on January 31, 2020, the redeemable non-controlling interests were recorded as a component of the fair value of consideration transferred at an estimated preliminary fair value of $11 million. The fair value of the redeemable non-controlling interests was estimated using the Monte-Carlo simulation approach under the option pricing framework, which considers the redemption rights of both the Company and the holders of the Rondo Class B Units.

The Company will attribute 34.9% of the net income of Rondo to the redeemable non-controlling interests. The Company will also accrete the redeemable non-controlling interests to redemption value upon an event that makes redemption probable. For the three and six months ended June 30, 2020, a tax distribution of $0.4 million was recorded as a reduction of redeemable non-controlling interests. As of June 30, 2020, a liability of $0.4 million was included in related-party payables for the tax distribution.

Changes in Accumulated Other Comprehensive Loss by Component (in thousands):


	Foreign currency translation adjustment		Unrealized gain (loss) on cash flow hedge, net of tax		Accumulated other comprehensive loss
Balance December 31, 2018	$	(7,755)	$	—	$	(7,755)
Other comprehensive (loss) income before reclassification	(729)		7,764		7,035
Amounts reclassified from accumulated other comprehensive loss	1,461		—		1,461
Reallocation of ownership interests	(809)		—		(809)
Balance December 31, 2019	(7,832)		7,764		(68)
Other comprehensive loss before reclassification	(3,985)		(35,622)		(39,607)
Reallocation of ownership interests	(14)		(7)		(21)
Balance June 30, 2020	$	(11,831)	$	(27,865)	$	(39,696)