MYLAN N.V.
`
`FORM 10-Q
`
`(Quarterly Report)
`
`Filed 05/08/15 for the Period Ending 03/31/15
`
`
`Telephone
`CIK
`SIC Code
`Fiscal Year
`
`
`44 0 1707 853 000
`0001623613
`2834 - Pharmaceutical Preparations
`12/31
`
`http://www.edgar-online.com
`© Copyright 2015, EDGAR Online, Inc. All Rights Reserved.
`Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.
`
`NCI Exhibit 2012
`Page 1 of 104
`
`

`
`
`
`
`
`UNITED STATES SECURITIES AND EXCHANGE COMMISSION
`Washington, DC 20549
`Form 10-Q
`
`(cid:1) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934
`For the quarterly period ended March 31, 2015
`
`OR
`
`
`
` 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 333-199861
`
`MYLAN N.V.
`
`(Exact name of registrant as specified in its charter)
`
`The Netherlands
`(State or other jurisdiction
`of incorporation or organization)
`
`
`
`
`
`98-1189497
`(I.R.S. Employer
`Identification No.)
`
`Albany Gate, Darkes Lane, Potters Bar, Herts EN6 1AG, United Kingdom
`(Address of principal executive offices)
`
`+44 (0) 1707-853-000
`(Registrant’s telephone number, including area code)
`
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
`Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
`subject to such filing requirements for the past 90 days. Yes (cid:1) No 
`
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
`Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
`12 months (or for such shorter period that the registrant was required to submit and post such files). Yes (cid:1) No 
`
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
`company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
`Act. (Check one):
`
`Large accelerated filer
`
`Non-accelerated filer
`
` (cid:1)
`
`  (Do not check if a smaller reporting company)
`
` Accelerated filer
`
` Smaller reporting company
`
` 
`
` 
`
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No (cid:1)
`
`Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
`
`As of May 1, 2015 , there were 490,033,276 of the issuer’s €0.01 nominal value ordinary shares outstan ding.
`
`
`
`
`
`
`
`NCI Exhibit 2012
`Page 2 of 104
`
`

`
`Table of Contents
`
`
`
`
`
`
`ITEM 1.
`
`
`
`
`
`
`
`
`
`
`ITEM 2.
`
`
`ITEM 3.
`
`
`ITEM 4.
`
`
`
`ITEM 1.
`
`
`ITEM 1A.
`
`
`ITEM 6.
`
`
`SIGNATURES
`
`
`
`
`2
`
`MYLAN N.V. AND SUBSIDIARIES
`INDEX TO FORM 10-Q
`For the Quarterly Period Ended
`March 31, 2015
`
`
`
`
`
`Page
`
`PART I — FINANCIAL INFORMATION
`Condensed Consolidated Financial Statements (unaudited)
`Condensed Consolidated Statements of Operations — Three Months Ended March 31, 2015 and 2014
`Condensed Consolidated Statements of Comprehensive Earnings — Three Months Ended March 31, 2015 and
`2014
`Condensed Consolidated Balance Sheets — March 31, 2015 and December 31, 2014
`Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2015 and 2014
`
`
`Notes to Condensed Consolidated Financial Statements
`
`
`Management’s Discussion and Analysis of Financial Condition and Results of Operations
`
`
`Quantitative and Qualitative Disclosures About Market Risk
`
`
`PART II — OTHER INFORMATION
`
`Controls and Procedures
`
`
`Legal Proceedings
`
`
`Risk Factors
`
`
`Exhibits
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`3
`
`4
`5
`6
`
`7
`
`44
`
`60
`
`60
`
`61
`
`61
`
`93
`
`96
`
`NCI Exhibit 2012
`Page 3 of 104
`
`

`
`2015
`
`2014
`
`1,703.0
`12.6
`1,715.6
`977.8
`737.8
`
`118.0
`377.7
`3.1
`498.8
`239.0
`82.7
`4.6
`151.7
`35.1
`116.6
`(0.7 )
`115.9
`
`Three Months Ended
`March 31,
`
`
`1,854.6 $
`17.1
`1,871.7
`1,041.6
`830.1
`
`169.9
`483.2
`17.7
`670.8
`159.3
`79.5
`18.5
`61.3
`4.7
`56.6
`—
`56.6 $
`
`0.14 $
`0.13 $
`
`418.0
`443.8
`
`
`0.31
`0.29
`
`372.3
`396.7
`
`
`$
`
`
`
`$
`
`$
`$
`
`
`
`
`Table of Contents
`
`
`
`
`PART I — FINANCIAL INFORMATION
`
`
`MYLAN N.V. AND SUBSIDIARIES
`Condensed Consolidated Statements of Operations
`(Unaudited; in millions, except per share amounts)
`
`
`
`
`Revenues:
`Net sales
`Other revenues
`Total revenues
`Cost of sales
`Gross profit
`Operating expenses:
`Research and development
`Selling, general and administrative
`Litigation settlements, net
`Total operating expenses
`Earnings from operations
`Interest expense
`Other expense (income), net
`Earnings before income taxes and noncontrolling interest
`Income tax provision
`Net earnings
`Net earnings attributable to the noncontrolling interest
`Net earnings attributable to Mylan N.V. ordinary shareholders
`Earnings per ordinary share attributable to Mylan N.V. ordinary shareholders:
`Basic
`Diluted
`Weighted average ordinary shares outstanding:
`Basic
`Diluted
`
`
`
`See Notes to Condensed Consolidated Financial Statements
`3
`
`
`
`
`
`
`
`NCI Exhibit 2012
`Page 4 of 104
`
`

`
`Three Months Ended
`March 31,
`
`
`
`2014
`
`2015
`
`56.6 $
`
`(602.6 )
`0.1
`(34.5 )
`0.1
`(636.9 )
`(13.0 )
`(623.9 )
`(567.3 )
`—
`(567.3 ) $
`
`
`116.6
`
`97.2
`(1.5 )
`(27.4 )
`—
`68.3
`(12.4 )
`80.7
`197.3
`(0.7 )
`196.6
`
`
`
`$
`
`
`$
`
`
`Table of Contents
`
`
`
`
`
`
`
`
`MYLAN N.V. AND SUBSIDIARIES
`Condensed Consolidated Statements of Comprehensive Earnings
`(Unaudited; in millions)
`
`Net earnings
`Other comprehensive (loss) earnings, before tax:
`Foreign currency translation adjustment
`Change in unrecognized gain (loss) and prior service cost related to defined benefit plans
`Net unrecognized loss on derivatives
`Net unrealized gain on marketable securities
`Other comprehensive (loss) earnings, before tax
`Income tax benefit
`Other comprehensive (loss) earnings, net of tax
`Comprehensive (loss) earnings
`Comprehensive earnings attributable to the noncontrolling interest
`Comprehensive (loss) earnings attributable to Mylan N.V. ordinary shareholders
`
`
`
`
`See Notes to Condensed Consolidated Financial Statements
`4
`
`
`
`
`
`
`
`NCI Exhibit 2012
`Page 5 of 104
`
`

`
`Table of Contents
`
`
`
`
`MYLAN N.V. AND SUBSIDIARIES
`Condensed Consolidated Balance Sheets
`(Unaudited; in millions, except share and per share amounts)
`
`ASSETS
`
`March 31,
`2015
`
`December 31,
`2014
`
`
`
`Assets
`Current assets:
`Cash and cash equivalents
`Accounts receivable, net
`Inventories
`Deferred income tax benefit
`Prepaid expenses and other current assets
`Total current assets
`Property, plant and equipment, net
`Intangible assets, net
`Goodwill
`Deferred income tax benefit
`Other assets
`Total assets
`
`
`LIABILITIES AND EQUITY
`
`
`
`$
`
`$
`
`
`
`
`$
`
`Liabilities
`Current liabilities:
`Trade accounts payable
`Short-term borrowings
`Income taxes payable
`Current portion of long-term debt and other long-term obligations
`Deferred income tax liability
`Other current liabilities
`Total current liabilities
`Long-term debt
`Deferred income tax liability
`Other long-term obligations
`Total liabilities
`Equity
`Mylan N.V. shareholders’ equity
`Ordinary shares (1) — nominal value €0.01 per ordinary share as of Mar ch 31, 2015 and par value
`
`$0.50 per share as of December 31, 2014
`Shares authorized: 1,200,000,000 and 1,500,000,000 as of March 31, 2015 and December 31, 2014
`Shares issued: 489,493,548 and 546,658,507 as of March 31, 2015 and December 31, 2014
`Additional paid-in capital
`Retained earnings
`Accumulated other comprehensive loss
`
`
`
`
`
`
`Noncontrolling interest
`Less: Treasury stock — at cost
`Shares: zero and 171,435,200 as of March 31, 2015 and December 31, 2014
`Total equity
`Total liabilities and equity
`
`____________
`
`
`
`$
`
`
`
`
`277.2 $
`2,264.6
`1,908.3
`369.9
`2,606.4
`7,426.4
`1,872.3
`6,770.6
`5,115.8
`87.8
`850.9
`22,123.8 $
`
`
`
`
`997.0 $
`169.2
`63.9
`2,611.4
`7.4
`1,439.1
`5,288.0
`5,750.4
`613.8
`1,378.4
`13,030.6
`
`
`
`
`
`5.5
`7,007.6
`3,671.1
`(1,610.9 )
`9,073.3
`19.9
`
`—
`9,093.2
`22,123.8 $
`
`
`225.5
`2,268.5
`1,651.4
`345.7
`2,295.8
`6,786.9
`1,785.7
`2,347.1
`4,049.3
`83.4
`834.2
`15,886.6
`
`905.6
`330.7
`160.7
`2,474.4
`0.2
`1,434.1
`5,305.7
`5,732.8
`235.4
`1,336.7
`12,610.6
`
`273.3
`4,212.8
`3,614.5
`(987.0 )
`7,113.6
`20.1
`
`3,857.7
`3,276.0
`15,886.6
`
`NCI Exhibit 2012
`Page 6 of 104
`
`

`
`Common stock prior to Februaly 27, 2015 .
`
`See Notes to Condensed Consolidated Financial Statements
`5
`
`NCI Exhibit 2012
`
`(1) Common stock prior to February 27, 2015 .
`
`
`
`
`
`See Notes to Condensed Consolidated Financial Statements
`5
`
`NCI Exhibit 2012
`Page 7 of 104
`
`

`
`Table of Contents
`
`
`MYLAN N.V. AND SUBSIDIARIES
`Condensed Consolidated Statements of Cash Flows
`(Unaudited; in millions)
`
`
`
`
`Cash flows from operating activities:
`Net earnings
`Adjustments to reconcile net earnings to net cash provided by operating activities:
`Depreciation and amortization
`Share-based compensation expense
`Change in estimated sales allowances
`Deferred income tax benefit (provision)
`Loss from equity method investments
`Other non-cash items
`Litigation settlements, net
`Changes in operating assets and liabilities:
`Accounts receivable
`Inventories
`Trade accounts payable
`Income taxes
`Other operating assets and liabilities, net
`Net cash provided by operating activities
`Cash flows from investing activities:
`Capital expenditures
`Purchase of marketable securities
`Proceeds from sale of marketable securities
`Payments for product rights and other, net
`Net cash used in investing activities
`Cash flows from financing activities:
`Payment of financing fees
`Change in short-term borrowings, net
`Proceeds from issuance of long-term debt
`Payment of long-term debt
`Proceeds from exercise of stock options
`Taxes paid related to net share settlement of equity awards
`Other items, net
`Net cash used in financing activities
`Effect on cash of changes in exchange rates
`Net increase (decrease) in cash and cash equivalents
`Cash and cash equivalents — beginning of period
`Cash and cash equivalents — end of period
`Supplemental disclosures of cash flow information —
`Non-cash transaction:
`Ordinary shares issued for acquisition
`
`
`
`
`
`
`See Notes to Condensed Consolidated Financial Statements
`6
`
`
`$
`
`
`
`
`
`
`
`
`$
`
`
`$
`
`
`2015
`
`2014
`
`116.6
`
`135.2
`15.4
`131.1
`(8.4 )
`22.7
`50.0
`3.1
`
`49.1
`(88.0 )
`(32.7 )
`(33.5 )
`(92.5 )
`268.1
`
`Three Months Ended
`March 31,
`
`
`56.6 $
`
`175.0
`34.4
`(92.1 )
`12.8
`24.7
`46.3
`17.7
`
`469.0
`(136.7 )
`(15.4 )
`(203.3 )
`(122.0 )
`267.0
`
`(48.1 )
`(40.1 )
`12.2
`(11.5 )
`(87.5 )
`
`(22.4 )
`(161.6 )
`100.0
`(100.0 )
`67.4
`(31.7 )
`39.3
`(109.0 )
`(18.8 )
`51.7
`225.5
`277.2 $
`
`
`6,305.8 $
`
`
`(72.3 )
`(4.8 )
`4.9
`(129.0 )
`(201.2 )
`
`(2.3 )
`(71.1 )
`200.0
`(260.0 )
`21.9
`(21.8 )
`18.7
`(114.6 )
`(0.6 )
`(48.3 )
`291.3
`243.0
`
`—
`
`NCI Exhibit 2012
`Page 8 of 104
`
`

`
`MYLAN N.V. AND SUBSIDIARIES
`Notes to Condensed Consolidated Financial Statements (Unaudited)
`
`Table of Contents
`
`
`
`1. General
`
`As discussed in Note 4 of the Notes to the Condensed Consolidated Financial Statements, on February 27, 2015 (the “EPD
`Transaction Closing Date”), Mylan N.V. completed the transaction (the “EPD Transaction”) by which it acquired Mylan Inc. and Abbott
`Laboratories ’ (“Abbott”) non-U.S. developed markets specialty and branded generics business (the “EPD Business”). Pursuant to the terms of
`the Amended and Restated Business Transfer Agreement and Plan of Merger, dated as of November 4, 2014 , by and among Mylan Inc. , New
`Moon B.V. (which converted into a public limited company ( naamloze vennootschap ) and was renamed Mylan N.V. on the EPD Transaction
`Closing Date), Moon of PA Inc., and Abbott (the “EPD Transaction Agreement”) on the Closing Date, Mylan N.V. acquired the EPD Business
`in consideration for Mylan N.V. ordinary shares, and Moon of PA Inc. merged with and into Mylan Inc. , with Mylan Inc. surviving as a wholly
`owned indirect subsidiary of Mylan N.V. and each share of Mylan Inc. common stock issued and outstanding immediately prior to the effective
`date of the EPD Transaction was canceled and automatically converted into, and became the right to receive, one Mylan N.V. ordinary share. In
`connection with the EPD Transaction, Mylan Inc. and the EPD Business were reorganized under Mylan N.V. , a new public company organized
`in the Netherlands. On February 18, 2015, the Office of Chief Counsel of the Division of Corporation Finance of the Securities and Exchange
`Commission (“SEC”) issued a no-action letter to Mylan Inc. and Mylan N.V. that included its views that the EPD Transaction constituted a
`“succession” for purposes of Rule 12g-3(a) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and that Mylan
`N.V. , as successor to Mylan Inc. , is deemed a large accelerated filer for purposes of Exchange Act Rule 12b-2. As of March 2, 2015, Mylan
`N.V. , and not Mylan Inc. , traded on the NASDAQ Global Select Stock Market under the symbol “MYL”.
`
`The accompanying unaudited Condensed Consolidated Financial Statements (“ interim financial statements ”) of Mylan N.V. and
`subsidiaries (“Mylan” or the “Company”) were prepared in accordance with accounting principles generally accepted in the United States of
`America (“U.S. GAAP”) and the rules and regulations of the SEC for reporting on Form 10-Q; therefore, as permitted under these rules, certain
`footnotes and other financial information included in audited financial statements were condensed or omitted. The interim financial statements
`contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the interim results of operations,
`comprehensive earnings, financial position and cash flows for the periods presented. For periods prior to the EPD Transaction, the Company’s
`consolidated financial statements presented the accounts of Mylan Inc.
`
`These interim financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto in
`Mylan Inc. ’s Annual Report on Form 10-K for the year ended December 31, 2014 . The December 31, 2014 Condensed Consolidated Balance
`Sheet was derived from audited financial statements.
`
`The interim results of operations, comprehensive earnings and cash flows for the three months ended March 31, 2015 are not
`necessarily indicative of the results to be expected for the full fiscal year or any other future period. The Company computed its provision for
`income taxes using an estimated effective tax rate for the full year with consideration of certain discrete tax items which occurred within the
`interim period.
`
`2. Revenue Recognition and Accounts Receivable
`
`The Company recognizes net sales when title and risk of loss pass to its customers and when provisions for estimates, including
`discounts, sales allowances, price adjustments, returns, chargebacks and other promotional programs are reasonably determinable. Accounts
`receivable are presented net of allowances relating to these provisions. No revisions were made to the methodology used in determining these
`provisions during the three months ended March 31, 2015 . Such allowances were $1.58 billion and $1.63 billion at March 31, 2015 and
`December 31, 2014 , respectively. Other current liabilities include $514.1 million and $581.3 million at March 31, 2015 and December 31,
`2014 , respectively, for certain sales allowances and other adjustments that are paid to indirect customers.
`
`Through its wholly owned subsidiary Mylan Pharmaceuticals Inc. (“MPI”), the Company has access to a $400 million accounts
`receivable securitization facility (the “Receivables Facility”). The receivables underlying any borrowings are included in accounts receivable,
`net, in the Condensed Consolidated Balance Sheets . There were $620.6 million and $1.07 billion of securitized accounts receivable at March 31,
`2015 and December 31, 2014 , respectively.
`
`
`
`7
`
`NCI Exhibit 2012
`Page 9 of 104
`
`

`
`Table of Contents
`
`
`
`MYLAN N.V. AND SUBSIDIARIES
`Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
`
`
`3. Recent Accounting Pronouncements
`
`In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-02, Amendments to
`Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 revises the guidance with respect to the analysis that a reporting entity must perform to
`determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised
`consolidation model. The revised guidance modifies the evaluation of whether certain limited partnerships and similar entities are variable
`interest entities (“VIE”) or voting interest entities, impacts the consolidation analysis of VIEs, clarifies when fees paid to a decision maker
`should be factors to include in the consolidation of VIEs, amends the guidance for assessing how related party relationships affect VIE
`consolidation analysis and provides an exemption for certain registered money market funds. This guidance is effective for fiscal years, and for
`interim periods within those fiscal years, beginning after December 15, 2015 and can be applied using a modified retrospective approach. The
`Company is currently assessing the impact of the adoption of this guidance on its financial condition, results of operations and cash flows.
`
`In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”),
`which revised accounting guidance on revenue recognition that will supersede nearly all existing revenue recognition guidance under U.S.
`GAAP. The core principal of this guidance is that an entity should recognize revenue when it transfers promised goods or services to customers
`in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. This guidance also
`requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts,
`including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This guidance
`is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years, and can be applied using a full
`retrospective or modified retrospective approach. The Company is currently assessing the impact of the adoption of this guidance on its financial
`condition, results of operations and cash flows.
`
`4. Acquisitions and Other Transactions
`
`EPD Business
`
`On July 13, 2014 , Mylan N.V. , Mylan Inc. , and Moon of PA Inc. entered into a definitive agreement with Abbott to acquire the EPD
`Business in an all-stock transaction. On November 4, 2014 , Mylan N.V. , Mylan Inc. , Moon of PA Inc. and Abbott entered into the EPD
`Transaction Agreement. The EPD Transaction closed on February 27, 2015 , after receiving approval from Mylan Inc. ’s shareholders on
`January 29, 2015 . At closing, Abbott transferred the EPD Business to Mylan N.V. in exchange for 110 million ordinary shares of Mylan N.V.
`Immediately after the transfer of the EPD Business, Mylan Inc. merged with Moon of PA Inc., a wholly owned subsidiary of Mylan N.V. , with
`Mylan Inc. becoming a wholly owned subsidiary of Mylan N.V. Mylan Inc. ’s outstanding common stock was exchanged on a one to one basis
`for Mylan N.V. ordinary shares. As a result of the EPD Transaction, Mylan N.V. ’s corporate seat is located in Amsterdam, the Netherlands, and
`its principal executive offices are located in Potters Bar, United Kingdom.
`
`The EPD Business includes more than 100 specialty and branded generic pharmaceutical products in five major therapeutic areas and
`includes several patent protected, novel and/or hard-to-manufacture products. As a result of the acquisition, Mylan N.V. has significantly
`expanded and strengthened its product portfolio in Europe, Japan, Canada, Australia and New Zealand.
`
`The purchase price for Mylan N.V. of the EPD Business, which was on a debt-free basis, was $6.31 billion based on the closing price of
`Mylan Inc. ’s stock as of the EPD Transaction Closing Date, as reported by the NASDAQ Global Select Stock Market. At the EPD Transaction
`Closing Date, former shareholders of Mylan Inc. owned approximately 78% of Mylan N.V. ’s ordinary shares and certain affiliates of Abbott
`(the “Abbott Shareholders”) owned approximately 22% of Mylan N.V. ’s ordinary shares. On the EPD Transaction Closing Date, Mylan N.V. ,
`Abbott and Abbott Shareholders entered into a shareholder agreement (the “Shareholder Agreement”). Following an underwritten public offering
`of Abbott Shareholders of a portion of Mylan N.V.’s ordinary shares held by them, which offering closed on April 6, 2015, the Abbott
`Shareholders collectively owned approximately 14.2% of Mylan N.V.’s outstanding ordinary shares as of May 1, 2015 .
`
`In accordance with U.S. GAAP, Mylan N.V. used the purchase method of accounting to account for the EPD Transaction, with Mylan
`Inc. being treated as the accounting acquirer. Under the purchase method of accounting, the assets acquired and liabilities assumed in the EPD
`Transaction were recorded at their respective estimated fair values at the EPD
`
`
`8
`
`NCI Exhibit 2012
`Page 10 of 104
`
`

`
`Table of Contents
`
`MYLAN N.V. AND SUBSIDIARIES
`Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
`
`
`
`Transaction Closing Date. The preliminary allocation of the $6.31 billion purchase price to the assets acquired and liabilities assumed for the
`EPD Business is as follows:
`
`
`(In millions)
`Accounts receivable
`Inventories
`Other current assets
`Property, plant and equipment
`Identified intangible assets
`Goodwill
`Other assets
`Total assets acquired
`Current liabilities
`Deferred tax liabilities
`Other non-current liabilities
`
`Net assets acquired
`
`
`
`
`$
`
`$
`
`462.5
`196.3
`70.1
`140.8
`4,843.0
`1,285.7
`15.5
`7,013.9
`(269.0 )
`(382.1 )
`(57.0 )
`6,305.8
`
`The identified intangible assets of $4.84 billion are comprised of $4.52 billion of product rights and licenses that have a weighted
`average useful life of 13 years and $320 million of contractual rights that have weighted average useful lives ranging from two to five years .
`The goodwill of $1.29 billion arising from the acquisition primarily relates to the expected synergies of the combined company and the value of
`the employee workforce. All of the goodwill was assigned to the Generics segment. The allocation of the goodwill to the individual reporting
`units within the Generics segment has not been completed. Goodwill of $766.9 million is currently expected to be deductible for income tax
`purposes. Acquisition related costs of approximately $62.1 million and $50.2 million were incurred during the three months ended March 31,
`2015 and year ended December 31, 2014 , respectively, which were recorded as a component of selling, general and administrative (“SG&A”)
`expense in the Condensed Consolidated Statements of Operations .
`
`
`Significant assumptions utilized in the valuation of identified intangible assets were based on company specific information and
`projections which are not observable in the market and are thus considered Level 3 measurements as defined by U.S. GAAP. The preliminary
`fair value estimates for assets acquired and liabilities assumed were based upon preliminary calculations, valuations and assumptions that are
`subject to change as the Company obtains additional information during the measurement period (up to one year from the acquisition date). The
`primary areas of those preliminary estimates that are not yet finalized relate to post-employment benefits, the working capital adjustment and
`deferred income taxes.
`
`
`The operating results of the EPD Business have been included in the Company’s Condensed Consolidated Statements of Operations
`since February 27, 2015 . The revenues of the EPD Business for the period from the acquisition date to March 31, 2015 were $147.4 million
` and the net loss, net of tax, was $54.3 million . The net loss, net of tax, includes the effects of the purchase accounting adjustments and
`acquisition related costs.
`
`Unaudited Pro Forma Financial Results
`
`
`The following table presents supplemental unaudited pro forma information as if the acquisition of the EPD Business had occurred on
`January 1, 2014. The unaudited pro forma results reflect certain adjustments related to past operating performance and acquisition accounting
`adjustments, such as increased amortization expense based on the fair valuation of assets acquired, the impact of transaction costs and the related
`income tax effects. The unaudited pro forma results do not include any anticipated synergies which may be achievable subsequent to the EPD
`Transaction Closing Date. Accordingly, the unaudited pro forma results are not necessarily indicative of the results that actually would have
`occurred had the acquisition been completed on January 1, 2014, nor are they indicative of the future operating results of Mylan N.V.
`
`9
`
`
`
`NCI Exhibit 2012
`Page 11 of 104
`
`

`
`Table of Contents
`
`
`
`MYLAN N.V. AND SUBSIDIARIES
`Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
`
`
`
`
`(Unaudited, in millions, except per share amounts)
`Total revenues
`Net earnings (loss) attributable to Mylan N.V. ordinary shareholders
`Earnings (loss) per ordinary share attributable to Mylan N.V. ordinary shareholders:
`Basic
`Diluted
`Weighted average ordinary shares outstanding:
`Basic
`
`Diluted
`
`
`
`Other Transactions
`
`$
`$
`
`$
`$
`
`
`2014
`2,166.7
`(83.6 )
`
`Three Months Ended
`March 31, 2015
`
`2015
`2,118.7 $
`76.9 $
`
`0.16 $
`0.15 $
`
`491.3
`517.1
`
`(0.17 )
`(0.16 )
`
`482.3
`506.7
`
`On April 24, 2015, Mylan N.V. issued a Rule 2.5 announcement under the Irish Takeover Rules setting forth its legally-binding
`commitment to commence an offer for the entire issued and to be issued share capital of Perrigo Company plc (“Perrigo”) (the “Perrigo
`Proposal”). Under the terms of the offer, amended on April 29, 2015, Perrigo shareholders would receive $75 in cash and 2.3 Mylan N.V.
`ordinary shares for each Perrigo ordinary share. The offer is subject to certain conditions and other terms set forth in the formal Rule 2.5
`announcement, including approval by Mylan N.V. ordinary shareholders. The offer is fully financed, cash confirmed and not conditional on due
`diligence. The making of the offer is pre-conditioned on one of the following having occurred: (i) the expiration or termination of all applicable
`waiting periods (including any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, of the United
`States and the rules and regulations thereunder (the “HSR Act”), (ii) a final decision to clear or approve the consummation of the acquisition of
`Perrigo contemplated by the offer under the HSR Act having been obtained, irrespective of the conditions attaching thereto, or (iii) September
`13, 2015. The offer is subject to customary conditions for an offer governed by the Irish Takeover Rules.
`
`Subsequent to March 31, 2015, the Company entered into agreements with multiple counterparties to acquire certain marketed
`pharmaceutical products for upfront payments totaling approximately $360 million . These transactions are expected to close during 2015. In
`addition, under the terms of one of the agreements, the Company may be required to make future sales and other contingent milestone payments.
`
`On February 2, 2015 , the Company signed a definitive agreement to acquire certain female health care businesses from Famy Care
`Limited, a specialty women’s health care company with global leadership in generic oral contraceptive products. The purchase price is $750
`million in cash plus additional contingent payments of up to $50 million . The transaction is expected to close in the second half of 2015, subject
`to regulatory approvals and certain closing conditions.
`
`On January 30, 2015 , the Company entered into a development and commercialization collaboration with Theravance Biopharma, Inc.
`(“ Theravance Biopharma ”) for the development and, subject to U.S. Food and Drug Administration (“FDA”) approval, commercialization of
`TD-4208, a novel once-daily nebulized long-acting muscarinic antagonist for chronic obstructive pulmonary disease (“COPD”) and other
`respiratory diseases. Under the terms of the agreement, Mylan and Theravance Biopharma will co-develop nebulized TD-4208 for COPD and
`other respiratory diseases. Theravance Biopharma will lead the U.S. registrational development program and Mylan will be responsible for
`reimbursement of Theravance Biopharma 's development costs for that program up until the approval of the first new drug application, after
`which costs will be shared. In addition, Mylan will be responsible for commercial manufacturing. In the U.S., Mylan will lead commercialization
`and Theravance Biopharma will retain the right to co-promote the product under a profit-sharing arrangement. In addition to funding the U.S.
`registrational development program, the Company made a $30 million investment in Theravance Biopharma during the first quarter of 2015,
`which was accounted for as an available-for-sale security. The Company has accrued $15 million in upfront development costs, which will be
`paid to Theravance Biopharma in the second quarter of 2015. Under the terms of the agreement, Theravance Biopharma is eligible to receive
`potential development and sales milestone payments totaling $220 million in the aggregate.
`
`
`
`
`10
`
`NCI Exhibit 2012
`Page 12 of 104
`
`

`
`Table of Contents
`
`MYLAN N.V. AND SUBSIDIARIES
`Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
`
`
`
`
`5. Share-Based Incentive Plan
`
`The Company’s shareholders have approved the 2003 Long-Term Incentive Plan (as amended, the “ 2003 Plan ”). Under the 2003
`Plan , 55,300,000 ordinary shares are reserved for issuance to key employees, consultants, independent contractors and non-employee directors
`of the Company through a variety of incentive awards, including: stock options, stock appreciation rights (“SAR”), restricted shares and units,
`performance awards (“PSU”), other stock-based awards and short-term cash awards. Stock option awards are granted at the fair value of the
`shares underlying the options at the date of the grant, generally become exercisable over periods ranging from three to four years , and generally
`expire in ten years . Upon approval of the 2003 Plan, no further grants of stock options have been made under any other previous plans.
`
`The following table summarizes stock option and SAR (“stock awards”) activity:
`
`
`Outstanding at December 31, 2014
`Granted
`Exercised
`Forfeited
`Outstanding at March 31, 2015
`Vested and expected to vest at March 31, 2015
`Exercisable at March 31, 2015
`
`Number of Shares
`Under Stock
`
`Awards
`16,207,777 $
`293,010
`(3,775,134 )
`(52,916 )
`12,672,737 $
`12,314,675 $
`6,007,826 $
`
`Weighted
`Average
`Exercise Price
`per Share
`33.21
`55.47
`22.68
`48.29
`36.80
`36.56
`21.71
`
`As of M