Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2015
Feb. 8, 2016
Jun. 30, 2015
Document Information [Line Items]
 
 
 
Entity Registrant Name
MYLAN N.V. 
 
 
Entity Central Index Key
0001623613 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2015 
 
 
Amendment Flag
false 
 
 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
FY 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
$ 33,063,308,366 
Entity Common Stock, Shares Outstanding
 
490,687,866 
 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 1,236.0 
$ 225.5 
Accounts receivable, net
2,689.1 
2,268.5 
Inventories
1,951.0 
1,651.4 
Prepaid expenses and other current assets
596.6 
2,295.8 
Total current assets
6,472.7 
6,441.2 
Property, plant and equipment, net
1,983.9 
1,785.7 
Intangible assets, net
7,221.9 
2,347.1 
Goodwill
5,380.1 
4,049.3 
Deferred income tax benefit
457.6 
397.4 
Other assets
751.5 
799.8 
Total assets
22,267.7 
15,820.5 
Current liabilities:
 
 
Trade accounts payable
1,109.6 
905.6 
Short-term borrowings
1.3 
330.7 
Income taxes payable
92.4 
160.7 
Current portion of long-term debt and other long-term obligations
1,077.0 
2,472.9 
Other current liabilities
1,841.9 
1,434.1 
Total current liabilities
4,122.2 
5,304.0 
Long-term debt
6,295.6 
5,699.9 
Other long-term obligations
1,366.0 
1,336.7 
Deferred income tax liability
718.1 
203.9 
Total liabilities
12,501.9 
12,544.5 
Mylan N.V. shareholders’ equity
 
 
Ordinary shares — nominal value €0.01 per share as of December 31, 2015 and par value $0.50 per share as of December 31, 2014
5.5 
273.3 
Additional paid-in capital
7,128.6 
4,212.8 
Retained earnings
4,462.1 
3,614.5 
Accumulated other comprehensive loss
(1,764.3)
(987.0)
Total Mylan N.V. shareholders' equity, before treasury stock
9,831.9 
7,113.6 
Noncontrolling interest
1.4 
20.1 
Less: Treasury stock — at cost
67.5 
3,857.7 
Total equity
9,765.8 
3,276.0 
Total liabilities and equity
$ 22,267.7 
$ 15,820.5 
Consolidated Balance Sheets (Parenthetical)
Dec. 31, 2015
EUR (€)
Dec. 31, 2014
USD ($)
Statement of Financial Position [Abstract]
 
 
Ordinary shares, par value, in USD per share
€ 0.01 
$ 0.5 
Ordinary shares, number of shares authorized
1,200,000,000 
1,500,000,000 
Ordinary shares, number of shares issued
491,928,095 
546,658,507 
Treasury stock, number of shares
1,311,193 
171,435,200 
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
$ 9,362.6 
$ 7,646.5 
$ 6,856.6 
Other revenues
 
 
 
 
 
 
 
 
66.7 
73.1 
52.5 
Total revenues
2,490.7 
2,695.2 
2,371.7 
1,871.7 1
2,082.7 
2,084.0 
1,837.3 
1,715.6 
9,429.3 
7,719.6 
6,909.1 
Cost of sales
 
 
 
 
 
 
 
 
5,213.2 
4,191.6 
3,868.8 
Gross profit
1,062.6 
1,315.3 
1,008.1 
830.1 1
969.0 
1,012.4 
808.8 
737.8 
4,216.1 
3,528.0 
3,040.3 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
 
 
 
 
 
 
671.9 
581.8 
507.8 
Selling, general and administrative
 
 
 
 
 
 
 
 
2,180.7 
1,625.7 
1,408.5 
Litigation settlements, net
 
 
 
 
 
 
 
 
(97.4)
47.9 
(14.6)
Other operating (income) expense, net
 
 
 
 
 
 
 
 
(80.0)
3.1 
Total operating expenses
 
 
 
 
 
 
 
 
2,755.2 
2,175.4 
1,904.8 
Earnings from operations
 
 
 
 
 
 
 
 
1,460.9 
1,352.6 
1,135.5 
Interest expense
 
 
 
 
 
 
 
 
339.4 
333.2 
313.3 
Other expense (income), net
 
 
 
 
 
 
 
 
206.1 
44.9 
74.9 
Earnings before income taxes and noncontrolling interest
 
 
 
 
 
 
 
 
915.4 
974.5 
747.3 
Income tax provision
 
 
 
 
 
 
 
 
67.7 
41.4 
120.8 
Net earnings
194.6 
428.6 
167.9 
56.6 1
190.5 
499.4 
126.6 
116.6 
847.7 
933.1 
626.5 
Net earnings attributable to the noncontrolling interest
 
 
 
 
 
 
 
 
(0.1)
(3.7)
(2.8)
Net earnings attributable to Mylan N.V. ordinary shareholders
$ 194.6 
$ 428.6 
$ 167.8 
$ 56.6 1
$ 189.2 
$ 499.1 
$ 125.2 
$ 115.9 
$ 847.6 
$ 929.4 
$ 623.7 
Earnings per ordinary share attributable to Mylan N.V. ordinary shareholders:
 
 
 
 
 
 
 
 
 
 
 
Basic (in USD per share)
$ 0.40 2
$ 0.87 2
$ 0.34 2
$ 0.14 1 2
$ 0.51 2
$ 1.33 2
$ 0.34 2
$ 0.31 2
$ 1.80 
$ 2.49 
$ 1.63 
Diluted (in USD per share)
$ 0.38 2
$ 0.83 2
$ 0.32 2
$ 0.13 1 2
$ 0.47 2
$ 1.26 2
$ 0.32 2
$ 0.29 2
$ 1.70 
$ 2.34 
$ 1.58 
Weighted average ordinary shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
472.2 
373.7 
383.3 
Diluted
 
 
 
 
 
 
 
 
497.4 
398.0 
394.5 
Consolidated Statements of Comprehensive Earnings (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Net earnings
$ 194.6 
$ 428.6 
$ 167.9 
$ 56.6 1
$ 190.5 
$ 499.4 
$ 126.6 
$ 116.6 
$ 847.7 
$ 933.1 
$ 626.5 
Other comprehensive loss, before tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
 
 
 
 
 
 
 
 
(790.9)
(622.9)
(273.7)
Change in unrecognized gain (loss) and prior service cost related to defined benefit plans
 
 
 
 
 
 
 
 
3.1 
(11.8)
8.2 
Net unrecognized gain (loss) on derivatives
 
 
 
 
 
 
 
 
16.7 
(182.6)
180.4 
Net unrealized loss on marketable securities
 
 
 
 
 
 
 
 
(2.0)
(1.1)
Other comprehensive loss, before tax
 
 
 
 
 
 
 
 
(773.1)
(817.3)
(86.2)
Income tax provision (benefit)
 
 
 
 
 
 
 
 
4.2 
(70.4)
67.4 
Other comprehensive loss, net of tax
 
 
 
 
 
 
 
 
(777.3)
(746.9)
(153.6)
Comprehensive earnings
 
 
 
 
 
 
 
 
70.4 
186.2 
472.9 
Comprehensive earnings attributable to the noncontrolling interest
 
 
 
 
 
 
 
 
(0.1)
(3.7)
(2.8)
Comprehensive earnings attributable to Mylan N.V. ordinary shareholders
 
 
 
 
 
 
 
 
$ 70.3 
$ 182.5 
$ 470.1 
Consolidated Statements of Equity (USD $)
In Millions, except Share data
Total
Common Stock
Additional Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Earnings (Loss)
Noncontrolling Interest
Balance at Dec. 31, 2012
$ 3,355.8 
$ 269.8 
$ 3,986.7 
$ 2,061.4 
$ (2,890.7)
$ (86.5)
$ 15.1 
Balance (in shares) at Dec. 31, 2012
 
539,664,386 
 
 
(144,459,209)
 
 
Net earnings
626.5 
 
 
623.7 
 
 
2.8 
Other comprehensive (loss) earnings, net of tax
(153.6)
 
 
 
 
(153.6)
 
Common stock share repurchase
(1,000.0)
 
 
 
(1,000.0)
 
 
Common stock share repurchase (in shares)
(41,400,000)
 
 
 
(28,485,459)
 
 
Stock options exercised, net of shares tendered for payment
76.2 
2.2 
74.0 
 
 
 
 
Stock options exercised, net of shares tendered for payment (in shares)
 
4,313,644 
 
 
 
 
 
Stock compensation expense
47.0 
 
47.0 
 
 
 
 
Issuance of restricted stock, net of shares withheld
(7.7)
 
(19.6)
 
11.9 
 
 
Issuance of restricted stock, net of shares withheld (in shares)
 
 
 
 
570,769 
 
 
Tax benefit of stock option plans
15.5 
 
15.5 
 
 
 
 
Stock Issued During Period, Value, Acquisitions
 
 
 
 
 
 
Other
0.2 
 
 
 
 
0.2 
Balance at Dec. 31, 2013
2,959.9 
272.0 
4,103.6 
2,685.1 
(3,878.8)
(240.1)
18.1 
Balance (in shares) at Dec. 31, 2013
 
543,978,030 
 
 
(172,373,899)
 
 
Common Stock, Value, Issued
273.3 
 
 
 
 
 
 
Net earnings
933.1 
 
 
929.4 
 
 
3.7 
Other comprehensive (loss) earnings, net of tax
(746.9)
 
 
 
 
(746.9)
 
Common stock share repurchase
(1,000.0)
 
 
 
 
 
 
Common stock share repurchase (in shares)
(28,500,000)
 
 
 
 
 
 
Stock options exercised, net of shares tendered for payment
53.8 
1.3 
52.5 
 
 
 
 
Stock options exercised, net of shares tendered for payment (in shares)
 
2,680,477 
 
 
 
 
 
Stock compensation expense
66.0 
 
66.0 
 
 
 
 
Issuance of restricted stock, net of shares withheld
(19.1)
 
(40.2)
 
21.1 
 
 
Issuance of restricted stock, net of shares withheld (in shares)
 
 
 
 
938,699 
 
 
Tax benefit of stock option plans
30.9 
 
30.9 
 
 
 
 
Stock Issued During Period, Value, Acquisitions
 
 
 
 
 
 
Other
(1.7)
 
 
 
 
 
(1.7)
Additional Paid in Capital
4,212.8 
 
 
 
 
 
 
Balance at Dec. 31, 2014
3,276.0 
 
 
3,614.5 
(3,857.7)
(987.0)
20.1 
Balance (in shares) at Dec. 31, 2014
 
546,658,507 
 
 
(171,435,200)
 
 
Common Stock, Value, Issued
5.5 
 
 
 
 
 
 
Net earnings
847.7 
 
 
847.6 
 
 
0.1 
Other comprehensive (loss) earnings, net of tax
(777.3)
 
 
 
 
(777.3)
 
Common stock share repurchase
(67.5)
 
 
 
(67.5)
 
 
Common stock share repurchase (in shares)
(1,300,000)
 
 
 
1,311,193 
 
 
Stock options exercised, net of shares tendered for payment
98.0 
1.3 
96.7 
 
 
 
 
Stock options exercised, net of shares tendered for payment (in shares)
 
6,086,450 
 
 
 
 
 
Stock compensation expense
92.8 
 
92.8 
 
 
 
 
Issuance of restricted stock, net of shares withheld
(41.7)
 
(56.2)
 
14.5 
 
 
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests
 
 
 
 
 
 
(18.7)
Issuance of restricted stock, net of shares withheld (in shares)
 
 
 
 
618,338 
 
 
Tax benefit of stock option plans
52.5 
 
52.5 
 
 
 
 
Exchange of Mylan Inc. Common Stock into Mylan N.V. Ordinary Shares
 
(378,388,431)
 
 
 
 
 
Exchange of Mylan Inc. Common Shares into Mylan N.V. Ordinary Shares, Cost
 
(185.0)
185.0 
 
 
 
 
Issuance of Ordinary Shares to Mylan N.V.
 
378,388,431 
 
 
 
 
 
Stock Issued During Period, Shares, Acquisitions
 
110,000,000 
 
 
 
 
 
Stock Issued During Period, Value, Acquisitions
6,305.8 
1.3 
 
 
 
 
 
Adjustments to Additional Paid in Capital, Shares Issued in Acquisition
 
 
6,304.5 
 
 
 
 
Treasury Stock, Shares, Retired
 
(170,816,862)
 
 
170,816,862 
 
 
Treasury Stock, Retired, Cost Method, Amount
(85.4)
(3,757.7)
 
3,843.1 
 
 
Other
(1.8)
 
(1.8)
 
0.1 
 
(0.1)
Additional Paid in Capital
7,128.6 
 
 
 
 
 
 
Balance at Dec. 31, 2015
$ 9,765.8 
 
 
$ 4,462.1 
$ (67.5)
$ (1,764.3)
$ 1.4 
Balance (in shares) at Dec. 31, 2015
 
491,928,095 
 
 
1,311,193 
 
 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash flows from operating activities:
 
 
 
Net earnings
$ 847.7 
$ 933.1 
$ 626.5 
Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
1,032.1 
566.6 
516.0 
Stock-based compensation expense
92.8 
66.0 
47.0 
Change in estimated sales allowances
331.1 
707.9 
345.8 
Deferred income tax provision
(115.9)
(315.2)
(87.1)
Loss from equity method investments
105.1 
91.4 
34.6 
Financing fees
99.6 
Other non-cash items
263.2 
139.1 
127.1 
Litigation settlements, net
15.1 
7.4 
(14.6)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(265.3)
(939.1)
(553.5)
Inventories
(320.4)
(147.5)
(157.1)
Trade accounts payable
131.8 
(0.3)
137.2 
Income taxes
(164.2)
78.5 
(1.1)
Other operating assets and liabilities, net
(44.2)
(173.1)
85.8 
Net cash provided by operating activities
2,008.5 
1,014.8 
1,106.6 
Cash flows from investing activities:
 
 
 
Capital expenditures
(362.9)
(325.3)
(334.6)
Change in restricted cash
21.8 
(5.1)
(228.0)
Cash paid for acquisitions, net
(693.1)
(50.0)
(1,261.9)
Proceeds from sale of property, plant and equipment
2.3 
8.9 
25.3 
Purchase of marketable securities
(62.1)
(19.9)
(19.3)
Proceeds from sale of marketable securities
33.1 
20.2 
10.6 
Payments for product rights and other, net
(508.8)
(429.1)
(60.9)
Net cash used in investing activities
(1,569.7)
(800.3)
(1,868.8)
Cash flows from financing activities:
 
 
 
Payment of financing fees
(130.4)
(5.8)
(34.6)
Purchase of common stock
(67.5)
(1,000.0)
Change in short-term borrowings, net
(329.2)
(107.8)
141.4 
Proceeds from convertible note hedge
1,970.8 
Proceeds from issuance of long-term debt
3,539.2 
2,235.0 
4,974.7 
Payment of long-term debt
(4,484.1)
(2,295.8)
(3,480.3)
Proceeds from exercise of stock options
97.7 
53.8 
76.2 
Taxes paid related to net share settlement of equity awards
(31.8)
(27.7)
Acquisition of noncontrolling interest
(11.7)
Payments for contingent consideration
(150.0)
Other items, net
51.8 
30.9 
15.5 
Net cash provided by (used in) financing activities
604.8 
(267.4)
692.9 
Effect on cash of changes in exchange rates
(33.1)
(12.9)
10.6 
Net increase (decrease) in cash and cash equivalents
1,010.5 
(65.8)
(58.7)
Cash and cash equivalents — beginning of period
225.5 
291.3 
350.0 
Cash and cash equivalents — end of period
1,236.0 
225.5 
291.3 
Non-cash transactions:
 
 
 
Stock Issued During Period, Value, Acquisitions
6,305.8 
Cash paid during the period for:
 
 
 
Income taxes
302.9 
210.5 
189.6 
Interest
254.7 
273.8 
249.4 
Other current liabilities
 
 
 
Non-cash transactions:
 
 
 
Non-cash transactions
$ 18.0 
$ 0 
$ 250.0 
Nature of Operations
Nature of Operations
Nature of Operations
Mylan N.V. and its subsidiaries (collectively, the “Company,” “Mylan,” “our” or “we”) are engaged in the global development, licensing, manufacture, marketing and distribution of generic, brand and branded generic pharmaceutical products for resale by others and active pharmaceutical ingredients (“API”) through two segments, “Generics” and “Specialty.” The principal markets for Generics are proprietary and ethical pharmaceutical wholesalers and distributors, group purchasing organizations, drug store chains, independent pharmacies, drug manufacturers, institutions, and public and governmental agencies primarily within the United States (“U.S.”) and Canada (collectively, “North America”); Europe; and India, Australia, Japan, New Zealand and Brazil (collectively, “Rest of World”). Generics also focuses on developing API with non-infringing processes for both internal use and to partner with manufacturers in regulated markets such as the U.S. and the European Union (the “EU”) at market formation. The principal market for Specialty is pharmaceutical wholesalers and distributors, pharmacies and healthcare institutions primarily in the U.S.
Summary of Significant Accounting Policies
Summary Of Significant Accounting Policies
Summary of Significant Accounting Policies
Principles of Consolidation. The Consolidated Financial Statements include the accounts of Mylan and those of its wholly owned and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Investments in equity method affiliates are recorded at cost and adjusted for the Company’s share of the affiliates’ cumulative results of operations, capital contributions and distributions. Noncontrolling interests in the Company’s subsidiaries are recorded net of tax as net earnings attributable to noncontrolling interests.
Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because of the uncertainty inherent in such estimates, actual results could differ from those estimates.
Foreign Currencies. The Consolidated Financial Statements are presented in U.S. Dollars, the reporting currency of Mylan. Statements of Operations and Cash Flows of all of the Company’s subsidiaries that have functional currencies other than U.S. Dollars are translated at a weighted average exchange rate for the period for inclusion in the Consolidated Statements of Operations and Cash Flows, whereas assets and liabilities are translated at the end of the period exchange rates for inclusion in the Consolidated Balance Sheets. Translation differences are recorded directly in shareholders’ equity as foreign currency translation adjustments. Gains or losses on transactions denominated in a currency other than the subsidiaries’ functional currency, which arise as a result of changes in foreign currency exchange rates, are recorded in the Consolidated Statements of Operations.
Cash and Cash Equivalents. Cash and cash equivalents are comprised of highly liquid investments with an original maturity of three months or less at the date of purchase.
Marketable Securities. Marketable equity and debt securities classified as available-for-sale are recorded at fair value, with net unrealized gains and losses, net of income taxes, reflected in accumulated other comprehensive loss as a component of shareholders’ equity. Net realized gains and losses on sales of available-for-sale securities are computed on a specific security basis and are included in other expense (income), net, in the Consolidated Statements of Operations. Marketable equity and debt securities classified as trading securities are valued at the quoted market price from broker or dealer quotations or transparent pricing sources at the reporting date, and realized and unrealized gains and losses are included in other expense (income), net, in the Consolidated Statements of Operations.
Concentrations of Credit Risk. Financial instruments that potentially subject the Company to credit risk consist principally of interest-bearing investments, derivatives and accounts receivable.
Mylan invests its excess cash in high-quality, liquid money market instruments, principally overnight deposits and highly rated money market funds. The Company maintains deposit balances at certain financial institutions in excess of federally insured amounts. Periodically, the Company reviews the creditworthiness of its counterparties to derivative transactions, and it does not expect to incur a loss from failure of any counterparties to perform under agreements it has with such counterparties.
Mylan performs ongoing credit evaluations of its customers and generally does not require collateral. Approximately 42% and 53% of the accounts receivable balances represent amounts due from three customers at December 31, 2015 and 2014, respectively. Total allowances for doubtful accounts were $33.6 million and $25.7 million at December 31, 2015 and 2014, respectively.
Inventories. Inventories are stated at the lower of cost or market, with cost principally determined by the first-in, first-out method. Provisions for potentially obsolete or slow-moving inventory, including pre-launch inventory, are made based on our analysis of inventory levels, historical obsolescence and future sales forecasts.
Property, Plant and Equipment. Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed and recorded on a straight-line basis over the assets’ estimated service lives (three to 18 years for machinery and equipment and other fixed assets and 15 to 39 years for buildings and improvements). Capitalized software is included in property, plant and equipment and is amortized over a period of three years. Capitalized software costs included on our Consolidated Balance Sheets were $130.0 million and $116.3 million, net of accumulated depreciation, at December 31, 2015 and 2014, respectively. The Company periodically reviews the original estimated useful lives of assets and makes adjustments when appropriate. Depreciation expense was approximately $186.1 million, $172.8 million and $152.3 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Intangible Assets and Goodwill. Intangible assets are stated at cost less accumulated amortization. Amortization is generally recorded on a straight-line basis over estimated useful lives ranging from five to 20 years. The Company periodically reviews the original estimated useful lives of intangible assets and makes adjustments when events indicate that a shorter life is appropriate.
The Company accounts for acquired businesses using the purchase method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. The cost to acquire a business is allocated to the underlying net assets of the acquired business in proportion to their respective fair values. Amounts allocated to acquired in-process research and development (“IPR&D”) are capitalized at the date of an acquisition and, at the time, such IPR&D assets have indefinite lives. As products in development are approved for sale, amounts will be allocated to product rights and licenses and will be amortized over their estimated useful lives. Definite-lived intangible assets are amortized over the expected life of the asset. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.
The Company reviews goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable based on management's assessment of the fair value of the Company's reporting units as compared to their related carrying value. Under the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”), we have the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the two-step goodwill impairment test is performed. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step would need to be performed; otherwise, no further step is required. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of the goodwill. Any excess of the goodwill carrying amount over the applied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value.
The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s financial condition and results of operations. Fair values and useful lives are determined based on, among other factors, the expected future period of benefit of the asset, the various characteristics of the asset and projected cash flows.
Contingent Consideration. Mylan records contingent consideration resulting from business acquisitions at fair value on the acquisition date. Each reporting period thereafter, the Company revalues these obligations and records increases or decreases in their fair value as a charge (credit) to other operating (income) expense, net within the Consolidated Statements of Operations. Changes in the fair value of the contingent consideration obligations can result from adjustments to the discount rates, payment periods and adjustments in the probability of achieving future development steps, regulatory approvals, market launches, sales targets and profitability. These fair value measurements represent Level 3 measurements, as they are based on significant inputs not observable in the market.
Significant judgment is employed in determining the assumptions utilized as of the acquisition date and for each subsequent measurement period. Accordingly, changes in the assumptions described above could have a material impact on the Company’s consolidated financial condition and results of operations.
Impairment of Long-Lived Assets. The carrying values of long-lived assets, which include property, plant and equipment and intangible assets with finite lives, are evaluated periodically in relation to the expected future undiscounted cash flows of the underlying assets and monitored for other potential triggering events. Adjustments are made in the event that estimated undiscounted net cash flows are less than the carrying value.
Indefinite-lived intangibles, principally IPR&D, are tested at least annually for impairment or upon the occurrence of a triggering event. The impairment test for IPR&D consists of a comparison of the asset’s fair value with its carrying value. Impairment is determined to exist when the fair value is less than the carrying value of the assets being tested.
Short-Term Borrowings. The Company’s subsidiaries in India have working capital facilities with several banks. At December 31, 2015, the Company had no amounts outstanding under such facilities. At December 31, 2014, the working capital facilities had a weighted average interest rate of 10.9% on borrowings of approximately $6 million.
Mylan Pharmaceuticals Inc. (“MPI”), a wholly owned subsidiary of the Company, also has a $400 million accounts receivable facility (“Receivables Facility”), which will expire in January 2018. The Company had no amounts outstanding under the Receivables Facility in the Consolidated Balance Sheets at December 31, 2015. Included in the Consolidated Balance Sheets at December 31, 2014 was $325 million of short-term borrowings, which are recorded as a secured loan. The receivables underlying any borrowings are included in accounts receivable, net, in the Consolidated Balance Sheets. At December 31, 2015 and 2014, there was $914.2 million and $1.07 billion of securitized accounts receivable, respectively.
Revenue Recognition. Mylan recognizes net revenue for product 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. The following briefly describes the nature of each provision and how such provisions are estimated.
Discounts are reductions to invoiced amounts offered to customers for payment within a specified period and are estimated upon sale utilizing historical customer payment experience.
Volume-based sales allowances are offered to key customers to promote customer loyalty and encourage greater product sales. These programs provide that upon the attainment of pre-established volumes or the attainment of revenue milestones for a specified period, the customer receives credit against purchases. Other promotional programs are incentive programs periodically offered to our customers. The Company is able to estimate provisions for volume-based sales allowances and other promotional programs based on the specific terms in each agreement at the time of sale.
Consistent with industry practice, Mylan maintains a return policy that allows customers to return product within a specified period prior and subsequent to the expiration date. The Company’s estimate of the provision for returns is generally based upon historical experience with actual returns.
Price adjustments, which include shelf stock adjustments, are credits issued to reflect decreases in the selling prices of products. Shelf stock adjustments are based upon the amount of product which the customer has remaining in its inventory at the time of the price reduction. Decreases in selling prices are discretionary decisions made by the Company to reflect market conditions. Amounts recorded for estimated price adjustments are based upon specified terms with direct customers, estimated launch dates of competing products, estimated declines in market price and, in the case of shelf stock adjustments, estimates of inventory held by the customer.
The Company has agreements with certain indirect customers, such as independent pharmacies, managed care organizations, hospitals, nursing homes, governmental agencies and pharmacy benefit management companies, which establish contract prices for certain products. The indirect customers then independently select a wholesaler from which to actually purchase the products at these contracted prices. Alternatively, certain wholesalers may enter into agreements with indirect customers that establish contract pricing for certain products, which the wholesalers provide. Under either arrangement, Mylan will provide credit to the wholesaler for any difference between the contracted price with the indirect party and the wholesaler’s invoice price. Such credits are called chargebacks. The provision for chargebacks is based on expected sell-through levels by our wholesaler customers to indirect customers, as well as estimated wholesaler inventory levels.
Accounts receivable are presented net of allowances relating to the above provisions. No significant revisions were made to the methodology used in determining these provisions during the years ended December 31, 2015 and 2014. Such allowances were $1.84 billion and $1.63 billion at December 31, 2015 and 2014, respectively. Other current liabilities included $681.8 million and $581.3 million at December 31, 2015 and 2014, respectively, for certain sales allowances and other adjustments that are paid to indirect customers.
Royalty or profit share revenue from licensees, which are based on third-party sales of licensed products and technology, is recorded in accordance with the contract terms, when third-party sales can be reliably measured and collection of the funds is reasonably assured. Royalty revenue is included in other revenue in the Consolidated Statements of Operations.
The Company recognizes contract manufacturing and other service revenue when the service is performed or when the Company’s partners take ownership and title has passed, collectability is reasonably assured, the sales price is fixed or determinable, and there is persuasive evidence of an arrangement.
The following table represents the percentage of consolidated third party net sales to Mylan’s major customers during the years ended December 31, 2015, 2014 and 2013.
 
Percentage of Third Party Net Sales
 
2015
 
2014
 
2013
AmeriSourceBergen Corporation
16
%
 
13
%
 
10
%
McKesson Corporation
15
%
 
19
%
 
14
%
Cardinal Health, Inc.
12
%
 
12
%
 
15
%

Research and Development. Research and development (“R&D”) expenses are charged to operations as incurred.
Income Taxes. Income taxes have been provided for using an asset and liability approach in which deferred income taxes reflect the tax consequences on future years of events that the Company has already recognized in the financial statements or tax returns. Changes in enacted tax rates or laws may result in adjustments to the recorded tax assets or liabilities in the period that the new tax law is enacted.
Earnings per Ordinary Share. Basic earnings per ordinary share is computed by dividing net earnings attributable to Mylan N.V. ordinary shareholders by the weighted average number of shares outstanding during the period. Diluted earnings per ordinary share is computed by dividing net earnings attributable to Mylan N.V. ordinary shareholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding related to potentially dilutive securities or instruments, if the impact is dilutive.
On September 15, 2008, concurrent with the sale of $575 million aggregate principal amount of Cash Convertible Notes due 2015 (the “Cash Convertible Notes”), Mylan Inc. entered into convertible note hedge and warrant transactions with certain counterparties. In connection with the consummation of the EPD Transaction (as defined below in Note 3 Acquisitions and Other Transactions), the terms of the convertible note hedge were adjusted so that the cash settlement value would be based on Mylan N.V. ordinary shares. The Company’s convertible note hedge on its Cash Convertible Notes, which was entered into in order to offset the cash flow risk associated with the cash conversion feature of the Cash Convertible Notes, was settled in conjunction with the maturity and full redemption of the Cash Convertible Notes on September 15, 2015. The terms of the warrant transactions were also adjusted so that the Company may settle the obligations under the warrant transactions by delivering Mylan N.V. ordinary shares. Pursuant to the warrant transactions, as adjusted, the Company has sold to the counterparties warrants to purchase in the aggregate up to approximately 43.2 million shares of Mylan N.V. ordinary shares, subject to certain anti-dilution adjustments, which under most circumstances represented the maximum number of shares to which the Cash Convertible Notes related (based on the conversion reference rate at the time of issuance). The sold warrants had an exercise price of $20.00 and will be net share settled, meaning that the Company will issue a number of shares per warrant corresponding to the difference between its share price at each warrant expiration date and the exercise price. The warrants meet the definition of derivatives under the guidance in the FASB Accounting Standards Codification (“ASC”) 815 Derivatives and Hedging (“ASC 815”); however, because these instruments have been determined to be indexed to the Company’s own ordinary shares and meet the criteria for equity classification under ASC 815-40 Contracts in Entity’s Own Equity (“ASC 815-40”), the warrants have been recorded in shareholders’ equity in the Consolidated Balance Sheets.
In September 2011, Mylan Inc. entered into amendments with the counterparties to exchange the original warrants with an exercise price of $20.00 (the “Old Warrants”) for new warrants with an exercise price of $30.00 (the “New Warrants”). Approximately 41.0 million Old Warrants were exchanged for New Warrants. All other terms and settlement provisions of the Old Warrants remain unchanged in the New Warrants. The New Warrants meet the definition of derivatives under the guidance in ASC 815; however, because these instruments have been determined to be indexed to the Company’s own ordinary shares and meet the criteria for equity classification under ASC 815-40, the New Warrants have also been recorded in shareholders’ equity in the Consolidated Balance Sheets. Settlement of the warrants will occur in the second quarter of 2016. The dilutive impact of the Old Warrants and New Warrants are included in the calculation of diluted earnings per share based upon the average market value of the Company’s ordinary shares during the period as compared to the exercise price. For the years ended December 31, 2015, 2014 and 2013, warrants included in the calculation of diluted earnings per share were 20.7 million, 17.7 million and 5.1 million, respectively.

The Board of Directors periodically authorizes the Company to repurchase ordinary shares in the open market or through other methods. The Company repurchased approximately 1.3 million ordinary shares at a cost of approximately $67.5 million in 2015. The Company may repurchase up to $1 billion of the Company’s ordinary shares under its current repurchase program that was announced on November 16, 2015 (the “Share Repurchase Program”), but is not obligated to acquire any particular amount of ordinary shares and the program expires on August 27, 2016. The Company repurchased approximately 28.5 million common shares at a cost of approximately $1.0 billion in 2014 and approximately 41.4 million common shares at a cost of approximately $1.0 billion in 2013. These amounts reflect transactions executed through December 31st of each year.

Basic and diluted earnings per ordinary share attributable to Mylan N.V. are calculated as follows:
 
 
Year Ended December 31,
(In millions, except per share amounts)
2015 (1)
 
2014
 
2013
Basic earnings attributable to Mylan N.V. ordinary shareholders (numerator):
 
 
 
 
 
Net earnings attributable to Mylan N.V. ordinary shareholders
$
847.6

 
$
929.4

 
$
623.7

Shares (denominator):
 
 
 
 
 
Weighted average ordinary shares outstanding
472.2

 
373.7

 
383.3

Basic earnings per ordinary share attributable to Mylan N.V. ordinary shareholders
$
1.80

 
$
2.49

 
$
1.63

 
 
 
 
 
 
Diluted earnings attributable to Mylan N.V. ordinary shareholders (numerator):
 
 
 
 
 
Net earnings attributable to Mylan N.V. ordinary shareholders
$
847.6

 
$
929.4

 
$
623.7

Shares (denominator):
 
 
 
 
 
Weighted average ordinary shares outstanding
472.2

 
373.7

 
383.3

Share-based awards and warrants
25.2

 
24.3

 
11.2

Total dilutive shares outstanding
497.4

 
398.0

 
394.5

Diluted earnings per ordinary share attributable to Mylan N.V. ordinary shareholders
$
1.70

 
$
2.34

 
$
1.58

____________
(1)    As Mylan N.V. is the successor to Mylan Inc., the information set forth above refers to Mylan Inc. for periods prior to February 27, 2015, and to Mylan N.V. on and after February 27, 2015.
Additional stock options or restricted stock awards were outstanding during the years ended December 31, 2015, 2014 and 2013 but were not included in the computation of diluted earnings per share for each respective period, because the effect would be anti-dilutive. Such anti-dilutive stock options or restricted stock awards represented 5.9 million, 6.1 million and 1.0 million shares for the years ended December 31, 2015, 2014 and 2013, respectively.
Share-Based Compensation. The fair value of share-based compensation is recognized as expense in the Consolidated Statements of Operations over the vesting period.
Derivatives. From time to time the Company may enter into derivative financial instruments (mainly foreign currency exchange forward contracts, interest rate swaps and purchased equity call options) designed to: 1) hedge the cash flows resulting from existing assets and liabilities and transactions expected to be entered into over the next 24 months in currencies other than the functional currency, 2) hedge the variability in interest expense on floating rate debt, 3) hedge the fair value of fixed-rate notes, 4) hedge against changes in interest rates that could impact future debt issuances, or 5) hedge cash or share payments required on conversion of issued convertible notes. Derivatives are recognized as assets or liabilities in the Consolidated Balance Sheets at their fair value. When the derivative instrument qualifies as a cash flow hedge, changes in the fair value are included in earnings or deferred through other comprehensive earnings depending on the nature and effectiveness of the offset. If a derivative instrument qualifies as a fair value hedge, the changes in the fair value, as well as the offsetting changes in the fair value of the hedged items, are included in interest expense. When such instruments do not qualify for hedge accounting the changes in fair value are recorded in the Consolidated Statements of Operations within other expense (income), net.
Financial Instruments. The Company’s financial instruments consist primarily of short-term and long-term debt, interest rate swaps, forward contracts and option contracts. The Company’s financial instruments also include cash and cash equivalents as well as accounts and other receivables and accounts payable, the fair values of which approximate their carrying values. As a policy, the Company does not engage in speculative or leveraged transactions.
The Company uses derivative financial instruments for the purpose of hedging foreign currency and interest rate exposures, which exist as part of ongoing business operations or to hedge cash or share payments required on conversion of issued convertible notes. The Company carries derivative instruments on the Consolidated Balance Sheets at fair value, determined by reference to market data such as forward rates for currencies, implied volatilities, and interest rate swap yield curves. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it.
Recent Accounting Pronouncements. In January 2016, the FASB issued Accounting Standards Update 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income (other than those accounted for under equity method of accounting). The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company is currently assessing the impact of the adoption of this guidance on its Consolidated Financial Statements and disclosures.
In November 2015, the FASB issued Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which simplifies the presentation of deferred taxes by requiring that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The updated guidance does not change the existing requirement that only permits offsetting within a jurisdiction, and as such, companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. This guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those years and early adoption is permitted. This guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively. If applied prospectively, companies are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, companies are required to include quantitative information about the effects of the change on prior periods. The Company has elected to early adopt the new accounting guidance related to the presentation of deferred taxes as of December 31, 2015. As a result, the Company has changed its accounting policy to record all deferred tax assets and liabilities, along with any related valuation allowance, as noncurrent on the Consolidated Balance Sheets. The Consolidated Balance Sheet has been retrospectively adjusted to reflect this change for all periods presented. The reclassification resulted in a decrease in current assets and a decrease in current liabilities of approximately $345.7 million and $0.2 million, respectively at December 31 2014.
In September 2015, the FASB issued Accounting Standards Update 2015-16, Business Combinations (Topic 805) - Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”), which requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in ASU 2015-16 require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. An entity is required to present separately on the face of the income statement or disclose in the notes thereto the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. This guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015 and should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier adoption permitted for financial statements that have not been issued. The Company will prospectively adopt this guidance beginning in fiscal year 2016.
In August 2015, the FASB issued Accounting Standards Update 2015-15, Interest - Imputation of Interest, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”), which states that given the absence of authoritative guidance for debt issuance costs related to line-of-credit arrangements within ASU 2015-03, defined below, the SEC staff would not object to an entity deferring and presenting such costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of credit arrangement. The Company has elected to continue to present debt issuance costs related to line-of-credit arrangements as assets and continue to amortize the costs ratably over the term of the line-of credit arrangement.
In April 2015, the FASB issued Accounting Standards Update 2015-03, Interest – Imputation of Interest (“ASU 2015-03”), which simplifies the presentation of debt issuance costs by requiring that debt issue costs for term debt be presented on the balance sheet as a direct reduction of the term debt liability as opposed to a deferred charge within other non-current assets. The change is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. Retrospective application is required and early adoption is permitted. The Company has elected to early adopt the new accounting guidance related to deferred financing fees for term debt as of December 31, 2015. As a result, the Company has changed its accounting policy to record deferred financing fees, related to term debt, as a reduction of the liability recorded for the debt instrument rather than as an asset. The Consolidated Balance Sheet has been retrospectively adjusted to reflect this change for all periods presented. The Company retrospectively reclassified approximately $34.4 million from other assets to long-term debt, including current portion of long-term debt, for the year ended December 31, 2014.
In February 2015, the 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 will adopt this guidance beginning in fiscal year 2016 and does not believe it will have a material impact on the Company’s Consolidated Financial Statements.
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09” updated with “ASU 2015-14”), which revises 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.
Acquisitions and Other Transactions
Acquisitions and Other Transactions
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 Laboratories (“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 an amended and restated definitive agreement implementing the transaction (the “EPD Transaction Agreement”). The EPD Transaction, closed on February 27, 2015 (the “EPD Transaction Closing Date”), 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., an indirect wholly owned subsidiary of Mylan N.V., with Mylan Inc. becoming an indirect wholly owned subsidiary of Mylan N.V. In addition, 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, its principal executive offices are located in Hatfield, Hertfordshire, England and Mylan N.V. group’s global headquarters are located in Canonsburg, Pennsylvania.

The acquired EPD Business included 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 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 acquired 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 (“NASDAQ”). At the closing of the EPD Transaction, 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. The Company and Abbott engage in commercial transactions for the supply of products. In addition, Abbott provides certain transitional services to Mylan. The Company believes that these transactions are conducted on commercially reasonable terms.

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 Transaction Closing Date. During the year ended December 31, 2015, adjustments were made to the preliminary purchase price recorded at February 27, 2015. These adjustments made to the preliminary purchase price related primarily to working capital amounts, deferred taxes and liabilities for post-employment benefits. The purchase price was finalized during the fourth quarter of 2015. The allocation of the $6.31 billion purchase price (as valued on the EPD Transaction Closing Date) to the assets acquired and liabilities assumed for the acquired EPD Business is as follows:
(In millions)
Preliminary Purchase Price Allocation as of February 27, 2015(a)
 
Measurement Period Adjustments(b)
 
Purchase Price Allocation as of December 31, 2015 (as adjusted)
Accounts receivable
$
462.5

 
(18.7
)
 
$
443.8

Inventories
196.3

 
2.2

 
198.5

Other current assets
70.1

 
(27.1
)
 
43.0

Property, plant and equipment
140.8

 

 
140.8

Identified intangible assets
4,843.0

 

 
4,843.0

Goodwill
1,285.7

 
55.3

 
1,341.0

Other assets
15.5

 
25.5

 
41.0

Total assets acquired
7,013.9

 
37.2

 
7,051.1

Current liabilities
(269.0
)
 
0.1

 
(268.9
)
Deferred tax liabilities
(382.1
)
 
(39.8
)
 
(421.9
)
Other non-current liabilities
(57.0
)
 
2.5

 
(54.5
)
Net assets acquired
$
6,305.8

 
$

 
$
6,305.8

____________
(a) 
As originally reported in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015.
(b) 
The measurement period adjustments are for 1) certain working capital adjustments to reflect facts and circumstances that existed as of the acquisition date, 2) an increase in the liability recorded for post-employment benefit programs to reflect updated opening balance sheet actuarial valuations and 3) adjustments to deferred income taxes. These adjustments did not have a significant impact on the Company’s previously reported condensed consolidated financial statements and accordingly, the Company has not retrospectively adjusted those financial statements.
The identified intangible assets of $4.84 billion are comprised of $4.52 billion of product rights and licenses that have weighted average useful lives of 13 years and $320 million of contractual rights that have weighted average useful lives ranging from two to five years. 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 goodwill of $1.34 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. Goodwill of $947 million is currently expected to be deductible for income tax purposes. Acquisition related costs of approximately $86.1 million and $50.2 million were incurred during the years ended December 31, 2015 and 2014, respectively, which were recorded as a component of selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Operations.
The operating results of the acquired EPD Business have been included in the Company’s Consolidated Statements of Operations since February 27, 2015. The revenues of the acquired EPD Business for the period from the acquisition date to December 31, 2015 were $1.47 billion and the net loss, net of tax, was $62.4 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 value 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.
 
Year Ended December 31,
(Unaudited, in millions, except per share amounts)
2015
 
2014
Total revenues
$
9,676.3

 
$
9,704.6

Net earnings attributable to Mylan N.V. ordinary shareholders
$
934.9

 
$
694.0

Earnings per ordinary share attributable to Mylan N.V. ordinary shareholders:
 
 
 
Basic
$
1.91

 
$
1.43

Diluted
$
1.81

 
$
1.37

Weighted average ordinary shares outstanding:
 
 
 
Basic
490.5

 
483.7

Diluted
515.7

 
508.0


Jai Pharma Limited
On February 2, 2015, the Company signed a definitive agreement to acquire certain female healthcare businesses from Famy Care Limited (such businesses “Jai Pharma Limited”), a specialty women’s healthcare company with global leadership in generic oral contraceptive products. On November 20, 2015, the Company completed the acquisition of Jai Pharma Limited through its wholly owned subsidiary Mylan Laboratories Limited for a cash payment of $750 million plus additional contingent payments of up to $50 million for the filing for approval with, and receipt of approval from, the U.S. Food and Drug Administration (“FDA”) of a product under development with Jai Pharma Limited.
In accordance with U.S. GAAP, the Company used the purchase method of accounting to account for this transaction. Under the purchase method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at their respective estimated fair values at the acquisition date. The U.S. GAAP purchase price was $711.1 million, which excludes the $50 million paid into escrow at closing that is contingent upon at least one of two former principal shareholders of Jai Pharma Limited continuing to provide consulting services to the acquired business for the two year post-closing period and this amount will be treated as compensation expense over the service period. The U.S. GAAP purchase price also excludes $7 million of working capital and other adjustments and includes estimated contingent consideration of approximately $18 million related to the $50 million contingent payment. The allocation of the $711.1 million purchase price to the assets acquired and liabilities assumed for Jai Pharma Limited is as follows:
(In millions)
 
Current assets (excluding inventories)
$
25.7

Inventories
4.9

Property, plant and equipment
17.2

Identified intangible assets
437.0

In-process research and development
98.0

Goodwill
317.2

Other assets
0.7

Total assets acquired
900.7

Current liabilities
(9.1
)
Deferred tax liabilities
(180.5
)
Net assets acquired
$
711.1

The preliminary fair value estimates for the 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 the determination of contingent liabilities, the finalization of the fair value of tangible and intangible assets, the finalization of the working capital adjustment and deferred income taxes.
The acquisition of Jai Pharma Limited significantly broadened the Company’s women’s healthcare portfolio and strengthened its technical and manufacturing capabilities. The amount allocated to IPR&D represents an estimate of the fair value of purchased in-process technology for research projects that, as of the closing date of the acquisition, had not reached technological feasibility and had no alternative future use. The fair value of IPR&D was based on the excess earnings method, which utilizes forecasts of expected cash inflows (including estimates for ongoing costs) and other contributory charges. Discount rates of 10% and 11% were utilized to discount net cash inflows to present values. IPR&D is accounted for as an indefinite-lived intangible asset and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion and launch of each product, the Company will make a determination of the estimated useful life of the individual IPR&D asset. The acquired IPR&D projects are in various stages of completion and the estimated costs to complete these products will total approximately $5 million and are expected to be incurred from 2016 through 2019. There are risks and uncertainties associated with the timely and successful completion of the projects included in IPR&D, and no assurances can be given that the underlying assumptions used to estimate the fair value of IPR&D will not change or the timely completion of each project to commercial success will occur.
The identified intangible assets of $437 million are comprised of product rights and licenses that have weighted average useful lives of nine years. 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 goodwill of $317.2 million arising from the acquisition consisted largely of the value of the employee workforce and the value of products to be developed in the future. All of the goodwill was assigned to Mylan’s Generics segment. None of the goodwill recognized is currently expected to be deductible for income tax purposes. Acquisition related costs of approximately $8.5 million were incurred during the year ended December 31, 2015, which were recorded as a component of SG&A expense in the Consolidated Statements of Operations. The acquisition did not have a material impact on the Company’s results of operations since the acquisition date or on a pro forma basis.
Agila Specialties
On February 27, 2013, the Company announced that it had signed definitive agreements to acquire the Agila Specialties businesses (“Agila”), a developer, manufacturer and marketer of high-quality generic injectable products, from Strides Arcolab Limited (“Strides Arcolab”). The transaction closed on December 4, 2013, and the total purchase price was approximately $1.43 billion (net of cash acquired of $3.4 million), which included estimated contingent consideration of $250 million. During the third quarter of 2014, the Company entered into an agreement with Strides Arcolab to settle a portion of the contingent consideration for $150 million, for which the Company accrued $230 million at the acquisition date. As a result of this agreement, the Company recognized a gain of $80 million during the year ended December 31, 2014, which is included in other operating (income) expense, net in the Consolidated Statements of Operations. The remaining contingent consideration, which could total a maximum of $173 million, is primarily related to the satisfaction of certain regulatory conditions, including potential regulatory remediation costs and the resolution of certain pre-acquisition contingencies. The acquisition of Agila significantly expanded and strengthened Mylan injectables platform and portfolio, and also provided Mylan entry into certain new geographic markets. Approximately $49.8 million of expenses were incurred during the year ended December 31, 2013 that related to this acquisition.

In accordance with U.S. GAAP, the Company used the purchase method of accounting to account for this transaction. Under the purchase method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at their respective estimated fair values at the acquisition date. During the six months ended June 30, 2014, adjustments were made to the preliminary amounts recorded at December 31, 2013 primarily related to working capital and deferred taxes. These adjustments are reflected in the values presented below. The allocation of the $1.43 billion purchase price to the assets acquired and liabilities assumed for Agila is as follows:

(In millions)
 
Current assets (excluding inventories)
$
45.5

Inventories
37.3

Property, plant and equipment
146.2

Identified intangible assets
280.0

In-process research and development
436.0

Goodwill
936.6

Other assets (including equity method investment)
152.8

Total assets acquired
2,034.4

Current liabilities
(242.0
)
Deferred tax liabilities
(235.1
)
Other noncurrent liabilities
(123.6
)
Net assets acquired
$
1,433.7



The amount allocated to IPR&D represents an estimate of the fair value of purchased in-process technology for research projects that, as of the closing date of the acquisition, had not reached technological feasibility and had no alternative future use. The fair value of the IPR&D was based on the excess earnings method, which utilized forecasts of expected cash inflows (including estimates for ongoing costs) and other contributory charges. A discount rate of 13.0% was utilized to discount net cash inflows to present values. IPR&D is accounted for as an indefinite-lived intangible asset and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion and launch of each product, the Company will make a determination of the estimated useful life of the individual IPR&D asset. The acquired IPR&D projects are in various stages of completion and the estimated costs to complete these projects total approximately $10 million, which is expected to be incurred in 2016. There are risks and uncertainties associated with the timely and successful completion of the projects included in IPR&D, and no assurances can be given that the underlying assumptions used to estimate the fair value of IPR&D will not change or the timely completion of each project to commercial success will occur.

The identified intangible assets of $280 million are comprised of $221 million of product rights and licenses that have weighted average useful lives of eight years and $59 million of customer relationships that have weighted average useful lives of five years. The equity method investment of $125 million represents the fair value of Agila’s 50% interest in Sagent Agila LLC (“Sagent Agila”). Payments for product rights and other, net on the Consolidated Statements of Cash Flows for the year ended December 31, 2014, includes payments totaling $120 million to acquire certain commercialization rights in the U.S. and other countries. The goodwill of approximately $937 million arising from the acquisition consisted largely of the value of the employee workforce and the value of products to be developed in the future. All of the goodwill was assigned to Mylan’s Generics segment. At the date of the acquisition, the Company estimated that none of the goodwill recognized would be deductible for income tax purposes. As a result of a legal merger of the Indian subsidiaries of Agila with Mylan Laboratories Limited, which was approved by the relevant Indian regulatory authorities during the third quarter of 2014, approximately $711 million of goodwill related to the acquisition of Agila will be deductible for tax purposes, refer to Note 10 Income Taxes for additional information.

Significant assumptions utilized in the valuation of identified intangible assets, the equity method investment and IPR&D 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.

Unaudited Pro Forma Financial Results
The following table presents supplemental unaudited pro forma information as if the acquisition of Agila had occurred on January 1, 2012. 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 acquisition financing, 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 acquisition 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, 2012, nor are they indicative of the future operating results of the combined company.

 
Year Ended December 31,
(Unaudited, in millions, except per share amounts)
2013
Total revenues
$
7,109

Net earnings attributable to Mylan Inc. common shareholders
$
443

Earnings per common share attributable to Mylan Inc. common shareholders
 
Basic
$
1.16

Diluted
$
1.12

Weighted average common shares outstanding:
 
Basic
383.3

Diluted
394.5



Other Transactions
On January 8, 2016, the Company entered into an agreement with Momenta Pharmaceuticals, Inc. (“Momenta”) to develop, manufacture and commercialize up to six of Momenta’s current biosimilar candidates, including Momenta’s biosimilar candidate, ORENCIA® (abatacept). Mylan paid an up-front cash payment of $45 million to Momenta. Under the terms of the agreement, Momenta is eligible to receive additional contingent milestone payments of up to $200 million. The Company and Momenta will jointly be responsible for product development and will equally share in the costs and profits of the products. Under the agreement, Mylan will lead the worldwide commercialization efforts.
In December 2015, the Company entered into an agreement to acquire certain European intellectual property rights and marketing authorizations. The purchase price was $202.5 million including approximately $2.5 million of transaction costs. The Company accounted for this transaction as an asset acquisition. The Company paid $10 million at the closing of the transaction, which is included in investing on the Consolidated Statements of Cash Flows. The Company expects to pay approximately $165 million during 2016 and the remaining $25 million during the first quarter of 2017, subject to certain timing conditions. The asset will be amortized over a useful life of five years.
On November 13, 2015, the Company announced that the acceptance condition to our previously announced offer (the “Perrigo Offer”) to acquire all of the issued and outstanding ordinary shares of Perrigo Company plc (“Perrigo”) had not been satisfied and had lapsed in accordance with its terms. Any Perrigo ordinary shares that were tendered by Perrigo shareholders were returned to the respective Perrigo shareholders.
On April 3, 2015, the Company and Stichting Preferred Shares Mylan (the “Foundation”) entered into a call option agreement (the “Call Option Agreement”). Pursuant to the terms of the Call Option Agreement, Mylan N.V. granted the Foundation a call option (the “Option”), permitting the Foundation to acquire from time-to-time Mylan N.V. preferred shares up to a maximum number equal to the total number of Mylan N.V. ordinary shares issued at such time to the extent such shares are not held by the Foundation. The exercise price of the Option is €0.01 per preferred share. On April 21, 2015, the Company received a letter from the President and Chief Executive Officer of Teva Pharmaceutical Industries Ltd. ("Teva"), containing a non-binding expression of interest from Teva to acquire Mylan for $82 per Mylan ordinary share. On July 23, 2015, in response to Teva's unsolicited expression of interest in acquiring Mylan, the Foundation exercised the Option and acquired 488,388,431 Mylan preferred shares pursuant to the terms of the Call Option Agreement. In compliance with the current statutory arrangement, 25% of the nominal value of the preferred shares, approximately $1.3 million, was paid to Mylan in cash upon issuance. Each Mylan ordinary share and preferred share is entitled to one vote on each matter properly brought before a general meeting of shareholders. On July 27, 2015, Teva announced its entry into an agreement to acquire the Generic Drug Unit of Allergan plc and the withdrawal of its unsolicited, non-binding expression of interest to acquire Mylan. On September 19, 2015, the Foundation requested the redemption of the Mylan preferred shares issued on July 23, 2015, informing Mylan that it was reasonably convinced that the influences that might adversely affect or threaten the strategy, mission, independence, continuity and/or identity of Mylan and its business in a manner that is contrary to the interest of Mylan, its business, and its stakeholders had been sufficiently addressed. Mylan ordinary shareholders approved the redemption of the preferred shares on January 7, 2016 at an extraordinary general meeting of shareholders. The Foundation will continue to have the right to exercise the Option in the future in response to a new threat to the interests of Mylan, its businesses and its stakeholders from time to time.
During 2015, the Company entered into agreements with multiple counterparties to acquire certain marketed pharmaceutical products for upfront payments totaling approximately $360.8 million, which were paid during the year ended December 31, 2015 and are included in investing activities in the Consolidated Statements of Cash Flows. The Company will be subject to potential future sales and other contingent milestone payments under the terms of one of the agreements.
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 FDA approval, commercialization of Revefenacin (“TD-4208”), a novel once-daily nebulized long-acting muscarinic antagonist (“LAMA”) 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 the 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. On September 14, 2015, Mylan announced the initiation of the Phase 3 program that will support the registrational development program of TD-4208 in the U.S. In addition to funding the U.S. registrational development program, the Company made a $30 million investment in Theravance Biopharma’s common stock during the first quarter of 2015, which is being accounted for as an available-for-sale security. The Company incurred $15 million in upfront development costs during the year ended December 31, 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. 
On September 10, 2014, the Company entered into an agreement with Aspen Global Incorporated to acquire the U.S. commercialization, marketing and intellectual property rights related to Arixtra® Injection (“Arixtra”) and the authorized generic rights of Arixtra. The purchase price for this intangible asset was $300 million, of which $225 million was paid at the closing of the transaction on September 25, 2014. An additional $37.5 million was paid during the fourth quarter of 2014, and is included in payments for product rights and other, net on the Consolidated Statements of Cash Flows. The remaining $37.5 million, which was held in escrow, was released during the year ended December 31, 2015 upon the satisfaction of certain conditions. The asset will be amortized over an estimated useful life of ten years.
On June 30, 2014, the Company acquired certain product rights and other intangible assets in, or for, Australia, New Zealand and Brazil. In accordance with U.S. GAAP, the Company used the purchase method of accounting to account for this transaction. The purchase price for these assets was $50.0 million. The purchase price allocation resulted in approximately $36.7 million of intangible assets which were included in product rights and licenses, and goodwill of approximately $13.3 million which was assigned to Mylan’s Generics segment. 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 acquisition did not have a material impact on the Company’s results of operations since the acquisition date.
Balance Sheet Components
Balance Sheet Components
Balance Sheet Components
Selected balance sheet components consist of the following:
 
(In millions)
December 31, 2015
 
December 31, 2014
Inventories:
 
 
 
Raw materials
$
592.4

 
$
549.5

Work in process
387.0

 
298.4

Finished goods
971.6

 
803.5

 
$
1,951.0

 
$
1,651.4


(In millions)
December 31, 2015
 
December 31, 2014
Property, plant and equipment:
 
 
 
Land and improvements
$
124.5

 
$
88.3

Buildings and improvements
950.6

 
826.4

Machinery and equipment
1,928.4

 
1,739.3

Construction in progress
290.5

 
301.8

 
3,294.0

 
2,955.8

Less accumulated depreciation
1,310.1

 
1,170.1

 
$
1,983.9

 
$
1,785.7


Other current liabilities:
 
 
 
Legal and professional accruals, including litigation accruals
$
122.6

 
$
81.8

Payroll and employee benefit plan accruals
367.9

 
282.6

Accrued sales allowances
681.8

 
581.3

Accrued interest
25.1

 
63.8

Fair value of financial instruments
19.8

 
52.2

Other
624.7

 
372.4

 
$
1,841.9

 
$
1,434.1



Contingent consideration included in other current liabilities is $35.0 million and $20.0 million at December 31, 2015 and 2014, respectively. Contingent consideration included in other long-term obligations is $491.4 million and $450.0 million at December 31, 2015 and 2014, respectively. During the year ended December 31, 2015, the Company reclassified $15.0 million of contingent consideration from other long-term obligations to other current liabilities representing milestone payments that are expected to be paid in 2016. Included in prepaid expenses and other current assets is $106.6 million and $134.1 million of restricted cash at December 31, 2015 and 2014, respectively. An additional $100 million of restricted cash is classified as a component of other long-term assets at December 31, 2015 and 2014, principally related to amounts deposited in escrow, or restricted accounts, for potential contingent consideration payments related to the Agila acquisition.
Equity Method Investments
Equity Method Investments
Equity Method Investments
The Company’s has five equity method investments in limited liability companies that own refined coal production plants (the “clean energy investments”), whose activities qualify for income tax credits under Section 45 of the Internal Revenue Code, as amended (the “Code”). The carrying value of the clean energy investments totaled $379.3 million and $437.5 million at December 31, 2015 and 2014, respectively, and are included in other assets in the Consolidated Balance Sheets. Liabilities related to these clean energy investments totaled $419.3 million and $472.7 million at December 31, 2015 and 2014, respectively. Of these liabilities, $357.0 million and $412.9 million are included in other long-term obligations in the Consolidated Balance Sheets at December 31, 2015 and 2014, respectively. The remaining $62.3 million and $59.8 million are included in other current liabilities in the Consolidated Balance Sheets at December 31, 2015 and 2014, respectively.
In addition, the Company holds a 50% interest in Sagent Agila, which is accounted for using the equity method of accounting. Sagent Agila was established to allow for the development, manufacturing and distribution of certain generic injectable products in the U.S. market. The initial term of the venture expires upon the tenth anniversary of its formation. The carrying value of the investment in Sagent Agila included in other assets totaled $96.2 million and $109.9 million at December 31, 2015 and 2014, respectively, in the Consolidated Balance Sheets.
Summarized financial information, in the aggregate, of the Company’s equity method investments on a 100% basis as of and for the years ended December 31, 2015, 2014 and 2013 are as follows:
(In millions)
December 31, 2015
 
December 31, 2014
Current assets
$
97.6

 
$
97.3

Noncurrent assets
14.6

 
18.8

Total assets
112.2

 
116.1

Current liabilities
74.9

 
83.8

Noncurrent liabilities
2.6

 
2.5

Total liabilities
77.5

 
86.3

Net assets
$
34.7

 
$
29.8

(In millions)
Year Ended December 31,
 
2015
 
2014
 
2013
Total revenues
$
774.6

 
$
536.8

 
$
167.5

Gross loss
(11.3
)
 
(7.8
)
 
(6.1
)
Operating and non-operating expense
25.6

 
16.9

 
4.3

Net loss
$
(36.9
)
 
$
(24.7
)
 
$
(10.4
)

The Company’s net losses from equity method investments includes amortization expense related to the excess of the cost basis of the Company’s investment to the underlying assets of each individual investee. For the years ended December 31, 2015, 2014 and 2013, the Company’s share of the net loss of the equity method investments was $105.1 million, $91.4 million and $34.6 million, respectively, which was recognized as a component of other income (expense), net. The Company recognizes the income tax credits and benefits from the clean energy investments as part of its provision for income taxes.
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 are as follows:
 
(In millions)
Generics Segment
 
Specialty Segment
 
Total
Balance at December 31, 2013:
 
 
 
 
 
Goodwill
$
3,991.4

 
$
734.1

 
$
4,725.5

Accumulated impairment losses

 
(385.0
)
 
(385.0
)
 
3,991.4

 
349.1

 
4,340.5

Acquisitions
13.3

 

 
13.3

Divestment
(10.5
)
 

 
(10.5
)
Foreign currency translation
(294.0
)
 

 
(294.0
)
 
3,700.2

 
349.1

 
4,049.3

Balance at December 31, 2014:
 
 
 
 
 
Goodwill
3,700.2

 
734.1

 
4,434.3

Accumulated impairment losses

 
(385.0
)
 
(385.0
)
 
3,700.2

 
349.1

 
4,049.3

Acquisitions
1,658.2

 

 
1,658.2

Foreign currency translation
(327.4
)
 

 
(327.4
)
 
5,031.0

 
349.1

 
5,380.1

Balance at December 31, 2015:
 
 
 
 
 
Goodwill
5,031.0

 
734.1

 
5,765.1

Accumulated impairment losses

 
(385.0
)
 
(385.0
)
 
$
5,031.0

 
$
349.1

 
$
5,380.1


Intangible assets consist of the following components at December 31, 2015 and 2014:
(In millions)
Weighted
Average Life
(Years)
 
Original
Cost
 
Accumulated
Amortization
 
Net Book
Value
December 31, 2015
 
 
 
 
 
 
 
Amortized intangible assets:
 
 
 
 
 
 
 
Patents and technologies
20
 
$
116.6

 
$
103.8

 
$
12.8

Product rights and licenses
11
 
8,848.6

 
2,652.7

 
6,195.9

Other(1)
6
 
465.3

 
189.8

 
275.5

 
 
 
9,430.5

 
2,946.3

 
6,484.2

In-process research and development
 
 
737.7

 

 
737.7

 
 
 
$
10,168.2

 
$
2,946.3

 
$
7,221.9

December 31, 2014
 
 
 
 
 
 
 
Amortized intangible assets:
 
 
 
 
 
 
 
Patents and technologies
20
 
$
116.6

 
$
99.2

 
$
17.4

Product rights and licenses
10
 
3,617.0

 
2,127.8

 
1,489.2

Other(1)
8
 
162.2

 
70.6

 
91.6

 
 
 
3,895.8

 
2,297.6

 
1,598.2

In-process research and development
 
 
748.9

 

 
748.9

 
 
 
$
4,644.7

 
$
2,297.6

 
$
2,347.1

____________
(1) 
Other intangibles consist principally of customer lists, contractual rights and other contracts.
Product rights and licenses are primarily comprised of the products marketed at the time of acquisition. These product rights and licenses relate to numerous individual products, the net book value of which, by therapeutic category, is as follows:
(In millions)
December 31, 2015
 
December 31, 2014
Allergy
$
71.2

 
$
82.5

Anti-infectives
368.7

 
152.8

Antineoplastic
169.3

 
123.7

Cardiovascular
1,105.5

 
175.0

Central Nervous System
949.8

 
199.5

Dermatological
52.9

 
65.9

Endocrine and Metabolic
1,152.5

 
54.8

Gastrointestinal
1,289.9

 
67.6

Hematological Agents
370.1

 
294.5

Immunological Agents
322.7

 
20.8

Respiratory System
137.9

 
78.3

Other(1) 
205.4

 
173.8

 
$
6,195.9

 
$
1,489.2

____________
(1) 
Other consists of numerous therapeutic classes, none of which individually exceeds 5% of total product rights and licenses.
Amortization expense, which is classified primarily within cost of sales in the Consolidated Statements of Operations, for the years ended December 31, 2015, 2014 and 2013 was approximately $846.0 million, $393.8 million and $363.7 million, respectively. Amortization expense for the years ended December 31, 2015, 2014 and 2013 includes intangible asset impairment charges of $31.3 million, $27.7 million and $18.0 million, respectively. Amortization expense, inclusive of the intangible assets acquired as a result of the acquisition of the EPD Business and the acquisition of Jai Pharma Limited during 2015, is expected to be approximately $933 million, $795 million, $742 million, $661 million and $568 million for the years ended December 31, 2016 through 2020, respectively.
Indefinite-lived intangibles, such as the Company’s IPR&D assets, are tested at least annually for impairment, but they may be tested whenever certain impairment indicators are present. Impairment is determined to exist when the fair value is less than the carrying value of the assets being tested.
The Company performed its annual impairment review of certain IPR&D assets during the third and fourth quarters of 2015. This review of IPR&D assets principally relates to assets acquired as part of the Agila acquisition in December 2013, the respiratory delivery platform acquisition in December 2011 and the Bioniche Pharma acquisition in September 2010. For the years ended December 31, 2015 and 2014, the Company recorded $31.3 million and $17.7 million, respectively, of impairment charges related to the Agila IPR&D assets, which was recorded as a component of amortization expense. For the year ended December 31, 2013, the Company recorded $18.0 million of impairment charges primarily related to the Bioniche Pharma IPR&D assets, which was recorded as a component of amortization expense. These impairment charges resulted from the Company’s estimate of the fair value of these assets, which was based upon updated forecasts and commercial development plans, compared with the assigned fair values at the acquisition date. The fair value was determined based upon detailed valuations employing the income approach which utilized Level 3 inputs, as defined in Note 7 Financial Instruments and Risk Management. The fair value of IPR&D was calculated as the present value of the estimated future net cash flows using a market rate of return. The assumptions inherent in the estimated future cash flows include, among other things, the impact of changes to the development programs, the projected development and regulatory time frames and the current competitive environment. Discount rates ranging between 9.8% and 11.8% were utilized in the valuations performed during the third and fourth quarters of 2015. Discount rates ranging between 10% and 12% were utilized in valuation during the third quarter of 2014. Changes to any of the Company’s assumptions may result in a further reduction to the estimated fair value of the IPR&D asset. During the years ended December 31, 2015 and 2014, approximately $59.4 million and $60.3 million, respectively, was reclassified from acquired IPR&D to product rights and licenses.

In addition, the Company monitors long-lived intangible assets for potential triggering events or changes in circumstances that would indicate that the carrying amount of the asset may not be recoverable. During the year ended December 31, 2015, the Company revised its estimated useful lives on certain intangible assets. During the year ended December 31, 2014, the Company recorded impairment charges of approximately $10.0 million related to product rights and licenses, which was recorded as a component of amortization expense.

During the year ended December 31, 2015, the Company made cash payments of approximately $425 million for products rights and licenses related to certain marketed pharmaceutical products with multiple counterparties, as further described in Note 3 Acquisitions and Other Transactions. During the year ended December 31, 2014, the Company made cash payments of approximately $383 million for product rights and licenses, of which approximately $120 million related to the Company’s purchase of certain commercialization rights in the U.S. and other countries related to the Agila acquisition and approximately $263 million related to the Company’s purchase of the U.S. commercialization, marketing and intellectual property rights of Arixtra and the authorized generic rights of Arixtra.
Financial Instruments and Risk Management
Financial Instruments And Risk Management
Financial Instruments and Risk Management
The Company is exposed to certain financial risks relating to its ongoing business operations. The primary financial risks that are managed by using derivative instruments are foreign currency risk, interest rate risk and equity risk.

Foreign Currency Risk Management
In order to manage foreign currency risk, the Company enters into foreign exchange forward contracts to mitigate risk associated with changes in spot exchange rates of mainly non-functional currency denominated assets or liabilities. The foreign exchange forward contracts are measured at fair value and reported as current assets or current liabilities on the Consolidated Balance Sheets. Any gains or losses on the foreign exchange forward contracts are recognized in earnings in the period incurred in the Consolidated Statements of Operations.

The Company has also entered into forward contracts to hedge forecasted foreign currency denominated sales from certain international subsidiaries. These contracts are designated as cash flow hedges to manage foreign currency transaction risk and are measured at fair value and reported as current assets or current liabilities on the Consolidated Balance Sheets. Any changes in fair value are included in earnings or deferred through accumulated other comprehensive earnings (“AOCE”), depending on the nature and effectiveness of the offset.
Interest Rate Risk Management
The Company enters into interest rate swaps in order to manage interest rate risk associated with the Company’s fixed- and floating-rate debt. These derivative instruments are measured at fair value and reported as current assets or current liabilities on the Consolidated Balance Sheets.

Cash Flow Hedging Relationships

The Company’s interest rate swaps designated as cash flow hedges fix the interest rate on a portion of the Company’s variable-rate debt or hedge part of the Company’s interest rate exposure associated with the variability in the future cash flows attributable to changes in interest rates. Any changes in fair value are included in earnings or deferred through AOCE, depending on the nature and effectiveness of the offset. Any ineffectiveness in a cash flow hedging relationship is recognized immediately in earnings in the Consolidated Statements of Operations.

In conjunction with a senior notes offering during the second quarter of 2013 and the related repayment of the Company’s variable-rate 2011 term loans (the “2011 Term Loans”), the Company terminated all interest rate swaps that had previously fixed the interest rate on a portion of the Company’s variable-rate 2011 Term Loans. As a result, during the year ended December 31, 2013, approximately $0.8 million that had previously been classified in AOCE was recognized into other expense (income), net, as the forecasted transaction was no longer probable of occurring. In addition, $750 million of floating-rate debt interest rate swaps that were extended through forward-starting swaps were terminated during the year ended December 31, 2013 in the transaction described above. There were no interest rate swaps on floating-rate debt as of December 31, 2015 or December 31, 2014.

In anticipation of issuing fixed-rate debt, the Company may use treasury rate locks or forward starting interest rate swaps that are designated as cash flow hedges. In April 2013, the Company entered into a series of forward starting swaps to hedge against changes in interest rates that could impact future debt issuances. These swaps were designed as cash flow hedges of expected future issuances of long-term bonds. The Company executed $1 billion of notional value swaps with an effective date of August 2015. These swaps had a maturity of ten years. In August 2015, the Company terminated these swaps. As a result of this termination, the Company incurred losses, net of tax, of approximately $32.9 million, which were recorded in AOCE in the third quarter of 2015. During the fourth quarter of 2015, the balance in AOCE was recognized in other expense (income), net as the forecasted transaction was no longer probable of occurring.
In August 2014, the Company entered into a series of forward starting swaps to hedge against changes in interest rates that could impact future debt issuances. These swaps were designed as cash flow hedges of expected future issuances of long-term bonds. The Company executed $575 million of notional value swaps with an effective date of September 2015. These swaps had a maturity of ten years. In September 2015, the Company terminated these swaps, and as a result of this termination, the Company has recognized losses, net of tax, of approximately $22.4 million, which were recorded in AOCE. During the fourth quarter of 2015, the Company issued $500 million aggregate principal amount of 3.000% Senior Notes due December 2018 and $500 million aggregate principal amount of 3.750% Senior Notes due December 2020. The Company recognized approximately $11.8 million of the loss, net of tax, previously recorded to AOCE in other expense (income), net during the fourth quarter of 2015. The remaining loss, net of tax, of approximately $10.6 million will be amortized over the remaining lives of the 3.000% Senior Notes due December 2018 and 3.750% Senior Notes due December 2020.
In September 2015, the Company entered into a series of forward starting swaps to hedge against changes in interest rates related to future debt issuances. These swaps are designated as cash flow hedges of expected future issuances of long-term bonds. The Company executed $500 million of notional value swaps with an effective date of June 2016 and an additional $500 million of notional value swaps with an effective date of November 2016. Both sets of swaps have a maturity of ten years.
In December 2014, the Company terminated certain forward starting swaps designated as cash flow hedges of expected future issuances of long-term bonds. As a result of this termination, the Company has recognized a loss of approximately $14.6 million during the year ended December 31, 2014.

During the first and third quarters of 2013, the Company entered into a series of forward starting swaps to hedge against changes in interest rates that could impact the Company’s expected financing of the acquisition of Agila. These interest rate swaps were designated as cash flow hedges of expected future interest payments. In February 2013, the Company executed interest rate swaps with a notional value of $1.07 billion. In September 2013, the terms of these swaps were extended to an effective date in November 2013 and the Company executed an additional $930 million of notional value of interest rate swaps with an effective date in November 2013. In November 2013, all of the swaps were terminated in conjunction with the completion of the financing of the Agila acquisition. As a result, a gain of $41.2 million was recorded in AOCE, which is being amortized over the term of the related financing transactions. In addition, approximately $0.8 million of hedge ineffectiveness was recorded in other expense (income), net.

Fair Value Hedging Relationships

The Company's interest rate swaps designated as fair value hedges convert the fixed rate on a portion of the Company's fixed-rate senior notes to a variable rate. These interest rate swaps designated as fair value hedges are measured at fair value and reported as assets or current liabilities in the Consolidated Balance Sheets. Any changes in the fair value of these derivative instruments, as well as the offsetting change in fair value of the portion of the fixed-rate debt being hedged, is included in interest expense. In November 2014, in conjunction with the redemption of the Company’s 6.000% Senior Notes due 2018, the Company’s counterparties exercised their right to terminate certain swaps that had been designated as a fair value hedge on a portion of the Company’s 6.000% Senior Notes due 2018. As a result, during the year ended December 31, 2014, the Company received a payment of approximately $15 million related to the swap termination, which was recognized into other expense (income), net.

In June 2013, the Company entered into interest rate swaps with a notional value of $500 million that were designated as hedges of the Company’s 1.800% Senior Notes due 2016. In October 2014, the Company terminated these fair value swaps, and as a result, during the year ended December 31, 2014, the Company recognized a gain of approximately $0.4 million. This amount will be amortized to earnings over the remaining life of the 1.350% Senior Notes due 2016. In December 2013, the Company entered into interest rate swaps with a notional value of $750 million that were designated as hedges of the Company’s 3.125% Senior Notes due 2023. The variable rate was 0.74% at December 31, 2015. The total notional amount of the Company’s interest rate swaps on fixed-rate debt was $750 million as of December 31, 2015 and 2014.

Certain derivative instrument contracts entered into by the Company are governed by master agreements, which contain credit-risk-related contingent features that would allow the counterparties to terminate the contracts early and request immediate payment should the Company trigger an event of default on other specified borrowings. The Company is not subject to any obligations to post collateral under derivative instrument contracts.

In connection with the consummation of the EPD Transaction, Mylan Inc. and Mylan N.V. executed a supplemental indenture that amended the indenture governing the Cash Convertible Notes so that, among other things, all relevant determinations for purposes of the cash conversion rights to which holders may be entitled from time-to-time in accordance with such indenture shall be made by reference to the Mylan N.V. ordinary shares. As adjusted in connection with the consummation of the EPD Transaction, holders could convert their Cash Convertible Notes subject to certain conversion provisions determined by a) the market price of Mylan N.V.’s ordinary shares, b) specified distributions to common shareholders, c) a fundamental change, as defined in the indenture governing the Cash Convertible Notes, or d) certain time periods specified in the indenture governing the Cash Convertible Notes. The conversion feature could only be settled in cash and, therefore, it was bifurcated from the Cash Convertible Notes and treated as a separate derivative instrument. In order to offset the cash flow risk associated with the cash conversion feature, the Company entered into a convertible note hedge with certain counterparties. In connection with the consummation of the EPD Transaction, the terms of the convertible note hedge were adjusted so that the cash settlement value would be based on Mylan N.V. ordinary shares. Both the cash conversion feature and the purchased convertible note hedge were measured at fair value with gains and losses recorded in the Company’s Consolidated Statements of Operations. The Company’s convertible note hedge on its Cash Convertible Notes, which was entered into in order to offset the cash flow risk associated with the cash conversion feature of the Cash Convertible Notes, was settled in conjunction with the maturity and full redemption of the Cash Convertible Notes on September 15, 2015.

At December 31, 2014, the convertible note hedge had a total fair value of $1.85 billion, which reflected the maximum loss that would have been incurred had the parties failed to perform according to the terms of the contract. The counterparties were highly rated diversified financial institutions with both commercial and investment banking operations. The counterparties were required to post collateral against this obligation had they been downgraded below thresholds specified in the contract. Eligible collateral was comprised of a wide range of financial securities with a valuation discount percentage reflecting the associated risk.

Also, in conjunction with the issuance of the Cash Convertible Notes, Mylan Inc. entered into several warrant transactions with certain counterparties. In connection with the consummation of the EPD Transaction, the terms of the warrants were also adjusted so that the Company may settle the obligations under the warrant transaction by delivering Mylan N.V. ordinary shares. Settlement of the warrants will occur during the second quarter of 2016. The warrants meet the definition of derivatives; however, because these instruments have been determined to be indexed to the Company’s own ordinary shares, and have been recorded in shareholders’ equity in the Company’s Consolidated Balance Sheets, the instruments are exempt from the scope of U.S. GAAP guidance regarding accounting for derivative instruments and hedging activities and are not subject to the fair value provisions set forth therein.

The Company regularly reviews the creditworthiness of its financial counterparties and does not expect to incur a significant loss from failure of any counterparties to perform under any agreements. The Company records all derivative instruments on a gross basis in the Consolidated Balance Sheets. Accordingly, there are no offsetting amounts that net assets against liabilities. The asset and liability balances presented in the tables below reflect the gross amounts of derivatives recorded in the Company’s Consolidated Financial Statements.

Fair Values of Derivative Instruments
Derivatives Designated as Hedging Instruments
 
Asset Derivatives
 
December 31, 2015
 
December 31, 2014
(In millions)
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Interest rate swaps
Prepaid expenses and other current assets
 
$
36.3

 
Prepaid expenses and other current assets
 
$
30.4

Foreign currency forward contracts
Prepaid expenses and other current assets
 
8.4

 
Prepaid expenses and other current assets
 
12.9

Total
 
$
44.7

 
 
 
$
43.3


 
Liability Derivatives
 
December 31, 2015
 
December 31, 2014
(In millions)
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Interest rate swaps
Other current liabilities
 
$
10.5

 
Other current liabilities
 
$
49.9

Total
 
$
10.5

 
 
 
$
49.9



Fair Values of Derivative Instruments
Derivatives Not Designated as Hedging Instruments
 
Asset Derivatives
 
December 31, 2015
 
December 31, 2014
(In millions)
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Foreign currency forward contracts
Prepaid expenses and other current assets
 
$
20.0

 
Prepaid expenses and other current assets
 
$
5.5

Purchased cash convertible note hedge
Prepaid expenses and other current assets
 

 
Prepaid expenses and other current assets
 
1,853.5

Total
 
$
20.0

 
 
 
$
1,859.0

 
Liability Derivatives
 
December 31, 2015
 
December 31, 2014
(In millions)
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Foreign currency forward contracts
Other current liabilities
 
$
9.3

 
Other current liabilities
 
$
2.3

Cash conversion feature of Cash Convertible Notes
Current portion of long-term debt and other long-term obligations
 

 
Current portion of long-term debt and long-term obligations
 
1,853.5

Total
 
$
9.3

 
 
 
$
1,855.8



The Effect of Derivative Instruments on the Consolidated Statements of Operations
Derivatives in Fair Value Hedging Relationships
 
Location of (Loss) or Gain Recognized in Earnings on Derivatives
Amount of (Loss) or Gain Recognized in Earnings on Derivatives
 
Year Ended December 31,
(In millions)
2015
 
2014
 
2013
Interest rate swaps
Interest expense
$
5.9

 
$
35.6

 
$
(17.9
)
Total
$
5.9

 
$
35.6

 
$
(17.9
)
 
 
Location of (Loss) or Gain Recognized in Earnings on Hedged Items
Amount of (Loss) or Gain Recognized in Earnings on Hedging Items
 
Year Ended December 31,
(In millions)
2015
 
2014
 
2013
2016 Senior Notes (1.800% coupon)
Interest expense
$

 
$
(0.9
)
 
$
0.4

2018 Senior Notes (6.000% coupon)
Interest expense

 
4.6

 
17.1

2018 Senior Notes (6.000% coupon)
Other expense (income), net

 
15.0

 

2023 Senior Notes (3.125% coupon)
Interest expense
(5.9
)
 
(45.7
)
 
15.4

Total
$
(5.9
)
 
$
(27.0
)
 
$
32.9



The Effect of Derivative Instruments on the Consolidated Statements of Operations
Derivatives in Cash Flow Hedging Relationships
 
Amount of (Loss) or Gain
Recognized in AOCE (Net of Tax)
on Derivative
(Effective Portion)
 
Year Ended December 31,
(In millions)
2015
 
2014
 
2013
Foreign currency forward contracts
$
(44.5
)
 
$
(26.8
)
 
$
(83.8
)
Interest rate swaps
13.5

 
(135.1
)
 
136.6

  Total
$
(31.0
)
 
$
(161.9
)
 
$
52.8

 
 
Location of Loss Reclassified from AOCE into Earnings (Effective Portion)
Amount of Loss
Reclassified from AOCE
into Earnings
(Effective Portion)
 
Year Ended December 31,
(In millions)
2015
 
2014
 
2013
Foreign currency forward contracts
Net sales
$
(40.3
)
 
$
(47.9
)
 
$
(60.5
)
Interest rate swaps
Interest expense
(0.8
)
 
(0.6
)
 
(1.5
)
Interest rate swaps
Other expense (income), net

 

 
(0.8
)
  Total
$
(41.1
)
 
$
(48.5
)
 
$
(62.8
)

 
Location of Gain Excluded from the Assessment of Hedge Effectiveness
Amount of Gain
Excluded from the Assessment
of Hedge Effectiveness
 
Year Ended December 31,
(In millions)
2015
 
2014
 
2013
Foreign currency forward contracts
Other expense (income), net
$
45.1

 
$
82.3

 
$
61.6

  Total
$
45.1

 
$
82.3

 
$
61.6



At December 31, 2015, the Company expects that approximately $40.7 million of pre-tax net losses on cash flow hedges will be reclassified from AOCE into earnings during the next twelve months.

The Effect of Derivative Instruments on the Consolidated Statements of Operations
Derivatives Not Designated as Hedging Instruments
 
 
Location of Gain
or (Loss)
Recognized
in Earnings
on Derivatives
Amount of Gain or (Loss)
Recognized in Earnings on
Derivatives
 
Year Ended December 31,
(In millions)
2015
 
2014
 
2013
Interest rate swaps
Other expense (income), net
$
(71.2
)
 
$

 
$

Foreign currency forward contracts
Other expense (income), net
41.7

 
(78.3
)
 
2.2

Cash conversion feature of Cash Convertible Notes
Other expense (income), net
1,853.5

 
(550.2
)
 
(667.0
)
Purchased cash convertible note hedge
Other expense (income), net
(1,853.5
)
 
550.2

 
667.0

  Total
$
(29.5
)
 
$
(78.3
)
 
$
2.2



Fair Value Measurement
Fair value is based on the price that would be received from the sale of an identical asset or paid to transfer an identical liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy has been established that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1:    
Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:    
Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.

Level 3:    
Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.

Financial assets and liabilities carried at fair value are classified in the tables below in one of the three categories described above:
 
December 31, 2015
(In millions)
Level 1
 
Level 2
 
Level 3
 
Total
Recurring fair value measurements
 
 
 
 
 
 
 
Financial Assets
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
923.3

 
$

 
$

 
$
923.3

Total cash equivalents
923.3

 

 

 
923.3

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