Mylan N.V.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 9, 2016
Mylan N.V.
(Exact name of registrant as specified in its charter)
The Netherlands
333-199861
98-1189497
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
Building 4, Trident Place
Mosquito Way, Hatfield, Hertfordshire
AL10 9UL
(Address of principal executive offices)
(Zip Code)
+44 (0) 1707 853 000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
…
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
…
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
…
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
…
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01
Regulation FD Disclosure.
On March 4, 2016, Mylan N.V. (the “Company”) issued a press release announcing that the Company will present at the
Raymond James 37th Annual Institutional Investors Conference on Wednesday, March 9, 2016, in Orlando, Florida. In connection
therewith, the Company’s presentation is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in this Item 7.01 (including Exhibit 99.1) shall not be deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not
be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or
the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number
Description
99.1
Presentation dated March 9, 2016
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
MYLAN N.V.
Date: March 9, 2016
By: /s/ John D. Sheehan
John D. Sheehan
Executive Vice President and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number
Description
99.1
Presentation dated March 9, 2016
My lan N V Ray mond James 37th Annual Ins titu tion al In vestors Conference March 9 2016 Exhib it 9 9 1
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Agenda 2 M ylan Fundamentals / 20 15 High ligh ts M ed a Transaction 3 201 6 Financial Guid ance 1
At M ylan Working to gether around the world to provide 7 billio n people access to hig h quality medicine we: • Innovate to satisfy u nmet needs • M ak e reliability an d service excellence a hab it • Do what’s right not what’s easy • Impact the future throu gh passionate glob al lead ersh ip mission our we are committed to s etting new standards in healthcare
My lan: Lon g Stan ding Strategy & Track Reco rd of Success Differentiated large-scale glo bal operating p latform Hig h quality vertically -integrated manufacturing p latform One of the in dustry’s broad es t product p ortfolio s More th an 1 400 marketed p rod ucts to cu stomers in ~165 countries an d territories Sign ifican t inv es tment in future growth drivers Billions o f anticipated spend fueling an extensive techn ology platform Valu e-creating bus iness develop ment ensu ring futu re financial flexib ility Acquisitions and p artn erships driving s ynergistic growth with exis ting co re operation s Track record of execution driving exceptional shareholder return 26% adjusted diluted E PS CAGR 200 8-2 016* and strong focus on optimal capital allocation *2016 adjusted d iluted EPS represents the midpoint of M ylan’s 201 6 adjusted diluted EPS g uidance range Adjusted d iluted EPS is a n on-GAAP finan cial meas ure See Appendix for reco nciliation of adju sted diluted EPS to the most directly comp arable GAAP measure
201 5 Highlights My lan deliv ered exceptional 2 015 performance wh ile executing agains t our long-term growth drivers 28% y ear-over-year co nstant currency ad justed total revenues growth Actual adju sted to tal rev enu es ab sorbed foreign exchan ge headwinds of $0 4 billion 21% year-ov er-year adju sted diluted EPS growth des pite foreign exchange head winds of $0 11 p er sh are 107% y ear-over-year adjusted free cash flow growth Clos ed the acquisition o f Ab bott’s non-U S developed markets s pecialty and branded generics bus iness s urpassing growth expectatio ns and yielding a s table cas h-generativ e b usin ess Closed the acquisitio n of certain women’s healthcare b usiness es from Famy Care L imited creatin g a lead ing women’s healthcare franchise Further s treng thened our EpiPen® Auto-Injector franchise an d co ntin ued our efforts to expand access an d awareness to an aph ylaxis market Year-Over-Year Op eratio nal Leverage Constant cu rrency adjus ted total revenues adjusted total revenues adjus ted diluted EPS adjusted free cash flow ad justed g ro ss margin adjusted R&D % of ad justed total revenues adju sted SG&A % o f adjusted to tal reven ues and EBITDA marg in are n on-GAAP fin an cial meas ures Please see the Appendix for reconciliation s of such no n-GAAP financial measu res to the most d irectly comparab le GAAP fin an cial meas ures
Meda Transaction
My lan + Meda: Strateg ic Ratio nale Further divers ifies and de-risks Mylan’s g lobal po rtfo lio mix b y strengthen ing b randed p latform and creates ~$1 billion bus iness in attractive OTC market Establishes leadership across all commercial channels in Europe; strengthens U S s pecialty bus iness; an d provid es ex citing platform for growth in new emerging markets Complemen ts and op timizes infras tructure from Abbott EPD tran saction En han ces therapeutic p resence in all regions to create a leader in allerg y and res piratory and critical mass in dermatolog y and pain Cross-fertilization opp ortunities of combined product p ortfolio Helps maximize future Mylan launches Enhances size and scale with 2015 combined revenues of ~$11 8 b illion1 and adjusted EBITDA of ~$ 3 8 billion1 Rep resents a multiple of 12 9x 201 5 adjusted EBITDA and 8 9x 20 15 adjus ted EBITDA with s ynerg ies Su bstantial synergy o pportun ity with ~$350 million of an nual pre-tax operational s ynerg ies expected by year fou r after closin g Expected to b e immediately accretive to Mylan adjusted earnings with accretion increasing significantly after firs t full year (2017) as s ynerg ies are realized Creates opportu nity to achieve $0 35 -$ 0 40 adju sted diluted EPS accretion in 2017 an d to accelerate achiev ement of prev ious ly stated $6 00 adjusted diluted EPS target to 2017 v s 2018 2 Significantly Streng thens and Divers ifies Co mmercial Presence Enhances Critical Mass in Key Therapeutic Areas Financially Co mpelling Transaction SEK = 0 1 18 USD; Combined co mpany figu res represen t an aggregation o f M ylan figu res d eriv ed from US GAAP financial info rmation and Meda figures derived fro m EU IFRS financial in formation and d o not reflect pro forma adjus tments (including no elimination o f trans actions between M ylan and M eda) Stated 2017 opportu nity /2018 targ et; th is is a long-term target o nly and d oes not represent c
Further Diversifies and Strength ens Mylan’s Business Combined company will h av e an attractiv e and d iverse portfolio of >2 000 b randed g eneric and OTC products Expands M ylan’s branded po rtfo lio in all regio ns in ex isting and new therapeutic areas Provides strong position into attractive OTC market creating $1 billio n combined busines s at close Further div ersifies and balances M ylan’s g eog raphic foo tprint an d provid es entry into new emerg ing markets Stand alone Meda and pro forma My lan rev enu es bas ed on exchange rate of SEK = 0 118 USD; Combined compan y figures represent an ag gregation of My lan figures derived from US GAAP financial information and M ed a fig ures derived from EU IFRS finan cial information and do not reflect pro forma ad justments (includin g no elimination of transaction s between Mylan an d Meda) Stand alone Mylan Stand alone Meda Pro Forma M ylan Generics Specialty / Branded Gx OTC & Other 201 5 Revenue by Channel1 2015 Reven ue by Geography Standalone M ylan Standalone M eda Pro Forma Mylan N orth America Europe Rest of World $9 4 billion $2 3 billion $11 8 billio n
Enhances Critical Mass in Key Franchises Nearly 50% of Meda’s reven ues derive from Allergy/Respiratory Dermato logy and Pain products wh ich are highly complementary to Mylan Mylan exp ects that th e combined compan y will have ap proximately six $1 billio n therapeu tic franchises at close in cludin g Respirato ry & Allerg y GI Cardio CNS Diabetes & Metabolic an d Infectio us Dis ease Meda also sign ificantly enhances Mylan ’s pres en ce in other areas such as Dermatology Pain and Wo men’s Health +25% +160% M ylan Net Sales by TA (1) M ed a Net Sales by TA(1 ) Combined Net Sales by TA(1) +160% +25 % +30 % +50 % +40 % +2 0% (1 ) Percentages in therapeutic area break out based o n Q1-Q3 201 5 actual product n et sales Derm 2% Derm 17% Resp & Allergy 15 % Anesth & Pain 14% GI 13% Card io 10 % WHC 9% Other 22 % In f D iseas e 1 7% Resp & Allergy 15% CNS 12 % Cardio 1 2% Diabetes & Metab 10% GI 9% An es thesia & Pain 6 % Other 6% Oncolog y 5% WHC 5%
Creates Attractiv e Portfolios of Rx Gx and OTC Products Attractive portfolios acro ss th erapeutic categories offering greater op portunities to maximize combined p ortfolio and drive growth Well-positioned for futu re high-value launches e g generic Advair Rev efencin biosimilars Comb ined bus iness will be fueled by Mylan commitment to R&D and portfolio expansion Allergy /Resp iratory Dermatolog y Pain Meda + M ylan in Key TAs (Portfolio an d Disclo sed Pipeline) Gx Adv air® DPI Gx Flu ticasone MDI Nov el ICS/LABA /LAMA DPI So tirimod Hok unalin Gx Benzaclin Gx Acyclov ir ointment Revefenacin Amn es teem
Creates ~$1 Billion Glo bal OTC Bus iness Es tablis hed OTC p resence in Eu rop e and platform for growth in the U S and emerging markets Well-established and differentiated b rands includ ing: Meda portfolio is exclu sively brand ed OT C; n o private label Op portunities to leverage po rtfo lio and exp ertise in new markets an d accelerate growth throu gh marketing an d lin e exten sions Stro ng platform fo r future bu siness dev elopment an d M&A in OTC space
Pro vides M ylan with Expansion into 16 New Coun tries Significantly enhances Mylan’s commercial platform and capabilities Combined comp any will sell into more than 165 cou ntries and territories arou nd th e wo rld with a direct co mmercial presen ce in ~60 mark ets and comb ined salesforce of ~5 900 Opportun ity to optimize in frastructure to accelerate growth particularly EPD bus iness and emerging markets Th e Americas M ylan: ~600 sales reps Meda: ~350 sales reps E uro pe Mylan: ~2 000 sales reps M ed a: ~1 0 15 sales reps J apan ANZ Mylan: ~70 0 sales reps Meda: ~10 s ales reps In dia and EM Mylan: ~45 0 sales reps Meda: ~775 s ales reps
Creates European Leader Leveraging Respective Stren gths ~$3 8 billion 1 in 2 015 pro forma revenues fro m Europe Builds on E PD asset to create stro nger p latform th at can max imize market op portunities and weather inherent market challeng es Cons olid ates EpiPen® Auto-In jector and provid es greater opportunities to b uild brand Combined s ales fo rce of ~3 000 reaching phys icians retail/pharmacy an d institu tion s Co mbin ed portfolio of marketed products across Rx Gx OTC M ed a Stand-Alo ne Europe 2015 Sales by Cou ntry Top Existing M ylan M arket Increase in Pro Forma 20 15A Sales vs Standalon e To tal Europe +60% France +25% Italy +55% Germany +185 % UK & Ireland +60% Spain +70% Ben elux +75% Nordics +44 0% Po rtugal +120% Greece +35% Switzerlan d/Austria +6 0% All CEE +25% SEK = 0 118 USD; Combined company figures represent an ag gregation of M ylan figures derived from US GAAP financial information and M ed a fig ures derived from EU IFRS financial information and do not reflect pro forma ad justments (includin g no elimination of transactio ns between Mylan an d Meda)
Accelerates Growth in Emergin g Markets and Es tablis hes Presence in Attractive New M arkets ~$1 5 billion 1 in 2 015 pro forma revenues from emerging mark ets Pro vides M ylan entry to Ch ina Ru ssia Southeast Asia Turkey M ex ico and parts of M iddle E ast Meda has stro ng his tory in Ch ina; bus iness est in 1 994 and op eratin g as owned affiliate since 20 11 Pro vides established s alesforce in key markets includ ing Chin a Russ ia Turkey etc Key Meda emerg ing markets bran ds in clude: Potential to add M ylan differentiated generics portfolio to Meda busines s for accelerated growth My lan brings strong EM presence in Infectious Diseas e Biologics Ins ulin s Women’s Health Meda Stan d-Alone 2015 Emerging Mark ets Sales by Key Countries SEK = 0 11 8 USD; Co mbin ed company figu res repres en t an aggreg ation o f M ylan figu res d erived from US GAAP financial in fo rmation and Meda figures derived fro m EU IFRS financial information and d o not reflect pro forma adjustments (including no elimin ation o f trans actions between My lan and Meda)
Financially Compellin g Tran saction Comb ined 2015 revenues o f approx imately $11 8 b illion1 and adjusted E BITDA of $3 8 billion1 Expected to b e immediately accretive to Mylan adjusted earn ings with accretion increasing significantly after first full y ear (2017) as sy nerg ies are realized Creates opportu nity to achieve $0 35 -$ 0 40 adju sted diluted EPS accretion in 2017 an d to accelerate achiev ement of prev ious ly stated $6 00 adjusted d iluted EPS target to 2017 v s 2018 2 Su bstantially increases free cas h flow Accelerates lo ng-term EBITDA and earning s growth Enhances EBITDA margin profile ~$350 million in annual p re-tax operation al synergies expected by year fo ur Offers subs tantial ben efits to stakeholders of bo th comp anies SEK = 0 118 USD; Combined company figures represent an aggregation of Mylan figures derived from US GAAP fin ancial information an d Meda figures derived from EU IFRS financial information and do no t reflect pro forma adju stments (includ ing n o elimination of tran sactions between M ylan and M ed a) Stated 20 17 oppo rtunity/20 18 target; this is a lon g-term targ et only an d does no t rep resent company guidance
Delivers Immediate an d Significant Accretion to Shareholders Creates opportu nity to accelerate achievement of $6 00 in adjus ted diluted EPS targ et to 20 17 vs 20182 Mylan Ad justed Diluted EPS ’15-’17E CAGR: +1 8% Adjus ted diluted EPS is a non-GAAP financial measure 2016 figure represents the mid point of 2016 guidance rang e See Appendix for reconciliation of 20 15 and 201 6E adjus ted diluted EPS to th e most d irectly comparable GAAP meas ure (1) M idpoint o f 2 016 guidance range (2) Stated 2017 o pportun ity/2018 target; this is a long-term target on ly and do es not represen t company guidance 1 2
Strong Financial Profile Post Completio n Pro forma leverage at close is exp ected to be ap proximately 3 8x deb t-to-adjus ted EBITDA Sig nifican t free cas h flows g enerated by the combined company will allow for rapid delev eraging Highly leverageable in frastructure Competitive global tax s tructure Able to u tilize and b uild upon adv antag ed platform provided by s uccessful EPD trans action My lan expects to retain ample financial flexibility for fu ture opportu nities Mylan Debt-to-LTM Ad justed EBITDA* As sumes illus trative transaction close of end of Q3 20 16 *Debt to LTM Adjus ted EBITDA and net debt to LTM Adjusted EBITDA are non-GAAP financial measures Please see the Append ix for a reconciliation of such non-GAAP financial measures to the mos t directly comparable GAAP financial measures 1 Net debt to LTM Ad j EBIT DA* ~2 4x ~3 8x <3 0x Today <2 0x @ Close End of 2017 Pro Forma
My lan 2016 Finan cial Guidance
201 6 Financial Guid ance 16%* revenue growth 16%* adjus ted diluted EPS growth 2 016 reven ue exp ected to be between $10 5 billion and $11 5 b illion 20 16 adjus ted diluted EPS exp ected to be between $4 85 and $5 15 *Year-over-year growth is based off of the midpoint of 201 6 guidan ce ranges Note that 2016 guidance rang es includes M eda for on e q uarter Adjusted d iluted EPS is a n on-GAAP fin an cial meas ure Please see the Appendix fo r a reco nciliation of su ch n on-GAAP finan cial meas ure to the most d irectly comparable GAAP finan cial meas ure
201 6 Financial Guid ance $ millions except EPS 2016 Guidance Y-o -Y Growth Total Revenues $10 500-$11 500 16 % Gro ss Margin * 55%-57% +40 b ps R&D as % of Rev enu e* 6%-7 % (4 0) bps SG&A as % o f Revenue* 19%-21% (20) bp s EBITDA* $3 50 0-$ 4 000 25% Net Earnings * $2 52 5-$2 725 23% Diluted EPS* $4 85-$5 15 16% Op eratin g Cash Flo w* $2 4 00-$2 600 13% Capital Exp en ditures $4 00-$500 24% Effectiv e Tax Rate* 15%-17% (100 ) bps Diluted Share Count 520-530 *Adju sted metrics No te that 20 16 guidance ranges in cludes Meda for one quarter Adjus ted metrics are non-GAAP financial measures Please see the App end ix for reconciliatio ns of such n on-GAAP fin ancial meas ures to th e most directly comparable GAAP financial measures Note: Year-o ver-year g ro wth is calculated from the midpoint of 201 6 guidan ce ranges Q1 adju sted gross margin expected to be below full year adjus ted gross marg in gu idance range due mainly to prev ious ly anticipated seas onal facto rs in North America Europe an d ROW as well as increased competition on North American products Dev elopment of adjusted g ro ss margin co nsisten t with 2015 when Q1 margin was more than 2% les s than annu al margin Q1 adjusted R&D exp ens e materially above Q4 2015 du e to ramp up of respiratory stud ies and timin g of payments on biologics projects Q1 adjusted R&D expens e s ignificantly above full year guidance range for adjusted R&D exp ens e FY 20 16 guidance ranges for ad justed gross margin and adjus ted R&D expense remain unchanged As a result of the foregoing previously anticip ated factors and as s tated on o ur Q4 2015 earning s call “we exp ect the quarterly developmen t of our EPS for 20 16 to be similar to 20 15 with Q1 bein g relatively flat to th e prior year ”
My lan’s Prov en Track Record Generics and specialty pharmaceutical busin es s Non-US developed markets s pecialty and branded generics bus iness 2 007 201 0 2013 2015 Adjusted Diluted EPS in ($ ) Adjusted dilu ted EPS is a non-GAAP financial measure See Appendix for reconciliation o f adjusted diluted EPS to the mos t directly comparable GAAP measure *Midpoint of 201 6 guidan ce range **Stated 2017 opportunity /201 8 target; th is is a long-term target only and does not represent compan y guidan ce 20 16 Women’s health care busines ses $0 80 $1 30 $1 61 $ 2 04 $ 2 59 $2 89 $3 56 $4 3 0 $5 00 * ~$ 6 00** 2008 2 009 20 10 2011 2012 2013 2 014 201 5 2016 E 2017 Opportun ity 2 008-2016 ad justed diluted EPS Growth = 2 6% CAGR
Reconciliation of Non-GAAP M etrics Impact of Shares Iss ued in EPD Transaction GAAP requires th at EPS be calcu lated for each in dividual period b ased o n average shares outs tanding fo r the period (both quarter-to-date and year-to-date) The iss uance of sh ares to Abbott in the first quarter of 2015 impacted th e averag e q uarterly outstan ding shares v ersu s average outs tandin g shares fo r the fu ll year of 2015 The below table s hows a quarterly reco nciliation of adjus ted diluted EPS (in millions except per share amounts ): Three M onth s Ended Th ree Mon ths En ded Year End ed Year Ended M arch 31 2015 M arch 31 2015 J une 30 20 15 Ju ne 3 0 201 5 September 3 0 2015 September 30 2015 December 31 2 015 December 3 1 2015 Impact of Average Share Count Impact of Average Share Count December 31 20 15 December 31 2015 Adjusted diluted EPS $ 0 70 $ 0 91 $ 1 43 $ 1 22 $ 0 04 $ 4 30 Adjusted net earning s $ 309 1 $ 47 4 3 $ 7 33 8 $ 620 2 $ 2 137 4 Dilu ted share cou nt 44 3 8 521 9 514 0 509 8 497 4
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31 2 014 o f conv ertible debt d iscount 5 7 11 9 45 6 46 0 Non -cash accretio n and fair value ad justments of con ting ent co nsid eratio n liability 9 9 9 2 38 4 35 3 Clean en ergy investmen ts pre-tax los s (b) 24 9 2 2 5 93 2 78 9 Finan cing related co sts (included in other expense (income) net) (c) 7 1 2 33 3 112 0 33 3 Acquisition related costs (primarily included in cost o f s ales and selling general an d admin istrative exp ens e) 19 4 3 58 5 438 0 139 5 Acqu isition related customer incentiv e (in cluded in third p arty net sales) — — 17 1 — Restructu ring and other special items includ ed in: Cost of sales 16 5 13 1 3 6 3 45 1 Research and d ev elopment exp ens e 1 8 — 2 0 3 17 9 Selling gen eral and adminis trative expense 7 0 1 8 0 48 3 66 9 Other income (ex pense) net 0 3 (7 2 ) 7 2 (10 9 ) T ax effect o f the ab ove items an d other in come tax related items (d ) (80 6 ) (58 6 ) (370 1 ) (4 32 0 ) Adjusted net earning s attribu table to M ylan N V and ad justed dilu ted EPS $ 6 20 2 $ 1 22 $ 419 8 $ 1 05 $ 2 137 4 $ 4 3 0 $ 1 41 6 3 $ 3 56 Weighted average dilu ted ordinary sh ares outstanding 509 8 400 6 497 4 398 0 Below is a reconciliation of GAAP n et earning s attrib utable to Mylan N V an d GAAP diluted EPS to ad justed net earnin gs attributable to Mylan N V and adjus ted diluted EPS for the quarter and y ear co mpared to the respecti
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8 adjusted diluted EPS for each of the four qu arters of 201 5 (in millions except p er sh are amounts): Adjustmen t for purchas e accounting related amortization expense for the three months ended December 3 1 2015 includ es intangible asset impairment charges of $31 3 millio n Adju stment represents ex clusion of the pre-tax loss related to My lan's clean energy inv es tments the activities of which qualify for income tax credits und er Section 45 of the Internal Revenue Code of 1986 as amen ded (the "Code") The amou nt is includ ed in other expens e (in come) net in the Cons olidated Statemen ts of Operations Adjus tment represents app ro ximately $71 2 million related to the termination of certain interest rate s wap s for the three months ended December 3 1 2015 an d charges o f approx imately $ 40 8 million related to the red emptio n of the Company’s 7 875% Senior Notes due 2020 for the three month s ended September 30 201 5 Three M onth s Ended Th ree Mon ths E nded March 31 20 15 March 31 2 015 Ju ne 30 201 5 June 30 2015 Septemb er 30 2015 September 30 2015 December 31 201 5 Decemb er 31 2015 GAAP net earnings attributab le to M ylan N V and GAAP diluted EPS $ 56 6 $ 0 1 3 $ 167 8 $ 0 3 2 $ 42 8 6 $ 0 83 $ 19 4 6 $ 0 38 Purch ase acco unting related amortizatio n (primarily included in cost o f s ales ) (a) 144 0 246 6 219 2 2 91 1 Litigation settlements net 17 7 (0 9 ) 2 3 (11 6 5 ) Interes t expense primarily amortization of convertib le debt disco unt 1 2 2 16 2 11 5 5 7 Non-cash accretion an d fair v alue adjustmen ts of contingent con sideration liability 9 2 9 6 9 7 9 9 Clean energ y inv estments pre-tax loss (b) 22 5 21 7 24 1 24 9 Financing related costs (included in oth er expense (income) n
Reconciliation of Non-GAAP M etrics (Unaudited; USD in millions) Three Months En ded Three M onths Ended Year E nded Year End ed D ecember 31 December 3 1 Decemb er 31 December 31 2 015 20 15 201 4 2014 2015 2 015 20 14 2014 GAAP n et earnin gs attrib utable to Mylan N V $ 194 6 $ 18 9 2 $ 84 7 6 $ 9 29 4 Ad d ad justments: Net contrib utio n attribu table to the noncontrollin g interest and equ ity method investmen ts 27 6 27 2 105 2 9 5 1 Income taxes 2 3 7 81 9 67 7 4 1 4 Interest expense 70 9 82 0 339 4 3 33 2 Depreciation and amortization 340 7 168 5 1 032 1 566 6 EBITDA $ 65 7 5 $ 5 48 8 $ 2 392 0 $ 1 96 5 7 Add / (deduct) ad justments: Sh are-bas ed co mpensatio n expense 26 4 17 9 92 8 65 9 Litigation settlements net (116 5 ) 0 7 (97 4 ) 47 9 Restructurin g & o ther special items 259 8 114 7 624 7 2 86 4 Ad justed EBITDA $ 8 27 2 $ 6 82 1 $ 3 012 1 $ 2 36 5 9 Adjusted total revenues (e) $ 2 490 7 $ 2 08 2 7 $ 9 446 4 $ 7 719 6 Adju sted EBIT DA marg in (f) 33 2 % 32 8 % 31 9 % 30 6 % Below is a reconciliation of GAA P net earnings attribu table to M ylan N V to EBIT DA an d adjusted EBITDA for the qu arter and year compared to the respective prio r y ear period: (e)Refer to the no n-GAA P reco nciliations for recon ciliation of adjus ted total revenues to the most d irectly comparable GAAP finan cial meas ure for th e y ear ended Decemb er 31 2015 For th e three months en ded December 31 2 015 and 2 014 and the year ended December 31 2014 GAAP total revenues was the same as the correspond ing adjusted measure (f)Ad justed EBITDA margin is calculated as adju sted EBIT DA divided by adju sted total rev enu es
Summary of Adjusted To tal Revenu es by Segment (Unaudited ; USD in millions) Th ree Mon ths En ded Three M onth s Ended Year Ended Year End ed Three M onths Ended Year En ded December 31 December 31 December 3 1 Decemb er 31 Percent Chang e Percent Change 2015 2015 2014 20 14 201 5 2015 2014 2 014 Actual Cons tant Currency(1) Actual Constan t Currency(1) Generics (adju sted): Third party net s ales North America $ 1 03 3 8 $ 1 000 6 $ 3 895 6 $ 3 3 61 2 3 % 4 % 16 % 1 6 % Europe (ad justed ) (2) 61 6 4 373 4 2 22 2 7 1 4 76 8 65 % 77 % 51 % 67 % Rest of World 57 0 5 441 0 2 05 6 6 1 6 21 3 29 % 39 % 27 % 38 % Adju sted to tal th ird party net s ales (2 ) 2 220 7 1 815 0 8 174 9 6 459 3 22 % 2 7 % 27 % 33 % Other third party rev enu es 9 0 19 5 40 8 51 1 Adjusted total third party revenues 2 22 9 7 1 8 34 5 8 215 7 6 510 4 In ters egmen t sales 1 1 1 0 6 3 4 7 Ad justed Generics total reven ues 2 230 8 1 83 5 5 8 2 22 0 6 5 15 1 Specialty: Third p arty net sales 254 1 242 7 1 204 8 1 18 7 2 5 % 5 % 1 % 1 % Other third party revenues 6 9 5 5 25 9 22 0 T otal th ird party revenues 261 0 248 2 1 230 7 1 209 2 Intersegment s ales 5 1 1 7 10 9 9 0 Specialty total rev enu es 266 1 2 49 9 1 241 6 1 218 2 Eliminatio n of intersegmen t sales (6 2 ) (2 7 ) (17 2 ) (13 7 ) Adjusted cons olid ated total revenues (2) $ 2 490 7 $ 2 082 7 $ 9 44 6 4 $ 7 719 6 20 % 24 % 2 2 % 28 % Th e cons tant curren cy percent change is d eriv ed by translating third party net sales for the current period at prior y ear comparative period exchange rates Refer to the no n-G AAP reco nciliations for recon ciliations of adju sted th ird party net s ales from Europe Generics segment adjusted third party net sales adjusted third party net sales and adjusted total revenues to the mos t directly comparable GAAP financial measures for the year end ed December 31 2 015 For the th ree mon ths ended December 31 20 15 and 201 4 and th e yea
Reconciliation of Non-GAAP M etrics (Unaudited; USD in millions) Three Months En ded Three M onths Ended Year E nded Year End ed D ecember 31 December 3 1 Decemb er 31 December 31 2 015 20 15 201 4 2014 2015 2 015 20 14 2014 GAAP third party net sales from Europ e $ 616 4 $ 373 4 $ 2 20 5 6 $ 1 476 8 Ad d: Acquisition related customer incentive — — 17 1 — Adju sted th ird party net s ales from Europe $ 61 6 4 $ 3 73 4 $ 2 222 7 $ 1 476 8 GAAP Gen erics s eg ment th ird party net s ales $ 2 22 0 7 $ 1 815 1 $ 8 157 8 $ 6 4 59 3 Add : Acquis ition related cu stomer incentive — — 17 1 — Adjus ted Generics segment third party n et sales $ 2 2 20 7 $ 1 815 1 $ 8 17 4 9 $ 6 459 3 GAAP third party net sales $ 2 4 74 8 $ 2 057 7 $ 9 362 6 $ 7 646 5 Ad d: Acquisition related customer incentive — — 17 1 — Adju sted th ird party net s ales $ 2 47 4 8 $ 2 057 7 $ 9 379 7 $ 7 6 46 5 GAAP total revenu es $ 2 490 7 $ 2 0 82 7 $ 9 429 3 $ 7 71 9 6 Add: Acquisitio n related cus tomer in centive — — 17 1 — Adjus ted total revenues $ 2 490 7 $ 2 08 2 7 $ 9 446 4 $ 7 719 6
Reconciliation of Non-GAAP M etrics (Unaudited; USD in millions) Three Months En ded Three M onths Ended Year E nded Year End ed D ecember 31 December 3 1 Decemb er 31 December 31 2 015 20 15 201 4 2014 2015 2 015 20 14 2014 GAAP cos t of sales $ 1 428 1 $ 1 113 7 $ 5 213 2 $ 4 191 6 Ded uct: Purch as e acco unting related amortizatio n (287 2 ) (12 5 4 ) (885 5 ) (40 3 6 ) Acquis ition related co sts (34 8 ) (15 9 ) (98 5 ) (68 6 ) Restru cturing & other special items (16 5 ) (1 3 1 ) (36 3 ) (45 1 ) Adjus ted cost of sales $ 1 089 6 $ 95 9 3 $ 4 192 9 $ 3 674 3 Adju sted gross profit (a) $ 1 401 1 $ 1 1 23 4 $ 5 253 5 $ 4 04 5 3 Adjusted gros s margin (a) 56 % 5 4 % 56 % 52 % GAAP R&D $ 159 0 $ 150 2 $ 671 9 $ 58 1 8 Deduct: Acqu isition related costs (0 9 ) (2 6 ) (2 1 ) (2 7 ) Restructu ring & other special items (1 8 ) — (2 0 3 ) (17 9 ) Ad justed R&D $ 156 3 $ 147 6 $ 649 5 $ 56 1 2 Adjusted R&D as % o f adjusted total reven ues 6 3 % 7 1 % 6 9 % 7 3 % GAAP SG&A $ 59 6 2 $ 42 5 6 $ 2 180 7 $ 1 625 7 Deduct: Acquisition related costs (91 0 ) (37 9 ) (22 7 4 ) (65 9 ) Restructurin g & o ther special items (7 0 ) (18 0 ) (48 3 ) (6 6 9 ) Adjusted SG&A $ 498 2 $ 369 7 $ 1 90 5 0 $ 1 492 9 Ad justed SG&A as % of adjusted total revenues 20 0 % 17 7 % 20 2 % 1 9 3 % Adjusted gros s profit is calcu lated as adjus ted total revenues les s adjusted co st of sales Adjusted gross margin is calculated as adjusted gros s profit d ivid ed by adjus ted total revenues GAAP gros s profit is calculated as GAAP total revenues les s GAAP cos t of sales GAAP gross margin is calcu lated as GAAP gro ss profit divided by GAAP total rev enu es
Reconciliation of Non-GAAP M etrics (Unaudited; USD in millions) Three Months En ded Three M onths Ended Year E nded Year End ed D ecember 31 December 3 1 Decemb er 31 December 31 2 015 20 15 201 4 2014 2015 2 015 20 14 2014 GAAP p re-tax in co me $ 218 3 $ 272 4 $ 91 5 4 $ 9 74 5 Pre-tax loss related to the clean en ergy investmen ts 24 9 22 5 93 2 78 9 Purchase accou ntin g related amortization includ ing p rod uct and IPR&D ass et imp airments 29 1 1 12 9 2 900 9 419 0 Litigation settlemen ts net (11 6 5 ) 0 7 (9 7 4 ) 47 9 Finan cing-related cos ts 71 2 33 3 112 0 3 3 3 Acquisition related costs (p rimarily included in selling general an d admin istrativ e exp ens e) 19 4 3 58 5 438 0 139 5 Acqu isition related customer incentiv e (in cluded in third party net sales) — — 17 1 — Interest ex pense primarily accretion o f contingent co nsideration an d amortizatio n of convertible d eb t dis cou nt 15 6 21 1 84 0 8 1 3 Restructuring and other special items 25 6 23 9 1 12 1 11 9 0 Adjusted pre-tax income $ 724 5 $ 561 6 $ 2 5 75 3 $ 1 893 4 GAAP inco me tax expense (benefit) $ 23 7 $ 81 9 $ 67 7 $ 41 4 Tax effect of adjustmen ts to pre-tax income and other income tax related items (80 6 ) (58 6 ) (3 70 1 ) (432 0 ) Adjus ted income tax ex pen se $ 104 3 $ 140 5 $ 437 8 $ 47 3 4 Adjusted effectiv e tax rate 14 % 25 % 17 % 25 % GAAP net cas h provid ed by operating activities $ 651 $ 127 $ 2 008 $ 1 01 5 (Dedu ct) / Add: (Receip t) / payment of litigatio n settlements (113 ) 42 (113 ) 96 Financing Fees — 24 13 7 24 Acquisition related costs 70 1 1 91 64 R&D exp en se — — 1 2 21 Income tax items (7 ) (13 ) (22 ) (1 3 ) Other 1 — 4 3 Adju sted cas h provided by operating activities $ 602 $ 181 $ 2 217 $ 1 21 0 (Ded uct) / Add: Capital expenditures (15 6 ) (105 ) (363 ) (325 ) Proceeds from sale of property plan t and equipment — — — 9 Adjus ted free cas h flow $ 4 46 $ 76 $ 1 85 4 $ 894
Reconciliation of Non-GAAP M etrics Below is a reco nciliation of GAAP net earnings attributable to My lan N V and GAAP diluted EPS to adjus ted net earn ings attributab le to M ylan N V and adjusted diluted EPS for the years end ed December 31 2 013 20 12 and 201 1 (in millions ex cept p er sh are amounts): Adjustmen t for purchas e accounting related amortization expense for the years en ded December 31 2 013 20 12 and 20 11 in clude intang ible asset impairment charges of approximately $1 8 millio n $42 million an d $16 million respectiv ely Adju stment represents exclu sion of the pre-tax loss related to Mylan's clean energ y inv estments the activities of which qualify for income tax credits und er sectio n 45 of th e U S Internal Reven ue Code Th e amo unt is inclu ded in o ther exp en se (inco me) net in the Con solidated Statements of Operation s Year En ded December 31 Year Ended December 31 (Unaudited; in millions ex cept p er sh are amounts) 2013 2013 2 012 20 12 201 1 2011 GAAP n et earning s attrib utable to Mylan N V an d GAAP d iluted EPS $ 6 24 $ 1 58 $ 64 1 $ 1 5 2 $ 537 $ 1 22 Purchase accounting related amortization (primarily in cluded in cos t of sales) (a) 37 1 391 365 Litigation settlements net (10 ) (3 ) 49 Interest expense p rimarily amo rtization o f conv ertible debt d iscount 38 36 49 Non-cash accretion an d fair v alue adjustments o f contingent con sideration liability 35 39 — Clean energy in ves tments pre-tax loss (b ) 2 2 17 — Finan cing related costs (included in other expense (income) net) 73 — — Acquisition related costs (primarily included in cost o f s ales and selling general an d admin istrative exp ens e) 50 — 34 Restructurin g and other sp ecial items included in: Cost o f s ales 49 66 8 Research and dev elopment exp ens e 5 2 12 4 Selling g eneral and administrative ex pense 71 105 45 Oth er inco me (exp ens e) n et 25 (1 ) — Tax effect of the abo ve items and other incom
Reconciliation of Non-GAAP M etrics Below is a reco nciliation of GAAP net earnings attributable to My lan N V and GAAP diluted EPS to adjus ted net earn ings attributab le to M ylan N V and adjusted diluted EPS for the years end ed December 31 2 010 20 09 and 200 8 (in millions ex cept p er sh are amounts): Adjusted d iluted EPS for the year ended December 31 20 10 in cludes the full effect of the conversion of the company's preferred stock into 1 25 2 million s hares of common stock on Nov ember 1 5 201 0 Adju sted diluted EPS fo r the period ended December 3 1 2009 was calculated under the "if-converted meth od" wh ich assumes con vers ion of the Compan y's preferred stock into shares of co mmo n sto ck bas ed on an average share price and ex cludes the preferred dividend from th e calculation as th e "if-co nverted method " is more dilutive Year Ended December 31 Year Ended December 31 (Unaudited; in million s except per share amo unts) 20 10 201 0 2009 2009 2 008 20 08 GAAP net earnings attributable to Mylan N V and GAAP diluted EPS $ 224 $ 0 68 $ 94 $ 0 30 $ (335 ) $ (1 10 ) Purch ase acco unting related amortizatio n (primarily included in cost o f s ales ) 3 09 283 489 Goo dwill imp airment charg es — — 3 85 Bystolic rev enu e — — (468 ) L itig ation s ettlements net 127 226 1 7 Interest expense primarily amortization of convertible deb t dis co unt 60 43 30 Fin an cing related co sts (included in other expense (income) net) 37 — — Acceleratio n of deferred revenue — (29 ) — Non-controllin g interest — 9 — Restructurin g and other sp ecial items included in: Cost o f s ales 7 33 5 3 Research and dev elopment exp en se 10 22 1 4 Selling gen eral and adminis trative expense 63 4 9 89 Other inco me (exp ens e) n et 1 (13 ) 1 Tax effect of th e abov e items and other income tax related items (253 ) (2 73 ) (31 ) Preferred div idend (c) 122 13 9 — Adjusted n et earnin gs attrib utable to Mylan
Reconciliation of 2016 Forecasted Guidance The reconciliations below are b as ed on management's estimate of ad justed net earnings and adjusted diluted E PS adjus ted EBITDA and adjusted cash prov ided by o perating activities for the twelv e month s ending December 31 2 016 M ylan expects certain kno wn GAAP amounts fo r 2 016 as p resented in the reco nciliation below Other GAAP charges in cluding thos e related to potential litigation asset impairments and res tructuring programs th at would be exclu ded from the adju sted results are pos sible but their amounts are dependent on numerou s factors that we currently can not ascertain with sufficient certainty or are presen tly unknown These GAAP charges are dependent upon future events an d valuatio ns th at have not yet occurred or been performed T he unaudited forecasted amounts presented below are stated in millio ns excep t for earnin gs per share d ata Reco nciliation of Forecasted GAAP Net Earning s and GAAP Diluted EPS to Adjus ted Net Earnings an d Adjus ted Diluted EPS T welve M onths Ended December 31 20 16 Twelve Mo nths Ended Decemb er 31 2016 L ower Lo wer Upp er Upper GAAP net earnings attributable to My lan N V and GAAP diluted EPS $ 1 235 $ 2 38 $ 1 29 0 $ 2 43 Pu rchase accoun ting related amo rtization 1 000 1 050 Interest expense primarily amortization of conv ertible debt discount 60 70 Pre-tax loss of clean energy in ves tments 90 10 0 R&D mileston e p aymen ts 10 0 125 Restructurin g acq uisition an d other special items 27 0 375 T ax effect o f the abo ve items an d other income tax related items (23 0 ) (285 ) Adjusted net earnings attribu table to M ylan N V and ad justed d iluted EPS $ 2 525 $ 4 85 $ 2 725 $ 5 15 Th e Comp an y's annu al budgeting process wh ich is the basis for its 201 6 earnings gu idance is perfo rmed on an adju sted basis That process is then s upplemented by adjus ting net income for kn
Reconciliation of 2016 Forecasted Guidance Reconciliation of forecasted n et earnin gs to adjusted E BITDA Twelve M onths Ended December 31 2016 Twelve Months End ed December 31 2 016 Lower Lower Upper Upper GAAP n et earning s $ 1 2 35 $ 1 290 Add ad justments: Net contribu tion attributab le to the noncontrolling interest and equ ity method investees 95 1 25 Income taxes 13 0 235 Interest exp ens e 3 90 450 Dep reciation an d amortization 1 20 0 1 300 EBITDA $ 3 050 $ 3 400 Add adjus tments : Stock-based compensation expense 80 100 R&D milesto ne pay ments 100 125 Acq uisition restructuring and other special items 270 375 Adjusted EBITDA $ 3 5 00 $ 4 000 Recon ciliatio n of forecasted cash provided by op eratin g activities to adjusted cash provided by o perating activities Twelve M onths Ended December 31 2016 Twelve Months End ed December 31 2 016 Lower Lower Upper Upper GAAP cash prov ided by o perating activities $ 2 155 $ 2 250 Ad d: Acquisition and financing related cos ts 14 5 225 R&D milestone payments 100 1 25 Adjusted cash provided by op eratin g activities $ 2 4 00 $ 2 600