/Mylan Third Quarter 2015 Constant Currency Adjusted Total Revenues Increase 36% and Adjusted Diluted EPS Increases 23% to $1.43

NEWS

Mylan Third Quarter 2015 Constant Currency Adjusted Total Revenues Increase 36% and Adjusted Diluted EPS Increases 23% to $1.43

FiercePharma

2015/10/30

Mylan Expects to be at High End of Full Year 2015 Adjusted Diluted EPS Guidance Range of $4.15 to $4.35

Mylan Remains Steadfastly Committed To Our Value-Creating Offer for Perrigo

HERTFORDSHIRE, ENGLAND and PITTSBURGH, Oct. 30, 2015 /PRNewswire/ -- Mylan N.V. (Nasdaq: MYL) today announced its financial results for the quarter ended September 30, 2015.

Third Quarter 2015 Highlights

Adjusted total revenues of $2.71 billion, up 36% on a constant currency basis versus the prior year period. GAAP total revenues of $2.70 billion.
Excluding the impact of the acquisition of Abbott's non-U.S. developed markets specialty and branded generics business ("EPD Business"), adjusted total revenues increased 14% on a constant currency basis, reflecting the continued strength in our legacy business. Foreign currency exchange rates unfavorably impacted adjusted total revenues in Q3 by $122 million. Generics segment adjusted third party net sales of $2.26 billion, up 48% on a constant currency basis. GAAP Generics segment third party net sales of $2.24 billion. Excluding the EPD Business, Generics segment adjusted third party net sales increased 19% on a constant currency basis. Both including and excluding the EPD Business, all regions in the generics segment showed positive growth. Specialty segment third party net sales of $437.8 million, down 5%
Adjusted gross profit of $1.58 billion, up 39%; GAAP gross profit of $1.32 billion, up 30%
Adjusted gross margin of 58%, up 400 basis points; GAAP gross margin of 49%, flat
Adjusted diluted earnings per ordinary share ("EPS") of $1.43, up 23%; GAAP diluted EPS of $0.83, down 34%
Adjusted cash provided by operating activities for Q3 of $1.13 billion, up 139%; GAAP net cash provided by operating activities for Q3 of $975 million, up 122%
Adjusted free cash flow for Q3 of $1.04 billion, up 158%

Mylan CEO Heather Bresch commented, "Our outstanding third quarter results underscore the diversity of Mylan's platform and organic growth capabilities, which allows us to successfully identify and integrate strategic acquisitions and drive sustainable long-term growth and shareholder value creation. With our business continuing to hit on all cylinders, as well as the recent developments with respect to EpiPen® Auto-Injector, we are expecting to be at the high end of our 2015 guidance of $4.15 to $4.35 in adjusted diluted EPS."

Mylan CFO John Sheehan added, "Mylan's exceptional third quarter results reflect double digit growth in our legacy business as well as enhanced double digit growth with the addition of the EPD Business. As of the end of the third quarter, our debt to adjusted EBITDA leverage was 2.0 times and our adjusted cash provided by operating activities was an impressive record of $1.62 billion year-to-date. Mylan continues to have ample borrowing capacity and financial firepower to execute on strategic opportunities while maintaining our commitment to an investment grade credit rating."

Adjusted Total Revenues

Three Months Ended

September 30,

(Unaudited; in millions)

2015

2014

Percent Change

Adjusted Total Revenues*

2,712.3

2,084.0

30%

Generics Adjusted Third Party Net Sales*

2,255.5

1,607.4

40%

North America

1,079.6

841.8

28%

Europe (adjusted)*

629.0

351.5

79%

Rest of World

546.9

414.1

32%

Specialty Third Party Net Sales

437.8

462.0

(5)%

Other Revenues

19.0

14.6

30%

*For the three months ended September 30, 2015, GAAP total revenues were $2,695.2 million, GAAP Generics third party net sales were $2,238.4 million and GAAP third party net sales from Europe were $611.9 million. Refer to the non-GAAP reconciliations for the third party net sales from Europe, Generics third party net sales and total revenues in the non-GAAP financial measures for the directly comparable GAAP financial measures.

Generics Segment Revenues

Generics segment adjusted third party net sales were $2.26 billion for the quarter, an increase of 40% when compared to the prior year period. GAAP Generics segment third party net sales were $2.24 billion. When translating adjusted third party net sales for the current quarter at prior year comparative period exchange rates ("constant currency"), adjusted third party net sales increased by 48%.

Third party net sales from North America were $1.08 billion for the quarter, an increase of 28% when compared to the prior year period. This increase was primarily driven by net sales from new products, and to a lesser extent, net sales from the acquired EPD Business of approximately $42 million. Also contributing to the increase were higher volumes on existing products, partially offset by lower pricing. The effect of foreign currency translation on third party net sales was insignificant in North America.
Adjusted third party net sales from Europe were $629.0 million for the quarter, an increase of 79% when compared to the prior year period. GAAP third party net sales from Europe were $611.9 million. Excluded from adjusted revenues during the quarter is a one-time customer incentive of$17.1 million that was provided in Europe as a result of the acquired EPD Business. Constant currency adjusted third party net sales increased by 95%. This increase was primarily driven by net sales from the acquired EPD Business of approximately $314 million, and to a lesser extent, net sales from new products. Higher volumes on existing products, primarily in France and Italy, were offset by lower pricing throughout Europe.
Third party net sales from Rest of World were $546.9 million for the quarter, an increase of 32% when compared to the prior year period. Constant currency third party net sales increased by 47%. This increase was primarily driven by net sales from the acquired EPD Business of approximately$105 million, new product launches in Australia and Japan and higher third party net sales volumes in India, predominately from growth in our anti-retroviral franchise, and Brazil. These increases were partially offset by lower volumes on existing products in Japan and lower pricing throughout this region.

Specialty Segment Revenues

Specialty segment reported third party net sales of $437.8 million for the quarter, a decrease of 5% when compared to the prior year period. This decrease was primarily due to a lower average net selling price for the EpiPen® Auto-Injector as a result of competitive market conditions.

Total Gross Profit

Adjusted gross profit was $1.58 billion and adjusted gross margins were 58% for the quarter as compared to adjusted gross profit of $1.13 billion and adjusted gross margins of 54% in the comparable prior year period. The current quarter increase was primarily due to net sales from the acquired EPD Business, new product introductions and increased margins on existing products in North America.GAAP gross profit was $1.32 billion and $1.01 billion for the third quarter of 2015 and 2014, respectively. GAAP gross margins were 49% in both periods.

Total Profitability

Adjusted earnings from operations for the quarter were $911.9 million, up 38% from the comparable prior year period. GAAP earnings from operations were $601.1 million for the quarter, an increase of 21% from the comparable prior year period. R&D expense increased due to the impact of the acquired EPD Business. SG&A expense increased from the prior year period as a result of the impact the acquired EPD Business as well as acquisition and integration related costs.

EBITDA, which is defined as net earnings (excluding the non-controlling interest and losses from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $835.7 million for the quarter and $652.7 million for the comparable prior year quarter. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $986.9 million for the quarter and $736.0 million for the comparable prior year period. Adjusted net earnings attributable to Mylan N.V. increased by $271.0 million to $733.8 million compared to $462.8 million for the prior year comparable period. Adjusted diluted EPS increased 23% to $1.43 compared to $1.16 in the prior year comparable period. GAAP net earnings attributable to Mylan N.V. decreased by $70.5 million to$428.6 million as compared to $499.1 million for the prior year comparable period. This decrease is partially attributable to a tax benefit recorded in the prior year period of approximately $156 millionrelated to the merger of the Company's wholly owned subsidiaries, Agila Specialties Private Limited and Onco Therapies Limited, into Mylan Laboratories Limited. GAAP diluted EPS decreased from $1.26 to$0.83 when compared to the prior year comparable period due to the impact of ordinary shares issued in the acquisition of the EPD Business, transaction costs incurred in the current year period and a gain related to the resolution of certain contingent consideration in the prior year period.

Cash Flow

Adjusted cash provided by operating activities was $1.13 billion for the three months endedSeptember 30, 2015 compared to $470 million for the comparable prior year period. On a GAAP basis,net cash provided by operating activities was $975 million for the three months ended September 30, 2015 compared to $440 million for the comparable prior year period. Capital expenditures were approximately $85 million for the three months ended September 30, 2015 as compared to approximately $67 million for the comparable prior year period. Adjusted free cash flow was $1.04 billion for the three months ended September 30, 2015 compared to $403 million in the prior year period.

Adjusted cash provided by operating activities was $1.62 billion for the nine months endedSeptember 30, 2015 compared to $1.03 billion for the comparable prior year period. On a GAAP basis,net cash provided by operating activities was $1.36 billion for the nine months ended September 30, 2015 compared to $888 million for the comparable prior year period. The increase in net cash provided by operating activities for the quarter and year to date period was primarily due to an increase in adjusted earnings combined with our ongoing working capital initiatives. Capital expenditures were approximately $207 million for the nine months ended September 30, 2015 as compared to approximately $220 million for the nine months ended September 30, 2014. Adjusted free cash flowwas $1.41 billion for the nine months ended September 30, 2015 compared to $818 million in the prior year period.

Conference Call

Mylan will host a conference call and live webcast, today, October 30, 2015, at 10:00 am ET, in conjunction with the release of its financial results. The dial-in number to access the call is 800.514.4861 or 678.809.2405 for international callers. To access the live webcast and slide presentation, please log onto Mylan's website (www.mylan.com) at least 15 minutes before the event is to begin to register and download or install any necessary software.

Non-GAAP Financial Measures

This press release includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in the United States ("GAAP"). These non-GAAP financial measures, including, but not limited to, adjusted diluted EPS, adjusted cash provided by operating activities, adjusted third party net sales from Europe, adjusted Generics segment third party net sales, adjusted third party net sales, adjusted total revenues, adjusted gross profit, adjusted gross margins, adjusted earnings from operations, adjusted net earnings attributable to Mylan N.V. ("Mylan" or the "Company"), adjusted constant currency total revenues, adjusted constant currency third party net sales, constant currency adjusted total revenues, constant currency adjusted third party net sales, EBITDA, adjusted EBITDA, debt to adjusted EBITDA leverage, and adjusted free cash flow, are presented in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance. Management uses these measures internally for forecasting, budgeting and measuring its operating performance. In addition, primarily due to acquisitions, Mylan believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. In addition, the Company believes that including EBITDA and supplemental adjustments applied in presenting adjusted EBITDA pursuant to our debt agreements is appropriate to provide additional information to investors to demonstrate the Company's ability to comply with financial debt covenants (which are calculated using a measure similar to adjusted EBITDA) and assess the Company's ability to incur additional indebtedness. We also report sales performance using the non-GAAP financial measure of "constant currency" total revenues, adjusted total revenues, third party net sales, and adjusted third party net sales. This measure provides information on the change in net sales assuming that foreign currency exchange rates had not changed between the prior and current period. The comparisons presented as constant currency rates reflect comparative local currency sales at the prior year's foreign exchange rates. We routinely evaluate our third party net sales performance at constant currency so that sales results can be viewed without the impact of foreign currency exchange rates, thereby facilitating a period-to-period comparison of our operational activities, and we believe that this presentation also provides useful information to investors for the same reason. The "Summary of Adjusted Revenues by Segment" table below compares adjusted third party net sales on an actual and constant currency basis for each reportable segment and the geographic regions within the Generics segment for the three and nine months ended September 30, 2015 and 2014. Also, set forth below, Mylan has provided reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliations of the non-GAAP measures to their most directly comparable GAAP measures set forth below, and investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with GAAP.

Below is a reconciliation of GAAP net earnings attributable to Mylan N.V. and GAAP diluted EPS to adjusted net earnings attributable to Mylan N.V. and adjusted diluted EPS for the three and nine month period compared to the respective prior year period (in millions, except per share amounts):

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Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

GAAP net earnings attributable to Mylan N.V. and GAAP diluted EPS

428.6

0.83

499.1

1.26

653.0

1.32

740.2

1.86

Purchase accounting related amortization (primarily included in cost of sales)

219.2

95.3

609.8

289.8

Litigation settlements, net

2.3

20.9

19.1

47.2

Interest expense, primarily amortization of convertible debt discount

11.5

11.7

39.9

34.1

Non-cash accretion and fair value adjustments of contingent consideration liability

9.7

9.0

28.5

26.1

Clean energy investments pre-tax loss (a)

24.1

19.8

68.3

56.4

Financing related costs (included in other expense (income), net)

40.8

—

40.8

—

Acquisition related costs (primarily included in cost of sales and selling, general and administrative expense)

92.3

31.5

243.7

81.0

Acquisition related customer incentive (included in third party net sales)

17.1

—

17.1

—

Restructuring and other special items included in:

Cost of sales

5.1

11.8

19.8

32.0

Research and development expense

0.6

1.0

18.5

17.9

Selling, general and administrative expense

8.6

7.7

41.3

48.9

Other income (expense), net

(1.2)

(4.0)

6.9

(3.7)

Tax effect of the above items and other income tax related items (b)

(124.9)

(241.0)

(289.5)

(373.4)

Adjusted net earnings attributable to Mylan N.V. and adjusted diluted EPS

733.8

1.43

462.8

1.16

1,517.2

3.08

996.5

2.51

Weighted average diluted ordinary shares outstanding

514.0

397.3

493.2

397.1

(a)

Adjustment represents exclusion of the pre-tax loss related to Mylan's clean energy investments, the activities of which qualify for income tax credits under Section 45 of the Internal Revenue Code of 1986, as amended (the "Code"). The amount is included in other expense (income), net in the Condensed Consolidated Statements of Operations.

(b)

Adjustment for other income tax related items includes the exclusion from adjusted net earnings for the three and nine months ended September 30, 2014 of the tax benefit of approximately $156 million related to the merger of the Company's wholly owned subsidiaries, Agila Specialties Private Limited and Onco Therapies Limited, into Mylan Laboratories Limited.

Below is a reconciliation of GAAP net earnings attributable to Mylan N.V. to EBITDA and adjusted EBITDA for the three and nine month period compared to the respective prior year period (in millions):

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP net earnings attributable to Mylan N.V.

428.6

499.1

653.0

740.2

Add / (deduct) adjustments:

Net contribution attributable to the noncontrolling interest and equity method investments

27.8

22.8

77.7

67.9

Income taxes

26.5

(86.8)

44.0

(40.5)

Interest expense

95.1

83.9

268.5

251.2

Depreciation and amortization

257.7

133.7

691.4

398.1

EBITDA

835.7

652.7

1,734.6

1,416.9

Add adjustments:

Share-based compensation expense

16.1

15.5

66.4

48.0

Litigation settlements, net

2.3

20.9

19.1

47.2

Restructuring & other special items

132.8

46.9

364.9

171.7

Adjusted EBITDA

986.9

736.0

2,185.0

1,683.8

About Mylan

Mylan is a global pharmaceutical company committed to setting new standards in health care. Working together around the world to provide 7 billion people access to high quality medicine, we innovate to satisfy unmet needs; make reliability and service excellence a habit; do what's right, not what's easy; and impact the future through passionate global leadership. We offer a growing portfolio of around 1,400 generic pharmaceuticals and several brand medications. In addition, we offer a wide range of antiretroviral therapies, upon which nearly 50% of HIV/AIDS patients in developing countries depend. We also operate one of the largest active pharmaceutical ingredient manufacturers and currently market products in about 145 countries and territories. Our workforce includes approximately 30,000 people dedicated to improving the customer experience and increasing pharmaceutical access to consumers around the world. But don't take our word for it. See for yourself. See inside. mylan.com

Mylan N.V. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited; in millions, except per share amounts)

Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

Revenues:

Net sales

2,676.2

2,069.4

6,887.8

5,588.8

Other revenues

19.0

14.6

50.8

48.1

Total revenues

2,695.2

2,084.0

6,938.6

5,636.9

Cost of sales

1,379.9

1,071.6

3,785.1

3,077.9

Gross profit

1,315.3

1,012.4

3,153.5

2,559.0

Operating expenses:

Research and development

174.8

158.2

512.9

431.6

Selling, general and administrative

537.1

418.3

1,584.5

1,200.1

Litigation settlements, net

2.3

20.9

19.1

47.2

Other operating income, net

—

(80.0)

—

(80.0)

Total operating expenses

714.2

517.4

2,116.5

1,598.9

Earnings from operations

601.1

495.0

1,037.0

960.1

Interest expense

95.1

83.9

268.5

251.2

Other expense (income), net

50.9

(1.5)

71.4

6.8

Earnings before income taxes and noncontrolling interest

455.1

412.6

697.1

702.1

Income tax provision (benefit)

26.5

(86.8)

44.0

(40.5)

Net earnings

428.6

499.4

653.1

742.6

Net earnings attributable to the noncontrolling interest

—

(0.3)

(0.1)

(2.4)

Net earnings attributable to Mylan N.V. ordinary shareholders

428.6

499.1

653.0

740.2

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

Basic

0.87

1.33

1.40

1.98

Diluted

0.83

1.26

1.32

1.86

Weighted average ordinary shares outstanding:

Basic

490.5

374.1

466.2

373.4

Diluted

514.0

397.3

493.2

397.1

Mylan N.V. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited; in millions)

September 30, 2015

December 31, 2014

ASSETS

Assets

Current assets

Cash and cash equivalents

587.0

225.5

Accounts receivable, net

2,917.1

2,268.5

Inventories

1,944.1

1,651.4

Other current assets

1,037.7

2,641.5

Total current assets

6,485.9

6,786.9

Intangible assets, net

6,888.2

2,347.1

Goodwill

5,125.3

4,049.3

Other non-current assets

2,817.1

2,703.3

Total assets

21,316.5

15,886.6

LIABILITIES AND EQUITY

Liabilities

Current liabilities

3,684.1

5,305.7

Long-term debt

5,845.8

5,732.8

Other non-current liabilities

1,971.6

1,572.1

Total liabilities

11,501.5

12,610.6

Noncontrolling interest

1.4

20.1

Mylan N.V. shareholders' equity

9,813.6

3,255.9

Total liabilities and equity

21,316.5

15,886.6

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Mylan N.V. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

(Unaudited; in millions)

Summary of Adjusted Total Revenues by Segment

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

September 30,

Percent Change

2015

2014

2015

2014

Actual

Constant Currency(1)

Actual

Constant Currency(1)

Generics (adjusted):

Third party net sales

North America

1,079.6

841.8

2,861.8

2,360.6

Europe (adjusted) (2)

629.0

351.5

1,606.3

1,103.4

Rest of World

546.9

414.1

1,486.1

1,180.3

Adjusted total third party net sales (2)

2,255.5

1,607.4

5,954.2

4,644.3

Other third party revenues

11.5

9.5

31.7

31.6

Adjusted total third party revenues

2,267.0

1,616.9

5,985.9

4,675.9

Intersegment sales

1.4

1.1

5.2

3.7

Adjusted Generics total revenues

2,268.4

1,618.0

5,991.1

4,679.6

Specialty:

Third party net sales

437.8

462.0

950.7

944.5

(5)%

Other third party revenues

7.5

5.1

19.1

16.5

Total third party revenues

445.3

467.1

969.8

961.0

Intersegment sales

1.2

2.9

5.8

7.3

Specialty total revenues

446.5

470.0

975.6

968.3

Elimination of intersegment sales

(2.6)

(4.0)

(11.0)

Adjusted consolidated total revenues (2)

2,712.3

2,084.0

6,955.7

5,636.9

(1)

The constant currency percent change is derived by translating third party net sales for the current period at prior year comparative period exchange rates.

(2)

Refer to the non-GAAP reconciliations for the third party net sales from Europe, Generics segment third party net sales, third party net sales and total revenues in the non-GAAP financial measures for the directly comparable GAAP financial measures.

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP third party net sales from Europe

611.9

351.5

1,589.2

1,103.4

Add:

Acquisition related customer incentive

17.1

—

17.1

—

Adjusted third party net sales from Europe

629.0

351.5

1,606.3

1,103.4

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP Generics segment third party net sales

2,238.4

1,607.4

5,937.1

4,644.3

Add:

Acquisition related customer incentive

17.1

—

17.1

—

Adjusted Generics segment third party net sales

2,255.5

1,607.4

5,954.2

4,644.3

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP third party net sales

2,676.2

2,069.4

6,887.8

5,588.8

Add:

Acquisition related customer incentive

17.1

—

17.1

—

Adjusted third party net sales

2,693.3

2,069.4

6,904.9

5,588.8

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP total revenues

2,695.2

2,084.0

6,938.6

5,636.9

Add:

Acquisition related customer incentive

17.1

—

17.1

—

Adjusted total revenues

2,712.3

2,084.0

6,955.7

5,636.9

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP cost of sales

1,379.9

1,071.6

3,785.1

3,077.9

Deduct:

Purchase accounting related amortization

(215.4)

(91.5)

(598.3)

(278.3)

Acquisition related costs

(24.9)

(17.3)

(63.7)

(52.7)

Restructuring & other special items

(5.1)

(11.8)

(19.8)

(32.0)

Adjusted cost of sales

1,134.5

951.0

3,103.3

2,714.9

Adjusted gross profit (a)

1,577.8

1,133.0

3,852.4

2,922.0

Adjusted gross margin (a)

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP R&D

174.8

158.2

512.9

431.6

Deduct:

Acquisition related costs

(0.7)

—

(1.2)

—

Restructuring & other special items

(0.6)

(1.0)

(18.5)

(17.9)

Adjusted R&D

173.5

157.2

493.2

413.7

Adjusted R&D as % of adjusted total revenues

6.4

7.5

7.1

7.3

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP SG&A

537.1

418.3

1,584.5

1,200.1

Deduct:

Acquisition related costs

(36.1)

(14.2)

(136.4)

(28.1)

Restructuring & other special items

(8.6)

(7.7)

(41.3)

(48.9)

Adjusted SG&A

492.4

396.4

1,406.8

1,123.1

Adjusted SG&A as % of adjusted total revenues

18.2

19.0

20.2

19.9

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP total operating expenses

714.2

517.4

2,116.5

1,598.9

Deduct:

Litigation settlements, net

(2.3)

(20.9)

(19.1)

(47.2)

Acquisition related costs

(36.8)

(14.3)

(137.6)

(28.2)

Restructuring & other special items

(9.2)

(8.5)

(59.8)

(66.7)

Adjusted total operating expenses

665.9

473.7

1,900.0

1,456.8

Adjusted earnings from operations (b)

911.9

659.3

1,952.4

1,465.2

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP interest expense

95.1

83.9

268.5

251.2

Deduct:

Interest expense related to clean energy investments (c)

(4.1)

(3.9)

(12.5)

(11.7)

Non-cash accretion of contingent consideration liability

(9.7)

(9.0)

(28.5)

(26.1)

Non-cash interest

(7.5)

(7.8)

(27.4)

(22.4)

Acquisition financing costs

(30.4)

—

(42.3)

—

Adjusted interest expense

43.4

63.2

157.8

191.0

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Three Months Ended

Nine Months Ended

September 30,

2015

2014

2015

2014

GAAP other expense (income), net

50.9

(1.5)

71.4

6.8

(Add) / Deduct:

Equity method losses from clean energy investments

(24.1)

(19.8)

(68.3)

(56.4)

Purchase accounting related amortization

(3.8)

(11.5)

Financing related costs

(40.8)

—

(40.8)

—

Restructuring & other special items

1.2

4.0

(6.9)

3.7

Adjusted other income

(16.6)

(21.1)

(56.1)

(57.4)

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Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

GAAP net cash provided by operating activities

975

440

1,357

888

Add / (Deduct):

Payment of litigation settlements

—

Financing Fees

127

—

137

—

Acquisition related costs

121

R&D expense

—

Income tax items

(15)

—

(15)

—

Other

Adjusted cash provided by operating activities

1,125

470

1,615

1,029

(Deduct) / Add:

Capital expenditures

(85)

(67)

(207)

(220)

Proceeds from sale of property, plant and equipment

—

Adjusted free cash flow

1,040

403

1,408

818

(a)

Adjusted gross profit is calculated as adjusted total revenues less adjusted cost of sales. Adjusted gross margin is calculated as adjusted gross profit divided by adjusted total revenues.

(b)

Adjusted earnings from operations is calculated as adjusted gross profit less adjusted total operating expenses.

(c)

Adjustment represents exclusion of activity related to Mylan's clean energy investments, the activities of which qualify for income tax credits under section 45 of the Code.

Reconciliation of Forecasted Guidance

The reconciliation below is based on management's estimate of adjusted net earnings and adjusted diluted EPS for the twelve months ending December 31, 2015. Mylan expects certain known GAAP amounts for 2015, as presented in the reconciliation below. Other GAAP charges, including those related to potential litigation, asset impairments and restructuring programs that would be excluded from the adjusted results are possible, but their amounts are dependent on numerous factors that we currently cannot ascertain with sufficient certainty or are presently unknown. These GAAP charges are dependent upon future events and valuations that have not yet occurred or been performed. The unaudited forecasted amounts presented below are stated in millions, except for earnings per share data.

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Reconciliation of Forecasted GAAP Net Earnings and GAAP Diluted EPS to Adjusted Net Earnings and Adjusted Diluted EPS

Twelve Months Ended December 31, 2015

Lower

Upper

GAAP net earnings attributable to Mylan N.V. and GAAP diluted EPS

940

1.88

965

1.93

Purchase accounting related amortization

825

860

Interest expense, primarily amortization of convertible debt discount

Non-cash accretion of contingent consideration liability

Pre-tax loss of clean energy investments

100

Litigation settlements, net

Financing related

Restructuring, acquisition and other special items

370

450

Tax effect of the above items and other income tax related items

(298)

(380)

Adjusted net earnings attributable to Mylan N.V. and adjusted diluted EPS

2,075

4.15

2,175

4.35

SOURCE Mylan N.V.

Summary

Mylan Expects to be at High End of Full Year 2015 Adjusted Diluted EPS Guidance Range of 4.15to4.35 Mylan Remains Steadfastly Committed To Our Value-Creating Offer for Perrigo HERTFORDSHIRE,...