Acquisitions and License Agreements (Tables)

3 Months Ended

Dec. 26, 2014

Schedule of Fair Value of Identifiable Assets Acquired and Liabilities Assumed



	Questcor		Cadence
Cash and cash equivalents	$	445.1	$	43.2
Inventory	67.9		21.0
Intangible assets	5,601.1		1,300.0
Goodwill	1,783.3		318.1
Other assets, current and non-current ⁽¹⁾	274.3		18.0
Total assets acquired	8,171.7		1,700.3
Current liabilities ⁽²⁾	157.1		60.1
Unpaid purchase consideration (current)	128.8		—
Other liabilities (non-current) ⁽²⁾	184.8		18.7
Deferred tax liabilities, net (non-current)	1,914.5		292.3
Total liabilities assumed	2,385.2		371.1
Net assets acquired	$	5,786.5	$	1,329.2


(1)	This amount includes $87.3 million and $14.7 million of accounts receivable for the Questcor Acquisition and the Cadence Acquisition, respectively, which is also the gross contractual value.


(2)	These amounts include $30.0 million of pre-existing Cadence debt, which the Company repaid upon completion of the Cadence Acquisition.

Schedule of Reconciliation of Total Consideration to Net Assets Acquired

The following reconciles the total consideration to net assets acquired:



	Questcor			Cadence
Total consideration, net of cash	$	5,470.2		$	1,286.0
Plus: cash assumed in acquisition	445.1			43.2
Total consideration	5,915.3			1,329.2
Less: unpaid purchase consideration	(128.8		)	—
Net assets acquired	$	5,786.5		$	1,329.2

Schedule of Intangible Assets Acquired

Intangible assets acquired consist of the following:



Questcor	Amount		Amortization Period
Completed technology	$	5,343.3	18 years
Trademark	5.2		13 years
Customer relationships	34.3		12 years
In-process research and development	218.3		Non-Amortizable
	$	5,601.1

The completed technology intangible asset relates to Acthar. The trademark and customer relationship intangible assets relate to BioVectra. The in-process research and development ("IPR&D") relates to the development of Synacthen®, a synthetic pharmaceutical product. The fair values of the intangible assets were determined using the income approach, which is a valuation technique that provides an estimate of the fair value of the asset based on market participant expectations of the cash flows an asset would generate. The cash flows were discounted at various discount rates commensurate with the level of risk associated with each asset or their projected cash flows. Completed technology, customer relationships, trademark and IPR&D intangibles utilized discount rates of 14.5%, 10.0%, 10.0% and 16.0%, respectively. The IPR&D discount rate was developed after assigning a probability of success to achieving the projected cash flows based on the current stage of development, inherent uncertainty in the FDA approval process and risks associated with commercialization of a new product. Based on the Company's preliminary estimate, the excess of purchase price over net tangible and intangible assets acquired resulted in goodwill, which represents the assembled workforce, anticipated synergies and the tax status of the transaction. The goodwill is not deductible for U.S. income tax purposes. The majority of the assets acquired are included within the Company's Specialty Brands segment.



Cadence	Amount		Amortization Period
Completed technology	$	1,300.0	8 years

Schedule of Net Sales and Earnings by Acquiree

The amount of net sales and earnings included in the Company's results for the three months ended December 26, 2014 were as follows:



Net sales
Questcor	$	287.8
Cadence	71.4
	$	359.2
Operating income (loss)
Questcor	$	81.2
Cadence	(9.3		)
	$	71.9

Schedule of Intangible Asset Amortization by Acquiree

The amount of amortization on acquired intangible assets included within operating income (loss) for the three months ended December 26, 2014 was as follows:



Intangible asset amortization
Questcor	$	75.4
Cadence	40.6
	$	116.0

Schedule of Unaudited Pro Forma Information



	Three Months Ended December 27, 2013
Net sales	$	818.4
Net income	61.2

Basic earnings per share	$	0.54
Diluted earnings per share	0.53