Acquisitions and License Agreements (Tables)

9 Months Ended

Jun. 26, 2015

Schedule of Fair Value of Identifiable Assets Acquired and Liabilities Assumed



	Ikaria		Questcor		Cadence
Cash and cash equivalents	$	77.3	$	445.1	$	43.2
Inventory	26.3		67.9		21.0
Intangible assets	1,971.0		5,601.1		1,300.0
Goodwill	814.2		1,789.4		318.1
Other assets, current and non-current ⁽¹⁾	173.3		274.3		18.0
Total assets acquired	3,062.1		8,177.8		1,700.3
Current Liabilities	32.3		168.9		48.8
Unpaid purchase consideration (current)	—		128.8		—
Other liabilities (non-current) less debt	9.1		186.8		—
Deferred tax liabilities, net (non-current)	646.1		1,906.8		292.3
Total Debt	1,121.0		—		30.0
Total liabilities assumed	1,808.5		2,391.3		371.1
Net assets acquired	$	1,253.6	$	5,786.5	$	1,329.2


(1)	This amount includes $73.8 million, $87.3 million and $14.7 million of accounts receivable for the Ikaria Acquisition, Questcor Acquisition and the Cadence Acquisition, respectively, which is also the gross contractual value.

Schedule of Reconciliation of Total Consideration to Net Assets Acquired

The following is a reconciliation of the total consideration to net assets acquired:



	Ikaria		Questcor			Cadence
Total consideration, net of cash	$	1,176.3	$	5,470.2		$	1,286.0
Plus: cash assumed in acquisition	77.3		445.1			43.2
Total consideration	1,253.6		5,915.3			1,329.2
Less: unpaid purchase consideration	—		(128.8		)	—
Net assets acquired	$	1,253.6	$	5,786.5		$	1,329.2

Schedule of Intangible Assets Acquired

Intangible assets acquired consist of the following:



Ikaria	Amount		Amortization Period
Completed technology	$	1,820.0	15 years
Trademark	70.0		22 years
In-process research and development - terlipressin	81.0		Non-Amortizable
	$	1,971.0

The completed technology and trademark intangible assets relate to Inomax. 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, trademark and in-process research and development ("IPR&D") terlipressin intangibles utilized discount rates of 14.5%, 14.5%, and 17.0%, respectively. The IPR&D discount rate, for terlipressin, 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, future product and device development anticipated synergies and the tax status of the transaction. The goodwill is not deductible for U.S. income tax purposes. All assets acquired are included within the Company's Specialty Brands segment.



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 IPR&D relates to the development of Synacthen® (tetracosactide) ("Synacthen"), a synthetic pharmaceutical product for the U.S. market. The fair values of the intangible assets were determined using the income approach. 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

The completed technology intangible asset relates to Ofirmev, the rights to which have been in-licensed from Bristol-Myers Squibb Company ("BMS"). The fair value of the intangible asset was determined using the income approach and the cash flows were discounted at a 13.0% rate. For more information on the BMS license agreement, refer to "License Agreement" below. 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. All assets acquired are included within the Company's Specialty Brands segment.

Schedule of Net Sales and Earnings by Acquiree

The amount of net sales and earnings included in the Company's results for the periods presented were as follows:



	Three Months Ended						Nine Months Ended
	June 26, 2015			June 27, 2014			June 26, 2015			June 27, 2014
Net sales
Ikaria	$	84.8		$	—		$	84.8		$	—
Questcor	290.4			—			837.7			—
Cadence	62.1			53.2			201.6			58.5
	$	437.3		$	53.2		$	1,124.1		$	58.5
Operating income (loss)
Ikaria	$	13.7		$	—		$	13.7		$	—
Questcor	56.2			—			144.7			—
Cadence	(28.9		)	(57.6		)	(70.5		)	(66.6		)
	$	41.0		$	(57.6	)	$	87.9		$	(66.6	)

Schedule of Intangible Asset Amortization by Acquiree

The amount of amortization on acquired intangible assets included within operating income (loss) for the periods presented was as follows:



	Three Months Ended				Nine Months Ended
	June 26, 2015		June 27, 2014		June 26, 2015		June 27, 2014
Intangible asset amortization
Ikaria	$	25.9	$	—	$	25.9	$	—
Questcor	75.3		—		226.1		—
Cadence	40.6		40.6		121.9		45.5
	$	141.8	$	40.6	$	373.9	$	45.5

Schedule of Acquisition-Related Costs by Acquiree

The amount of acquisition-related costs included with operating income (loss) for the periods presented was as follows:



	Three Months Ended				Nine Months Ended
	June 26, 2015		June 27, 2014		June 26, 2015			June 27, 2014
Acquisition-Related Costs
Ikaria	$	23.5	$	—	$	30.7		$	—
Questcor	—		16.6		(0.1		)	17.5
Cadence	—		—		—			17.6
	$	23.5	$	16.6	$	30.6		$	35.1

Schedule of Unaudited Pro Forma Information



	Three Months Ended				Nine Months Ended
	June 26, 2015		June 27, 2014		June 26, 2015		June 27, 2014
Net sales	$	982.1	$	1,033.5	$	2,964.8	$	2,870.0
Net income	81.1		56.6		264.2		99.5

Basic earnings per share	$	0.70	$	0.53	$	2.29	$	0.93
Diluted earnings per share	0.69		0.52		2.26		0.92