UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____________to___________                 

Commission File Number 333-199861

MYLAN N.V.

(Exact name of registrant as specified in its charter)

Netherlands	98-1493528
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Building 4, Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL, England

(Address of principal executive offices)

+44 (0) 1707-853-000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, nominal value €0.01	MYL	The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of October 31, 2019, there were 516,132,520 of the issuer’s €0.01 nominal value ordinary shares outstanding.

MYLAN N.V. AND SUBSIDIARIES

INDEX TO FORM 10-Q

For the Quarterly Period Ended

September 30, 2019

		Page
	PART I — FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2019 and 2018	3
	Condensed Consolidated Statements of Comprehensive Loss — Three and Nine Months Ended September 30, 2019 and 2018	4
	Condensed Consolidated Balance Sheets — September 30, 2019 and December 31, 2018	5
	Condensed Consolidated Statements of Equity — Three and Nine Months Ended September 30, 2019 and 2018	6
	Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2019 and 2018	8
	Notes to Condensed Consolidated Financial Statements	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	67
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	89
ITEM 4.	Controls and Procedures	89
	PART II — OTHER INFORMATION
ITEM 1.	Legal Proceedings	90
ITEM 1A.	Risk Factors	90
ITEM 6.	Exhibits	90
SIGNATURES		91

2

PART I — FINANCIAL INFORMATION

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,						September 30,
	2019			2018			2019			2018
Revenues:
Net sales	$	2,928.2		$	2,827.3		$	8,207.0		$	8,233.2
Other revenues	33.5			35.1			101.7			122.0
Total revenues	2,961.7			2,862.4			8,308.7			8,355.2
Cost of sales	1,889.3			1,823.2			5,498.5			5,369.2
Gross profit	1,072.4			1,039.2			2,810.2			2,986.0
Operating expenses:
Research and development	167.9			144.1			488.1			555.7
Selling, general and administrative	632.7			577.3			1,909.2			1,808.1
Litigation settlements and other contingencies, net	(51.9		)	(20.4		)	(30.3		)	(50.6		)
Total operating expenses	748.7			701.0			2,367.0			2,313.2
Earnings from operations	323.7			338.2			443.2			672.8
Interest expense	128.9			136.2			391.3			407.1
Other expense, net	9.0			9.8			32.7			44.3
Earnings before income taxes	185.8			192.2			19.2			221.4
Income tax (benefit) provision	(4.0		)	15.5			22.9			(79.9		)
Net earnings (loss)	$	189.8		$	176.7		$	(3.7	)	$	301.3
Earnings (Loss) per ordinary share:
Basic	$	0.37		$	0.34		$	(0.01	)	$	0.59
Diluted	$	0.37		$	0.34		$	(0.01	)	$	0.58
Weighted average ordinary shares outstanding:
Basic	516.0			514.5			515.5			514.4
Diluted	516.2			516.5			515.5			516.5

See Notes to Condensed Consolidated Financial Statements

3

MYLAN N.V. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited; in millions)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net earnings (loss)	$	189.8		$	176.7		$	(3.7	)	$	301.3
Other comprehensive loss, before tax:
Foreign currency translation adjustment	(748.9		)	(270.8		)	(890.8		)	(1,097.6		)
Change in unrecognized loss and prior service cost related to defined benefit plans	(0.7		)	(6.8		)	(0.5		)	(8.3		)
Net unrecognized (loss) gain on derivatives in cash flow hedging relationships	(10.6		)	(51.9		)	24.8			(146.1		)
Net unrecognized gain on derivatives in net investment hedging relationships	111.8			18.8			133.6			78.7
Net unrealized gain (loss) on marketable securities	0.1			—			0.7			(0.1		)
Other comprehensive loss, before tax	(648.3		)	(310.7		)	(732.2		)	(1,173.4		)
Income tax provision (benefit)	1.2			(19.1		)	14.1			(51.2		)
Other comprehensive loss, net of tax	(649.5		)	(291.6		)	(746.3		)	(1,122.2		)
Comprehensive loss	$	(459.7	)	$	(114.9	)	$	(750.0	)	$	(820.9	)

See Notes to Condensed Consolidated Financial Statements

4

MYLAN N.V. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited; in millions, except share and per share amounts)

	September 30, 2019			December 31, 2018
ASSETS
Assets
Current assets:
Cash and cash equivalents	$	358.9		$	388.1
Accounts receivable, net	2,948.0			2,881.0
Inventories	2,763.5			2,580.2
Prepaid expenses and other current assets	574.7			518.4
Total current assets	6,645.1			6,367.7
Property, plant and equipment, net	2,123.9			2,170.2
Intangible assets, net	11,824.3			13,664.6
Goodwill	9,387.1			9,747.8
Deferred income tax benefit	628.1			572.2
Other assets	445.0			212.4
Total assets	$	31,053.5		$	32,734.9
LIABILITIES AND EQUITY
Liabilities
Current liabilities:
Accounts payable	$	1,511.3		$	1,617.0
Short-term borrowings	—			1.9
Income taxes payable	153.2			121.5
Current portion of long-term debt and other long-term obligations	605.3			699.8
Other current liabilities	2,375.2			2,147.6
Total current liabilities	4,645.0			4,587.8
Long-term debt	12,460.5			13,161.2
Deferred income tax liability	1,557.0			1,722.0
Other long-term obligations	927.6			1,096.8
Total liabilities	19,590.1			20,567.8
Equity
Mylan N.V. shareholders’ equity
Ordinary shares — nominal value €0.01 per ordinary share
Shares authorized: 1,200,000,000
Shares issued: 540,739,501 and 539,289,665 as of September 30, 2019 and December 31, 2018	6.1			6.0
Additional paid-in capital	8,637.6			8,591.4
Retained earnings	6,010.6			6,010.7
Accumulated other comprehensive loss	(2,191.2		)	(1,441.3		)
	12,463.1			13,166.8
Less: Treasury stock — at cost
Ordinary shares: 24,598,074 and 23,490,867 as of September 30, 2019 and December 31, 2018	999.7			999.7
Total equity	11,463.4			12,167.1
Total liabilities and equity	$	31,053.5		$	32,734.9

See Notes to Condensed Consolidated Financial Statements

5

MYLAN N.V. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(Unaudited; in millions, except share amounts)

				Additional Paid-In Capital			Retained Earnings							Accumulated Other Comprehensive Loss			Total Equity
	Ordinary Shares									Treasury Stock
	Shares	Cost								Shares	Cost
Balance at June 30, 2019	540,459,996	$	6.1	$	8,617.3		$	5,820.8		24,598,074	$	(999.7	)	$	(1,541.7	)	$	11,902.8
Net earnings	—	—		—			189.8			—	—			—			189.8
Other comprehensive loss, net of tax	—	—		—			—			—	—			(649.5		)	(649.5		)
Issuance of restricted stock and stock options exercised, net	279,505	—		4.2			—			—	—			—			4.2
Taxes related to the net share settlement of equity awards	—	—		—			—			—	—			—			—
Share-based compensation expense	—	—		16.1			—			—	—			—			16.1
Balance at September 30, 2019	540,739,501	$	6.1	$	8,637.6		$	6,010.6		24,598,074	$	(999.7	)	$	(2,191.2	)	$	11,463.4
				Additional Paid-In Capital			Retained Earnings							Accumulated Other Comprehensive Loss			Total Equity
	Ordinary Shares									Treasury Stock
	Shares	Cost								Shares	Cost
Balance at December 31, 2018	539,289,665	$	6.0	$	8,591.4		$	6,010.7		23,490,867	$	(999.7	)	$	(1,441.3	)	$	12,167.1
Net loss	—	—		—			(3.7		)	—	—			—			(3.7		)
Other comprehensive loss, net of tax	—	—		—			—			—	—			(746.3		)	(746.3		)
Issuance of restricted stock and stock options exercised, net	1,449,836	0.1		8.1			—			—	—			—			8.2
Taxes related to the net share settlement of equity awards	—	—		(12.8		)	—			—	—			—			(12.8		)
Share-based compensation expense	—	—		50.9			—			—	—			—			50.9
Cancellation of restricted stock	—	—		—			—			1,107,207	—			—			—
Cumulative effect of the adoption of new accounting standards	—	—		—			3.6			—	—			(3.6		)	—
Balance at September 30, 2019	540,739,501	$	6.1	$	8,637.6		$	6,010.6		24,598,074	$	(999.7	)	$	(2,191.2	)	$	11,463.4

See Notes to Condensed Consolidated Financial Statements

6

				Additional Paid-In Capital			Retained Earnings						Accumulated Other Comprehensive Loss			Total Equity
	Ordinary Shares								Treasury Stock
	Shares	Cost							Shares	Cost
Balance at June 30, 2018	539,010,910	$	6.0	$	8,612.6		$	5,782.5	23,490,867	$	(999.7	)	$	(1,199.3	)	$	12,202.1
Net earnings	—	—		—			176.7		—	—			—			176.7
Other comprehensive loss, net of tax	—	—		—			—		—	—			(291.6		)	(291.6		)
Issuance of restricted stock and stock options exercised, net	93,194	—		1.7			—		—	—			—			1.7
Taxes related to the net share settlement of equity awards	—	—		(0.1		)	—		—	—			—			(0.1		)
Share-based compensation income	—	—		(29.2		)	—		—	—			—			(29.2		)
Balance at September 30, 2018	539,104,104	$	6.0	$	8,585.0		$	5,959.2	23,490,867	$	(999.7	)	$	(1,490.9	)	$	12,059.6
				Additional Paid-In Capital			Retained Earnings						Accumulated Other Comprehensive Loss			Total Equity
	Ordinary Shares								Treasury Stock
	Shares	Cost							Shares	Cost
Balance at December 31, 2017	537,902,426	$	6.0	$	8,586.0		$	5,644.5	13,695,251	$	(567.7	)	$	(361.2	)	$	13,307.6
Net earnings	—	—		—			301.3		—	—			—			301.3
Other comprehensive loss, net of tax	—	—		—			—		—	—			(1,122.2		)	(1,122.2		)
Issuance of restricted stock and stock options exercised, net	1,201,678	—		15.4			—		—	—			—