þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Financial Statements: |
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Supplemental Schedule at December 31, 2010: |
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Consent of Independent Registered Public Accounting Firm |
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EX-23.1 |
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December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets |
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Investments At fair value |
$ | 296,101,321 | $ | 242,865,038 | ||||
Receivables |
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Employer contributions |
17,609,246 | 18,076,543 | ||||||
Employee contributions |
323,560 | 216,588 | ||||||
Notes receivable from participants |
7,162,181 | 5,676,852 | ||||||
Total receivables |
25,094,987 | 23,969,983 | ||||||
Net assets available for benefits |
$ | 321,196,308 | $ | 266,835,021 | ||||
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Additions |
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Investment Income: |
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Net realized and unrealized appreciation in fair value of investments |
$ | 28,508,688 | ||
Dividend income |
5,183,153 | |||
Other |
74 | |||
Total Investment Income: |
33,691,915 | |||
Interest income on notes receivable from participants |
285,809 | |||
Contributions: |
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Employer contributions |
27,210,848 | |||
Employee contributions |
19,201,247 | |||
Total contributions |
46,412,095 | |||
Total additions |
80,389,819 | |||
Deductions |
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Administrative expenses |
139,167 | |||
Benefits paid to participants |
25,889,365 | |||
Total deductions |
26,028,532 | |||
Net increase |
54,361,287 | |||
Net assets available for benefits |
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Beginning of
year |
266,835,021 | |||
End of year |
$ | 321,196,308 | ||
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General The Mylan Profit Sharing 401(k) Plan (the Plan) is a defined contribution plan covering all regular, non-bargaining unit employees of Mylan Inc. (the Company) and any affiliated employer (i.e., any corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Internal Revenue Code of 1986, as amended (the Code)) who meet the eligibility requirements of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The following description of the Plan provides only general information. For a complete description of the provisions of the Plan, please refer to the Plan document. |
Contributions Eligible employees of the Company are automatically enrolled in the Plan on the next scheduled payroll date following 30 days from their date of hire, unless the participant affirmatively elects to opt out of the Plan. Unless the participant elects otherwise, after 30 days from the date of hire the Company will automatically begin deducting 4% of compensation from employee pay on a pre-tax basis for contribution to the Plan. |
Each year, participants may contribute up to 50% of pre-tax annual compensation into the Plan. In addition, participants may contribute up to 10% of after-tax annual compensation in the plan. Participants pre-tax and after-tax annual contributions cannot exceed the lesser of 60% of eligible annual compensation or the Internal Revenue Service (IRS) maximum for 2010 of $16,500. Participants who are age 50 or older by the end of the Plan year are eligible to contribute an additional pre-tax catch-up contribution, up to the IRS maximum of $5,500 for 2010. All contributions to the Plan are directed by the participants to specific assets, specific funds or other investments permitted under the Plan. If participants do not make an investment selection at enrollment, contributions will be directed to the JP Morgan Smart Retirement Fund that most closely corresponds to the participants age and a projected retirement date based on retirement at age 65. Beginning in January 2008, the Companys common stock, which had been an investment option, was frozen for any new contributions or transfers from the other existing investment options. During the 2010 Plan year, the Plan offered 18 mutual funds and 4 common/collective trusts as investment options for participants. |
The Company contributes a matching contribution equal to 100% of the participants salary deferral contribution, up to a maximum of 4% of the participants annual eligible compensation. In addition, the Company may contribute, at its sole discretion, an additional amount (Discretionary Contribution) to the Plan each fiscal year, to be allocated among the participants based on a uniform percentage of each participants annual compensation for that year. Total employer and employee contributions to all of an employers plans are subject to an IRS overall annual limitation of the lesser of 100% of the employees annual compensation or $49,000 for 2010. |
Trustee and Recordkeeper Bank of America (the Trustee) is the trustee, recordkeeper and custodian of the Plan. |
Participant Accounts Each participants account is funded with the participants contribution and allocations of the Companys contributions and Plan earnings or losses. Allocations are based on participant account balances or compensation, as defined by the Plan. The participant is entitled to the vested portion of his or her account. |
Vesting Participants are vested immediately in their contributions and Company matching contributions plus actual earnings. Vesting in the Companys Discretionary Contribution is based on years of continuous service. Any Discretionary Contributions given by the Company to participants new to the Plan in 2009 or after will vest 100% after three years of credited service. Any Discretionary Contributions given by the Company to individuals participating in the plan prior to January 1, 2009 will be 20% vested after two years of continuous service and 100% vested after three years of continuous service. |
Additionally, all participants become fully vested at age 65. |
Loans to Participants Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000, or 50% of their account balance, whichever is lower. Loan transactions are treated as transfers between the investment fund and the loan fund. The maximum term of a loan is 15 years for primary residence loans and five years for other hardship loans. The loans are secured by the balance in the participants account and bear interest at a rate equal to the prime rate plus 1%, as established by the Trustee. Principal and interest are paid ratably through bi-weekly payroll deductions. |
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Payment of Benefits Upon termination of service, a participant or beneficiary may elect to receive a lump-sum amount equal to the value of the participants vested interest in his or her account or choose to leave their balance in the account for withdrawal at a later point in time. Benefits are recorded by the Plan when paid. The Plans minimum automatic distribution of a terminated participants account is $1,000. |
Forfeitures Company Discretionary Contributions that are not vested upon termination of employment are forfeited and may be used to reduce the Companys contribution for the year in which such forfeiture occurs. For the years ended December 31, 2010 and 2009, forfeitures totaling $7,767 and $183,838 were used to off-set current year employer contributions. |
Basis of Presentation The financial statements of the Plan have been prepared on the accrual basis of accounting and in conformity with accounting principles generally accepted in the United States of America. |
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan Sponsor to make estimates and assumptions that could affect the reported amounts of assets and liabilities and changes therein. Actual results could differ from those estimates. |
Notes receivable from participants Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. |
Risks and Uncertainties The Plan utilizes various investment instruments. Investment securities, in general, are subject to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the financial statements. |
Investment Valuation and Income Recognition The Plan investments are stated at fair value. Shares of mutual funds and common stock are valued at quoted closing market prices, which, for mutual funds, represent the Net Asset Value (NAV) of shares held by the Plan at the end of the fiscal year. Common/collective trust funds are stated at fair value, which approximates cost plus accumulated interest earnings less distributions to date. |
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. |
Administrative Expenses All mutual funds incur expenses that reduce earnings in the fund and are reflected in the daily NAV. The amount of these expenses, stated as a percentage of assets, is called an expense ratio. The NAVs for the mutual funds are listed publicly, and the same NAV applies whether the mutual fund is purchased on the open market or through the Plan. Expense ratios charged by mutual funds cover costs relating to investing, such as the mutual fund managers asset management fees and costs related to administration of the fund. Examples of administrative costs include issuing quarterly statements, operating a service center and having toll-free numbers available for the participants. Expenses incurred by the mutual funds are netted against earnings of the respective funds in the Statement of Changes in Net Assets Available for Benefits. |
Other administrative expenses, including trustee, legal, auditing and other fees, are paid by the Company. |
Evaluation of Tax Position Accounting principals generally accepted in the United States of America (GAAP) require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. As the Plan is tax-exempt, the Plan administrator has concluded that as of December 31, 2010, there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2007. |
Adoption of New Accounting Pronouncement In January 2010, new accounting guidance on fair value measurements was issued which requires (i) an entity to disclose separately the amounts of significant transfers in and out of Level 1 and 2 fair value measurements and describe the reasons for such transfers and (ii) separate presentation of purchases, sales, issuances and settlements for Level 3 fair value measurements. The new accounting guidance also clarifies the disclosure requirements about the imputs and valuation techniques for Level 2 or Level 3 fair value measurements. The adoption of the new accounting guidance did not have a material effect on the Plans financial statements. |
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In September 2010, new accounting guidance was issued which requires participant loans to be measured at their unpaid principal balance plus any accrued but unpaid interest and to be classified as notes receivable from participants in the financial statements. The adoption of such guidance did not affect the amount of participant loans receivable, but did result in the reclassification of such loans from Investments at fair value to Notes receivable from participants on the accompanying Statements of Net Assets Available for Benefits. |
Recent Accounting PronouncementsIn May 2011, new accounting guidance on fair value measurements was issued which requires updates to the fair value measurement disclosure to conform U.S. GAAP and International Financial Reporting Standards, effective for interim and annual periods beginning after December 15, 2011. The adoption of the new guidance will not affect the Plans financial statements. |
Fair value is based on the price that would be received from the sale of an identical asset or paid to transfer an identical liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy has been established that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: |
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. |
Level 2: Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities. |
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
December 31, 2010 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Mutual Funds: |
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Growth |
$ | 78,592,258 | $ | | $ | 78,592,258 | ||||||
Value |
47,369,295 | | 47,369,295 | |||||||||
Balanced |
23,977,715 | | 23,977,715 | |||||||||
Fixed Income |
32,375,168 | | 32,375,168 | |||||||||
Total Mutual Funds |
182,314,436 | | 182,314,436 | |||||||||
Common Stock |
24,606,287 | | 24,606,287 | |||||||||
Common/Collective Trust |
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Short-Term Bond Fund |
| 57,735,570 | 57,735,570 | |||||||||
Index |
| 31,115,887 | 31,115,887 | |||||||||
Total Common/Collective Trust |
| 88,851,457 | 88,851,457 | |||||||||
Total Assets at Fair Value |
$ | 206,920,723 | $ | 88,851,457 | $ | 295,772,180 | ||||||
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December 31, 2009 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Mutual Funds: |
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Growth |
$ | 60,629,273 | $ | | $ | 60,629,273 | ||||||
Value |
37,467,581 | | 37,467,581 | |||||||||
Balanced |
15,154,660 | | 15,154,660 | |||||||||
Fixed Income |
27,932,144 | | 27,932,144 | |||||||||
Total Mutual Funds |
141,183,658 | | 141,183,658 | |||||||||
Common Stock |
23,955,294 | | 23,955,294 | |||||||||
Common/Collective Trust: |
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Stable Value |
| 55,522,550 | 55,522,550 | |||||||||
Index |
| 22,111,007 | 22,111,007 | |||||||||
Total Common/Collective Trust |
| 77,633,557 | 77,633,557 | |||||||||
Total Assets at Fair Value |
$ | 165,138,952 | $ | 77,633,557 | $ | 242,772,509 | ||||||
| Mutual funds valued at the net asset value of the shares held by the Plan at year-end. The net asset value is a quoted price in an active market. |
| Companys common stock valued at the closing price reported on the active market on which the individual securities are traded. |
| Common/collective trust funds stated at fair value based on the fair market value of the underlying investments. The Plan invests in the following four collective funds: the Merrill Lynch Mid Cap Index Trust Tier II; the Merrill Lynch Equity Index Trust Tier 10; the Merrill Lynch International Index Trust Tier II; and the Merrill Lynch Retirement Preservation Trust. These funds invest in a diversified pool of high quality bonds and other short-term investments, together with book value contracts and traditional insurance contracts, of varying maturity, size and yield. |
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2010 | 2009 | |||||||
Merrill Lynch Retirement Preservation Trust |
$ | 57,735,570 | $ | 55,522,550 | ||||
MFS Institutional International Equity Fund |
35,508,168 | 29,002,945 | ||||||
PIMCO Total Return Fund |
29,219,048 | 25,528,891 | ||||||
Mylan Inc. Common Stock |
24,606,287 | 23,955,294 | ||||||
Eaton Vance Large Cap Value Fund |
25,670,082 | 20,997,506 | ||||||
Alliancebernstein Small Cap Growth Fund |
28,291,502 | 19,034,574 | ||||||
Merrill Lynch Equity Index Trust Tier 10 |
22,709,922 | 17,341,927 | ||||||
Columbia Small Cap Value Fund I |
21,699,213 | 16,470,075 |
Common / Collective Trust |
$ | 3,941,443 | ||
Mutual Funds |
18,950,400 | |||
Common Stock |
3,127,662 | |||
Net
unrealized appreciation in fair value |
$ | 26,019,505 | ||
Accounting guidance requires disclosures to include the category, fair value, redemption frequency, and redemption notice period for those assets whose fair value is estimated using the NAV per share. |
The following tables set forth a summary of the Plans investments with a reported NAV: |
Fair Value Estimated Using Net Asset Value per Share | ||||||||||||
December 31, 2010 | ||||||||||||
Redemption | ||||||||||||
Redemption | Notice | |||||||||||
Investment | Fair Value * | Frequency | Period | |||||||||
Merrill Lynch Equity Index Trust Tier 10 (i) |
$ | 22,709,922 | Immediate | None | ||||||||
Merrill Lynch International Index Trust Tier II (ii) |
2,884,139 | Immediate | None | |||||||||
Merrill Lynch Mid Cap Index Trust Tier II (iii) |
5,521,827 | Immediate | None | |||||||||
Merrill Lynch Retirement Preservation Trust (iv) |
57,735,570 | Immediate | None | |||||||||
Total |
$ | 88,851,458 | ||||||||||
Fair Value Estimated Using Net Asset Value per Share | ||||||||||||
December 31, 2009 | ||||||||||||
Redemption | ||||||||||||
Redemption | Notice | |||||||||||
Investment | Fair Value * | Frequency | Period | |||||||||
Merrill Lynch Equity Index Trust Tier 10 (i) |
$ | 17,341,927 | Immediate | None | ||||||||
Merrill Lynch International Index Trust Tier II (ii) |
2,796,097 | Immediate | None | |||||||||
Merrill Lynch Mid Cap Index Trust Tier II (iii) |
1,972,983 | Immediate | None | |||||||||
Total |
$ | 22,111,007 | ||||||||||
* | The fair values of the investments have been estimated using the NAV of the investment. |
(i) | The Trust seeks to provide investment results that, before expenses, replicate the total return of the Standard and Poors (S&P) 500 Index. | |
(ii) | The Trust seeks to provide investment results that, before expenses, replicate the total return of the Morgan Stanley Capital International EAFE (Europe, Australasia and Far East) Index. | |
(iii) | The Trust seeks to provide investment results that, before expenses, replicate the total return of the S&P 400 Index. | |
(iv) | The Trust seeks to preserve principal, maintain high liquidity and earn an appropriate market return. The Trust seeks to maintain a $1.00 net asset value per unit, although achievement of the objective cannot be assured. |
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Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. |
The Internal Revenue Service determined and informed the Company by a letter dated April 24, 2008, that the Plan and related trust are designed in accordance with the applicable sections of the Internal Revenue Code (IRC). The Plan has been amended subsequent to receiving the determination letter. The Company and Plan management continue to believe that the Plan is designed and is currently being operated in compliance with applicable requirements of the IRC. |
Certain Plan investments are shares of the Companys common stock. The Company is the Plan Sponsor and therefore qualifies as a related party. At December 31, 2010 and 2009, the Plan held an investment of 1,164,519 and 1,299,799 shares, respectively, of common stock. The fair value of the Companys common stock held by the fund at December 31, 2010 and 2009 was $24,606,287 and $23,955,294. For the fiscal year ended December 31, 2010, the Plan sold 122,271 shares of the Companys common stock with proceeds of $2,277,968 and distributed 13,536 in-kind shares with a market value of $264,711. For the fiscal year ended December 31, 2009, the Plan purchased 38,102 shares with a market value of $381,942, sold 91,746 shares of the Companys common stock with proceeds of $1,556,008 and distributed 1,598 in-kind shares with a market value of $18,179. |
Certain Plan investments are shares of mutual funds managed by the Trustee, as defined by the Plan, and these transactions qualify as exempt party-in-interest transactions. |
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Identity of Issue, | ||||||||
Borrower, Lessor, or | Description of Investment Including Maturity Date, | Current | ||||||
Similar Party | Rate of Interest, Collateral, Par, or Maturity Value | Value | ||||||
* | Merrill Lynch | ML Mid Cap Index Trust Tier II |
5,521,827 | |||||
* | Merrill Lynch | ML Equity Index Trust Tier 10 |
22,709,922 | |||||
* | Merrill Lynch | ML International Index Trust Tier II |
2,884,138 | |||||
* | Merrill Lynch | ML Retirement Preservation Trust |
57,735,570 | |||||
Vangaurd | Vanguard Total Bond Market Index Fund |
3,156,120 | ||||||
PIMCO | PIMCO Total Return Fund |
29,219,048 | ||||||
Columbia | Columbia Small Cap Value Fund I |
21,699,213 | ||||||
MFS Instl | MFS Institutional International Equity Fund |
35,508,168 | ||||||
Eaton Vance | Eaton Vance Large Cap Value Fund |
25,670,082 | ||||||
Alliancebernstein | Alliancebernstein Small Cap Growth Fund |
28,291,502 | ||||||
JP Morgan | JP Morgan Smart Retirement 2015 Fund |
704,137 | ||||||
JP Morgan | JP Morgan Smart Retirement Income |
1,758,181 | ||||||
JP Morgan | JP Morgan Smart Retirement 2030 Fund |
3,842,859 | ||||||
JP Morgan | JP Morgam Smart Retirement 2010 Fund |
1,411,638 | ||||||
JP Morgan | JP Morgan Smart Retirement 2020 Fund |
3,240,950 | ||||||
JP Morgan | JP Morgan Smart Retirement 2040 Fund |
3,495,308 | ||||||
JP Morgan | JP Morgan Smart Retirement 2025 Fund |
3,106,615 | ||||||
JP Morgan | JP Morgan Smart Retirement 2045 Fund |
2,172,659 | ||||||
JP Morgan | JP Morgan Smart Retirement 2050 Fund |
1,429,190 | ||||||
JP Morgan | JP Morgan Smart Retirement 2035 Fund |
2,816,178 | ||||||
Rainier | Rainier Large Cap Equity Portfolio Fund |
14,792,588 | ||||||
* | Merrill Lynch | Merrill Lynch Cash and Cash Equivalents, Pending
Settlement Fund |
329,141 | |||||
* | Mylan Inc. | Common Stock |
24,606,287 | |||||
Total Investments At fair value |
$ | 296,101,321 | ||||||
* | Party-in-interest |
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MYLAN PROFIT SHARING 401(K) PLAN |
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/s/ Patricia A. Lang | ||||
Patricia A. Lang, Plan Administrator | ||||
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