Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

Fair value, assets measured on recurring and nonrecurring basis

The following tables summarize the valuation of our financial instruments carried at fair value by the above pricing categories (in millions):



		Fair Value
	Fair Value Hierarchy	December 31, 2017		December 31, 2016		December 31, 2015
Measured at fair value on a recurring basis:
Assets:
Investment securities	Level 1	$	17.0	$	38.2	$	14.9

Foreign currency forward contracts	Level 2	$	6.3	$	3.8	$	4.8
Funds associated with Israeli severance liability	Level 2	16.3		15.9		17.2
Total level 2 assets		$	22.6	$	19.7	$	22.0

Royalty Pharma contingent milestone payments	Level 3	$	134.5	$	—	$	—
Financial assets	Level 3	—		2,350.0		5,310.0
Total level 3 assets		$	134.5	$	2,350.0	$	5,310.0

Liabilities:
Interest rate swap agreements	Level 2	$	—	$	—	$	0.3
Foreign currency forward contracts	Level 2	3.8		5.0		3.9
Total level 2 liabilities		$	3.8	$	5.0	$	4.2

Contingent consideration	Level 3	$	22.0	$	69.9	$	17.9

Measured at fair value on a non-recurring basis:
Assets:
Goodwill⁽¹⁾	Level 3	$	—	$	1,148.4	$	—
Indefinite-lived intangible assets⁽²⁾	Level 3	—		0.3		1,031.8
Definite-lived intangible assets⁽³⁾	Level 3	11.5		758.0		—
Assets held for sale, net	Level 3	—		18.2		37.5
Total level 3 assets		$	11.5	$	1,924.9	$	1,069.3


⁽¹⁾	As of December 31, 2016, goodwill with a carrying amount of $2.2 billion was written down to its implied fair value of $1.1 billion.


⁽²⁾	As of December 31, 2016, indefinite-lived intangible assets with a carrying amount of $0.7 million were written down to a fair value of $0.3 million. As of December 31, 2015, indefinite-lived intangible assets with a carrying amount of $1.2 billion were written down to a fair value of $1.0 billion.

⁽³⁾

As of December 31, 2017, definite-lived intangible assets with a carrying amount of $31.2 million were written down to a fair value of $11.5 million. As of December 31, 2016, definite-lived intangible assets with a carrying amount of $2.3 billion were written down to a fair value of $758.0 million. Included in this balance are indefinite-lived intangible assets with a fair value of $364.5 million and $674.2 million that were reclassified to definite-lived assets at April 3, 2016 and October 2, 2016, respectively.

Fair value assets, unobservable inputs reconciliation

The following table summarizes the change in our Consolidated Balance Sheet for the Tysabri^® Financial Asset, which includes our fair value adjustment that is a Level 3 measurement under ASC 820 and is included in our Consolidated Statement of Operations for the years ended December 31, 2017 and December 31, 2016, six months ended December 31, 2015, and year ended June 27, 2015 (in millions):



	Year Ended						Six Months Ended			Year Ended
	December 31, 2017			December 31, 2016			December 31, 2015			June 27, 2015
Tysabri^®financial asset
Beginning balance	$	2,350.0		$	5,310.0		$	5,420.0		$	5,680.0
Royalties earned	—			(351.8		)	(167.3		)	(338.5		)
Change in fair value	—			(2,608.2		)	57.3			78.5
Divestitures	(2,350.0		)	—			—			—
Ending balance	$	—		$	2,350.0		$	5,310.0		$	5,420.0

The table below presents a reconciliation for the Royalty Pharma contingent milestone payments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in millions). Change in fair value in the table was recorded in Change in financial assets on the Consolidated Statements of Operations.



	Year Ended
	December 31, 2017
Royalty Pharma Contingent Milestone Payments
Beginning balance	$	—
Additions	184.5
Payments	(8.0		)
Change in fair value	(42.0		)
Ending balance	$	134.5

Liabilities unobservable inputs reconciliation

The table below presents a reconciliation for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in millions). Net realized losses in the table were recorded in Other expense (Income), net on the Consolidated Statements of Operations.



	Year Ended						Six Months Ended
	December 31, 2017			December 31, 2016			December 31, 2015
Contingent Consideration
Beginning balance	$	69.9		$	17.9		$	—
Net realized losses	(19.5		)	(2.1		)	—
Purchases or additions	—			56.7			17.9
Divestiture	(12.5		)	—			—
Currency translation adjustments	1.5			0.1			—
Settlements	(17.4		)	(2.7		)	—
Ending balance	$	22.0		$	69.9		$	17.9

Fair value inputs assets

Below is a summary of the various metrics used in our valuations:



	Year Ended
	December 31, 2017
	Lumara
5-year average growth rate	(4.1)%
Discount rate	13.5%
Valuation method	MPEEM



	Year Ended
	December 31, 2016
	Omega - Lifestyle	Omega - XLS	Entocort^®- Branded Products	Entocort^®- AG Products	Herron Trade Names and Trademarks
5-year average growth rate	2.5%	3.2%	(31.7)%	(30.4)%	4.6%
Long-term growth rates	2.0%	NA	(10.0)%	(4.7)%	2.5%
Discount rate	9.3%	9.5%	13.0%	10.5%	10.8%
Royalty rate	NA	4.0%	NA	NA	11.0%
Valuation method	MPEEM	Relief from Royalty	MPEEM	MPEEM	Relief from Royalty

Long-term debt fair value

Our fixed rate long-term debt consisted of public bonds, a private placement note and retail bonds as follows (in millions):



		Year Ended
	Fair Value Hierarchy	December 31, 2017		December 31, 2016		December 31, 2015

Public bonds	Level 1
Carrying value		$	2.6	$	4.6	$	3.9
Fair value		$	2.7	$	4.6	$	3.8

Retail bonds and private placement note	Level 2
Carrying value (excluding premium)		$	306.0	$	773.1	$	798.3
Fair value		$	342.1	$	825.0	$	859.8
Premium		$	21.4	$	49.8	$	82.5