LAVAL, Quebec, April 29, 2016 /PRNewswire/ -- Valeant
Pharmaceuticals International, Inc. ("Valeant" or the "Company")
(NYSE: VRX) (TSX: VRX) today announced that it has filed with the
U.S. Securities and Exchange Commission (the "SEC") its Annual
Report on Form 10-K for the fiscal year ended December 31, 2015 (the "Form 10-K"). This Form
10-K includes consolidated financial statements for the years ended
December 31, 2013, 2014 and
2015. The audited consolidated financial statements for the
year ended December 31, 2014 are
restated. The Company has also restated certain unaudited quarterly
results related to the three months ended December 31, 2014, the three months ended
March 31, 2015, the six months ended
June 30, 2015 and the nine months
ended September 30, 2015, and revised
certain unaudited results for the three months and nine months
ended September 30, 2014.
The default under our senior note indentures arising from the
failure to timely file the Form 10-K was cured in all respects by
the filing of this Form 10-K. In addition, the Company
remains in full compliance with its credit agreement.
Ad Hoc Committee Review
As previously disclosed, on April 5,
2016, Valeant announced that the Ad Hoc Committee ("AHC")
had determined that its review was complete, and that the AHC had
not identified any additional items that would require restatements
beyond those required by matters previously disclosed. In addition,
the Company announced that, given the completion of the review by
the AHC, the Company's Board of Directors (the "Board") had
determined to dissolve the AHC and that the 12 independent
directors on the Board, including the members of the Audit and Risk
Committee, would assume oversight responsibility for remaining
work, including work associated with the completion of the
Company's current and restated financial statements and
disclosures, as well as its assessment of related internal controls
and remediation matters.
Impact of Restatement
As previously disclosed, the Company identified misstatements
that would reduce previously-reported fiscal year 2014 revenue by
approximately $58 million, net income
attributable to Valeant by approximately $33
million, and basic and diluted earnings per share by
$0.09 (as compared to the
previously-reported amounts of $8,264
million for revenue, $914
million for net income attributable to Valeant and
$2.72 and $2.67 for basic and diluted earnings per share
respectively). A substantial part of the earnings impact of
these misstatements reverses in the first quarter of 2015.
The Company has also identified misstatements in the first
quarter of 2015, consisting primarily of the reversing effect on
earnings of the 2014 misstatements, which would reduce revenue by
approximately $21 million (due to
timing of recognition of managed care rebates), increase net income
attributable to Valeant by approximately $24
million and increase basic and diluted earnings per share by
$0.07.
Internal Control Over Financial Reporting and Disclosure
Controls and Procedures
The Form 10-K also discloses management's determination that
internal control over financial reporting, as well as the Company's
disclosure controls and procedures, were not effective due to the
existence of material weaknesses. For further information regarding
management's assessment of internal control over financial
reporting and disclosure controls and procedures, as well as the
related remediation actions, please see Item 9A "Controls and
Procedures" on Form 10-K.
Adjustments to Unaudited Fourth Quarter 2015 Results
On March 15, 2016, Valeant issued
preliminary unaudited fourth quarter results for 2015, including
unaudited revenue of $2.8 billion and
GAAP EPS of ($0.98). As stated at
that time, those results were preliminary and unaudited. As a
result of ongoing analysis and review, and finalization of the
results for the fourth quarter of 2015 by the Company, the Company
has made adjustments to revenue, GAAP EPS and Adjusted EPS
(non-GAAP), resulting in revenue of $2.8
billion, GAAP EPS of ($1.12)
and Adjusted EPS (non-GAAP) of $1.55. The majority of the impact is
attributed to adjustments relating to the deferral of Addyi®
revenue, adjustments to the returns reserve of Xifaxan®, as well as
several items, including increased professional service fees and
intellectual property related adjustments, post March 15, 2016.
Addyi:
After considering various factors related to the Addyi product
launch, including that Addyi is a new product in a new therapeutic
area and the resulting lack of history with the product and
associated returns, the Company has now determined that it is more
appropriate to record revenue on a "sell-through" basis, instead of
on a "sell-in" basis. This results in a net reduction of
$16 million to revenue previously
included in the preliminary fourth quarter results.
Xifaxan IBS-D Return:
Valeant has reduced its previously-reported preliminary fourth
quarter 2015 revenue of approximately $5
million related to estimated returns of Xifaxan.
Changes to Valeant's Non-GAAP Tax Reporting
Historically, in calculating adjusted (non-GAAP) net income and
EPS, Valeant has reported its non-cash tax adjustment (non-GAAP) on
Tables 2, 2A and 2B of the press tables by combining the tax
effects of non-GAAP adjustments and the use of tax attributes and
other timing issues. This adjustment, representing roughly 5
percent of adjusted non-GAAP net income, approximates the actual
cash tax that Valeant paid each year. Going forward, Valeant
will no longer include the tax effects from the use of tax
attributes and other timing issues, which will in turn raise the
Company's reported tax rate on non-GAAP net income. This new
reporting metric has no change to either cash flow or actual taxes
paid. Tables 2, 2A and 2B of the press tables show the retroactive
effect of this new tax treatment on the Company's historical
financial statements in order to make them consistent with the
current year presentation.
Canadian Regulatory Matters
The Company also announced that it intends to file today its
audited annual financial statements for the year ended December 31, 2015, the related management's
discussion and analysis, certificates of its CEO and CFO and the
Form 10-K (collectively, the "Canadian Required Filings")
with the Canadian Securities Administrators (the "CSA"). As a
result, the previously announced customary management cease trade
orders ("MCTO") issued on March 31,
2016 by the Autorité des marchés financiers (the "AMF"), the
Company's principal securities regulator in Canada, and by the Ontario Securities
Commission (the "OSC"), respectively, are expected to be lifted or
expire on or about May 4, 2016 and
the Company will no longer be required to report under the
alternative information guidelines set out in National Policy
12-203 Cease Trade Orders for Continuous Disclosure
Defaults.
The MCTOs related to the trading in securities of the Company by
the Company's CEO, its CFO and each other member of the Company's
Board. The MCTOs do not affect the ability of other
shareholders to trade in the securities of the Company.
Supplemental Information
Supplemental information regarding fourth quarter and full year
2015 financial results, fourth quarter 2015 top 30 brands, fourth
quarter 2015 adjustments since preliminary results were released on
March 15, 2016, and changes to
non-GAAP tax reporting using a new non-GAAP tax methodology, has
been posted in the investor relations section of Valeant's
corporate website at www.valeant.com.
About Valeant
Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a
multinational specialty pharmaceutical company that develops,
manufactures and markets a broad range of pharmaceutical
products primarily in the areas of dermatology, gastrointestinal
disorders, eye health, neurology and branded generics. More
information about Valeant can be at www.valeant.com.
Forward-looking Statements
This press release may contain forward-looking statements,
including, but not limited to, statements regarding the remediation
measures being implemented by the Company, the timing of filing the
Canadian Required Filings, the timing of the lifting or expiration
of the MCTOs and the impact of the Company's new tax reporting
metric. Forward-looking statements may generally be
identified by the use of the words "anticipates," "expects,"
"intends," "plans," "should," "could," "would," "may," "will,"
"believes," "estimates," "potential," "target," or "continue" and
variations or similar expressions. These statements are based upon
the current expectations and beliefs of management and are subject
to certain risks and uncertainties that could cause actual results
to differ materially from those described in the forward-looking
statements. These risks and uncertainties include, but are not
limited to, risks and uncertainties discussed in the Company's most
recent annual or quarterly report and detailed from time to time in
Valeant's other filings with the SEC and the CSA, which factors are
incorporated herein by reference. Readers are cautioned not to
place undue reliance on any of these forward-looking statements.
These forward-looking statements speak only as of the date hereof.
Valeant undertakes no obligation to update any of these
forward-looking statements to reflect events or circumstances after
the date of this press release or to reflect actual outcomes, other
than as required by law.
Non-GAAP Information
To supplement the financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses certain non-GAAP financial measures including (i) Adjusted net
income attributable to Valeant Pharmaceuticals International, Inc.,
(ii) Adjusted earnings per share ("EPS"), (iii) Revenue excluding
currency impact, (iv) Cost of goods sold excluding fair value
step-up adjustment in inventory and other, and (v) Organic
growth. The reconciliations of these non-GAAP measures to the
most directly comparable financial measures calculated and
presented in accordance with GAAP are shown in the tables
below. Management uses these non-GAAP measures as key metrics
in the evaluation of Company performance and the consolidated
financial results and, in part, in the determination of cash
bonuses for its executive officers. The Company believes
these non-GAAP measures are useful to investors in their assessment
of our operating performance and the valuation of our
company. In addition, these non-GAAP measures address
questions the Company routinely receives from analysts and
investors and, in order to assure that all investors have access to
similar data, the Company has determined that it is appropriate to
make this data available to all investors. However, non-GAAP
financial measures are not prepared in accordance with GAAP, as
they exclude certain items as described below. Therefore, the
information is not necessarily comparable to other companies and
should be considered as a supplement to, not a substitute for, or
superior to, the corresponding measures calculated in accordance
with GAAP.
(i) Adjusted net income attributable to Valeant Pharmaceuticals
International, Inc. and (ii) Adjusted EPS
Management uses Adjusted net income attributable to Valeant
Pharmaceuticals International, Inc. and Adjusted EPS for strategic
decision making, forecasting future results and evaluating current
performance. In addition, cash bonuses for the Company's
executive officers are based, in part, on the achievement of
certain Adjusted EPS targets. Such non-GAAP measures exclude
the impact of certain items (as further described below) that may
obscure trends in the Company's underlying performance. By
disclosing these non-GAAP measures, management intends to provide
investors with a meaningful, consistent comparison of the Company's
operating results and trends for the periods presented.
Management believes these measures are also useful to investors as
such measures allow investors to evaluate the Company's performance
using the same tools that management uses to evaluate past
performance and prospects for future performance. However, GAAP net
income attributable to Valeant Pharmaceuticals International, Inc.
and GAAP EPS are significantly less than Adjusted net income
attributable to Valeant Pharmaceuticals International, Inc.
(non-GAAP) and Adjusted EPS (non-GAAP).
Adjusted EPS reflect adjustments based on the following
items:
- Inventory step-up and property, plant and equipment (PP&E)
step-up/down: The Company has excluded the impact of fair value
step-up/down adjustments to inventory and PP&E in connection
with business combinations as such adjustments represent non-cash
items, and the amount and frequency is not consistent and is
significantly impacted by the timing and size of our
acquisitions.
- Stock-based compensation: The Company has excluded the impact
of previously accelerated vesting of certain stock-based equity
instruments as such impact is not reflective of the ongoing and
planned pattern of recognition for such expense.
- Acquisition-related contingent consideration: The Company has
excluded the impact of acquisition-related contingent consideration
non-cash adjustments due to the inherent uncertainty and volatility
associated with such amounts based on changes in assumptions with
respect to fair value estimates, and the amount and frequency of
such adjustments is not consistent and is significantly impacted by
the timing and size of our acquisitions, as well as the nature of
the agreed-upon consideration.
- In-Process research and development impairments and other
charges: The Company has excluded expenses associated with acquired
in-process research and development (including any impairment
charges), as these amounts are inconsistent in amount and frequency
and are significantly impacted by the timing, size and nature of
acquisitions. Although expenses associated with acquired in-process
research and development are generally not recurring with respect
to past acquisitions, the Company may incur these expenses in
connection with any future acquisitions.
- Philidor Rx Services wind down costs – The Company has excluded
certain costs associated with the wind down of the arrangement with
Philidor Rx Services, LLC ("Philidor"), primarily including
write-downs of fixed assets and bad debt expenses. The Company
believes it is useful to understand the effect of excluding this
item when evaluating ongoing performance.
- Other (income) expense: The Company has excluded certain other
expenses that are the result of other, unplanned events to measure
operating performance, primarily including costs associated with
the termination of certain supply and distribution agreements,
legal settlements and related fees, costs of legal proceedings,
investigations and inquiries respecting certain of our
distribution, marketing, pricing, disclosure and accounting
practices, including our former relationship with Philidor,
post-combination expenses associated with business combinations for
the acceleration of employee stock awards and/or cash bonuses, and
gains/losses from the sale of assets and businesses. These events
are unplanned and arise outside of the ordinary course of
continuing operations. The Company believes the exclusion of such
amounts allows management and the users of the financial statements
to better understand the financial results of the Company.
- Restructuring, integration, and acquisition-related expenses:
In recent years, the Company completed a number of acquisitions,
which resulted in operating expenses which would not otherwise have
been incurred. The Company has excluded certain restructuring,
integration and other acquisition-related expense items resulting
from acquisitions (including legal and due diligence costs) to
allow more accurate comparisons of the financial results to
historical operations and forward-looking guidance. Such costs are
generally not relevant to assessing or estimating the long-term
performance of the acquired assets as part of the Company, and are
not factored into management's evaluation of potential acquisitions
or its performance after completion of acquisitions. In addition,
the frequency and amount of such charges vary significantly based
on the size and timing of the acquisitions and the maturities of
the businesses being acquired. Also, the size, complexity and/or
volume of past acquisitions, which often drives the magnitude of
such expenses, may not be indicative of the size, complexity and/or
volume of any future acquisitions. By excluding the above
referenced expenses from our non-GAAP measures, management is
better able to evaluate the Company's ability to utilize its
existing assets and estimate the long-term value that acquired
assets will generate for the Company. Furthermore, the Company
believes that the adjustments of these items more closely correlate
with the sustainability of the Company's operating
performance.
- Amortization and impairments of finite-lived intangible assets:
The Company has excluded the impact of amortization and impairments
of finite-lived intangible assets (including impairments of
intangible assets related to Philidor), as such non-cash amounts
are inconsistent in amount and frequency and are significantly
impacted by the timing and/or size of acquisitions. The Company
believes that the adjustments of these items more closely correlate
with the sustainability of the Company's operating performance.
Although the Company excludes amortization of intangible assets
from its non-GAAP expenses, the Company believes that it is
important for investors to understand that such intangible assets
contribute to revenue generation. Amortization of intangible assets
that relate to past acquisitions will recur in future periods until
such intangible assets have been fully amortized. Any future
acquisitions may result in the amortization of additional
intangible assets and potential impairment charges.
- Amortization of deferred financing costs and debt discounts:
The Company has excluded amortization of deferred financing costs
and debt discounts as this represents a non-cash component of
interest expense.
- Loss on extinguishment of debt: The Company has excluded loss
on extinguishment of debt as this represents a non-cash charge, and
the amount and frequency of such charges is not consistent and is
significantly impacted by the timing and size of debt financing
transactions.
- (Gain) loss on disposal of fixed assets and assets held for
sale/impairment, net: The Company has excluded the impact of (gain)
loss on disposal of fixed assets and assets held for
sale/impairment, net as such items are inconsistent in amount and
frequency. The Company believes the exclusion of such amounts
allows management and users of the financial statements to better
understand the financial results of the Company.
- (Gain) loss on investments, net: The Company has excluded the
gain on investment associated with the withdrawal of the exchange
offer in the fourth quarter of 2014 to acquire all of the
outstanding shares of Allergan Inc. The Company believes it is
useful to understand the effect of excluding this item when
evaluating ongoing performance.
- Foreign exchange and other: The Company has excluded foreign
exchange and other to eliminate the impact of foreign currency
fluctuations primarily related to intercompany financing
arrangements in evaluating company performance.
- Tax: The Company has excluded the tax impact of the non-GAAP
adjustments in order to reflect an expected tax rate for the
current period.
(iii) Revenue excluding currency impact
Management uses this non-GAAP measure to calculate organic
growth and assess performance of its business units, and the
Company in total, without the impact of foreign currency exchange
fluctuations. In the fourth quarter of 2015, the Company also
excluded revenue related to Philidor for November and December of
2015. Such measure is useful to investors as it allows for a
more consistent period-to-period comparison of our
revenue.
(iv) Cost of goods sold excluding fair value step-up adjustment
to inventory and other
Management uses this non-GAAP measure to assess cost of goods
sold as a percentage of sales for its reportable segments, and the
Company in total, without the impact of fair-value adjustments to
inventory and PP&E in connection with business combinations,
and integration-related inventory charges and technology transfer
costs. In the fourth quarter of 2015, the Company also
excluded costs related to Philidor for November and December of
2015. Such measure is useful to investors as it allows for a
more consistent period-to-period comparison of costs.
(v) Organic Growth
Organic growth measures growth rates for our businesses. The
most directly comparable GAAP financial measure is change in total
revenue (GAAP) over the applicable period. We show organic growth
on both a same store sales basis and a pro forma basis. Same
store sales organic growth provides growth rates for businesses
that have been owned for one year or more. Pro forma organic growth
provides year over year growth rates for the entire business,
including those that have been acquired within the last year.
Management uses organic growth in assessing growth rates for its
business and evaluating current performance, as well as forecasting
future results. By disclosing this non-GAAP measure,
management intends to provide investors with a meaningful,
consistent comparison of revenue trends.
The calculation of organic growth primarily includes the
following adjustments to total revenue (GAAP):
- Foreign currency: The Company excludes foreign currency to
eliminate the impact of foreign currency fluctuations when
evaluating year over year revenue growth to show a more consistent
period-to-period comparison of our revenue.
- Divestitures and discontinuations: The Company excludes
revenues associated with divestitures and discontinuations from
prior year results to allow for a more consistent period-to-period
comparison of our revenue.
- Acquisitions: In calculating same store sales organic growth,
the Company excludes revenues associated with acquisitions from the
current year GAAP revenues for the period in which they are not
comparable to the prior year. In calculating pro forma organic
growth, the Company includes revenues associated with acquisitions
to the prior year GAAP revenues for the period in which they are
not comparable to the current year. Such measures are useful to
investors as it allows for a more consistent period-to-period
comparison of our revenue.
- Other Revenue: The Company excludes Other revenue in
calculating organic growth on the basis that such revenue (which
includes revenue from contract manufacturing and royalties) is not
reflective of the growth in the Company's core businesses.
Financial Tables Follow
Valeant
Pharmaceuticals International, Inc.
|
|
Table
1
|
Condensed
Consolidated Statements of Income (Loss)
|
|
|
For the Three and
Twelve Months Ended December 31, 2015 and 2014
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
|
2015
|
|
2014
Restated
|
|
2015
|
|
2014
Restated
|
|
|
|
|
|
|
|
|
|
Product
sales
|
|
$ 2,722.9
|
|
$ 2,190.9
|
|
$ 10,292.2
|
|
$ 8,046.1
|
Other
revenues
|
|
34.3
|
|
44.5
|
|
154.3
|
|
159.9
|
Total
revenues
|
|
2,757.2
|
|
2,235.4
|
|
10,446.5
|
|
8,206.0
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
(exclusive of amortization and impairments of finite-lived
intangible assets shown separately below)
|
|
719.2
|
|
558.8
|
|
2,531.6
|
|
2,177.7
|
Cost of other
revenues
|
|
10.0
|
|
13.1
|
|
53.1
|
|
58.4
|
Selling, general and
administrative ("SG&A")
|
|
742.9
|
|
524.5
|
|
2,699.8
|
|
2,026.3
|
Research and
development
|
|
95.9
|
|
59.1
|
|
334.4
|
|
246.0
|
Acquisition-related
contingent consideration
|
|
(45.6)
|
|
(28.9)
|
|
(23.0)
|
|
(14.1)
|
In-process research
and development impairments and other charges
|
|
140.3
|
|
0.7
|
|
248.4
|
|
41.0
|
Other
(income)/expense
|
|
42.9
|
|
7.0
|
|
256.1
|
|
(268.7)
|
Restructuring,
integration, acquisition-related and other costs
|
|
96.0
|
|
46.9
|
|
400.4
|
|
388.0
|
Amortization and
impairments of finite-lived intangible assets
|
|
788.5
|
|
436.8
|
|
2,418.3
|
|
1,550.7
|
|
|
2,590.1
|
|
1,618.0
|
|
8,919.1
|
|
6,205.3
|
Operating income
(loss)
|
|
167.1
|
|
617.4
|
|
1,527.4
|
|
2,000.7
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(431.7)
|
|
(223.7)
|
|
(1,559.9)
|
|
(966.0)
|
Loss on
extinguishment of debt
|
|
-
|
|
(35.9)
|
|
(20.0)
|
|
(129.6)
|
Gain (loss) on
investments, net
|
|
-
|
|
286.7
|
|
-
|
|
292.6
|
Foreign exchange and
other
|
|
(3.3)
|
|
(81.1)
|
|
(102.8)
|
|
(144.1)
|
|
|
|
|
|
|
|
|
|
Income (loss) before
(recovery of) provision for income taxes
|
|
(267.9)
|
|
563.4
|
|
(155.3)
|
|
1,053.6
|
|
|
|
|
|
|
|
|
|
(Recovery of)
provision for income taxes
|
|
118.5
|
|
51.7
|
|
132.5
|
|
174.2
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
(386.4)
|
|
511.7
|
|
(287.8)
|
|
879.4
|
|
|
|
|
|
|
|
|
|
Less: Net
income (loss) attributable to noncontrolling interest
|
|
(0.5)
|
|
(0.8)
|
|
3.9
|
|
(1.3)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Valeant Pharmaceuticals International,
Inc.
|
|
$
(385.9)
|
|
$
512.5
|
|
$
(291.7)
|
|
$
880.7
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
Earnings
(loss)
|
|
$
(1.12)
|
|
$
1.53
|
|
$
(0.85)
|
|
$
2.63
|
Shares used in per
share computation
|
|
344.9
|
|
335.8
|
|
342.7
|
|
335.4
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Earnings
(loss)
|
|
$
(1.12)
|
|
$
1.50
|
|
$
(0.85)
|
|
$
2.58
|
Shares used in per
share computation
|
|
344.9
|
|
341.9
|
|
342.7
|
|
341.5
|
Valeant
Pharmaceuticals International, Inc.
|
|
Table
2
|
Reconciliation of
GAAP EPS to Adjusted EPS Non-GAAP (n)
|
|
|
For the Three and
Twelve Months Ended December 31, 2015, 2014 Restated and
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
|
2015
|
|
2014
Restated
|
|
2015
|
|
2014
Restated
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Valeant Pharmaceuticals International,
Inc.
|
|
$(385.9)
|
|
$ 512.5
|
|
$ (291.7)
|
|
$ 880.7
|
|
$ (866.1)
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up
(a)
|
|
36.0
|
|
5.4
|
|
133.7
|
|
27.3
|
|
372.5
|
PP&E step-up/down
(b)
|
|
7.2
|
|
14.0
|
|
28.9
|
|
29.8
|
|
8.7
|
Stock-based
compensation (c)
|
|
(5.6)
|
|
(2.1)
|
|
11.5
|
|
0.3
|
|
21.3
|
Acquisition-related
contingent consideration (d)
|
|
(45.6)
|
|
(28.9)
|
|
(23.0)
|
|
(14.1)
|
|
(29.2)
|
In-process research
and development impairments and other charges (e)
|
|
140.3
|
|
0.7
|
|
248.4
|
|
41.0
|
|
153.6
|
Philidor Rx Services
wind down costs (f)
|
|
62.0
|
|
-
|
|
62.0
|
|
-
|
|
-
|
Other
(income)/expense (g)
|
|
42.9
|
|
7.0
|
|
256.1
|
|
(268.7)
|
|
287.2
|
Restructuring,
integration, acquisition-related and other costs (h)
|
|
96.0
|
|
46.9
|
|
400.4
|
|
388.0
|
|
498.4
|
Amortization and
impairments of finite-lived intangible assets and other non-GAAP
charges (i)
|
|
802.1
|
|
449.2
|
|
2,441.9
|
|
1,599.0
|
|
1,957.3
|
|
|
1,135.3
|
|
492.2
|
|
3,559.9
|
|
1,802.6
|
|
3,269.8
|
Amortization of
deferred financing costs and debt discounts (j)
|
|
27.7
|
|
11.9
|
|
159.2
|
|
70.0
|
|
89.5
|
Loss on
extinguishment of debt
|
|
-
|
|
35.9
|
|
20.0
|
|
129.6
|
|
65.0
|
(Gain) loss on
disposal of fixed assets and assets held for sale/impairment,
net
|
|
-
|
|
1.2
|
|
7.9
|
|
3.9
|
|
-
|
(Gain) loss on
investments, net (k)
|
|
-
|
|
(286.7)
|
|
-
|
|
(286.7)
|
|
-
|
Foreign exchange and
other (l)
|
|
(1.4)
|
|
72.7
|
|
95.2
|
|
135.1
|
|
0.8
|
Tax effect of
non-GAAP adjustments (m)
|
|
(234.6)
|
|
45.0
|
|
(709.6)
|
|
(99.8)
|
|
(872.5)
|
Total non-GAAP
adjustments
|
|
927.0
|
|
372.2
|
|
3,132.6
|
|
1,754.7
|
|
2,552.6
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
non-GAAP attributable to Valeant Pharmaceuticals International,
Inc. (n)
|
|
$
541.1
|
|
$
884.7
|
|
$
2,840.9
|
|
$
2,635.4
|
|
$
1,686.5
|
|
|
|
|
|
|
|
|
|
|
|
GAAP earnings (loss)
per share - diluted
|
|
$
(1.12)
|
|
$
1.50
|
|
$
(0.85)
|
|
$
2.58
|
|
$
(2.70)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share non-GAAP - diluted (n)
|
|
$
1.55
|
|
$
2.59
|
|
$
8.14
|
|
$
7.72
|
|
$
5.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
diluted per share calculation - GAAP earnings per share
|
|
344.9
|
|
341.9
|
|
342.7
|
|
341.5
|
|
321.0
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
diluted per share calculation - Adjusted earnings per share
non-GAAP
|
|
349.9
|
|
341.9
|
|
348.8
|
|
341.5
|
|
327.5
|
(a) See footnote (c)
to Table 2a and Table 2b.
|
(b) See footnote (d)
to Table 2a and Table 2b.
|
(c) See footnote (e)
to Table 2a and Table 2b.
|
(d) See footnote (f)
to Table 2a and Table 2b.
|
(e) See footnote (g)
to Table 2a and Table 2b.
|
(f) See footnote (b)
(d) (e) to Table 2a and Table 2b.
|
(g) See footnote (h)
to Table 2a and Table 2b.
|
(h) See footnote (i)
(j) to Table 2a and (i) (j) (k) to Table 2b.
|
(i) See footnote
(d)(k) to Table 2a and (d)(l) to Table 2b.
|
(j) See footnote (l)
to Table 2a and (m) to Table 2b.
|
(k) See footnote (m)
to Table 2a and (n) to Table 2b.
|
(l) See footnote (n)
to Table 2a and (o) to Table 2b.
|
(m) See footnote
(o)(p) to Table 2a and (p)(q) to Table 2b.
|
(n) See footnote (a)
to Table 2a and Table 2b.
|
Valeant
Pharmaceuticals International, Inc.
|
|
Table
2a
|
|
Reconciliation of
GAAP EPS to Adjusted EPS Non-GAAP (a)
|
For the Three
Months Ended December 31, 2015 and 2014 Restated
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments(a) for
|
|
|
|
Three Months
Ended
|
|
|
|
December
31,
|
|
(In
millions)
|
|
2015
|
|
2014
Restated
|
|
|
|
|
|
|
|
Product
sales
|
|
$ (4.6)
|
(b)
|
$
-
|
|
Other
revenues
|
|
-
|
|
-
|
|
Total
revenues
|
|
(4.6)
|
|
-
|
|
|
|
|
|
|
|
Cost of goods sold
(exclusive of amortization and impairments of finite-lived
intangible assets shown separately below)
|
|
(56.3)
|
(c)(d)
|
(31.1)
|
(c)(d)
|
Cost of other
revenues
|
|
-
|
|
-
|
|
Selling, general and
administrative ("SG&A")
|
|
(61.1)
|
(e)
|
0.5
|
(e)
|
Research and
development
|
|
(0.4)
|
|
(0.3)
|
|
Acquisition-related
contingent consideration
|
|
45.6
|
(f)
|
28.9
|
(f)
|
In-process research
and development impairments and other charges
|
|
(140.3)
|
(g)
|
(0.7)
|
(g)
|
Other
income/(expense)
|
|
(42.9)
|
(h)
|
(7.0)
|
(h)
|
Restructuring,
integration, acquisition-related and other costs
|
|
(96.0)
|
(i)
|
(46.9)
|
(j)
|
Amortization and
impairments of finite-lived intangible assets
|
|
(788.5)
|
(k)
|
(436.8)
|
(k)
|
|
|
(1,139.9)
|
|
(493.4)
|
|
Operating income
(loss)
|
|
1,135.3
|
|
493.4
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
27.7
|
(l)
|
11.9
|
(l)
|
Loss on
extinguishment of debt
|
|
-
|
|
35.9
|
|
(Gain) loss on
investments, net
|
|
-
|
|
(286.7)
|
(m)
|
Foreign exchange and
other
|
|
(1.4)
|
(n)
|
72.7
|
(n)
|
|
|
|
|
|
|
Income (loss) before
(recovery of) provision for income taxes
|
|
1,161.6
|
|
327.2
|
|
|
|
|
|
|
|
Tax effect of
non-GAAP adjustments
|
|
(234.6)
|
(o)(p)
|
45.0
|
(o)(p)
|
|
|
|
|
|
|
Total non-GAAP
adjustments to net income (loss) attributable to Valeant
Pharmaceuticals International, Inc.
|
|
$
927.0
|
|
$
372.2
|
|
|
|
|
|
|
|
Non-GAAP
adjustments to earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
Total non-GAAP
adjustments to earnings (loss)
|
|
$
2.65
|
|
$
1.09
|
|
Shares used in per
share computation
|
|
349.9
|
|
341.9
|
|
(a) The figures for
GAAP net income and GAAP earnings per share are significantly less
than non-GAAP adjusted net income and non-GAAP adjusted earnings
per share. To supplement the financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), the Company uses certain non-GAAP financial measures. For
additional information about the Company's use of such non-GAAP
financial measures, please refer to the body of the press release
to which these tables are attached.
|
(b) Product sales of
$4.6 million represents Philidor Rx Services sales during the
wind-down period November 1, 2015 through December 31,
2015.
|
(c) ASC 805, Business
Combinations, requires inventory to be recorded at fair value,
resulting in an inventory step-up whose total amortization impact
for the three months ended December 31, 2015 is $36.0 million
primarily due to the acquisitions of Salix Pharmaceuticals Ltd. on
April 1, 2015, Amoun Pharmaceutical Company S.A.E on October 19,
2015 and Synergetics USA, Inc. on October 15, 2015. For the
three months ended December 31, 2014 the impact of inventory fair
value amortization step-up is $5.4 million primarily due to the
acquisition of PreCision Dermatology Inc. on July 7,
2014.
|
(d) For the three
months ended December 31, 2015 and 2014, cost of goods sold
includes $12.0 million and $11.2 million, respectively, of costs
associated with integration related inventory and technology
transfers, depreciation resulting from PP&E step up of $6.2
million and $13.1 million, respectively, primarily relating to the
acquisition of Bausch & Lomb Holdings Incorporated. For
the three months ended December 31, 2015, cost of goods sold also
includes $2.1 million of cost of goods related to Philidor Rx
Services products sold during the wind-down period November 1, 2015
through December 31, 2015. For the three months ended
December 31, 2014, cost of goods sold also includes $1.4 million
amortization of the BMS fair value inventory adjustment.
|
(e) For the three
months ended December 31, 2015, SG&A of $61.1 million is
primarily related to Philidor Rx Services wind-down costs of $64.5
million which includes $26.9 million of
bad debt reserve, $23.3 million of depreciation expense
resulting from the write-down of fixed assets and $14.3 million of operating expenses during the
wind-down period November 1, 2015 through December 31, 2015,
partially offset by, ($5.6) million stock-based compensation
which primarily reflects the impact of previously accelerated
vesting of certain stock-based equity instruments. For the
three months ended December 31, 2014, SG&A primarily includes
($2.1) million of stock-based compensation which reflects the
acceleration of certain equity instruments offset by $1.2 million
loss on disposal of assets.
|
(f) Net
expense/(income) from the changes in acquisition-related contingent
consideration for the three months ended December 31, 2015 and 2014
is ($45.6) million and ($28.9) million, respectively.
|
(g) In-process
research and development impairments and other charges for the
three months ended December 31, 2015 of $140.3 million is primarily
related to the $100.0 million upfront payment in connection with
the license of brodalumab, a $28.2 million impairment related to
Emerade® and other smaller impairments. In-process research
and development impairments and other charges for the three months
ended December 31, 2014 is $0.7 million due to the impairments of
IPR&D assets.
|
(h) For the three
months ended December 31, 2015, other (income)/expense of $42.9
million is primarily due to costs resulting from the termination of
supply and distribution agreements of $20.6 million, legal
settlements and related fees of $12.7 million including costs of
legal proceedings, investigations and inquiries respecting certain
of our distribution, marketing, pricing, disclosure and accounting
practices, including our former relationship with Philidor and a
post-combination expense of $11.7 million related to cash bonuses
paid to Amoun Pharmaceutical Company S.A.E employees in connection
with the acquisition. For the three months ended December 31,
2014, other (income)/expense of $7.0 million primarily relates to
legal settlements and associated fees as well as a net loss on sale
of assets.
|
(i) Restructuring,
integration, acquisition-related and other costs of $96.0 million
primarily relates to the acquisitions of Salix Pharmaceuticals,
Ltd., Philidor Rx Services, Synergetics USA, Inc. and Marathon
Pharmaceuticals, LLC. These include $51.5 million of
contract terminations, integration consulting, transition services,
duplicative labor and other, $24.0 million of employee severance
costs, $8.1 million of acquisition costs, $3.8 million of facility
closure costs and $8.6 million of other. See additional
information on Table 5.2.
|
(j) Restructuring,
integration, acquisition-related and other costs of $46.9 million
primarily relates to the acquisitions of Bausch & Lomb Holdings
Incorporated, Croma, Solta Medical, Inc., PreCision Dermatology
Inc. and other Valeant restructuring and integration
initiatives. These include $25.8 million of contract
terminations, integration consulting, transition services,
duplicative labor and other, $9.0 million of employee severance
costs, $7.2 million of facility closure costs, $2.6 million of
acquisition costs, $1.3 million of other and $1.0 million of
non-personnel manufacturing integration costs.
|
(k) Represents
amortization and impairments of finite-lived intangible assets
including an impairment charge of $79.0 million related to Philidor
Rx Services in the three months ended December 31, 2015.
|
(l) Non-cash interest
expense associated with amortization and write-down of deferred
financing costs and debt discounts for the three months ended
December 31, 2015 and 2014 is $27.7 million and $11.9 million,
respectively.
|
(m) Gain on
investment, net was a gain recognized in connection with the sale
by PS Fund 1, LLC of the Allergan Inc. shares.
|
(n) Unrealized
foreign exchange (gain)/loss on intercompany financing arrangements
for the three months ended December 31, 2015 and 2014 is ($1.4)
million and $72.7 million, respectively.
|
(o) Adjusted amounts
represent adjusted pretax income multiplied by our effective tax
rate for the three months ended December 31, 2015 and 2014.
The effective tax rate was derived by reference to statutory rates
in the regions in which the company
operates.
|
(p) As the Company
disclosed on March 15, 2016, it revised its methodology for the
presentation of tax adjustments to non-GAAP earnings and eliminated
the use of tax attributes and other timing items in its calculation
of non-GAAP net income (loss) and earnings (loss) per share.
The adjustments to the tax provisions for the three months ended
December 31, 2015 and 2014 under the discontinued tax presentation
were $68.4 million and $14.4 million, respectively, which would
have resulted in Adjusted non-GAAP earnings per share of $2.41 and
$2.50, respectively.
|
Valeant
Pharmaceuticals International, Inc.
|
|
Table
2b
|
|
Reconciliation of
GAAP EPS to Adjusted EPS Non-GAAP (a)
|
|
|
For the Twelve
Months Ended December 31, 2015, 2014 Restated and
2013
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments(a) for
|
|
|
|
Twelve Months
Ended
|
|
|
|
December
31,
|
|
(In
millions)
|
|
2015
|
|
2014
Restated
|
|
2013
|
|
|
|
|
|
|
|
|
|
Product
sales
|
|
$ (4.6)
|
(b)
|
$ -
|
|
$
-
|
|
Other
revenues
|
|
-
|
|
-
|
|
-
|
|
Total
revenues
|
|
(4.6)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
(exclusive of amortization and impairments of finite-lived
intangible assets shown separately below)
|
|
(181.2)
|
(c)(d)
|
(95.4)
|
(c)(d)
|
(436.1)
|
(c)(d)
|
Cost of other
revenues
|
|
-
|
|
-
|
|
-
|
|
Selling, general and
administrative ("SG&A")
|
|
(89.6)
|
(e)
|
(12.9)
|
(e)
|
(21.7)
|
(e)
|
Research and
development
|
|
(1.4)
|
|
(1.3)
|
|
-
|
|
Acquisition-related
contingent consideration
|
|
23.0
|
(f)
|
14.1
|
(f)
|
29.2
|
(f)
|
In-process research
and development impairments and other charges
|
|
(248.4)
|
(g)
|
(41.0)
|
(g)
|
(153.6)
|
(g)
|
Other
income/(expense)
|
|
(256.1)
|
(h)
|
268.7
|
(h)
|
(287.2)
|
(h)
|
Restructuring,
integration, acquisition-related and other costs
|
|
(400.4)
|
(i)
|
(388.0)
|
(j)
|
(498.4)
|
(k)
|
Amortization and
impairments of finite-lived intangible assets
|
|
(2,418.3)
|
(l)
|
(1,550.7)
|
(l)
|
(1,902.0)
|
(l)
|
|
|
(3,572.4)
|
|
(1,806.5)
|
|
(3,269.8)
|
|
Operating income
(loss)
|
|
3,567.8
|
|
1,806.5
|
|
3,269.8
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
159.2
|
(m)
|
70.0
|
(m)
|
89.5
|
(m)
|
Loss on
extinguishment of debt
|
|
20.0
|
|
129.6
|
|
65.0
|
|
(Gain) loss on
investments, net
|
|
-
|
|
(286.7)
|
(n)
|
-
|
|
Foreign exchange and
other
|
|
95.2
|
(o)
|
135.1
|
(o)
|
0.8
|
(o)
|
|
|
|
|
|
|
|
|
Income (loss) before
(recovery of) provision for income taxes
|
|
3,842.2
|
|
1,854.5
|
|
3,425.1
|
|
|
|
|
|
|
|
|
|
Tax effect of
non-GAAP adjustments
|
|
(709.6)
|
(p)(q)
|
(99.8)
|
(p)(q)
|
(872.5)
|
(p)(q)
|
|
|
|
|
|
|
|
|
Total non-GAAP
adjustments to net income (loss) attributable to Valeant
Pharmaceuticals International, Inc.
|
|
$
3,132.6
|
|
$
1,754.7
|
|
$
2,552.6
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments to earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
Total non-GAAP
adjustments to earnings (loss)
|
|
$
8.98
|
|
$
5.14
|
|
$
7.79
|
|
Shares used in per
share computation
|
|
348.8
|
|
341.5
|
|
327.5
|
|
(a) The figures for
GAAP net income and GAAP earnings per share are significantly less
than non-GAAP adjusted net income and non-GAAP adjusted earnings
per share. To supplement the financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), the Company uses certain non-GAAP financial measures. For
additional information about the Company's use of such non-GAAP
financial measures, please refer to the body of the press release
to which these tables are attached.
|
(b) Product sales of
$4.6 million represents Philidor Rx Services sales during the
wind-down period November 1, 2015 through December 31,
2015.
|
(c) ASC 805, Business
Combinations, requires inventory to be recorded at fair value,
resulting in an inventory step-up whose total amortization impact
for the twelve months ended December 31, 2015 is $133.7 million
primarily due to the acquisitions of Salix Pharmaceuticals Ltd. on
April 1, 2015 and Marathon Pharmaceuticals, LLC on February 10,
2015. For the twelve months ended December 31, 2014, the
impact of inventory fair value step-up amortization is $27.3
million primarily relating to the acquisitions of Solta Medical,
Inc. on January 23, 2014 and PreCision Dermatology Inc. on July 7,
2014. For the twelve months ended December 31, 2013 the
impact of inventory fair value step-up amortization is $372.5
million primarily due to the acquisitions of Bausch & Lomb
Holdings Incorporated on August 5, 2013 and Medicis Pharmaceutical
Corporation on December 11, 2012.
|
(d) For the twelve
months ended December 31, 2015, 2014 and 2013, cost of goods sold
includes $22.0 million, $33.4 million and $47.7 million,
respectively, of costs associated with integration related
technology transfers, depreciation resulting from PP&E step up
of $23.4 million, $28.8 million and $7.1 million, respectively,
primarily relating to the acquisition of Bausch & Lomb Holdings
Incorporated. For the twelve months ended December 31, 2015,
cost of goods sold also includes $2.1 million of cost of goods
related to Philidor Rx Services products sold during the wind-down
period November 1, 2015 through December 31, 2015. For
the twelve months ended December 31, 2014 and 2013, cost of goods
sold also includes $5.9 million and $6.5 million, respectively,
amortization of the BMS fair value inventory adjustment.
|
(e) For the twelve
months ended December 31, 2015, SG&A of $89.6 million is
primarily related to Philidor Rx Services wind-down costs of $64.5
million which includes $26.9 million of
bad debt reserve, $23.3 million of depreciation expense
resulting from the write-down of fixed assets and $14.3 million of operating expenses during the
wind-down period November 1, 2015 through December 31, 2015, $11.5
million of stock-based compensation which reflects expense
associated with the modified equity awards for a certain executive
who terminated his employment in June 2015 as well as the impact of
previously accelerated equity instruments, $7.9 million loss on
disposal of assets and $4.1 million of depreciation expense
resulting from PP&E step-up. For the twelve months ended
December 31, 2014, SG&A of $12.9 million primarily includes
$7.9 million of registration and fees associated with the Allergan
transaction, $2.7 million loss on asset held for sale and $1.2
million on disposal of assets. For the twelve months
ended December 31, 2013, SG&A of $21.7 million primarily
includes $21.3 million of stock-based compensation which reflects
the one time modification and cash settlement of certain board of
directors equity instruments, acceleration of certain equity
instruments and the amortization of the fair value step-up
increment resulting from the merger of Legacy Valeant into Legacy
Biovail.
|
(f) Net
expense/(income) from the changes in acquisition-related contingent
consideration for the twelve months ended December 31, 2015, 2014
and 2013 is ($23.0) million, ($14.1) million and ($29.2) million,
respectively.
|
(g) In-process
research and development impairments and other charges for the
twelve months ended December 31, 2015 of $248.4 million is
primarily related to the $100.0 million upfront payment in
connection with the license of brodalumab, a $90.2 million
impairment related to Rifaximin SSD developmental program, a $28.2
million impairment related to Emerade® in the fourth quarter, a
$12.3 million impairment related to Arestin® Peri-Implantitis
developmental program and other smaller impairments.
In-process research and development impairments and other charges
for the twelve months ended December 31, 2014 of $41.0 million is
primarily due to the write-offs of IPR&D assets including $12.5
million acquired in the Medicis Pharmaceutical Corporation
acquisition in December 2012, an upfront payment made in connection
with an amendment to a license and distribution agreement with a
third party of $12.0 million, and payments to third parties with
the achievement of specific developmental and regulatory milestones
under our R&D programs, including Jublia® of $8.4
million. For the twelve months ended December 31, 2013,
$153.6 million is primarily due to the write-off of IPR&D
assets relating to the modified-release formulation of
ezogabine/retigabine of $93.8 million, $27.3 million of IPR&D
assets acquired as part of Aton Pharma, Inc. acquisition in May
2010, IPR&D assets acquired as part of the Bausch & Lomb
acquisition of $14.4 million and an impairment to Xerese Ointment
of $8.8 million.
|
(h) For the twelve
months ended December 31, 2015, other (income)/expense of $256.1
million primarily relates to post-combination expense of $168.3
million related to the acceleration of unvested restricted stock
for Salix Pharmaceuticals Ltd, legal related charges associated
with the AntiGrippin® litigation of $25.4 million, costs resulting
from the termination of supply and distribution agreements of $20.6
million, legal settlements and related fees of $19.3 million
including costs of legal proceedings, investigations and inquiries
respecting certain of our distribution, marketing, pricing,
disclosure and accounting practices, including our former
relationship with Philidor, a post-combination expense of $11.7
million related to cash bonuses paid to Amoun Pharmaceutical
Company S.A.E in connection with the acquisition and $6.4 million
loss on sale of divested assets. For the twelve months ended
December 31, 2014, other (income)/expense of ($268.7) million
primarily relates to the gain on sale of filler and toxin assets of
($323.9) million and the reversal of the AntiGrippin® litigation
reserve of ($50.0) million offset by $58.5 million loss on sale of
Metronidazole 1.3%, a post combination expense of $20.4 million
related to acceleration of unvested stock options for PreCision
employees, $8.8 million loss on generic tretinoin product rights
acquired in the PreCision Dermatology Inc. acquisition and $5.6
million related to a settlement of a pre-existing relationship with
respect to the acquisition of Solta Medical, Inc. For the
twelve months ended December 31, 2013, other (income)/expense of
$287.2 million primarily relates to a $142.5 million settlement
agreement with Anacor Pharmaceuticals, Inc., $52.8 million of
stock-based compensation expense related to the acquisition of
Bausch & Lomb Holdings Incorporated and a $50.0 million charge
related to an AntiGrippin® litigation.
|
(i) Restructuring,
integration, acquisition-related and other costs of $400.4 million
primarily relates to the acquisitions of Salix Pharmaceuticals,
Ltd., Dendreon Corporation, Philidor Rx Services, Bausch & Lomb
Holdings Incorporated, Marathon Pharmaceuticals, LLC and
Synergetics USA, Inc. These include $179.7 million of
contract terminations, integration consulting, transition services,
duplicative labor and other, $137.0 million of employee severance
costs, $38.5 million of acquisition costs, $33.3 million of other,
$10.4 million of facility closure costs and $1.5 million of
non-personnel manufacturing integration costs.
|
(j) Restructuring,
integration, acquisition-related and other costs of $388.0 million
primarily relates to the acquisitions of Bausch & Lomb Holdings
Incorporated, the restructuring of a manufacturing facility in
Waterford, Ireland, the acquisition of Solta Medical, Inc., other
Valeant restructuring and integration initiatives and the
acquisitions of PreCision Dermatology Inc. and OnPharma Inc.
These include $184.1 million of contract terminations, integration
consulting, transition services, duplicative labor and other,
$127.0 million of employee severance costs, $43.1 million of
facility closure costs, $16.7 million of other, $7.3 million of
non-personnel manufacturing integration costs, $6.3 million of
acquisition costs and $3.5 million of stock-based
compensation.
|
(k) Restructuring,
integration, acquisition-related and other costs of $498.4 million
primarily relates to the acquisitions of Bausch & Lomb Holdings
Incorporated, Medicis Pharmaceutical Corporation, Obagi Medical
Products, Inc. and internal Valeant restructuring and integration
initiatives. These include $199.7 million of contract
terminations, integration consulting, transition services,
duplicative labor and other, $190.9 million of employee severance
costs, $39.1 million of facility closure costs, $36.4 million of
acquisition costs, $14.8 million of other, $9.1 million of
non-personnel manufacturing integration costs, $4.7 million of
other non-cash charges and $3.7 million of stock-based
compensation.
|
(l) Represents
amortization and impairments of finite-lived intangible assets
including an impairment charge of $79.0 million related to Philidor
Rx Services in the twelve months ended December 31,
2015.
|
(m) Non-cash interest
expense associated with amortization of deferred financing costs
and debt discounts for the twelve months ended December 31, 2015,
2014 and 2013 is $77.7 million, $70.0 million and $89.5 million,
respectively. The twelve months ended December 31, 2015 also
includes $73.5 million write-down of deferred finance costs and
$8.0 million of interest expense resulting from the acquisition of
Salix Pharmaceuticals, Ltd.
|
(n) Gain on
investment, net was a gain recognized in connection with the sale
by PS Fund 1, LLC of the Allergan Inc. shares.
|
(o) Unrealized
foreign exchange loss on intercompany financing arrangements for
the twelve months ended December 31, 2015, 2014 and 2013 is $68.6
million, $135.1 million and $0.8 million, respectively. The
twelve months ended December 31, 2015 also includes unrealized
foreign exchange loss of $26.6M relating to a foreign currency
forward-exchange contract.
|
(p) Adjusted amounts
represent adjusted pretax income multiplied by our effective tax
rate for the twelve months ended December 31, 2015, 2014 and
2013. The effective tax rate was derived by reference to
statutory rates in the regions in which the company
operates.
|
(q) As the Company
disclosed on March 15, 2016, it revised its methodology for the
presentation of tax adjustments to non-GAAP earnings and eliminated
the use of tax attributes and other timing items in its calculation
of non-GAAP net income (loss) and earnings (loss) per share.
The adjustments to the tax provisions for the twelve months
ended December 31, 2015, 2014 and 2013 under the discontinued tax
presentation were ($7.0) million, $75.7 million and ($515.9)
million, respectively, which would have resulted in Adjusted
non-GAAP earnings per share of $10.16, $8.23 and $6.24,
respectively.
|
Valeant
Pharmaceuticals International, Inc.
|
|
Table
3
|
Statement of
Revenues - by Segment
|
|
For the Three and
Twelve Months Ended December 31, 2015 and 2014
Restated
|
|
(In
millions)
|
|
|
|
|
Three Months
Ended
|
|
|
December
31,
|
Revenues
|
|
2015
GAAP
|
|
2014 Restated
GAAP
|
|
%
Change
|
|
2015 currency
impact & other (a)
|
|
2015 excluding
currency impact & other
non-GAAP (b)
|
|
%
Change
|
Dermatology
|
|
$ 322.5
|
|
$ 427.5
|
|
-25%
|
|
$ (4.6)
|
|
$ 317.9
|
|
-26%
|
Consumer
|
|
155.9
|
|
141.4
|
|
10%
|
|
-
|
|
155.9
|
|
10%
|
Ophthalmology
Rx
|
|
112.0
|
|
131.8
|
|
-15%
|
|
-
|
|
112.0
|
|
-15%
|
Contact
Lenses
|
|
53.5
|
|
42.6
|
|
26%
|
|
-
|
|
53.5
|
|
26%
|
Surgical
|
|
65.4
|
|
56.6
|
|
16%
|
|
-
|
|
65.4
|
|
16%
|
Neuro &
Other/Generics
|
|
541.2
|
|
449.0
|
|
21%
|
|
-
|
|
541.2
|
|
21%
|
Dental
|
|
44.7
|
|
41.1
|
|
9%
|
|
-
|
|
44.7
|
|
9%
|
Oncology/Urology
|
|
76.6
|
|
-
|
|
|
|
-
|
|
76.6
|
|
|
GI
|
|
500.1
|
|
-
|
|
|
|
-
|
|
500.1
|
|
|
Total U.S.
|
|
1,871.9
|
|
1,290.0
|
|
45%
|
|
(4.6)
|
|
1,867.3
|
|
45%
|
ROW Developed
|
|
363.4
|
|
423.1
|
|
-14%
|
|
49.2
|
|
412.6
|
|
-2%
|
Developed
Markets
|
|
2,235.3
|
|
1,713.1
|
|
30%
|
|
44.6
|
|
2,279.9
|
|
33%
|
Emerging Markets-Europe/Middle East/Africa
|
|
280.1
|
|
280.0
|
|
0%
|
|
46.1
|
|
326.2
|
|
17%
|
Emerging Markets-Latin America
|
|
100.4
|
|
112.7
|
|
-11%
|
|
28.9
|
|
129.3
|
|
15%
|
Emerging Markets-Asia
|
|
141.4
|
|
129.6
|
|
9%
|
|
7.7
|
|
149.1
|
|
15%
|
Emerging
Markets
|
|
521.9
|
|
522.3
|
|
0%
|
|
82.7
|
|
604.6
|
|
16%
|
Total
revenues
|
|
$ 2,757.2
|
|
$ 2,235.4
|
|
23%
|
|
$ 127.3
|
|
$ 2,884.5
|
|
29%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
December
31,
|
Revenues
|
|
2015
GAAP
|
|
2014 Restated
GAAP
|
|
%
Change
|
|
2015 currency
impact & other (a)
|
|
2015 excluding
currency impact & other
non-GAAP (b)
|
|
%
Change
|
Dermatology
|
|
$ 1,648.4
|
|
$ 1,322.3
|
|
25%
|
|
$ (4.6)
|
|
$ 1,643.8
|
|
24%
|
Consumer
|
|
625.6
|
|
587.4
|
|
7%
|
|
-
|
|
625.6
|
|
7%
|
Ophthalmology
Rx
|
|
490.8
|
|
465.4
|
|
5%
|
|
-
|
|
490.8
|
|
5%
|
Contact
Lenses
|
|
212.8
|
|
170.4
|
|
25%
|
|
-
|
|
212.8
|
|
25%
|
Surgical
|
|
224.6
|
|
215.1
|
|
4%
|
|
-
|
|
224.6
|
|
4%
|
Neuro &
Other/Generics
|
|
2,153.0
|
|
1,524.8
|
|
41%
|
|
-
|
|
2,153.0
|
|
41%
|
Dental
|
|
182.3
|
|
123.4
|
|
48%
|
|
-
|
|
182.3
|
|
48%
|
Oncology/Urology
|
|
249.7
|
|
-
|
|
|
|
-
|
|
249.7
|
|
|
GI
|
|
1,276.2
|
|
-
|
|
|
|
-
|
|
1,276.2
|
|
|
Total U.S.
|
|
7,063.4
|
|
4,408.8
|
|
60%
|
|
(4.6)
|
|
7,058.8
|
|
60%
|
ROW Developed
|
|
1,473.9
|
|
1,700.8
|
|
-13%
|
|
254.0
|
|
1,727.9
|
|
2%
|
Developed
Markets
|
|
8,537.3
|
|
6,109.6
|
|
40%
|
|
249.4
|
|
8,786.7
|
|
44%
|
Emerging Markets-Europe/Middle East/Africa
|
|
971.7
|
|
1,139.2
|
|
-15%
|
|
245.3
|
|
1,217.0
|
|
7%
|
Emerging Markets-Latin
America
|
|
376.3
|
|
435.4
|
|
-14%
|
|
93.9
|
|
470.2
|
|
8%
|
Emerging
Markets-Asia
|
|
561.2
|
|
521.8
|
|
8%
|
|
23.1
|
|
584.3
|
|
12%
|
Emerging
Markets
|
|
1,909.2
|
|
2,096.4
|
|
-9%
|
|
362.3
|
|
2,271.5
|
|
8%
|
Total
revenues
|
|
$ 10,446.5
|
|
$ 8,206.0
|
|
27%
|
|
$ 611.7
|
|
$ 11,058.2
|
|
35%
|
(a) Currency effect
for constant currency sales is determined by comparing 2015
reported amounts adjusted to exclude currency impact, calculated
using 2014 monthly average exchange rates, to the actual 2014
reported amounts. The $4.6 million in Dermatology represents
product sales relating to Philidor Rx Services during the wind-down
period November 1, 2015 through December 31, 2015.
|
(b) To
supplement the financial measures prepared in accordance with U.S.
generally accepted accounting principles (GAAP), the Company uses
certain non-GAAP financial measures. For additional information
about the Company's use of such non-GAAP financial measures, please
refer to the body of the press release to which these tables are
attached.
|
Valeant
Pharmaceuticals International, Inc.
|
|
Table
4
|
Reconciliation of
GAAP Cost of Goods Sold to Non-GAAP Cost of Goods Sold - by
Segment
|
|
|
For the Three and
Twelve Months Ended December 31, 2015
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
Cost of goods
sold
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
December
31,
|
|
|
|
2015
as reported
GAAP
|
|
%
of product sales
|
|
2015
fair value step-up adjustment to inventory and other
non-GAAP (a) (b)
|
|
2015 excluding
fair value step-up adjustment to inventory and other non-GAAP
(a)
|
|
%
of product sales
|
|
Developed
Markets
|
|
$ 500.4
|
|
23%
|
|
$ 51.7
|
|
$ 448.7
|
|
20%
|
|
Emerging
Markets
|
|
218.8
|
|
42%
|
|
4.6
|
|
214.2
|
|
42%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
719.2
|
|
26%
|
|
$
56.3
|
|
$
662.9
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
|
December
31,
|
|
|
|
2015
as reported
GAAP
|
|
%
of product sales
|
|
2015
fair value step-up adjustment to inventory and other
non-GAAP (a) (c)
|
|
2015 excluding
fair value step-up adjustment to inventory and other non-GAAP
(a)
|
|
%
of product sales
|
|
Developed
Markets
|
|
$ 1,773.8
|
|
21%
|
|
$ 171.0
|
|
$ 1,602.8
|
|
19%
|
|
Emerging
Markets
|
|
757.8
|
|
40%
|
|
10.2
|
|
747.6
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
2,531.6
|
|
25%
|
|
$
181.2
|
|
$
2,350.4
|
|
23%
|
(a) To supplement the
financial measures prepared in accordance with U.S. generally
accepted accounting principles (GAAP), the Company uses certain
non-GAAP financial measures. For additional information about the
Company's use of such non-GAAP financial measures, please refer to
the body of the press release to which these tables are
attached.
|
(b) Developed Markets
include $32.7 million of fair value step-up adjustment to
inventory, $11.5 million of integration related inventory and
technology transfer costs, PP&E net step up adjustment of $5.4
million and $2.1 million of cost of goods related to Philidor Rx
Services during the wind-down period November 1, 2015 through
December 31, 2015. Emerging Markets include $3.3 million of
fair value step-up adjustment to inventory, $0.8 million of
PP&E step up adjustment and $0.5 million of integration related
inventory and technology transfer costs.
|
(c) Developed Markets
include $129.5 million of fair value step-up adjustment to
inventory, PP&E net step up adjustment of $21.6 million, $17.8
million of integration related inventory and technology transfer
costs and $2.1 million of cost of goods related to Philidor Rx
Services during the wind-down period November 1, 2015 through
December 31, 2015. Emerging Markets include $4.2 million of
fair value step-up adjustment to inventory, $4.2 million of
integration related inventory and technology transfer costs and
$1.8 million of PP&E step up adjustment.
|
|
Valeant
Pharmaceuticals International, Inc.
|
|
Table
5
|
|
Consolidated
Balance Sheet
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
As
of
|
|
As
of
|
|
|
|
|
December
31,
|
|
December
31,
|
5.1
|
Cash
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
597.3
|
|
$
322.6
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Credit
Facility
|
|
$
250.0
|
|
$
165.0
|
|
Series A-1 Tranche A
Term Loan Facility
|
|
140.4
|
|
139.3
|
|
Series A-2 Tranche A
Term Loan Facility
|
|
137.3
|
|
135.5
|
|
Series A-3 Tranche A
Term Loan Facility
|
|
1,881.5
|
|
1,633.8
|
|
Series A-4 Tranche A
Term Loan Facility
|
|
951.3
|
|
-
|
|
Series D-2 Tranche B
Term Loan Facility
|
|
1,087.5
|
|
1,088.4
|
|
Series C-2 Tranche B
Term Loan Facility
|
|
835.1
|
|
835.0
|
|
Series E-1 Tranche B
Term Loan Facility
|
|
2,531.2
|
|
2,543.8
|
|
Series F Tranche B
Term Loan Facility
|
|
4,055.8
|
|
-
|
|
Senior
Notes
|
|
19,206.0
|
|
8,675.2
|
|
Other
|
|
12.3
|
|
12.9
|
|
|
|
|
31,088.4
|
|
15,228.9
|
|
Less: current
portion
|
|
(823.0)
|
|
(0.9)
|
|
Total long-term
debt
|
|
$
30,265.4
|
|
$
15,228.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.2
|
Restructuring,
integration, acquisition-related and other costs
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
December 31,
2015
|
|
by project
type
|
|
Cash
Paid
|
|
Expensed
|
|
|
|
|
|
|
|
|
Salix
Pharmaceuticals, Ltd.
|
|
|
$
53.9
|
|
$
37.0
|
|
Dendreon
Corporation
|
|
|
13.3
|
|
3.2
|
|
Philidor Rx
Services
|
|
|
10.8
|
|
18.9
|
|
Marathon
Pharmaceuticals, LLC
|
|
|
10.2
|
|
7.7
|
|
Synergetics USA,
Inc.
|
|
|
6.2
|
|
8.1
|
|
Amoun Pharmaceutical
Company S.A.E
|
|
|
4.0
|
|
2.0
|
|
Sprout
Pharmaceuticals
|
|
|
3.2
|
|
2.2
|
|
Medicis
Pharmaceutical Corporation
|
|
|
3.0
|
|
3.0
|
|
Paragon Holdings I,
Inc
|
|
|
2.8
|
|
1.4
|
|
Other (Various
deals)
|
|
|
16.4
|
|
12.5
|
|
|
|
|
|
|
|
|
Total
|
|
|
123.8
|
|
96.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by expense
type
|
|
Cash
Paid
|
|
|
|
|
|
|
|
|
|
|
Integration related
consulting, duplicative labor, transition services, and
other
|
61.2
|
|
|
|
Severance
payments
|
|
25.8
|
|
|
|
Acquisition-related
costs paid to 3rd parties
|
|
23.7
|
|
|
|
Facility closure
costs, other manufacturing integration and other
|
|
13.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123.8
|
|
|
Valeant
Pharmaceuticals International, Inc.
|
|
Table
6
|
Organic Growth
(non-GAAP) - by Segment
|
|
|
|
|
|
For the Three and
Twelve Months Ended December 31, 2015
|
|
|
|
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
For the
Three Months Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
|
(1) Q4
2015
|
(2) Acq
impact
|
(3) Q4 2015
Same store
|
|
(4) Q4 2014
Restated
|
(5) Pro
Forma Adj
|
(6) Q4
2014 Restated
|
|
(7)
Currency impact Same store (a)
|
(8)
Currency impact Acq (a)
|
|
(9)
Divestitures / Discontinuations (b)
|
|
Pro Forma
(1)+(7)+(8) / (6)-(9)
(d) (e)
|
|
Same store
(3)+(7) / (4)-(9)
(d) (e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
U.S. (c)
|
1,854.8
|
719.5
|
1,135.3
|
|
1,274.7
|
152.2
|
1,426.8
|
|
(0.1)
|
0.1
|
|
3.9
|
|
30.4%
|
|
-10.7%
|
ROW
Developed
|
353.0
|
5.8
|
347.2
|
|
405.6
|
2.5
|
408.1
|
|
47.2
|
0.5
|
|
1.3
|
|
-1.5%
|
|
-2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
2,207.8
|
725.3
|
1,482.5
|
|
1,680.3
|
154.7
|
1,834.9
|
|
47.1
|
0.7
|
|
5.2
|
|
23.3%
|
|
-8.7%
|
Emerging
Markets
|
515.8
|
56.1
|
459.7
|
|
511.5
|
44.3
|
555.8
|
|
74.7
|
7.4
|
|
2.0
|
|
8.0%
|
|
4.9%
|
Total product
sales
|
2,723.6
|
781.4
|
1,942.2
|
|
2,191.8
|
198.9
|
2,390.7
|
|
121.7
|
8.0
|
|
7.2
|
|
19.7%
|
|
-5.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
For the
Twelve Months Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
|
(1) FY
2015
|
(2) Acq
impact
|
(3) 2015
FY
Same store
|
|
(4) FY 2014
Restated
|
(5) Pro
Forma Adj
|
(6) Pro
Forma 2014 FY Restated
|
|
(7)
Currency impact Same store (a)
|
(8)
Currency impact Acq (a)
|
|
(9)
Divestitures / Discontinuations (b)
|
|
Pro Forma
(1)+(7)+(8) / (6)-(9)
(d) (e)
|
|
Same store
(3)+(7) / (4)-(9)
(d) (e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
U.S. (c)
|
6,987.0
|
2,081.8
|
4,905.3
|
|
4,355.4
|
1,221.1
|
5,576.6
|
|
(0.1)
|
0.1
|
|
107.4
|
|
27.8%
|
|
15.5%
|
ROW
Developed
|
1,429.4
|
33.9
|
1,395.5
|
|
1,641.0
|
35.4
|
1,676.3
|
|
238.7
|
7.8
|
|
14.0
|
|
0.8%
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
8,416.4
|
2,115.6
|
6,300.8
|
|
5,996.3
|
1,256.5
|
7,252.9
|
|
238.5
|
7.9
|
|
121.4
|
|
21.5%
|
|
11.3%
|
Emerging
Markets
|
1,878.3
|
92.3
|
1,786.0
|
|
2,054.9
|
74.7
|
2,129.6
|
|
345.6
|
11.8
|
|
19.5
|
|
6.0%
|
|
4.7%
|
Total product
sales
|
10,294.7
|
2,207.9
|
8,086.8
|
|
8,051.2
|
1,331.2
|
9,382.5
|
|
584.1
|
19.7
|
|
140.9
|
|
17.9%
|
|
9.6%
|
(a) Currency effect
for constant currency sales is determined by comparing 2015
reported amounts adjusted to exclude currency impact, calculated
using 2014 monthly average exchange rates, to the actual 2014
reported amounts.
|
(b) Includes
divestitures and discontinuations.
|
(c) Includes
Valeant's attributable portion of revenue from joint ventures (JV)
- $0.7M Q4'15 and $0.9M Q4 '14 and $2.6M YTD'15 and $5.2M
YTD'14.
|
(d) To supplement the
financial measures prepared in accordance with U.S. generally
accepted accounting principles (GAAP), the Company uses certain
non-GAAP financial measures. For additional information about the
Company's use of such non-GAAP financial measures, please refer to
the body of the press release to which these tables are
attached.
|
(e) Organic Growth
Definitions:
|
Pro Forma (PF):
This measure provides year over year growth rates for the entire
business, including those that have been acquired within the last
year.
|
((Current Year Total product sales + YoY FX impact) – (Prior Year
Total product sales + Pro Forma impact of acquisitions within the
last year - divestitures or discontinuations))/(Prior Year
Total product sales + Pro Forma impact of acquisitions within the
last year - divestitures or
discontinuations).
|
Same Store (SS): This
measure provides growth rates for businesses that have been owned
for one year or more.
|
((Current Year Total product sales – acquisitions within the last
year + YoY FX impact)- (Prior Year Total product sales –
divestitures & discontinuations))/( Prior Year Total product
sales – divestitures & discontinuations)
|
Contact Information:
Laurie W. Little
949-461-6002
laurie.little@valeant.com
Elif McDonald
905-695-7607
elif.mcdonald@valeant.com
Media:
Renée Soto/Jared Levy
Sard Verbinnen & Co.
212-687-8080
rsoto@sardverb.com
Meghan Gavigan
Sard Verbinnen & Co.
415-618-8750
mgavigan@sardverb.com
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SOURCE Valeant Pharmaceuticals International, Inc.