Valeant Pharmaceuticals Reports Fourth Quarter And Full Year 2013 Financial Results
LAVAL, Quebec, Feb. 27, 2014 /CNW/ - Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces fourth quarter financial results for 2013.
Fourth Quarter 2013
- 2013 Fourth Quarter Total Revenue $2.1 billion; an increase of 109% over the prior year
- 2% organic growth (same store sales) including impact from genericized products; 6% organic growth (pro forma) for total Company
- 10% organic growth for Bausch + Lomb in Q4 and since close
- 13% organic growth (same store sales) for the Developed Markets segment, excluding the impact from certain generic products
- 7% organic growth (same store sales) for the Emerging Markets segment
- 2% organic growth (same store sales) including impact from genericized products; 6% organic growth (pro forma) for total Company
- 2013 Fourth Quarter GAAP EPS of $0.36; Cash EPS $2.15, an increase of 76% over the prior year
- 2013 Fourth Quarter GAAP Operating Cash Flow $280 million; Adjusted Operating Cash Flow $607 million
Full Year 2013
- Total 2013 revenue was $5.8 billion; an increase of 66% over the prior year
- 9% organic growth (same store sales) for the Developed Markets segment, excluding the impact from certain generic products
- 11% organic growth (same store sales) for the Emerging Markets segment
- 10% organic growth for Bausch + Lomb since the close
- Total 2013 GAAP EPS loss of $2.70; Cash EPS $6.24, an increase of 51% over the prior year
- Total 2013 GAAP Operating Cash Flow $1.0 billion; Adjusted Operating Cash Flow $1.8 billion
"Our dedicated team of professionals continued to deliver strong top line and bottom line results," stated J. Michael Pearson, chairman and chief executive officer. "We are particularly pleased with the outperformance of the Bausch + Lomb businesses, coupled with the fact that the Company returned to positive organic growth. Valeant's focus on cash pay businesses, diversification, durable assets, key geographies, and lower risk R&D will continue to benefit our shareholders as we look forward to continuing our track record of outperformance in 2014."
Valeant Fourth Quarter Financial Results
Valeant's total revenues were $2.1 billion, up 109% compared to the fourth quarter of 2012. Same store organic product sales growth for Valeant was 11%, excluding the impact of the genericization of the Zovirax franchise, Retin-A Micro and BenzaClin. These products accounted for approximately $78 million in lost sales as compared to the year-ago quarter. Including the generic impact of these products, same store organic product sales growth for Valeant was 2% and pro forma organic growth was 6%.
Valeant's Developed Markets revenue was $1.6 billion, up 122% as compared to the fourth quarter of 2012. This increase was primarily led by the acquisition of Bausch+ Lomb, which was completed on August 5, 2013. Same store organic product sales growth was 13%, excluding the impact of the genericization of the Zovirax franchise, Retin-A Micro and BenzaClin. The growth in the Developed Markets was driven by continued growth in certain dermatology prescription brands, our aesthetics, consumer, neurology and other and oral health portfolios, and our Canadian business unit.
Valeant's Emerging Markets revenue was $493 million, up 77% as compared to the fourth quarter of 2012. This increase was also primarily led by the acquisition of Bausch + Lomb. Total same store sales growth was 7% for the segment, with pro forma organic growth at 13%. This increase was driven by continued strong growth in all of our emerging market regions, particularly Poland, Russia, China and the Middle East.
The Company reported net income of $124 million for the fourth quarter of 2013, or $0.36 per diluted share, which included restructuring, integration and other charges of $128 million primarily related to the acquisition of Bausch + Lomb.
On a Cash EPS basis, adjusted income was $732 million, or $2.15 per diluted share, an increase of 76% over the prior year.
GAAP cash flow from operations was $280 million in the fourth quarter of 2013, and adjusted cash flow from operations was $607 million, an increase of 43% over the prior year. This increase in adjusted cash flow from operations was driven by growth across all our businesses and an investment in working capital due to the integration of Bausch + Lomb.
The Company's cost of goods sold (COGS) was 26% of product sales in the fourth quarter of 2013, after backing out the fair value adjustment to inventory and other items related to acquisitions.
Selling, General and Administrative expenses were $450 million in the fourth quarter of 2013, or approximately 22% of revenue. Research and Development expenses were $60 million in the fourth quarter of 2013, or approximately 3% of revenue.
2014 Guidance
The Company is reaffirming its 2014 Cash EPS guidance of $8.25 to $8.75, which includes overcoming the negative impact from currency fluctuations since the beginning of the year of approximately $0.10 per share. This guidance does not include the positive impact of the PreCision Dermatology, Inc. acquisition, which is expected to close in the second quarter of 2014. Total revenue for 2014 is expected to be in the range of $8.2 billion to $8.6 billion and adjusted Cash Flow from Operations is expected to be in the range of $2.4 billion to $2.6 billion. The Company expects to raise guidance on Cash EPS, revenue and adjusted cash flow from operations once the acquisition of PreCision has closed.
Conference Call and Webcast Information
The Company will host a conference call and a live Internet webcast along with a slide presentation today at 8:00 a.m. ET (5:00 a.m. PT), February 27, 2014 to discuss its fourth quarter financial results for 2013. The dial-in number to participate on this call is (877) 876-8393 confirmation code 68673247. International callers should dial (973) 200-3961, confirmation code 68673247. A replay will be available approximately two hours following the conclusion of the conference call through March 7, 2014 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 68673247. The live webcast of the conference call may be accessed through the investor relations section of the Company'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, eye health, neurology and branded generics. More information about Valeant can be found at www.valeant.com.
Forward-looking Statements
This press release may contain forward-looking statements, including, but not limited to, statements regarding future benefits to shareholders, and our expected future performance, including 2014 guidance with respect to Cash EPS, total revenue and adjusted cash flow from operations and our expectations with respect to updating guidance. 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 Securities and Exchange Commission and the Canadian Securities Administrators, 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.
Non-GAAP Information
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, In-process research and development, impairments and other charges, ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization and other non-cash charges, amortization including intangible asset impairments and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets sold/held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. 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.
Contact Information:
Laurie W. Little
949-461-6002
[email protected]
Financial Tables follow.
| Valeant Pharmaceuticals International, Inc. |
Table 1 |
||||||
| Condensed Consolidated Statements of Income (Loss) |
|||||||
| For the Three and Twelve Months Ended December 31, 2013 and 2012 |
|||||||
| Three Months Ended |
Twelve Months Ended |
||||||
| December 31, |
December 31, |
||||||
| (In thousands, except per share data) |
2013 |
2012 |
2013 |
2012 |
|||
| Product sales |
$ 2,031,532 |
$ 941,993 |
$ 5,640,333 |
$ 3,288,592 |
|||
| Alliance and royalty |
12,955 |
23,493 |
52,606 |
105,591 |
|||
| Service and other |
19,270 |
20,807 |
76,666 |
86,193 |
|||
| Total revenues |
2,063,757 |
986,293 |
5,769,605 |
3,480,376 |
|||
| Cost of goods sold (exclusive of amortization and impairments of finite-lived intangible assets shown separately below) |
717,372 |
271,477 |
1,846,314 |
905,095 |
|||
| Cost of alliance and service revenues |
14,565 |
15,184 |
58,806 |
64,601 |
|||
| Selling, general and administrative ("SG&A") |
450,254 |
204,697 |
1,305,164 |
756,083 |
|||
| Research and development |
59,510 |
20,165 |
156,783 |
79,052 |
|||
| Acquisition-related contingent consideration |
4,252 |
(28,464) |
(29,259) |
(5,266) |
|||
| In-process research and development impairments and other charges |
24,828 |
40,033 |
153,639 |
189,901 |
|||
| Other (Income)/Expense |
79,269 |
- |
234,442 |
59,349 |
|||
| Restructuring, integration, acquisition-related and other costs |
128,274 |
261,801 |
551,241 |
422,991 |
|||
| Amortization and impairments of finite-lived intangible assets |
361,956 |
299,485 |
1,901,977 |
928,885 |
|||
| 1,840,280 |
1,084,378 |
6,179,107 |
3,400,691 |
||||
| Operating income (loss) |
223,477 |
(98,085) |
(409,502) |
79,685 |
|||
| Interest expense, net |
(260,215) |
(160,228) |
(836,293) |
(475,610) |
|||
| Gain (loss) on extinguishment of debt |
(35,474) |
(17,625) |
(65,014) |
(20,080) |
|||
| Gain (loss) on investments, net |
- |
32 |
5,822 |
2,056 |
|||
| Foreign exchange and other |
(5,902) |
1,263 |
(9,465) |
19,721 |
|||
| Income (loss) before (recovery of) provision for income taxes |
(78,114) |
(274,643) |
(1,314,452) |
(394,228) |
|||
| (Recovery of) provision for income taxes |
(203,083) |
(185,501) |
(450,783) |
(278,203) |
|||
| Net income (loss) |
124,969 |
(89,142) |
(863,669) |
(116,025) |
|||
| Less: Net income (loss) attributable to noncontrolling interest |
1,205 |
- |
2,473 |
- |
|||
| Net income (loss) attributable to Valeant Pharmaceuticals International, Inc. |
$ 123,764 |
$ (89,142) |
$ (866,142) |
$ (116,025) |
|||
| Earnings (loss) per share: |
|||||||
| Basic: |
|||||||
| Earnings (loss) |
$ 0.37 |
$ (0.29) |
$ (2.70) |
$ (0.38) |
|||
| Shares used in per share computation |
334,444 |
305,131 |
320,996 |
305,446 |
|||
| Diluted: |
|||||||
| Earnings (loss) |
$ 0.36 |
$ (0.29) |
$ (2.70) |
$ (0.38) |
|||
| Shares used in per share computation |
340,865 |
305,131 |
320,996 |
305,446 |
|||
| Valeant Pharmaceuticals International, Inc. |
Table 2 |
|||||||
| Reconciliation of GAAP EPS to Cash EPS |
||||||||
| For the Three and Twelve Months Ended December 31, 2013 and 2012 |
||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||
| December 31, |
December 31, |
|||||||
| (In thousands, except per share data) |
2013 |
2012 |
2013 |
2012 |
||||
| Net income (loss) attributable to Valeant Pharmaceuticals International, Inc. |
$ 123,764 |
$ (89,142) |
$ (866,142) |
$ (116,025) |
||||
| Non-GAAP adjustments (a): |
||||||||
| Inventory step-up (b) |
153,291 |
29,421 |
372,450 |
78,822 |
||||
| Alliance product assets & PP&E step-up/down (c) |
21,064 |
(336) |
22,668 |
50,434 |
||||
| Stock-based compensation (d) |
371 |
2,720 |
21,254 |
29,484 |
||||
| Acquisition-related contingent consideration (e) |
4,252 |
(28,464) |
(29,259) |
(5,266) |
||||
| In-process research and development impairments and other charges (f) |
24,828 |
40,033 |
153,639 |
189,901 |
||||
| Legal settlements and related fees (g) |
65,322 |
- |
220,495 |
56,779 |
||||
| Restructuring, integration, acquisition-related and other costs (h) |
128,274 |
261,801 |
551,241 |
422,991 |
||||
| Amortization and impairments of finite-lived intangible assets and other non-GAAP charges (i) |
385,438 |
311,834 |
1,957,310 |
963,248 |
||||
| 782,840 |
617,009 |
3,269,798 |
1,786,393 |
|||||
| Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest (j) |
18,963 |
22,188 |
89,461 |
36,402 |
||||
| (Gain) loss on extinguishment of debt |
35,474 |
17,625 |
65,014 |
20,080 |
||||
| (Gain) loss on disposal of fixed assets and assets held for sale/impairment, net (k) |
- |
3,701 |
- |
4,703 |
||||
| Foreign exchange and other (l) |
193 |
- |
776 |
- |
||||
| Tax (m) |
(229,698) |
(191,801) |
(515,884) |
(319,603) |
||||
| Total adjustments |
607,772 |
468,722 |
2,909,165 |
1,527,975 |
||||
| Adjusted net income attributable to Valeant Pharmaceuticals International, Inc. |
$ 731,536 |
$ 379,580 |
$ 2,043,023 |
$ 1,411,950 |
||||
| GAAP earnings (loss) per share - diluted |
$ 0.36 |
$ (0.29) |
$ (2.70) |
$ (0.38) |
||||
| Cash earnings per share - diluted |
$ 2.15 |
$ 1.22 |
$ 6.24 |
$ 4.51 |
||||
| Cash earnings per share excluding one-time items - diluted |
$ 2.15 |
$ 1.22 |
$ 6.24 |
$ 4.14 |
||||
| Shares used in diluted per share calculation - GAAP earnings per share |
340,865 |
305,131 |
320,996 |
305,446 |
||||
| Shares used in diluted per share calculation - Cash earnings per share |
340,865 |
311,739 |
327,466 |
313,123 |
||||
| (a) See footnote (a) to Table 2a and Table 2b. |
||||||||
| (b) See footnote (b) to Table 2a and Table 2b. |
||||||||
| (c) See footnote (h) to Table 2a and Table 2b. |
||||||||
| (d) See footnote (d) to Table 2a and Table 2b. |
||||||||
| (e) See footnote (f) to Table 2a and Table 2b. |
||||||||
| (f) See footnote (g) 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 Table 2b. |
||||||||
| (i) See footnote (c) to Table 2a and Table 2b. |
||||||||
| (j) See footnote (k) to Table 2a and Table 2b. |
||||||||
| (k) See footnote (e) to Table 2a and Table 2b. |
||||||||
| (l) See footnote (l) to Table 2a and Table 2b. |
||||||||
| (m) See footnote (m) to Table 2a and Table 2b. |
||||||||
| Valeant Pharmaceuticals International, Inc. |
Table 2a |
||||
| Reconciliation of GAAP EPS to Cash EPS |
|||||
| For the Three Months Ended December 31, 2013 and 2012 |
|||||
| Non-GAAP Adjustments(a) for |
|||||
| Three Months Ended |
|||||
| December 31, |
|||||
| (In thousands, except per share data) |
2013 |
2012 |
|||
| Product sales |
$ - |
$ - |
|||
| Alliance and royalty |
- |
- |
|||
| Service and other |
- |
- |
|||
| Total revenues |
- |
- |
|||
| Cost of goods sold (exclusive of amortization and impairments of finite-lived intangible assets shown separately below) |
(183,892) |
(b)(c) |
(41,838) |
(b)(c) |
|
| Cost of alliance and service revenues |
- |
- |
|||
| Selling, general and administrative ("SG&A") |
(369) |
(d) |
(6,017) |
(d)(e) |
|
| Research and development |
- |
- |
|||
| Acquisition-related contingent consideration |
(4,252) |
(f) |
28,464 |
(f) |
|
| In-process research and development impairments and other charges |
(24,828) |
(g) |
(40,033) |
(g) |
|
| Other Income/(Expense) |
(79,269) |
(h) |
- |
||
| Restructuring, integration, acquisition-related and other costs |
(128,274) |
(i) |
(261,801) |
(j) |
|
| Amortization and impairments of finite-lived intangible assets |
(361,956) |
(299,485) |
|||
| (782,840) |
(620,710) |
||||
| Operating income (loss) |
782,840 |
620,710 |
|||
| Interest expense, net |
18,963 |
(j) |
22,188 |
(k) |
|
| Gain (loss) on extinguishment of debt |
35,474 |
17,625 |
|||
| Foreign exchange and other |
193 |
(l) |
- |
||
| Income (loss) before (recovery of) provision for income taxes |
837,470 |
660,523 |
|||
| (Recovery of) provision for income taxes |
(229,698) |
(m) |
(191,801) |
(m) |
|
| Total adjustments to net income (loss) attributable to Valeant Pharmaceuticals International, Inc. |
$ 607,772 |
$ 468,722 |
|||
| Earnings (loss) per share: |
|||||
| Diluted: |
|||||
| Total adjustments to earnings (loss) |
$ 1.78 |
$ 1.50 |
|||
| Shares used in per share computation |
340,865 |
311,739 |
|||
| (a) To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, integration, acquisition-related and other costs, In-process research and development, impairments and other charges, ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization including intangible asset impairments and other non-cash charges, amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets sold/held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. |
|||||
| Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. 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. |
|||||
| (b) ASC 805, accounting for business combinations requires an inventory fair value step-up whose total impact for the three months ended December 31, 2013 is $153.3 million primarily relating to the acquisitions of Bausch & Lomb Holdings Incorporated on August 5, 2013. For the three months ended December 31, 2012 the impact of inventory fair value step-up is $29.4 million primarily relating to the acquisitions of Medicis Pharmaceutical Corporation on December 11, 2012. |
|||||
| (c) For the three months ended December 31, 2013 and 2012 cost of goods sold include costs associated with integration related tech transfers, $22.0 million and $10.1 million, respectively. For the three months ended December 31, 2013 cost of goods sold includes PP&E step up of $7.1 million related to the acquisition of Bausch & Lomb and amortization of a BMS fair value inventory adjustment of $1.5 million. |
|||||
| (d) For the three months ended December 31, 2013 and 2012 SG&A primarily includes $0.4 million and $2.7 million of stock-based compensation, respectively, which reflects the 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. |
|||||
| (e) SG&A includes $3.7 million loss on disposal of fixed assets for the three months ended December 31, 2012. |
|||||
| (f) Net gain (expense) from the changes in acquisition-related contingent consideration for the three months ended December 31, 2013 and 2012 of ($4.3) million and $28.5 million, respectively. |
|||||
| (g) In-process research and development impairments and other charges for the three months ended December 31, 2013 of $24.8 million primarily due to the write-off of IPR&D assets acquired as part of Bausch & Lomb acquisition in August 2013 of $14.4 million and an impairment related to Xerese Ointment of $8.8 million. In-process research and development impairments and other charges for the three months ended December 31, 2012 of $40.0 million relates primarily to an impairment of $24.7 million related to Xerese ® life-cycle management project, $5.0 million related to upfront payment to acquire North America rights to Emervel ® and $5.0 million related to the IDP-108 program. |
|||||
| (h) For the three months ended December 31, 2013 other income/(expense) of $79.3 million primarily relates to a settlement agreement with Anacor Pharmaceuticals, Inc. and an AntiGrippin® litigation as well as a loss on the sale of certain Australian skin care products. |
|||||
| (i) Restructuring, integration, acquisition-related and other costs of $128.3 million primarily represent costs relating to the acquisitions of Bausch & Lomb Holdings Incorporation, Medicis Pharmaceutical Corporation, Obagi Medical Products, Inc. and other Valeant restructuring and integration initiatives. These include $83.6 million relating to duplicative labor, contract terminations, integration consulting, transition services, and other, $24.3 million relating to facility closure costs, $12.0 million relating to acquisition costs, $4.9 million relating to other, $4.4 million relating to non-personnel manufacturing integration costs, $0.3 million stock-based compensation, $0.5 million of other non-cash charges offset by $1.7 million reduction to employee severance costs. |
|||||
| (j) Restructuring, integration, acquisition-related and other costs of $261.8 million represent costs related to the acquisitions of Medicis, internal Valeant restructuring and integration initiatives, iNova, Dermik, OraPharma, Sanitas, Visudyne and Swiss Herbal. These include $52.6 million related to acquisition costs, $98.2 million related to employee severance costs, $77.3 million of stock-based compensation, $30.5 million related to integration consulting, duplicative labor, transition services, and other, and $3.2 million related to facility closure costs. |
|||||
| (k) Non-cash interest expense associated with amortization and write-down of deferred financing costs and debt discounts for the three months ended December 31, 2013 is $19.0 million. For the three months ended December 31, 2012 non-cash interest expense associated with amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest is $22.2 million. |
|||||
| (l) Unrealized foreign exchange loss on intercompany financing arrangements of $0.2 million. |
|||||
| (m) Total tax effect of non-GAAP pre-tax adjustments, resolution of uncertain tax positions and change in valuation allowance associated with deferred tax asset. |
|||||
| Valeant Pharmaceuticals International, Inc. |
Table 2b |
||||
| Reconciliation of GAAP EPS to Cash EPS |
|||||
| For the Twelve Months Ended December 31, 2013 and 2012 |
|||||
|
Non-GAAP Adjustments(a) for |
|||||
| Twelve Months Ended |
|||||
| December 31, |
|||||
| (In thousands, except per share data) |
2013 |
2012 |
|||
| Product sales |
$ - |
$ - |
|||
| Alliance and royalty |
- |
- |
|||
| Service and other |
- |
- |
|||
| Total revenues |
- |
- |
|||
| Cost of goods sold (exclusive of amortization and impairments of finite-lived intangible assets shown separately below) |
(436,050) |
(b)(c) |
(112,273) |
(b)(c) |
|
| Cost of alliance and service revenues |
- |
- |
|||
| Selling, general and administrative ("SG&A") |
(21,708) |
(d) |
(34,575) |
(d)(e) |
|
| Research and development |
- |
- |
|||
| Acquisition-related contingent consideration |
29,259 |
(f) |
5,266 |
(f) |
|
| In-process research and development impairments and other charges |
(153,639) |
(g) |
(189,901) |
(g) |
|
| Other Income/(Expense) |
(234,442) |
(h) |
(107,737) |
(h) |
|
| Restructuring, integration, acquisition-related and other costs |
(551,241) |
(i) |
(422,991) |
(j) |
|
| Amortization and impairments of finite-lived intangible assets |
(1,901,977) |
(928,885) |
|||
| (3,269,798) |
(1,791,096) |
||||
| Operating income (loss) |
3,269,798 |
1,791,096 |
|||
| Interest expense, net |
89,461 |
(k) |
36,402 |
(k) |
|
| Gain (loss) on extinguishment of debt |
65,014 |
20,080 |
|||
| Foreign exchange and other |
776 |
(l) |
- |
||
| Income (loss) before (recovery of) provision for income taxes |
3,425,049 |
1,847,578 |
|||
| (Recovery of) provision for income taxes |
(515,884) |
(m) |
(319,603) |
(m) |
|
| Total adjustments to net income (loss) attributable to Valeant Pharmaceuticals International, Inc. |
$ 2,909,165 |
$ 1,527,975 |
|||
| Earnings (loss) per share: |
|||||
| Diluted: |
|||||
| Total adjustments to earnings (loss) |
$ 8.88 |
$ 4.88 |
|||
| Shares used in per share computation |
327,466 |
313,123 |
|||
| (a) See footnote (a) to Table 2a. |
|||||
| (b) ASC 805, accounting for business combinations requires an inventory fair value step-up whose total impact for the twelve months ended December 31, 2013 is $372.5 million primarily relating to the acquisition of Bausch & Lomb Holdings Incorporated on August 5, 2013 and Medicis Pharmaceutical Corporation on December 11, 2012. For the twelve months ended December 31, 2012 the impact of inventory fair value step-up is $78.8 million primarily relating to the acquisitions of Medicis Pharmaceutical Corporation on December 11, 2012, iNova on December 21, 2011, Dermik on December 16, 2011, Afexa Life Sciences on October 17, 2011, Ortho Dermatologics on December 12, 2011 and Pedinol Pharmacal, Inc. on April 11, 2012. |
|||||
| (c) For the twelve months ended December 31, 2013 and 2012 cost of goods sold include costs associated with integration related tech transfers, $47.7 million and $28.9 million, respectively. For the twelve months ended December 31, 2013 cost of goods sold include amortization of a BMS fair value inventory adjustment of $6.5 million and PP&E step up related to the acquisition of Bausch & Lomb of $7.1 million. |
|||||
| (d) For the twelve months ended December 31, 2013 and 2012 SG&A primarily includes $21.3 million and $29.5 million of stock-based compensation, respectively, 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. |
|||||
| (e) SG&A includes $1.0 million loss on assets held for sale/impairment and $3.7 million loss on disposal of fixed assets for the twelve months ended December 31, 2012. |
|||||
| (f) Net gain from the changes in acquisition-related contingent consideration for the twelve months ended December 31, 2013 and 2012 is $29.3 million and $5.3 million, respectively. |
|||||
| (g) In-process research and development impairments and other charges for the twelve months ended December 31, 2013 of $153.6 million primarily due to the write-off of IPR&D assets relating to the modified-release formulation of ezogabine/retigabine of $93.8 million, IPR&D assets acquired as part of Aton Pharma, Inc. acquisition in May 2010 of $27.3 million, IPR&D assets acquired as part of Bausch & Lomb acquisition in August 2013 of $14.4 million and an impairment related to Xerese Ointment of $8.8 million. In-process research and development impairments and other charges for the twelve months ended December 31, 2012 of $189.9 million relates primarily to the write-off of the IPR&D asset related to the IDP-107 dermatology program of $133.4 million, an impairment of $24.7 million related to Xerese ® life-cycle management project, a $12.0 million payment to terminate a research and development commitment with a third party, $5.0 million related to upfront payment to acquire North America rights to Emervel ®, $5.0 million related to the IDP-108 program and $4.3 million related to the termination of the MC5 program acquired from Ortho Dermatologics. |
|||||
| (h) For the twelve months ended December 31, 2013 other income/(expense) of $234.4 million primarily relating to a settlement agreement with Anacor Pharmaceuticals, Inc. and an AntiGrippin® litigation as well as a loss on the sale of certain Australian skin care products. For the twelve months ended December 31, 2012 other income/(expense) of $107.7 million relates to the litigation settlement and associated legal fees of patent-related and anti-trust litigations and a loss on the sale of 5FU and IDP-111 resulting from the acquisition of Dermik. |
|||||
| (i) Restructuring, integration, acquisition-related and other costs of $551.2 million primarily represent costs relating to the acquisitions of Bausch & Lomb Holdings Incorporated, Medicis Pharmaceutical Corporation, Obagi Medical Products, Inc. and other Valeant restructuring and integration initiatives. These include $199.7 million relating to duplicative labor, contract terminations, integration consulting, transition services, and other, $190.9 million relating to employee severance costs, $56.6 million relating to stock-based compensation, $39.1 million relating to facility closure costs, $36.4 million relating to acquisition costs, $14.7 million relating to other, $9.1 million relating to non-personnel manufacturing integration costs and $4.7 million of other non-cash charges. |
|||||
| (j) Restructuring, integration, acquisition-related and other costs of $423.0 million represent costs related to the acquisitions of Medicis, internal Valeant restructuring and integration initiatives, iNova, Dermik, OraPharma, Sanitas, Pedinol, Ortho Dermatologics, University Medical, Afexa, Swiss Herbal and Eyetech. These include $144.5 million related to employee severance costs, $78.6 million related to acquisition costs, $77.3 million stock-based compensation, $73.6 million related to integration consulting, duplicative labor, transition services, and other, $30.8 million related to facility closure costs, $14.0 million related to other, and $4.2 million related to non-personnel manufacturing integration costs. |
|||||
| (k) Non-cash interest expense associated with amortization and write-down of deferred financing costs and debt discounts for the twelve months ended December 31, 2013 is $89.5 million. For the twelve months ended December 31, 2012 non-cash interest expense associated with amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest is $36.4 million. |
|||||
| (l) Unrealized foreign exchange loss on intercompany financing arrangements of $0.8 million. |
|||||
| (m) Total tax effect of non-GAAP pre-tax adjustments, resolution of uncertain tax positions and change in valuation allowance associated with deferred tax asset. |
|||||
| Valeant Pharmaceuticals International, Inc. |
Table 3 |
|||||||||||
| Statement of Revenues - by Segment |
||||||||||||
| For the Three and Twelve Months Ended December 31, 2013 and 2012 |
||||||||||||
| (In thousands) |
||||||||||||
| Three Months Ended |
||||||||||||
| December 31, |
||||||||||||
| Revenues(a)(b) |
|
|
% Change |
2013 currency impact |
2013 excluding currency impact |
% Change |
||||||
| Total U.S. |
$ 1,085,610 |
$ 547,610 |
98% |
$ - |
$ 1,085,610 |
98% |
||||||
| ROW Developed |
484,772 |
160,071 |
203% |
15,036 |
499,808 |
212% |
||||||
| Developed Markets |
1,570,382 |
707,681 |
122% |
15,036 |
1,585,418 |
124% |
||||||
| Emerging Markets-Europe/Middle East |
244,735 |
159,480 |
53% |
(874) |
243,861 |
53% |
||||||
| Emerging Markets-Latin America |
121,421 |
95,071 |
28% |
8,074 |
129,495 |
36% |
||||||
| Emerging Markets-Asia/Africa |
127,219 |
24,061 |
429% |
1,580 |
128,799 |
435% |
||||||
| Emerging Markets |
493,375 |
278,612 |
77% |
8,780 |
502,155 |
80% |
||||||
| Total revenues |
$ 2,063,757 |
$ 986,293 |
109% |
$ 23,816 |
$ 2,087,573 |
112% |
||||||
| Twelve Months Ended |
||||||||||||
| December 31, |
||||||||||||
| Revenues(a)(b) |
|
|
% Change |
2013 currency impact |
2013 excluding currency impact |
% Change |
||||||
| Total U.S. |
$ 3,194,531 |
$ 1,915,304 |
67% |
$ - |
$ 3,194,531 |
67% |
||||||
| ROW Developed |
1,098,685 |
586,960 |
87% |
32,873 |
1,131,558 |
93% |
||||||
| Developed Markets |
4,293,216 |
2,502,264 |
72% |
32,873 |
4,326,089 |
73% |
||||||
| Emerging Markets-Europe/Middle East |
809,657 |
574,876 |
41% |
(9,299) |
800,358 |
39% |
||||||
| Emerging Markets-Latin America |
392,767 |
319,940 |
23% |
14,854 |
407,621 |
27% |
||||||
| Emerging Markets-Asia/Africa |
273,965 |
83,296 |
229% |
7,921 |
281,886 |
238% |
||||||
| Emerging Markets |
1,476,389 |
978,112 |
51% |
13,476 |
1,489,865 |
52% |
||||||
| Total revenues |
$ 5,769,605 |
$ 3,480,376 |
66% |
$ 46,349 |
$ 5,815,954 |
67% |
||||||
| (a) Note: Currency effect for constant currency sales is determined by comparing 2013 reported amounts adjusted to exclude currency impact, calculated using 2012 monthly average exchange rates, to the actual 2012 reported amounts. Constant currency sales is not a GAAP-defined measure of revenue growth. Constant currency sales as defined and presented by us may not be comparable to similar measures reported by other companies. |
|||||||||||
| (b) See footnote (a) to Table 2a. |
|||||||||||
| 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, 2013 |
|||||||||||
| (In thousands) |
|||||||||||
| 4.1 |
Cost of goods sold (a) |
||||||||||
| Three Months Ended |
|||||||||||
| December 31, |
|||||||||||
| 2013 |
% |
2013 |
2013 excluding fair value step-up adjustment to inventory and other |
% |
|||||||
| Developed Markets |
$ 482,296 |
31% |
$ 139,632 |
$ 342,664 |
22% |
||||||
| Emerging Markets |
235,076 |
48% |
44,260 |
190,816 |
39% |
||||||
| $ 717,372 |
35% |
$ 183,892 |
$ 533,480 |
26% |
|||||||
| Twelve Months Ended |
|||||||||||
| December 31, |
|||||||||||
| 2013 |
% |
2013 |
2013 excluding fair value step-up adjustment to inventory and other |
% |
|||||||
| Developed Markets |
$ 1,184,071 |
28% |
$ 347,478 |
$ 836,593 |
20% |
||||||
| Emerging Markets |
662,243 |
46% |
88,572 |
573,671 |
40% |
||||||
| $ 1,846,314 |
33% |
$ 436,050 |
$ 1,410,264 |
25% |
|||||||
| (a) See footnote (a) to Table 2a. |
|||||||||||
| (b) Developed Markets include $119.6 million of fair value step-up adjustment to inventory, $11.9 million of integration related tech transfer costs and $1.5 million BMS fair value inventory adjustment and PP&E net step up adjustment of $6.6 million. Emerging Markets include $33.7 million of fair value step up adjustment to inventory, $10.1 million of integration related tech transfer costs and $0.5 million of PP&E step up adjustment. |
|||||||||||
| (c) Developed Markets include $307.3 million of fair value step-up adjustment to inventory, $27.7 million of integration related tech transfer costs and $6.5 million BMS fair value inventory adjustment and PP&E net step up adjustment of $6.0 million. Emerging Markets include $65.1 million of fair value step up adjustment to inventory, $20.0 million of integration related tech transfer costs and $3.5 million of PP&E step up adjustment and other. |
| Valeant Pharmaceuticals International, Inc. |
Table 5 |
||||||
| Consolidated Balance Sheet and Other Data |
|||||||
| (In thousands) |
|||||||
| As of |
As of |
||||||
| December 31, |
December 31, |
||||||
| 5.1 |
Cash |
2013 |
2012 |
||||
| Cash and cash equivalents |
$ 600,340 |
$ 916,091 |
|||||
| Marketable securities |
- |
4,410 |
|||||
| Total cash and marketable securities |
$ 600,340 |
$ 920,501 |
|||||
| Debt |
|||||||
| Series A-1 Tranche A Term Loan Facility |
$ 258,985 |
$ 2,083,462 |
|||||
| Series A-2 Tranche A Term Loan Facility |
228,145 |
- |
|||||
| Series A-3 Tranche A Term Loan Facility |
1,935,713 |
- |
|||||
| Series D-2 Tranche B Term Loan Facility |
1,256,704 |
1,275,167 |
|||||
| Series C-2 Tranche B Term Loan Facility |
966,808 |
973,988 |
|||||
| Series E Tranche B Term Loan Facility |
3,090,506 |
- |
|||||
| Senior Notes |
9,618,829 |
6,448,317 |
|||||
| Medicis Convertible Notes |
209 |
233,793 |
|||||
| Other |
11,803 |
898 |
|||||
| 17,367,702 |
11,015,625 |
||||||
| Less: current portion |
(204,756) |
(480,182) |
|||||
| Total long-term debt |
$ 17,162,946 |
$ 10,535,443 |
|||||
| 5.2 |
Summary of Cash Flow Statements |
Three Months Ended |
|||||
| December 31, |
|||||||
| 2013 |
2012 |
||||||
| Cash flow provided by (used in): |
|||||||
| Net cash provided by operating activities (GAAP) |
$ 279,868 |
$ 67,920 |
|||||
| Restructuring, integration and acquisition-related costs(c) |
127,749 |
261,801 |
|||||
| Payment of accrued legal settlements |
166,151 |
- |
|||||
| Payment of accreted interest on convertible debt |
- |
- |
|||||
| Tax benefit from stock options exercised (a) |
(24,428) |
6,699 |
|||||
| Cash settlement of BOD equity awards |
- |
18,391 |
|||||
| Working capital change related to business development activities |
- |
- |
|||||
| Non-cash adjustments to income taxes payable |
- |
- |
|||||
| Changes in working capital related to restructuring, integration and acquisition-related costs(c) |
58,117 |
68,580 |
|||||
| Adjusted cash flow from operations (Non-GAAP)(b) |
$ 607,457 |
$ 423,391 |
|||||
| (a) Includes stock option tax benefit which will reduce taxes in future periods. |
|||
| (b) See footnote (a) to Table 2a. |
|||
| (c) Total restructuring, integration and acquisition-related costs cash payments of $185,866 which include $21,330 of payments related to transaction costs incurred by B&L in connection with the acqusition, are broken down as follows: |
|||
| Project Type |
Amount Paid |
||
| Bausch & Lomb |
147,156 |
||
| Medicis |
10,866 |
||
| Intellectual property migration |
8,655 |
||
| Vital Science Corp (Dermaglow) |
5,982 |
||
| Other |
5,040 |
||
| Europe (including Nature Produkt, Lek-Am, Croma & Ekomir) |
2,728 |
||
| Manufacturing integration (various deals) |
2,362 |
||
| Obagi |
1,808 |
||
| OraPharma |
991 |
||
| Solta |
166 |
||
| Systems Integration |
112 |
||
| Total |
$ 185,866 |
||
| Expense Type |
Amount Paid |
||
| Integration related consulting, duplicative labor, transition services, and other |
100,391 |
||
| Severance payments |
56,431 |
||
| Facility closure costs, other manufacturing integration, and other |
20,470 |
||
| Acquisition-related costs paid to 3rd parties |
7,746 |
||
| Stock-based compensation |
828 |
||
| Total |
$ 185,866 |
| Valeant Pharmaceuticals International, Inc. |
Table 6 |
|||||||||||||||
| Organic Growth - by Segment |
||||||||||||||||
| For the Three and Twelve Months Ended December 31, 2013 |
||||||||||||||||
| (In thousands) |
||||||||||||||||
| As reported |
||||||||||||||||
| For the Three Months Ended December 31, 2013 |
||||||||||||||||
| Organic growth |
||||||||||||||||
| (a) |
(b) |
(b) |
(b) |
|||||||||||||
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
Pro Forma |
Same store |
||||||
| Total U.S. (c) (g) |
1,073.5 |
550.3 |
523.3 |
539.1 |
495.3 |
1,034.5 |
- |
- |
(2.7) |
4% |
-3% |
|||||
| ROW Developed (d) (h) |
476.2 |
344.8 |
131.4 |
137.6 |
343.9 |
481.5 |
9.8 |
6.2 |
11.8 |
5% |
12% |
|||||
| Developed Markets |
1,549.7 |
895.1 |
654.7 |
676.7 |
839.2 |
1,516.0 |
9.8 |
6.2 |
9.1 |
4% |
0% |
|||||
| Emerging Markets (i) |
486.5 |
203.5 |
283.0 |
269.4 |
172.3 |
441.7 |
2.9 |
6.5 |
3.5 |
13% |
8% |
|||||
| Total product Sales |
2,036.2 |
1,098.6 |
937.7 |
946.1 |
1,011.5 |
1,957.7 |
12.7 |
12.7 |
12.6 |
6% |
2% |
|||||
| Excludes Generics |
||||||||||||||||
| For the Three Months Ended December 31, 2013 |
||||||||||||||||
| Organic growth |
||||||||||||||||
| (a) |
(b) |
(b) |
(b) |
|||||||||||||
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
Pro Forma |
Same store |
||||||
| Total U.S. (c) (f) (g) |
1,036.6 |
550.3 |
486.4 |
424.6 |
495.3 |
919.9 |
- |
- |
(2.7) |
12% |
14% |
|||||
| ROW Developed (d) (h) |
476.2 |
344.8 |
131.4 |
137.6 |
343.9 |
481.5 |
9.8 |
6.2 |
11.8 |
5% |
12% |
|||||
| Developed Markets |
1,512.8 |
895.1 |
617.8 |
562.2 |
839.2 |
1,401.4 |
9.8 |
6.2 |
9.1 |
10% |
13% |
|||||
| Emerging Markets (i) |
486.5 |
203.5 |
283.0 |
269.4 |
172.3 |
441.7 |
2.9 |
6.5 |
3.5 |
13% |
8% |
|||||
| Total product sales |
1,999.3 |
1,098.6 |
900.8 |
831.6 |
1,011.5 |
1,843.1 |
12.7 |
12.7 |
12.6 |
11% |
12% |
|||||
| As reported |
||||||||||||||||
| For the Twelve Months Ended December 31, 2013 |
||||||||||||||||
| Organic growth |
||||||||||||||||
| (a) |
(b) |
(b) |
(b) |
|||||||||||||
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
Pro Forma |
Same store |
||||||
| Total U.S. (c) (g) |
3,150.7 |
1,484.5 |
1,666.2 |
1,820.1 |
1,415.2 |
3,235.3 |
- |
- |
20.7 |
-2% |
-7% |
|||||
| ROW Developed (d) (h) |
1,048.5 |
566.5 |
482.0 |
517.1 |
568.7 |
1,085.8 |
21.1 |
12.5 |
24.1 |
2% |
2% |
|||||
| Developed Markets |
4,199.2 |
2,051.0 |
2,148.2 |
2,337.2 |
1,983.9 |
4,321.1 |
21.1 |
12.5 |
44.8 |
-1% |
-5% |
|||||
| Emerging Markets (i) |
1,458.3 |
415.6 |
1,042.7 |
963.2 |
367.0 |
1,330.2 |
4.9 |
9.7 |
23.0 |
12% |
11% |
|||||
| Total product Sales |
5,657.5 |
2,466.6 |
3,190.9 |
3,300.4 |
2,350.9 |
5,651.3 |
26.0 |
22.2 |
67.8 |
2% |
0% |
|||||
| Excludes Generics |
||||||||||||||||
| For the Twelve Months Ended December 31, 2013 |
||||||||||||||||
| Organic growth |
||||||||||||||||
| (a) |
(b) |
(b) |
(b) |
|||||||||||||
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
Pro Forma |
Same store |
||||||
| Total U.S. (c) (f) (g) |
3,056.1 |
1,484.5 |
1,571.6 |
1,450.6 |
1,415.2 |
2,865.7 |
- |
- |
20.7 |
7% |
10% |
|||||
| ROW Developed (d) (h) |
1,042.7 |
566.5 |
478.7 |
492.4 |
568.7 |
1,085.8 |
21.1 |
12.5 |
24.1 |
1% |
7% |
|||||
| Developed Markets |
4,098.8 |
2,051.0 |
2,050.3 |
1,943.0 |
1,983.9 |
3,951.5 |
21.1 |
12.5 |
44.8 |
6% |
9% |
|||||
| Emerging Markets (i) |
1,458.3 |
415.6 |
1,042.7 |
963.2 |
367.0 |
1,330.2 |
4.9 |
9.7 |
23.0 |
12% |
11% |
|||||
| Total product sales |
5,557.1 |
2,466.6 |
3,093.0 |
2,906.2 |
2,350.9 |
5,281.7 |
26.0 |
22.2 |
67.8 |
7% |
10% |
|||||
| (a) Note: Currency effect for constant currency sales is determined by comparing 2013 reported amounts adjusted to exclude currency impact, calculated using 2012 monthly average exchange rates, to the actual 2012 reported amounts. Constant currency sales is not a GAAP-defined measure of revenue growth. Constant currency sales as defined and presented by us may not be comparable to similar measures reported by other companies. |
||||||||||||||||
| (b) See footnote (a) to Table 2a. |
||||||||||||||||
| (c) Includes Valeant's attributable portion of revenue from joint ventures (JV) - $1.6M Q4'12 and $1.3M Q4'13 and $3.5M FY'12 and $6.2M FY'13. |
||||||||||||||||
| (d) Includes Valeant's attributable portion of revenue from joint ventures (JV) - $2.5M Q4'12 and $3.4M Q4'13 and $8.2M FY'12 and $11.0M FY'13. |
||||||||||||||||
| (e) Includes divestitures, discontinuations and supply interruptions. |
||||||||||||||||
| (f) Excludes revenue from genericized products of $114.6M Q4'12 and $36.9M Q4'13 and $394.3M FY'12 and $100.4M FY'13. |
||||||||||||||||
| (g) Reflects Bausch & Lomb post-acquisition revenue of $355.5M for Q4'13 and $572.0M FY'13 and $302.6M Q4'12 and $491.1M FY'12 pro forma revenue adjustments. |
||||||||||||||||
| (h) Reflects Bausch & Lomb post-acquisition revenue of $333.9M Q4'13 and $517.3M FY'13, currency impact of $5.1M Q4'13 and $10.4M FY'13 and $334.1M Q4'12 and $518.1M FY'12 pro forma revenue adjustments. |
||||||||||||||||
| (i) Reflects Bausch & Lomb post-acquisition revenue of $153.6M Q4'13 and $253.8M FY'13, currency impact of $4.9M Q4'13 and $7.3M FY'13 and $136.7M Q4'12 and $226.7M FY'12 pro forma revenue adjustments. |
(Logo: http://photos.prnewswire.com/prnh/20101025/LA87217LOGO)
SOURCE: Valeant Pharmaceuticals International, Inc.
http://www.valeant.com
http://photos.prnewswire.com/prnh/20101025/LA87217LOGO
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