2015 Q4 Form 10-K Financial Statement

#000088559016000101 Filed on April 29, 2016

View on sec.gov

Income Statement

Concept 2015 Q4 2014 Q4 2014 Q3
Revenue $2.758B $2.235B $2.043B
YoY Change 23.38% 8.31% 32.54%
Cost Of Revenue $676.7M $571.3M $545.8M
YoY Change 18.45% -21.94% -2.67%
Gross Profit $2.060B $1.651B $1.498B
YoY Change 24.74% 23.97% 52.67%
Gross Profit Margin 74.68% 73.87% 73.29%
Selling, General & Admin $742.9M $524.5M $504.1M
YoY Change 41.64% 16.48% 41.72%
% of Gross Profit 36.07% 31.76% 33.66%
Research & Development $95.90M $59.10M $59.10M
YoY Change 62.27% -0.67% 20.61%
% of Gross Profit 4.66% 3.58% 3.95%
Depreciation & Amortization $698.6M $365.9M $439.3M
YoY Change 90.93% -10.86% -53.56%
% of Gross Profit 33.92% 22.16% 29.34%
Operating Expenses $1.670B $1.027B $563.2M
YoY Change 62.57% 245.11% 39.16%
Operating Profit $168.0M $617.4M $671.6M
YoY Change -72.79% -40.3% -175.33%
Interest Expense -$435.0M -$18.10M -$307.2M
YoY Change 2303.31% -93.2% 27.26%
% of Operating Profit -258.93% -2.93% -45.74%
Other Income/Expense, Net
YoY Change
Pretax Income -$240.3M $551.1M $376.7M
YoY Change -143.6% -805.63% -133.01%
Income Tax $122.1M $49.80M $100.3M
% Of Pretax Income 9.04% 26.63%
Net Earnings -$361.9M $502.1M $276.4M
YoY Change -172.08% 305.57% -128.44%
Net Earnings / Revenue -13.12% 22.46% 13.53%
Basic Earnings Per Share -$1.12 $1.53 $0.79
Diluted Earnings Per Share -$1.12 $1.50 $0.78
COMMON SHARES
Basic Shares Outstanding 343.1M shares 335.7M shares 335.4M shares
Diluted Shares Outstanding 341.3M shares

Balance Sheet

Concept 2015 Q4 2014 Q4 2014 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $597.0M $323.0M $809.0M
YoY Change 84.83% -46.17% 35.74%
Cash & Equivalents $597.0M $323.0M $808.8M
Short-Term Investments
Other Short-Term Assets $966.0M $844.0M $792.0M
YoY Change 14.45% 16.25% 48.87%
Inventory $1.257B $889.2M $932.7M
Prepaid Expenses
Receivables $2.687B $2.076B $1.880B
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $5.507B $4.132B $4.414B
YoY Change 33.29% 6.33% 14.69%
LONG-TERM ASSETS
Property, Plant & Equipment $1.442B $1.312B $1.300B
YoY Change 9.88% 6.33% 6.45%
Goodwill $18.55B $9.361B $9.468B
YoY Change 98.19% -4.01% -2.81%
Intangibles $23.08B $11.28B $11.62B
YoY Change 104.67% -12.22% -11.23%
Long-Term Investments
YoY Change
Other Assets $224.0M $167.4M $233.4M
YoY Change 33.81% -14.37% -3.53%
Total Long-Term Assets $43.46B $22.17B $22.65B
YoY Change 96.0% -7.79% -7.02%
TOTAL ASSETS
Total Short-Term Assets $5.507B $4.132B $4.414B
Total Long-Term Assets $43.46B $22.17B $22.65B
Total Assets $48.97B $26.30B $27.06B
YoY Change 86.15% -5.83% -4.06%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $434.0M $398.0M $323.3M
YoY Change 9.05% 21.71% -21.71%
Accrued Expenses $3.859B $2.157B $1.994B
YoY Change 78.91% 19.82% 5.53%
Deferred Revenue
YoY Change
Short-Term Debt $16.00M $6.200M $0.00
YoY Change 158.06% -48.76%
Long-Term Debt Due $823.0M $900.0K $690.6M
YoY Change 91344.44% -99.56% 91.32%
Total Short-Term Liabilities $5.313B $2.708B $3.143B
YoY Change 96.17% 7.8% 10.17%
LONG-TERM LIABILITIES
Long-Term Debt $30.27B $15.23B $15.58B
YoY Change 98.75% -11.27% -8.56%
Other Long-Term Liabilities $185.0M $197.1M $208.6M
YoY Change -6.14% 22.8% 27.21%
Total Long-Term Liabilities $30.45B $15.43B $15.79B
YoY Change 97.41% -10.96% -8.22%
TOTAL LIABILITIES
Total Short-Term Liabilities $5.313B $2.708B $3.143B
Total Long-Term Liabilities $30.45B $15.43B $15.79B
Total Liabilities $42.94B $20.90B $21.83B
YoY Change 105.41% -8.07% -5.69%
SHAREHOLDERS EQUITY
Retained Earnings -$2.750B -$2.398B -$2.900B
YoY Change 14.69% -26.86% -14.77%
Common Stock $10.20B $8.593B $8.575B
YoY Change 18.72% 0.74% 0.74%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $5.910B $5.279B $5.123B
YoY Change
Total Liabilities & Shareholders Equity $48.97B $26.30B $27.06B
YoY Change 86.15% -5.96% -4.06%

Cashflow Statement

Concept 2015 Q4 2014 Q4 2014 Q3
OPERATING ACTIVITIES
Net Income -$361.9M $502.1M $276.4M
YoY Change -172.08% 305.57% -128.44%
Depreciation, Depletion And Amortization $698.6M $365.9M $439.3M
YoY Change 90.93% -10.86% -53.56%
Cash From Operating Activities $598.0M $815.7M $618.7M
YoY Change -26.69% 191.43% 206.74%
INVESTING ACTIVITIES
Capital Expenditures -$81.20M -$154.0M $39.60M
YoY Change -47.27% 61.93% 59.04%
Acquisitions $606.8M
YoY Change -86.33%
Other Investing Activities -$1.454B -$51.80M $870.2M
YoY Change 2706.76% 4.65% -119.6%
Cash From Investing Activities -$1.535B -$205.8M $756.3M
YoY Change 645.92% 42.32% -116.92%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $0.00
YoY Change -100.0%
Debt Paid & Issued, Net $1.630B
YoY Change -65.91%
Cash From Financing Activities 122.5M -1.099B -$1.082B
YoY Change -111.15% 739.27% -146.67%
NET CHANGE
Cash From Operating Activities $598.0M $815.7M $618.7M
Cash From Investing Activities -1.535B -205.8M $756.3M
Cash From Financing Activities 122.5M -1.099B -$1.082B
Net Change In Cash $598.0M $815.7M $292.9M
YoY Change -26.69% 18438.64% -115.03%
FREE CASH FLOW
Cash From Operating Activities $598.0M $815.7M $618.7M
Capital Expenditures -$81.20M -$154.0M $39.60M
Free Cash Flow $679.2M $969.7M $579.1M
YoY Change -29.96% 158.59% 227.55%

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CY2014 us-gaap Depreciation
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CY2013 us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
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24200000 USD
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17100000 USD
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24200000 USD
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4100000 USD
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1100000 USD
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CY2015 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Liability Issues
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CY2014 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Liability Settlements
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CY2015 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Liability Settlements
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CY2015Q4 us-gaap Fair Value Measurement With Unobservable Inputs Reconciliations Recurring Basis Liability Value
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44700000 USD
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1053600000 USD
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143900000 USD
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29600000 USD
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32300000 USD
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4100000 USD
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50100000 USD
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90600000 USD
CY2013 us-gaap Increase Decrease In Restricted Cash
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94200000 USD
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CY2014 us-gaap Proceeds From Sale And Maturity Of Available For Sale Securities
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CY2015 us-gaap Proceeds From Sale And Maturity Of Available For Sale Securities
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CY2013 us-gaap Proceeds From Sale Of Equity Method Investments
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CY2014 us-gaap Proceeds From Sale Of Equity Method Investments
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CY2014 us-gaap Proceeds From Sale Of Equity Method Investments
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CY2013 us-gaap Proceeds From Sale Of Property Plant And Equipment
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CY2014 us-gaap Proceeds From Sale Of Property Plant And Equipment
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19400000 USD
CY2015 us-gaap Proceeds From Short Term Debt
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CY2013 us-gaap Proceeds From Stock Options Exercised
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10000000 USD
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CY2013 vrx Income Tax Reconciliation Foreign Withholding Tax
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CY2013 vrx Income Tax Reconciliation Nondeductible Expense Merger And Acquisition Costs
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3100000 USD
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CY2013 vrx Income Tax Reconciliation Uncertain Tax Positions
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51300000 USD
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CY2015 vrx Maximum Term Of Original Maturity To Classify Instruments As Cash And Cash Equivalents
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CY2015 vrx Minimum Period To Classify Uncertain Tax Position Liabilities As Long Term Liabilities
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CY2015 vrx Other Comprehensive Income Loss Pensionand Other Postretirement Benefit Plans Amortizationor Settlement Recognition
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CY2015 us-gaap Comparability Of Prior Year Financial Data
ComparabilityOfPriorYearFinancialData
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Reclassifications </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Certain reclassifications have been made to prior year amounts to conform with the current year presentation. Such amounts include a reclassification of </font><font style="font-family:inherit;font-size:10pt;">$26 million</font><font style="font-family:inherit;font-size:10pt;"> of debt issuance costs as of December 31, 2014 from Other long-term assets, net to Long-term debt (treated as a deduction to Long-term debt) on the consolidated balance sheet as a result of adoption of guidance issued by the Financial Accounting Standards Board (&#8220;FASB&#8221;) (see below under &#8220;Adoption of New Accounting Standards&#8221; in this Note 3 for more details). </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The reclassifications described above had no effect on the Company&#8217;s previously reported results of operations</font></div></div>
CY2015 us-gaap Concentration Risk Credit Risk
ConcentrationRiskCreditRisk
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Concentrations of Credit Risk</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable.</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company invests its excess cash in high-quality, money market instruments and term deposits with varying maturities, but typically less than </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> months.</font><font style="font-family:inherit;font-size:10pt;font-weight:bold;"> </font><font style="font-family:inherit;font-size:10pt;">The Company maintains its cash and cash equivalents with major financial institutions. The Company has not experienced any significant losses on its cash or cash equivalents.</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company&#8217;s accounts receivable primarily represent amounts due from wholesale distributors, retail pharmacies, government entities and group purchasing organizations. Outside of the U.S., concentrations of credit risk with respect to trade receivables, which are typically unsecured, are limited due to the number of customers using the Company&#8217;s products, as well as their dispersion across many different geographic areas. The Company performs periodic credit evaluations of customers and does not require collateral. The Company monitors economic conditions, including volatility associated with international economies, and related impacts on the relevant financial markets and its business, especially in light of sovereign credit issues. The credit and economic conditions within Italy, Portugal, Spain, Greece, among other members of the European Union, Russia, Brazil, and Egypt have been weak in recent years. These conditions have increased, and may continue to increase, the average length of time that it takes to collect on the Company&#8217;s accounts receivable outstanding in these countries. An allowance for doubtful accounts is maintained for potential credit losses based on the aging of accounts receivable, historical bad debts experience, and changes in customer payment patterns. Accounts receivable balances are written off against the allowance when it is deemed probable that the receivable will not be&#160;collected.</font></div></div>
CY2015 us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">DESCRIPTION OF BUSINESS</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Valeant Pharmaceuticals International,&#160;Inc. (the&#160;&#8220;Company&#8221;) is a multinational, specialty pharmaceutical and medical device company that develops, manufactures, and markets a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (&#8220;OTC&#8221;) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices), which are marketed directly or indirectly in over </font><font style="font-family:inherit;font-size:10pt;">100</font><font style="font-family:inherit;font-size:10pt;"> countries. Effective August 9, 2013, the Company continued from the federal jurisdiction of Canada to the Province of British Columbia, meaning that the Company became a company registered under the laws of the Province of British Columbia as if it had been incorporated under the laws of the Province of British Columbia. As a result of this continuance, the legal domicile of the Company became the Province of British Columbia, the Canada Business Corporations Act ceased to apply to the Company and the Company became subject to the British Columbia Business Corporations Act.</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On April 1, 2015, the Company acquired Salix Pharmaceuticals, Ltd. (&#8220;Salix&#8221;), pursuant to an Agreement and Plan of Merger dated February 20, 2015, as amended on March 16, 2015 (the &#8220;Salix Merger Agreement&#8221;), with Salix surviving as a wholly owned subsidiary of Valeant Pharmaceuticals International (&#8220;Valeant&#8221;), a subsidiary of the Company (the &#8220;Salix Acquisition&#8221;). </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For further information regarding the Salix Acquisition, including the related financing, see Note 4 and Note 13.</font></div></div>
CY2015 us-gaap Revenue Recognition Sales Of Goods
RevenueRecognitionSalesOfGoods
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Product Sales </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For products sold directly to wholesalers and retailers, the Company recognizes product sales revenue when persuasive evidence of an arrangement exists, delivery has occurred, collectability is reasonably assured, and the price to the buyer is fixed or determinable, the timing of which is based on the specific contractual terms with each customer. Delivery occurs when title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. As such, the Company generally recognizes revenue on a sell-in basis (i.e., record revenue upon delivery); however, based upon specific terms and circumstances, the Company has determined that, for certain arrangements with third parties, revenue should be recognized on a sell-through basis (i.e., record revenue when products are dispensed to patients). Refer to Note 2 for information regarding the arrangement with Philidor. With respect to the recent launch of Addyi&#174; in the U.S. in the fourth quarter of 2015, the Company has determined that it does not have the ability to reasonably estimate returns due to a lack of historical returns data for this product or similar products. Therefore, the Company is recording revenue for Addyi&#174; on a sell-through basis until it determines that returns can be reasonably estimated. In evaluating the proper revenue recognition for sales transactions, the Company considers all relevant factors, including additional discounts or extended payment terms which the Company grants to certain customers, often near the end of fiscal quarterly periods.</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Revenue from product sales is recognized net of provisions for estimated cash discounts, allowances, returns, rebates, chargebacks and distribution fees paid to certain of the Company&#8217;s wholesale customers. The Company establishes these provisions concurrently with the recognition of product sales revenue. &#160;Price appreciation credits are generated when the Company increases a product&#8217;s wholesaler acquisition cost (&#8220;WAC&#8221;) under our contracts with certain wholesalers. Under such contracts, the Company is entitled to credits from such wholesalers for the impact of that WAC increase on inventory currently on hand at the wholesalers. Such credits, which can be significant, are used to offset against the total distribution service fees the Company pays on all of its products to each wholesaler. Net revenue on these credits is recognized on the date that the wholesaler is notified of the price increase. The Company offers cash discounts for prompt payment and allowances for volume purchases to customers. Provisions for cash discounts and allowances are estimated based on contractual sales terms with customers, an analysis of unpaid invoices, and historical payment experience. The Company generally allows customers to return product within a specified period of time before and after its expiration date, excluding the Company&#8217;s European businesses which generally do not carry a right of return. Provisions for returns are estimated based on historical sales and return levels, taking into account additional available information such as historical return and exchange levels, external data with respect to inventory levels in the wholesale distribution channel, external data with respect to prescription demand for the Company&#8217;s products, remaining shelf lives of the Company&#8217;s products at the date of sale and estimated returns liability to be processed by year of sale based on analysis of lot information related to actual historical returns. The Company reviews its methodology and adequacy of the provision for returns on a quarterly basis, adjusting for changes in assumptions, historical results and business practices, as necessary. The Company is subject to rebates on sales made under governmental and managed-care programs in the U.S., and chargebacks on sales made to government agencies, group purchasing organizations and other indirect customers. Provisions for rebates and chargebacks are estimated based on historical utilization levels, relevant statutes with respect to governmental pricing programs and contractual sales&#160;terms with managed-care providers and group purchasing organizations. Changes in the level of utilization of the Company&#8217;s products through private or public benefit plans and group purchasing organizations will impact the amount of rebates and chargebacks that the Company is obligated to pay.</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company is party to product manufacturing and supply agreements with a number of commercialization counterparties in the U.S.&#160;Under the terms of these agreements, the Company&#8217;s supply prices for its products are determined after taking into consideration estimates for future returns, rebates, and chargebacks provided by each counterparty. The Company makes adjustments as needed to state these estimates on a basis consistent with this policy and its methodology for estimating returns, rebates and chargebacks related to its own direct product&#160;sales.</font></div></div>
CY2015 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In preparing the Company&#8217;s consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include: provisions for product returns, rebates, chargebacks, discounts and allowances, and distribution fees paid to certain wholesalers; useful lives of amortizable intangible assets and property, plant and equipment; expected future cash flows used in evaluating intangible assets for impairment; reporting unit fair values in testing goodwill for impairment; provisions for loss contingencies; provisions for income taxes, uncertain tax positions and realizability of deferred tax assets; and the allocation of the purchase price for acquired assets and businesses, including the fair value of contingent consideration. Under certain product manufacturing and supply agreements, management relies on estimates for future returns, rebates and chargebacks made by the Company&#8217;s commercialization counterparties. </font></div><div style="line-height:120%;padding-bottom:10px;padding-top:10px;text-align:justify;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company&#8217;s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company&#8217;s consolidated financial statements could be materially impacted.</font></div></div>

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