2015 Q4 Form 10-K Financial Statement

#000088559017000015 Filed on March 01, 2017

View on sec.gov

Income Statement

Concept 2015 Q4 2015 Q3 2015 Q2
Revenue $2.758B $2.787B $2.733B
YoY Change 23.38% 36.4% 33.9%
Cost Of Revenue $676.7M $634.6M $669.9M
YoY Change 18.45% 16.27% 17.61%
Gross Profit $2.060B $2.152B $2.063B
YoY Change 24.74% 43.73% 40.2%
Gross Profit Margin 74.68% 77.23% 75.49%
Selling, General & Admin $742.9M $697.6M $685.5M
YoY Change 41.64% 38.39% 32.93%
% of Gross Profit 36.07% 32.41% 33.23%
Research & Development $95.90M $101.6M $81.10M
YoY Change 62.27% 71.91% 21.95%
% of Gross Profit 4.66% 4.72% 3.93%
Depreciation & Amortization $698.6M $726.4M $635.0M
YoY Change 90.93% 65.35% 55.75%
% of Gross Profit 33.92% 33.75% 30.78%
Operating Expenses $1.670B $799.2M $766.6M
YoY Change 62.57% 41.9% 31.67%
Operating Profit $168.0M $448.0M $342.0M
YoY Change -72.79% -33.29% -3.69%
Interest Expense -$435.0M -$453.5M -$406.2M
YoY Change 2303.31% 47.62% 73.52%
% of Operating Profit -258.93% -101.23% -118.77%
Other Income/Expense, Net
YoY Change
Pretax Income -$240.3M -$5.700M -$64.70M
YoY Change -143.6% -101.51% -153.47%
Income Tax $122.1M -$57.40M -$13.10M
% Of Pretax Income
Net Earnings -$361.9M $51.70M -$51.60M
YoY Change -172.08% -81.3% -142.3%
Net Earnings / Revenue -13.12% 1.86% -1.89%
Basic Earnings Per Share -$1.12 $0.14 -$0.15
Diluted Earnings Per Share -$1.12 $0.14 -$0.15
COMMON SHARES
Basic Shares Outstanding 343.1M shares 344.9M shares 344.4M shares
Diluted Shares Outstanding 351.0M shares 344.4M shares

Balance Sheet

Concept 2015 Q4 2015 Q3 2015 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $597.0M $1.420B $958.0M
YoY Change 84.83% 75.53% 80.41%
Cash & Equivalents $597.0M $1.420B $958.0M
Short-Term Investments
Other Short-Term Assets $966.0M $1.680B $1.786B
YoY Change 14.45% 112.12% -6.98%
Inventory $1.257B $1.199B $1.230B
Prepaid Expenses
Receivables $2.687B $2.696B $2.371B
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $5.507B $6.996B $6.345B
YoY Change 33.29% 58.5% 22.88%
LONG-TERM ASSETS
Property, Plant & Equipment $1.442B $1.351B $1.360B
YoY Change 9.88% 3.92% 3.05%
Goodwill $18.55B $17.37B $17.23B
YoY Change 98.19% 83.51% 82.63%
Intangibles $23.08B $22.38B $23.15B
YoY Change 104.67% 92.61% 97.0%
Long-Term Investments
YoY Change
Other Assets $224.0M $236.1M $167.0M
YoY Change 33.81% 1.16% -19.05%
Total Long-Term Assets $43.46B $41.46B $42.00B
YoY Change 96.0% 83.07% 84.75%
TOTAL ASSETS
Total Short-Term Assets $5.507B $6.996B $6.345B
Total Long-Term Assets $43.46B $41.46B $42.00B
Total Assets $48.97B $48.45B $48.34B
YoY Change 86.15% 79.07% 73.3%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $434.0M $476.8M $415.8M
YoY Change 9.05% 47.48% 26.88%
Accrued Expenses $3.859B $3.294B $3.055B
YoY Change 78.91% 65.18% 72.11%
Deferred Revenue
YoY Change
Short-Term Debt $16.00M $0.00 $0.00
YoY Change 158.06%
Long-Term Debt Due $823.0M $707.0M $590.9M
YoY Change 91344.44% 2.37% 121.56%
Total Short-Term Liabilities $5.313B $4.651B $4.291B
YoY Change 96.17% 47.95% 71.89%
LONG-TERM LIABILITIES
Long-Term Debt $30.27B $30.18B $30.29B
YoY Change 98.75% 93.63% 77.56%
Other Long-Term Liabilities $185.0M $209.1M $208.8M
YoY Change -6.14% 0.24% -2.88%
Total Long-Term Liabilities $30.45B $30.39B $30.50B
YoY Change 97.41% 92.4% 76.56%
TOTAL LIABILITIES
Total Short-Term Liabilities $5.313B $4.651B $4.291B
Total Long-Term Liabilities $30.45B $30.39B $30.50B
Total Liabilities $42.94B $41.99B $41.78B
YoY Change 105.41% 92.38% 85.48%
SHAREHOLDERS EQUITY
Retained Earnings -$2.750B -$2.339B -$2.388B
YoY Change 14.69% -19.36% -24.8%
Common Stock $10.20B $10.14B $10.11B
YoY Change 18.72% 18.31% 18.47%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $5.910B $6.342B $6.435B
YoY Change
Total Liabilities & Shareholders Equity $48.97B $48.45B $48.34B
YoY Change 86.15% 79.07% 73.3%

Cashflow Statement

Concept 2015 Q4 2015 Q3 2015 Q2
OPERATING ACTIVITIES
Net Income -$361.9M $51.70M -$51.60M
YoY Change -172.08% -81.3% -142.3%
Depreciation, Depletion And Amortization $698.6M $726.4M $635.0M
YoY Change 90.93% 65.35% 55.75%
Cash From Operating Activities $598.0M $733.0M $418.0M
YoY Change -26.69% 18.47% 11.17%
INVESTING ACTIVITIES
Capital Expenditures -$81.20M $51.10M $46.80M
YoY Change -47.27% 29.04% -58.77%
Acquisitions $115.8M $13.09B
YoY Change -80.92% 19151.32%
Other Investing Activities -$1.454B -$105.0M $500.0K
YoY Change 2706.76% -112.07% -135.71%
Cash From Investing Activities -$1.535B -$156.2M -$2.645B
YoY Change 645.92% -120.65% 892.94%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $0.00 $50.00M
YoY Change
Debt Paid & Issued, Net $29.00M $247.9M
YoY Change -98.22% 106.07%
Cash From Financing Activities 122.5M -$108.5M $1.325B
YoY Change -111.15% -89.97% -946.3%
NET CHANGE
Cash From Operating Activities $598.0M $733.0M $418.0M
Cash From Investing Activities -1.535B -$156.2M -$2.645B
Cash From Financing Activities 122.5M -$108.5M $1.325B
Net Change In Cash $598.0M $468.3M -$901.9M
YoY Change -26.69% 59.88% 1818.94%
FREE CASH FLOW
Cash From Operating Activities $598.0M $733.0M $418.0M
Capital Expenditures -$81.20M $51.10M $46.80M
Free Cash Flow $679.2M $681.9M $371.2M
YoY Change -29.96% 17.75% 41.41%

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30000000 USD
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CY2016 vrx Other Post Business Combination Acquisition Related Costs
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CY2014 vrx Other Post Business Combination Acquisition Related Costs Accelerationof Unvested Restricted Stock
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CY2015 vrx Past Due Period For Accounts Receivable To Be Negligible
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CY2014 vrx Paymentof Deferred Consideration
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CY2015Q1 vrx Saleof Stock Public Offering Price Per Share
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0.15
CY2014 vrx Stock Issued During Period Value Equity Settlement And Reclassification Of Call Options
StockIssuedDuringPeriodValueEquitySettlementAndReclassificationOfCallOptions
-3000000 USD
CY2016 vrx Tax Benefit Recognition Measurement Percentage
TaxBenefitRecognitionMeasurementPercentage
0.5
CY2015 vrx Unrecognized Tax Benefits Decrease Resultingfrom Priorand Current Period Tax Positions
UnrecognizedTaxBenefitsDecreaseResultingfromPriorandCurrentPeriodTaxPositions
-21000000 USD
CY2016 vrx Unrecognized Tax Benefits Decrease Resultingfrom Priorand Current Period Tax Positions
UnrecognizedTaxBenefitsDecreaseResultingfromPriorandCurrentPeriodTaxPositions
63000000 USD
CY2015Q4 vrx Unrecognized Tax Benefits Including Interest And Penalties
UnrecognizedTaxBenefitsIncludingInterestAndPenalties
344000000 USD
CY2016Q4 vrx Unrecognized Tax Benefits Including Interest And Penalties
UnrecognizedTaxBenefitsIncludingInterestAndPenalties
423000000 USD
CY2015 vrx Unrecognized Tax Benefits Increase Resultingfrom Priorand Current Period Tax Positions
UnrecognizedTaxBenefitsIncreaseResultingfromPriorandCurrentPeriodTaxPositions
5000000 USD
CY2016 vrx Unrecognized Tax Benefits Increase Resultingfrom Priorand Current Period Tax Positions
UnrecognizedTaxBenefitsIncreaseResultingfromPriorandCurrentPeriodTaxPositions
16000000 USD
CY2016Q4 vrx Unrecognized Tax Benefits That Would Not Impact Effective Tax Rate
UnrecognizedTaxBenefitsThatWouldNotImpactEffectiveTaxRate
238000000 USD
CY2016 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 trade receivables.</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&#8217;s cash and cash equivalents are invested in various investment grade institutional money market accounts and bank term deposits. Deposits held at banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk. The Company seeks to mitigate such risks by spreading its risk across multiple counterparties and monitoring the risk profiles of these 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;">The Company&#8217;s trade receivables 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 regions. 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. In November 2016, as a result of the Egyptian government&#8217;s decision to float the Egyptian pound and un-peg it to the U.S. Dollar, the Egyptian pound was significantly devalued.&#160; The Company's exposure to the Egyptian pound is primarily with respect to the Amoun Pharmaceutical Company S.A.E. business acquired in October 2015, which represented approximately </font><font style="font-family:inherit;font-size:10pt;">2%</font><font style="font-family:inherit;font-size:10pt;"> of the Company's 2016 total revenues. These conditions have increased, and may continue to increase, the average length of time that it takes to collect on the Company&#8217;s trade receivables outstanding in these countries. An allowance for doubtful accounts is maintained for potential credit losses based on the aging of trade receivables, historical bad debts experience, and changes in customer payment patterns. Trade receivable balances are written off against the allowance when it is deemed probable that the receivable will not be&#160;collected.</font></div></div>
CY2016 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;). See Note 3 for additional information regarding the Salix Acquisition and related financing.</font></div></div>
CY2016 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<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 to the current year presentation. </font></div></div>
CY2016 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;">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 certain retailers and other third parties, revenue should be recognized on a sell-through basis (i.e., record revenue when products are dispensed to patients). 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 its 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>

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