BAUSCH HEALTH COMPANIES INC 
By LAVAL, Quebec, Feb. 27, 2014 /PRNewswire/ -- 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
-- 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
laurie.little@valeant.com
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 below)
(exclusive of
amortization
and
impairments
of finite-
lived
intangible
assets shown
separately 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 separately
(exclusive below)
of
amortization
and
impairments
of finite-
lived
intangible
assets shown (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
(R) life-cycle management project, $5.0
million related to upfront payment to acquire
North America rights to Emervel (R) 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(R) 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 (R)
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 (R), $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(R) 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
2013 2012 non-GAAP
GAAP GAAP
---- ----
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
2013 2012 non-GAAP
GAAP GAAP
---- ----
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 %
as reported of product sales fair value step-up
adjustment to inventory
and other non-GAAP (b) non-GAAP of product sales
GAAP
----
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 %
as reported of product sales fair value step-up
adjustment to inventory
and other non-GAAP (c) non-GAAP of product sales
GAAP
----
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
QTD Acq impact QTD QTD Pro Forma Adj Pro Forma 2012 Currency impact Same Currency impact Acq Divestitures / Discontinuations (e) (1)+(7)+(8)+(9)
store /(6) (3)+(7) / (4)-(9)
2013 Same store 2012
---- ---------- ----
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
QTD Acq impact QTD QTD Pro Forma Adj Pro Forma 2012 Currency impact Same Currency impact Acq Divestitures / Discontinuations (e) (1)+(7)+(8)+(9)
store /(6) (3)+(7) / (4)-(9)
2013 Same store 2012
---- ---------- ----
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
YTD Acq impact YTD YTD Pro Forma Adj Pro Forma 2012 Currency impact Same Currency impact Acq Divestitures / Discontinuations (e) (1)+(7)+(8)+(9)
store /(6) (3)+(7) / (4)-(9)
2013 Same store 2012
---- ---------- ----
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
YTD Acq impact YTD YTD Pro Forma Adj Pro Forma 2012 Currency impact Same Currency impact Acq Divestitures / Discontinuations (e) (1)+(7)+(8)+(9)
store /(6) (3)+(7) / (4)-(9)
2013 Same store 2012
---- ---------- ----
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.
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SOURCE Valeant Pharmaceuticals International, Inc.
