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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended June 30, 2014
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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British Columbia, Canada
(State or other jurisdiction of incorporation or organization) |
98-0448205
(I.R.S. Employer Identification No.) |
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2150 St. Elzéar Blvd. West, Laval, Quebec
(Address of principal executive offices) |
H7L 4A8
(Zip Code) |
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company
o
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Part I.
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Financial Information
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Other Information
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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•
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the challenges and difficulties associated with managing the rapid growth of our Company and a larger, more complex business;
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•
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the introduction of generic competitors of our brand products;
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the introduction of products that compete against our products that do not have patent or data exclusivity rights, which products represent a significant portion of our revenues;
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our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;
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our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis;
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•
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factors relating to the integration of the companies, businesses and products acquired by the Company (including the integration relating to our recent acquisitions of PreCision Dermatology, Inc. (“PreCision”), Solta Medical, Inc. (“Solta Medical”), and Bausch & Lomb Holdings Incorporated (“B&L”)), such as the time and resources required to integrate such companies, businesses and products, the difficulties associated with such integrations (including potential disruptions in sales activities and potential challenges with information technology systems integrations), the difficulties and challenges associated with entering into new business areas and new geographic markets, the difficulties, challenges
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•
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factors relating to our ability to achieve all of the estimated synergies from our acquisitions, including from our recent acquisition of B&L (which we anticipate will be greater than $900 million), as a result of cost-rationalization and integration initiatives. These factors may include greater than expected operating costs, the difficulty in eliminating certain duplicative costs, facilities and functions, and the outcome of many operational and strategic decisions, some of which have not yet been made;
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the ultimate outcome of any possible transaction between the Company and Allergan, Inc. (“Allergan”) including the possibilities that the Company will not continue to pursue a transaction with Allergan or that Allergan will reject a transaction with the Company and factors relating to the time, resources and efforts expended in pursuing a transaction with Allergan;
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ability to obtain regulatory approvals and meet other closing conditions to the proposed Allergan transaction, including all necessary stockholder approvals, on a timely basis;
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the ultimate outcome and results of integrating the operations of the Company and Allergan, the ultimate outcome of the Company’s pricing and operating strategy applied to Allergan and the ultimate ability to realize synergies;
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the effects of the business combination of the Company and Allergan, including the combined company’s future financial condition, operating results, strategy and plans;
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our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;
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•
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our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries;
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our substantial debt and debt service obligations and their impact on our financial condition and results of operations;
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•
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our future cash flow, our ability to service and repay our existing debt and our ability to raise additional funds, if needed, in light of our current and projected levels of operations, acquisition activity and general economic conditions;
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•
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interest rate risks associated with our floating debt borrowings;
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•
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the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering new geographic markets (including the challenges created by new and different regulatory regimes in those markets);
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•
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adverse global economic conditions and credit market and foreign currency exchange uncertainty in the countries in which we do business (such as the recent instability in Russia, Ukraine and the Middle East);
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economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;
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our ability to retain, motivate and recruit executives and other key employees;
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•
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our ability to obtain and maintain sufficient intellectual property rights over our products and defend against challenge to such intellectual property;
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•
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the outcome of legal proceedings, investigations and regulatory proceedings;
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the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits and/or withdrawals of products from the market;
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the availability of and our ability to obtain and maintain adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third party insurance or self-insurance;
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the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including, but not limited to, the U.S. Food and Drug Administration, Health Canada and other regulatory approvals, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;
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•
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the results of continuing safety and efficacy studies by industry and government agencies;
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the availability and extent to which our products are reimbursed by government authorities and other third party payors, as well as the impact of obtaining or maintaining such reimbursement on the price of our products;
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the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price of our products in connection therewith;
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•
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the impact of price control restrictions on our products, including the risk of mandated price reductions;
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•
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the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as factors impacting the commercial success of our currently marketed products, which could lead to material impairment charges;
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•
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the results of management reviews of our research and development portfolio, conducted periodically and in connection with certain acquisitions, the decisions from which could result in terminations of specific projects which, in turn, could lead to material impairment charges;
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negative publicity or reputational harm to our products and business, including as faced in connection with our proposed transaction with Allergan;
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the uncertainties associated with the acquisition and launch of new products, including, but not limited to, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing;
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our ability to obtain components, raw materials or finished products supplied by third parties and other manufacturing and related supply difficulties, interruptions and delays;
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•
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the disruption of delivery of our products and the routine flow of manufactured goods;
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•
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the seasonality of sales of certain of our products;
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•
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declines in the pricing and sales volume of certain of our products that are distributed by third parties, over which we have no or limited control;
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compliance with, or the failure to comply with, health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and pricing practices, worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide environmental laws and regulation and privacy and security regulations;
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the impacts of the Patient Protection and Affordable Care Act (as amended) and other legislative and regulatory healthcare reforms in the countries in which we operate;
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interruptions, breakdowns or breaches in our information technology systems; and
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•
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other risks detailed from time to time in our filings with the U.S. Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks associated with the foregoing.
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As of
June 30,
2014
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As of
December 31,
2013
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Assets
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Current assets:
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Cash and cash equivalents
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$
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531.2
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$
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600.3
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Trade receivables, net
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1,770.7
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1,676.4
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Inventories, net
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942.5
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883.0
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Prepaid expenses and other current assets
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452.6
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343.4
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Assets held for sale
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1,156.9
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15.9
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Deferred tax assets, net
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309.8
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366.9
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Total current assets
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5,163.7
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3,885.9
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Property, plant and equipment, net
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1,319.6
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1,234.2
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Intangible assets, net
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11,751.4
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12,848.2
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Goodwill
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9,436.3
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9,752.1
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Deferred tax assets, net
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18.3
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54.9
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Other long-term assets, net
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206.3
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195.5
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Total assets
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$
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27,895.6
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$
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27,970.8
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Liabilities
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Current liabilities:
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Accounts payable
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$
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327.7
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$
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327.0
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Accrued and other current liabilities
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1,774.9
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1,800.2
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Acquisition-related contingent consideration
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88.9
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114.5
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Current portion of long-term debt
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266.7
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204.8
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Liability held for sale
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27.1
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—
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Deferred tax liabilities, net
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11.0
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66.0
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Total current liabilities
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2,496.3
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2,512.5
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Acquisition-related contingent consideration
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238.1
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241.3
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Long-term debt
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17,058.8
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17,162.9
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Pension and other benefit liabilities
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165.5
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172.0
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Liabilities for uncertain tax positions
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115.8
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169.1
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Deferred tax liabilities, net
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2,238.8
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2,319.2
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Other long-term liabilities
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215.0
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160.5
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Total liabilities
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22,528.3
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22,737.5
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Commitments and contingencies (note 17)
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Equity
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Common shares, no par value, unlimited shares authorized, 333,777,181 and
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||||
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333,036,637 issued and outstanding at June 30, 2014 and December 31, 2013, respectively
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8,325.9
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8,301.2
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Additional paid-in capital
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212.2
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228.8
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Accumulated deficit
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(3,175.3
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)
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(3,278.5
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)
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Accumulated other comprehensive loss
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(104.7
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)
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(132.8
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)
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||
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Total Valeant Pharmaceuticals International, Inc. shareholders’ equity
|
5,258.1
|
|
|
5,118.7
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Noncontrolling interest
|
109.2
|
|
|
114.6
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||
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Total equity
|
5,367.3
|
|
|
5,233.3
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||
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Total liabilities and equity
|
$
|
27,895.6
|
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$
|
27,970.8
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
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||||||||||||
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|
2014
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2013
|
|
2014
|
|
2013
|
||||||||
|
Revenues
|
|
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|
|
|
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|
||||||||
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Product sales
|
$
|
1,994.1
|
|
|
$
|
1,063.5
|
|
|
$
|
3,845.2
|
|
|
$
|
2,102.4
|
|
|
Other revenues
|
47.0
|
|
|
32.2
|
|
|
82.1
|
|
|
61.7
|
|
||||
|
|
2,041.1
|
|
|
1,095.7
|
|
|
3,927.3
|
|
|
2,164.1
|
|
||||
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Expenses
|
|
|
|
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|
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||||||||
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Cost of goods sold (exclusive of amortization and impairments of
|
|
|
|
|
|
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|
||||||||
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finite-lived intangible assets shown separately below)
|
569.6
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283.2
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|
1,073.7
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|
568.1
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||||
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Cost of other revenues
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16.0
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|
14.5
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|
30.3
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29.9
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||||
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Selling, general and administrative
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515.7
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257.3
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|
997.7
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|
499.2
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||||
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Research and development
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66.5
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|
24.5
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|
127.8
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48.3
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||||
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Amortization and impairments of finite-lived intangible assets (see Note 8)
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365.6
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303.6
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720.8
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|
629.8
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||||
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Restructuring, integration and other costs
|
142.1
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|
53.6
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|
275.7
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|
102.6
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||||
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In-process research and development impairments and other charges
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8.4
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|
4.8
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20.4
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|
4.8
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||||
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Acquisition-related costs
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0.6
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|
7.9
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2.1
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|
|
15.8
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||||
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Acquisition-related contingent consideration
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1.9
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3.7
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|
10.8
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1.5
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||||
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Other (income) expense
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(0.4
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)
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|
1.1
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(43.7
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)
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5.6
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||||
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|
1,686.0
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954.2
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3,215.6
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|
1,905.6
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||||
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Operating income
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355.1
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|
141.5
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|
711.7
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|
258.5
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|
||||
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Interest income
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1.2
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|
|
1.0
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|
3.0
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|
2.6
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|
||||
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Interest expense
|
(241.2
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)
|
|
(176.8
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)
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|
(487.7
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)
|
|
(332.1
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)
|
||||
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Loss on extinguishment of debt
|
—
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|
—
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(93.7
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)
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(21.4
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)
|
||||
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Foreign exchange and other
|
3.4
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(10.0
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)
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|
(10.0
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)
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|
(8.6
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)
|
||||
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Gain on investments, net
|
2.5
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|
|
3.9
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|
2.5
|
|
|
5.8
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|
||||
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Income (loss) before (recovery of) provision for income taxes
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121.0
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(40.4
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)
|
|
125.8
|
|
|
(95.2
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)
|
||||
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(Recovery of) provision for income taxes
|
(1.0
|
)
|
|
(51.2
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)
|
|
24.1
|
|
|
(78.5
|
)
|
||||
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Net income (loss)
|
122.0
|
|
|
10.8
|
|
|
101.7
|
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(16.7
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)
|
||||
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Less: Net loss attributable to noncontrolling interest
|
(3.8
|
)
|
|
—
|
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(1.5
|
)
|
|
—
|
|
||||
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
125.8
|
|
|
$
|
10.8
|
|
|
$
|
103.2
|
|
|
$
|
(16.7
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
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Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
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|
||||||||
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Basic
|
$
|
0.38
|
|
|
$
|
0.04
|
|
|
$
|
0.31
|
|
|
$
|
(0.05
|
)
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.03
|
|
|
$
|
0.30
|
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted-average common shares
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
335.3
|
|
|
308.1
|
|
|
335.1
|
|
|
307.7
|
|
||||
|
Diluted
|
341.3
|
|
|
314.4
|
|
|
341.4
|
|
|
307.7
|
|
||||
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Net income (loss)
|
$
|
122.0
|
|
|
$
|
10.8
|
|
|
$
|
101.7
|
|
|
$
|
(16.7
|
)
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency translation adjustment
|
13.8
|
|
|
(141.1
|
)
|
|
6.4
|
|
|
(224.2
|
)
|
||||
|
Unrealized gain on equity method investment, net of tax
|
18.5
|
|
|
—
|
|
|
18.5
|
|
|
—
|
|
||||
|
Net unrealized holding gain (loss) on available-for-sale equity securities:
|
|
|
|
|
|
|
|
||||||||
|
Arising in period
|
2.7
|
|
|
(2.1
|
)
|
|
2.7
|
|
|
3.6
|
|
||||
|
Reclassification to net income (loss)
|
—
|
|
|
(3.9
|
)
|
|
—
|
|
|
(3.9
|
)
|
||||
|
Pension and postretirement benefit plan adjustments
|
(0.6
|
)
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
||||
|
Other comprehensive income (loss)
|
34.4
|
|
|
(147.1
|
)
|
|
26.4
|
|
|
(224.5
|
)
|
||||
|
Comprehensive income (loss)
|
156.4
|
|
|
(136.3
|
)
|
|
128.1
|
|
|
(241.2
|
)
|
||||
|
Less: Comprehensive loss attributable to noncontrolling interest
|
(4.7
|
)
|
|
—
|
|
|
(3.2
|
)
|
|
—
|
|
||||
|
Comprehensive income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
161.1
|
|
|
$
|
(136.3
|
)
|
|
$
|
131.3
|
|
|
$
|
(241.2
|
)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss)
|
$
|
122.0
|
|
|
$
|
10.8
|
|
|
$
|
101.7
|
|
|
$
|
(16.7
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
|
Depreciation and amortization, including impairments of finite-lived intangible assets
|
407.7
|
|
|
317.9
|
|
|
808.8
|
|
|
659.3
|
|
||||
|
Amortization and write-off of debt discounts and debt issuance costs
|
11.3
|
|
|
33.3
|
|
|
23.5
|
|
|
42.9
|
|
||||
|
In-process research and development impairments
|
0.4
|
|
|
4.8
|
|
|
0.4
|
|
|
4.8
|
|
||||
|
Acquisition accounting adjustment on inventory sold
|
4.3
|
|
|
26.6
|
|
|
9.5
|
|
|
69.8
|
|
||||
|
Acquisition-related contingent consideration
|
1.9
|
|
|
3.7
|
|
|
10.8
|
|
|
1.5
|
|
||||
|
Allowances for losses on accounts receivable and inventories
|
16.0
|
|
|
11.6
|
|
|
35.6
|
|
|
20.6
|
|
||||
|
Deferred income taxes
|
(21.4
|
)
|
|
(63.2
|
)
|
|
(11.4
|
)
|
|
(100.6
|
)
|
||||
|
Additions (reductions) to accrued legal settlements
|
1.5
|
|
|
1.1
|
|
|
(47.3
|
)
|
|
5.6
|
|
||||
|
Payments of accrued legal settlements
|
(0.9
|
)
|
|
(11.7
|
)
|
|
(1.0
|
)
|
|
(14.5
|
)
|
||||
|
Share-based compensation
|
15.6
|
|
|
7.4
|
|
|
40.4
|
|
|
16.5
|
|
||||
|
Tax benefits from stock options exercised
|
—
|
|
|
(11.8
|
)
|
|
(1.2
|
)
|
|
(16.4
|
)
|
||||
|
Foreign exchange (gain) loss
|
(5.3
|
)
|
|
10.6
|
|
|
7.3
|
|
|
8.8
|
|
||||
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
93.7
|
|
|
21.4
|
|
||||
|
Payment of accreted interest on contingent consideration
|
(7.5
|
)
|
|
(2.3
|
)
|
|
(8.2
|
)
|
|
(2.9
|
)
|
||||
|
Other
|
(3.7
|
)
|
|
(7.7
|
)
|
|
6.1
|
|
|
(8.6
|
)
|
||||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Trade receivables
|
(53.7
|
)
|
|
(49.3
|
)
|
|
(83.8
|
)
|
|
(161.0
|
)
|
||||
|
Inventories
|
(12.1
|
)
|
|
(34.0
|
)
|
|
(81.3
|
)
|
|
(58.9
|
)
|
||||
|
Prepaid expenses and other current assets
|
24.8
|
|
|
9.9
|
|
|
29.0
|
|
|
32.2
|
|
||||
|
Accounts payable, accrued and other liabilities
|
(124.9
|
)
|
|
47.4
|
|
|
(72.3
|
)
|
|
56.6
|
|
||||
|
Net cash provided by operating activities
|
376.0
|
|
|
305.1
|
|
|
860.3
|
|
|
560.4
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
||||||||
|
Acquisition of businesses, net of cash acquired
|
(68.0
|
)
|
|
(513.4
|
)
|
|
(374.3
|
)
|
|
(751.0
|
)
|
||||
|
Acquisition of intangible assets and other assets
|
(10.4
|
)
|
|
(32.5
|
)
|
|
(31.5
|
)
|
|
(33.2
|
)
|
||||
|
Purchases of property, plant and equipment
|
(113.5
|
)
|
|
(12.8
|
)
|
|
(171.6
|
)
|
|
(26.8
|
)
|
||||
|
Proceeds from sales and maturities of marketable securities
|
—
|
|
|
8.0
|
|
|
—
|
|
|
17.0
|
|
||||
|
Purchase of equity method investment
|
(75.9
|
)
|
|
—
|
|
|
(75.9
|
)
|
|
—
|
|
||||
|
Proceeds from sale of assets
|
1.4
|
|
|
19.0
|
|
|
2.8
|
|
|
27.4
|
|
||||
|
Net cash used in investing activities
|
(266.4
|
)
|
|
(531.7
|
)
|
|
(650.5
|
)
|
|
(766.6
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
||||||||
|
Issuance of long-term debt, net of discount
|
50.0
|
|
|
340.0
|
|
|
410.6
|
|
|
340.0
|
|
||||
|
Repayments of long-term debt
|
(120.3
|
)
|
|
(174.7
|
)
|
|
(554.2
|
)
|
|
(604.7
|
)
|
||||
|
Short-term debt borrowings
|
4.8
|
|
|
14.1
|
|
|
6.4
|
|
|
18.6
|
|
||||
|
Short-term debt repayments
|
(8.1
|
)
|
|
(10.9
|
)
|
|
(13.2
|
)
|
|
(12.3
|
)
|
||||
|
Issuance of common stock, net
|
—
|
|
|
2,271.2
|
|
|
—
|
|
|
2,271.2
|
|
||||
|
Repurchases of common shares
|
—
|
|
|
(20.6
|
)
|
|
—
|
|
|
(55.6
|
)
|
||||
|
Settlement of stock options
|
(3.1
|
)
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
||||
|
Proceeds from exercise of stock options
|
3.6
|
|
|
2.0
|
|
|
7.1
|
|
|
4.6
|
|
||||
|
Tax benefits from stock options exercised
|
—
|
|
|
11.8
|
|
|
1.2
|
|
|
16.4
|
|
||||
|
Payments of employee withholding tax upon vesting of share-based awards
|
(8.8
|
)
|
|
(14.7
|
)
|
|
(36.5
|
)
|
|
(21.5
|
)
|
||||
|
Payments of contingent consideration
|
(72.5
|
)
|
|
(61.8
|
)
|
|
(82.2
|
)
|
|
(82.9
|
)
|
||||
|
Acquisition of noncontrolling interest
|
—
|
|
|
—
|
|
|
(3.3
|
)
|
|
—
|
|
||||
|
Payments of debt issuance costs
|
(0.9
|
)
|
|
(0.3
|
)
|
|
(10.8
|
)
|
|
(33.6
|
)
|
||||
|
Other
|
(1.3
|
)
|
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
||||
|
Net cash (used in) provided by financing activities
|
(156.6
|
)
|
|
2,356.1
|
|
|
(279.3
|
)
|
|
1,840.2
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
1.9
|
|
|
(3.8
|
)
|
|
0.4
|
|
|
(10.7
|
)
|
||||
|
Net (decrease) increase in cash and cash equivalents
|
(45.1
|
)
|
|
2,125.7
|
|
|
(69.1
|
)
|
|
1,623.3
|
|
||||
|
Cash and cash equivalents, beginning of period
|
576.3
|
|
|
413.7
|
|
|
600.3
|
|
|
916.1
|
|
||||
|
Cash and cash equivalents, end of period
|
$
|
531.2
|
|
|
$
|
2,539.4
|
|
|
$
|
531.2
|
|
|
$
|
2,539.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Non-Cash Investing and Financing Activities
|
|
|
|
|
|
|
|
||||||||
|
Acquisition of businesses, contingent consideration obligations at fair value
|
$
|
(27.4
|
)
|
|
$
|
(8.3
|
)
|
|
$
|
(49.1
|
)
|
|
$
|
(67.4
|
)
|
|
Acquisition of businesses, debt assumed
|
—
|
|
|
(5.0
|
)
|
|
(4.0
|
)
|
|
(42.6
|
)
|
||||
|
1.
|
DESCRIPTION OF BUSINESS
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
3.
|
BUSINESS COMBINATIONS
|
|
•
|
On January 23, 2014, the Company acquired all of the outstanding common stock of Solta Medical, Inc. (“Solta Medical”) for
$292.5 million
, which includes
$2.92
per share in cash and
$44.2 million
for the repayment of Solta Medical’s long-term debt, including accrued interest. In connection with the acquisition, the Company recognized a charge of
$5.6 million
in the first quarter of 2014 relating to a settlement of a pre-existing relationship with Solta Medical, which is included in Other (income) expense in the consolidated statements of income (loss). As a result of the completion of the merger, Solta Medical has become a wholly-owned subsidiary of Valeant. Solta Medical designs, develops, manufactures, and markets energy-based medical device systems for aesthetic applications. Solta Medical’s products include the Thermage CPT® system that provides non-invasive treatment options using radiofrequency energy for skin tightening, the Fraxel® repair system for use in dermatological procedures requiring ablation, coagulation, and resurfacing of soft tissue, the Clear + Brilliant® system to improve skin texture and help prevent the signs of aging skin, and the Liposonix® system that destroys unwanted fat cells resulting in waist circumference reduction.
|
|
•
|
During the
six-month period ended June 30, 2014
, the Company completed other smaller acquisitions which are not material individually or in the aggregate. These acquisitions are included in the aggregated amounts presented below.
|
|
•
|
amounts for intangible assets, property and equipment, inventories and working capital adjustments pending finalization of the valuation;
|
|
•
|
amounts for income tax assets and liabilities, pending finalization of estimates and assumptions in respect of certain tax aspects of the transaction; and
|
|
•
|
amount of goodwill pending the completion of the valuation of the assets acquired and liabilities assumed.
|
|
|
|
Amounts
Recognized as of
Acquisition Dates
|
|
Measurement
Period
Adjustments
(a)
|
|
Amounts
Recognized as of
June 30, 2014
(as adjusted)
|
||||||
|
Cash and cash equivalents
|
|
$
|
2.7
|
|
|
$
|
—
|
|
|
$
|
2.7
|
|
|
Accounts receivable
(b)
|
|
16.8
|
|
|
—
|
|
|
16.8
|
|
|||
|
Inventories
|
|
46.1
|
|
|
(6.5
|
)
|
|
39.6
|
|
|||
|
Other current assets
|
|
7.5
|
|
|
—
|
|
|
7.5
|
|
|||
|
Property, plant and equipment, net
|
|
6.6
|
|
|
(0.6
|
)
|
|
6.0
|
|
|||
|
Identifiable intangible assets, excluding acquired IPR&D
(c)
|
|
232.6
|
|
|
6.3
|
|
|
238.9
|
|
|||
|
Acquired IPR&D
(d)
|
|
61.8
|
|
|
0.8
|
|
|
62.6
|
|
|||
|
Other non-current assets
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|||
|
Current liabilities
|
|
(34.6
|
)
|
|
(0.6
|
)
|
|
(35.2
|
)
|
|||
|
Long-term debt, including current portion
|
|
(4.0
|
)
|
|
—
|
|
|
(4.0
|
)
|
|||
|
Deferred income taxes, net
|
|
(9.4
|
)
|
|
(4.7
|
)
|
|
(14.1
|
)
|
|||
|
Other non-current liabilities
|
|
(9.8
|
)
|
|
—
|
|
|
(9.8
|
)
|
|||
|
Total identifiable net assets
|
|
317.2
|
|
|
(5.3
|
)
|
|
311.9
|
|
|||
|
Goodwill
(e)
|
|
106.4
|
|
|
5.3
|
|
|
111.7
|
|
|||
|
Total fair value of consideration transferred
|
|
$
|
423.6
|
|
|
$
|
—
|
|
|
$
|
423.6
|
|
|
(a)
|
The measurement period adjustments relate to the Solta Medical acquisition and primarily reflect: (i) reductions in the estimated fair value of inventory, (ii) increases in the estimated fair value of intangible assets, and (iii) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.
|
|
(b)
|
The fair value of trade accounts receivable acquired was
$16.8 million
, with the gross contractual amount being
$19.1 million
, of which the Company expects that
$2.3 million
will be uncollectible.
|
|
(c)
|
The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:
|
|
|
|
Weighted-
Average
Useful Lives
(Years)
|
|
Amounts
Recognized as of
Acquisition Dates
|
|
Measurement
Period
Adjustments
|
|
Amounts
Recognized as of
June 30, 2014
(as adjusted)
|
||||||
|
Product brands
|
|
9
|
|
$
|
127.4
|
|
|
$
|
5.7
|
|
|
$
|
133.1
|
|
|
Product rights
|
|
8
|
|
86.3
|
|
|
(0.9
|
)
|
|
85.4
|
|
|||
|
Corporate brand
|
|
14
|
|
18.5
|
|
|
1.5
|
|
|
20.0
|
|
|||
|
In-licensed products
|
|
7
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|||
|
Total identifiable intangible assets acquired
|
|
9
|
|
$
|
232.6
|
|
|
$
|
6.3
|
|
|
$
|
238.9
|
|
|
(d)
|
The acquired in-process research and development (“IPR&D”) assets primarily relate to programs from smaller acquisitions. In addition, the Solta Medical acquisition includes a program for the development of a next generation Thermage
®
product.
|
|
(e)
|
Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded from the Solta Medical acquisition represents the following:
|
|
•
|
cost savings, operating synergies and other benefits expected to result from combining the operations of Solta Medical with those of the Company;
|
|
•
|
the Company’s expectation to develop and market new products and technology; and
|
|
•
|
intangible assets that do not qualify for separate recognition (for instance, Solta Medical’s assembled workforce).
|
|
|
|
Fair Value
|
||
|
Enterprise value
|
|
$
|
8,700.0
|
|
|
Adjusted for the following:
|
|
|
||
|
B&L’s outstanding debt, including accrued interest
|
|
(4,248.3
|
)
|
|
|
B&L’s company expenses
|
|
(6.4
|
)
|
|
|
Payment in B&L’s performance-based option
(a)
|
|
(48.5
|
)
|
|
|
Payment for B&L’s cash balance
(b)
|
|
149.0
|
|
|
|
Additional cash payment
(b)
|
|
75.0
|
|
|
|
Other
|
|
(3.2
|
)
|
|
|
Equity purchase price
|
|
4,617.6
|
|
|
|
Less: Cash consideration paid for B&L’s unvested stock options
(c)
|
|
(4.3
|
)
|
|
|
Total fair value of consideration transferred
|
|
$
|
4,613.3
|
|
|
(a)
|
The cash consideration paid for previously cancelled B&L’s performance-based options was recognized as a post-combination expense within Restructuring, integration and other costs in the third quarter of 2013.
|
|
(b)
|
As defined in the Merger Agreement.
|
|
(c)
|
The cash consideration paid for B&L stock options and restricted stock attributable to pre-combination services has been included as a component of purchase price. The remaining
$4.3 million
balance related to the acceleration of unvested stock options for B&L employees was recognized as a post-combination expense within Restructuring, integration and other costs in the third quarter of 2013.
|
|
|
|
Amounts
Recognized as of
Acquisition Date
(as previously
reported)
(a)
|
|
Measurement
Period
Adjustments
(b)
|
|
Amounts
Recognized as of
June 30, 2014
(as adjusted)
|
||||||
|
Cash and cash equivalents
|
|
$
|
209.5
|
|
|
$
|
(31.4
|
)
|
|
$
|
178.1
|
|
|
Accounts receivable
(c)
|
|
547.9
|
|
|
(7.2
|
)
|
|
540.7
|
|
|||
|
Inventories
(d)
|
|
675.8
|
|
|
(34.0
|
)
|
|
641.8
|
|
|||
|
Other current assets
(e)
|
|
146.6
|
|
|
0.3
|
|
|
146.9
|
|
|||
|
Property, plant and equipment, net
(f)
|
|
761.4
|
|
|
33.2
|
|
|
794.6
|
|
|||
|
Identifiable intangible assets, excluding acquired IPR&D
(g)
|
|
4,316.1
|
|
|
17.3
|
|
|
4,333.4
|
|
|||
|
Acquired IPR&D
(h)
|
|
398.1
|
|
|
17.0
|
|
|
415.1
|
|
|||
|
Other non-current assets
|
|
58.8
|
|
|
(1.9
|
)
|
|
56.9
|
|
|||
|
Current liabilities
(i)
|
|
(885.6
|
)
|
|
2.1
|
|
|
(883.5
|
)
|
|||
|
Long-term debt, including current portion
(j)
|
|
(4,209.9
|
)
|
|
—
|
|
|
(4,209.9
|
)
|
|||
|
Deferred income taxes, net
(k)
|
|
(1,410.9
|
)
|
|
36.0
|
|
|
(1,374.9
|
)
|
|||
|
Other non-current liabilities
(l)
|
|
(280.2
|
)
|
|
(1.0
|
)
|
|
(281.2
|
)
|
|||
|
Total identifiable net assets
|
|
327.6
|
|
|
30.4
|
|
|
358.0
|
|
|||
|
Noncontrolling interest
(m)
|
|
(102.3
|
)
|
|
(0.4
|
)
|
|
(102.7
|
)
|
|||
|
Goodwill
(n)
|
|
4,388.0
|
|
|
(30.0
|
)
|
|
4,358.0
|
|
|||
|
Total fair value of consideration transferred
|
|
$
|
4,613.3
|
|
|
$
|
—
|
|
|
$
|
4,613.3
|
|
|
(a)
|
As previously reported in the 2013 Form 10-K.
|
|
(b)
|
The measurement period adjustments primarily reflect: (i) a decrease in the net deferred tax liability, (ii) a reduction in the estimated fair value of inventory, (iii) an increase in the estimated fair value of property, plant and equipment mainly related to certain machinery and equipment in Western Europe and the U.S., partially offset by a reduction in the estimated fair value related to certain manufacturing facilities and an office building, (iv) an adjustment between cash and accounts payable, and (v) increases in the estimated fair value of intangible assets, which included a net increase to IPR&D assets driven by a higher fair value for the next generation silicone hydrogel lens (Bausch + Lomb Ultra™). The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.
|
|
(c)
|
The fair value of trade accounts receivable acquired was
$540.7 million
, with the gross contractual amount being
$555.6 million
, of which the Company expects that
$14.9 million
will be uncollectible.
|
|
(d)
|
Includes an estimated fair value adjustment to inventory of
$269.1 million
.
|
|
(e)
|
Includes primarily prepaid expenses.
|
|
(f)
|
The following table summarizes the amounts and useful lives assigned to property, plant and equipment:
|
|
|
|
Weighted-
Average
Useful Lives
(Years)
|
|
Amounts
Recognized as of
Acquisition Date
(as previously
reported)
|
|
Measurement
Period
Adjustments
|
|
Amounts
Recognized as of
June 30, 2014
(as adjusted)
|
||||||
|
Land
|
|
NA
|
|
$
|
47.4
|
|
|
$
|
(12.6
|
)
|
|
$
|
34.8
|
|
|
Buildings
|
|
24
|
|
273.1
|
|
|
(23.8
|
)
|
|
249.3
|
|
|||
|
Machinery and equipment
|
|
5
|
|
273.5
|
|
|
76.3
|
|
|
349.8
|
|
|||
|
Leasehold improvements
|
|
5
|
|
22.5
|
|
|
(0.3
|
)
|
|
22.2
|
|
|||
|
Equipment on operating lease
|
|
3
|
|
13.8
|
|
|
(0.2
|
)
|
|
13.6
|
|
|||
|
Construction in progress
|
|
NA
|
|
131.1
|
|
|
(6.2
|
)
|
|
124.9
|
|
|||
|
Total property, plant and equipment acquired
|
|
|
|
$
|
761.4
|
|
|
$
|
33.2
|
|
|
$
|
794.6
|
|
|
(g)
|
The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:
|
|
|
|
Weighted-
Average
Useful Lives
(Years)
|
|
Amounts
Recognized as of
Acquisition Date
(as previously
reported)
|
|
Measurement
Period
Adjustments
|
|
Amounts
Recognized as of
June 30, 2014
(as adjusted)
|
||||||
|
Product brands
|
|
10
|
|
$
|
1,770.2
|
|
|
$
|
4.6
|
|
|
$
|
1,774.8
|
|
|
Product rights
|
|
8
|
|
855.4
|
|
|
5.7
|
|
|
861.1
|
|
|||
|
Corporate brand
|
|
Indefinite
|
|
1,690.5
|
|
|
7.0
|
|
|
1,697.5
|
|
|||
|
Total identifiable intangible assets acquired
|
|
9
|
|
$
|
4,316.1
|
|
|
$
|
17.3
|
|
|
$
|
4,333.4
|
|
|
(h)
|
The significant components of the acquired IPR&D assets primarily relate to the development of (i) various vision care products (
$223.4 million
in the aggregate), such as the next generation silicone hydrogel lens (Bausch + Lomb Ultra™), (ii) various pharmaceutical products (
$170.9 million
, in the aggregate), such as latanoprostene bunod, a nitric oxide-donating prostaglandin for reduction of elevated intraocular pressure in patients with glaucoma or ocular hypertension, and (iii) various surgical products (
$20.8 million
, in the aggregate). A multi-period excess earnings methodology (income approach) was used to determine the estimated fair values of the acquired IPR&D assets from market participant perspective. The projected cash flows from these assets were adjusted for the probabilities of successful development and commercialization of each project. A risk-adjusted discount rate of
10%
was used to present value the projected cash flows. The next generation silicone hydrogel lens (Bausch + Lomb Ultra™) was launched in February 2014.
|
|
(i)
|
Includes accrued liabilities, including reserves for sales returns, rebates and managed care, accounts payable and accrued compensation-related liabilities.
|
|
(j)
|
The following table summarizes the fair value of long-term debt assumed as of the acquisition date:
|
|
|
|
Amounts
Recognized as of
Acquisition Date
|
||
|
Holdco unsecured term loan
(1)
|
|
$
|
707.0
|
|
|
U.S. dollar-denominated senior secured term loan
(1)
|
|
1,915.8
|
|
|
|
Euro-denominated senior secured term loan
(1)
|
|
604.0
|
|
|
|
U.S. dollar-denominated delayed draw term loan
(1)
|
|
398.0
|
|
|
|
U.S. dollar-denominated revolver loan
(1)
|
|
170.0
|
|
|
|
9.875% senior notes
(1)
|
|
350.0
|
|
|
|
Multi-currency denominated revolver loan
(1)
|
|
15.0
|
|
|
|
Japanese revolving credit facility
(2)
|
|
33.8
|
|
|
|
Debentures
|
|
11.8
|
|
|
|
Other
(1)
|
|
4.5
|
|
|
|
Total long-term debt assumed
|
|
$
|
4,209.9
|
|
|
(1)
|
The Company subsequently repaid these amounts in full in the third quarter of 2013.
|
|
(2)
|
In the fourth quarter of 2013, the Company repaid in full the amounts outstanding. In January 2014, the Company terminated this facility.
|
|
(k)
|
Comprises current net deferred tax assets (
$61.6 million
) and non-current net deferred tax liabilities (
$1,436.5 million
).
|
|
(l)
|
Includes
$224.2 million
related to the estimated fair value of pension and other benefits liabilities.
|
|
(m)
|
Represents the estimated fair value of B&L’s noncontrolling interest related primarily to Chinese joint ventures. A discounted cash flow methodology was used to determine the estimated fair values as of the acquisition date.
|
|
(n)
|
Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:
|
|
•
|
the Company’s expectation to develop and market new product brands, product lines and technology;
|
|
•
|
cost savings and operating synergies expected to result from combining the operations of B&L with those of the Company;
|
|
•
|
the value of the continuing operations of B&L’s existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and
|
|
•
|
intangible assets that do not qualify for separate recognition (for instance, B&L’s assembled workforce).
|
|
•
|
On
April 25, 2013
, the Company acquired all of the outstanding shares of Obagi Medical Products, Inc. (“Obagi”) at a price of
$24.00
per share in cash. The aggregate purchase price paid by the Company was approximately
$437.1 million
. Obagi is a specialty pharmaceutical company that develops, markets, and sells topical aesthetic and therapeutic skin-health systems with a product portfolio of dermatology brands including Obagi Nu-Derm®, Condition & Enhance®, Obagi-C® Rx, ELASTIDerm® and CLENZIDerm®.
|
|
•
|
On
February 20, 2013
, the Company acquired certain assets from Eisai Inc. (“Eisai”) relating to the U.S. rights to Targretin®, which is indicated for the treatment of Cutaneous T-Cell Lymphoma. The consideration includes up-front payments of
$66.5 million
and the Company may pay up to an additional
$60.0 million
of contingent consideration based on the occurrence of potential future events. The fair value of the contingent consideration was determined to be
$50.8 million
as of the acquisition date.
As of June 30, 2014
, the assumptions used for determining fair value of the contingent consideration have not changed significantly from those used at the acquisition date. In April 2014, the Company made a contingent consideration payment of
$30.0 million
.
|
|
•
|
On
February 1, 2013
, the Company acquired Natur Produkt International, JSC (“Natur Produkt”), a specialty pharmaceutical company in Russia, for a purchase price of
$149.9 million
, including a
$20.0 million
contingent refund of purchase price relating to the outcome of certain litigation involving AntiGrippin® that commenced prior to the acquisition. Subsequent to the acquisition, during the
three-month
period ended
March 31, 2013
, the litigation was resolved, and the
$20.0 million
was refunded back to the Company. Natur Produkt’s key brand products include AntiGrippin®, Anti-Angin®, Sage™ and Eucalyptus MA™.
|
|
•
|
During the year ended December 31, 2013, the Company completed other smaller acquisitions which are not material individually or in the aggregate. These acquisitions are included in the aggregated amounts presented below.
|
|
|
|
Amounts
Recognized as of
Acquisition Dates
|
|
Measurement
Period
Adjustments
(a)
|
|
Amounts
Recognized as of
June 30, 2014
(as adjusted)
|
||||||
|
Cash
|
|
$
|
43.1
|
|
|
$
|
—
|
|
|
$
|
43.1
|
|
|
Accounts receivable
(b)
|
|
64.0
|
|
|
0.5
|
|
|
64.5
|
|
|||
|
Inventories
|
|
33.6
|
|
|
1.9
|
|
|
35.5
|
|
|||
|
Other current assets
|
|
14.0
|
|
|
—
|
|
|
14.0
|
|
|||
|
Property, plant and equipment
|
|
13.9
|
|
|
(3.3
|
)
|
|
10.6
|
|
|||
|
Identifiable intangible assets, excluding acquired IPR&D
(c)
|
|
722.9
|
|
|
3.9
|
|
|
726.8
|
|
|||
|
Acquired IPR&D
(d)
|
|
18.7
|
|
|
0.2
|
|
|
18.9
|
|
|||
|
Indemnification assets
|
|
3.2
|
|
|
(0.7
|
)
|
|
2.5
|
|
|||
|
Other non-current assets
|
|
0.2
|
|
|
3.7
|
|
|
3.9
|
|
|||
|
Current liabilities
|
|
(36.2
|
)
|
|
(0.4
|
)
|
|
(36.6
|
)
|
|||
|
Short-term borrowings
(e)
|
|
(33.3
|
)
|
|
0.5
|
|
|
(32.8
|
)
|
|||
|
Long-term debt
(e)
|
|
(24.0
|
)
|
|
—
|
|
|
(24.0
|
)
|
|||
|
Deferred tax liability, net
|
|
(147.8
|
)
|
|
(1.1
|
)
|
|
(148.9
|
)
|
|||
|
Other non-current liabilities
|
|
(1.5
|
)
|
|
—
|
|
|
(1.5
|
)
|
|||
|
Total identifiable net assets
|
|
670.8
|
|
|
5.2
|
|
|
676.0
|
|
|||
|
Noncontrolling interest
(f)
|
|
(11.2
|
)
|
|
—
|
|
|
(11.2
|
)
|
|||
|
Goodwill
(g)
|
|
224.3
|
|
|
9.0
|
|
|
233.3
|
|
|||
|
Total fair value of consideration transferred
|
|
$
|
883.9
|
|
|
$
|
14.2
|
|
|
$
|
898.1
|
|
|
(a)
|
The measurement period adjustments primarily reflect an increase in the total fair value of consideration transferred with respect to the Natur Produkt acquisition pursuant to a purchase price adjustment. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.
|
|
(b)
|
The fair value of trade accounts receivable acquired was
$64.5 million
, with the gross contractual amount being
$68.2 million
, of which the Company expects that
$3.7 million
will be uncollectible.
|
|
(c)
|
The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:
|
|
|
|
Weighted-
Average
Useful Lives
(Years)
|
|
Amounts
Recognized as of
Acquisition Dates
|
|
Measurement
Period
Adjustments
|
|
Amounts
Recognized as of
June 30, 2014
(as adjusted)
|
||||||
|
Product brands
|
|
7
|
|
$
|
517.2
|
|
|
$
|
3.1
|
|
|
$
|
520.3
|
|
|
Corporate brand
|
|
13
|
|
86.1
|
|
|
0.8
|
|
|
86.9
|
|
|||
|
Patents
|
|
3
|
|
71.7
|
|
|
—
|
|
|
71.7
|
|
|||
|
Royalty Agreement
|
|
5
|
|
26.5
|
|
|
—
|
|
|
26.5
|
|
|||
|
Partner relationships
|
|
5
|
|
16.0
|
|
|
—
|
|
|
16.0
|
|
|||
|
Technology
|
|
10
|
|
5.4
|
|
|
—
|
|
|
5.4
|
|
|||
|
Total identifiable intangible assets acquired
|
|
8
|
|
$
|
722.9
|
|
|
$
|
3.9
|
|
|
$
|
726.8
|
|
|
(d)
|
The acquired IPR&D assets relate to the Obagi and Natur Produkt acquisitions. Obagi’s acquired IPR&D assets primarily relate to the development of dermatology products for anti-aging and suncare. Natur Produkt’s acquired IPR&D assets include a product indicated for the prevention of viral diseases, specifically cold and flu, and a product indicated for the treatment of inflammation and muscular disorders.
|
|
(e)
|
Short-term borrowings and long-term debt primarily relate to the Natur Produkt acquisition. In
March 2013
, the Company settled all of Natur Produkt’s outstanding third party short-term borrowings and long-term debt.
|
|
(f)
|
Represents the estimated fair value of noncontrolling interest related to a smaller acquisition completed in the third quarter of 2013.
|
|
(g)
|
The goodwill relates primarily to the Obagi and Natur Produkt acquisitions. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. None of Obagi’s and Natur Produkt’s
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Revenues
|
$
|
2,041.1
|
|
|
$
|
1,957.6
|
|
|
$
|
3,930.9
|
|
|
$
|
3,874.6
|
|
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
127.7
|
|
|
(21.5
|
)
|
|
102.5
|
|
|
(104.2
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.38
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.31
|
|
|
$
|
(0.31
|
)
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.30
|
|
|
$
|
(0.31
|
)
|
|
•
|
elimination of the historical intangible asset amortization expense of these acquisitions;
|
|
•
|
additional amortization expense related to the fair value of identifiable intangible assets acquired;
|
|
•
|
additional depreciation expense related to fair value adjustment to property, plant and equipment acquired; and
|
|
•
|
additional interest expense associated with the financing obtained by the Company in connection with the various acquisitions.
|
|
4.
|
CO-PROMOTION AGREEMENTS
|
|
5.
|
RESTRUCTURING, INTEGRATION AND OTHER COSTS
|
|
•
|
workforce reductions across the Company and other organizational changes;
|
|
•
|
closing of duplicative facilities and other site rationalization actions company-wide, including research and development facilities, sales offices and corporate facilities;
|
|
•
|
leveraging research and development spend; and
|
|
•
|
procurement savings.
|
|
|
|
Employee Termination Costs
|
|
IPR&D
Termination
Costs
|
|
Contract
Termination,
Facility Closure
and Other Costs
|
|
|
||||||||||||
|
|
Severance and
Related Benefits
|
|
Share-Based
Compensation
(1)
|
|
|
|
Total
|
|||||||||||||
|
Balance, January 1, 2013
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Costs incurred and/or charged to expense
|
|
155.7
|
|
|
52.8
|
|
|
—
|
|
|
25.6
|
|
|
234.1
|
|
|||||
|
Cash payments
|
|
(77.8
|
)
|
|
(52.8
|
)
|
|
—
|
|
|
(7.8
|
)
|
|
(138.4
|
)
|
|||||
|
Non-cash adjustments
|
|
11.4
|
|
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|
4.6
|
|
|||||
|
Balance, December 31, 2013
|
|
89.3
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
|
100.3
|
|
|||||
|
Costs incurred and/or charged to expense
|
|
22.5
|
|
|
—
|
|
|
—
|
|
|
6.6
|
|
|
29.1
|
|
|||||
|
Cash payments
|
|
(50.9
|
)
|
|
—
|
|
|
—
|
|
|
(3.2
|
)
|
|
(54.1
|
)
|
|||||
|
Non-cash adjustments
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
(5.4
|
)
|
|||||
|
Balance, March 31, 2014
|
|
58.6
|
|
|
—
|
|
|
—
|
|
|
11.3
|
|
|
69.9
|
|
|||||
|
Costs incurred and charged to expense
|
|
12.3
|
|
|
—
|
|
|
—
|
|
|
10.1
|
|
|
22.4
|
|
|||||
|
Cash payments
|
|
(25.7
|
)
|
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|
(27.5
|
)
|
|||||
|
Non-cash adjustments
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.9
|
)
|
|||||
|
Balance, June 30, 2014
|
|
$
|
44.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19.2
|
|
|
$
|
63.9
|
|
|
(1)
|
Relates to B&L’s previously cancelled performance-based options and the acceleration of unvested stock options for B&L employees as a result of the B&L Acquisition.
|
|
|
|
Employee Termination Costs
|
|
IPR&D
Termination
Costs
|
|
Contract
Termination,
Facility Closure
and Other Costs
|
|
|
||||||||||||
|
|
Severance and
Related Benefits
|
|
Share-Based
Compensation
(1)
|
|
|
|
Total
|
|||||||||||||
|
Balance, January 1, 2012
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Costs incurred and/or charged to expense
|
|
85.3
|
|
|
77.3
|
|
|
—
|
|
|
0.4
|
|
|
163.0
|
|
|||||
|
Cash payments
|
|
(78.0
|
)
|
|
(77.3
|
)
|
|
—
|
|
|
—
|
|
|
(155.3
|
)
|
|||||
|
Non-cash adjustments
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
3.9
|
|
|||||
|
Balance, December 31, 2012
|
|
11.4
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
11.6
|
|
|||||
|
Costs incurred and/or charged to expense
|
|
20.0
|
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|
23.5
|
|
|||||
|
Cash payments
|
|
(31.4
|
)
|
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|
(35.0
|
)
|
|||||
|
Non-cash adjustments
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
0.2
|
|
|||||
|
Balance, December 31, 2013
(2)
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
(1)
|
Relates to the acceleration of unvested stock options, restricted stock awards, and share appreciation rights for Medicis employees that was triggered by the change in control.
|
|
(2)
|
The Company has not recognized any restructuring charges, and made a payment of
$0.1 million
, in the six-month period ended June 30, 2014 with respect to the Medicis acquisition-related initiatives.
In the six-month period ended June 30, 2013, the Company recognized
$21.0 million
of restructuring charges and made payments of
$31.9 million
.
|
|
6.
|
FAIR VALUE MEASUREMENTS
|
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities;
|
|
•
|
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
|
•
|
Level 3 — Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using discounted cash flow methodologies, pricing models, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
|
|
|
|
As of June 30, 2014
|
|
As of December 31, 2013
|
||||||||||||||||||||||||||||
|
|
|
Carrying
Value
|
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Carrying
Value
|
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Cash equivalents
(1)
|
|
$
|
14.6
|
|
|
$
|
14.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
171.3
|
|
|
$
|
171.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Available-for-sale equity securities
(2)
|
|
4.9
|
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Total financial assets
|
|
$
|
19.5
|
|
|
$
|
19.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
171.3
|
|
|
$
|
171.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash equivalents
(1)
|
|
$
|
14.6
|
|
|
$
|
14.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
171.3
|
|
|
$
|
171.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Marketable securities
|
|
4.9
|
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Total financial assets
|
|
$
|
19.5
|
|
|
$
|
19.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
171.3
|
|
|
$
|
171.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Acquisition-related contingent consideration
|
|
$
|
(327.0
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(327.0
|
)
|
|
$
|
(355.8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(355.8
|
)
|
|
(1)
|
Cash equivalents include highly liquid investments with an original maturity of
three
months or less at acquisition, including money market funds reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.
|
|
(2)
|
For the three-month period ended June 30, 2014, the Company recorded a gross unrealized gain on the available-for-sale equity securitie
s of
$4.3 million
in other comprehensive income (loss).
|
|
|
Balance,
January 1,
2014
|
|
Issuances
(a)
|
|
Payments
(b)
|
|
Net
Unrealized
Loss
(c)
|
|
Foreign
Exchange
(d)
|
|
Transfers
Into
Level 3
|
|
Transfers
Out of
Level 3
|
|
Balance,
June 30,
2014
|
||||||||||||||||
|
Acquisition-related contingent consideration
|
$
|
(355.8
|
)
|
|
$
|
(49.1
|
)
|
|
$
|
90.4
|
|
|
$
|
(10.8
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(327.0
|
)
|
|
(a)
|
Relates to a contingent consideration liability assumed in the Solta Medical acquisition, as well as contingent consideration with respect to other smaller acquisitions, as described in note 3.
|
|
(b)
|
Relates primarily to payments of acquisition-related contingent consideration related to the OraPharma Topco Holdings, Inc. and Eisai (Targretin®) acquisitions and the Elidel®/Xerese®/Zovirax® agreement entered into with Meda Pharma SARL (“Meda”) in June 2011 (the “Elidel®/Xerese®/Zovirax® agreement”).
|
|
(c)
|
For the
six months ended June 30, 2014
, a net loss of
$10.8 million
was recognized as Acquisition-related contingent consideration in the consolidated statements of income (loss). The acquisition-related contingent consideration net loss was primarily driven by fair value adjustments to reflect accretion for the time value of money related to the Elidel®/Xerese®/Zovirax® agreement.
|
|
(d)
|
Included in other comprehensive income (loss).
|
|
7.
|
INVENTORIES
|
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
|
Raw materials
|
|
$
|
236.6
|
|
|
$
|
221.8
|
|
|
Work in process
|
|
110.9
|
|
|
104.7
|
|
||
|
Finished goods
|
|
709.5
|
|
|
656.3
|
|
||
|
|
|
1,057.0
|
|
|
982.8
|
|
||
|
Less allowance for obsolescence
|
|
(114.5
|
)
|
|
(99.8
|
)
|
||
|
|
|
$
|
942.5
|
|
|
$
|
883.0
|
|
|
8.
|
INTANGIBLE ASSETS AND GOODWILL
|
|
|
|
As of June 30, 2014
|
|
As of December 31, 2013
|
||||||||||||||||||||
|
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization,
Including
Impairments
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization,
Including
Impairments
|
|
Net
Carrying
Amount
|
||||||||||||
|
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product brands
|
|
$
|
10,224.0
|
|
|
$
|
(3,094.0
|
)
|
|
$
|
7,130.0
|
|
|
$
|
10,554.2
|
|
|
$
|
(2,729.1
|
)
|
|
$
|
7,825.1
|
|
|
Corporate brands
|
|
386.7
|
|
|
(56.9
|
)
|
|
329.8
|
|
|
365.6
|
|
|
(44.4
|
)
|
|
321.2
|
|
||||||
|
Product rights
|
|
3,094.8
|
|
|
(1,070.4
|
)
|
|
2,024.4
|
|
|
3,021.0
|
|
|
(876.9
|
)
|
|
2,144.1
|
|
||||||
|
Partner relationships
|
|
211.3
|
|
|
(102.5
|
)
|
|
108.8
|
|
|
194.0
|
|
|
(83.2
|
)
|
|
110.8
|
|
||||||
|
Out-licensed technology and other
|
|
255.4
|
|
|
(115.6
|
)
|
|
139.8
|
|
|
264.0
|
|
|
(93.8
|
)
|
|
170.2
|
|
||||||
|
Total finite-lived intangible assets
|
|
14,172.2
|
|
|
(4,439.4
|
)
|
|
9,732.8
|
|
|
14,398.8
|
|
|
(3,827.4
|
)
|
|
10,571.4
|
|
||||||
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Acquired IPR&D
|
|
321.1
|
|
|
—
|
|
|
321.1
|
|
|
579.3
|
|
|
—
|
|
|
579.3
|
|
||||||
|
Corporate brand
(1)
|
|
1,697.5
|
|
|
—
|
|
|
1,697.5
|
|
|
1,697.5
|
|
|
—
|
|
|
1,697.5
|
|
||||||
|
|
|
$
|
16,190.8
|
|
|
$
|
(4,439.4
|
)
|
|
$
|
11,751.4
|
|
|
$
|
16,675.6
|
|
|
$
|
(3,827.4
|
)
|
|
$
|
12,848.2
|
|
|
(1)
|
Represents the B&L corporate trademark, which has an indefinite useful life and is not amortizable. See note 3 “BUSINESS COMBINATIONS” for further information.
|
|
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||
|
Amortization expense
(1)
|
|
$
|
1,412.7
|
|
|
$
|
1,366.6
|
|
|
$
|
1,275.4
|
|
|
$
|
1,215.7
|
|
|
$
|
1,091.9
|
|
|
(1)
|
Estimated amortization expense shown in the table above does not include potential future impairments of finite-lived intangible assets, if any.
|
|
|
|
Developed
Markets
|
|
Emerging
Markets
|
|
Total
|
||||||
|
Balance, January 1, 2014
|
|
$
|
7,428.7
|
|
|
$
|
2,323.4
|
|
|
$
|
9,752.1
|
|
|
Additions
(a)
|
|
68.9
|
|
|
42.8
|
|
|
111.7
|
|
|||
|
Adjustments
(b)
|
|
(11.0
|
)
|
|
(4.3
|
)
|
|
(15.3
|
)
|
|||
|
Allocations to assets held for sale
(c)
|
|
(428.9
|
)
|
|
—
|
|
|
(428.9
|
)
|
|||
|
Foreign exchange and other
|
|
9.5
|
|
|
7.2
|
|
|
16.7
|
|
|||
|
Balance, June 30, 2014
|
|
$
|
7,067.2
|
|
|
$
|
2,369.1
|
|
|
$
|
9,436.3
|
|
|
(a)
|
Primarily relates to the Solta Medical acquisition (as described in note 3).
|
|
(b)
|
Primarily reflects the impact of measurement period adjustments related to the B&L Acquisition (as described in note 3).
|
|
(c)
|
Relates to the reclassifications of goodwill to assets held for sale in the second quarter of 2014 related to the divestitures of filler and toxin assets and Metronidazole 1.3% in July 2014 (as described in note 19, “SUBSEQUENT EVENTS AND PROPOSED TRANSACTIONS”).
|
|
9.
|
|
|
|
|
Maturity
Date
|
|
As of
June 30,
2014
|
|
As of
December 31,
2013
|
||||
|
Revolving Credit Facility
(1)
|
|
April 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Series A-1 Tranche A Term Loan Facility
(1)
|
|
April 2016
|
|
225.5
|
|
|
259.0
|
|
||
|
Series A-2 Tranche A Term Loan Facility
(1)
|
|
April 2016
|
|
203.4
|
|
|
228.1
|
|
||
|
Series A-3 Tranche A Term Loan Facility
(1)
|
|
October 2018
|
|
2,110.4
|
|
|
1,935.7
|
|
||
|
Series D-2 Tranche B Term Loan Facility
(1)
|
|
February 2019
|
|
1,252.8
|
|
|
1,256.7
|
|
||
|
Series C-2 Tranche B Term Loan Facility
(1)
|
|
December 2019
|
|
963.8
|
|
|
966.8
|
|
||
|
Series E-1 Tranche B Term Loan Facility
(1)
|
|
August 2020
|
|
2,931.6
|
|
|
3,090.5
|
|
||
|
Senior Notes:
|
|
|
|
|
|
|
||||
|
6.75%
|
|
October 2017
|
|
498.9
|
|
|
498.7
|
|
||
|
6.875%
|
|
December 2018
|
|
940.6
|
|
|
940.2
|
|
||
|
7.00%
|
|
October 2020
|
|
687.3
|
|
|
687.1
|
|
||
|
6.75%
|
|
August 2021
|
|
650.0
|
|
|
650.0
|
|
||
|
7.25%
|
|
July 2022
|
|
542.7
|
|
|
542.2
|
|
||
|
6.375%
|
|
October 2020
|
|
2,223.5
|
|
|
2,221.4
|
|
||
|
6.75%
|
|
August 2018
|
|
1,583.8
|
|
|
1,581.9
|
|
||
|
7.50%
|
|
July 2021
|
|
1,607.1
|
|
|
1,605.9
|
|
||
|
5.625%
|
|
December 2021
|
|
892.1
|
|
|
891.5
|
|
||
|
Other
(2)
|
|
Various
|
|
12.0
|
|
|
12.0
|
|
||
|
|
|
|
|
17,325.5
|
|
|
17,367.7
|
|
||
|
Less current portion
|
|
|
|
(266.7
|
)
|
|
(204.8
|
)
|
||
|
Total long-term debt
|
|
|
|
$
|
17,058.8
|
|
|
$
|
17,162.9
|
|
|
(1)
|
Together, the “Senior Secured Credit Facilities” under the Company’s Third Amended and Restated Credit and Guaranty Agreement (the “Credit Agreement”).
|
|
(2)
|
Relates primarily to the debentures assumed from B&L.
|
|
10.
|
SECURITIES REPURCHASE PROGRAM
|
|
11.
|
SHARE-BASED COMPENSATION
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Stock options
|
$
|
4.2
|
|
|
$
|
4.8
|
|
|
$
|
9.3
|
|
|
$
|
8.2
|
|
|
RSUs
|
11.4
|
|
|
2.6
|
|
|
31.1
|
|
|
8.3
|
|
||||
|
Share-based compensation expense
|
$
|
15.6
|
|
|
$
|
7.4
|
|
|
$
|
40.4
|
|
|
$
|
16.5
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Research and development expenses
|
$
|
1.4
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
Selling, general and administrative expenses
|
14.2
|
|
|
7.4
|
|
|
37.6
|
|
|
16.5
|
|
||||
|
Share-based compensation expense
|
$
|
15.6
|
|
|
$
|
7.4
|
|
|
$
|
40.4
|
|
|
$
|
16.5
|
|
|
12.
|
PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS
|
|
|
|
Pension Benefit Plans
|
|
Postretirement
Benefit
Plan
|
||||||||
|
|
U.S. Plan
|
|
Non-U.S. Plans
|
|
||||||||
|
|
|
Three Months Ended June 30, 2014
|
||||||||||
|
Service cost
|
|
$
|
0.1
|
|
|
$
|
1.0
|
|
|
$
|
0.4
|
|
|
Interest cost
|
|
2.7
|
|
|
2.1
|
|
|
0.6
|
|
|||
|
Expected return on plan assets
|
|
(3.7
|
)
|
|
(2.0
|
)
|
|
(0.1
|
)
|
|||
|
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
|
Net periodic (benefit) cost
|
|
$
|
(0.9
|
)
|
|
$
|
1.1
|
|
|
$
|
0.3
|
|
|
|
|
Pension Benefit Plans
|
|
Postretirement
Benefit
Plan
|
||||||||
|
|
U.S. Plan
|
|
Non-U.S. Plans
|
|
||||||||
|
|
|
Six Months Ended June 30, 2014
|
||||||||||
|
Service cost
|
|
$
|
0.2
|
|
|
$
|
2.0
|
|
|
$
|
0.8
|
|
|
Interest cost
|
|
5.4
|
|
|
4.3
|
|
|
1.2
|
|
|||
|
Expected return on plan assets
|
|
(7.4
|
)
|
|
(4.0
|
)
|
|
(0.2
|
)
|
|||
|
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|||
|
Net periodic (benefit) cost
|
|
$
|
(1.8
|
)
|
|
$
|
2.3
|
|
|
$
|
0.6
|
|
|
13.
|
SHAREHOLDERS’ EQUITY
|
|
|
Valeant Pharmaceuticals International, Inc. Shareholders
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Common Shares
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Valeant
Pharmaceuticals
International, Inc.
Shareholders’
Equity
|
|
Noncontrolling
Interest
|
|
Total
Equity
|
|||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance, January 1, 2013
|
303.9
|
|
|
$
|
5,940.7
|
|
|
$
|
267.1
|
|
|
$
|
(2,371.0
|
)
|
|
$
|
(119.4
|
)
|
|
$
|
3,717.4
|
|
|
$
|
—
|
|
|
$
|
3,717.4
|
|
|
Issuance of common stock
(1)
|
27.1
|
|
|
2,269.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,269.5
|
|
|
—
|
|
|
2,269.5
|
|
|||||||
|
Common shares issued under share-based compensation plans
(2)
|
2.2
|
|
|
54.2
|
|
|
(53.2
|
)
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
|||||||
|
Repurchase of common shares
(2)
|
(0.7
|
)
|
|
(14.2
|
)
|
|
—
|
|
|
(41.4
|
)
|
|
—
|
|
|
(55.6
|
)
|
|
—
|
|
|
(55.6
|
)
|
|||||||
|
Share-based compensation
|
—
|
|
|
—
|
|
|
16.5
|
|
|
—
|
|
|
—
|
|
|
16.5
|
|
|
—
|
|
|
16.5
|
|
|||||||
|
Employee withholding taxes related to share-based awards
|
—
|
|
|
—
|
|
|
(21.5
|
)
|
|
—
|
|
|
—
|
|
|
(21.5
|
)
|
|
—
|
|
|
(21.5
|
)
|
|||||||
|
Tax benefits from stock options exercised
|
—
|
|
|
—
|
|
|
16.4
|
|
|
—
|
|
|
—
|
|
|
16.4
|
|
|
—
|
|
|
16.4
|
|
|||||||
|
|
332.5
|
|
|
8,250.2
|
|
|
225.3
|
|
|
(2,412.4
|
)
|
|
(119.4
|
)
|
|
5,943.7
|
|
|
—
|
|
|
5,943.7
|
|
|||||||
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(16.7
|
)
|
|
—
|
|
|
(16.7
|
)
|
|
—
|
|
|
(16.7
|
)
|
|||||||
|
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(224.5
|
)
|
|
(224.5
|
)
|
|
—
|
|
|
(224.5
|
)
|
|||||||
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(241.2
|
)
|
|
—
|
|
|
(241.2
|
)
|
||||||||||||
|
Balance, June 30, 2013
|
332.5
|
|
|
$
|
8,250.2
|
|
|
$
|
225.3
|
|
|
$
|
(2,429.1
|
)
|
|
$
|
(343.9
|
)
|
|
$
|
5,702.5
|
|
|
$
|
—
|
|
|
$
|
5,702.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Balance, January 1, 2014
|
333.0
|
|
|
$
|
8,301.2
|
|
|
$
|
228.8
|
|
|
$
|
(3,278.5
|
)
|
|
$
|
(132.8
|
)
|
|
$
|
5,118.7
|
|
|
$
|
114.6
|
|
|
$
|
5,233.3
|
|
|
Common shares issued under share-based compensation plans
|
0.8
|
|
|
24.7
|
|
|
(17.5
|
)
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|
—
|
|
|
7.2
|
|
|||||||
|
Settlement of stock options
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
(3.1
|
)
|
|||||||
|
Share-based compensation
|
—
|
|
|
—
|
|
|
40.4
|
|
|
—
|
|
|
—
|
|
|
40.4
|
|
|
—
|
|
|
40.4
|
|
|||||||
|
Employee withholding taxes related to share-based awards
|
—
|
|
|
—
|
|
|
(36.5
|
)
|
|
—
|
|
|
—
|
|
|
(36.5
|
)
|
|
—
|
|
|
(36.5
|
)
|
|||||||
|
Tax benefits from stock options exercised
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
|||||||
|
Acquisition of noncontrolling interest
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
(2.2
|
)
|
|
(3.3
|
)
|
|||||||
|
|
333.8
|
|
|
8,325.9
|
|
|
212.2
|
|
|
(3,278.5
|
)
|
|
(132.8
|
)
|
|
5,126.8
|
|
|
112.4
|
|
|
5,239.2
|
|
|||||||
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
103.2
|
|
|
—
|
|
|
103.2
|
|
|
(1.5
|
)
|
|
101.7
|
|
|||||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28.1
|
|
|
28.1
|
|
|
(1.7
|
)
|
|
26.4
|
|
|||||||
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
131.3
|
|
|
(3.2
|
)
|
|
128.1
|
|
||||||||||||
|
Balance, June 30, 2014
|
333.8
|
|
|
$
|
8,325.9
|
|
|
$
|
212.2
|
|
|
$
|
(3,175.3
|
)
|
|
$
|
(104.7
|
)
|
|
$
|
5,258.1
|
|
|
$
|
109.2
|
|
|
$
|
5,367.3
|
|
|
(1)
|
On June 24, 2013, the Company completed, pursuant to an Underwriting Agreement with Goldman Sachs & Co. and Goldman Sachs Canada, Inc., a public offering of
27,058,824
of its common shares, no par value, at a price of
$85.00
per share, or aggregate gross proceeds of approximately
$2.3 billion
. In connection with the issuance of these new common shares, the Company incurred approximately
$30.5 million
of issuance costs, which has been reflected as reduction to the gross proceeds from the equity issuance.
|
|
(2)
|
During the second quarter of 2013,
225,000
common shares were repurchased by the Company pursuant to a purchase agreement with Goldman, Sachs & Co. Under this purchase program, the repurchases were made by Goldman, Sachs & Co. in compliance with Rule 10b5-1(c)(1)(i) of the Securities Exchange Act of 1934.
217,294
of these common shares were repurchased on behalf of certain members of the Company’s Board of Directors, and were subsequently transferred to such directors, in connection with the share settlement of certain deferred stock units and restricted stock units held by such directors following the termination of the applicable equity program. The remaining
7,706
common shares were repurchased on behalf of the Company pursuant to the 2012 Securities Repurchase Program (and therefore these shares are included in the
507,957
of total common shares repurchased under the 2012 Securities Repurchase Program as of June 30, 2013) and were subsequently cancelled (see note 10 titled “SECURITIES REPURCHASE PROGRAM” for further information).
|
|
14.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
|
|
Foreign
Currency
Translation
Adjustment
|
|
Unrealized
Gain on
Equity Investment
|
|
Net
Unrealized
Holding
Gain
on Available-
For-Sale
Equity
Securities
|
|
Pension
Adjustment
|
|
Total
|
||||||||||
|
Balance, January 1, 2013
|
|
$
|
(119.5
|
)
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
(0.3
|
)
|
|
$
|
(119.4
|
)
|
|
Foreign currency translation adjustment
|
|
(224.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(224.2
|
)
|
|||||
|
Reclassification to net income (loss)
(1)
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|
—
|
|
|
(3.9
|
)
|
|||||
|
Net unrealized holding gain on available-for-sale equity securities
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
|||||
|
Balance, June 30, 2013
|
|
$
|
(343.7
|
)
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
(0.3
|
)
|
|
$
|
(343.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Balance, January 1, 2014
|
|
$
|
(170.3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37.5
|
|
|
$
|
(132.8
|
)
|
|
Foreign currency translation adjustment
|
|
8.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.1
|
|
|||||
|
Unrealized gain on equity method investment, net of tax
|
|
—
|
|
|
18.5
|
|
|
—
|
|
|
—
|
|
|
18.5
|
|
|||||
|
Net unrealized holding gain on available-for-sale equity securities, net of tax
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
2.7
|
|
|||||
|
Pension adjustment
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
(1.2
|
)
|
|||||
|
Balance, June 30, 2014
|
|
$
|
(162.2
|
)
|
|
$
|
18.5
|
|
|
$
|
2.7
|
|
|
$
|
36.3
|
|
|
$
|
(104.7
|
)
|
|
(1)
|
Included in gain on investments, net.
|
|
(2)
|
Reflects changes in defined benefit obligations and related plan assets of the Company’s defined benefit pension plans and the U.S. postretirement benefit plan (as described in note 12).
|
|
15.
|
INCOME TAXES
|
|
16.
|
EARNINGS (LOSS) PER SHARE
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
125.8
|
|
|
$
|
10.8
|
|
|
$
|
103.2
|
|
|
$
|
(16.7
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic weighted-average number of common shares outstanding
|
335.3
|
|
|
308.1
|
|
|
335.1
|
|
|
307.7
|
|
||||
|
Diluted effect of stock options and RSUs
(a)
|
6.0
|
|
|
6.3
|
|
|
6.3
|
|
|
—
|
|
||||
|
Diluted weighted-average number of common shares outstanding
|
341.3
|
|
|
314.4
|
|
|
341.4
|
|
|
307.7
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.38
|
|
|
$
|
0.04
|
|
|
$
|
0.31
|
|
|
$
|
(0.05
|
)
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.03
|
|
|
$
|
0.30
|
|
|
$
|
(0.05
|
)
|
|
(a)
|
In the six-month period ended June 30, 2013, all potential common shares issuable for stock options and RSUs were excluded from the calculation of diluted loss per share, as the effect of including them would have been anti-dilutive. The dilutive effect of potential common shares issuable for stock options and RSUs on the weighted-average number of common shares outstanding would have been as follows:
|
|
|
|
Six Months Ended
June 30, |
|
|
|
|
2013
|
|
|
Basic weighted-average number of common shares outstanding
|
|
307.7
|
|
|
Dilutive effect of stock options and RSUs
|
|
6.4
|
|
|
Diluted weighted-average number of common shares outstanding
|
|
314.1
|
|
|
17.
|
LEGAL PROCEEDINGS
|
|
18.
|
SEGMENT INFORMATION
|
|
•
|
Developed Markets
consists of (i) sales in the U.S. of pharmaceutical products, OTC products, and medical device products, as well as alliance and contract service revenues, in the areas of eye health, dermatology and podiatry, aesthetics, and dentistry, (ii) sales in the U.S. of pharmaceutical products indicated for the treatment of neurological and other diseases, as well as alliance revenue from the licensing of various products we developed or acquired, and (iii) pharmaceutical products, OTC products, and medical device products sold in Canada, Australia, New Zealand, Western Europe and Japan.
|
|
•
|
Emerging Markets
consists of branded generic pharmaceutical products and branded pharmaceuticals, OTC products, and medical device products. Products are sold primarily in Central and Eastern Europe (primarily Poland and Russia), Asia, Latin America (Mexico, Brazil, and Argentina and exports out of Mexico to other Latin American markets), Africa and the Middle East.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Revenues:
|
|
|
|
|
|
|
|
||||||||
|
Developed Markets
(1)
|
$
|
1,479.7
|
|
|
$
|
799.8
|
|
|
$
|
2,901.5
|
|
|
$
|
1,580.1
|
|
|
Emerging Markets
(2)
|
561.4
|
|
|
295.9
|
|
|
1,025.8
|
|
|
584.0
|
|
||||
|
Total revenues
|
2,041.1
|
|
|
1,095.7
|
|
|
3,927.3
|
|
|
2,164.1
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Segment profit:
|
|
|
|
|
|
|
|
||||||||
|
Developed Markets
(3)
|
458.0
|
|
|
247.2
|
|
|
897.3
|
|
|
434.9
|
|
||||
|
Emerging Markets
(4)
|
96.0
|
|
|
18.2
|
|
|
164.1
|
|
|
44.4
|
|
||||
|
Total segment profit
|
554.0
|
|
|
265.4
|
|
|
1,061.4
|
|
|
479.3
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate
(5)
|
(46.3
|
)
|
|
(52.8
|
)
|
|
(84.4
|
)
|
|
(90.5
|
)
|
||||
|
Restructuring, integration and other costs
|
(142.1
|
)
|
|
(53.6
|
)
|
|
(275.7
|
)
|
|
(102.6
|
)
|
||||
|
In-process research and development impairments and other charges
|
(8.4
|
)
|
|
(4.8
|
)
|
|
(20.4
|
)
|
|
(4.8
|
)
|
||||
|
Acquisition-related costs
|
(0.6
|
)
|
|
(7.9
|
)
|
|
(2.1
|
)
|
|
(15.8
|
)
|
||||
|
Acquisition-related contingent consideration
|
(1.9
|
)
|
|
(3.7
|
)
|
|
(10.8
|
)
|
|
(1.5
|
)
|
||||
|
Other income (expense)
|
0.4
|
|
|
(1.1
|
)
|
|
43.7
|
|
|
(5.6
|
)
|
||||
|
Operating income
|
355.1
|
|
|
141.5
|
|
|
711.7
|
|
|
258.5
|
|
||||
|
Interest income
|
1.2
|
|
|
1.0
|
|
|
3.0
|
|
|
2.6
|
|
||||
|
Interest expense
|
(241.2
|
)
|
|
(176.8
|
)
|
|
(487.7
|
)
|
|
(332.1
|
)
|
||||
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(93.7
|
)
|
|
(21.4
|
)
|
||||
|
Foreign exchange and other
|
3.4
|
|
|
(10.0
|
)
|
|
(10.0
|
)
|
|
(8.6
|
)
|
||||
|
Gain on investments, net
|
2.5
|
|
|
3.9
|
|
|
2.5
|
|
|
5.8
|
|
||||
|
Income (loss) before (recovery of) provision for income taxes
|
$
|
121.0
|
|
|
$
|
(40.4
|
)
|
|
$
|
125.8
|
|
|
$
|
(95.2
|
)
|
|
(1)
|
Developed Markets segment revenues reflect incremental product sales revenue of
$709.2 million
and
$1,374.4 million
, in the aggregate, from all 2013 acquisitions and all 2014 acquisitions in the
three-month and six-month periods ended June 30, 2014
, respectively, primarily from the B&L and Solta Medical acquisitions.
|
|
(2)
|
Emerging Markets segment revenues reflect incremental product sales revenue of
$250.7 million
and
$467.0 million
, in the aggregate, from all 2013 acquisitions and all 2014 acquisitions in the
three-month and six-month periods ended June 30, 2014
, respectively, primarily from the B&L acquisition.
|
|
(3)
|
Developed Markets segment profit reflects the addition of operations from all 2013 acquisitions and all 2014 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of
$216.3 million
and
$441.4 million
, in the aggregate, in the
three-month and six-month periods ended June 30, 2014
, respectively, primarily from B&L and Medicis operations.
|
|
(4)
|
Emerging Markets segment profit reflects the addition of operations from all 2013 acquisitions and all 2014 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of
$78.9 million
, and
$153.7 million
in the aggregate, in the
three-month and six-month periods ended June 30, 2014
, respectively, primarily from B&L operations.
|
|
(5)
|
Corporate reflects non-restructuring-related share-based compensation expense of
$5.9 million
and
$21.1 million
in the
three-month and six-month periods ended June 30, 2014
, respectively, compared with
$7.4 million
and
$16.5 million
in the corresponding periods of
2013
.
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
|
Assets
(1)
:
|
|
|
|
||||
|
Developed Markets
(2)
|
$
|
20,381.3
|
|
|
$
|
20,007.2
|
|
|
Emerging Markets
(3)
|
6,509.6
|
|
|
6,907.8
|
|
||
|
|
26,890.9
|
|
|
26,915.0
|
|
||
|
Corporate
|
1,004.7
|
|
|
1,055.8
|
|
||
|
Total assets
|
$
|
27,895.6
|
|
|
$
|
27,970.8
|
|
|
(1)
|
The segment assets as of December 31, 2013 contain reclassifications between segments to conform to the current period presentation.
|
|
(2)
|
Developed Markets segment assets as of
June 30, 2014
reflect the provisional amounts of identifiable intangible assets and goodwill of the Solta Medical acquisition of
$103.5 million
and
$64.0 million
, respectively.
|
|
(3)
|
Emerging Markets segment assets as of
June 30, 2014
reflect the provisional amounts of identifiable intangible assets and goodwill of the Solta Medical acquisition of
$69.4 million
and
$42.9 million
, respectively.
|
|
19.
|
SUBSEQUENT EVENTS AND PROPOSED TRANSACTIONS
|
|
|
|
Acquisition
Date
|
|
Acquisitions of businesses and product rights
|
|
|
|
Solta Medical, Inc. (“Solta Medical”)
|
|
January, 2014
|
|
PreCision Dermatology, Inc. (“PreCision”)
|
|
July, 2014
|
|
|
|
Disposition
Date
|
|
Dispositions
|
|
|
|
Filler and toxin assets
|
|
July, 2014
|
|
Metronidazole 1.3%
|
|
July, 2014
|
|
Tretin-X® (tretinoin) cream and generic tretinoin gel and cream products
(1)
|
|
July, 2014
|
|
(1)
|
In connection with the acquisition of PreCision, we were required by the Federal Trade Commission to divest the rights to
PreCision’s Tretin-X® (tretinoin) cream product and PreCision’s generic tretinoin gel and cream products.
|
|
•
|
workforce reductions across the Company and other organizational changes;
|
|
•
|
closing of duplicative facilities and other site rationalization actions company-wide, including research and development facilities, sales offices and corporate facilities;
|
|
•
|
leveraging research and development spend; and
|
|
•
|
procurement savings.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||||
|
($ in millions, except per share data)
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||
|
Revenues
|
2,041.1
|
|
|
1,095.7
|
|
|
945.4
|
|
|
86
|
|
3,927.3
|
|
|
2,164.1
|
|
|
1,763.2
|
|
|
81
|
|
Operating expenses
|
1,686.0
|
|
|
954.2
|
|
|
731.8
|
|
|
77
|
|
3,215.6
|
|
|
1,905.6
|
|
|
1,310.0
|
|
|
69
|
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
125.8
|
|
|
10.8
|
|
|
115.0
|
|
|
NM
|
|
103.2
|
|
|
(16.7
|
)
|
|
119.9
|
|
|
NM
|
|
Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Basic
|
0.38
|
|
|
0.04
|
|
|
0.34
|
|
|
NM
|
|
0.31
|
|
|
(0.05
|
)
|
|
0.36
|
|
|
NM
|
|
Diluted
|
0.37
|
|
|
0.03
|
|
|
0.34
|
|
|
NM
|
|
0.30
|
|
|
(0.05
|
)
|
|
0.35
|
|
|
NM
|
|
•
|
Developed Markets
consists of (i) sales in the U.S. of pharmaceutical products, OTC products, and medical device products, as well as alliance and contract service revenues, in the areas of eye health, dermatology and podiatry,
|
|
•
|
Emerging Markets
consists of branded generic pharmaceutical products and branded pharmaceuticals, OTC products, and medical device products. Products are sold primarily in Central and Eastern Europe (primarily Poland and Russia), Asia, Latin America (Mexico, Brazil, and Argentina and exports out of Mexico to other Latin American markets), Africa and the Middle East.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||||||
|
($ in millions)
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
||||||
|
Developed Markets
|
1,479.7
|
|
72
|
|
799.8
|
|
73
|
|
679.9
|
|
85
|
|
2,901.5
|
|
74
|
|
1,580.1
|
|
73
|
|
1,321.4
|
|
84
|
|
Emerging Markets
|
561.4
|
|
28
|
|
295.9
|
|
27
|
|
265.5
|
|
90
|
|
1,025.8
|
|
26
|
|
584.0
|
|
27
|
|
441.8
|
|
76
|
|
Total revenues
|
2,041.1
|
|
100
|
|
1,095.7
|
|
100
|
|
945.4
|
|
86
|
|
3,927.3
|
|
100
|
|
2,164.1
|
|
100
|
|
1,763.2
|
|
81
|
|
•
|
the incremental product sales revenue of $709.2 million and $1,374.4 million, in the aggregate, from all 2013 acquisitions and all 2014 acquisitions in the second quarter and first half of 2014, respectively, primarily from (i) the 2013 acquisitions of B&L (driven by Ocuvite®/PreserVision®, Lotemax® Gel, ReNu Multiplus®, and Biotrue® MultiPurpose Solution product sales) and (ii) the 2014 acquisition of Solta Medical (mainly driven by Thermage CPT® system product sales).
|
|
•
|
decrease in product sales of $53.6 million and $107.5 million, in the aggregate, in the second quarter and first half of 2014, respectively, related to a decline in sales of the Retin-A Micro®, Vanos®, and Zovirax® franchises and Wellbutrin® XL (Canada) due to generic competition. We anticipate a continuing decline in sales of Retin-A Micro®, Vanos®, Zovirax® ointment, and Wellbutrin® XL (Canada) due to continued generic erosion. However, the rate of decline is expected to decrease in the future, and these brands are expected to represent a declining percentage of total revenues primarily due to anticipated growth in other parts of our business and recent acquisitions;
|
|
•
|
decrease in product sales of $31.2 million and $53.3 million, in the aggregate, in the second quarter and first half of 2014, respectively, related to facial injectables (filler and toxin assets). The decline was primarily due to sales force disruption following the announcements in the first half of 2014 of (i) the proposed merger with Allergan and (ii) the planned divestiture of these products to Galderma S.A. These assets were designated as assets held for sale as of June 30, 2014;
|
|
•
|
a negative impact from divestitures, discontinuations and supply interruptions of $24.2 million and $47.2 million in the second quarter and first half of 2014, respectively. The largest contributors were the discontinuation of Maxair® and the divestiture of Buphenyl® in 2013; and
|
|
•
|
a negative foreign currency exchange impact on the existing business of $6.4 million and $17.4 million in the second quarter and first half of 2014, respectively.
|
|
•
|
the incremental product sales revenue of $250.7 million and $467.0 million, in the aggregate, from all 2013 acquisitions and all 2014 acquisitions in the second quarter and first half of 2014, respectively, primarily from the 2013 acquisition of B&L (driven by ReNu Multiplus® product sales) and the 2014 acquisition of Solta Medical (mainly driven by Thermage CPT® system product sales).
|
|
•
|
a negative impact from divestitures, discontinuations and supply interruptions of $4.6
million and $40.0 million in the second quarter and first half of 2014, respectively, primarily from Eastern Europe and Brazil;
|
|
•
|
a negative foreign currency exchange impact on the existing business of $1.6 million and $14.3 million in the second quarter and first half of 2014, respectively; and
|
|
•
|
decrease in product sales of $2.5 million and $3.9 million, in the aggregate, in the second quarter and first half of 2014, respectively, related to facial injectables (filler and toxin assets) designated as assets held for sale as of June 30, 2014.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||||||
|
($ in millions)
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
||||||
|
Developed Markets
|
458.0
|
|
31
|
|
247.2
|
|
31
|
|
210.8
|
|
85
|
|
897.3
|
|
31
|
|
434.9
|
|
28
|
|
462.4
|
|
106
|
|
Emerging Markets
|
96.0
|
|
17
|
|
18.2
|
|
6
|
|
77.8
|
|
NM
|
|
164.1
|
|
16
|
|
44.4
|
|
8
|
|
119.7
|
|
NM
|
|
Total segment profit
|
554.0
|
|
27
|
|
265.4
|
|
24
|
|
288.6
|
|
109
|
|
1,061.4
|
|
27
|
|
479.3
|
|
22
|
|
582.1
|
|
121
|
|
•
|
an increase in contribution of $491.5 million and $942.5 million, in the aggregate, from all 2013 acquisitions and all 2014 acquisitions in the second quarter and first half of 2014, respectively, primarily from the product sales of B&L, including higher expenses for acquisition accounting adjustments related to inventory of $6.4
million and $13.5 million, in the aggregate, in the second quarter and first half of 2014, respectively; and
|
|
•
|
a favorable impact of $24.5 million and $65.6 million related to the existing business acquisition accounting adjustments related to inventory in the second quarter and first half of 2013, respectively, that did not similarly occur in the second quarter and first half of 2014.
|
|
•
|
an increase in operating expenses (including amortization and impairments of finite-lived intangible assets) of $273.5 million and $500.0 million in the second quarter and first half of 2014, respectively, primarily due to the acquisitions of new businesses within the segment;
|
|
•
|
a decrease in contribution of $50.4 million and $103.1 million in the second quarter and first half of 2014, respectively, related to the lower sales of the Retin-A Micro®, Vanos®, and Zovirax® franchises and Wellbutrin® XL (Canada) as a result of the continued impact of generic competition;
|
|
•
|
a decrease in contribution of $26.5 million and $47.0 million in the second quarter and first half of 2014, respectively, related to facial injectables (filler and toxin assets). These assets were designated as assets held for sale as of June 30, 2014;
|
|
•
|
a decrease in contribution of $18.7 million and $37.3 million in the second quarter and first half of 2014, respectively, related to divestitures, discontinuations and supply interruptions; and
|
|
•
|
a negative foreign currency exchange impact on the existing business contribution of $4.9
million and $13.3 million in the second quarter and first half of 2014, respectively.
|
|
•
|
an increase in contribution of $166.1 million and $310.0 million, in the aggregate, from all 2013 acquisitions and all 2014 acquisitions, in the second quarter and first half of 2014, respectively, primarily from the sale of B&L products.
|
|
•
|
an increase in operating expenses (including amortization and impairments of finite-lived intangible assets) of $95.6 million and $175.2 million in the second quarter and first half of 2014, respectively, primarily associated with the acquisitions of new businesses within the segment;
|
|
•
|
a decrease in contribution of $2.9 million and $23.9 million in the second quarter and first half of 2014, respectively, related to divestitures, discontinuations and supply interruptions;
|
|
•
|
a negative foreign currency exchange impact on the existing business contribution of $8.9
million in the first half of 2014; and
|
|
•
|
a decrease in contribution of $2.3 million and $3.4 million in the second quarter and first half of 2014, respectively, related to facial injectables (filler and toxin assets) designated as assets held for sale as of June 30, 2014.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
|||||||||||||||
|
($ in millions)
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
|||||||||
|
Cost of goods sold (exclusive of amortization and impairments of finite-lived intangible assets shown separately below)
|
569.6
|
|
28
|
|
|
283.2
|
|
26
|
|
286.4
|
|
101
|
|
|
1,073.7
|
|
27
|
|
568.1
|
|
26
|
|
505.6
|
|
89
|
|
|
Cost of other revenues
|
16.0
|
|
1
|
|
|
14.5
|
|
1
|
|
1.5
|
|
10
|
|
|
30.3
|
|
1
|
|
29.9
|
|
1
|
|
0.4
|
|
1
|
|
|
Selling, general and administrative
|
515.7
|
|
25
|
|
|
257.3
|
|
23
|
|
258.4
|
|
100
|
|
|
997.7
|
|
25
|
|
499.2
|
|
23
|
|
498.5
|
|
100
|
|
|
Research and development
|
66.5
|
|
3
|
|
|
24.5
|
|
2
|
|
42.0
|
|
171
|
|
|
127.8
|
|
3
|
|
48.3
|
|
2
|
|
79.5
|
|
165
|
|
|
Amortization and impairments of finite-lived intangible assets
|
365.6
|
|
18
|
|
|
303.6
|
|
28
|
|
62.0
|
|
20
|
|
|
720.8
|
|
18
|
|
629.8
|
|
29
|
|
91.0
|
|
14
|
|
|
Restructuring, integration and other costs
|
142.1
|
|
7
|
|
|
53.6
|
|
5
|
|
88.5
|
|
165
|
|
|
275.7
|
|
7
|
|
102.6
|
|
5
|
|
173.1
|
|
169
|
|
|
In-process research and development impairments and other charges
|
8.4
|
|
—
|
|
|
4.8
|
|
—
|
|
3.6
|
|
75
|
|
|
20.4
|
|
1
|
|
4.8
|
|
—
|
|
15.6
|
|
NM
|
|
|
Acquisition-related costs
|
0.6
|
|
—
|
|
|
7.9
|
|
1
|
|
(7.3
|
)
|
(92
|
)
|
|
2.1
|
|
—
|
|
15.8
|
|
1
|
|
(13.7
|
)
|
(87
|
)
|
|
Acquisition-related contingent consideration
|
1.9
|
|
—
|
|
|
3.7
|
|
—
|
|
(1.8
|
)
|
(49
|
)
|
|
10.8
|
|
—
|
|
1.5
|
|
—
|
|
9.3
|
|
NM
|
|
|
Other (income) expense
|
(0.4
|
)
|
—
|
|
|
1.1
|
|
—
|
|
(1.5
|
)
|
NM
|
|
|
(43.7
|
)
|
(1)
|
|
5.6
|
|
—
|
|
(49.3
|
)
|
NM
|
|
|
Total operating expenses
|
1,686.0
|
|
83
|
|
|
954.2
|
|
87
|
|
731.8
|
|
77
|
|
|
3,215.6
|
|
82
|
|
1,905.6
|
|
88
|
|
1,310.0
|
|
69
|
|
|
•
|
an unfavorable impact from product mix related to (i) the product portfolio acquired as part of the B&L Acquisition and (ii) decreased sales of the Retin-A Micro®, Vanos®, and Zovirax® franchises and Wellbutrin® XL (Canada) which have a higher gross profit margin than our overall margin.
|
|
•
|
the impact of lower acquisition accounting adjustments of $22.0 million and $60.0 million in the second quarter and first half of 2014, respectively, primarily related to the fair value step-up for acquired inventory from the Medicis acquisition which was expensed in the second quarter and first half of 2013 that did not similarly occur in the second quarter and first half of 2014; and
|
|
•
|
the benefits realized from worldwide manufacturing rationalization initiatives primarily from Latin America and Canada.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||||
|
($ in millions; Income (Expense))
|
$
|
|
$
|
|
$
|
%
|
|
$
|
|
$
|
|
$
|
%
|
||||||||
|
Interest income
|
1.2
|
|
|
1.0
|
|
|
0.2
|
|
20
|
|
|
3.0
|
|
|
2.6
|
|
|
0.4
|
|
15
|
|
|
Interest expense
|
(241.2
|
)
|
|
(176.8
|
)
|
|
(64.4
|
)
|
36
|
|
|
(487.7
|
)
|
|
(332.1
|
)
|
|
(155.6
|
)
|
47
|
|
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
(93.7
|
)
|
|
(21.4
|
)
|
|
(72.3
|
)
|
NM
|
|
|
Foreign exchange and other
|
3.4
|
|
|
(10.0
|
)
|
|
13.4
|
|
NM
|
|
|
(10.0
|
)
|
|
(8.6
|
)
|
|
(1.4
|
)
|
16
|
|
|
Gain on investments, net
|
2.5
|
|
|
3.9
|
|
|
(1.4
|
)
|
(36
|
)
|
|
2.5
|
|
|
5.8
|
|
|
(3.3
|
)
|
(57
|
)
|
|
Total non-operating expense
|
(234.1
|
)
|
|
(181.9
|
)
|
|
(52.2
|
)
|
29
|
|
|
(585.9
|
)
|
|
(353.7
|
)
|
|
(232.2
|
)
|
66
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||||
|
($ in millions; Expense (Income))
|
$
|
|
$
|
|
$
|
%
|
|
$
|
|
$
|
|
$
|
%
|
||||||||
|
Current income tax expense
|
20.3
|
|
|
12.0
|
|
|
8.3
|
|
69
|
|
|
35.4
|
|
|
22.1
|
|
|
13.3
|
|
60
|
|
|
Deferred income tax recovery
|
(21.3
|
)
|
|
(63.2
|
)
|
|
41.9
|
|
(66
|
)
|
|
(11.3
|
)
|
|
(100.6
|
)
|
|
89.3
|
|
(89
|
)
|
|
Total (recovery of) provision for income taxes
|
(1.0
|
)
|
|
(51.2
|
)
|
|
50.2
|
|
(98
|
)
|
|
24.1
|
|
|
(78.5
|
)
|
|
102.6
|
|
NM
|
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
|
Change
|
|||||
|
($ in millions; Asset (Liability))
|
$
|
|
$
|
|
$
|
%
|
||||
|
Cash and cash equivalents
|
531.2
|
|
|
600.3
|
|
|
(69.1
|
)
|
(12
|
)
|
|
Long-lived assets
(1)
|
22,507.3
|
|
|
23,834.5
|
|
|
(1,327.2
|
)
|
(6
|
)
|
|
Total debt, including current portion
|
(17,325.5
|
)
|
|
(17,367.7
|
)
|
|
42.2
|
|
—
|
|
|
•
|
$405.8 million
paid, in the aggregate, in connection with the purchases of businesses and intangible assets, mainly in respect of the Solta Medical acquisition in the first half of 2014;
|
|
•
|
purchases of property, plant and equipment of
$171.6 million
;
|
|
•
|
$140.6 million in repayments, in the aggregate, under our (i) Series A-1, Series A-2 and Series A-3 of tranche A term loan facilities, (ii) Series E-1 tranche B term loan facility, and (iii) Series D-2 and Series C-2 of tranche B term loan facilities, in the first half of 2014;
|
|
•
|
contingent consideration payments within financing activities of
$82.2 million
primarily related to the OraPharma Topco Holdings, Inc. acquisition in June 2012, the Eisai (Targretin®) acquisition in February 2013 and the Elidel®/Xerese®/Zovirax® agreement entered into in June 2011;
|
|
•
|
$75.9 million payment related to the investment in PS Fund 1, LLC (“PS Fund 1”), a newly formed company jointly owned by Pershing Square Capital Management, L.P. (“Pershing Square”) and Valeant in connection with a merger proposal to the Board of Directors of Allergan. Refer to note 19 to the unaudited consolidated financial statements for additional information;
|
|
•
|
$36.5 million
of employee withholding taxes paid in connection with the exercise of share-based awards; and
|
|
•
|
$10.8 million
related to debt issue costs paid primarily due to the refinancing of our Series E tranche B term loan facility in February 2014 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”).
|
|
•
|
$860.3 million
in operating cash flows.
|
|
•
|
the carrying amount of intangible assets and goodwill of $1.0 billion and $91.0 million, in the aggregate, related to the divestitures of (i) filler and toxin assets and (ii) Metronidazole 1.3%, respectively, which were reclassified to assets held for sale in the second quarter of 2014. Refer to note 19 to the unaudited consolidated financial statements for additional information; and
|
|
•
|
the depreciation of property, plant and equipment and amortization of intangible assets of
$808.8 million
, in the aggregate.
|
|
•
|
the inclusion of the identifiable intangible assets, goodwill and property, plant and equipment from the 2014 acquisitions of $419.2
million, in the aggregate, primarily related to the Solta Medical acquisition; and
|
|
•
|
purchases of property, plant and equipment of
$171.6 million
.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
||||||||||
|
($ in millions)
|
$
|
|
$
|
|
$
|
%
|
|
$
|
|
$
|
|
$
|
%
|
||||||||
|
Net cash provided by operating activities
|
376.0
|
|
|
305.1
|
|
|
70.9
|
|
23
|
|
|
860.3
|
|
|
560.4
|
|
|
299.9
|
|
54
|
|
|
Net cash used in investing activities
|
(266.4
|
)
|
|
(531.7
|
)
|
|
265.3
|
|
(50
|
)
|
|
(650.5
|
)
|
|
(766.6
|
)
|
|
116.1
|
|
(15
|
)
|
|
Net cash (used in) provided by financing activities
|
(156.6
|
)
|
|
2,356.1
|
|
|
(2,512.7
|
)
|
NM
|
|
|
(279.3
|
)
|
|
1,840.2
|
|
|
(2,119.5
|
)
|
NM
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
1.9
|
|
|
(3.8
|
)
|
|
5.7
|
|
NM
|
|
|
0.4
|
|
|
(10.7
|
)
|
|
11.1
|
|
NM
|
|
|
Net (decrease) increase in cash and cash equivalents
|
(45.1
|
)
|
|
2,125.7
|
|
|
(2,170.8
|
)
|
(102
|
)
|
|
(69.1
|
)
|
|
1,623.3
|
|
|
(1,692.4
|
)
|
(104
|
)
|
|
Cash and cash equivalents, beginning of period
|
576.3
|
|
|
413.7
|
|
|
162.6
|
|
39
|
|
|
600.3
|
|
|
916.1
|
|
|
(315.8
|
)
|
(34
|
)
|
|
Cash and cash equivalents, end of period
|
531.2
|
|
|
2,539.4
|
|
|
(2,008.2
|
)
|
(79
|
)
|
|
531.2
|
|
|
2,539.4
|
|
|
(2,008.2
|
)
|
(79
|
)
|
|
•
|
the inclusion of cash flows in the second quarter of 2014 from all 2013 acquisitions, primarily the B&L acquisition, as well as all 2014 acquisitions, primarily the Solta Medical acquisition.
|
|
•
|
an increased investment in working capital of
$139.9 million
in the second quarter of 2014, primarily related to the impact of changes related to timing of payments, including interest payments, and receipts in the ordinary course of business;
|
|
•
|
higher payments of $71.3 million related to restructuring, integration and other costs in the second quarter of 2014; and
|
|
•
|
a decrease in contribution of $50.4 million in the second quarter of 2014 related to the lower sales of the Retin-A Micro®, Vanos®, and Zovirax® franchises and Wellbutrin® XL (Canada) as a result of generic competition.
|
|
•
|
the inclusion of cash flows in the first half of 2014 from all 2013 acquisitions, primarily the B&L and Obagi acquisitions, as well as all 2014 acquisitions, primarily the Solta Medical acquisition.
|
|
•
|
higher payments of $149.3 million related to restructuring, integration and other costs in the first half of 2014;
|
|
•
|
a decrease in contribution of $103.1 million in the first half of 2014 related to the lower sales of the Retin-A Micro®, Vanos®, and Zovirax® franchises and Wellbutrin® XL (Canada) as a result of generic competition; and
|
|
•
|
an increased investment in working capital of
$77.3 million
in the first half of 2014, primarily related to the impact of changes related to timing of payments, including interest payments, and receipts in the
ordinary course of business.
|
|
•
|
a decrease of
$467.5 million
, in the aggregate, related to the purchases of businesses (net of cash acquired) and intangible assets in the aggregate.
|
|
•
|
an increase of
$100.7 million
in purchases of property, plant and equipment;
|
|
•
|
an increase of $75.9 million related to the investment in the PS Fund 1, a newly formed company jointly owned by Pershing Square and Valeant, formed in connection with a merger proposal to the Board of Directors of Allergan; and
|
|
•
|
an increase of
$17.6 million
, related to lower proceeds from the sale of assets, primarily attributable to the cash proceeds of $19.0 million for the sale of Buphenyl® in the second quarter of 2013, which was acquired in connection with the Medicis acquisition in December 2012.
|
|
•
|
a decrease of
$378.4 million
, in the aggregate, related to the purchases of businesses (net of cash acquired) and intangible assets in the aggregate.
|
|
•
|
an increase of
$144.8 million
in purchases of property, plant and equipment;
|
|
•
|
an increase of $75.9 million related to the investment in the PS Fund 1, a newly formed company jointly owned by Pershing Square and Valeant, formed in connection with a merger proposal to the Board of Directors of Allergan;
|
|
•
|
an increase of
$24.6 million
, related to lower proceeds from the sale of assets, primarily attributable to the cash proceeds of $19.0 million for the sale of Buphenyl® in the second quarter of 2013, which was acquired in connection with the Medicis acquisition in December 2012; and
|
|
•
|
an increase of
$17.0 million
related to proceeds from the sale of marketable securities in the first half of 2013 that did not similarly occur in the first half of 2014.
|
|
•
|
a decrease of
$2.3 billion
related to the net proceeds from the issuance of common stock in June 2013, which were utilized to fund the B&L Acquisition;
|
|
•
|
a decrease of $225.0 million in net borrowings under our revolving credit facility in the second quarter of 2014; and
|
|
•
|
a decrease of $11.4 million related to the higher repayments under our senior secured credit facilities in the second quarter of 2014.
|
|
•
|
an increase of
$20.6 million
related to lower repurchases of common shares in the second quarter of 2014.
|
|
•
|
a decrease of
$2.3 billion
related to the net proceeds from the issuance of common stock in June 2013, which were utilized to fund the B&L Acquisition; and
|
|
•
|
a decrease of $225.0 million in net borrowings under our revolving credit facility in the first half of 2014.
|
|
•
|
an increase of $233.6 million related to the repayments of long-term debt assumed in connection with the Medicis acquisition in the first half of 2013 that did not similarly occur in the first half of 2014;
|
|
•
|
an increase of $77.2 million related to the lower repayments under our senior secured credit facilities in the first half of 2014;
|
|
•
|
an increase of
$55.6 million
related to lower repurchases of common shares in the first half of 2014;
|
|
•
|
an increase of $37.6 million related to the repayments of short-term borrowings and long-term debt, in the aggregate, assumed in connection with the Natur Produkt acquisition in the first half of 2013 that did not similarly occur in the first half of 2014; and
|
|
•
|
an increase of
$22.8 million
related to the lower debt issue costs paid in the first half of 2014 due to the lower refinancing activities in the first half of 2014.
|
|
|
|
Payments Due by Period
|
|||||||||||||
|
|
|
Total
|
|
2014
|
|
2015 and 2016
|
|
2017 and 2018
|
|
Thereafter
|
|||||
|
($ in millions)
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
|
Long-term debt obligations, including interest
(1)
|
|
23,015.9
|
|
|
530.4
|
|
|
2,994.1
|
|
|
6,376.9
|
|
|
13,114.5
|
|
|
(1)
|
Expected interest payments assume repayment of the principal amount of the debt obligations at maturity.
|
|
•
|
the challenges and difficulties associated with managing the rapid growth of our Company and a larger, more complex business;
|
|
•
|
the introduction of generic competitors of our brand products;
|
|
•
|
the introduction of products that compete against our products that do not have patent or data exclusivity rights, which products represent a significant portion of our revenues;
|
|
•
|
our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;
|
|
•
|
our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis;
|
|
•
|
factors relating to the integration of the companies, businesses and products acquired by the Company (including the integration relating to our recent acquisitions of PreCision, Solta Medical, and B&L, such as the time and resources required to integrate such companies, businesses and products, the difficulties associated with such integrations (including potential disruptions in sales activities and potential challenges with information technology systems integrations), the difficulties and challenges associated with entering into new business areas and new geographic markets, the difficulties, challenges and costs associated with managing and integrating new facilities, equipment and other assets, and the achievement of the anticipated benefits from such integrations;
|
|
•
|
factors relating to our ability to achieve all of the estimated synergies from our acquisitions, including from our recent acquisition of B&L (which we anticipate will be greater than $900 million), as a result of cost-rationalization and integration initiatives. These factors may include greater than expected operating costs, the difficulty in eliminating certain duplicative costs, facilities and functions, and the outcome of many operational and strategic decisions, some of which have not yet been made;
|
|
•
|
the ultimate outcome of any possible transaction between the Company and Allergan, Inc. (“Allergan”) including the possibilities that the Company will not continue to pursue a transaction with Allergan or that Allergan will reject a transaction with the Company and factors relating to the time, resources and efforts expended in pursuing a transaction with Allergan;
|
|
•
|
ability to obtain regulatory approvals and meet other closing conditions to the proposed Allergan transaction, including all necessary stockholder approvals, on a timely basis;
|
|
•
|
the ultimate outcome and results of integrating the operations of the Company and Allergan, the ultimate outcome of the Company’s pricing and operating strategy applied to Allergan and the ultimate ability to realize synergies;
|
|
•
|
the effects of the business combination of the Company and Allergan, including the combined company’s future financial condition, operating results, strategy and plans;
|
|
•
|
our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;
|
|
•
|
our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries;
|
|
•
|
our substantial debt and debt service obligations and their impact on our financial condition and results of operations;
|
|
•
|
our future cash flow, our ability to service and repay our existing debt and our ability to raise additional funds, if needed, in light of our current and projected levels of operations, acquisition activity and general economic conditions;
|
|
•
|
interest rate risks associated with our floating debt borrowings;
|
|
•
|
the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering new geographic markets (including the challenges created by new and different regulatory regimes in those markets);
|
|
•
|
adverse global economic conditions and credit market and foreign currency exchange uncertainty in the countries in which we do business (such as the recent instability in Russia, Ukraine and the Middle East);
|
|
•
|
economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;
|
|
•
|
our ability to retain, motivate and recruit executives and other key employees;
|
|
•
|
our ability to obtain and maintain sufficient intellectual property rights over our products and defend against challenge to such intellectual property;
|
|
•
|
the outcome of legal proceedings, investigations and regulatory proceedings;
|
|
•
|
the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits and/or withdrawals of products from the market;
|
|
•
|
the availability of and our ability to obtain and maintain adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third party insurance or self-insurance;
|
|
•
|
the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including, but not limited to, the U.S. Food and Drug Administration, Health Canada and other regulatory approvals, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;
|
|
•
|
the results of continuing safety and efficacy studies by industry and government agencies;
|
|
•
|
the availability and extent to which our products are reimbursed by government authorities and other third party payors, as well as the impact of obtaining or maintaining such reimbursement on the price of our products;
|
|
•
|
the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price of our products in connection therewith;
|
|
•
|
the impact of price control restrictions on our products, including the risk of mandated price reductions;
|
|
•
|
the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as factors impacting the commercial success of our currently marketed products, which could lead to material impairment charges;
|
|
•
|
the results of management reviews of our research and development portfolio, conducted periodically and in connection with certain acquisitions, the decisions from which could result in terminations of specific projects which, in turn, could lead to material impairment charges;
|
|
•
|
negative publicity or reputational harm to our products and business, including as faced in connection with our proposed transaction with Allergan;
|
|
•
|
the uncertainties associated with the acquisition and launch of new products, including, but not limited to, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing;
|
|
•
|
our ability to obtain components, raw materials or finished products supplied by third parties and other manufacturing and related supply difficulties, interruptions and delays;
|
|
•
|
the disruption of delivery of our products and the routine flow of manufactured goods;
|
|
•
|
the seasonality of sales of certain of our products;
|
|
•
|
declines in the pricing and sales volume of certain of our products that are distributed by third parties, over which we have no or limited control;
|
|
•
|
compliance with, or the failure to comply with, health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and pricing practices, worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide environmental laws and regulation and privacy and security regulations;
|
|
•
|
the impacts of the Patient Protection and Affordable Care Act (as amended) and other legislative and regulatory healthcare reforms in the countries in which we operate;
|
|
•
|
interruptions, breakdowns or breaches in our information technology systems; and
|
|
•
|
other risks detailed from time to time in our filings with the SEC and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks associated with the foregoing.
|
|
Period
|
Total Number of
Shares (or Units)
Purchased
(1)(2)
|
|
Average Price
Paid Per Share
(3)
|
|
Total Number of Shares
Purchased as
Part of Publicly
Announced Plan
|
|
Maximum Number
(Approximate Dollar Value)
of Shares That
May Yet Be Purchased
Under the Plan
(1)
|
||||||
|
|
|
|
|
|
|
|
(In millions)
|
||||||
|
April 1, 2014 to April 30, 2014
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,500
|
|
|
May 1, 2014 to May 31, 2014
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,500
|
|
|
June 1, 2014 to June 30, 2014
|
9,724
|
|
|
$
|
134.03
|
|
|
—
|
|
|
$
|
1,500
|
|
|
(1)
|
On November 21, 2013, our Board of Directors authorized the repurchase of up to $1.5 billion of convertible notes, senior notes, common shares and/or other future debt or shares, subject to any restrictions in our financing agreements and applicable law (the “2013 Securities Repurchase Program”). The 2013 Securities Repurchase Program will terminate on November 21, 2014 or at such time as the Company completes its purchases. During the three-month period ended June 30, 2014, we did not make any repurchases of our senior notes or common shares under the 2013 Securities Repurchase Program.
|
|
(2)
|
Includes 206 shares purchased (subsequently cancelled) under the employee stock purchase program and 9,518 shares purchased (subsequently cancelled) in negotiated purchases. Such purchases were not made under the 2013 Securities Repurchase Program.
|
|
(3)
|
The average price paid per share excludes any broker commissions.
|
|
10.1
|
|
Letter Agreement, dated May 30, 2014, between Valeant Pharmaceuticals International, Inc. and Pershing Square Capital Management, L.P., originally filed as Exhibit 99.3 to the Company’s Schedule 13D/A filed on June 2, 2014, which is incorporated by reference herein.
|
|
|
31.1*
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2*
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1*
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2*
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
*
|
Filed herewith.
|
|
|
Valeant Pharmaceuticals International, Inc.
(Registrant) |
|
Date: July 31, 2014
|
/s/ J. MICHAEL PEARSON
J. Michael Pearson
Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |
|
Date: July 31, 2014
|
/s/ HOWARD B. SCHILLER
Howard B. Schiller
Executive Vice-President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) and Director |
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
10.1
|
|
Letter Agreement, dated May 30, 2014, between Valeant Pharmaceuticals International, Inc. and Pershing Square Capital Management, L.P., originally filed as Exhibit 99.3 to the Company’s Schedule 13D/A filed on June 2, 2014, which is incorporated by reference herein.
|
|
|
31.1*
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2*
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1*
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2*
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
*
|
Filed herewith.
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|