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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 September 30, 2016
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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
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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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Consolidated
Financial Statements (unaudited)
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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 expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor), including pending investigations by the U.S. Attorney's Office for the District of Massachusetts, the U.S. Attorney's Office for the Southern District of New York and the State of North Carolina Department of Justice, the pending investigations by the U.S. Securities and Exchange Commission (the “SEC”) of the Company, pending investigations by the U.S. Senate Special Committee on Aging and the U.S. House Committee on Oversight and Government Reform, the request for documents and information received by the Company from the Autorité des marchés financiers (the “AMF”) (the Company’s principal securities regulator in Canada), the document subpoena from the New Jersey State Bureau of Securities, the pending investigation by the California Department of Insurance, a number of pending putative class action litigations in the U.S. and Canada and purported class actions under the federal RICO statute and other claims, investigations or proceedings that may be initiated or that may be asserted;
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our ability to manage the transition to our new management team (including our new Chairman and Chief Executive Officer, new Chief Financial Officer, new General Counsel, and new Controller and Chief Accounting Officer), the success of new management in assuming their new roles and the ability of new management to implement and achieve the strategies and goals of the Company as they develop;
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our ability to manage the transition to our new Board of Directors and the success of these individuals in their new roles as members of the Board of Directors of the Company;
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the impact of the changes in and reorganizations to our business structure, including changes to our operating and reportable segments;
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the effect of the misstatements identified in, and the resultant restatement of, certain of our previously issued financial statements and results; the material weaknesses in our internal control over financial reporting identified by the Company; and any claims, investigations or proceedings (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity or reputational harm that has arisen or may arise as a result;
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the effectiveness of the remediation measures and actions already implemented or currently being implemented to remediate the material weaknesses in our internal control over financial reporting identified by the Company, our deficient control environment and the contributing factors leading to the misstatement of our results and the impact such measures may have on the Company and our businesses;
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potential additional litigation and regulatory investigations (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity and reputational harm on our Company, products and business that may result from the recent public scrutiny of our distribution, marketing, pricing, disclosure and accounting practices and from our former relationship with Philidor, including any claims, proceedings, investigations and liabilities we may face as a result of any alleged wrongdoing by Philidor;
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the current scrutiny of our business practices including with respect to pricing (including the investigations by the U.S. Attorney's Offices for the District of Massachusetts and the Southern District of New York, the U.S. Senate Special Committee on Aging, the U.S. House Committee on Oversight and Government Reform and the State of North Carolina Department of Justice) and any pricing controls or price adjustments that may be sought or imposed (or that we may elect to implement) on our products as a result thereof (such as the decision of the Company to take no further price increases on our Nitropress® and Isuprel® products and to implement an enhanced rebate program for such products or the decision to take no pricing adjustments on our dermatology and ophthalmology products in 2016);
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ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the U.S. Food and Drug Administration (the "FDA"), and the results thereof, such as the recent inspections by the FDA of the Company's facilities in Tampa, Florida and Rochester, New York, and the results thereof, and the recently announced delay by the FDA of the Prescription Drug User Fee Act (“PDUFA”) date upon which it would announce its decision whether to approve our new drug application for our brodalumab product;
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any default under the terms of our senior notes indentures or Credit Agreement and our ability, if any, to cure or obtain waivers of such default;
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any delay in the filing of any subsequent financial statements or other filings and any default under the terms of our senior notes indentures or Credit Agreement as a result of such delays;
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our substantial debt (and potential additional future indebtedness) and current and future debt service obligations and their impact on our financial condition, cash flows and results of operations;
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our ability to meet the financial and other covenants contained in our Credit Agreement, senior note indentures and other current or future debt agreements and the limitations, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, including the restrictions imposed by the April 11, 2016 amendment (the “April 2016 amendment”) to our Credit Agreement that restrict us from, among other things, making acquisitions over an aggregate threshold (subject to certain exceptions) and from incurring debt to finance such acquisitions, until we achieve a specified leverage ratio;
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our ability to service and repay our existing or any future debt, including our ability to reduce our outstanding debt levels in accordance with our stated intention;
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any further downgrade by rating agencies in our credit ratings, which may impact, among other things, our ability to raise debt and the cost of capital for additional debt issuances;
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our ability to raise additional funds, as needed, in light of our current and projected levels of operations, general economic conditions (including capital market conditions) and any restrictions or limitations imposed by the financial and other covenants of our debt agreements with respect to incurring additional debt;
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any further reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2016 or beyond, which could lead to, among other things, (i) a failure to meet the financial and/or other covenants contained in our Credit Agreement and/or senior note indentures, and/or (ii) impairment in the goodwill associated with certain of our reporting units (including our Salix reporting unit) or impairment charges related to certain of our products (in particular, our Addyi® product) or other intangible assets, which impairments could be material;
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changes in the assumptions used in connection with our impairment analyses or assessments, which would lead to a change in such impairment analyses and assessments and which could result in an impairment in the goodwill associated with any of our reporting units (such as the Salix reporting unit of our Branded Rx operating segment) or impairment charges related to certain of our products (in particular, our Addyi® product) or other intangible assets;
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the proposed or potential divestiture of certain of our assets or businesses and our ability to successfully complete any future divestitures on commercially reasonable terms and on a timely basis, or at all, and the impact of any such future divestitures on our Company, including the reduction in the size or scope of our business or market share, loss of revenue, any loss on sale, including any resultant write-downs of goodwill, or any adverse tax consequences suffered as a result of such divestitures;
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our shift in focus to minimal business development activity through acquisitions in 2016 and the foreseeable future as we focus on reducing our outstanding debt levels and as a result of the restrictions imposed by our Credit Agreement, including as contained in the April 2016 amendment that restrict us from, among other things, making acquisitions over an aggregate threshold (subject to certain exceptions) and from incurring debt to finance such acquisitions, until we achieve a specified leverage ratio;
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the uncertainties associated with the acquisition and launch of new products (in particular, our Addyi® product launched in October 2015), including, but not limited to, our ability to provide the time, resources, expertise and costs required for the commercial launch of new products, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing, which could lead to material impairment charges;
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our ability to retain, motivate and recruit executives and other key employees, including subsequent to retention payments being paid out;
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our ability to implement effective succession planning for our executives and key employees;
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our implemented pricing actions, including the decision of the Company to take no further price increases on, and to implement an enhanced rebate program with respect to, our Nitropress® and Isuprel® products and to take no pricing adjustments in 2016 on its dermatology and ophthalmology products, and any future pricing actions we may take following review by our recently established Patient Access and Pricing Committee (which will be responsible for pricing of our drugs), as well as any proposed or future legislative price controls or price regulation, including mandated price reductions, that may impact our products;
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the challenges and difficulties associated with managing a large complex business, which has grown rapidly over the last few years;
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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 effectively operate, stabilize and grow our businesses in light of the challenges that the Company currently faces, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our pricing, distribution and other practices, reputational harm and limitations on the way we conduct business imposed by the covenants in our Credit Agreement senior note indentures and the agreements governing our other indebtedness;
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the success of our recent and future fulfillment and other arrangements with Walgreen Co. ("Walgreens"), including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, pharmacy benefit managers ("PBMs"), third party payors and governmental agencies), the continued compliance of such arrangements with applicable laws, whether the anticipated increased volume across all distribution channels resulting from such arrangements will offset the impact of lower average selling prices associated with these arrangements and our ability to successfully negotiate improvements to our arrangements with Walgreens;
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the extent to which our products are reimbursed by government authorities, PBMs and other third party payors; the impact our distribution, pricing and other practices (including as it relates to our former relationship with Philidor, any alleged wrongdoing by Philidor and our current relationship with Walgreens) may have on the decisions of such government authorities, PBMs and other third party payors to reimburse our products; and the impact of obtaining or maintaining such reimbursement on the price and sales 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 and sales of our products in connection therewith;
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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, including the impact on such matters of the proposals published by the Organization for Economic Co-operation and Development ("OECD") respecting base erosion and profit shifting ("BEPS");
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the actions of our third party partners or service providers of research, development, manufacturing, marketing, distribution or other services, including their compliance with applicable laws and contracts, which actions may be beyond our control or influence, and the impact of such actions on our Company, including the impact to the Company of our former relationship with Philidor and any alleged legal or contractual non-compliance by Philidor;
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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 such countries and the need to comply with applicable anti-bribery and economic sanctions laws and regulations);
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adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in the countries in which we do business (such as the current or recent instability in Brazil, Russia, Ukraine, Argentina, Egypt, certain other countries in Africa and the Middle East, the devaluation of the Egyptian pound, and the adverse economic impact and related uncertainty caused by the United Kingdom's decision to leave the European Union (Brexit));
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our ability to reduce or maintain wholesaler inventory levels in certain countries such as Russia and Poland, in-line with our targeted levels for such markets;
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our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property;
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the introduction of generic, biosimilar or other competitors of our branded products and other products, including the introduction of products that compete against our products that do not have patent or data exclusivity rights;
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once the additional limitations in our Credit Agreement (including as contained in the April 2016 amendment) restricting our ability to make acquisitions are no longer applicable, and to the extent we elect to resume business development activities through acquisitions, our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis;
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factors relating to the acquisition and integration of the companies, businesses and products that have been acquired by the Company and that may in the future be acquired by the Company, once the additional limitations in our Credit Agreement (including as contained in the April 2016 amendment) restricting our ability to make acquisitions are no longer applicable and to the extent we elect to resume business development activities through acquisitions, 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, the risks associated with the acquired companies, businesses and products and our ability to achieve the anticipated benefits and synergies from such acquisitions and integrations, including as a result of cost-rationalization and integration initiatives. Factors impacting the achievement of anticipated benefits and synergies 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;
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the expense, timing and outcome of pending or future legal and governmental proceedings, arbitrations, investigations, subpoenas, tax and other regulatory audits, reviews and regulatory proceedings against us or relating to us and settlements thereof;
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our ability to obtain components, raw materials or finished products supplied by third parties (some of which may be single-sourced) and other manufacturing and related supply difficulties, interruptions and delays;
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the disruption of delivery of our products and the routine flow of manufactured goods;
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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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interest rate risks associated with our floating rate debt borrowings;
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our ability to effectively distribute our products and the effectiveness and success of our distribution arrangements, including the impact of our recent arrangements with Walgreens;
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our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;
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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, product liability claims and damages and/or recalls or withdrawals of products from the market;
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the mandatory or voluntary recall or withdrawal of our products from the market (such as the recent voluntary recall of our PeroxiClear
®
product in the U.S. and Canada) and the costs associated therewith;
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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 with respect to approvals by the FDA, Health Canada and similar agencies in other countries, 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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the results of continuing safety and efficacy studies by industry and government agencies;
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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 (such as our Addyi® product launched in October 2015), which could lead to material impairment charges;
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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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the seasonality of sales of certain of our products;
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declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;
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compliance by the Company or our third party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to pricing), worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide economic sanctions and/or export laws, 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, including with respect to recent government inquiries on pricing;
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the impact of any changes in or reforms to the legislation, laws, rules, regulation and guidance that apply to the Company and its business and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to the Company or its businesses or products;
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the impact of the current United States elections, including any healthcare reforms arising therefrom, including with respect to pricing controls;
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potential ramifications, including legal sanctions and/or financial penalties, relating to the restatement by Salix Pharmaceuticals, Ltd. ("Salix") of its historical financial results prior to our acquisition of Salix in April 2015;
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illegal distribution or sale of counterfeit versions of our products;
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interruptions, breakdowns or breaches in our information technology systems; and
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other risks detailed from time to time in our filings with the SEC and the Canadian Securities Administrators (the “CSA”) (including in our 2015 Form 10-K), as well as our ability to anticipate and manage the risks associated with the foregoing.
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As of
September 30, 2016 |
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As of
December 31, 2015 |
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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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658.5
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$
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597.3
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Trade receivables, net
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2,708.4
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2,686.9
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Inventories, net
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1,300.1
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1,256.6
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Prepaid expenses and other current assets
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1,006.8
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966.4
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Total current assets
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5,673.8
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5,507.2
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Property, plant and equipment, net
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1,462.0
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1,441.8
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Intangible assets, net
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20,509.4
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23,083.0
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Goodwill
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17,450.1
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18,552.8
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Deferred tax assets, net
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452.3
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156.0
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Other long-term assets, net
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213.6
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223.7
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Total assets
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$
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45,761.2
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$
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48,964.5
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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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358.7
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$
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433.7
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Accrued and other current liabilities
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3,391.8
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3,859.1
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Acquisition-related contingent consideration
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87.3
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196.8
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Current portion of long-term debt
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59.0
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823.0
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Total current liabilities
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3,896.8
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5,312.6
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Acquisition-related contingent consideration
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898.0
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959.1
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Long-term debt
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30,386.2
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30,265.4
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Pension and other benefit liabilities
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190.3
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190.4
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Liabilities for uncertain tax positions
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112.3
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120.2
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Deferred tax liabilities, net
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5,839.0
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5,902.4
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Other long-term liabilities
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165.0
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184.6
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Total liabilities
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41,487.6
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42,934.7
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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, 347,669,423 and
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342,926,531 issued and outstanding at September 30, 2016 and December 31, 2015, respectively
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10,034.4
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9,897.4
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Additional paid-in capital
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325.9
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304.9
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Accumulated deficit
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(4,614.1
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)
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(2,749.7
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)
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Accumulated other comprehensive loss
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(1,578.9
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)
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(1,541.6
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)
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Total Valeant Pharmaceuticals International, Inc. shareholders’ equity
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4,167.3
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5,911.0
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Noncontrolling interest
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106.3
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118.8
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Total equity
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4,273.6
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6,029.8
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Total liabilities and equity
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$
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45,761.2
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$
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48,964.5
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2016
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2015
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2016
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2015
(restated) |
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Revenues
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Product sales
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$
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2,443.6
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$
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2,748.2
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$
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7,168.4
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$
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7,569.3
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|
|
Other revenues
|
36.0
|
|
|
38.6
|
|
|
103.0
|
|
|
120.0
|
|
||||
|
|
2,479.6
|
|
|
2,786.8
|
|
|
7,271.4
|
|
|
7,689.3
|
|
||||
|
Operating Expenses
|
|
|
|
|
|
|
|
||||||||
|
Cost of goods sold (exclusive of amortization and impairments of
|
|
|
|
|
|
|
|
||||||||
|
finite-lived intangible assets shown separately below)
|
649.2
|
|
|
634.6
|
|
|
1,916.7
|
|
|
1,812.4
|
|
||||
|
Cost of other revenues
|
8.8
|
|
|
13.6
|
|
|
29.0
|
|
|
43.1
|
|
||||
|
Selling, general and administrative
|
660.9
|
|
|
697.6
|
|
|
2,145.0
|
|
|
1,956.9
|
|
||||
|
Research and development
|
100.8
|
|
|
101.6
|
|
|
328.2
|
|
|
238.5
|
|
||||
|
Amortization and impairments of finite-lived intangible assets
|
807.1
|
|
|
679.2
|
|
|
2,389.2
|
|
|
1,629.8
|
|
||||
|
Goodwill impairment
|
1,049.0
|
|
|
—
|
|
|
1,049.0
|
|
|
—
|
|
||||
|
Restructuring and integration costs
|
20.7
|
|
|
75.6
|
|
|
78.2
|
|
|
274.0
|
|
||||
|
In-process research and development impairments and other charges
|
36.0
|
|
|
95.8
|
|
|
53.9
|
|
|
108.1
|
|
||||
|
Acquisition-related costs
|
—
|
|
|
7.0
|
|
|
1.8
|
|
|
30.4
|
|
||||
|
Acquisition-related contingent consideration
|
9.0
|
|
|
3.8
|
|
|
18.3
|
|
|
22.6
|
|
||||
|
Other expense (income)
|
1.1
|
|
|
30.2
|
|
|
(21.6
|
)
|
|
213.2
|
|
||||
|
|
3,342.6
|
|
|
2,339.0
|
|
|
7,987.7
|
|
|
6,329.0
|
|
||||
|
Operating (loss) income
|
(863.0
|
)
|
|
447.8
|
|
|
(716.3
|
)
|
|
1,360.3
|
|
||||
|
Interest income
|
2.5
|
|
|
0.7
|
|
|
5.5
|
|
|
2.5
|
|
||||
|
Interest expense
|
(469.6
|
)
|
|
(420.2
|
)
|
|
(1,368.7
|
)
|
|
(1,130.7
|
)
|
||||
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.0
|
)
|
||||
|
Foreign exchange (loss) gain and other
|
(2.3
|
)
|
|
(34.0
|
)
|
|
4.6
|
|
|
(99.5
|
)
|
||||
|
(Loss) income before (recovery of) provision for income taxes
|
(1,332.4
|
)
|
|
(5.7
|
)
|
|
(2,074.9
|
)
|
|
112.6
|
|
||||
|
(Recovery of) provision for income taxes
|
(113.3
|
)
|
|
(57.4
|
)
|
|
(178.9
|
)
|
|
14.0
|
|
||||
|
Net (loss) income
|
(1,219.1
|
)
|
|
51.7
|
|
|
(1,896.0
|
)
|
|
98.6
|
|
||||
|
Less: Net (loss) income attributable to noncontrolling interest
|
(0.7
|
)
|
|
2.2
|
|
|
(1.6
|
)
|
|
4.4
|
|
||||
|
Net (loss) income attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
(1,218.4
|
)
|
|
$
|
49.5
|
|
|
$
|
(1,894.4
|
)
|
|
$
|
94.2
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
(3.49
|
)
|
|
$
|
0.14
|
|
|
$
|
(5.47
|
)
|
|
$
|
0.28
|
|
|
Diluted
|
$
|
(3.49
|
)
|
|
$
|
0.14
|
|
|
$
|
(5.47
|
)
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted-average common shares outstanding (in millions)
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
349.5
|
|
|
344.9
|
|
|
346.5
|
|
|
340.8
|
|
||||
|
Diluted
|
349.5
|
|
|
351.0
|
|
|
346.5
|
|
|
347.2
|
|
||||
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
(restated) |
||||||||
|
Net (loss) income
|
$
|
(1,219.1
|
)
|
|
$
|
51.7
|
|
|
$
|
(1,896.0
|
)
|
|
$
|
98.6
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency translation adjustment
|
(4.8
|
)
|
|
(173.2
|
)
|
|
(37.5
|
)
|
|
(548.3
|
)
|
||||
|
Pension and postretirement benefit plan adjustments
|
(0.6
|
)
|
|
(0.5
|
)
|
|
(1.6
|
)
|
|
(1.4
|
)
|
||||
|
Other comprehensive loss
|
(5.4
|
)
|
|
(173.7
|
)
|
|
(39.1
|
)
|
|
(549.7
|
)
|
||||
|
Comprehensive loss
|
(1,224.5
|
)
|
|
(122.0
|
)
|
|
(1,935.1
|
)
|
|
(451.1
|
)
|
||||
|
Less: Comprehensive (loss) income attributable to noncontrolling interest
|
(0.9
|
)
|
|
0.4
|
|
|
(3.4
|
)
|
|
2.2
|
|
||||
|
Comprehensive loss attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
(1,223.6
|
)
|
|
$
|
(122.4
|
)
|
|
$
|
(1,931.7
|
)
|
|
$
|
(453.3
|
)
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2016
|
|
2015
(restated) |
||||
|
Cash Flows From Operating Activities
|
|
|
|
||||
|
Net (loss) income
|
$
|
(1,896.0
|
)
|
|
$
|
98.6
|
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
|
Depreciation and amortization, including impairments of finite-lived intangible assets
|
2,532.5
|
|
|
1,768.4
|
|
||
|
Amortization and write-off of debt discounts and debt issuance costs
|
89.2
|
|
|
123.7
|
|
||
|
In-process research and development impairments
|
20.0
|
|
|
108.1
|
|
||
|
Acquisition accounting adjustment on inventory sold
|
38.1
|
|
|
97.7
|
|
||
|
(Gain) loss on disposals of assets and businesses, net
|
(11.0
|
)
|
|
9.2
|
|
||
|
Acquisition-related contingent consideration
|
18.3
|
|
|
22.6
|
|
||
|
Allowances for losses on accounts receivable and inventories
|
95.9
|
|
|
46.4
|
|
||
|
Deferred income tax benefit
|
(310.3
|
)
|
|
(61.1
|
)
|
||
|
(Reductions) additions to accrued legal settlements
|
(32.1
|
)
|
|
31.9
|
|
||
|
Payments of accrued legal settlements
|
(67.8
|
)
|
|
(32.1
|
)
|
||
|
Goodwill impairment
|
1,049.0
|
|
|
—
|
|
||
|
Loss on deconsolidation
|
18.4
|
|
|
—
|
|
||
|
Share-based compensation
|
134.0
|
|
|
111.4
|
|
||
|
Foreign exchange (gain) loss
|
(14.6
|
)
|
|
96.6
|
|
||
|
Loss on extinguishment of debt
|
—
|
|
|
20.0
|
|
||
|
Payment of contingent consideration adjustments, including accretion
|
(26.6
|
)
|
|
(19.8
|
)
|
||
|
Other
|
(12.2
|
)
|
|
(13.6
|
)
|
||
|
Changes in operating assets and liabilities:
|
|
|
|
||||
|
Trade receivables
|
(30.9
|
)
|
|
(656.0
|
)
|
||
|
Inventories
|
(166.3
|
)
|
|
(184.9
|
)
|
||
|
Prepaid expenses and other current assets
|
117.7
|
|
|
(252.0
|
)
|
||
|
Accounts payable, accrued and other liabilities
|
29.2
|
|
|
344.7
|
|
||
|
Net cash provided by operating activities
|
1,574.5
|
|
|
1,659.8
|
|
||
|
|
|
|
|
||||
|
Cash Flows From Investing Activities
|
|
|
|
||||
|
Acquisition of businesses, net of cash acquired
|
(18.5
|
)
|
|
(14,001.7
|
)
|
||
|
Acquisition of intangible assets and other assets
|
(48.1
|
)
|
|
(58.1
|
)
|
||
|
Purchases of property, plant and equipment
|
(181.1
|
)
|
|
(163.7
|
)
|
||
|
Reduction of cash due to deconsolidation
|
(30.2
|
)
|
|
—
|
|
||
|
Proceeds from sales and maturities of short-term investments
|
—
|
|
|
50.2
|
|
||
|
Net settlement of assumed derivative contracts
|
—
|
|
|
184.6
|
|
||
|
Settlement of foreign currency forward exchange contracts
|
—
|
|
|
(26.3
|
)
|
||
|
Purchases of marketable securities
|
(1.4
|
)
|
|
(24.5
|
)
|
||
|
Proceeds from sale of marketable securities
|
16.5
|
|
|
—
|
|
||
|
Proceeds from sale of assets and businesses, net of costs to sell
|
131.4
|
|
|
2.8
|
|
||
|
Increase in restricted cash and cash equivalents
|
—
|
|
|
(5.2
|
)
|
||
|
Net cash used in investing activities
|
(131.4
|
)
|
|
(14,041.9
|
)
|
||
|
|
|
|
|
||||
|
Cash Flows From Financing Activities
|
|
|
|
||||
|
Issuance of long-term debt, net of discount
|
1,219.9
|
|
|
16,925.8
|
|
||
|
Repayments of long-term debt
|
(1,917.1
|
)
|
|
(1,387.2
|
)
|
||
|
Short-term debt borrowings
|
2.7
|
|
|
6.9
|
|
||
|
Short-term debt repayments
|
(2.8
|
)
|
|
(7.1
|
)
|
||
|
Repayments of convertible notes assumed
|
—
|
|
|
(3,122.8
|
)
|
||
|
Issuance of common stock, net
|
—
|
|
|
1,433.7
|
|
||
|
Repurchases of common shares
|
—
|
|
|
(50.0
|
)
|
||
|
Proceeds from exercise of stock options
|
33.1
|
|
|
29.1
|
|
||
|
Payment of employee withholding tax upon vesting of share-based awards
|
(9.1
|
)
|
|
(85.8
|
)
|
||
|
Payments of contingent consideration
|
(93.9
|
)
|
|
(129.4
|
)
|
||
|
Payments of deferred consideration
|
(516.6
|
)
|
|
—
|
|
||
|
Payments of financing costs
|
(96.4
|
)
|
|
(101.7
|
)
|
||
|
Other
|
(8.1
|
)
|
|
(10.0
|
)
|
||
|
Net cash (used in) provided by financing activities
|
(1,388.3
|
)
|
|
13,501.5
|
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
6.4
|
|
|
(22.0
|
)
|
||
|
Net increase in cash and cash equivalents
|
61.2
|
|
|
1,097.4
|
|
||
|
Cash and cash equivalents, beginning of period
|
597.3
|
|
|
322.6
|
|
||
|
Cash and cash equivalents, end of period
|
$
|
658.5
|
|
|
$
|
1,420.0
|
|
|
|
|
|
|
||||
|
Non-Cash Investing and Financing Activities
|
|
|
|
||||
|
Acquisition of businesses, contingent and deferred consideration obligations at fair value (Restated)
|
$
|
—
|
|
|
$
|
(744.5
|
)
|
|
Acquisition of businesses, debt assumed
|
—
|
|
|
(3,129.2
|
)
|
||
|
1.
|
DESCRIPTION OF BUSINESS
|
|
2.
|
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
|
|
(a)
|
Philidor revenue recognition adjustments - The correction of the misstatement from recognizing revenue related to sales to Philidor from a sell-in to sell-through basis had the effect of eliminating certain revenue recorded in 2014 prior to the date that Philidor was consolidated as a variable interest entity. The revenue that was eliminated from 2014 did not result in an increase to revenue in subsequent periods as a result of the Company having previously recognized that revenue,
|
|
(b)
|
Accrued liability adjustment - Unrelated to Philidor, the Company recorded an accrual for previously unrecorded professional fees related to acquisition-related costs.
|
|
(c)
|
Tax effect of restatement adjustments - The Company calculated the tax effect of the adjustments noted above.
|
|
(d)
|
Philidor measurement period adjustments - Related to the consolidation of Philidor, the Company previously recorded certain measurement period adjustments during the second and third quarters of 2015 when known, which should be retroactively recorded as of the date Philidor was consolidated (December 2014). These measurement period adjustments primarily resulted in (1) an increase to acquisition-related contingent consideration as a result of further valuation analysis around the probability and timing of certain milestone payments; (2) increases in the fair value of certain intangible assets resulting from the higher sales forecast; and (3) a net increase in goodwill as a result of (1) and (2) above. The measurement period adjustments were previously determined to be immaterial to the Company’s consolidated financial statements, but were recorded in the fourth quarter of 2014 in connection with the other restatement adjustments related to Philidor.
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2015
(As Previously Reported)
|
|
Restatement
Adjustments
|
|
2015
(Restated)
|
|
Restatement
Ref
|
||||||
|
Revenues
|
|
|
|
|
|
|
|
||||||
|
Product sales
|
$
|
7,590.1
|
|
|
$
|
(20.8
|
)
|
|
$
|
7,569.3
|
|
|
(a)
|
|
Other revenues
|
120.0
|
|
|
—
|
|
|
120.0
|
|
|
|
|||
|
|
7,710.1
|
|
|
(20.8
|
)
|
|
7,689.3
|
|
|
|
|||
|
Expenses
|
|
|
|
|
|
|
|
||||||
|
Cost of goods sold (exclusive of amortization and impairments of finite-lived
|
|
|
|
|
|
|
|
||||||
|
intangible assets shown separately below)
|
1,864.9
|
|
|
(52.5
|
)
|
|
1,812.4
|
|
|
(a)
|
|||
|
Cost of other revenues
|
43.1
|
|
|
—
|
|
|
43.1
|
|
|
|
|||
|
Selling, general and administrative
|
1,956.9
|
|
|
—
|
|
|
1,956.9
|
|
|
|
|||
|
Research and development
|
238.5
|
|
|
—
|
|
|
238.5
|
|
|
|
|||
|
Amortization and impairment of finite-lived intangible assets
|
1,629.8
|
|
|
—
|
|
|
1,629.8
|
|
|
|
|||
|
Restructuring and integration costs
|
274.0
|
|
|
—
|
|
|
274.0
|
|
|
|
|||
|
In-process research and development impairments and other changes
|
108.1
|
|
|
—
|
|
|
108.1
|
|
|
|
|||
|
Acquisition-related costs
|
26.3
|
|
|
4.1
|
|
|
30.4
|
|
|
(b)
|
|||
|
Acquisition-related contingent consideration
|
22.6
|
|
|
—
|
|
|
22.6
|
|
|
|
|||
|
Other expense
|
213.2
|
|
|
—
|
|
|
213.2
|
|
|
|
|||
|
|
6,377.4
|
|
|
(48.4
|
)
|
|
6,329.0
|
|
|
|
|||
|
Operating income
|
1,332.7
|
|
|
27.6
|
|
|
1,360.3
|
|
|
|
|||
|
Interest income
|
2.5
|
|
|
—
|
|
|
2.5
|
|
|
|
|||
|
Interest expense
|
(1,130.7
|
)
|
|
—
|
|
|
(1,130.7
|
)
|
|
|
|||
|
Loss on extinguishment of debt
|
(20.0
|
)
|
|
—
|
|
|
(20.0
|
)
|
|
|
|||
|
Foreign exchange loss and other
|
(99.5
|
)
|
|
—
|
|
|
(99.5
|
)
|
|
|
|||
|
Income before provision for income taxes
|
85.0
|
|
|
27.6
|
|
|
112.6
|
|
|
|
|||
|
Provision for income taxes
|
10.4
|
|
|
3.6
|
|
|
14.0
|
|
|
(c)
|
|||
|
Net income
|
74.6
|
|
|
24.0
|
|
|
98.6
|
|
|
|
|||
|
Less: Net income attributable to noncontrolling interest
|
4.4
|
|
|
—
|
|
|
4.4
|
|
|
|
|||
|
Net income attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
70.2
|
|
|
$
|
24.0
|
|
|
$
|
94.2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Earnings per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
||||||
|
Basic
|
$
|
0.21
|
|
|
$
|
0.07
|
|
|
$
|
0.28
|
|
|
|
|
Diluted
|
$
|
0.20
|
|
|
$
|
0.07
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted-average common shares (in millions)
|
|
|
|
|
|
|
|
||||||
|
Basic
|
340.8
|
|
|
|
|
340.8
|
|
|
|
||||
|
Diluted
|
347.2
|
|
|
|
|
347.2
|
|
|
|
||||
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2015
(As Previously Reported)
|
|
Restatement
Adjustments
|
|
2015
(Restated)
|
|
Restatement
Ref
|
||||||
|
Cash Flow From Operating Activities
|
|
|
|
|
|
|
|
||||||
|
Net income
|
$
|
74.6
|
|
|
$
|
24.0
|
|
|
$
|
98.6
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization, including impairments of finite-lived intangible assets
|
1,768.4
|
|
|
—
|
|
|
1,768.4
|
|
|
|
|||
|
Amortization and write-off of debt discounts and debt issuance costs
|
123.7
|
|
|
—
|
|
|
123.7
|
|
|
|
|||
|
In-process research and development impairments
|
108.1
|
|
|
—
|
|
|
108.1
|
|
|
|
|||
|
Acquisition accounting adjustment on inventory sold
|
97.7
|
|
|
—
|
|
|
97.7
|
|
|
|
|||
|
Acquisition-related contingent consideration
|
22.6
|
|
|
—
|
|
|
22.6
|
|
|
|
|||
|
Allowances for losses on accounts receivable and inventories
|
46.4
|
|
|
—
|
|
|
46.4
|
|
|
|
|||
|
Deferred income taxes
(1)
|
(64.7
|
)
|
|
3.6
|
|
|
(61.1
|
)
|
|
(c)
|
|||
|
Loss on disposal of assets and liabilities
|
9.2
|
|
|
—
|
|
|
9.2
|
|
|
|
|||
|
Additions to accrued legal settlements
|
31.9
|
|
|
—
|
|
|
31.9
|
|
|
|
|||
|
Payments of accrued legal settlements
|
(32.1
|
)
|
|
—
|
|
|
(32.1
|
)
|
|
|
|||
|
Share-based compensation
|
111.4
|
|
|
—
|
|
|
111.4
|
|
|
|
|||
|
Foreign exchange loss
|
96.6
|
|
|
—
|
|
|
96.6
|
|
|
|
|||
|
Loss on extinguishment of debt
|
20.0
|
|
|
—
|
|
|
20.0
|
|
|
|
|||
|
Payment of contingent consideration adjustments, including accretion
|
(19.8
|
)
|
|
—
|
|
|
(19.8
|
)
|
|
|
|||
|
Other
|
(13.6
|
)
|
|
—
|
|
|
(13.6
|
)
|
|
|
|||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||
|
Trade receivables
|
(656.0
|
)
|
|
—
|
|
|
(656.0
|
)
|
|
|
|||
|
Inventories
|
(132.4
|
)
|
|
(52.5
|
)
|
|
(184.9
|
)
|
|
(a)
|
|||
|
Prepaid expenses and other current assets
|
(252.0
|
)
|
|
—
|
|
|
(252.0
|
)
|
|
|
|||
|
Accounts payable, accrued and other liabilities
(1)
|
319.8
|
|
|
24.9
|
|
|
344.7
|
|
|
(a), (b)
|
|||
|
Net cash provided by operating activities
|
1,659.8
|
|
|
—
|
|
|
1,659.8
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
|
Net cash used in investing activities
|
(14,041.9
|
)
|
|
—
|
|
|
(14,041.9
|
)
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
|
Net cash provided by financing activities
|
13,501.5
|
|
|
—
|
|
|
13,501.5
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
(22.0
|
)
|
|
—
|
|
|
(22.0
|
)
|
|
|
|||
|
Net increase in cash and cash equivalents
|
1,097.4
|
|
|
—
|
|
|
1,097.4
|
|
|
|
|||
|
Cash and cash equivalents, beginning of period
|
322.6
|
|
|
—
|
|
|
322.6
|
|
|
|
|||
|
Cash and cash equivalents, end of period
|
$
|
1,420.0
|
|
|
$
|
—
|
|
|
$
|
1,420.0
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Non- Cash Investing and Financing Activities
|
|
|
|
|
|
|
|
||||||
|
Acquisition of businesses, contingent consideration at fair value
|
$
|
(783.3
|
)
|
|
$
|
38.8
|
|
|
$
|
(744.5
|
)
|
|
(d)
|
|
Acquisition of businesses, debt assumed
|
(3,129.2
|
)
|
|
—
|
|
|
(3,129.2
|
)
|
|
|
|||
|
(1)
|
As described in Note 3, the Consolidated Statement of Cash Flows reflects a reclassification of
$14 million
related to a change in income taxes payable which increased deferred income taxes and decreased accounts payable, accrued and other liabilities within the cash flow from operating activities.
|
|
3.
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
•
|
Excess tax benefits and tax deficiencies, representing the realized tax effect on the difference between share-based compensation costs deductible for tax purposes and for accounting purposes, are recognized prospectively in the provision for income taxes instead of additional paid-in capital. As a result of the adoption, a cumulative-effect adjustment of
$30 million
was recorded to deferred tax asset and accumulated deficit as of January 1, 2016 for the previously unrecognized excess tax benefits. The Company is required to apply this aspect of the guidance retrospectively as if the adoption is effective as of January 1, 2016. However, given the adoption impact for the six months ended June 30, 2016 was insignificant (less than
$2 million
for the three months ended March 31, 2016 and less than
$1 million
for the three months ended June 30, 2016), the Company recorded the cumulative adoption impact for the six months ended June 30, 2016 in the three months ended September 30, 2016;
|
|
•
|
Excess tax benefits are classified as operating cash flows instead of financing cash flows effective January 1, 2016 and the Company has elected to apply this requirement on a retrospective basis. As a result of the adoption, cash flows provided by operating activities decreased by
$1 million
for the three months ended March 31, 2016 and for the six months ended June 30, 2016 and cash flows provided by (used in) financing activities increased by
$1 million
for the three months ended March 31, 2016 and decreased by
$1 million
for the six months ended June 30, 2016. The adoption impact on the corresponding comparative periods in 2015 includes an increase in cash flows provided by operating activities of
$18 million
,
$26 million
and
$22 million
for three months ended March 31, 2015, for the six months ended June 30, 2015 and for the nine months ended September 30, 2015, respectively, with a corresponding decrease in cash flows provided by financing activities of the same amounts in the respective periods;
|
|
•
|
The calculation of diluted weighted-average number of common shares excludes excess tax benefits and tax deficiencies in the calculation of assumed proceeds under the treasury stock method prospectively effective January 1, 2016. Accordingly, the diluted weighted-average number of common shares outstanding increased by
0.6 million
for the three months ended March 31, 2016, decreased by
0.1 million
for the three months ended June 30, 2016, and increased by
0.2 million
for the six months ended June 30, 2016. The adoption of this aspect of the guidance did not have an effect on the Company's previously reported diluted earnings per share for the three months ended March 31, 2016 and June 30, 2016 as well as for the six months ended June 30, 2016 given the Company reported a net loss for each of those periods; and
|
|
•
|
The Company elected to continue its current policy of estimating forfeitures rather than recognizing forfeitures when they occur.
|
|
4.
|
ACQUISITIONS
|
|
|
|
Amounts
Recognized as of
Acquisition Date
(as previously
reported)
(a)
|
|
Measurement
Period
Adjustments
|
|
Amounts
Recognized as of
September 30, 2016
(as adjusted)
|
||||||
|
Cash
|
|
$
|
43.5
|
|
|
$
|
—
|
|
|
$
|
43.5
|
|
|
Accounts receivable
(b)
|
|
64.2
|
|
|
—
|
|
|
64.2
|
|
|||
|
Inventories
|
|
37.9
|
|
|
—
|
|
|
37.9
|
|
|||
|
Other current assets
|
|
12.2
|
|
|
—
|
|
|
12.2
|
|
|||
|
Property, plant and equipment
|
|
96.4
|
|
|
(1.0
|
)
|
|
95.4
|
|
|||
|
Identifiable intangible assets, excluding acquired in-process research and development ("IPR&D")
(c)
|
|
528.0
|
|
|
(7.8
|
)
|
|
520.2
|
|
|||
|
Acquired IPR&D
|
|
18.5
|
|
|
1.0
|
|
|
19.5
|
|
|||
|
Other non-current assets
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||
|
Current liabilities
|
|
(30.8
|
)
|
|
(1.2
|
)
|
|
(32.0
|
)
|
|||
|
Deferred tax liability, net
(d)
|
|
(130.5
|
)
|
|
(0.4
|
)
|
|
(130.9
|
)
|
|||
|
Other non-current liabilities
|
|
(11.2
|
)
|
|
4.0
|
|
|
(7.2
|
)
|
|||
|
Total identifiable net assets
|
|
628.3
|
|
|
(5.4
|
)
|
|
622.9
|
|
|||
|
Goodwill
(e)
|
|
282.0
|
|
|
1.5
|
|
|
283.5
|
|
|||
|
Total fair value of consideration transferred
|
|
$
|
910.3
|
|
|
$
|
(3.9
|
)
|
|
$
|
906.4
|
|
|
(a)
|
As previously reported in the Company’s 2015 Form 10-K.
|
|
(b)
|
The fair value of trade accounts receivable acquired was
$64 million
, with the gross contractual amount being
$66 million
, of which the Company expects that
$2 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 Date
(as previously
reported)
|
|
Measurement
Period
Adjustments
|
|
Amounts
Recognized as of
September 30, 2016
(as adjusted)
|
||||||
|
Product brands
|
|
9
|
|
$
|
490.8
|
|
|
$
|
(11.0
|
)
|
|
$
|
479.8
|
|
|
Corporate brand
|
|
17
|
|
37.2
|
|
|
3.2
|
|
|
40.4
|
|
|||
|
Total identifiable intangible assets acquired
|
|
10
|
|
$
|
528.0
|
|
|
$
|
(7.8
|
)
|
|
$
|
520.2
|
|
|
(d)
|
Comprised of deferred tax liabilities partially offset by nominal deferred tax assets.
|
|
(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 represents the following:
|
|
•
|
the Company’s expectation to develop and market new products and expand its business to new geographic markets;
|
|
•
|
the value of the continuing operations of Amoun'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, Amoun's assembled workforce).
|
|
|
|
Amounts
Recognized as of
Acquisition Date
(as previously
reported)
(a)
|
||
|
Cash and cash equivalents
|
|
$
|
26.6
|
|
|
Inventories
|
|
11.0
|
|
|
|
Other assets
|
|
1.6
|
|
|
|
Identifiable intangible assets
(b)
|
|
993.7
|
|
|
|
Current liabilities
|
|
(4.4
|
)
|
|
|
Deferred income taxes, net
|
|
(351.9
|
)
|
|
|
Total identifiable net assets
|
|
676.6
|
|
|
|
Goodwill
(c)
|
|
769.9
|
|
|
|
Total fair value of consideration transferred
|
|
$
|
1,446.5
|
|
|
(a)
|
As previously reported in the Company’s 2015 Form 10-K.
|
|
(b)
|
Consists of product rights with a weighted-average useful life of
11
years.
|
|
(c)
|
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 potential ability to develop and market the product to additional types of patients/indications and launch the product in a variety of new geographies;
|
|
•
|
the value of the continuing operations of Sprout'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, Sprout's assembled workforce).
|
|
(In millions except per share data)
|
|
Conversion
Calculation
|
|
Fair
Value
|
||||
|
Number of shares of Salix common stock outstanding as of acquisition date
|
|
64.3
|
|
|
|
|
||
|
Multiplied by Per Share Merger Consideration
|
|
$
|
173.00
|
|
|
$
|
11,123.9
|
|
|
Number of outstanding stock options of Salix cancelled and exchanged for cash
(a)
|
|
0.1
|
|
|
10.1
|
|
||
|
Number of outstanding restricted stock of Salix cancelled and exchanged for cash
(a)
|
|
1.1
|
|
|
195.0
|
|
||
|
|
|
|
|
11,329.0
|
|
|||
|
Less: Cash consideration paid for Salix’s restricted stock that was accelerated at the closing of the Salix Acquisition
(a)
|
|
|
|
(164.5
|
)
|
|||
|
Add: Payment of Salix’s Term Loan B Credit Facility
(b)
|
|
|
|
1,125.2
|
|
|||
|
Add: Payment of Salix’s 6.00% Senior Notes due 2021
(b)
|
|
|
|
842.3
|
|
|||
|
Total fair value of consideration transferred
|
|
|
|
|
$
|
13,132.0
|
|
|
|
(a)
|
The purchase consideration paid to holders of Salix stock options and restricted stock attributable to pre-combination services was included as a component of the purchase price. Purchase consideration of
$165 million
paid for outstanding restricted stock that was accelerated by the Company in connection with the Salix Acquisition was excluded from the purchase price and accounted for as post-combination expense within Other expense (income) in the second quarter of 2015.
|
|
(b)
|
The repayment of Salix’s Term Loan B Credit Facility has been reflected as part of the purchase consideration as the debt was repaid concurrently with the consummation of the Salix Acquisition and was not assumed by the Company as part of the acquisition. Similarly, the redemption of Salix’s
6.00%
Senior Notes due 2021 has been reflected as part of the purchase consideration as the indenture governing the
6.00%
Senior Notes due 2021 was satisfied and discharged concurrently with the consummation of the Salix Acquisition and was not assumed by the Company as part of the acquisition.
|
|
|
|
Amounts
Recognized as of
Acquisition Date
(as previously
reported)
(a)
|
|
Measurement
Period
Adjustments
(b)
|
|
Amounts
Recognized as of
December 31, 2015
(as adjusted)
|
||||||
|
Cash and cash equivalents
|
|
$
|
113.7
|
|
|
$
|
—
|
|
|
$
|
113.7
|
|
|
Inventories
(c)
|
|
233.2
|
|
|
(0.6
|
)
|
|
232.6
|
|
|||
|
Other assets
(d)
|
|
1,400.3
|
|
|
10.1
|
|
|
1,410.4
|
|
|||
|
Property, plant and equipment, net
|
|
24.3
|
|
|
—
|
|
|
24.3
|
|
|||
|
Identifiable intangible assets, excluding acquired IPR&D
(e)
|
|
6,756.3
|
|
|
—
|
|
|
6,756.3
|
|
|||
|
Acquired IPR&D
(f)
|
|
5,366.8
|
|
|
(183.9
|
)
|
|
5,182.9
|
|
|||
|
Current liabilities
(g)
|
|
(1,764.2
|
)
|
|
(175.0
|
)
|
|
(1,939.2
|
)
|
|||
|
Contingent consideration, including current and long-term portion
(h)
|
|
(327.9
|
)
|
|
(6.2
|
)
|
|
(334.1
|
)
|
|||
|
Long-term debt, including current portion
(i)
|
|
(3,123.1
|
)
|
|
—
|
|
|
(3,123.1
|
)
|
|||
|
Deferred income taxes, net
(j)
|
|
(3,512.0
|
)
|
|
84.1
|
|
|
(3,427.9
|
)
|
|||
|
Other non-current liabilities
|
|
(7.3
|
)
|
|
(36.0
|
)
|
|
(43.3
|
)
|
|||
|
Total identifiable net assets
|
|
5,160.1
|
|
|
(307.5
|
)
|
|
4,852.6
|
|
|||
|
Goodwill
(k)
|
|
7,971.9
|
|
|
307.5
|
|
|
8,279.4
|
|
|||
|
Total fair value of consideration transferred
|
|
$
|
13,132.0
|
|
|
$
|
—
|
|
|
$
|
13,132.0
|
|
|
(a)
|
As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
|
|
(b)
|
The measurement period adjustments primarily reflect: (i) a reduction in acquired IPR&D assets, specifically for the Oral Relistor® (as defined below) program based mainly on refinement of the pricing assumptions and cost projections (see further discussion of IPR&D programs in (f) below) and (ii) the tax impact of pre-tax measurement period adjustments, as well as reclassifications of certain tax balances impacting current liabilities. 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 consolidated financial statements. As the measurement period for the Salix Acquisition closed in the fourth quarter of 2015, there were no measurement period adjustments recorded in subsequent periods.
|
|
(c)
|
Includes an estimated fair value step-up adjustment to inventory of
$108 million
.
|
|
(d)
|
Primarily includes an estimated fair value of
$1.27 billion
to record the capped call transactions and convertible bond hedge transactions that were entered into by Salix prior to the Salix Acquisition in connection with its
1.5%
Convertible Senior Notes due 2019 and
2.75%
Convertible Senior Notes due 2015. These instruments were settled on the date of the Salix Acquisition and, as such, the fair value was based on the settlement amounts. Other assets also includes an estimated insurance recovery of
$80 million
, based on estimated fair value, related to the legal matters discussed in (g) below.
|
|
(e)
|
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
December 31, 2015
(as adjusted)
|
||||||
|
Product brands
|
|
10
|
|
$
|
6,088.3
|
|
|
$
|
1.3
|
|
|
$
|
6,089.6
|
|
|
Corporate brand
|
|
20
|
|
668.0
|
|
|
(1.3
|
)
|
|
666.7
|
|
|||
|
Total identifiable intangible assets acquired
|
|
11
|
|
$
|
6,756.3
|
|
|
$
|
—
|
|
|
$
|
6,756.3
|
|
|
(f)
|
A multi-period excess earnings methodology (income approach) was used to determine the estimated fair values of the acquired IPR&D assets from a market participant perspective. The projected cash flows from these assets were adjusted for the probabilities of successful development and commercialization of each project, and the Company used risk-adjusted discount rates of
9.5%
-
11%
to present value the projected cash flows.
|
|
(g)
|
Primarily includes an estimated fair value of
$1.08 billion
to record the warrant transactions that were entered into by Salix prior to the Salix Acquisition in connection with its
1.5%
Convertible Senior Notes due 2019 (these instruments were settled on the date of the Salix Acquisition and, as such, the fair value was based on the settlement amounts), as well as accruals for (i) the estimated fair value of
$336 million
(exclusive of the related insurance recovery described in (d) above) for potential losses and related costs associated with legal matters relating to the legacy Salix business (See Note 17 for additional information regarding these legal matters) and (ii) product returns and rebates of
$375 million
.
|
|
(h)
|
The contingent consideration consists of potential payments to third parties including developmental milestone payments due upon specified regulatory achievements, commercialization milestones contingent upon achieving specified targets for net sales, and royalty-based payments. As of the acquisition date, the range of potential milestone payments (excluding royalty-based payments) is from
nil
, if
none
of the milestones are achieved, to a maximum of up to approximately
$650 million
(the majority of which relates to sales-based milestones) over time, if all milestones are achieved, in the aggregate, to third parties. This amount includes up to
$250 million
in developmental and sales-based milestones to Progenics Pharmaceuticals, Inc. related to Relistor® (including Oral Relistor®), of which
$50 million
was paid in the third quarter of 2016 in connection with the FDA's approval of Oral Relistor®, and various other developmental and sales-based milestones. The total fair value of the contingent consideration of
$334 million
as of the acquisition date was determined using probability-weighted discounted cash flows. Refer to Note 7 for additional information regarding the contingent consideration.
|
|
(i)
|
The following table summarizes the fair value of long-term debt assumed as of the acquisition date:
|
|
|
|
Amounts
Recognized as of
Acquisition Date
|
||
|
1.5% Convertible Senior Notes due 2019
(1)
|
|
$
|
1,837.1
|
|
|
2.75% Convertible Senior Notes due 2015
(1)
|
|
1,286.0
|
|
|
|
Total long-term debt assumed
|
|
$
|
3,123.1
|
|
|
(1)
|
The Company subsequently redeemed these amounts in full in the second quarter of 2015, except for a nominal amount of the
1.5%
Convertible Senior Notes due 2019 which remains outstanding.
|
|
(j)
|
Comprises deferred tax assets (
$303 million
) and deferred tax liabilities (
$3.73 billion
).
|
|
(k)
|
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 Salix with those of the Company;
|
|
•
|
the value of the continuing operations of Salix’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, Salix’s assembled workforce).
|
|
•
|
On February 23, 2015, the Company, completed via a "stalking horse bid" in a sales process conducted under the U.S. Bankruptcy Code, the acquisition of certain assets of Dendreon Corporation ("Dendreon") for a purchase price of
$415 million
, net of cash received (
$495 million
less cash received of
$80 million
). The purchase price included approximately
$50 million
in stock consideration, and the Company issued such common shares in June 2015. The assets acquired from Dendreon included the worldwide rights to the Provenge® product (an immunotherapy treatment designed to treat men with advanced prostate cancer).
|
|
•
|
On February 10, 2015, the Company acquired certain assets of Marathon. The assets acquired from Marathon comprised a portfolio of hospital products, including Nitropress®, Isuprel®, Opium Tincture, Pepcid®, Seconal® Sodium, Amytal® Sodium, and Iprivask® for an aggregate purchase price of
$286 million
(which is net of a
$64 million
assumed liability owed to a third party which is reflected in the table below). Also, as part of this acquisition, the Company assumed a contingent consideration liability as described further below.
|
|
•
|
In the year ended December 31, 2015, 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
(as previously reported)
|
|
Measurement
Period
Adjustments
(a)
|
|
Amounts
Recognized as of
September 30, 2016
(as adjusted)
|
||||||
|
Cash
|
|
$
|
92.2
|
|
|
$
|
—
|
|
|
$
|
92.2
|
|
|
Accounts receivable
(b)
|
|
49.5
|
|
|
(3.0
|
)
|
|
46.5
|
|
|||
|
Inventories
|
|
142.9
|
|
|
(2.6
|
)
|
|
140.3
|
|
|||
|
Other current assets
|
|
20.2
|
|
|
(0.5
|
)
|
|
19.7
|
|
|||
|
Property, plant and equipment
|
|
94.6
|
|
|
(15.1
|
)
|
|
79.5
|
|
|||
|
Identifiable intangible assets, excluding acquired IPR&D
(c)
|
|
1,121.6
|
|
|
(43.2
|
)
|
|
1,078.4
|
|
|||
|
Acquired IPR&D
|
|
57.5
|
|
|
(3.7
|
)
|
|
53.8
|
|
|||
|
Other non-current assets
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|||
|
Deferred tax (liability) asset, net
|
|
(54.7
|
)
|
|
61.1
|
|
|
6.4
|
|
|||
|
Current liabilities
(d)
|
|
(123.9
|
)
|
|
(4.5
|
)
|
|
(128.4
|
)
|
|||
|
Long-term debt
|
|
(6.1
|
)
|
|
—
|
|
|
(6.1
|
)
|
|||
|
Non-current liabilities
(d)
|
|
(117.4
|
)
|
|
0.2
|
|
|
(117.2
|
)
|
|||
|
Total identifiable net assets
|
|
1,279.3
|
|
|
(11.3
|
)
|
|
1,268.0
|
|
|||
|
Goodwill
(e)
|
|
141.9
|
|
|
(3.1
|
)
|
|
138.8
|
|
|||
|
Total fair value of consideration transferred
|
|
$
|
1,421.2
|
|
|
$
|
(14.4
|
)
|
|
$
|
1,406.8
|
|
|
(a)
|
The measurement period adjustments primarily relate to the acquisition of certain assets of Dendreon and reflect: (i) an increase to the deferred tax assets based on further assessment of the Dendreon net operating losses ("NOLs") available to the Company post-acquisition, (ii) a reduction in the estimated fair value of intangible assets based on further assessment of assumptions related to the probability-weighted cash flows, (iii) a reduction in the estimated fair value of property, plant and equipment driven by further assessment of the fair value of a manufacturing facility, and (iv) 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. The adjustments recorded in the current period did not have a significant impact on the Company’s consolidated financial statements.
|
|
(b)
|
The fair value of trade accounts receivable acquired was
$47 million
, with the gross contractual amount being
$51 million
, of which the Company expects that
$4 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 (as previously reported)
|
|
Measurement
Period
Adjustments
|
|
Amounts
Recognized as of
September 30, 2016
(as adjusted)
|
||||||
|
Product brands
|
|
7
|
|
$
|
741.2
|
|
|
$
|
(6.0
|
)
|
|
$
|
735.2
|
|
|
Product rights
|
|
3
|
|
42.7
|
|
|
(0.7
|
)
|
|
42.0
|
|
|||
|
Corporate brands
|
|
16
|
|
6.6
|
|
|
—
|
|
|
6.6
|
|
|||
|
Partner relationships
|
|
8
|
|
7.8
|
|
|
—
|
|
|
7.8
|
|
|||
|
Technology/know-how
|
|
10
|
|
321.3
|
|
|
(36.5
|
)
|
|
284.8
|
|
|||
|
Other
|
|
6
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|||
|
Total identifiable intangible assets acquired
|
|
8
|
|
$
|
1,121.6
|
|
|
$
|
(43.2
|
)
|
|
$
|
1,078.4
|
|
|
(d)
|
As part of the acquisition of certain assets of Marathon, the Company assumed a contingent consideration liability related to potential payments, in the aggregate, of up to approximately
$200 million
as of the acquisition date, for Isuprel® and Nitropress®, the amounts of which are dependent on the timing of generic entrants for these products. The fair value of the liability as of the acquisition date was determined using probability-weighted projected cash flows, with
$41 million
classified in Current liabilities and
$46 million
classified in Non-current liabilities in the table above. As of
September 30, 2016
, the assumptions used for determining the fair value of the contingent consideration liability have not changed significantly from those used as of the acquisition date. The Company made contingent consideration payments related to the Marathon acquisition of
$35 million
during 2015 and an additional
$5 million
and
$32 million
during the
three-month and nine-month periods ended September 30, 2016
, respectively.
|
|
(e)
|
The goodwill relates primarily to certain smaller acquisitions and the acquisition of certain assets of Marathon. 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. The majority of the goodwill is not expected to be deductible for tax purposes.
The goodwill represents primarily the cost savings, operating synergies and other benefits expected to result from combining the operations with those of the Company.
|
|
|
Three Months Ended
September 30,
2015
|
|
Nine Months Ended
September 30, |
||||
|
|
|
2015
(restated) |
|||||
|
Revenues
|
$
|
2,862.1
|
|
|
$
|
7,938.3
|
|
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
56.2
|
|
|
(243.7
|
)
|
||
|
|
|
|
|
||||
|
Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
||||
|
Basic
|
$
|
0.16
|
|
|
$
|
(0.71
|
)
|
|
Diluted
|
$
|
0.16
|
|
|
$
|
(0.71
|
)
|
|
•
|
elimination of 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;
|
|
•
|
additional interest expense associated with the financing obtained by the Company in connection with the Salix Acquisition; and
|
|
•
|
the exclusion from pro forma earnings in the three-month and nine-month periods ended September 30, 2015 of the acquisition accounting adjustments on these acquisitions’ inventories that were sold subsequent to the acquisition date of
$25 million
for the three-month periods ended September 30, 2015,
$94 million
for the nine-month period ended September 30, 2015, and the acquisition-related costs incurred for these acquisitions.
|
|
5.
|
DIVESTITURES
|
|
6.
|
RESTRUCTURING AND INTEGRATION 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/or
|
|
•
|
procurement savings.
|
|
|
|
Severance and
Related Benefits
|
|
Contract
Termination,
Facility Closure
and Other Costs
|
|
Total
|
||||||
|
Balance, January 1, 2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Costs incurred and/or charged to expense
|
|
90.6
|
|
|
0.9
|
|
|
91.5
|
|
|||
|
Cash payments
|
|
(57.8
|
)
|
|
(0.3
|
)
|
|
(58.1
|
)
|
|||
|
Non-cash adjustments
|
|
2.2
|
|
|
—
|
|
|
2.2
|
|
|||
|
Balance, December 31, 2015
(1)
|
|
$
|
35.0
|
|
|
$
|
0.6
|
|
|
$
|
35.6
|
|
|
Costs incurred and/or charged to expense
|
|
0.7
|
|
|
7.7
|
|
|
8.4
|
|
|||
|
Cash payments
|
|
(11.1
|
)
|
|
(0.3
|
)
|
|
(11.4
|
)
|
|||
|
Balance, March 31, 2016
|
|
$
|
24.6
|
|
|
$
|
8.0
|
|
|
$
|
32.6
|
|
|
Costs incurred and/or charged to expense
|
|
(1.2
|
)
|
|
0.9
|
|
|
(0.3
|
)
|
|||
|
Cash payments
|
|
(10.2
|
)
|
|
(1.2
|
)
|
|
(11.4
|
)
|
|||
|
Balance, June 30, 2016
|
|
$
|
13.2
|
|
|
$
|
7.7
|
|
|
$
|
20.9
|
|
|
Costs incurred and/or charged to expense
|
|
(1.6
|
)
|
|
0.9
|
|
|
(0.7
|
)
|
|||
|
Cash payments
|
|
(4.6
|
)
|
|
(1.2
|
)
|
|
(5.8
|
)
|
|||
|
Balance, September 30, 2016
|
|
$
|
7.0
|
|
|
$
|
7.4
|
|
|
$
|
14.4
|
|
|
(1)
|
In the
nine-month period ended September 30, 2015
, the Company recognized
$88 million
of restructuring charges and made payments of
$47 million
related to the Salix Acquisition.
|
|
7.
|
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 September 30, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||||||||||
|
|
|
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)
|
|
$
|
296.6
|
|
|
$
|
208.5
|
|
|
$
|
88.1
|
|
|
$
|
—
|
|
|
$
|
167.2
|
|
|
$
|
156.1
|
|
|
$
|
11.1
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Acquisition-related contingent consideration
|
|
$
|
(985.3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(985.3
|
)
|
|
$
|
(1,155.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,155.9
|
)
|
|
(1)
|
Cash equivalents include highly liquid investments with an original maturity of
three
months or less at acquisition, primarily including money market funds, reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.
|
|
|
Balance,
January 1,
2016
|
|
Payments/
Settlements
(a)
|
|
Net
Unrealized
Loss
|
|
Foreign
Exchange
(b)
|
|
Adjustments
(c)
|
|
Balance,
September 30, 2016 |
||||||||||||
|
Acquisition-related contingent consideration
|
$
|
(1,155.9
|
)
|
|
$
|
144.8
|
|
|
$
|
(18.3
|
)
|
|
$
|
7.8
|
|
|
$
|
36.3
|
|
|
$
|
(985.3
|
)
|
|
(a)
|
Primarily relates to payments of acquisition-related contingent consideration related to Salix, the acquisition of certain assets of Marathon, the settlement of contingent consideration obligation in connection with the termination of the arrangements with and relating to Philidor, and payments of acquisition-related contingent consideration related to the Elidel®/Xerese®/Zovirax® agreement entered into with Meda Pharma SARL in June 2011 (the "Elidel®/Xerese®/Zovirax® agreement"), and other smaller acquisitions.
|
|
(b)
|
Included in other comprehensive loss.
|
|
(c)
|
Primarily relates to
$26 million
of contingent consideration reclassified to a liability held for sale. See Note 5 for further detail.
|
|
|
|
As of September 30, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||||||||||
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Prepaid expenses and other current assets
|
|
$
|
181.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
•
|
an asset held for sale within the Company's Branded Rx segment, related to the Company's North American commercialization rights to Ruconest®. The Company recognized an impairment charge of
$199 million
in Amortization and impairments of finite-lived intangible assets for the nine months ended September 30, 2016 in the Consolidated statement of loss. The adjusted carrying amount of Ruconest® of
$82 million
represents the estimated fair value less costs to sell, determined using a discounted cash flow analysis approach which utilized Level 3 unobservable inputs; and
|
|
•
|
assets held for sale related to a number of small businesses within the Company’s Bausch + Lomb / International segment. The Company recognized an aggregate impairment charge of
$88 million
in Amortization and impairments of finite-lived intangible assets for the three and nine months ended September 30, 2016 in the Consolidated statement of loss. The adjusted carrying amount of
$99 million
, in the aggregate, represents the estimated fair values of these assets less costs to sell, determined using a discounted cash flow analysis approach which utilized Level 3 unobservable inputs.
|
|
8.
|
INVENTORIES
|
|
|
|
As of
September 30, 2016 |
|
As of
December 31, 2015 |
||||
|
Raw materials
(1)
|
|
$
|
351.4
|
|
|
$
|
289.3
|
|
|
Work in process
(1)
|
|
131.8
|
|
|
152.7
|
|
||
|
Finished goods
(1)
|
|
816.9
|
|
|
814.6
|
|
||
|
|
|
$
|
1,300.1
|
|
|
$
|
1,256.6
|
|
|
(1)
|
The components of inventories shown in the table above are net of allowance for obsolescence.
|
|
9.
|
INTANGIBLE ASSETS AND GOODWILL
|
|
|
|
As of September 30, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||
|
|
|
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
|
|
$
|
21,959.0
|
|
|
$
|
(6,831.2
|
)
|
|
$
|
15,127.8
|
|
|
$
|
22,082.8
|
|
|
$
|
(5,236.4
|
)
|
|
$
|
16,846.4
|
|
|
Corporate brands
|
|
1,030.4
|
|
|
(138.8
|
)
|
|
891.6
|
|
|
1,066.1
|
|
|
(107.1
|
)
|
|
959.0
|
|
||||||
|
Product rights/patents
|
|
4,302.4
|
|
|
(2,061.0
|
)
|
|
2,241.4
|
|
|
4,339.9
|
|
|
(1,711.7
|
)
|
|
2,628.2
|
|
||||||
|
Partner relationships
|
|
164.6
|
|
|
(133.0
|
)
|
|
31.6
|
|
|
217.6
|
|
|
(170.3
|
)
|
|
47.3
|
|
||||||
|
Technology and other
|
|
443.1
|
|
|
(186.2
|
)
|
|
256.9
|
|
|
480.3
|
|
|
(186.1
|
)
|
|
294.2
|
|
||||||
|
Total finite-lived intangible assets
(1)
|
|
27,899.5
|
|
|
(9,350.2
|
)
|
|
18,549.3
|
|
|
28,186.7
|
|
|
(7,411.6
|
)
|
|
20,775.1
|
|
||||||
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Acquired IPR&D
(2)
|
|
262.6
|
|
|
—
|
|
|
262.6
|
|
|
610.4
|
|
|
—
|
|
|
610.4
|
|
||||||
|
Corporate brand
(3)
|
|
1,697.5
|
|
|
—
|
|
|
1,697.5
|
|
|
1,697.5
|
|
|
—
|
|
|
1,697.5
|
|
||||||
|
|
|
$
|
29,859.6
|
|
|
$
|
(9,350.2
|
)
|
|
$
|
20,509.4
|
|
|
$
|
30,494.6
|
|
|
$
|
(7,411.6
|
)
|
|
$
|
23,083.0
|
|
|
(1)
|
In the third quarter of 2016, the Company recognized impairment charges of
$142 million
, primarily due to (i) an impairment charge of
$88 million
recognized upon classification of assets associated with a number of small businesses as held for sale (refer to Note 5 for further details) and (ii) an impairment charge of
$25 million
related to IBS
Chek
™ (U.S. Diversified Products segment), resulting from a decline in sales trends. The remaining impairment charges relate to a number of individually immaterial intangible assets.
|
|
(2)
|
The Company acquired certain IPR&D assets as part of the Salix Acquisition, as described further in Note 4.
|
|
(3)
|
Represents the corporate trademark, related to the acquisition of Bausch & Lomb Holdings Incorporated (‘‘B&L’’) in August 2013, which has an indefinite useful life and is therefore not amortized.
|
|
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
||||||||||
|
Amortization expense
(1)
|
|
$
|
2,672.8
|
|
|
$
|
2,597.1
|
|
|
$
|
2,468.1
|
|
|
$
|
2,341.4
|
|
|
$
|
2,133.9
|
|
|
(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
|
|
Bausch + Lomb / International
|
|
Branded Rx
|
|
U.S. Diversified Products
|
|
Total
|
||||||||||||
|
Balance, January 1, 2016
|
|
$
|
16,141.3
|
|
|
$
|
2,411.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,552.8
|
|
|
Additions
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
|
Divestitures
(1)
|
|
(36.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36.2
|
)
|
||||||
|
Allocations to assets held for sale
(2)
|
|
(37.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.1
|
)
|
||||||
|
Foreign exchange and other
|
|
47.3
|
|
|
(12.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35.2
|
|
||||||
|
Impairment
(4)
|
|
(837.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(837.9
|
)
|
||||||
|
Realignment of goodwill
(3)
|
|
(15,278.1
|
)
|
|
(2,399.4
|
)
|
|
6,498.2
|
|
|
8,026.8
|
|
|
3,152.5
|
|
|
—
|
|
||||||
|
Impairment
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(211.1
|
)
|
|
—
|
|
|
(211.1
|
)
|
||||||
|
Allocations to assets held for sale
(2)
|
|
—
|
|
|
—
|
|
|
(29.8
|
)
|
|
—
|
|
|
—
|
|
|
(29.8
|
)
|
||||||
|
Foreign exchange and other
|
|
—
|
|
|
—
|
|
|
13.9
|
|
|
(0.4
|
)
|
|
—
|
|
|
13.5
|
|
||||||
|
Balance, September 30, 2016
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,482.3
|
|
|
$
|
7,815.3
|
|
|
$
|
3,152.5
|
|
|
$
|
17,450.1
|
|
|
(1)
|
See Note 5 for additional information regarding the divestiture of a portfolio of neurology medical device products to Stryker Corporation.
|
|
(2)
|
Relates to the reclassification of goodwill to assets held for sale as of September 30, 2016 related to Ruconest® and a number of smaller businesses which the Company expects to divest within one year. Refer to Note 5 for further details.
|
|
(3)
|
Effective in the third quarter of 2016, the Company has
three
reportable segments: (i) Bausch + Lomb / International, (ii) Branded Rx, and (iii) U.S. Diversified Products. Accordingly, goodwill previously reported in the former Developed Markets and Emerging Markets segments have been reallocated to the new reportable segments using a relative fair value approach. For additional information on the Company's operating and reportable segments, see Note 18.
|
|
(4)
|
During the third quarter of 2016, the Company recognized an aggregate goodwill impairment charge of
$1.05 billion
, consisting of
$838 million
of goodwill impairment charge related to its former U.S. reporting unit within the Development Markets segment and
$211 million
of goodwill impairment charge related to the Salix reporting unit within the Branded Rx reportable segment. Refer to "Realignment of segment structure" below for additional information.
|
|
•
|
The results of the impairment analysis under the former reporting unit structure indicated that the fair values of all former reporting units exceeded their respective carrying values by more than
15%
except for the former U.S. reporting unit. With respect to the former U.S. reporting unit, the carrying value exceeded the fair value by
1%
. As a result, Step 2 of the goodwill impairment test was carried out by comparing the implied fair value of the goodwill associated with the former U.S. reporting unit to the carrying value of such goodwill. Based on this analysis, it was determined that the carrying value exceeded the implied fair value of the goodwill; accordingly, an estimated goodwill impairment charge of
$838 million
, representing the excess of the carrying value of goodwill over its implied fair value, was recognized in the three months ended September 30, 2016. The goodwill impairment was primarily driven by the change in forecast which resulted in a lower fair value of the US businesses, mainly the Salix business.
|
|
•
|
With respect to the impairment analysis conducted under the current reporting unit structure, the fair values exceeded the carrying values by more than
15%
for all current reporting units except for the Salix reporting unit. The carrying value of the Salix reporting unit exceeded its fair value by
38%
. As a result, the Company performed Step 2 of the goodwill impairment test for the Salix reporting unit. Based on this analysis, it was determined that the carrying value exceeded
|
|
10.
|
|
|
|
|
Maturity
Date
|
|
As of
September 30, 2016 |
|
As of
December 31, 2015 |
||||
|
Revolving Credit Facility
(1)
|
|
April 2018
|
|
$
|
1,100.0
|
|
|
$
|
250.0
|
|
|
Series A-1 Tranche A Term Loan Facility
(1)
|
|
April 2016
|
|
—
|
|
|
140.4
|
|
||
|
Series A-2 Tranche A Term Loan Facility
(1)
|
|
April 2016
|
|
—
|
|
|
137.3
|
|
||
|
Series A-3 Tranche A Term Loan Facility
(1)
|
|
October 2018
|
|
1,129.0
|
|
|
1,881.5
|
|
||
|
Series A-4 Tranche A Term Loan Facility
(1)
|
|
April 2020
|
|
763.0
|
|
|
951.3
|
|
||
|
Series D-2 Tranche B Term Loan Facility
(1)
|
|
February 2019
|
|
1,052.7
|
|
|
1,087.5
|
|
||
|
Series C-2 Tranche B Term Loan Facility
(1)
|
|
December 2019
|
|
808.2
|
|
|
835.1
|
|
||
|
Series E-1 Tranche B Term Loan Facility
(1)
|
|
August 2020
|
|
2,441.3
|
|
|
2,531.2
|
|
||
|
Series F Tranche B Term Loan Facility
(1)
|
|
April 2022
|
|
3,853.4
|
|
|
4,055.8
|
|
||
|
Senior Notes:
|
|
|
|
|
|
|
||||
|
7.00%
|
|
October 2020
|
|
688.3
|
|
|
688.0
|
|
||
|
6.75%
|
|
August 2021
|
|
646.6
|
|
|
646.1
|
|
||
|
7.25%
|
|
July 2022
|
|
543.0
|
|
|
542.1
|
|
||
|
6.375%
|
|
October 2020
|
|
2,230.1
|
|
|
2,226.5
|
|
||
|
6.75%
|
|
August 2018
|
|
1,592.0
|
|
|
1,588.8
|
|
||
|
7.50%
|
|
July 2021
|
|
1,611.8
|
|
|
1,609.7
|
|
||
|
5.625%
|
|
December 2021
|
|
894.1
|
|
|
893.2
|
|
||
|
5.50%
|
|
March 2023
|
|
991.6
|
|
|
990.6
|
|
||
|
5.375%
|
|
March 2020
|
|
1,983.4
|
|
|
1,979.9
|
|
||
|
5.875%
|
|
May 2023
|
|
3,218.5
|
|
|
3,215.0
|
|
||
|
4.50%
(2)
|
|
May 2023
|
|
1,668.8
|
|
|
1,611.8
|
|
||
|
6.125%
|
|
April 2025
|
|
3,217.1
|
|
|
3,214.3
|
|
||
|
Other
(3)
|
|
Various
|
|
12.3
|
|
|
12.3
|
|
||
|
|
|
|
|
30,445.2
|
|
|
31,088.4
|
|
||
|
Less current portion
|
|
|
|
(59.0
|
)
|
|
(823.0
|
)
|
||
|
Total long-term debt
|
|
|
|
$
|
30,386.2
|
|
|
$
|
30,265.4
|
|
|
(1)
|
Together, the “Senior Secured Credit Facilities” under the Company’s Third Amended and Restated Credit and Guaranty Agreement, as amended (the “Credit Agreement”).
|
|
(2)
|
Represents the U.S. dollar equivalent of Euro-denominated debt (discussed below).
|
|
(3)
|
Relates primarily to the debentures assumed in the acquisition of B&L.
|
|
|
|
|
Margins
|
|||||
|
|
Effective Interest Rate
|
|
Base Rate Borrowings
|
|
LIBO Rate Borrowings
|
|||
|
Revolving Credit Facility
|
3.60
|
%
|
|
2.75
|
%
|
|
3.75
|
%
|
|
Series A-1 Tranche A Term Loan Facility
(1)
|
2.68
|
%
|
|
2.75
|
%
|
|
3.75
|
%
|
|
Series A-2 Tranche A Term Loan Facility
(1)
|
2.68
|
%
|
|
2.75
|
%
|
|
3.75
|
%
|
|
Series A-3 Tranche A Term Loan Facility
|
3.41
|
%
|
|
2.75
|
%
|
|
3.75
|
%
|
|
Series A-4 Tranche A Term Loan Facility
|
3.56
|
%
|
|
2.75
|
%
|
|
3.75
|
%
|
|
Series D-2 Tranche B Term Loan Facility
(2)
|
4.28
|
%
|
|
3.25
|
%
|
|
4.25
|
%
|
|
Series C-2 Tranche B Term Loan Facility
(2)
|
4.53
|
%
|
|
3.50
|
%
|
|
4.50
|
%
|
|
Series E-1 Tranche B Term Loan Facility
(2)
|
4.45
|
%
|
|
3.50
|
%
|
|
4.50
|
%
|
|
Series F Tranche B Term Loan Facility
(2)
|
4.69
|
%
|
|
3.75
|
%
|
|
4.75
|
%
|
|
(1)
|
Fully repaid in the three-month period ended March 31, 2016.
|
|
(2)
|
Subject to a
1.75%
base rate floor and a
0.75%
LIBO rate floor.
|
|
11.
|
PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS
|
|
|
|
Pension Benefit Plans
|
|
Postretirement
Benefit
Plan
|
||||||||||||||||||||
|
|
U.S. Plan
|
|
Non-U.S. Plans
|
|
||||||||||||||||||||
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
|
Service cost
|
|
$
|
0.5
|
|
|
$
|
0.4
|
|
|
$
|
0.7
|
|
|
$
|
0.8
|
|
|
$
|
0.2
|
|
|
$
|
0.5
|
|
|
Interest cost
|
|
2.0
|
|
|
2.4
|
|
|
1.4
|
|
|
1.6
|
|
|
0.4
|
|
|
0.5
|
|
||||||
|
Expected return on plan assets
|
|
(3.3
|
)
|
|
(3.6
|
)
|
|
(1.8
|
)
|
|
(2.0
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||||
|
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.7
|
)
|
|
(0.7
|
)
|
||||||
|
Amortization of net loss
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
||||||
|
Net periodic (benefit) cost
|
|
$
|
(0.8
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
0.3
|
|
|
$
|
0.6
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
Pension Benefit Plans
|
|
Postretirement
Benefit
Plan
|
||||||||||||||||||||
|
|
U.S. Plan
|
|
Non-U.S. Plans
|
|
||||||||||||||||||||
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
|
Service cost
|
|
$
|
1.6
|
|
|
$
|
1.2
|
|
|
$
|
2.0
|
|
|
$
|
2.4
|
|
|
$
|
0.5
|
|
|
$
|
1.5
|
|
|
Interest cost
|
|
5.9
|
|
|
7.2
|
|
|
4.1
|
|
|
4.8
|
|
|
1.3
|
|
|
1.5
|
|
||||||
|
Expected return on plan assets
|
|
(9.8
|
)
|
|
(10.8
|
)
|
|
(5.2
|
)
|
|
(6.0
|
)
|
|
—
|
|
|
(0.3
|
)
|
||||||
|
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.6
|
)
|
|
(1.9
|
)
|
|
(2.0
|
)
|
||||||
|
Amortization of net loss
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
||||||
|
Net periodic (benefit) cost
|
|
$
|
(2.3
|
)
|
|
$
|
(2.4
|
)
|
|
$
|
0.9
|
|
|
$
|
1.8
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.7
|
|
|
12.
|
SHARE-BASED COMPENSATION
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
Stock options
|
$
|
4.7
|
|
|
$
|
8.3
|
|
|
$
|
11.4
|
|
|
$
|
15.7
|
|
|
RSUs
|
32.1
|
|
|
42.2
|
|
|
122.6
|
|
|
95.7
|
|
||||
|
Share-based compensation expense
|
$
|
36.8
|
|
|
$
|
50.5
|
|
|
$
|
134.0
|
|
|
$
|
111.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Research and development expenses
|
$
|
1.7
|
|
|
$
|
1.5
|
|
|
$
|
5.0
|
|
|
$
|
4.5
|
|
|
Selling, general and administrative expenses
|
35.1
|
|
|
49.0
|
|
|
129.0
|
|
|
106.9
|
|
||||
|
Share-based compensation expense
|
$
|
36.8
|
|
|
$
|
50.5
|
|
|
$
|
134.0
|
|
|
$
|
111.4
|
|
|
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
(in millions)
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance, January 1, 2015 (restated)
|
334.4
|
|
|
$
|
8,349.2
|
|
|
$
|
243.9
|
|
|
$
|
(2,397.8
|
)
|
|
$
|
(915.9
|
)
|
|
$
|
5,279.4
|
|
|
$
|
122.3
|
|
|
$
|
5,401.7
|
|
|
Issuance of common stock (see below)
|
7.5
|
|
|
1,481.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,481.0
|
|
|
—
|
|
|
1,481.0
|
|
|||||||
|
Common shares issued under share-based compensation plans
|
1.4
|
|
|
75.7
|
|
|
(46.6
|
)
|
|
—
|
|
|
—
|
|
|
29.1
|
|
|
—
|
|
|
29.1
|
|
|||||||
|
Repurchases of common shares
|
(0.2
|
)
|
|
(6.3
|
)
|
|
—
|
|
|
(43.7
|
)
|
|
—
|
|
|
(50.0
|
)
|
|
—
|
|
|
(50.0
|
)
|
|||||||
|
Share-based compensation
|
—
|
|
|
—
|
|
|
111.4
|
|
|
—
|
|
|
—
|
|
|
111.4
|
|
|
—
|
|
|
111.4
|
|
|||||||
|
Employee withholding taxes related to share-based awards
|
—
|
|
|
—
|
|
|
(85.8
|
)
|
|
—
|
|
|
—
|
|
|
(85.8
|
)
|
|
—
|
|
|
(85.8
|
)
|
|||||||
|
Excess tax benefits from share-based compensation
|
—
|
|
|
—
|
|
|
21.7
|
|
|
—
|
|
|
—
|
|
|
21.7
|
|
|
—
|
|
|
21.7
|
|
|||||||
|
Noncontrolling interest from business combinations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|
4.9
|
|
|||||||
|
Noncontrolling interest distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
|
(7.0
|
)
|
|||||||
|
|
343.1
|
|
|
9,899.6
|
|
|
244.6
|
|
|
(2,441.5
|
)
|
|
(915.9
|
)
|
|
6,786.8
|
|
|
120.2
|
|
|
6,907.0
|
|
|||||||
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net income (restated)
|
—
|
|
|
—
|
|
|
—
|
|
|
94.2
|
|
|
—
|
|
|
94.2
|
|
|
4.4
|
|
|
98.6
|
|
|||||||
|
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(547.5
|
)
|
|
(547.5
|
)
|
|
(2.2
|
)
|
|
(549.7
|
)
|
|||||||
|
Total comprehensive loss (restated)
|
|
|
|
|
|
|
|
|
|
|
(453.3
|
)
|
|
2.2
|
|
|
(451.1
|
)
|
||||||||||||
|
Balance, September 30, 2015 (restated)
|
343.1
|
|
|
$
|
9,899.6
|
|
|
$
|
244.6
|
|
|
$
|
(2,347.3
|
)
|
|
$
|
(1,463.4
|
)
|
|
$
|
6,333.5
|
|
|
$
|
122.4
|
|
|
$
|
6,455.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Balance, January 1, 2016
|
342.9
|
|
|
$
|
9,897.4
|
|
|
$
|
304.9
|
|
|
$
|
(2,749.7
|
)
|
|
$
|
(1,541.6
|
)
|
|
$
|
5,911.0
|
|
|
$
|
118.8
|
|
|
$
|
6,029.8
|
|
|
Effect of retrospective application of a new accounting standard (see Note 3)
|
—
|
|
|
—
|
|
|
—
|
|
|
30.0
|
|
|
—
|
|
|
30.0
|
|
|
—
|
|
|
30.0
|
|
|||||||
|
Common shares issued under share-based compensation plans
|
4.8
|
|
|
137.0
|
|
|
(103.9
|
)
|
|
—
|
|
|
—
|
|
|
33.1
|
|
|
—
|
|
|
33.1
|
|
|||||||
|
Share-based compensation
|
—
|
|
|
—
|
|
|
134.0
|
|
|
—
|
|
|
—
|
|
|
134.0
|
|
|
—
|
|
|
134.0
|
|
|||||||
|
Employee withholding taxes related to share-based awards
|
—
|
|
|
—
|
|
|
(9.1
|
)
|
|
—
|
|
|
—
|
|
|
(9.1
|
)
|
|
—
|
|
|
(9.1
|
)
|
|||||||
|
Noncontrolling interest distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.1
|
)
|
|
(9.1
|
)
|
|||||||
|
|
347.7
|
|
|
10,034.4
|
|
|
325.9
|
|
|
(2,719.7
|
)
|
|
(1,541.6
|
)
|
|
6,099.0
|
|
|
109.7
|
|
|
6,208.7
|
|
|||||||
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Net loss
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,894.4
|
)
|
|
—
|
|
|
(1,894.4
|
)
|
|
(1.6
|
)
|
|
(1,896.0
|
)
|
|||||||
|
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.3
|
)
|
|
(37.3
|
)
|
|
(1.8
|
)
|
|
(39.1
|
)
|
|||||||
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(1,931.7
|
)
|
|
(3.4
|
)
|
|
(1,935.1
|
)
|
||||||||||||
|
Balance, September 30, 2016
(1)
|
347.7
|
|
|
$
|
10,034.4
|
|
|
$
|
325.9
|
|
|
$
|
(4,614.1
|
)
|
|
$
|
(1,578.9
|
)
|
|
$
|
4,167.3
|
|
|
$
|
106.3
|
|
|
$
|
4,273.6
|
|
|
(1)
|
As described in Note 3, the Company adopted the new accounting guidance on employee share-based payment transactions in the third quarter of 2016. As a result of the adoption, excess tax benefits and tax deficiencies are recognized in the provision for income taxes instead of additional paid-in capital. This aspect of the new guidance is adopted prospectively with the effective date of January 1, 2016. Given the adoption impact for the six months ended June 30, 2016 was insignificant, the Company recorded an adjustment for the cumulative adoption impact for the six months ended June 30, 2016 in the three months ended September 30, 2016. Refer to Note 3 for further details.
|
|
14.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
|
|
Foreign Currency Translation Adjustment
|
|
Pension Adjustment
|
|
Total
|
||||||
|
Balance, January 1, 2015
|
|
$
|
(886.5
|
)
|
|
$
|
(29.4
|
)
|
|
$
|
(915.9
|
)
|
|
Foreign currency translation adjustment
|
|
(546.1
|
)
|
|
—
|
|
|
(546.1
|
)
|
|||
|
Pension adjustment
(1)
|
|
—
|
|
|
(1.4
|
)
|
|
(1.4
|
)
|
|||
|
Balance, September 30, 2015
|
|
$
|
(1,432.6
|
)
|
|
$
|
(30.8
|
)
|
|
$
|
(1,463.4
|
)
|
|
|
|
|
|
|
|
|
||||||
|
Balance, January 1, 2016
|
|
$
|
(1,529.4
|
)
|
|
$
|
(12.2
|
)
|
|
$
|
(1,541.6
|
)
|
|
Foreign currency translation adjustment
|
|
(35.7
|
)
|
|
—
|
|
|
(35.7
|
)
|
|||
|
Pension adjustment
(1)
|
|
—
|
|
|
(1.6
|
)
|
|
(1.6
|
)
|
|||
|
Balance, September 30, 2016
|
|
$
|
(1,565.1
|
)
|
|
$
|
(13.8
|
)
|
|
$
|
(1,578.9
|
)
|
|
(1)
|
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 (see Note 11).
|
|
15.
|
INCOME TAXES
|
|
16.
|
(LOSS) EARNINGS PER SHARE
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
(restated) |
||||||||
|
Net (loss) income attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
(1,218.4
|
)
|
|
$
|
49.5
|
|
|
$
|
(1,894.4
|
)
|
|
$
|
94.2
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic weighted-average number of common shares outstanding
|
349.5
|
|
|
344.9
|
|
|
346.5
|
|
|
340.8
|
|
||||
|
Diluted effect of stock options, RSUs and other
(a)
|
—
|
|
|
6.1
|
|
|
—
|
|
|
6.4
|
|
||||
|
Diluted weighted-average number of common shares outstanding
|
349.5
|
|
|
351.0
|
|
|
346.5
|
|
|
347.2
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
(3.49
|
)
|
|
$
|
0.14
|
|
|
$
|
(5.47
|
)
|
|
$
|
0.28
|
|
|
Diluted
|
$
|
(3.49
|
)
|
|
$
|
0.14
|
|
|
$
|
(5.47
|
)
|
|
$
|
0.27
|
|
|
(a)
|
In the three-month and nine-month periods ended September 30, 2016, 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:
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months
Ended
September 30, |
||
|
|
|
2016
|
|
2016
(1)
|
||
|
Basic weighted-average number of common shares outstanding
|
|
349.5
|
|
|
346.5
|
|
|
Diluted effect of stock options, RSUs and other
|
|
0.8
|
|
|
3.4
|
|
|
Diluted weighted-average number of common shares outstanding
|
|
350.3
|
|
|
349.9
|
|
|
(1)
|
The calculation of diluted weighted-average number of common shares outstanding for the nine-month period ended September 30, 2016 reflects the adjustment to the calculation for six-month period ended June 30, 2016 as a result of the adoption of a new accounting standard, effective as of January 1, 2016. Refer to Note 3 for further details.
|
|
17.
|
LEGAL PROCEEDINGS
|
|
18.
|
SEGMENT INFORMATION
|
|
•
|
The Bausch + Lomb / International segment
consists of (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products in the area of eye health, primarily comprised of Bausch + Lomb products, with a focus on
|
|
•
|
The Branded Rx segment
consists of sales of pharmaceutical products related to (i) the Salix product portfolio in the U.S., (ii) the Dermatological product portfolio in the U.S., (iii) the Canadian product portfolio, and (iv) product portfolios in the U.S. in the areas of oncology, dentistry and women’s health.
|
|
•
|
The U.S. Diversified Products segment
consists of (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products in the areas of neurology and certain other therapeutic classes, including aesthetics (which includes the Solta and Obagi businesses), and (ii) sales of generic products in the U.S.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
(restated) |
||||||||
|
Revenues:
|
|
|
|
|
|
|
|
||||||||
|
The Bausch + Lomb / International segment
(1)
|
$
|
1,161.8
|
|
|
$
|
1,118.9
|
|
|
$
|
3,431.4
|
|
|
$
|
3,416.3
|
|
|
The Branded Rx segment
(2)
|
847.3
|
|
|
1,104.3
|
|
|
2,318.5
|
|
|
2,579.3
|
|
||||
|
The U.S. Diversified Products segment
(3)
|
470.5
|
|
|
563.6
|
|
|
1,521.5
|
|
|
1,693.7
|
|
||||
|
Total revenues
|
2,479.6
|
|
|
2,786.8
|
|
|
7,271.4
|
|
|
7,689.3
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Segment profit:
|
|
|
|
|
|
|
|
||||||||
|
The Bausch + Lomb / International segment
(4)
|
345.6
|
|
|
382.5
|
|
|
979.5
|
|
|
1,187.5
|
|
||||
|
The Branded Rx segment
(5)
|
520.1
|
|
|
671.0
|
|
|
1,170.8
|
|
|
1,504.2
|
|
||||
|
The U.S. Diversified Products segment
(6)
|
378.3
|
|
|
447.5
|
|
|
1,226.5
|
|
|
1,329.5
|
|
||||
|
Total segment profit
|
1,244.0
|
|
|
1,501.0
|
|
|
3,376.8
|
|
|
4,021.2
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate
(7)
|
(184.1
|
)
|
|
(161.6
|
)
|
|
(524.3
|
)
|
|
(382.8
|
)
|
||||
|
Amortization and impairments of finite-lived intangible assets
|
(807.1
|
)
|
|
(679.2
|
)
|
|
(2,389.2
|
)
|
|
(1,629.8
|
)
|
||||
|
Goodwill impairment
|
(1,049.0
|
)
|
|
—
|
|
|
(1,049.0
|
)
|
|
—
|
|
||||
|
Restructuring and integration costs
|
(20.7
|
)
|
|
(75.6
|
)
|
|
(78.2
|
)
|
|
(274.0
|
)
|
||||
|
In-process research and development impairments and other charges
|
(36.0
|
)
|
|
(95.8
|
)
|
|
(53.9
|
)
|
|
(108.1
|
)
|
||||
|
Acquisition-related costs
|
—
|
|
|
(7.0
|
)
|
|
(1.8
|
)
|
|
(30.4
|
)
|
||||
|
Acquisition-related contingent consideration
|
(9.0
|
)
|
|
(3.8
|
)
|
|
(18.3
|
)
|
|
(22.6
|
)
|
||||
|
Other (expense) income
|
(1.1
|
)
|
|
(30.2
|
)
|
|
21.6
|
|
|
(213.2
|
)
|
||||
|
Operating (loss) income
|
(863.0
|
)
|
|
447.8
|
|
|
(716.3
|
)
|
|
1,360.3
|
|
||||
|
Interest income
|
2.5
|
|
|
0.7
|
|
|
5.5
|
|
|
2.5
|
|
||||
|
Interest expense
|
(469.6
|
)
|
|
(420.2
|
)
|
|
(1,368.7
|
)
|
|
(1,130.7
|
)
|
||||
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.0
|
)
|
||||
|
Foreign exchange (loss) gain and other
|
(2.3
|
)
|
|
(34.0
|
)
|
|
4.6
|
|
|
(99.5
|
)
|
||||
|
(Loss) income before (recovery of) provision for income taxes
|
$
|
(1,332.4
|
)
|
|
$
|
(5.7
|
)
|
|
$
|
(2,074.9
|
)
|
|
$
|
112.6
|
|
|
(1)
|
The Bausch + Lomb / International segment revenues reflect incremental product sales revenue in the
three-month and nine-month periods ended September 30, 2016
mainly from 2015 acquisitions of
$67 million
and
$226 million
, respectively, in the aggregate, primarily from the Amoun Acquisition.
|
|
(2)
|
The Branded Rx segment revenues reflect incremental product sales revenue in the
nine-month period ended September 30, 2016
from 2015 acquisitions of
$383 million
, in the aggregate, primarily from the Salix Acquisition and the acquisition of certain assets of Dendreon.
|
|
(3)
|
The U.S. Diversified Products segment revenues reflect incremental product sales revenue in the
three-month and nine-month periods ended September 30, 2016
from 2015 acquisitions of
$2 million
and
$113 million
, respectively, in the aggregate, primarily from the Salix Acquisition (Zegerid® authorized generic product sales) and the acquisition of certain assets of Marathon.
|
|
(4)
|
The Bausch + Lomb / International segment profit in the
three-month and nine-month periods ended September 30, 2016
reflects the impact of acquisition accounting adjustments related to the fair value adjustments to identifiable intangible assets of
$255 million
and
$587 million
, respectively, in the aggregate, compared with
$161 million
and
$478 million
in the corresponding periods of
2015
.
|
|
(5)
|
The Branded Rx segment profit in the
three-month and nine-month periods ended September 30, 2016
reflects the impact of acquisition accounting adjustments related to the fair value adjustments to identifiable intangible assets and inventory of
$421 million
and
$1.49 billion
, respectively, in the aggregate, primarily from the Salix Acquisition, compared with
$422 million
and
$907 million
in the corresponding periods of
2015
.
|
|
(6)
|
The U.S. Diversified Products segment profit in the
three-month and nine-month periods ended September 30, 2016
reflects the impact of acquisition accounting adjustments related to the fair value adjustments to identifiable intangible assets of
$133 million
and
$341 million
, respectively, in the aggregate, compared with
$121 million
and
$300 million
in the corresponding periods of
2015
.
|
|
(7)
|
Corporate reflects research and development expenses of
$56 million
and
$173 million
in the
three-month and nine-month periods ended September 30, 2016
, respectively, and non-restructuring-related share-based compensation expense of
$23 million
and
$93 million
in the
three-month and nine-month periods ended September 30, 2016
, respectively. This compares with research and development expenses of
$72 million
and
$162 million
in the corresponding periods of
2015
, respectively, and non-restructuring-related share-based compensation expense of
$40 million
and
$78 million
in the corresponding periods of
2015
, respectively. The non-restructuring-related share-based compensation expense in the
nine-month period ended
|
|
|
As of
September 30, 2016 |
|
As of
December 31, 2015 |
||||
|
Assets:
|
|
|
|
||||
|
The Bausch + Lomb / International segment
|
$
|
16,455.5
|
|
|
$
|
16,886.7
|
|
|
The Branded Rx segment
|
22,524.6
|
|
|
24,900.5
|
|
||
|
The U.S. Diversified Products segment
|
6,302.6
|
|
|
6,758.5
|
|
||
|
|
45,282.7
|
|
|
48,545.7
|
|
||
|
Corporate
|
478.5
|
|
|
418.8
|
|
||
|
Total assets
|
$
|
45,761.2
|
|
|
$
|
48,964.5
|
|
|
•
|
Maximizing our key therapeutic area businesses including: dermatology, gastrointestinal ("GI"), and eye health;
|
|
•
|
Obtaining regulatory approval for, and successfully launching, brodalumab and latanoprostene bunod;
|
|
•
|
Maximizing the success of our new fulfillment arrangements with Walgreen Co. ("Walgreens"), described further under ''Selected Financial Information" below;
|
|
•
|
Strengthening our balance sheet by reducing outstanding debt levels; and
|
|
•
|
Implementing efficient resource allocation.
|
|
•
|
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 September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
(restated) |
|
Change
|
||||||||||||
|
($ in millions, except per share data)
|
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||
|
Revenues
|
|
2,479.6
|
|
|
2,786.8
|
|
|
(307.2
|
)
|
|
(11
|
)
|
|
7,271.4
|
|
|
7,689.3
|
|
|
(417.9
|
)
|
|
(5
|
)
|
|
Operating expenses
|
|
3,342.6
|
|
|
2,339.0
|
|
|
1,003.6
|
|
|
43
|
|
|
7,987.7
|
|
|
6,329.0
|
|
|
1,658.7
|
|
|
26
|
|
|
Net (loss) income attributable to Valeant Pharmaceuticals International, Inc.
|
|
(1,218.4
|
)
|
|
49.5
|
|
|
(1,267.9
|
)
|
|
NM
|
|
|
(1,894.4
|
)
|
|
94.2
|
|
|
(1,988.6
|
)
|
|
NM
|
|
|
(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
(3.49
|
)
|
|
0.14
|
|
|
(3.63
|
)
|
|
NM
|
|
|
(5.47
|
)
|
|
0.28
|
|
|
(5.75
|
)
|
|
NM
|
|
|
Diluted
|
|
(3.49
|
)
|
|
0.14
|
|
|
(3.63
|
)
|
|
NM
|
|
|
(5.47
|
)
|
|
0.27
|
|
|
(5.74
|
)
|
|
NM
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
(restated) |
||||||||||||
|
($ in millions)
|
|
$
|
|
%
(1)
|
|
$
|
|
%
(1)
|
|
$
|
|
%
(1)
|
|
$
|
|
%
(1)
|
||||
|
Gross product sales
|
|
4,088.3
|
|
|
|
|
4,317.4
|
|
|
|
|
11,992.1
|
|
|
|
|
11,105.4
|
|
|
|
|
Provisions to reduce gross product sales to net product sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Discounts and allowances
|
|
192.6
|
|
|
5
|
|
186.1
|
|
|
4
|
|
560.7
|
|
|
5
|
|
445.8
|
|
|
4
|
|
Returns
|
|
99.2
|
|
|
2
|
|
130.8
|
|
|
3
|
|
342.7
|
|
|
3
|
|
297.8
|
|
|
3
|
|
Rebates
|
|
684.6
|
|
|
17
|
|
690.1
|
|
|
16
|
|
1,880.1
|
|
|
16
|
|
1,499.1
|
|
|
13
|
|
Chargebacks
|
|
562.5
|
|
|
14
|
|
487.9
|
|
|
11
|
|
1,708.3
|
|
|
14
|
|
1,197.0
|
|
|
11
|
|
Distribution fees
|
|
105.8
|
|
|
3
|
|
74.3
|
|
|
2
|
|
331.9
|
|
|
3
|
|
96.4
|
|
|
1
|
|
|
|
1,644.7
|
|
|
40
|
|
1,569.2
|
|
|
36
|
|
4,823.7
|
|
|
40
|
|
3,536.1
|
|
|
32
|
|
Net product sales
|
|
2,443.6
|
|
|
|
|
2,748.2
|
|
|
|
|
7,168.4
|
|
|
|
|
7,569.3
|
|
|
|
|
•
|
an increase in the provisions for discounts and allowances in the
third quarter
and
first nine months of 2016
, mainly due to a higher percentage of our total product sales driven by our generic product portfolio, which typically has higher discounts and allowances;
|
|
•
|
an increase in the provisions for rebates in the
third quarter
and
first nine months of 2016
driven primarily by increased sales of products that carry higher contractual rebates and co-pay assistance programs, including the impact of gross price increases where customers receive incremental rebates based on contractual price increase limitations. Specifically, the comparisons were impacted primarily by higher provisions for rebates, including managed care rebates for Jublia® and the co-pay assistance programs for launch products and other promoted products including Onexton®, Retin-A Micro® Microsphere 0.08% ("RAM 0.08%"), and Solodyn®, as well as the Salix products. The increase was partially offset by a decrease in rebates for Glumetza® due to a decline in sales volume as a result of generic competition;
|
|
•
|
an increase in the provisions for chargebacks in the
third quarter
and
first nine months of 2016
as a result of increased utilization and higher chargebacks given to group purchasing organizations for products sales of Isuprel® and Nitropress® and to the U.S. government in connection with product sales for Minocin®, Ativan®, Glumetza® and Targretin®, offset by decreases in utilization for Wellbutrin®; and
|
|
•
|
higher distribution service fees due to lower offsetting price appreciation credits, which credits offset against the total distribution service fees we pay on all of our products to each wholesaler, realized in the
third quarter
and
first nine months of 2016
as compared to the amounts realized in the
third quarter
and
first nine months of 2015
. Price appreciation credits in the first nine months of 2016 decreased primarily due to lower and fewer price increase actions taken in the
first nine months of 2016
and lower inventory levels at the wholesalers impacted by those price increases. Net reduction to the distribution service fees provisions from price appreciation credits decreased from $44 million and $171 million in the
third quarter
and
first nine months of 2015
, respectively, to nil and $3 million in the
third quarter
and
first nine months of 2016
, respectively.
|
|
•
|
a decrease in the returns provision in the
third quarter
of 2016 mainly driven by favorable adjustments to (i) Cuprimine® and Ativan® due to increased utilization by the U.S. government, and (ii) Relistor® and Apriso® as a result of additional promotional efforts, which lowered the inventory level in the distribution channel for these promoted products.
|
|
•
|
The Bausch + Lomb / International segment
consists of (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products in the area of eye health, primarily comprised of Bausch + Lomb products, with a focus on four product offerings (Vision Care
,
Surgical, Consumer and Ophthalmology Rx), and (ii) branded pharmaceutical products, branded generic pharmaceutical products, OTC products, medical device products, and Bausch + Lomb products sold in Europe, Asia, Australia and New Zealand, Latin America, Africa and the Middle East.
|
|
•
|
The Branded Rx segment
consists of sales of pharmaceutical products related to (i) the Salix product portfolio in the U.S., (ii) the Dermatological product portfolio in the U.S., (iii) the Canadian product portfolio, and (iv) product portfolios in the U.S. in the areas of oncology, dentistry and women’s health.
|
|
•
|
The U.S. Diversified Products segment
consists of (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products in the areas of neurology and certain other therapeutic classes, including aesthetics (which includes the Solta and Obagi businesses), and (ii) sales of generic products in the U.S.
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
(restated) |
|
Change
|
||||||||||||||
|
($ in millions)
|
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
|
$
|
%
|
||||||||
|
The Bausch + Lomb / International segment
|
|
1,161.8
|
|
47
|
|
1,118.9
|
|
40
|
|
42.9
|
|
4
|
|
|
3,431.4
|
|
47
|
|
3,416.3
|
|
44
|
|
15.1
|
|
—
|
|
|
The Branded Rx segment
|
|
847.3
|
|
34
|
|
1,104.3
|
|
40
|
|
(257.0
|
)
|
(23
|
)
|
|
2,318.5
|
|
32
|
|
2,579.3
|
|
34
|
|
(260.8
|
)
|
(10
|
)
|
|
The U.S. Diversified Products segment
|
|
470.5
|
|
19
|
|
563.6
|
|
20
|
|
(93.1
|
)
|
(17
|
)
|
|
1,521.5
|
|
21
|
|
1,693.7
|
|
22
|
|
(172.2
|
)
|
(10
|
)
|
|
Total revenues
|
|
2,479.6
|
|
100
|
|
2,786.8
|
|
100
|
|
(307.2
|
)
|
(11
|
)
|
|
7,271.4
|
|
100
|
|
7,689.3
|
|
100
|
|
(417.9
|
)
|
(5
|
)
|
|
•
|
the incremental product sales revenue of
$67 million
and
$226 million
, in the aggregate, mainly from all 2015 acquisitions in the
third quarter
and
first nine months of 2016
, respectively, as compared to the same periods in the prior year, primarily from the acquisition of Amoun Pharmaceutical Company S.A.E. ("Amoun") (the "Amoun Acquisition").
|
|
•
|
a decline in product sales revenue from our existing business (excluding effects from 2015 acquisitions, foreign currency and divestitures and discontinuations as described below) of $4 million and $93 million in the
third quarter and first nine months of 2016
, respectively, primarily due to lower realized prices related to our ophthalmology products as a result of the implementation of rebates and other price adjustments during the year. The decline in product sales was also due to nominal price appreciation credits recognized during the
third quarter and first nine months of 2016
, as a result of lower and fewer price increases taken in 2016. These factors were partially offset by higher volumes in U.S. consumer product sales, as well as in product sales in Eastern Europe (excluding Poland and Russia) and China. With respect to Poland and Russia, product sales declined in the
first nine months of 2016
primarily as a result of our efforts to reduce wholesaler inventory levels in those countries (our wholesaler inventory levels in Poland and Russia, in the aggregate, approximated 2.7 months at
September 30, 2016
, as compared to approximately four to five months during 2015). We met our targeted inventory levels of below three months for Poland and Russia in the third quarter of 2016 and we expect to continue to maintain inventory at or below such targeted levels for those countries. In the case of Russia, the product sales decline in the
first nine months of 2016
was lessened by the increase in products sales in the
third quarter
of 2016;
|
|
•
|
a negative foreign currency exchange impact on the existing business of $7 million and $84 million in the
third quarter and first nine months of 2016
, respectively, due to the impact of
a strengthening of the U.S. dollar against certain currencies, including the Mexican peso, Egyptian pound and Chinese yuan, partially offset by the strengthening of the Japanese yen against the U.S. dollar
. In November 2016, we observed a significant devaluation of the Egyptian pound against the U.S. dollar as a result of the Egyptian government’s decision to float the Egyptian pound and un-peg it to the U.S. Dollar. Revenue generated from the Amoun business represents approximately 2% of our total revenues or approximately 5% of revenues from our Bausch + Lomb / International segment. We anticipate the devaluation of the Egyptian pound would have a negative impact on our reported revenue; and
|
|
•
|
a negative impact from divestitures and discontinuations of $12 million and $28 million related to a number of individually immaterial products in the
third quarter and first nine months of 2016
, respectively.
|
|
•
|
a decline in product sales revenue from our existing business (excluding effects from 2015 acquisitions, foreign currency and divestitures and discontinuations as described below) of $251 million and $616 million in the
third quarter and first nine months of 2016
, respectively, primarily as a result of lower average realized prices resulting from (i) higher managed care rebates (dermatology and Salix), (ii) lower price appreciation credits (dermatology and Salix), and (iii) the new fulfillment agreement with Walgreens (dermatology), refer to “Selected Financial Information” for further details. The decline in products sales was also due to lower volumes in dermatology (mainly attributable to Jublia®, Solodyn® and Ziana®) due to changes in the fulfillment model as well as driven by generic competition in the case of Ziana®. These factors were partially offset by higher volumes in Salix, driven by Xifaxan® and Uceris®; and
|
|
•
|
a negative impact from divestitures and discontinuations of $5 million and $16 million related to a number of individually immaterial products in the
third quarter and first nine months of 2016
, respectively.
|
|
•
|
the incremental product sales revenue of
$383 million
, in the aggregate, in the
first nine months of 2016
, as compared to the same period in the prior year, from all 2015 acquisitions, primarily from the acquisitions of Salix (mainly driven by Xifaxan®, as well as Uceris®, Apriso®, Relistor® and Zegerid® product sales) and certain assets of Dendreon Corporation ("Dendreon") (Provenge® product sales). The incremental product sales revenue in the
third quarter
of 2016 from all 2015 acquisitions was nominal. Of the
$383 million
increase in the
first nine months of 2016
, approximately 10% of such amount was attributable to price increases implemented subsequent to such 2015 acquisitions (primarily related to such price increases for Apriso®, Zegerid®, and Relistor®). Price appreciation credits for the
third quarter
and
first nine months of 2016
related to product sales from 2015 acquisitions were nominal due to lower and fewer price increases taken during those periods. Regarding the acquisition of Salix in April 2015 (the "Salix Acquisition"), wholesaler inventory levels were approximately 1.5 months at
September 30, 2016
(as compared to approximately 1.8 months at December 31, 2015), which is consistent with the overall inventory levels of approximately 1.5 months at our U.S. wholesalers for branded products (excluding generic products) at both
September 30, 2016
and December 31, 2015.
|
|
•
|
a decline in product sales revenue from our existing business (excluding effects from 2015 acquisitions, foreign currency and divestitures and discontinuations as described below) of $92 million and $258 million in the
third quarter
and
first nine months of 2016
, respectively, primarily as a result of continued decline in Neurology driven by generic competition (Xenazine®, Mestinon®, Ammonul® and Sodium Edecrin). To a lesser extent, the decline in product sales was due to lower average realized prices related to our Neurology products resulting from (i) higher managed care rebates, (ii) lower price appreciation credits, and (iii) higher group purchasing organization chargebacks on Nitropress® and Isuprel®; and
|
|
•
|
a negative impact from divestitures and discontinuations of $5 million and $19 million related to a number of individually immaterial products in the
third quarter
and
first nine months of 2016
, respectively.
|
|
•
|
the incremental product sales revenue of
$2 million
and
$113 million
, in the aggregate, in the
third quarter
and
first nine months of 2016
, respectively, as compared to the same periods in the prior year, from all 2015 acquisitions, primarily from the Salix Acquisition (Zegerid® authorized generic product sales) and the acquisition of certain assets of Marathon Pharmaceuticals, LLC ("Marathon") (Nitropress® and Isuprel® product sales). Of the
$113 million
increase in the
first nine months of 2016
, approximately 38% of such amount was attributable to price increases implemented subsequent to such 2015 acquisitions.
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
(restated) |
|
Change
|
||||||||||||||
|
($ in millions)
|
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
||||||||
|
The Bausch + Lomb / International segment
|
|
345.6
|
|
30
|
|
382.5
|
|
34
|
|
(36.9
|
)
|
(10
|
)
|
|
979.5
|
|
29
|
|
1,187.5
|
|
35
|
|
(208.0
|
)
|
(18
|
)
|
|
The Branded Rx segment
|
|
520.1
|
|
61
|
|
671.0
|
|
61
|
|
(150.9
|
)
|
(22
|
)
|
|
1,170.8
|
|
50
|
|
1,504.2
|
|
58
|
|
(333.4
|
)
|
(22
|
)
|
|
The U.S. Diversified Products segment
|
|
378.3
|
|
80
|
|
447.5
|
|
79
|
|
(69.2
|
)
|
(15
|
)
|
|
1,226.5
|
|
81
|
|
1,329.5
|
|
78
|
|
(103.0
|
)
|
(8
|
)
|
|
Total segment profit
|
|
1,244.0
|
|
50
|
|
1,501.0
|
|
54
|
|
(257.0
|
)
|
(17
|
)
|
|
3,376.8
|
|
46
|
|
4,021.2
|
|
52
|
|
(644.4
|
)
|
(16
|
)
|
|
•
|
a decline in contribution from product sales from our existing business (excluding effects from 2015 acquisitions, foreign currency and divestitures and discontinuations as described below) of $54 million and $173 million in the
third quarter and first nine months of 2016
, respectively. Refer to "—Revenues By Segment" above for additional details;
|
|
•
|
a negative foreign currency exchange impact on the existing business contribution of $4 million and $52 million in the
third quarter and first nine months of 2016
, respectively, due to the impact of
a strengthening of the U.S. dollar against certain currencies, including the Mexican peso, Egyptian pound and Chinese yuan, partially offset by the strengthening of the Japanese yen against the U.S. dollar
;
|
|
•
|
an increase in operating expenses of $6 million and $74 million in the
third quarter and first nine months of 2016
, respectively, primarily associated with the 2015 acquisitions within the segment (primarily the Amoun Acquisition); and
|
|
•
|
a decrease in contribution related to divestitures and discontinuations of $7 million and $17 million related to a number of individually immaterial products in the
third quarter and first nine months of 2016
, respectively.
|
|
•
|
an increase in contribution of $34 million and $110 million, mainly from all 2015 acquisitions, primarily the Amoun Acquisition, in the
third quarter and first nine months of 2016
, respectively, including expenses for acquisition accounting adjustments related to inventory of $5 million, in the aggregate, in the
first nine months of 2016
.
|
|
•
|
a decline in contribution from product sales from our existing business (excluding effects from 2015 acquisitions, foreign currency and divestitures and discontinuations as described below) of $234 million and $583 million in the
third quarter and first nine months of 2016
, respectively. Refer to "—Revenues By Segment" above for additional details;
|
|
•
|
an increase in operating expenses of $54 million in the
first nine months of 2016
primarily associated with the 2015 acquisitions within the segment (primarily Salix); and
|
|
•
|
a decrease in contribution related to divestitures and discontinuations of $4 million and $13 million related to a number of individually immaterial products in the
third quarter and first nine months of 2016
, respectively.
|
|
•
|
an increase in contribution of $285 million, in the aggregate, from all 2015 acquisitions in the
first nine months of 2016
, primarily from the Salix Acquisition (mainly driven by Xifaxan®, as well as Uceris®, Apriso®, Relistor® and Zegerid® product sales) and the acquisition of certain assets of Dendreon (Provenge® product sales), including expenses for acquisition accounting adjustments related to inventory of $33 million, in the aggregate, in the
first nine months of 2016
; and
|
|
•
|
a decrease in operating expenses of $64 million in the
third quarter
of 2016, primarily related to lower advertising and promotional expenses to support the dermatology business; and
|
|
•
|
a favorable impact of $25 million and $30 million related to the existing business acquisition accounting adjustments related to inventory in the
third quarter
and
first nine months of 2015
, respectively, that did not similarly occur in the
third quarter and first nine months of 2016
.
|
|
•
|
a decline in contribution from product sales from our existing business (excluding effects from 2015 acquisitions, foreign currency and divestitures and discontinuations as described below) of $73 million and $220 million in the
third quarter and first nine months of 2016
, respectively. Refer to "—Revenues By Segment" above for additional details; and
|
|
•
|
a decrease in contribution related to divestitures and discontinuations of $4 million and $15 million related to a number of individually immaterial products in the
third quarter and first nine months of 2016
, respectively.
|
|
•
|
an increase in contribution of $106 million, in the aggregate, from all 2015 acquisitions in the
first nine months of 2016
, primarily from the Salix Acquisition (Zegerid® authorized generic product sales) and the acquisition of certain assets of Marathon (Nitropress® and Isuprel® product sales); and
|
|
•
|
a favorable impact of $40 million related to the existing business acquisition accounting adjustments related to inventory in the
first nine months of 2015
that did not similarly occur in the
first nine months of 2016
.
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
(restated) |
|
Change
|
||||||||||||||
|
($ in millions)
|
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
|
$
|
%
(1)
|
|
$
|
%
(1)
|
|
$
|
%
|
||||||||
|
Cost of goods sold (exclusive of amortization and impairments of finite-lived intangible assets shown separately below)
|
|
649.2
|
|
26
|
|
634.6
|
|
23
|
|
14.6
|
|
2
|
|
|
1,916.7
|
|
26
|
|
1,812.4
|
|
24
|
|
104.3
|
|
6
|
|
|
Cost of other revenues
|
|
8.8
|
|
—
|
|
13.6
|
|
—
|
|
(4.8
|
)
|
(35
|
)
|
|
29.0
|
|
—
|
|
43.1
|
|
1
|
|
(14.1
|
)
|
(33
|
)
|
|
Selling, general and administrative
|
|
660.9
|
|
27
|
|
697.6
|
|
25
|
|
(36.7
|
)
|
(5
|
)
|
|
2,145.0
|
|
29
|
|
1,956.9
|
|
25
|
|
188.1
|
|
10
|
|
|
Research and development
|
|
100.8
|
|
4
|
|
101.6
|
|
4
|
|
(0.8
|
)
|
(1
|
)
|
|
328.2
|
|
5
|
|
238.5
|
|
3
|
|
89.7
|
|
38
|
|
|
Amortization and impairments of finite-lived intangible assets
|
|
807.1
|
|
33
|
|
679.2
|
|
24
|
|
127.9
|
|
19
|
|
|
2,389.2
|
|
33
|
|
1,629.8
|
|
21
|
|
759.4
|
|
47
|
|
|
Goodwill Impairment
|
|
1,049.0
|
|
42
|
|
—
|
|
—
|
|
1,049.0
|
|
100
|
|
|
1,049.0
|
|
14
|
|
—
|
|
—
|
|
1,049.0
|
|
100
|
|
|
Restructuring and integration costs
|
|
20.7
|
|
1
|
|
75.6
|
|
3
|
|
(54.9
|
)
|
(73
|
)
|
|
78.2
|
|
1
|
|
274.0
|
|
4
|
|
(195.8
|
)
|
(71
|
)
|
|
In-process research and development impairments and other charges
|
|
36.0
|
|
1
|
|
95.8
|
|
3
|
|
(59.8
|
)
|
(62
|
)
|
|
53.9
|
|
1
|
|
108.1
|
|
1
|
|
(54.2
|
)
|
(50
|
)
|
|
Acquisition-related costs
|
|
—
|
|
—
|
|
7.0
|
|
—
|
|
(7.0
|
)
|
(100
|
)
|
|
1.8
|
|
—
|
|
30.4
|
|
—
|
|
(28.6
|
)
|
(94
|
)
|
|
Acquisition-related contingent consideration
|
|
9.0
|
|
—
|
|
3.8
|
|
—
|
|
5.2
|
|
137
|
|
|
18.3
|
|
—
|
|
22.6
|
|
—
|
|
(4.3
|
)
|
(19
|
)
|
|
Other expense (income)
|
|
1.1
|
|
—
|
|
30.2
|
|
1
|
|
(29.1
|
)
|
(96
|
)
|
|
(21.6
|
)
|
—
|
|
213.2
|
|
3
|
|
(234.8
|
)
|
NM
|
|
|
Total operating expenses
|
|
3,342.6
|
|
135
|
|
2,339.0
|
|
84
|
|
1,003.6
|
|
43
|
|
|
7,987.7
|
|
110
|
|
6,329.0
|
|
82
|
|
1,658.7
|
|
26
|
|
|
•
|
an increase of $39 million and $221 million in the
third quarter and first nine months of 2016
, respectively, related to the 2015 acquisitions, primarily from the Salix Acquisition, the acquisition of certain assets of Dendreon, and the Amoun Acquisition; and
|
|
•
|
an increase of approximately $13 million related to costs associated with the voluntary product recall of PeroxiClear® 3% hydrogen peroxide cleaning and disinfecting solution in the U.S. and Canada during the
third quarter of 2016
.
|
|
•
|
decrease in cost of goods sold due to decline in sales volumes. Refer to "—Revenues By Segment" above for additional details; and
|
|
•
|
a decrease of $7 million and $19 million in the
third quarter and first nine months of 2016
, respectively, related to divestitures and discontinuations.
|
|
•
|
an unfavorable impact on margin from foreign currency exchange in the
third quarter and first nine months of 2016
;
|
|
•
|
lower dermatology revenues in the
third quarter and first nine months of 2016
due to changes in the fulfillment model;
|
|
•
|
lower neurology revenues in the
third quarter and first nine months of 2016
due to generic competition for Xenazine®, Mestinon®, Ammonul® and Sodium Edecrin® and lower average realized prices on Nitropress® and Isuprel® due to higher group purchasing organization chargebacks; and
|
|
•
|
an unfavorable impact from sales of Provenge® (acquired as part of the acquisition of certain assets of Dendreon in the first quarter of 2015) and the Amoun portfolio, which represent lower margin products as compared to our overall product portfolio.
|
|
•
|
a favorable impact from sales of certain products acquired in the Salix Acquisition in the
third quarter
of 2015 (such as Xifaxan®), which represent higher margin products as compared to our overall product portfolio.
|
|
•
|
lower expenses of approximately $73 million incurred by the U.S. operations, primarily due to lower advertising and promotional expenses for our dermatology business.
|
|
•
|
higher corporate expenditures of $28 million primarily driven by increased personnel costs resulting from changes in our senior management team, employee retention costs, as well as professional fees incurred related to our material weakness remediation efforts and other expenses;
|
|
•
|
higher expenses of $17 million related to 2015 acquisitions, including the Amoun Acquisition; and
|
|
•
|
professional fees of $18 million in the
third quarter of 2016
in connection with recent legal and governmental proceedings, investigations and information requests relating to, among other matters, our distribution, marketing, pricing, disclosure and accounting practices.
|
|
•
|
higher expenses of $190 million related to 2015 acquisitions, including the Salix Acquisition, the Amoun Acquisition and the acquisition of Sprout Pharmaceuticals, Inc. (the "Sprout Acquisition");
|
|
•
|
incremental expense of $37 million, in the aggregate, recognized in the first quarter of 2016, primarily related to termination benefits that our former Chief Executive Officer was entitled to as a result of his termination, consisting of (i) pro-rata vesting of performance-based restricted stock units ("RSUs") (no shares were issued on vesting of these performance-based RSUs because the associated market-based performance condition was not attained), (ii) a cash severance payment, and (iii) a pro-rata annual cash bonus. See Note 12 titled "SHARE-BASED COMPENSATION" of notes to the unaudited consolidated financial statements for detailed information; and
|
|
•
|
professional fees of $58 million incurred in the
first nine months of 2016
in connection with recent legal and governmental proceedings, investigations and information requests relating to, among other matters, our distribution, marketing, pricing, disclosure and accounting practices.
|
|
•
|
lower expenses of approximately $98 million incurred by the U.S. operations, primarily due to lower advertising and promotional expenses for our dermatology business; and
|
|
•
|
a favorable impact from foreign currency exchange of $35 million in the
first nine months of 2016
;
|
|
•
|
Latanoprostene bunod ophthalmic solution 0.024%, an intraocular pressure ("IOP") lowering single-agent eye drop dosed once daily for patients with open angle glaucoma or ocular hypertension. In September 2015, we announced that the FDA has accepted for review the New Drug Application ("NDA") for this product and set a PDUFA action date of July 21, 2016. On July 22, 2016, we announced that we had received a Complete Response Letter from the FDA regarding the NDA for this product. The concerns raised by the FDA in this letter pertain to a Current Good Manufacturing Practice (CGMP) inspection at B&L’s manufacturing facility in Tampa, Florida where some deficiencies were identified by the FDA, but do not identify any efficacy or safety concerns with respect to the NDA or additional clinical trials needed for the approval of the NDA. We are in the process of addressing the FDA concerns. We do not currently believe that there will be any material financial impact to the Company as a result of this matter;
|
|
•
|
Oral Relistor® is a tablet for the treatment of opioid-induced constipation in adult patients with chronic non-cancer pain. In September 2015, we announced that the FDA accepted for review the NDA for Oral Relistor®, and the FDA assigned a PDUFA action date of April 19, 2016. In April 2016, we announced that the FDA had extended the PDUFA action date for Oral Relistor® to July 19, 2016 to allow for a full review of our responses to certain information requests from the FDA. On July 19, 2016, the FDA approved Oral Relistor® for the treatment of opioid-induced constipation in adults with chronic non-cancer pain and we commenced sales of Relistor® tablets in the U.S. in the third quarter of 2016; and
|
|
•
|
Brodalumab is an IL-17 receptor monoclonal antibody for patients with moderate-to-severe plaque psoriasis and psoriatic arthritis. Regulatory submission in both the U.S. and the European Union occurred in November 2015. In January 2016, we announced that the FDA accepted for review the Biologics License Application ("BLA") for brodalumab, and the FDA assigned a PDUFA action date of November 16, 2016. On July 19, 2016, the Dermatologic and Ophthalmic Drug Advisory Committee appointed by the FDA voted by a margin of 18 to 0 for the approval of brodalumab injection, 210 mg, for adult patients with moderate-to-severe plaque psoriasis with conditions related to product labeling and post-marketing / risk management obligations. The FDA has extended the PDUFA action date, upon which it would announce its decision whether to approve this brodalumab injection, to February 16, 2017.
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||
|
($ in millions; Income (Expense))
|
|
$
|
|
$
|
|
$
|
%
|
|
$
|
|
$
|
|
$
|
%
|
||||||||
|
Interest income
|
|
2.5
|
|
|
0.7
|
|
|
1.8
|
|
257
|
|
|
5.5
|
|
|
2.5
|
|
|
3.0
|
|
120
|
|
|
Interest expense
|
|
(469.6
|
)
|
|
(420.2
|
)
|
|
(49.4
|
)
|
12
|
|
|
(1,368.7
|
)
|
|
(1,130.7
|
)
|
|
(238.0
|
)
|
21
|
|
|
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(20.0
|
)
|
|
20.0
|
|
(100
|
)
|
|
Foreign exchange (loss) gain and other
|
|
(2.3
|
)
|
|
(34.0
|
)
|
|
31.7
|
|
(93
|
)
|
|
4.6
|
|
|
(99.5
|
)
|
|
104.1
|
|
NM
|
|
|
Total non-operating expense
|
|
(469.4
|
)
|
|
(453.5
|
)
|
|
(15.9
|
)
|
4
|
|
|
(1,358.6
|
)
|
|
(1,247.7
|
)
|
|
(110.9
|
)
|
9
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
(restated) |
|
Change
|
||||||||
|
($ in millions)
|
|
$
|
|
$
|
|
$
|
%
|
|
$
|
|
$
|
|
$
|
%
|
||||||
|
(Recovery of) provision for income taxes
|
|
(113.3
|
)
|
|
(57.4
|
)
|
|
(55.9
|
)
|
97
|
|
(178.9
|
)
|
|
14.0
|
|
|
(192.9
|
)
|
NM
|
|
|
|
Nine Months Ended September 30,
|
|||||||||
|
|
|
2016
|
|
2015
|
|
Change
|
|||||
|
($ in millions)
|
|
$
|
|
$
|
|
$
|
%
|
||||
|
Net cash provided by operating activities
|
|
1,574.5
|
|
|
1,659.8
|
|
|
(85.3
|
)
|
(5
|
)
|
|
Net cash used in investing activities
|
|
(131.4
|
)
|
|
(14,041.9
|
)
|
|
13,910.5
|
|
(99
|
)
|
|
Net cash (used in) provided by financing activities
|
|
(1,388.3
|
)
|
|
13,501.5
|
|
|
(14,889.8
|
)
|
NM
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
6.4
|
|
|
(22.0
|
)
|
|
28.4
|
|
NM
|
|
|
Net increase in cash and cash equivalents
|
|
61.2
|
|
|
1,097.4
|
|
|
(1,036.2
|
)
|
(94
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
597.3
|
|
|
322.6
|
|
|
274.7
|
|
85
|
|
|
Cash and cash equivalents, end of period
|
|
658.5
|
|
|
1,420.0
|
|
|
(761.5
|
)
|
(54
|
)
|
|
•
|
lower operating cash flows generated from existing business which resulted from the decline in product sales experienced in the
first nine months of 2016
. Refer to "—Revenues By Segments" above for additional details; and
|
|
•
|
higher interest payments in the
first nine months of 2016
due to higher borrowings, primarily resulting from the issuances of debt in connection with the Salix Acquisition and an increase in interest rate applicable to our term loans and revolving credit facility under our senior secured credit facilities as a result of the April 2016 amendment and the August 2016 amendment.
|
|
•
|
the inclusion of cash flows in the
first nine months of 2016
from all 2015 acquisitions, including the Salix Acquisition and the Amoun Acquisition;
|
|
•
|
a decreased investment in working capital of
$698 million
in the
first nine months of 2016
, primarily related to (i) a true-up payment of $110 million, related to price appreciation credits, received in the first quarter of 2016 under a distribution service agreement with one of our wholesalers, (ii) the post-acquisition build up in accounts receivable in the
first nine months of 2015
related to the Salix Acquisition and the acquisition of certain assets of Marathon where minimal accounts receivable balances were acquired, which did not similarly occur in the
first nine months of 2016
, and (iii) the impact of changes related to timing of payments and receipts in the ordinary course of business;
|
|
•
|
payment of $168 million in the second quarter of 2015 for outstanding restricted stock that was accelerated in connection with the Salix Acquisition, which did not similarly occur in the
first nine months of 2016
;
|
|
•
|
payment of approximately $25 million (RUR 1.66 billion) in the third quarter of 2015 related to AntiGrippin® litigation; and
|
|
•
|
lower payments of $158 million related to restructuring and integration costs, primarily attributable to payments made in the
first nine months of 2015
in connection with the acquisitions of Salix, Dendreon, and B&L.
|
|
•
|
uses of cash of
$181 million
related to purchases of property, plant and equipment;
|
|
•
|
uses of cash of
$67 million
, in the aggregate, related to purchases of a business (net of cash acquired) and intangible assets; and
|
|
•
|
reduction of cash of
$30 million
which resulted from the deconsolidation of Philidor in the first quarter of 2016.
|
|
•
|
proceeds from sale of assets and businesses, net of costs to sell, of $
131 million
, in the aggregate, primarily related to the sale of a portfolio of neurology medical device products in the second quarter of 2016. See Note 5 titled "DIVESTITURES" of notes to unaudited consolidated financial statements for further details.
|
|
•
|
uses of cash of
$14.06 billion
, in the aggregate, related to purchases of businesses (net of cash acquired) and intangible assets, driven by the Salix Acquisition and the acquisition of certain assets of both Dendreon and Marathon in the
first nine months of 2015
; and
|
|
•
|
uses of cash of
$164 million
related to purchases of property, plant and equipment.
|
|
•
|
net proceeds of
$185 million
from net settlement of derivative contracts assumed as part of the Salix Acquisition.
|
|
•
|
repayments of
$1.92 billion
under our senior secured credit facilities in the
first nine months of 2016
;
|
|
•
|
payment of deferred consideration of $500 million in the first quarter of 2016 in connection with the Sprout Acquisition;
|
|
•
|
payments of contingent consideration of
$94 million
, in the aggregate, primarily related to the developmental milestone payment of $50 million in the third quarter of 2016 in connection with the FDA approval of Oral Relistor®; and
|
|
•
|
payments of $97 million, in the aggregate, in connection with the April 2016 amendment and the August 2016 amendment.
|
|
•
|
borrowings of
$1.22 billion
under our revolving credit facility in the first quarter of 2016.
|
|
•
|
aggregated net proceeds of approximately $16.49 billion related to debt and equity issuances in the
first nine months of 2015
which were utilized to fund the Salix Acquisition in the second quarter of 2015, consisting of (i) net proceeds of $10 billion related to the issuance of the senior notes in March 2015, (ii) net proceeds of $5.06 billion, in the aggregate, related to the issuance of incremental term loans under the Series A-4 Tranche A Term Loan Facility and the Series F Tranche B Term Loan Facility, and (iii) net proceeds of $1.43 billion related to the issuance of common stock in March 2015;
|
|
•
|
net proceeds of $992 million from the issuance of the 5.50% Senior Notes due 2023 in the first quarter of 2015; and
|
|
•
|
net proceeds of $250 million related to the issuance of incremental term loans under the Series A-3 Tranche A Term Loan Facility in the first quarter of 2015.
|
|
•
|
uses of cash of $3.12 billion related to the redemption of the convertible notes assumed in the Salix Acquisition in the
third quarter
of 2015;
|
|
•
|
net repayments of $165 million under our revolving credit facility in the
first nine months of 2015
; and
|
|
•
|
uses of cash of $500 million in connection with the redemption of the December 2018 Notes in the first quarter of 2015.
|
|
Rating Agency
|
|
Corporate Rating
|
|
Senior Secured Rating
|
|
Senior Unsecured Rating
|
|
Outlook
|
|
Moody’s
|
|
B3
|
|
Ba3
|
|
Caa1
|
|
Negative
|
|
Standard & Poor’s
|
|
B
|
|
BB-
|
|
B-
|
|
Stable
|
|
|
|
Payments Due by Period
|
|||||||||||||
|
|
|
Total
|
|
2016
|
|
2017 and 2018
|
|
2019 and 2020
|
|
Thereafter
|
|||||
|
($ in millions)
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
|
Long-term debt obligations, including interest
|
|
39,927.7
|
|
|
499.9
|
|
|
7,689.4
|
|
|
12,730.0
|
|
|
19,008.4
|
|
|
•
|
the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor), including pending investigations by the U.S. Attorney's Office for the District of Massachusetts, the U.S. Attorney's Office for the Southern District of New York and the State of North Carolina Department of Justice, the pending investigations by the U.S. Securities and Exchange Commission (the “SEC”) of the Company, pending investigations by the U.S. Senate Special Committee on Aging and the U.S. House Committee on Oversight and Government Reform, the request for documents and information received by the Company from the Autorité des marchés financiers (the “AMF”) (the Company’s principal securities regulator in Canada), the document subpoena from the New Jersey State Bureau of Securities, the pending investigation by the California Department of Insurance, a number of pending putative class action litigations in the U.S. and Canada and purported class actions under the federal RICO statute and other claims, investigations or proceedings that may be initiated or that may be asserted;
|
|
•
|
our ability to manage the transition to our new management team (including our new Chairman and Chief Executive Officer, new Chief Financial Officer, new General Counsel, and new Controller and Chief Accounting Officer), the
|
|
•
|
our ability to manage the transition to our new Board of Directors and the success of these individuals in their new roles as members of the Board of Directors of the Company;
|
|
•
|
the impact of the changes in and reorganizations to our business structure, including changes to our operating and reportable segments;
|
|
•
|
the effect of the misstatements identified in, and the resultant restatement of, certain of our previously issued financial statements and results; the material weaknesses in our internal control over financial reporting identified by the Company; and any claims, investigations or proceedings (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity or reputational harm that has arisen or may arise as a result;
|
|
•
|
the effectiveness of the remediation measures and actions already implemented or currently being implemented to remediate the material weaknesses in our internal control over financial reporting identified by the Company, our deficient control environment and the contributing factors leading to the misstatement of our results and the impact such measures may have on the Company and our businesses;
|
|
•
|
potential additional litigation and regulatory investigations (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity and reputational harm on our Company, products and business that may result from the recent public scrutiny of our distribution, marketing, pricing, disclosure and accounting practices and from our former relationship with Philidor, including any claims, proceedings, investigations and liabilities we may face as a result of any alleged wrongdoing by Philidor;
|
|
•
|
the current scrutiny of our business practices including with respect to pricing (including the investigations by the U.S. Attorney's Offices for the District of Massachusetts and the Southern District of New York, the U.S. Senate Special Committee on Aging, the U.S. House Committee on Oversight and Government Reform and the State of North Carolina Department of Justice) and any pricing controls or price adjustments that may be sought or imposed (or that we may elect to implement) on our products as a result thereof (such as the decision of the Company to take no further price increases on our Nitropress® and Isuprel® products and to implement an enhanced rebate program for such products or the decision to take no pricing adjustments on our dermatology and ophthalmology products in 2016);
|
|
•
|
ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the FDA, and the results thereof, such as the recent inspections by the FDA of the Company's facilities in Tampa, Florida and Rochester, New York, and the results thereof, and the recently announced delay by the FDA of the PDUFA date upon which it would announce its decision whether to approve our new drug application for our brodalumab product;
|
|
•
|
any default under the terms of our senior notes indentures or Credit Agreement and our ability, if any, to cure or obtain waivers of such default;
|
|
•
|
any delay in the filing of any subsequent financial statements or other filings and any default under the terms of our senior notes indentures or Credit Agreement as a result of such delays;
|
|
•
|
our substantial debt (and potential additional future indebtedness) and current and future debt service obligations and their impact on our financial condition, cash flows and results of operations;
|
|
•
|
our ability to meet the financial and other covenants contained in our Credit Agreement, senior note indentures and other current or future debt agreements and the limitations, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, including the restrictions imposed by the April 2016 amendment to our Credit Agreement that restrict us from, among other things, making acquisitions over an aggregate threshold (subject to certain exceptions) and from incurring debt to finance such acquisitions, until we achieve a specified leverage ratio;
|
|
•
|
our ability to service and repay our existing or any future debt, including our ability to reduce our outstanding debt levels in accordance with our stated intention;
|
|
•
|
any further downgrade by rating agencies in our credit ratings, which may impact, among other things, our ability to raise debt and the cost of capital for additional debt issuances;
|
|
•
|
our ability to raise additional funds, as needed, in light of our current and projected levels of operations, general economic conditions (including capital market conditions) and any restrictions or limitations imposed by the financial and other covenants of our debt agreements with respect to incurring additional debt;
|
|
•
|
any further reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2016 or beyond, which could lead to, among other things, (i) a failure to meet the financial and/or other covenants contained in our Credit Agreement and/or senior note indentures, and/or (ii) impairment in the goodwill associated with certain of our reporting units (including our Salix reporting unit) or impairment charges related to certain of our products (in particular, our Addyi® product) or other intangible assets, which impairments could be material;
|
|
•
|
changes in the assumptions used in connection with our impairment analyses or assessments, which would lead to a change in such impairment analyses and assessments and which could result in an impairment in the goodwill associated with any of our reporting units (such as the Salix reporting unit of our Branded Rx operating segment) or impairment charges related to certain of our products (in particular, our Addyi® product) or other intangible assets;
|
|
•
|
the proposed or potential divestiture of certain of our assets or businesses and our ability to successfully complete any future divestitures on commercially reasonable terms and on a timely basis, or at all, and the impact of any such future divestitures on our Company, including the reduction in the size or scope of our business or market share, loss of revenue, any loss on sale, including any resultant write-downs of goodwill, or any adverse tax consequences suffered as a result of such divestitures;
|
|
•
|
our shift in focus to minimal business development activity through acquisitions in 2016 and the foreseeable future as we focus on reducing our outstanding debt levels and as a result of the restrictions imposed by our Credit Agreement, including as contained in the April 2016 amendment that restrict us from, among other things, making acquisitions over an aggregate threshold (subject to certain exceptions) and from incurring debt to finance such acquisitions, until we achieve a specified leverage ratio;
|
|
•
|
the uncertainties associated with the acquisition and launch of new products (in particular, our Addyi® product launched in October 2015), including, but not limited to, our ability to provide the time, resources, expertise and costs required for the commercial launch of new products, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing, which could lead to material impairment charges;
|
|
•
|
our ability to retain, motivate and recruit executives and other key employees, including subsequent to retention payments being paid out;
|
|
•
|
our ability to implement effective succession planning for our executives and key employees;
|
|
•
|
our implemented pricing actions, including the decision of the Company to take no further price increases on, and to implement an enhanced rebate program with respect to, our Nitropress® and Isuprel® products and to take no pricing adjustments in 2016 on its dermatology and ophthalmology products, and any future pricing actions we may take following review by our recently established Patient Access and Pricing Committee (which will be responsible for pricing of our drugs), as well as any proposed or future legislative price controls or price regulation, including mandated price reductions, that may impact our products;
|
|
•
|
the challenges and difficulties associated with managing a large complex business, which has grown rapidly over the last few years;
|
|
•
|
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 effectively operate, stabilize and grow our businesses in light of the challenges that the Company currently faces, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our pricing, distribution and other practices, reputational harm and limitations on the way we conduct business imposed by the covenants in our Credit Agreement senior note indentures and the agreements governing our other indebtedness;
|
|
•
|
the success of our recent and future fulfillment and other arrangements with Walgreens, including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, pharmacy benefit managers ("PBMs"), third party payors and governmental agencies), the continued compliance of such arrangements with applicable laws, whether the anticipated increased volume across all distribution channels resulting from such
|
|
•
|
the extent to which our products are reimbursed by government authorities, PBMs and other third party payors; the impact our distribution, pricing and other practices (including as it relates to our former relationship with Philidor, any alleged wrongdoing by Philidor and our current relationship with Walgreens) may have on the decisions of such government authorities, PBMs and other third party payors to reimburse our products; and the impact of obtaining or maintaining such reimbursement on the price and sales 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 and sales of our products in connection therewith;
|
|
•
|
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, including the impact on such matters of the proposals published by the Organization for Economic Co-operation and Development ("OECD") respecting base erosion and profit shifting ("BEPS");
|
|
•
|
the actions of our third party partners or service providers of research, development, manufacturing, marketing, distribution or other services, including their compliance with applicable laws and contracts, which actions may be beyond our control or influence, and the impact of such actions on our Company, including the impact to the Company of our former relationship with Philidor and any alleged legal or contractual non-compliance by Philidor;
|
|
•
|
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 such countries and the need to comply with applicable anti-bribery and economic sanctions laws and regulations);
|
|
•
|
adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in the countries in which we do business (such as the current or recent instability in Brazil, Russia, Ukraine, Argentina, Egypt, certain other countries in Africa and the Middle East, the devaluation of the Egyptian pound, and the adverse economic impact and related uncertainty caused by the United Kingdom's decision to leave the European Union (Brexit));
|
|
•
|
our ability to reduce or maintain wholesaler inventory levels in certain countries such as Russia and Poland, in-line with our targeted levels for such markets;
|
|
•
|
our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property;
|
|
•
|
the introduction of generic, biosimilar or other competitors of our branded products and other products, including the introduction of products that compete against our products that do not have patent or data exclusivity rights;
|
|
•
|
once the additional limitations in our Credit Agreement (including as contained in the April 2016 amendment) restricting our ability to make acquisitions are no longer applicable, and to the extent we elect to resume business development activities through acquisitions, our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis;
|
|
•
|
factors relating to the acquisition and integration of the companies, businesses and products that have been acquired by the Company and that may in the future be acquired by the Company, once the additional limitations in our Credit Agreement (including as contained in the April 2016 amendment) restricting our ability to make acquisitions are no longer applicable and to the extent we elect to resume business development activities through acquisitions, 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, the risks associated with the acquired companies, businesses and products and our ability to achieve the anticipated benefits and synergies from such acquisitions and integrations, including as a result of cost-rationalization and integration initiatives. Factors impacting the achievement of anticipated benefits and synergies 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;
|
|
•
|
the expense, timing and outcome of pending or future legal and governmental proceedings, arbitrations, investigations, subpoenas, tax and other regulatory audits, reviews and regulatory proceedings against us or relating to us and settlements thereof;
|
|
•
|
our ability to obtain components, raw materials or finished products supplied by third parties (some of which may be single-sourced) and other manufacturing and related supply difficulties, interruptions and delays;
|
|
•
|
the disruption of delivery of our products and the routine flow of manufactured goods;
|
|
•
|
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;
|
|
•
|
interest rate risks associated with our floating rate debt borrowings;
|
|
•
|
our ability to effectively distribute our products and the effectiveness and success of our distribution arrangements, including the impact of our recent arrangements with Walgreens;
|
|
•
|
our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;
|
|
•
|
the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits, product liability claims and damages and/or recalls or withdrawals of products from the market;
|
|
•
|
the mandatory or voluntary recall or withdrawal of our products from the market (such as the recent voluntary recall of our PeroxiClear® product in the U.S. and Canada) and the costs associated therewith;
|
|
•
|
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 with respect to approvals by the FDA, Health Canada and similar agencies in other countries, 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 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 (such as our Addyi® product launched in October 2015), 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;
|
|
•
|
the seasonality of sales of certain of our products;
|
|
•
|
declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;
|
|
•
|
compliance by the Company or our third party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to pricing), worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide economic sanctions and/or export laws, 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, including with respect to recent government inquiries on pricing;
|
|
•
|
the impact of any changes in or reforms to the legislation, laws, rules, regulation and guidance that apply to the Company and its business and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to the Company or its businesses or products;
|
|
•
|
the impact of the current United States elections, including any healthcare reforms arising therefrom, including with respect to pricing controls;
|
|
•
|
potential ramifications, including legal sanctions and/or financial penalties, relating to the restatement by Salix of its historical financial results prior to our acquisition of Salix in April 2015;
|
|
•
|
illegal distribution or sale of counterfeit versions of our products;
|
|
•
|
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”) (including in our 2015 Form 10-K), as well as our ability to anticipate and manage the risks associated with the foregoing.
|
|
•
|
During the first quarter of 2016, the Company placed its former Corporate Controller on administrative leave and, subsequently, identified and hired a new Corporate Controller, who commenced employment with the Company on May 31, 2016;
|
|
•
|
The Board requested that the Company’s former Chief Financial Officer resign from the Board and the former Chief Financial Officer did not stand for re-election to the Board at the Company’s annual general shareholder meeting, held in June 2016;
|
|
•
|
In the second quarter of 2016, the Company identified the relevant members of senior management whose compensation was impacted, determined the impact to such individual’s compensation and informed each individual of this decision;
|
|
•
|
In the second quarter of 2016, the Company engaged a third party to conduct a tone at the top and enterprise risk review and make appropriate recommendations to ensure that the Company’s tone at the top is appropriate, demonstrates a commitment to integrity and ethical values and supports a robust internal control environment that mitigates risk of inappropriate behavior, accounting errors or irregularities, and promotes appropriate disclosures. This risk review commenced in the second quarter of 2016 and was completed in the third quarter of 2016. The Company is now in the process of addressing the risks identified as part of this review;
|
|
•
|
In the second quarter of 2016, the Company engaged a third party to develop and provide training programs with respect to proper revenue recognition accounting and the Company’s internal control over financial reporting framework for
|
|
•
|
With respect to the fourth quarter of 2015 and the first, second and third quarters of 2016, members of the ARC conducted quarterly private sessions with the Company’s business unit leaders and their Vice Presidents in the Finance and Accounting areas to ensure a candid and timely dialogue regarding accounting and financial reporting matters, including but not limited to significant unusual transactions and the business purposes thereof, significant changes in business terms and/or conditions, tone at the top and the level of senior management pressure to meet key performance measures. Quarterly sessions are planned for subsequent quarters; and
|
|
•
|
Commencing at the end of the first quarter of 2016 and continuing in the second and third quarters of 2016, certain independent Board members began to attend certain of the Company’s planning and forecasting telephone conferences to monitor, and, if necessary, address any tone at the top, management override, corporate governance, internal control, or accounting and financial reporting issues. Future attendance is scheduled for the fourth quarter of 2016.
|
|
•
|
With respect to the remediation relating to non-standard revenue transactions, the Company has developed a remediation plan, which identifies the necessary remediation measures (including enhancements to policies, procedures and internal controls), and, commencing in the third quarter of 2016, has begun to implement this plan. For further information on these remediation measures, see “Remediation of Material Weaknesses” in Item 9A of our 2015 Form 10-K.
|
|
10.1
|
Employment Agreement, dated as of August 17, 2016, between Valeant Pharmaceuticals International, Inc. and Paul S. Herendeen, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 23, 2016, which is incorporated by reference herein.†
|
|
|
10.2
|
|
Amendment No. 13 to the Third Amended and Restated Credit and Guaranty Agreement, dated as of August 23, 2016, by and among Valeant Pharmaceuticals International, Inc., the guarantors party thereto and Barclays Bank PLC, as administrative agent and on behalf of the requisite lenders and as Amendment No. 13 arranger, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 23, 2016, which is incorporated by reference herein.
|
|
31.1*
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2*
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1*
|
Certificate of the Chief Executive Officer of Valeant Pharmaceuticals International, Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2*
|
Certificate of the Chief Financial Officer of Valeant Pharmaceuticals International, Inc. 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
|
|
|
†
|
Management contract or compensatory plan or arrangement.
|
|
|
Valeant Pharmaceuticals International, Inc.
(Registrant) |
|
|
|
|
Date: November 9, 2016
|
/s/ JOSEPH C. PAPA
|
|
|
Joseph C. Papa
Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
|
|
|
Date: November 9, 2016
|
/s/ PAUL S. HERENDEEN
|
|
|
Paul S. Herendeen
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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Exhibit
Number
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Exhibit Description
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10.1
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Employment Agreement, dated as of August 17, 2016, between Valeant Pharmaceuticals International, Inc. and Paul S. Herendeen, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 23, 2016, which is incorporated by reference herein.†
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10.2
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Amendment No. 13 to the Third Amended and Restated Credit and Guaranty Agreement, dated as of August 23, 2016, by and among Valeant Pharmaceuticals International, Inc., the guarantors party thereto and Barclays Bank PLC, as administrative agent and on behalf of the requisite lenders and as Amendment No. 13 arranger, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 23, 2016, which is incorporated by reference herein.
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31.1*
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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1*
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Certificate of the Chief Executive Officer of Valeant Pharmaceuticals International, Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2*
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Certificate of the Chief Financial Officer of Valeant Pharmaceuticals International, Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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*101.INS
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XBRL Instance Document
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*101.SCH
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XBRL Taxonomy Extension Schema Document
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*101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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*101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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*101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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*101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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†
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Management contract or compensatory plan or arrangement.
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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 |
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| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
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No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
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