`
`Valeant Q2 2015
`
`10Q 1 valeantq22015.htm 10Q
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`FORM 10Q
` QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934
`
`For the Quarterly Period Ended June 30, 2015
`OR
` TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934
`
`For the transition period from to
`
`Commission File Number: 00114956
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`(Exact name of registrant as specified in its charter)
`
`British Columbia, Canada
`(State or other jurisdiction of
`incorporation or organization)
`2150 St. Elzéar Blvd. West, Laval, Quebec
`(Address of principal executive offices)
`
`980448205
`(I.R.S. Employer Identification No.)
`
`H7L 4A8
`(Zip Code)
`
`(514) 7446792
`(Registrant’s telephone number, including area code)
`
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
`the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
`required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
`
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
`any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST during the
`preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
`
`Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer,
`or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting
`company” in Rule 12b2 of the Exchange Act.
`
`Large accelerated filer
`
`Accelerated filer
`
`Nonaccelerated filer
`(Do not check if a smaller
`reporting company)
`
`Smaller reporting company
`
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Exchange Act).
`Yes No
`
`Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest
`practicable date.
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`Valeant Q2 2015
`Common shares, no par value — 342,788,885 shares outstanding as of July 22, 2015.
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`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`FORM 10Q
`FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2015
`
`INDEX
`
`Part I.
`Item 1.
`
`
`
`
`
`
`Financial Information
`Financial Statements (unaudited)
`Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014
`Consolidated Statements of (Loss) Income for the three months and six months ended June 30, 2015
`and 2014
`Consolidated Statements of Comprehensive (Loss) Income for the three months and six months ended
`June 30, 2015 and 2014
`Consolidated Statements of Cash Flows for the three months and six months ended June 30, 2015 and
`2014
`
`Notes to the Consolidated Financial Statements
`
`Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
`Item 3. Quantitative and Qualitative Disclosures About Market Risk
`Item 4. Controls and Procedures
`Part II. Other Information
`Item 1. Legal Proceedings
`Item 1A. Risk Factors
`Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
`Item 3. Defaults Upon Senior Securities
`Item 4. Mine Safety Disclosures
`Item 5. Other Information
`Item 6. Exhibits
`Signatures
`
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`5
`36
`52
`52
`
`53
`53
`53
`53
`53
`53
`53
`56
`
`i
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`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`FORM 10Q
`FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2015
`
`Introductory Note
`
`Except where the context otherwise requires, all references in this Quarterly Report on Form 10Q (this “Form 10Q”)
`to the “Company”, “we”, “us”, “our” or similar words or phrases are to Valeant Pharmaceuticals International, Inc. and its
`subsidiaries.
`
`In this Form 10Q, references to “$” are to United States (“U.S.”) dollars, references to “€” are to Euros, and references
`to RUR are to Russian rubles.
`
`ForwardLooking Statements
`
`Caution regarding forwardlooking information and statements and “SafeHarbor” statements under the U.S. Private
`Securities Litigation Reform Act of 1995:
`
`To the extent any statements made in this Form 10Q contain information that is not historical, these statements are
`forwardlooking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
`of the Securities Exchange Act of 1934, as amended, and may be forwardlooking information within the meaning defined
`under applicable Canadian securities legislation (collectively, “forwardlooking statements”).
`
`These forwardlooking statements relate to, among other things: the expected benefits of our acquisitions and other
`transactions (including the acquisition of Salix Pharmaceuticals, Ltd. (“Salix”)), such as cost savings, operating synergies
`and growth potential of the Company; our business strategy, business plans and prospects, product pipeline, prospective
`products or product approvals, future performance or results of current and anticipated products; exposure to foreign
`currency exchange rate changes and interest rate changes; the outcome of contingencies, such as certain litigation,
`investigations and regulatory proceedings; general market conditions; and our expectations regarding our financial
`performance, including revenues, expenses, gross margins, liquidity and income taxes.
`
`Forwardlooking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”,
`“intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “should”, “target”, “potential”,
`“opportunity”, “tentative”, “positioning”, “designed”, “create”, “predict”, “project”, “forecast”, “seek”, “ongoing”,
`“increase”, or “upside” and variations or other similar expressions. In addition, any statements that refer to expectations,
`projections or other characterizations of future events or circumstances are forwardlooking statements. These forward
`looking statements may not be appropriate for other purposes. Although we have indicated above certain of these
`statements set out herein, all of the statements in this Form 10Q that contain forwardlooking statements are qualified by
`these cautionary statements. These statements are based upon the current expectations and beliefs of management.
`Although we believe that the expectations reflected in such forwardlooking statements are reasonable, such statements
`involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or
`assumptions are applied in making forwardlooking statements, including, but not limited to, factors and assumptions
`regarding the items outlined above. Actual results may differ materially from those expressed or implied in such statements.
`Important factors that could cause actual results to differ materially from these expectations include, among other things,
`the following:
`
`•
`
`•
`
`the challenges and difficulties associated with managing the rapid growth of our Company and a large complex
`business;
`
`our ability to retain, motivate and recruit executives and other key employees;
`
`the introduction of products that compete against our products that do not have patent or data exclusivity rights;
`•
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`•
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`•
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`•
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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;
`
`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 acquired by the
`Company, 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,
`
`ii
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`equipment and other assets, and the achievement of the anticipated benefits from such integrations, as well as risks
`associated with the acquired companies, businesses and products;
`
`factors relating to our ability to achieve all of the estimated synergies from our acquisitions as a result of cost
`rationalization and integration initiatives. These factors may include greater than expected operating costs, the
`difficulty in eliminating certain duplicative costs, facilities and functions, and the outcome of many operational
`and strategic decisions, some of which have not yet been made;
`
`factors relating to our recent acquisition of Salix, including the impact of substantial additional debt on our
`financial condition and results of operations; our ability to effectively and efficiently integrate the operations of
`the Company and Salix; our ability to achieve the estimated synergies from this transaction; the challenges
`associated with entering into Salix's gastrointestinal (GI) business, which is a new business for our Company; our
`ability to further reduce wholesaler inventory levels of certain of Salix's products and the timing of such reduction;
`and, once integrated, the effects of such business combination on our future financial condition, operating results,
`strategy and plans;
`
`our ability to secure and maintain third party research, development, manufacturing, marketing or distribution
`arrangements;
`
`our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the
`business profits of certain of our subsidiaries;
`
`our substantial debt and debt service obligations and their impact on our financial condition and results of
`operations;
`
`our future cash flow, our ability to service and repay our existing debt, our ability to raise additional funds, if
`needed, and any restrictions that are or may be imposed as a result of our current and future indebtedness, in light
`of our current and projected levels of operations, acquisition activity and general economic conditions;
`
`any downgrade by rating agencies in our corporate credit ratings, which may impact, among other things, our
`ability to raise additional debt capital and implement elements of our growth strategy;
`
`interest rate risks associated with our floating rate debt borrowings;
`
`the risks associated with the international scope of our operations, including our presence in emerging markets
`and the challenges we face when entering new geographic markets (including the challenges created by new and
`different regulatory regimes in such countries);
`
`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 recent instability in Russia, Ukraine and the Middle East);
`
`economic factors over which the Company has no control, including changes in inflation, interest rates, foreign
`currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;
`
`the introduction of generic competitors of our branded products;
`
`our ability to obtain and maintain sufficient intellectual property rights over our products and defend against
`challenges to such intellectual property;
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`the expense, timing and outcome of legal proceedings, arbitrations, investigations, tax and other regulatory audits,
`and regulatory proceedings and settlements thereof (including the matters assumed as part of our acquisition of
`Salix);
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`Salix);
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`Valeant Q2 2015
`
`•
`
`•
`
`•
`
`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 withdrawals of products from the market;
`
`the availability of and our ability to obtain and maintain adequate insurance coverage and/or our ability to cover
`or insure against the total amount of the claims and liabilities we face, whether through third party insurance or
`selfinsurance;
`
`the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment,
`including with respect to approvals by the U.S. Food and Drug Administration (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;
`
`iii
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`•
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`•
`
`•
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`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including
`periodic audits by the FDA, and the results thereof;
`
`the availability and extent to which our products are reimbursed by government authorities and other third party
`payors, as well as the impact of obtaining or maintaining such reimbursement on the price of our products;
`
`the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the
`impact on the price of our products in connection therewith;
`
`the impact of price control restrictions on our products, including the risk of mandated price reductions;
`
`the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that
`adversely impact the timely commercialization of our pipeline products, as well as factors impacting the
`commercial success of our currently marketed products, which could lead to material impairment charges;
`
`the results of management reviews of our research and development portfolio, conducted periodically and in
`connection with certain acquisitions, the decisions from which could result in terminations of specific projects
`which, in turn, could lead to material impairment charges;
`
`negative publicity or reputational harm to our products and business;
`
`the uncertainties associated with the acquisition and launch of new products, including, but not limited to, the
`acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing;
`
`our ability to obtain components, raw materials or finished products supplied by third parties and other
`manufacturing and related supply difficulties, interruptions and delays;
`
`the disruption of delivery of our products and the routine flow of manufactured goods;
`
`the seasonality of sales of certain of our products;
`
`declines in the pricing and sales volume of certain of our products that are distributed or marketed by third
`parties, over which we have no or limited control;
`
`compliance with, or the failure to comply with, health care “fraud and abuse” laws and other extensive regulation
`of our marketing, promotional and pricing practices, worldwide antibribery laws (including the U.S. Foreign
`Corrupt Practices Act), worldwide environmental laws and regulation and privacy and security regulations;
`
`the impacts of the Patient Protection and Affordable Care Act (as amended) and other legislative and regulatory
`healthcare reforms in the countries in which we operate;
`
`potential ramifications, including possible financial penalties, relating to Salix's restatement of its historical
`financial results and our ability to address historic weaknesses in Salix's internal control over financial reporting;
`
`interruptions, breakdowns or breaches in our information technology systems; and
`
`other risks detailed from time to time in our filings with the U.S. Securities and Exchange Commission (the “SEC”)
`and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks
`associated with the foregoing.
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`Additional information about these factors and about the material factors or assumptions underlying such forward
`looking statements may be found under Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10K for the year
`ended December 31, 2014, under Item 1A. "Risk Factors" of Part II of the Company’s Quarterly Report on Form 10Q for
`the quarter ended March 31, 2015, and in the Company's other filings with the SEC and CSA. When relying on our forward
`looking statements to make decisions with respect to the Company, investors and others should carefully consider the
`foregoing factors and other uncertainties and potential events. These forwardlooking statements speak only as of the date
`made. We undertake no obligation to update or revise any of these forwardlooking statements to reflect events or
`circumstances after the date of this Form 10Q or to reflect actual outcomes, except as required by law. We caution that, as
`it is not possible to predict or identify all relevant factors that may impact forwardlooking statements, the foregoing list of
`important factors that may affect future results is not exhaustive and should not be considered a complete statement of all
`potential risks and uncertainties.
`
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`Item 1. Financial Statements
`
`PART I. FINANCIAL INFORMATION
`
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`CONSOLIDATED BALANCE SHEETS
`(All dollar amounts expressed in millions of U.S. dollars)
`(Unaudited)
`
`
`Assets
`Current assets:
`Cash and cash equivalents
`Trade receivables, net
`Inventories, net
`Prepaid expenses and other current assets
`Deferred tax assets, net
`Total current assets
`Property, plant and equipment, net
`Intangible assets, net
`Goodwill
`Deferred tax assets, net
`Other longterm assets, net
`Total assets
`
`
`Liabilities
`Current liabilities:
`Accounts payable
`Accrued and other current liabilities
`Acquisitionrelated contingent consideration
`Current portion of longterm debt
`Deferred tax liabilities, net
`Total current liabilities
`Acquisitionrelated contingent consideration
`Longterm debt
`Pension and other benefit liabilities
`Liabilities for uncertain tax positions
`Deferred tax liabilities, net
`
`Other longterm liabilities
`Total liabilities
`Commitments and contingencies (Note 15)
`Equity
`Common shares, no par value, unlimited shares authorized, 342,769,031 and
` 334,402,964 issued and outstanding at June 30, 2015 and December 31, 2014, respectively
`Additional paidin capital
`
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`
`
`
`$
`
`$
`
`
`
`$
`
`
`
`
`As of
`June 30,
`2015
`
`As of
`December 31,
` 2014
`
`
`
`
`958.0 $
`2,371.0
`1,229.5
`1,075.3
`711.4
`6,345.2
`1,359.9
`23,149.7
`17,233.1
`88.3
`167.0
`48,343.2 $
`
`
`
`415.8 $
`3,054.7
`191.4
`590.9
`38.2
`4,291.0
`514.4
`30,290.2
`226.4
`101.2
`6,152.8
`208.8
`41,784.8
`
`
`
`9,880.8
`234.0
`
`322.6
`2,075.8
`950.6
`650.8
`193.3
`4,193.1
`1,310.5
`11,255.9
`9,346.4
`54.0
`167.4
`26,327.3
`
`398.0
`2,179.4
`141.8
`0.9
`10.7
`2,730.8
`167.0
`15,228.0
`239.8
`102.6
`2,227.5
`
`197.1
`20,892.8
`
`8,349.2
`243.9
`
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`Accumulated deficit
`
`Valeant Q2 2015
`
`Accumulated other comprehensive loss
`Total Valeant Pharmaceuticals International, Inc. shareholders’ equity
`Noncontrolling interest
`Total equity
`Total liabilities and equity
`
`
`
`(2,387.9)
`(1,291.5)
`6,435.4
`123.0
`6,558.4
`48,343.2 $
`
`(2,365.0)
`
`(915.9)
`5,312.2
`122.3
`5,434.5
`26,327.3
`
`$
`
`The accompanying notes are an integral part of these consolidated financial statements.
`
` 1
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`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`CONSOLIDATED STATEMENTS OF (LOSS) INCOME
`(All dollar amounts expressed in millions of U.S. dollars, except per share data)
`(Unaudited)
`
`
`
`Revenues
`Product sales
`Other revenues
`
`Expenses
`Cost of goods sold (exclusive of amortization and impairments of
`finitelived intangible assets shown separately below)
`Cost of other revenues
`Selling, general and administrative
`Research and development
`Amortization and impairments of finitelived intangible assets
`Restructuring, integration and other costs
`Inprocess research and development impairments and other charges
`Acquisitionrelated costs
`Acquisitionrelated contingent consideration
`Other expense (income)
`
`Operating income
`Interest income
`Interest expense
`Loss on extinguishment of debt
`Foreign exchange and other
`Gain on investments, net
`(Loss) income before (recovery of) provision for income taxes
`(Recovery of) provision for income taxes
`Net (loss) income
`Less: Net income (loss) attributable to noncontrolling interest
`Net (loss) income attributable to Valeant Pharmaceuticals International, Inc.
`
`(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:
`Basic
`Diluted
`
`
`Weightedaverage common shares (in millions)
`Basic
`Diluted
`
`
`$
`
`
`
`
`$
`
`
`$
`$
`
`
`
`2015
`
`Three Months Ended
`June 30,
`
`
`2,695.0 $
`37.4
`2,732.4
`
`
`669.9
`15.2
`685.5
`81.1
`585.4
`143.4
`12.3
`9.5
`11.7
`176.9
`2,390.9
`341.5
`0.9
`(412.7)
`—
`5.6
`—
`(64.7)
`(13.1)
`(51.6)
`1.4
`(53.0) $
`
`
`(0.15) $
`(0.15) $
`
`
`344.4
`344.4
`
`2014
`
`
`
`
`1,994.1 $
`47.0
`2,041.1
`
`
`569.6
`16.0
`515.7
`66.5
`365.6
`142.1
`8.4
`0.6
`1.9
`(0.4)
`1,686.0
`355.1
`1.2
`(241.2)
`—
`3.4
`2.5
`121.0
`(1.0)
`122.0
`(3.8)
`125.8 $
`
`
`0.38 $
`0.37 $
`
`
`335.3
`341.3
`
`2015
`
`2014
`
`Six Months Ended
`June 30,
`
`
`4,841.9 $
`81.4
`4,923.3
`
`
`1,230.3
`29.5
`1,259.3
`136.9
`950.6
`198.4
`12.3
`19.3
`18.8
`183.0
`4,038.4
`884.9
`1.8
`(710.5)
`(20.0)
`(65.5)
`—
`90.7
`67.8
`22.9
`2.2
`20.7 $
`
`
`0.06 $
`0.06 $
`
`
`340.5
`347.1
`
`3,845.2
`82.1
`3,927.3
`
`1,073.7
`30.3
`997.7
`127.8
`720.8
`275.7
`20.4
`2.1
`10.8
`(43.7)
`3,215.6
`711.7
`3.0
`(487.7)
`(93.7)
`(10.0)
`2.5
`125.8
`24.1
`101.7
`(1.5)
`103.2
`
`0.31
`0.30
`
`335.1
`341.4
`
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`The accompanying notes are an integral part of these consolidated financial statements.
`
`2
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`
`Valeant Q2 2015
`
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
`(All dollar amounts expressed in millions of U.S. dollars)
`(Unaudited)
`
`$
`
`
`
`
`Net (loss) income
`Other comprehensive income (loss)
`Foreign currency translation adjustment
`Unrealized gain on equity method investment, net of tax
`Net unrealized holding gain on availableforsale equity securities:
`Arising in period
`Pension and postretirement benefit plan adjustments
`Other comprehensive income (loss)
`Comprehensive (loss) income
`Less: Comprehensive income (loss) attributable to noncontrolling interest
`Comprehensive (loss) income attributable to Valeant Pharmaceuticals International, Inc. $
`
`
`
`Three Months Ended
`June 30,
`
`2015
`(51.6) $
`
`36.4
`—
`
`—
`(0.5)
`35.9
`(15.7)
`1.2
`(16.9) $
`
`
`
`2014
`122.0 $
`
`13.8
`18.5
`
`2.7
`(0.6)
`34.4
`156.4
`(4.7)
`161.1 $
`
`2014
`101.7
`
`Six Months Ended
`June 30,
`
`2015
`22.9 $
`
`(375.1)
`—
`
`—
`(0.9)
`(376.0)
`(353.1)
`1.8
`(354.9) $
`
`6.4
`18.5
`
`2.7
`(1.2)
`26.4
`128.1
`(3.2)
`131.3
`
`
`
`The accompanying notes are an integral part of these consolidated financial statements.
`
`3
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`3/14/2016
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`Valeant Q2 2015
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`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`CONSOLIDATED STATEMENTS OF CASH FLOWS
`(All dollar amounts expressed in millions of U.S. dollars)
`(Unaudited)
`
`
`
`
`Cash Flows From Operating Activities
`
`Net (loss) income
`
`Adjustments to reconcile net loss (income) to net cash provided by operating activities:
`
`Depreciation and amortization, including impairments of finitelived intangible assets
`
`Amortization and writeoff of debt discounts and debt issuance costs
`
`Inprocess research and development impairments
`
`Acquisition accounting adjustment on inventory sold
`
`Acquisitionrelated contingent consideration
`
`Allowances for losses on accounts receivable and inventories
`
`Deferred income taxes
`
`Additions (reductions) to accrued legal settlements
`
`Payments of accrued legal settlements
`
`Sharebased compensation
`
`Tax benefits from stock options exercised
`
`Foreign exchange (gain) loss
`
`Loss on extinguishment of debt
`
`Payment of accreted interest on contingent consideration
`
`Other
`
`Changes in operating assets and liabilities:
`
`Trade receivables
`
`Inventories
`
`Prepaid expenses and other current assets
`
`Accounts payable, accrued and other liabilities
`
`Net cash provided by operating activities
`
`Cash Flows From Investing Activities
`
`Acquisition of businesses, net of cash acquired
`
`Acquisition of intangible assets and other assets
`
`Purchases of property, plant and equipment
`
`Proceeds from sales and maturities of shortterm investments
`
`Net settlement of assumed derivative contracts
`Settlement of foreign currency forward exchange contracts
`
`Purchase of equity method investment
`
`Decrease (increase) in restricted cash and cash equivalents (Note 8)
`
`Other
`
`Net cash used in investing activities
`
`Cash Flows From Financing Activities
`
`Issuance of longterm debt, net of discount
`
`Repayments of longterm debt
`https://www.sec.gov/Archives/edgar/data/885590/000088559015000064/valeantq22015.htm
`
`
`
`$
`
`
`
`
`
`
`
`
`
`
`2015
`
`Three Months Ended
`June 30,
`
`
`(51.6) $
`
`635.0
`92.7
`12.3
`46.0
`11.7
`14.6
`(50.1)
`4.8
`(2.9)
`25.9
`(7.7)
`(10.3)
`—
`(9.9)
`(2.7)
`
`(241.8)
`(48.3)
`(118.4)
`111.2
`410.5
`
`
`(13,090.9)
`(9.2)
`(46.8)
`—
`184.6
`(26.3)
`—
`10,343.9
`(0.5)
`(2,645.2)
`
`
`4,921.4
`(247.9)
`
`2014
`
`
`
`
`122.0 $
`
`407.7
`11.3
`0.4
`4.3
`1.9
`16.0
`(21.4)
`1.5
`(0.9)
`15.6
`—
`(5.3)
`—
`(7.5)
`(3.7)
`
`(53.7)
`(12.1)
`24.8
`(124.9)
`376.0
`
`
`(68.0)
`(10.4)
`(113.5)
`—
`—
`—
`(75.9)
`—
`1.4
`(266.4)
`
`
`49.3
`(120.3)
`
`2014
`
`2015
`
`Six Months Ended
`June 30,
`
`
`22.9 $
`
`1,042.0
`103.2
`12.3
`70.5
`18.8
`26.8
`12.4
`6.3
`(5.9)
`60.9
`(25.6)
`65.6
`20.0
`(12.1)
`(9.9)
`
`(308.8)
`(86.8)
`(163.5)
`52.5
`901.6
`
`
`(13,885.9)
`(58.0)
`(112.6)
`17.7
`184.6
`(26.3)
`—
`(5.2)
`—
`(13,885.7)
`
`
`16,925.8
`(1,358.2)
`
`101.7
`
`808.8
`
`23.5
`
`0.4
`
`9.5
`
`10.8
`
`35.6
`
`(11.4)
`
`(47.3)
`
`(1.0)
`
`40.4
`
`(1.2)
`
`7.3
`
`93.7
`
`(8.2)
`
`6.1
`
`(83.8)
`
`(81.3)
`
`29.0
`
`(72.3)
`
`860.3
`
`(374.3)
`
`(31.5)
`
`(171.6)
`
`—
`
`—
`
`—
`
`(75.9)
`
`—
`
`2.8
`
`(650.5)
`
`408.4
`
`(554.2)
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`3/14/2016
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`Valeant Q2 2015
`
`Repayments of convertible notes assumed
`
`Issuance of common stock, net
`
`Repurchases of common shares
`
`Proceeds from exercise of stock options
`
`Tax benefits from stock options exercised
`
`Payment of employee withholding tax upon vesting of sharebased awards
`
`Payments of contingent consideration
`
`Payments of financing costs
`
`Other
`
`Net cash provided by (used in) financing activities
`
`Effect of exchange rate changes on cash and cash equivalents
`
`Net (decrease) increase in cash and cash equivalents
`
`Cash and cash equivalents, beginning of period
`
`Cash and cash equivalents, end of period
`
`NonCash Investing and Financing Activities
`
`Acquisition of businesses, contingent and deferred consideration obligations at fair value
`
`Acquisition of businesses, debt assumed
`
`
`
`(3,122.8)
`—
`(50.0)
`7.6
`7.7
`(45.6)
`(68.7)
`(75.1)
`(1.3)
`1,325.3
`3.0
`(906.4)
`1,864.4
`958.0 $
`
`
`(387.7) $
`(3,123.1)
`
`$
`
`
`
`$
`
`—
`—
`—
`3.6
`—
`(8.8)
`(72.5)
`(0.2)
`(7.7)
`(156.6)
`1.9
`(45.1)
`576.3
`531.2 $
`
`
`(27.4) $
`—
`
`(3,122.8)
`1,433.7
`(50.0)
`22.1
`25.6
`(61.5)
`(81.0)
`(101.7)
`(0.4)
`13,631.6
`(12.1)
`635.4
`322.6
`958.0 $
`
`
`(674.6) $
`(3,123.1)
`
`—
`
`—
`
`—
`
`7.1
`
`1.2
`
`(36.5)
`
`(82.2)
`
`(8.6)
`
`(14.5)
`
`(279.3)
`
`0.4
`
`(69.1)
`
`600.3
`
`531.2
`
`(49.1)
`
`(4.0)
`
`The accompanying notes are an integral part of these consolidated financial statements.
`
`4
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`3/14/2016
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`Valeant Q2 2015
`
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
`(All tabular amounts expressed in millions of U.S. dollars, except per share data)
`(Unaudited)
`
`1. DESCRIPTION OF BUSINESS
`
`The Company is a multinational, specialty pharmaceutical and medical device company, continued under the laws of
`the Province of British Columbia, that develops, manufactures, and markets a broad range of branded, generic and
`branded generic pharmaceuticals, overthecounter (“OTC”) products, and medical devices (contact lenses, intraocular
`lenses, ophthalmic surgical equipment, and aesthetics devices), which are marketed directly or indirectly in over 100
`countries.
`
`On April 1, 2015, the Company acquired Salix Pharmaceuticals, Ltd. ("Salix"), pursuant to an Agreement and Plan of
`Merger dated February 20, 2015, as amended on March 16, 2015 (the "Merger Agreement"), with Salix surviving as a
`wholly owned subsidiary of Valeant Pharmaceuticals International ("Valeant"), a subsidiary of the Company (the "Salix
`Acquisition").
`
`For further information regarding the Salix Acquisition, including the related financing, see Note 3, Note 8 and Note 11.
`
`2. SIGNIFICANT ACCOUNTING POLICIES
`
`Basis of Presentation
`
`The accompanying unaudited consolidated financial statements (the “unaudited consolidated financial statements”)
`have been prepared by the Company in United States (“U.S.”) dollars and in accordance with U.S. generally accepted
`accounting principles (“U.S. GAAP”) for interim financial reporting, which do not conform in all respects to the
`requirements of U.S. GAAP for annual financial statements. Accordingly, these condensed notes to the unaudited
`consolidated financial statements should be read in conjunction with the audited consolidated financial statements and
`notes thereto prepared in accordance with U.S. GAAP that are contained in the Company’s Annual Report on Form 10
`K for the year ended December 31, 2014 (the “2014 Form 10K”). The unaudited consolidated financial statements have
`been prepared using accounting policies that are consistent with the policies used in preparing the Company’s audited
`consolidated financial statements for the year ended December 31, 2014. The unaudited consolidated financial
`statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position
`and results of operations for the interim periods presented.
`
`Reclassifications
`
`Certain reclassifications have been made to prior year amounts to con