Full Press Release Details
International Headquarters
Laval, Quebec H7L 4A8
Contact Information:
Ren e Soto/Jared Levy
Sard Verbinnen & Co.
Sard Verbinnen & Co.
VALEANT PHARMACEUTICALS
FILES ANNUAL REPORT ON FORM 10-K FOR YEAR
ENDED DECEMBER 31, 2015
Restated Financial Statements Included in Company s Annual Report on Form 10-K
Company in Full Compliance with Credit Agreement and Senior Note Indentures
No Additional Items Require Restatement Beyond Those Previously Disclosed
LAVAL, Quebec, April 29, 2016 Valeant Pharmaceuticals International, Inc. ( Valeant or the Company ) (NYSE:
VRX) (TSX: VRX) today announced that it has filed with the U.S. Securities and Exchange Commission (the SEC ) its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the Form 10-K ). This Form 10-K
includes consolidated financial statements for the years ended December 31, 2013, 2014 and 2015. The audited consolidated financial statements for the year ended December 31, 2014 are restated. The Company has also restated certain
unaudited quarterly results related to the three months ended December 31, 2014, the three months ended March 31, 2015, the six months ended June 30, 2015 and the nine months ended September 30, 2015, and revised certain
unaudited results for the three months and nine months ended September 30, 2014.
The default under our senior note indentures arising from the
failure to timely file the Form 10-K was cured in all respects by the filing of this Form 10-K. In addition, the Company remains in full compliance with its credit agreement.
International Headquarters
Laval, Quebec H7L 4A8
Ad Hoc Committee Review
As previously disclosed, on April 5, 2016, Valeant announced that the Ad Hoc Committee ( AHC ) had determined that its review
was complete, and that the AHC had not identified any additional items that would require restatements beyond those required by matters previously disclosed. In addition, the Company announced that, given the completion of the review by the AHC, the
Company s Board of Directors (the Board ) had determined to dissolve the AHC and that the 12 independent directors on the Board, including the members of the Audit and Risk Committee, would assume oversight responsibility for
remaining work, including work associated with the completion of the Company s current and restated financial statements and disclosures, as well as its assessment of related internal controls and remediation matters.
Impact of Restatement
disclosed, the Company identified misstatements that would reduce previously-reported fiscal year 2014 revenue by approximately $58 million, net income attributable to Valeant by approximately $33 million, and basic and diluted earnings per share by
$0.09 (as compared to the previously-reported amounts of $8,264 million for revenue, $914 million for net income attributable to Valeant and $2.72 and $2.67 for basic and diluted earnings per share respectively). A substantial part of the earnings
impact of these misstatements reverses in the first quarter of 2015. The Company has also identified misstatements in the first quarter of 2015, consisting primarily of the reversing effect on earnings of the 2014 misstatements, which would reduce
revenue by approximately $21 million (due to timing of recognition of managed care rebates), increase net income attributable to Valeant by approximately $24 million and increase basic and diluted earnings per share by $0.07.
Internal Control Over Financial Reporting and Disclosure Controls and Procedures
The Form 10-K also discloses management s determination that internal control over financial reporting, as well as the Company s
disclosure controls and procedures, were not effective due to the existence of material weaknesses. For further information regarding management s assessment of internal control over financial reporting and disclosure controls and procedures,
as well as the related remediation actions, please see Item 9A Controls and Procedures on Form 10-K.
Adjustments to Unaudited Fourth
Quarter 2015 Results
On March 15, 2016, Valeant issued preliminary unaudited fourth quarter results for 2015, including unaudited
revenue of $2.8 billion and GAAP EPS of ($0.98). As stated at that time, those results were preliminary and unaudited. As a result of ongoing analysis and review, and finalization of the results for the fourth quarter of 2015 by the Company, the
Company has made adjustments to revenue, GAAP EPS and Adjusted EPS (non-GAAP), resulting in revenue of $2.8 billion, GAAP EPS of ($1.12) and Adjusted EPS (non-GAAP) of $1.55. The majority of the impact is attributed to adjustments relating to the
deferral of Addyi revenue, adjustments to the returns reserve of Xifaxan , as well as several items, including increased professional
service fees and intellectual property related adjustments, post March 15, 2016.
After considering various factors related to the Addyi product launch, including that Addyi is a new product in a new therapeutic area and the
resulting lack of history with the product and associated returns, the Company has now determined that it is more appropriate to record revenue on a sell-through basis, instead of on a sell-in basis. This results in a net
reduction of $16 million to revenue previously included in the preliminary fourth quarter results.
International Headquarters
Laval, Quebec H7L 4A8
Xifaxan IBS-D Return:
Valeant has reduced its previously-reported preliminary fourth quarter 2015 revenue of approximately $5 million related to estimated returns of
Changes to Valeant s Non-GAAP Tax Reporting
Historically, in calculating adjusted (non-GAAP) net income and EPS, Valeant has reported its non-cash tax adjustment (non-GAAP) on Tables 2,
2A and 2B of the press tables by combining the tax effects of non-GAAP adjustments and the use of tax attributes and other timing issues. This adjustment, representing roughly 5 percent of adjusted non-GAAP net income, approximates the actual cash
tax that Valeant paid each year. Going forward, Valeant will no longer include the tax effects from the use of tax attributes and other timing issues, which will in turn raise the Company s reported tax rate on non-GAAP net income. This new
reporting metric has no change to either cash flow or actual taxes paid. Tables 2, 2A and 2B of the press tables show the retroactive effect of this new tax treatment on the Company s historical financial statements in order to make them
consistent with the current year presentation.
Canadian Regulatory Matters
The Company also announced that it intends to file today its audited annual financial statements for the year ended December 31, 2015, the
related management s discussion and analysis, certificates of its CEO and CFO and the Form 10-K (collectively, the Canadian Required Filings ) with the Canadian Securities Administrators (the CSA ). As a result, the
previously announced customary management cease trade orders ( MCTO ) issued on March 31, 2016 by the Autorit des march s financiers (the AMF ), the Company s principal securities regulator in Canada,
and by the Ontario Securities Commission (the OSC ), respectively, are expected to be lifted or expire on or about May 4, 2016 and the Company will no longer be required to report under the alternative information guidelines set out
in National Policy 12-203 Cease Trade Orders for Continuous Disclosure Defaults.
The MCTOs related to the trading in securities of
the Company by the Company s CEO, its CFO and each other member of the Company s Board. The MCTOs do not affect the ability of other shareholders to trade in the securities of the Company.
Supplemental Information
information regarding fourth quarter and full year 2015 financial results, fourth quarter 2015 top 30 brands, fourth quarter 2015 adjustments since preliminary results were released on March 15, 2016, and changes to non-GAAP tax reporting using
a new non-GAAP tax methodology, has been posted in the investor relations section of Valeant s corporate website at www.valeant.com.
International Headquarters
Laval, Quebec H7L 4A8
Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty pharmaceutical company that develops, manufactures and
markets a broad range of pharmaceutical products primarily in the areas of dermatology, gastrointestinal disorders, eye health, neurology and branded generics. More information about Valeant can be at www.valeant.com.
Forward-looking Statements
release may contain forward-looking statements, including, but not limited to, statements regarding the remediation measures being implemented by the Company, the timing of filing the Canadian Required Filings, the timing of the lifting or
expiration of the MCTOs and the impact of the Company s new tax reporting metric. Forward-looking statements may generally be identified by the use of the words anticipates, expects, intends,
plans, should, could, would, may, will, believes, estimates, potential, target, or continue and variations or similar
expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking
statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the Company s most recent annual or quarterly report and detailed from time to time in Valeant s other filings with the SEC and
the CSA, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Valeant undertakes no
obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect actual outcomes, other than as required by law.
Non-GAAP Information
To supplement the financial
measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures including (i) Adjusted net income attributable to Valeant Pharmaceuticals International, Inc.,
(ii) Adjusted earnings per share ( EPS ), (iii) Revenue excluding currency impact, (iv) Cost of goods sold excluding fair value step-up adjustment in inventory and other, and (v) Organic growth. The reconciliations of
these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables below. Management uses these non-GAAP measures as key metrics in the evaluation of Company
performance and the consolidated financial results and, in part, in the determination of cash bonuses for its executive officers. The Company believes these non-GAAP measures are useful to investors in their assessment of our operating performance
and the valuation of our company. In addition, these non-GAAP measures address questions the Company routinely receives from analysts and investors and, in order to assure that all investors have access to similar data, the Company has determined
that it is appropriate to make this data available to all investors. However, non-GAAP financial measures are not prepared in accordance with GAAP, as they exclude certain items as described below. Therefore, the information is not necessarily
comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
International Headquarters
Laval, Quebec H7L 4A8
(i) Adjusted net income attributable to Valeant Pharmaceuticals International, Inc. and (ii) Adjusted
Management uses Adjusted net income attributable to Valeant Pharmaceuticals International, Inc. and Adjusted EPS for strategic decision making,
forecasting future results and evaluating current performance. In addition, cash bonuses for the Company s executive officers are based, in part, on the achievement of certain Adjusted EPS targets. Such non-GAAP measures exclude the impact of
certain items (as further described below) that may obscure trends in the Company s underlying performance. By disclosing these non-GAAP measures, management intends to provide investors with a meaningful, consistent comparison of the
Company s operating results and trends for the periods presented. Management believes these measures are also useful to investors as such measures allow investors to evaluate the Company s performance using the same tools that management
uses to evaluate past performance and prospects for future performance. However, GAAP net income attributable to Valeant Pharmaceuticals International, Inc. and GAAP EPS are significantly less than Adjusted net income attributable to Valeant
Pharmaceuticals International, Inc. (non-GAAP) and Adjusted EPS (non-GAAP).
Adjusted EPS reflect adjustments based on the following items: