UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172019
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
|
| Exact name of registrant as specified in its charter, principal office and address and telephone number
|
| State of incorporation or organization
|
| I.R.S. Employer Identification No.
|
001-36867 |
| Allergan plc Clonshaugh Business and Technology Park Coolock, Dublin, D17 E400, Ireland (862) 261-7000 |
| Ireland |
| 98-1114402 |
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|
001-36887 |
| Warner Chilcott Limited
|
| Bermuda |
| 98-0496358 |
|
| 22 Victoria Street |
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| Hamilton HM 12 |
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| Bermuda |
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| (441) 295-2244 |
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|
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Allergan plc Ordinary Shares, $0.0001 par value | AGN | New York Stock Exchange |
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:
Allergan plc |
| YES ☒ |
| NO ☐ |
Warner Chilcott Limited |
| 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 S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Allergan plc |
| YES ☒ |
| NO ☐ |
Warner Chilcott Limited |
| YES ☒ |
| NO ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Allergan plc | Large accelerated filer | ☒ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
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|
Warner Chilcott Limited | Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Allergan plc |
| YES ☐ |
| NO ☒ |
Warner Chilcott Limited |
| YES ☐ |
| NO ☒ |
Number of shares of Allergan plc’s Ordinary Shares outstanding on October 27, 2017: 332,583,097.August 6, 2019: 328,032,715. There is no trading market for securities of Warner Chilcott Limited, all of which are indirectly wholly owned by Allergan plc.
This Quarterly Report on Form 10-Q is a combined report being filed separately by two different registrants: Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc. The information in this Quarterly Report on Form 10-Q is equally applicable to Allergan plc and Warner Chilcott Limited, except where otherwise indicated. Warner Chilcott Limited meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20172019
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| PAGE |
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Item 1. |
| 3 | |
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| 3 | |
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| 4 | |
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| 5 | |
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| 6 | |
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| 7 | |
|
| Consolidated Balance Sheets of Warner Chilcott Limited as of June 30, 2019 and December 31, 2018 | 8 |
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9 | |||
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| 10 | |
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| 12 | |
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Item 2. |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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87 | |||
Item 1. |
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Item 1A. |
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Item 2. |
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Item 6. |
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PART I. FINANCIALFINANCIAL INFORMATION
ALLERGAN PLC
(Unaudited; in millions, except par value)
|
| September 30, |
|
| December 31, |
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| June 30, |
|
| December 31, |
| |||||
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| 2017 |
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| 2016 |
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| 2019 |
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| 2018 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 1,612.7 |
|
| $ | 1,724.0 |
|
| $ | 1,651.4 |
|
| $ | 880.4 |
| |
Marketable securities |
|
| 3,829.1 |
|
|
| 11,501.5 |
|
|
| 322.3 |
|
|
| 1,026.9 |
| |
Accounts receivable, net |
|
| 2,808.6 |
|
|
| 2,531.0 |
|
|
| 3,086.3 |
|
|
| 2,868.1 |
| |
Inventories |
|
| 899.8 |
|
|
| 718.0 |
|
|
| 1,004.5 |
|
|
| 846.9 |
| |
Current assets held for sale |
|
| - |
|
|
| 34.0 |
| |||||||||
Prepaid expenses and other current assets |
|
| 962.6 |
|
|
| 1,383.4 |
|
|
| 2,508.3 |
|
|
| 819.1 |
| |
Total current assets |
|
| 10,112.8 |
|
|
| 17,857.9 |
|
|
| 8,572.8 |
|
|
| 6,475.4 |
| |
Property, plant and equipment, net |
|
| 1,802.2 |
|
|
| 1,611.3 |
|
|
| 1,821.0 |
|
|
| 1,787.0 |
| |
Right of use asset - operating leases |
|
| 457.9 |
|
|
| - |
| |||||||||
Investments and other assets |
|
| 269.9 |
|
|
| 282.1 |
|
|
| 335.2 |
|
|
| 1,970.6 |
| |
Non current assets held for sale |
|
| 11.1 |
|
|
| 27.0 |
|
|
| 32.5 |
|
|
| 882.2 |
| |
Deferred tax assets |
|
| 327.0 |
|
|
| 233.3 |
|
|
| 689.1 |
|
|
| 1,063.7 |
| |
Product rights and other intangibles |
|
| 56,698.9 |
|
|
| 62,618.6 |
|
|
| 41,231.5 |
|
|
| 43,695.4 |
| |
Goodwill |
|
| 49,770.9 |
|
|
| 46,356.1 |
|
|
| 42,340.7 |
|
|
| 45,913.3 |
| |
Total assets |
| $ | 118,992.8 |
|
| $ | 128,986.3 |
|
| $ | 95,480.7 |
|
| $ | 101,787.6 |
| |
LIABILITIES AND EQUITY |
|
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Current liabilities: |
|
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|
|
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|
|
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| |
Accounts payable and accrued expenses |
| $ | 4,541.7 |
|
| $ | 5,019.0 |
|
| $ | 4,995.3 |
|
| $ | 4,787.2 |
| |
Income taxes payable |
|
| 221.1 |
|
|
| 57.8 |
|
|
| 91.0 |
|
|
| 72.4 |
| |
Current portion of long-term debt and capital leases |
|
| 3,797.0 |
|
|
| 2,797.9 |
| |||||||||
Current portion of long-term debt |
|
| 3,094.2 |
|
|
| 868.3 |
| |||||||||
Current portion of lease liability - operating |
|
| 123.2 |
|
|
| - |
| |||||||||
Total current liabilities |
|
| 8,559.8 |
|
|
| 7,874.7 |
|
|
| 8,303.7 |
|
|
| 5,727.9 |
| |
Long-term debt and capital leases |
|
| 26,539.1 |
|
|
| 29,970.8 |
| |||||||||
Long-term debt |
|
| 19,609.3 |
|
|
| 22,929.4 |
| |||||||||
Lease liability - operating |
|
| 414.8 |
|
|
| - |
| |||||||||
Other long-term liabilities |
|
| 1,007.0 |
|
|
| 1,085.0 |
|
|
| 821.4 |
|
|
| 882.0 |
| |
Other taxes payable |
|
| 911.4 |
|
|
| 886.2 |
|
|
| 1,667.0 |
|
|
| 1,615.5 |
| |
Deferred tax liabilities |
|
| 10,802.0 |
|
|
| 12,969.1 |
|
|
| 4,968.4 |
|
|
| 5,501.8 |
| |
Total liabilities |
|
| 47,819.3 |
|
|
| 52,785.8 |
|
|
| 35,784.6 |
|
|
| 36,656.6 |
| |
Commitments and contingencies (Refer to Note 20) |
|
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Equity: |
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Preferred shares, $0.0001 par value per share, 5.1 million shares authorized, 5.1 million and 5.1 million shares issued and outstanding, respectively |
| $ | 4,929.7 |
|
| $ | 4,929.7 |
| |||||||||
Ordinary shares; $0.0001 par value per share; 1,000.0 million shares authorized, 332.6 million and 334.9 million shares issued and outstanding, respectively |
|
| - |
|
| - |
| ||||||||||
Ordinary shares; $0.0001 par value per share; 1,000.0 million shares authorized, 327.9 million and 332.6 million shares issued and outstanding, respectively |
| $ | - |
|
| $ | - |
| |||||||||
Additional paid-in capital |
|
| 54,381.3 |
|
|
| 53,958.9 |
|
|
| 55,811.9 |
|
|
| 56,510.0 |
| |
Retained earnings |
|
| 10,137.2 |
|
|
| 18,342.5 |
|
|
| 2,581.1 |
|
|
| 7,258.9 |
| |
Accumulated other comprehensive income / (loss) |
|
| 1,711.2 |
|
|
| (1,038.4 | ) | |||||||||
Accumulated other comprehensive income |
|
| 1,281.7 |
|
|
| 1,345.2 |
| |||||||||
Total shareholders’ equity |
|
| 71,159.4 |
|
|
| 76,192.7 |
|
|
| 59,674.7 |
|
|
| 65,114.1 |
| |
Noncontrolling interest |
|
| 14.1 |
|
|
| 7.8 |
|
|
| 21.4 |
|
|
| 16.9 |
| |
Total equity |
|
| 71,173.5 |
|
|
| 76,200.5 |
|
|
| 59,696.1 |
|
|
| 65,131.0 |
| |
Total liabilities and equity |
| $ | 118,992.8 |
|
| $ | 128,986.3 |
|
| $ | 95,480.7 |
|
| $ | 101,787.6 |
| |
See accompanying Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||
|
| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
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| 2019 |
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| 2018 |
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| 2019 |
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| 2018 |
| ||||||||
Net revenues |
| $ | 4,034.3 |
|
| $ | 3,622.2 |
|
| $ | 11,614.6 |
|
| $ | 10,706.3 |
|
| $ | 4,090.1 |
|
| $ | 4,124.2 |
|
| $ | 7,687.2 |
|
| $ | 7,796.3 |
|
Operating expenses: |
|
|
|
|
|
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|
|
|
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Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| 586.5 |
|
|
| 462.2 |
|
|
| 1,587.1 |
|
|
| 1,381.1 |
|
|
| 652.3 |
|
|
| 481.8 |
|
|
| 1,150.1 |
|
|
| 1,004.6 |
|
Research and development |
|
| 442.6 |
|
|
| 622.8 |
|
|
| 1,691.9 |
|
|
| 1,662.4 |
|
|
| 450.0 |
|
|
| 689.2 |
|
|
| 885.0 |
|
|
| 1,163.9 |
|
Selling and marketing |
|
| 832.8 |
|
|
| 796.0 |
|
|
| 2,637.1 |
|
|
| 2,429.6 |
|
|
| 873.3 |
|
|
| 853.4 |
|
|
| 1,677.3 |
|
|
| 1,653.4 |
|
General and administrative |
|
| 336.9 |
|
|
| 361.2 |
|
|
| 1,112.8 |
|
|
| 1,033.9 |
|
|
| 324.2 |
|
|
| 334.1 |
|
|
| 632.5 |
|
|
| 630.0 |
|
Amortization |
|
| 1,781.0 |
|
|
| 1,609.1 |
|
|
| 5,274.9 |
|
|
| 4,831.9 |
|
|
| 1,402.0 |
|
|
| 1,697.1 |
|
|
| 2,801.4 |
|
|
| 3,394.7 |
|
Goodwill impairments |
|
| 1,085.8 |
|
|
| - |
|
|
| 3,552.8 |
|
|
| - |
| ||||||||||||||||
In-process research and development impairments |
|
| 202.0 |
|
|
| 42.0 |
|
|
| 1,245.3 |
|
|
| 316.9 |
|
|
| 436.0 |
|
|
| 276.0 |
|
|
| 436.0 |
|
|
| 798.0 |
|
Asset sales and impairments, net |
|
| 3,874.8 |
|
|
| (4.7 | ) |
|
| 3,896.2 |
|
|
| (24.0 | ) |
|
| 129.4 |
|
|
| 259.6 |
|
|
| 124.2 |
|
|
| 272.7 |
|
Total operating expenses |
|
| 8,056.6 |
|
|
| 3,888.6 |
|
|
| 17,445.3 |
|
|
| 11,631.8 |
|
|
| 5,353.0 |
|
|
| 4,591.2 |
|
|
| 11,259.3 |
|
|
| 8,917.3 |
|
Operating (loss) |
|
| (4,022.3 | ) |
|
| (266.4 | ) |
|
| (5,830.7 | ) |
|
| (925.5 | ) |
|
| (1,262.9 | ) |
|
| (467.0 | ) |
|
| (3,572.1 | ) |
|
| (1,121.0 | ) |
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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Interest income |
|
| 11.1 |
|
|
| 18.1 |
|
|
| 53.0 |
|
|
| 23.5 |
|
|
| 9.7 |
|
|
| 6.3 |
|
|
| 31.0 |
|
|
| 23.6 |
|
Interest (expense) |
|
| (265.2 | ) |
|
| (324.3 | ) |
|
| (832.3 | ) |
|
| (1,002.9 | ) |
|
| (195.4 | ) |
|
| (230.0 | ) |
|
| (397.2 | ) |
|
| (480.6 | ) |
Other (expense) income, net |
|
| (1,310.3 | ) |
|
| 33.6 |
|
|
| (3,366.6 | ) |
|
| 184.2 |
| ||||||||||||||||
Other (expense) / income, net |
|
| (4.7 | ) |
|
| 215.4 |
|
|
| 9.1 |
|
|
| 136.6 |
| ||||||||||||||||
Total other (expense), net |
|
| (1,564.4 | ) |
|
| (272.6 | ) |
|
| (4,145.9 | ) |
|
| (795.2 | ) |
|
| (190.4 | ) |
|
| (8.3 | ) |
|
| (357.1 | ) |
|
| (320.4 | ) |
(Loss) before income taxes and noncontrolling interest |
|
| (5,586.7 | ) |
|
| (539.0 | ) |
|
| (9,976.6 | ) |
|
| (1,720.7 | ) |
|
| (1,453.3 | ) |
|
| (475.3 | ) |
|
| (3,929.2 | ) |
|
| (1,441.4 | ) |
(Benefit) for income taxes |
|
| (1,638.8 | ) |
|
| (158.9 | ) |
|
| (2,752.1 | ) |
|
| (825.8 | ) | ||||||||||||||||
Net (loss) from continuing operations, net of tax |
|
| (3,947.9 | ) |
|
| (380.1 | ) |
|
| (7,224.5 | ) |
|
| (894.9 | ) | ||||||||||||||||
(Loss) / income from discontinued operations, net of tax |
|
| (6.1 | ) |
|
| 15,601.9 |
|
|
| (17.6 | ) |
|
| 15,873.2 |
| ||||||||||||||||
Net (loss) / income |
|
| (3,954.0 | ) |
|
| 15,221.8 |
|
|
| (7,242.1 | ) |
|
| 14,978.3 |
| ||||||||||||||||
Provision (benefit) for income taxes |
|
| 301.6 |
|
|
| (5.2 | ) |
|
| 233.0 |
|
|
| (687.4 | ) | ||||||||||||||||
Net (loss) |
|
| (1,754.9 | ) |
|
| (470.1 | ) |
|
| (4,162.2 | ) |
|
| (754.0 | ) | ||||||||||||||||
(Income) attributable to noncontrolling interest |
|
| (1.7 | ) |
|
| (1.8 | ) |
|
| (4.7 | ) |
|
| (4.3 | ) |
|
| (4.1 | ) |
|
| (2.4 | ) |
|
| (4.8 | ) |
|
| (4.6 | ) |
Net (loss) / income attributable to shareholders |
|
| (3,955.7 | ) |
|
| 15,220.0 |
|
|
| (7,246.8 | ) |
|
| 14,974.0 |
| ||||||||||||||||
Net (loss) attributable to shareholders |
|
| (1,759.0 | ) |
|
| (472.5 | ) |
|
| (4,167.0 | ) |
|
| (758.6 | ) | ||||||||||||||||
Dividends on preferred shares |
|
| 69.6 |
|
|
| 69.6 |
|
|
| 208.8 |
|
|
| 208.8 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 46.4 |
|
Net (loss) /income attributable to ordinary shareholders |
| $ | (4,025.3 | ) |
| $ | 15,150.4 |
|
| $ | (7,455.6 | ) |
| $ | 14,765.2 |
| ||||||||||||||||
Net (loss) attributable to ordinary shareholders |
| $ | (1,759.0 | ) |
| $ | (472.5 | ) |
| $ | (4,167.0 | ) |
| $ | (805.0 | ) | ||||||||||||||||
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(Loss) / income per share attributable to ordinary shareholders - basic: |
|
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| ||||||||||||||||
Continuing operations |
| $ | (12.05 | ) |
| $ | (1.15 | ) |
| $ | (22.23 | ) |
| $ | (2.81 | ) | ||||||||||||||||
Discontinued operations |
|
| (0.02 | ) |
|
| 39.73 |
|
|
| (0.05 | ) |
|
| 40.25 |
| ||||||||||||||||
Net (loss) / income per share - basic |
| $ | (12.07 | ) |
| $ | 38.58 |
|
| $ | (22.28 | ) |
| $ | 37.44 |
| ||||||||||||||||
(Loss) / income per share attributable to ordinary shareholders - diluted: |
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|
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| ||||||||||||||||
Continuing operations |
| $ | (12.05 | ) |
| $ | (1.15 | ) |
| $ | (22.23 | ) |
| $ | (2.81 | ) | ||||||||||||||||
Discontinued operations |
|
| (0.02 | ) |
|
| 39.73 |
|
|
| (0.05 | ) |
|
| 40.25 |
| ||||||||||||||||
Net (loss) /income per share - diluted |
| $ | (12.07 | ) |
| $ | 38.58 |
|
| $ | (22.28 | ) |
| $ | 37.44 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Dividends per ordinary share |
| $ | 0.70 |
|
| $ | - |
|
| $ | 2.10 |
|
| $ | - |
| ||||||||||||||||
(Loss) per share attributable to ordinary shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Basic |
| $ | (5.37 | ) |
| $ | (1.39 | ) |
| $ | (12.63 | ) |
| $ | (2.39 | ) | ||||||||||||||||
Diluted |
| $ | (5.37 | ) |
| $ | (1.39 | ) |
| $ | (12.63 | ) |
| $ | (2.39 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 333.5 |
|
|
| 392.7 |
|
|
| 334.6 |
|
|
| 394.4 |
|
|
| 327.8 |
|
|
| 339.1 |
|
|
| 329.9 |
|
|
| 336.9 |
|
Diluted |
|
| 333.5 |
|
|
| 392.7 |
|
|
| 334.6 |
|
|
| 394.4 |
|
|
| 327.8 |
|
|
| 339.1 |
|
|
| 329.9 |
|
|
| 336.9 |
|
See accompanying Notes to the Consolidated Financial Statements.
ALLERGAN PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
(Unaudited; in millions)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||
Net (loss) |
| $ | (1,754.9 | ) |
| $ | (470.1 | ) |
| $ | (4,162.2 | ) |
| $ | (754.0 | ) |
Other comprehensive income / (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains / (losses) |
|
| 66.5 |
|
|
| (448.6 | ) |
|
| (61.3 | ) |
|
| (264.8 | ) |
Unrealized (losses), net of tax |
|
| (1.2 | ) |
|
| - |
|
|
| (2.2 | ) |
|
| - |
|
Total other comprehensive income / (loss), net of tax |
|
| 65.3 |
|
|
| (448.6 | ) |
|
| (63.5 | ) |
|
| (264.8 | ) |
Comprehensive (loss) |
|
| (1,689.6 | ) |
|
| (918.7 | ) |
|
| (4,225.7 | ) |
|
| (1,018.8 | ) |
Comprehensive (income) attributable to noncontrolling interest |
|
| (4.1 | ) |
|
| (2.4 | ) |
|
| (4.8 | ) |
|
| (4.6 | ) |
Comprehensive (loss) attributable to ordinary shareholders |
| $ | (1,693.7 | ) |
| $ | (921.1 | ) |
| $ | (4,230.5 | ) |
| $ | (1,023.4 | ) |
See accompanying Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME
(Unaudited; in millions)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net (loss) / income |
| $ | (3,954.0 | ) |
| $ | 15,221.8 |
|
| $ | (7,242.1 | ) |
| $ | 14,978.3 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains / (losses) |
|
| 280.8 |
|
|
| (19.1 | ) |
|
| 1,141.2 |
|
|
| 173.8 |
|
Net impact of other-than-temporary loss on investment in Teva securities |
|
| (207.7 | ) |
|
| - |
|
|
| 1,599.4 |
|
|
| - |
|
Impact of Teva Transaction |
|
| - |
|
|
| 1,544.8 |
|
|
| - |
|
|
| 1,544.8 |
|
Unrealized gains / (losses), net of tax |
|
| 13.1 |
|
|
| (609.3 | ) |
|
| 9.0 |
|
|
| (625.2 | ) |
Total other comprehensive income, net of tax |
|
| 86.2 |
|
|
| 916.4 |
|
|
| 2,749.6 |
|
|
| 1,093.4 |
|
Comprehensive (loss) / income |
|
| (3,867.8 | ) |
|
| 16,138.2 |
|
|
| (4,492.5 | ) |
|
| 16,071.7 |
|
Comprehensive (income) attributable to noncontrolling interest |
|
| (1.7 | ) |
|
| (1.8 | ) |
|
| (4.7 | ) |
|
| (4.3 | ) |
Comprehensive (loss) / income attributable to ordinary shareholders |
| $ | (3,869.5 | ) |
| $ | 16,136.4 |
|
| $ | (4,497.2 | ) |
| $ | 16,067.4 |
|
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
|
| Nine Months Ended September 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2019 |
|
| 2018 |
| ||||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income |
| $ | (7,242.1 | ) |
| $ | 14,978.3 |
| ||||||||
Net (loss) |
| $ | (4,162.2 | ) |
| $ | (754.0 | ) | ||||||||
Reconciliation to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
| 123.2 |
|
|
| 117.6 |
|
|
| 96.2 |
|
|
| 105.2 |
|
Amortization |
|
| 5,274.9 |
|
|
| 4,836.7 |
|
|
| 2,801.4 |
|
|
| 3,394.7 |
|
Provision for inventory reserve |
|
| 77.3 |
|
|
| 162.7 |
|
|
| 83.4 |
|
|
| 45.4 |
|
Share-based compensation |
|
| 220.8 |
|
|
| 269.9 |
|
|
| 111.8 |
|
|
| 127.4 |
|
Deferred income tax benefit |
|
| (3,205.3 | ) |
|
| (517.1 | ) |
|
| (166.4 | ) |
|
| (1,359.6 | ) |
Pre-tax gain on sale of generics business |
|
| - |
|
|
| (24,203.1 | ) | ||||||||
Non-cash tax effect of gain on sale of generics business |
|
| - |
|
|
| 5,749.9 |
| ||||||||
Goodwill impairments |
|
| 3,552.8 |
|
|
| - |
| ||||||||
In-process research and development impairments |
|
| 1,245.3 |
|
|
| 316.9 |
|
|
| 436.0 |
|
|
| 798.0 |
|
Loss / (gain) on asset sales and impairments, net |
|
| 3,896.2 |
|
|
| (24.0 | ) | ||||||||
Net income impact of other-than-temporary loss on investment in Teva securities |
|
| 3,273.5 |
|
|
| - |
| ||||||||
Amortization of inventory step-up |
|
| 126.2 |
|
|
| 42.4 |
| ||||||||
Loss on asset sales and impairments, net |
|
| 124.2 |
|
|
| 272.7 |
| ||||||||
Gain on sale of Teva securities, net |
|
| - |
|
|
| (60.9 | ) | ||||||||
Gain on sale of business |
|
| - |
|
|
| (53.0 | ) | ||||||||
Non-cash extinguishment of debt |
|
| (8.2 | ) |
|
| - |
|
|
| 0.2 |
|
|
| 4.0 |
|
Cash charge related to extinguishment of debt |
|
| - |
|
|
| (13.1 | ) | ||||||||
Amortization of deferred financing costs |
|
| 19.6 |
|
|
| 44.6 |
|
|
| 9.1 |
|
|
| 11.9 |
|
Non-cash lease expense |
|
| 68.0 |
|
|
| - |
| ||||||||
Contingent consideration adjustments, including accretion |
|
| (51.6 | ) |
|
| 76.7 |
|
|
| 46.8 |
|
|
| (101.8 | ) |
Other, net |
|
| (18.2 | ) |
|
| (16.0 | ) |
|
| (19.3 | ) |
|
| (0.3 | ) |
Changes in assets and liabilities (net of effects of acquisitions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease / (increase) in accounts receivable, net |
|
| (138.5 | ) |
|
| (40.4 | ) |
|
| (220.6 | ) |
|
| 90.3 |
|
Decrease / (increase) in inventories |
|
| (107.7 | ) |
|
| (221.6 | ) |
|
| (179.3 | ) |
|
| (113.3 | ) |
Decrease / (increase) in prepaid expenses and other current assets |
|
| 45.8 |
|
|
| 158.9 |
|
|
| 23.9 |
|
|
| 39.3 |
|
Increase / (decrease) in accounts payable and accrued expenses |
|
| (356.3 | ) |
|
| 331.9 |
|
|
| 161.6 |
|
|
| (40.4 | ) |
Increase / (decrease) in income and other taxes payable |
|
| 646.1 |
|
|
| (131.6 | ) |
|
| (44.2 | ) |
|
| 365.4 |
|
Increase / (decrease) in other assets and liabilities |
|
| 4.0 |
|
|
| (397.5 | ) |
|
| (79.1 | ) |
|
| (59.4 | ) |
Net cash provided by operating activities |
|
| 3,825.0 |
|
|
| 1,535.2 |
|
|
| 2,644.3 |
|
|
| 2,698.5 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
| (234.0 | ) |
|
| (250.5 | ) |
|
| (152.3 | ) |
|
| (106.5 | ) |
Additions to product rights and other intangibles |
|
| (604.3 | ) |
|
| - |
|
|
| (46.0 | ) |
|
| - |
|
Sale of generics business |
|
| - |
|
|
| 33,304.5 |
| ||||||||
Additions to investments |
|
| (8,433.8 | ) |
|
| (15,445.5 | ) |
|
| (738.2 | ) |
|
| (1,455.9 | ) |
Proceeds from sale of investments and other assets |
|
| 14,474.4 |
|
|
| 40.0 |
|
|
| 1,462.0 |
|
|
| 5,651.3 |
|
Payments to settle Teva related matters |
|
| - |
|
|
| (466.0 | ) | ||||||||
Proceeds from sales of property, plant and equipment |
|
| 5.8 |
|
|
| 33.3 |
|
|
| 17.7 |
|
|
| 11.5 |
|
Acquisitions of businesses, net of cash acquired |
|
| (5,290.4 | ) |
|
| (74.5 | ) |
|
| (80.6 | ) |
|
| - |
|
Net cash (used in) / provided by investing activities |
|
| (82.3 | ) |
|
| 17,607.3 |
| ||||||||
Net cash provided by investing activities |
|
| 462.6 |
|
|
| 3,634.4 |
| ||||||||
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings of long-term indebtedness, including credit facility |
|
| 3,025.0 |
|
|
| 1,050.0 |
|
|
| 3.3 |
|
|
| 709.0 |
|
Debt issuance and other financing costs |
|
| (17.5 | ) |
|
| - |
| ||||||||
Payments on debt, including capital lease obligations and credit facility |
|
| (5,579.2 | ) |
|
| (10,831.0 | ) | ||||||||
Payments on debt, including finance lease obligations and credit facility |
|
| (1,039.1 | ) |
|
| (5,366.8 | ) | ||||||||
Cash charge related to extinguishment of debt |
|
| - |
|
|
| 13.1 |
| ||||||||
Payments of contingent consideration and other financing |
|
| (4.1 | ) |
|
| (10.6 | ) | ||||||||
Proceeds from stock plans |
|
| 167.2 |
|
|
| 138.0 |
|
|
| 23.6 |
|
|
| 69.2 |
|
Payments of contingent consideration and other financing |
|
| (515.2 | ) |
|
| (77.7 | ) | ||||||||
Proceeds from forward sale of Teva securities |
|
| - |
|
|
| 465.5 |
| ||||||||
Payments to settle Teva related matters |
|
| - |
|
|
| (234.0 | ) | ||||||||
Repurchase of ordinary shares |
|
| (36.4 | ) |
|
| (2,758.6 | ) |
|
| (833.5 | ) |
|
| (1,572.1 | ) |
Dividends paid |
|
| (917.0 | ) |
|
| (208.8 | ) |
|
| (488.8 | ) |
|
| (563.7 | ) |
Net cash (used in) financing activities |
|
| (3,873.1 | ) |
|
| (12,688.1 | ) |
|
| (2,338.6 | ) |
|
| (6,490.4 | ) |
Effect of currency exchange rate changes on cash and cash equivalents |
|
| 19.1 |
|
|
| 4.3 |
|
|
| 2.7 |
|
|
| 15.0 |
|
Net (decrease) / increase in cash and cash equivalents |
|
| (111.3 | ) |
|
| 6,458.7 |
| ||||||||
Net increase / (decrease) in cash and cash equivalents |
|
| 771.0 |
|
|
| (142.5 | ) | ||||||||
Cash and cash equivalents at beginning of period |
|
| 1,724.0 |
|
|
| 1,096.0 |
|
|
| 880.4 |
|
|
| 1,817.2 |
|
Cash and cash equivalents at end of period |
| $ | 1,612.7 |
|
| $ | 7,554.7 |
|
| $ | 1,651.4 |
|
| $ | 1,674.7 |
|
Supplemental Disclosures of Cash Flow Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes paid in connection with the sale of the generics business |
| $ | - |
|
| $ | 2,571.7 |
| ||||||||
Other income taxes paid, net of refunds |
| $ | (173.6 | ) |
| $ | 339.0 |
| ||||||||
Cash payments of interest |
| $ | 988.8 |
|
| $ | 1,144.5 |
| ||||||||
Cash paid during the year for: |
|
|
|
|
|
|
|
| ||||||||
Income taxes other, net of refunds |
| $ | 450.9 |
|
| $ | 336.1 |
| ||||||||
Interest |
| $ | 401.1 |
|
| $ | 520.9 |
| ||||||||
Schedule of Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash equity issuance for the acquisition of Zeltiq net assets |
| $ | 8.5 |
|
| $ | - |
| ||||||||
Deferred consideration for the acquisition of Zeltiq |
| $ | 13.5 |
|
| $ | - |
| ||||||||
Receipt of Teva Pharmaceuticals Industries Ltd. ordinary shares in connection with the sale of the generics business |
| $ | - |
|
| $ | 5,038.6 |
| ||||||||
Conversion of mandatory convertible preferred shares |
| $ | - |
|
| $ | 4,929.7 |
| ||||||||
Settlement of Teva Shares |
| $ | - |
|
| $ | 465.5 |
| ||||||||
Settlement of secured financing |
| $ | - |
|
| $ | (465.5 | ) | ||||||||
Dividends accrued |
| $ | 24.6 |
|
| $ | 24.2 |
|
| $ | 1.1 |
|
| $ | 1.4 |
|
See accompanying Notes to the Consolidated Financial Statements.
ALLERGAN PLC
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions)
|
|
|
|
|
|
|
|
|
| Retained |
|
| Accumulated |
|
|
|
|
|
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
| Earnings/ |
|
| Other |
|
|
|
|
|
|
|
|
| |||
|
| Ordinary Shares |
|
| Preferred Shares |
|
| Paid-in- |
|
| (Accumulated |
|
| Comprehensive |
|
| Noncontrolling |
|
|
|
|
| ||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit) |
|
| Income / (Loss) |
|
| Interest |
|
| Total |
| |||||||||
BALANCE, December 31, 2017 |
|
| 330.2 |
|
| $ | - |
|
|
| 5.1 |
|
| $ | 4,929.7 |
|
| $ | 54,013.5 |
|
| $ | 12,957.2 |
|
| $ | 1,920.7 |
|
| $ | 16.0 |
|
| $ | 73,837.1 |
|
Implementation of new accounting pronouncements |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 424.7 |
|
|
| (63.0 | ) |
|
| - |
|
|
| 361.7 |
|
BALANCE, January 1, 2018 |
|
| 330.2 |
|
| $ | - |
|
|
| 5.1 |
|
| $ | 4,929.7 |
|
| $ | 54,013.5 |
|
| $ | 13,381.9 |
|
| $ | 1,857.7 |
|
| $ | 16.0 |
|
| $ | 74,198.8 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to shareholders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (286.1 | ) |
|
| - |
|
|
| - |
|
|
| (286.1 | ) |
Other comprehensive income, net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 183.8 |
|
|
| - |
|
|
| 183.8 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 72.5 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 72.5 |
|
Ordinary shares issued under employee stock plans |
|
| 0.7 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 35.5 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 35.5 |
|
Dividends declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (296.3 | ) |
|
| - |
|
|
| - |
|
|
| (296.3 | ) |
Conversion of Mandatory Preferred Shares |
|
| 17.8 |
|
|
| - |
|
|
| (5.1 | ) |
|
| (4,929.7 | ) |
|
| 4,929.7 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Repurchase of ordinary shares under the share repurchase programs |
|
| (9.6 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,540.0 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,540.0 | ) |
Repurchase of ordinary shares |
|
| (0.1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (24.3 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (24.3 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2.1 |
|
|
| 2.1 |
|
BALANCE, March 31, 2018 |
|
| 339.0 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 57,486.9 |
|
| $ | 12,799.5 |
|
| $ | 2,041.5 |
|
| $ | 18.1 |
|
| $ | 72,346.0 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to shareholders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (472.5 | ) |
|
| - |
|
|
| - |
|
|
| (472.5 | ) |
Other comprehensive (loss), net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (448.6 | ) |
|
| - |
|
|
| (448.6 | ) |
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 54.9 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 54.9 |
|
Ordinary shares issued under employee stock plans |
|
| 0.3 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33.7 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33.7 |
|
Dividends declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (244.1 | ) |
|
| - |
|
|
| - |
|
|
| (244.1 | ) |
Repurchase of ordinary shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7.8 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7.8 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2.4 |
|
|
| 2.4 |
|
BALANCE, June 30, 2018 |
|
| 339.3 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 57,567.7 |
|
| $ | 12,082.9 |
|
| $ | 1,592.9 |
|
| $ | 20.5 |
|
| $ | 71,264.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, December 31, 2018 |
|
| 332.6 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 56,510.0 |
|
| $ | 7,258.9 |
|
| $ | 1,345.2 |
|
| $ | 16.9 |
|
| $ | 65,131.0 |
|
Implementation of new accounting pronouncement |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (22.0 | ) |
|
| - |
|
|
| - |
|
|
| (22.0 | ) |
BALANCE, January 1, 2019 |
|
| 332.6 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 56,510.0 |
|
| $ | 7,236.9 |
|
| $ | 1,345.2 |
|
| $ | 16.9 |
|
| $ | 65,109.0 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to shareholders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,408.0 | ) |
|
| - |
|
|
| - |
|
|
| (2,408.0 | ) |
Other comprehensive (loss), net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (128.8 | ) |
|
| - |
|
|
| (128.8 | ) |
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 52.3 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 52.3 |
|
Ordinary shares issued under employee stock plans |
|
| 0.7 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9.7 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9.7 |
|
Dividends declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (246.1 | ) |
|
| - |
|
|
| - |
|
|
| (246.1 | ) |
Repurchase of ordinary shares under the share repurchase programs |
|
| (5.3 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (799.7 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (799.7 | ) |
Repurchase of ordinary shares |
|
| (0.2 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (29.5 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (29.5 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 0.7 |
|
|
| 0.7 |
|
BALANCE, March 31, 2019 |
|
| 327.8 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 55,742.8 |
|
| $ | 4,582.8 |
|
| $ | 1,216.4 |
|
| $ | 17.6 |
|
| $ | 61,559.6 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to shareholders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,759.0 | ) |
|
| - |
|
|
| - |
|
|
| (1,759.0 | ) |
Other comprehensive income, net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 65.3 |
|
|
| - |
|
|
| 65.3 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 59.5 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 59.5 |
|
Ordinary shares issued under employee stock plans |
|
| 0.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 13.9 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 13.9 |
|
Dividends declared |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (242.7 | ) |
|
| - |
|
|
| - |
|
|
| (242.7 | ) |
Repurchase of ordinary shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.3 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.3 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3.8 |
|
|
| 3.8 |
|
BALANCE, June 30, 2019 |
|
| 327.9 |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
| $ | 55,811.9 |
|
| $ | 2,581.1 |
|
| $ | 1,281.7 |
|
| $ | 21.4 |
|
| $ | 59,696.1 |
|
See accompanying Notes to the Consolidated Financial Statements.
(Unaudited; in millions)
|
| September 30, |
|
| December 31, |
|
| June 30, |
|
| December 31, |
| ||||
|
| 2017 |
|
| 2016 |
|
| 2019 |
|
| 2018 |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 1,608.5 |
|
| $ | 1,713.2 |
|
| $ | 1,650.0 |
|
| $ | 878.6 |
|
Marketable securities |
|
| 3,829.1 |
|
|
| 11,501.5 |
|
|
| 322.3 |
|
|
| 1,026.9 |
|
Accounts receivable, net |
|
| 2,808.6 |
|
|
| 2,531.0 |
|
|
| 3,086.3 |
|
|
| 2,868.1 |
|
Receivables from Parents |
|
| 5,308.9 |
|
|
| 9,289.2 |
|
|
| 210.6 |
|
|
| 640.9 |
|
Inventories |
|
| 899.8 |
|
|
| 718.0 |
|
|
| 1,004.5 |
|
|
| 846.9 |
|
Current assets held for sale |
|
| - |
|
|
| 34.0 |
| ||||||||
Prepaid expenses and other current assets |
|
| 961.0 |
|
|
| 1,382.1 |
|
|
| 2,505.0 |
|
|
| 818.7 |
|
Total current assets |
|
| 15,415.9 |
|
|
| 27,135.0 |
|
|
| 8,778.7 |
|
|
| 7,114.1 |
|
Property, plant and equipment, net |
|
| 1,802.2 |
|
|
| 1,611.3 |
|
|
| 1,821.0 |
|
|
| 1,787.0 |
|
Right of use asset - operating leases |
|
| 457.9 |
|
|
| - |
| ||||||||
Investments and other assets |
|
| 269.9 |
|
|
| 282.1 |
|
|
| 335.2 |
|
|
| 1,970.6 |
|
Non current receivables from Parents |
|
| 3,964.0 |
|
|
| 3,964.0 |
| ||||||||
Non current assets held for sale |
|
| 11.1 |
|
|
| 27.0 |
|
|
| 32.5 |
|
|
| 882.2 |
|
Deferred tax assets |
|
| 326.9 |
|
|
| 233.3 |
|
|
| 689.1 |
|
|
| 1,063.7 |
|
Product rights and other intangibles |
|
| 56,698.9 |
|
|
| 62,618.6 |
|
|
| 41,231.5 |
|
|
| 43,695.4 |
|
Goodwill |
|
| 49,770.9 |
|
|
| 46,356.1 |
|
|
| 42,340.7 |
|
|
| 45,913.3 |
|
Total assets |
| $ | 128,259.8 |
|
| $ | 142,227.4 |
|
| $ | 95,686.6 |
|
| $ | 102,426.3 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 4,516.1 |
|
| $ | 4,993.3 |
|
| $ | 4,995.2 |
|
| $ | 4,787.4 |
|
Payables to Parents |
|
| 1,816.5 |
|
|
| 1,372.8 |
|
|
| 2,491.7 |
|
|
| 2,829.2 |
|
Income taxes payable |
|
| 221.1 |
|
|
| 57.8 |
|
|
| 93.6 |
|
|
| 72.4 |
|
Current portion of long-term debt and capital leases |
|
| 3,797.0 |
|
|
| 2,797.9 |
| ||||||||
Current portion of long-term debt |
|
| 3,094.2 |
|
|
| 868.3 |
| ||||||||
Current portion of lease liability - operating |
|
| 123.2 |
|
|
| - |
| ||||||||
Total current liabilities |
|
| 10,350.7 |
|
|
| 9,221.8 |
|
|
| 10,797.9 |
|
|
| 8,557.3 |
|
Long-term debt and capital leases |
|
| 26,539.1 |
|
|
| 29,970.8 |
| ||||||||
Long-term debt |
|
| 19,609.3 |
|
|
| 22,929.4 |
| ||||||||
Lease liability - operating |
|
| 414.8 |
|
|
| - |
| ||||||||
Other long-term liabilities |
|
| 1,007.0 |
|
|
| 1,086.0 |
|
|
| 821.4 |
|
|
| 882.0 |
|
Other taxes payable |
|
| 911.4 |
|
|
| 886.2 |
|
|
| 1,660.8 |
|
|
| 1,615.5 |
|
Deferred tax liabilities |
|
| 10,802.0 |
|
|
| 12,969.1 |
|
|
| 4,968.5 |
|
|
| 5,501.8 |
|
Total liabilities |
|
| 49,610.2 |
|
|
| 54,133.9 |
|
|
| 38,272.7 |
|
|
| 39,486.0 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
| ||||||||
Commitments and contingencies (Refer to Note 20) |
|
|
|
|
|
|
|
| ||||||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members' capital |
|
| 72,935.1 |
|
|
| 72,935.1 |
|
|
| 64,509.4 |
|
|
| 65,797.9 |
|
Retained earnings |
|
| 3,989.2 |
|
|
| 16,189.0 |
|
|
| (8,398.6 | ) |
|
| (4,219.7 | ) |
Accumulated other comprehensive income / (loss) |
|
| 1,711.2 |
|
|
| (1,038.4 | ) | ||||||||
Accumulated other comprehensive income |
|
| 1,281.7 |
|
|
| 1,345.2 |
| ||||||||
Total members’ equity |
|
| 78,635.5 |
|
|
| 88,085.7 |
|
|
| 57,392.5 |
|
|
| 62,923.4 |
|
Noncontrolling interest |
|
| 14.1 |
|
|
| 7.8 |
|
|
| 21.4 |
|
|
| 16.9 |
|
Total equity |
|
| 78,649.6 |
|
|
| 88,093.5 |
|
|
| 57,413.9 |
|
|
| 62,940.3 |
|
Total liabilities and equity |
| $ | 128,259.8 |
|
| $ | 142,227.4 |
|
| $ | 95,686.6 |
|
| $ | 102,426.3 |
|
See accompanying Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||||||
Net revenues |
| $ | 4,034.3 |
|
| $ | 3,622.2 |
|
| $ | 11,614.6 |
|
| $ | 10,706.3 |
|
| $ | 4,090.1 |
|
| $ | 4,124.2 |
|
| $ | 7,687.2 |
|
| $ | 7,796.3 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| 586.5 |
|
|
| 462.2 |
|
|
| 1,587.1 |
|
|
| 1,381.1 |
|
|
| 652.3 |
|
|
| 481.8 |
|
|
| 1,150.1 |
|
|
| 1,004.6 |
|
Research and development |
|
| 442.6 |
|
|
| 622.8 |
|
|
| 1,691.9 |
|
|
| 1,662.4 |
|
|
| 450.0 |
|
|
| 689.2 |
|
|
| 885.0 |
|
|
| 1,163.9 |
|
Selling and marketing |
|
| 832.8 |
|
|
| 796.0 |
|
|
| 2,637.1 |
|
|
| 2,429.6 |
|
|
| 873.3 |
|
|
| 853.4 |
|
|
| 1,677.3 |
|
|
| 1,653.4 |
|
General and administrative |
|
| 277.2 |
|
|
| 312.2 |
|
|
| 1,039.2 |
|
|
| 966.2 |
|
|
| 316.4 |
|
|
| 299.5 |
|
|
| 622.5 |
|
|
| 593.6 |
|
Amortization |
|
| 1,781.0 |
|
|
| 1,609.1 |
|
|
| 5,274.9 |
|
|
| 4,831.9 |
|
|
| 1,402.0 |
|
|
| 1,697.1 |
|
|
| 2,801.4 |
|
|
| 3,394.7 |
|
Goodwill impairments |
|
| 1,085.8 |
|
|
| - |
|
|
| 3,552.8 |
|
|
| - |
| ||||||||||||||||
In-process research and development impairments |
|
| 202.0 |
|
|
| 42.0 |
|
|
| 1,245.3 |
|
|
| 316.9 |
|
|
| 436.0 |
|
|
| 276.0 |
|
|
| 436.0 |
|
|
| 798.0 |
|
Asset sales and impairments, net |
|
| 3,874.8 |
|
|
| (4.7 | ) |
|
| 3,896.2 |
|
|
| (24.0 | ) |
|
| 129.4 |
|
|
| 259.6 |
|
|
| 124.2 |
|
|
| 272.7 |
|
Total operating expenses |
|
| 7,996.9 |
|
|
| 3,839.6 |
|
|
| 17,371.7 |
|
|
| 11,564.1 |
|
|
| 5,345.2 |
|
|
| 4,556.6 |
|
|
| 11,249.3 |
|
|
| 8,880.9 |
|
Operating (loss) |
|
| (3,962.6 | ) |
|
| (217.4 | ) |
|
| (5,757.1 | ) |
|
| (857.8 | ) |
|
| (1,255.1 | ) |
|
| (432.4 | ) |
|
| (3,562.1 | ) |
|
| (1,084.6 | ) |
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Interest income |
|
| 37.9 |
|
|
| 18.1 |
|
|
| 126.5 |
|
|
| 23.5 |
|
|
| 9.7 |
|
|
| 71.8 |
|
|
| 31.0 |
|
|
| 142.1 |
|
Interest (expense) |
|
| (265.2 | ) |
|
| (324.3 | ) |
|
| (832.3 | ) |
|
| (1,002.9 | ) |
|
| (195.4 | ) |
|
| (230.0 | ) |
|
| (397.2 | ) |
|
| (480.6 | ) |
Other (expense) / income, net |
|
| (1,310.3 | ) |
|
| 33.6 |
|
|
| (3,366.6 | ) |
|
| 34.2 |
|
|
| (4.7 | ) |
|
| 215.4 |
|
|
| 9.1 |
|
|
| 136.6 |
|
Total other (expense), net |
|
| (1,537.6 | ) |
|
| (272.6 | ) |
|
| (4,072.4 | ) |
|
| (945.2 | ) | ||||||||||||||||
Total other (expense) / income, net |
|
| (190.4 | ) |
|
| 57.2 |
|
|
| (357.1 | ) |
|
| (201.9 | ) | ||||||||||||||||
(Loss) before income taxes and noncontrolling interest |
|
| (5,500.2 | ) |
|
| (490.0 | ) |
|
| (9,829.5 | ) |
|
| (1,803.0 | ) |
|
| (1,445.5 | ) |
|
| (375.2 | ) |
|
| (3,919.2 | ) |
|
| (1,286.5 | ) |
(Benefit) for income taxes |
|
| (1,638.8 | ) |
|
| (158.9 | ) |
|
| (2,752.1 | ) |
|
| (825.8 | ) | ||||||||||||||||
Net (loss) from continuing operations, net of tax |
|
| (3,861.4 | ) |
|
| (331.1 | ) |
|
| (7,077.4 | ) |
|
| (977.2 | ) | ||||||||||||||||
(Loss) / income from discontinued operations, net of tax |
|
| (6.1 | ) |
|
| 15,601.9 |
|
|
| (17.6 | ) |
|
| 15,873.2 |
| ||||||||||||||||
Net (loss) / income |
|
| (3,867.5 | ) |
|
| 15,270.8 |
|
|
| (7,095.0 | ) |
|
| 14,896.0 |
| ||||||||||||||||
Provision / (benefit) for income taxes |
|
| 301.6 |
|
|
| (5.2 | ) |
|
| 232.9 |
|
|
| (687.4 | ) | ||||||||||||||||
Net (loss) |
|
| (1,747.1 | ) |
|
| (370.0 | ) |
|
| (4,152.1 | ) |
|
| (599.1 | ) | ||||||||||||||||
(Income) attributable to noncontrolling interest |
|
| (1.7 | ) |
|
| (1.8 | ) |
|
| (4.7 | ) |
|
| (4.3 | ) |
|
| (4.1 | ) |
|
| (2.4 | ) |
|
| (4.8 | ) |
|
| (4.6 | ) |
Net (loss) / income attributable to members |
| $ | (3,869.2 | ) |
| $ | 15,269.0 |
|
| $ | (7,099.7 | ) |
| $ | 14,891.7 |
| ||||||||||||||||
Net (loss) attributable to members |
| $ | (1,751.2 | ) |
| $ | (372.4 | ) |
| $ | (4,156.9 | ) |
| $ | (603.7 | ) | ||||||||||||||||
See accompanying Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)INCOME / INCOME(LOSS)
(Unaudited; in millions)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net (loss) / income |
| $ | (3,867.5 | ) |
| $ | 15,270.8 |
|
| $ | (7,095.0 | ) |
| $ | 14,896.0 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains / (losses) |
|
| 280.8 |
|
|
| (19.1 | ) |
|
| 1,141.2 |
|
|
| 173.8 |
|
Net impact of other-than-temporary loss on investment in Teva securities |
|
| (207.7 | ) |
|
| - |
|
|
| 1,599.4 |
|
|
| - |
|
Impact of Teva Transaction |
|
| - |
|
|
| 1,544.8 |
|
|
| - |
|
|
| 1,544.8 |
|
Unrealized gains / (losses), net of tax |
|
| 13.1 |
|
|
| (609.3 | ) |
|
| 9.0 |
|
|
| (625.2 | ) |
Total other comprehensive income, net of tax |
|
| 86.2 |
|
|
| 916.4 |
|
|
| 2,749.6 |
|
|
| 1,093.4 |
|
Comprehensive (loss) / income |
|
| (3,781.3 | ) |
|
| 16,187.2 |
|
|
| (4,345.4 | ) |
|
| 15,989.4 |
|
Comprehensive (income) attributable to noncontrolling interest |
|
| (1.7 | ) |
|
| (1.8 | ) |
|
| (4.7 | ) |
|
| (4.3 | ) |
Comprehensive (loss) / income attributable to ordinary shareholders |
| $ | (3,783.0 | ) |
| $ | 16,185.4 |
|
| $ | (4,350.1 | ) |
| $ | 15,985.1 |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||
Net (loss) |
| $ | (1,747.1 | ) |
| $ | (370.0 | ) |
| $ | (4,152.1 | ) |
| $ | (599.1 | ) |
Other comprehensive income / (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains / (losses) |
|
| 66.5 |
|
|
| (448.6 | ) |
|
| (61.3 | ) |
|
| (264.8 | ) |
Unrealized (losses), net of tax |
|
| (1.2 | ) |
|
| - |
|
|
| (2.2 | ) |
|
| - |
|
Total other comprehensive income / (loss), net of tax |
|
| 65.3 |
|
|
| (448.6 | ) |
|
| (63.5 | ) |
|
| (264.8 | ) |
Comprehensive (loss) |
|
| (1,681.8 | ) |
|
| (818.6 | ) |
|
| (4,215.6 | ) |
|
| (863.9 | ) |
Comprehensive (income) attributable to noncontrolling interest |
|
| (4.1 | ) |
|
| (2.4 | ) |
|
| (4.8 | ) |
|
| (4.6 | ) |
Comprehensive (loss) attributable to members |
| $ | (1,685.9 | ) |
| $ | (821.0 | ) |
| $ | (4,220.4 | ) |
| $ | (868.5 | ) |
See accompanying Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
|
| Nine Months Ended September 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2019 |
|
| 2018 |
| ||||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income |
| $ | (7,095.0 | ) |
| $ | 14,896.0 |
| ||||||||
Net (loss) |
| $ | (4,152.1 | ) |
| $ | (599.1 | ) | ||||||||
Reconciliation to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
| 123.2 |
|
|
| 117.6 |
|
|
| 96.2 |
|
|
| 105.2 |
|
Amortization |
|
| 5,274.9 |
|
|
| 4,836.7 |
|
|
| 2,801.4 |
|
|
| 3,394.7 |
|
Provision for inventory reserve |
|
| 77.3 |
|
|
| 162.7 |
|
|
| 83.4 |
|
|
| 45.4 |
|
Share-based compensation |
|
| 220.8 |
|
|
| 269.9 |
|
|
| 111.8 |
|
|
| 127.4 |
|
Deferred income tax benefit |
|
| (3,205.3 | ) |
|
| (517.1 | ) |
|
| (166.4 | ) |
|
| (1,359.6 | ) |
Pre-tax gain on sale of generics business |
|
| - |
|
|
| (24,203.1 | ) | ||||||||
Non-cash tax effect of gain on sale of generics business |
|
| - |
|
|
| 5,749.9 |
| ||||||||
Goodwill impairments |
|
| 3,552.8 |
|
|
| - |
| ||||||||
In-process research and development impairments |
|
| 1,245.3 |
|
|
| 316.9 |
|
|
| 436.0 |
|
|
| 798.0 |
|
Loss / (gain) on asset sales and impairments, net |
|
| 3,896.2 |
|
|
| (24.0 | ) | ||||||||
Net income impact of other-than-temporary loss on investment in Teva securities |
|
| 3,273.5 |
|
|
| - |
| ||||||||
Amortization of inventory step up |
|
| 126.2 |
|
|
| 42.4 |
| ||||||||
Loss on asset sales and impairments, net |
|
| 124.2 |
|
|
| 272.7 |
| ||||||||
Gain on sale of Teva securities, net |
|
| - |
|
|
| (60.9 | ) | ||||||||
Gain on sale of business |
|
| - |
|
|
| (53.0 | ) | ||||||||
Non-cash extinguishment of debt |
|
| (8.2 | ) |
|
| - |
|
|
| 0.2 |
|
|
| 4.0 |
|
Cash charge related to extinguishment of debt |
|
| - |
|
|
| (13.1 | ) | ||||||||
Amortization of deferred financing costs |
|
| 19.6 |
|
|
| 44.6 |
|
|
| 9.1 |
|
|
| 11.9 |
|
Non-cash lease expense |
|
| 68.0 |
|
|
| - |
| ||||||||
Contingent consideration adjustments, including accretion |
|
| (51.6 | ) |
|
| 76.7 |
|
|
| 46.8 |
|
|
| (101.8 | ) |
Other, net |
|
| (18.2 | ) |
|
| (16.0 | ) |
|
| (19.3 | ) |
|
| (0.3 | ) |
Changes in assets and liabilities (net of effects of acquisitions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease / (increase) in accounts receivable, net |
|
| (138.5 | ) |
|
| (40.4 | ) |
|
| (220.6 | ) |
|
| 90.3 |
|
Decrease / (increase) in inventories |
|
| (107.7 | ) |
|
| (221.6 | ) |
|
| (179.3 | ) |
|
| (113.3 | ) |
Decrease / (increase) in prepaid expenses and other current assets |
|
| 47.4 |
|
|
| 156.8 |
|
|
| 26.8 |
|
|
| 40.6 |
|
Increase / (decrease) in accounts payable and accrued expenses |
|
| (330.7 | ) |
|
| 361.5 |
|
|
| 161.9 |
|
|
| (38.2 | ) |
Increase / (decrease) in income and other taxes payable |
|
| 646.1 |
|
|
| (131.6 | ) |
|
| (44.2 | ) |
|
| 365.4 |
|
Increase / (decrease) in other assets and liabilities, including receivable / payable with Parents |
|
| (32.9 | ) |
|
| (1,899.4 | ) |
|
| (102.2 | ) |
|
| (181.0 | ) |
Net cash provided by / (used in) operating activities |
|
| 3,962.4 |
|
|
| (21.5 | ) | ||||||||
Net cash provided by operating activities |
|
| 2,634.5 |
|
|
| 2,735.3 |
| ||||||||
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
| (234.0 | ) |
|
| (250.5 | ) |
|
| (152.3 | ) |
|
| (106.5 | ) |
Additions to product rights and other intangibles |
|
| (604.3 | ) |
|
| - |
|
|
| (46.0 | ) |
|
| - |
|
Sale of generics business |
|
| - |
|
|
| 33,304.5 |
| ||||||||
Additions to investments |
|
| (8,433.8 | ) |
|
| (15,445.5 | ) |
|
| (738.2 | ) |
|
| (1,455.9 | ) |
Proceeds from the sale of investments and other assets |
|
| 14,474.4 |
|
|
| 40.0 |
| ||||||||
Proceeds from sale of investments and other assets |
|
| 1,462.0 |
|
|
| 5,651.3 |
| ||||||||
Payments to settle Teva related matters |
|
| - |
|
|
| (466.0 | ) | ||||||||
Proceeds from sales of property, plant and equipment |
|
| 5.8 |
|
|
| 33.3 |
|
|
| 17.7 |
|
|
| 11.5 |
|
Acquisitions of businesses, net of cash acquired |
|
| (5,290.4 | ) |
|
| (74.5 | ) |
|
| (80.6 | ) |
|
| - |
|
Net cash (used in) / provided by investing activities |
|
| (82.3 | ) |
|
| 17,607.3 |
| ||||||||
Net cash provided by investing activities |
|
| 462.6 |
|
|
| 3,634.4 |
| ||||||||
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings of long-term indebtedness, including credit facility |
|
| 3,025.0 |
|
|
| 1,050.0 |
|
|
| 3.3 |
|
|
| 709.0 |
|
Debt issuance and other financing costs |
|
| (17.5 | ) |
|
| - |
| ||||||||
Payments on debt, including capital lease obligations and credit facility |
|
| (5,579.2 | ) |
|
| (10,831.0 | ) | ||||||||
Payments on debt, including finance lease obligations and credit facility |
|
| (1,039.1 | ) |
|
| (5,366.8 | ) | ||||||||
Cash charge related to extinguishment of debt |
|
| - |
|
|
| 13.1 |
| ||||||||
Payments of contingent consideration and other financing |
|
| (515.2 | ) |
|
| (77.7 | ) |
|
| (4.1 | ) |
|
| (10.6 | ) |
Dividend to Parent |
|
| (917.0 | ) |
|
| (1,244.8 | ) | ||||||||
Proceeds from forward sale of Teva securities |
|
| - |
|
|
| 465.5 |
| ||||||||
Payments to settle Teva related matters |
|
| - |
|
|
| (234.0 | ) | ||||||||
Dividends to Parents |
|
| (1,288.5 | ) |
|
| (2,103.7 | ) | ||||||||
Net cash (used in) financing activities |
|
| (4,003.9 | ) |
|
| (11,103.5 | ) |
|
| (2,328.4 | ) |
|
| (6,527.5 | ) |
Effect of currency exchange rate changes on cash and cash equivalents |
|
| 19.1 |
|
|
| 4.3 |
|
|
| 2.7 |
|
|
| 15.0 |
|
Net (decrease) / increase in cash and cash equivalents |
|
| (104.7 | ) |
|
| 6,486.6 |
| ||||||||
Net income / (decrease) in cash and cash equivalents |
|
| 771.4 |
|
|
| (142.8 | ) | ||||||||
Cash and cash equivalents at beginning of period |
|
| 1,713.2 |
|
|
| 1,036.2 |
|
|
| 878.6 |
|
|
| 1,816.3 |
|
Cash and cash equivalents at end of period |
| $ | 1,608.5 |
|
| $ | 7,522.8 |
|
| $ | 1,650.0 |
|
| $ | 1,673.5 |
|
Schedule of Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash dividends to Parent |
| $ | 4,203.9 |
|
| $ | - |
| ||||||||
Settlement of Teva Shares |
| $ | - |
|
| $ | 465.5 |
| ||||||||
Settlement of secured financing |
| $ | - |
|
| $ | (465.5 | ) | ||||||||
See accompanying Notes to the Consolidated Financial StatementsStatements.
WARNER CHILCOTT LIMITED
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share data)
|
| Members' Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| Shares |
|
| Amount |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income / (Loss) |
|
| Noncontrolling Interest |
|
| Total |
| ||||||
BALANCE, December 31, 2017 |
|
| 100.0 |
|
| $ | 72,935.1 |
|
| $ | 6,410.4 |
|
| $ | 1,920.7 |
|
| $ | 16.0 |
|
| $ | 81,282.2 |
|
Implementation of new accounting pronouncements |
|
| - |
|
|
| - |
|
|
| 424.7 |
|
|
| (63.0 | ) |
|
| - |
|
|
| 361.7 |
|
BALANCE, January 1, 2018 |
|
| 100.0 |
|
| $ | 72,935.1 |
|
| $ | 6,835.1 |
|
| $ | 1,857.7 |
|
| $ | 16.0 |
|
| $ | 81,643.9 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to members |
|
| - |
|
|
| - |
|
|
| (231.3 | ) |
|
| - |
|
|
| - |
|
|
| (231.3 | ) |
Other comprehensive income, net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 183.8 |
|
|
| - |
|
|
| 183.8 |
|
Dividends to Parents |
|
| - |
|
|
| - |
|
|
| (1,859.5 | ) |
|
| - |
|
|
| - |
|
|
| (1,859.5 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2.1 |
|
|
| 2.1 |
|
BALANCE, March 31, 2018 |
|
| 100.0 |
|
| $ | 72,935.1 |
|
| $ | 4,744.3 |
|
| $ | 2,041.5 |
|
| $ | 18.1 |
|
| $ | 79,739.0 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to members |
|
| - |
|
|
| - |
|
|
| (372.4 | ) |
|
| - |
|
|
| - |
|
|
| (372.4 | ) |
Other comprehensive (loss), net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (448.6 | ) |
|
| - |
|
|
| (448.6 | ) |
Dividends to Parents |
|
| - |
|
|
| - |
|
|
| (244.2 | ) |
|
| - |
|
|
| - |
|
|
| (244.2 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2.4 |
|
|
| 2.4 |
|
BALANCE, June 30, 2018 |
|
| 100.0 |
|
| $ | 72,935.1 |
|
| $ | 4,127.7 |
|
| $ | 1,592.9 |
|
| $ | 20.5 |
|
| $ | 78,676.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, December 31, 2018 |
|
| 100.0 |
|
| $ | 65,797.9 |
|
| $ | (4,219.7 | ) |
| $ | 1,345.2 |
|
| $ | 16.9 |
|
| $ | 62,940.3 |
|
Implementation of new accounting pronouncement |
|
| - |
|
|
| - |
|
|
| (22.0 | ) |
|
| - |
|
|
| - |
|
|
| (22.0 | ) |
BALANCE, January 1, 2019 |
|
| 100.0 |
|
| $ | 65,797.9 |
|
| $ | (4,241.7 | ) |
| $ | 1,345.2 |
|
| $ | 16.9 |
|
| $ | 62,918.3 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to members |
|
| - |
|
|
| - |
|
|
| (2,405.7 | ) |
|
| - |
|
|
| - |
|
|
| (2,405.7 | ) |
Other comprehensive (loss), net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (128.8 | ) |
|
| - |
|
|
| (128.8 | ) |
Dividends to Parents |
|
| - |
|
|
| (1,045.8 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,045.8 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 0.7 |
|
|
| 0.7 |
|
BALANCE, March 31, 2019 |
|
| 100.0 |
|
| $ | 64,752.1 |
|
| $ | (6,647.4 | ) |
| $ | 1,216.4 |
|
| $ | 17.6 |
|
| $ | 59,338.7 |
|
Comprehensive (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to members |
|
| - |
|
|
| - |
|
|
| (1,751.2 | ) |
|
| - |
|
|
| - |
|
|
| (1,751.2 | ) |
Other comprehensive income, net of tax |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 65.3 |
|
|
| - |
|
|
| 65.3 |
|
Dividends to Parents |
|
| - |
|
|
| (242.7 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (242.7 | ) |
Movement in noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3.8 |
|
|
| 3.8 |
|
BALANCE, June 30, 2019 |
|
| 100.0 |
|
| $ | 64,509.4 |
|
| $ | (8,398.6 | ) |
| $ | 1,281.7 |
|
| $ | 21.4 |
|
| $ | 57,413.9 |
|
See accompanying Notes to the Consolidated Financial Statements.
ALLERGAN PLC AND WARNER CHILCOTT LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — General
Allergan plc is a global pharmaceutical company and a leader in a new industry model – Growth Pharma. Allergan is focused on developing, manufacturing and commercializing branded pharmaceutical,(“brand,” “branded” or “specialty brand”), device, biologic, surgical and regenerative medicine products for patients around the world. Allergan markets a portfolio of leading brands and best-in-class products primarily focused on four key therapeutic areas including medical aesthetics, eye care, central nervous system and gastroenterology. The Company has operations in more than 100 countries. Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc and has the same principal business activities.
On August 2, 2016 we completed the divestiture of our global generics business and certain other assets to Teva Pharmaceutical Industries Ltd. (“Teva”) (the “Teva Transaction”) in exchange for which we received $33.3 billion in cash, net of cash acquired by Teva, which includes estimated working capital and other contractual adjustments, and 100.3 million unregistered Teva ordinary shares (or American Depository Shares with respect thereto), which at the time of the closing approximated $5.0 billion in value using the closing date Teva opening stock price discounted at a rate of 5.9 percent due to the lack of marketability (“Teva Shares”).
As part of the Teva Transaction, Teva acquired our global generics business, including the United States (“U.S.”) and international generic commercial units, our third-party supplier Medis, our global generic manufacturing operations, our global generic research and development (“R&D”) unit, our international over-the-counter (“OTC”) commercial unit (excluding OTC eye care products) and certain established international brands.
On October 3, 2016, the Company completed the divestiture of the Anda Distribution business to Teva for $500.0 million. The Anda Distribution business distributed generic, branded, specialty and OTC pharmaceutical products from more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the U.S.
The Company recognized a combined gain on the sale of the Anda Distribution business and the Teva Transaction of $15,932.2 million in the year ended December 31, 2016, as well as deferred liabilities relating to other elements of our arrangements with Teva of $299.2 million. In the three and nine months ended September 30, 2016, the Company recognized a gain on the sale of the generics business of $15,881.5 million.
As a result of the Teva Transaction and the divestiture of the Company’s Anda Distribution business, and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) number 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” the financial results of the businesses held for sale have been reclassified to discontinued operations for all periods presented in our consolidated financial statements. The results of our discontinued operations include the results of our generic product development, manufacturing and distribution of off-patent pharmaceutical products, certain established international brands marketed similarly to generic products and out-licensed generic pharmaceutical products primarily in Europe through our Medis third-party business through August 2, 2016, as well as our Anda Distribution business through October 3, 2016.
The accompanying consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 20162018 (“Annual Report”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted from the accompanying consolidated financial statements. The accompanying year end consolidated balance sheet was derived from the audited financial statements included in the Annual Report. The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s consolidated financial position, results of operations, comprehensive (loss) / income and cash flows for the periods presented. Unless otherwise noted, allAll such adjustments are of a normal, recurring nature. All intercompany transactions and balances have been eliminated in consolidation. The Company’s results of operations, comprehensive (loss) / income and cash flows for the interim periods are not necessarily indicative of the results of operations, comprehensive (loss) / income and cash flows that it may achieve in future periods.
References throughout to “we,” “our,” “us,” the “Company” or “Allergan” refer to financial information and transactions of Allergan plc. References to “Warner Chilcott Limited” refer to Warner Chilcott Limited, the Company’s indirect wholly-owned subsidiary, and, unless the context otherwise requires, its subsidiaries.
NOTE 2 –— Reconciliation of Warner Chilcott Limited results to Allergan plc results
Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc, the ultimate parent of the group (together with other direct or indirect parents of Warner Chilcott Limited, parents, the “Parents”). The results of Warner Chilcott Limited are consolidated into the results of Allergan plc. Due to the deminimis activity between Warner Chilcott Limited and the Parents (including Allergan plc), content throughout this filing relates to both Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited representationsdisclosures relate only to itself and not to any other company. Except where otherwise indicated, and excluding certain insignificant cash and non-cash transactions at the Allergan plc level, these notes relate to the consolidated financial statements for both separate registrants, Allergan plc and Warner Chilcott Limited. In addition to certain inter-company payable and receivable amounts between the entities, the following is a reconciliation of the financial position and results of operations of Warner Chilcott Limited to Allergan plc ($ in millions):
|
| As of September 30, 2017 |
|
| As of December 31, 2016 |
|
| As of June 30, 2019 |
|
| As of December 31, 2018 |
| ||||||||||||||||||||||||||||||||||||
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
| ||||||||||||
Cash and cash equivalents |
| $ | 1,612.7 |
|
| $ | 1,608.5 |
|
| $ | 4.2 |
|
| $ | 1,724.0 |
|
| $ | 1,713.2 |
|
| $ | 10.8 |
|
| $ | 1,651.4 |
|
| $ | 1,650.0 |
|
| $ | 1.4 |
|
| $ | 880.4 |
|
| $ | 878.6 |
|
| $ | 1.8 |
|
Prepaid expenses and other current assets |
|
| 962.6 |
|
|
| 961.0 |
|
|
| 1.6 |
|
|
| 1,383.4 |
|
|
| 1,382.1 |
|
|
| 1.3 |
|
|
| 2,508.3 |
|
|
| 2,505.0 |
|
|
| 3.3 |
|
|
| 819.1 |
|
|
| 818.7 |
|
|
| 0.4 |
|
Accounts payable and accrued liabilities |
|
| 4,541.7 |
|
|
| 4,516.1 |
|
|
| 25.6 |
|
|
| 5,019.0 |
|
|
| 4,993.3 |
|
|
| 25.7 |
|
|
| 4,995.3 |
|
|
| 4,995.2 |
|
|
| 0.1 |
|
|
| 4,787.2 |
|
|
| 4,787.4 |
|
|
| (0.2 | ) |
Other long-term liabilities |
|
| 1,007.0 |
|
|
| 1,007.0 |
|
|
| - |
|
|
| 1,085.0 |
|
|
| 1,086.0 |
|
|
| (1.0 | ) | ||||||||||||||||||||||||
Income taxes payable |
|
| 91.0 |
|
|
| 93.6 |
|
|
| (2.6 | ) |
|
| 72.4 |
|
|
| 72.4 |
|
|
| - |
| ||||||||||||||||||||||||
Other taxes payable |
|
| 1,667.0 |
|
|
| 1,660.8 |
|
|
| 6.2 |
|
|
| 1,615.5 |
|
|
| 1,615.5 |
|
|
| - |
| ||||||||||||||||||||||||
Deferred tax liabilities |
|
| 4,968.4 |
|
|
| 4,968.5 |
|
|
| (0.1 | ) |
|
| 5,501.8 |
|
|
| 5,501.8 |
|
|
| - |
| ||||||||||||||||||||||||
Total equity |
|
| 59,696.1 |
|
|
| 57,413.9 |
|
|
| 2,282.2 |
|
|
| 65,131.0 |
|
|
| 62,940.3 |
|
|
| 2,190.7 |
| ||||||||||||||||||||||||
|
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
|
| Three Months Ended June 30, 2019 |
|
| Six Months Ended June 30, 2019 |
| ||||||||||||||||||||||||||||||||||||
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
| ||||||||||||
General and administrative expenses |
| $ | 336.9 |
|
| $ | 277.2 |
|
| $ | 59.7 |
|
| $ | 1,112.8 |
|
| $ | 1,039.2 |
|
| $ | 73.6 |
|
| $ | 324.2 |
|
| $ | 316.4 |
|
| $ | 7.8 |
|
| $ | 632.5 |
|
| $ | 622.5 |
|
| $ | 10.0 |
|
Operating (loss) |
|
| (4,022.3 | ) |
|
| (3,962.6 | ) |
|
| (59.7 | ) |
|
| (5,830.7 | ) |
|
| (5,757.1 | ) |
|
| (73.6 | ) |
|
| (1,262.9 | ) |
|
| (1,255.1 | ) |
|
| (7.8 | ) |
|
| (3,572.1 | ) |
|
| (3,562.1 | ) |
|
| (10.0 | ) |
Total other (expense), net |
|
| (1,564.4 | ) |
|
| (1,537.6 | ) |
|
| (26.8 | ) |
|
| (4,145.9 | ) |
|
| (4,072.4 | ) |
|
| (73.5 | ) | ||||||||||||||||||||||||
(Loss) before income taxes and noncontrolling interest |
|
| (5,586.7 | ) |
|
| (5,500.2 | ) |
|
| (86.5 | ) |
|
| (9,976.6 | ) |
|
| (9,829.5 | ) |
|
| (147.1 | ) |
|
| (1,453.3 | ) |
|
| (1,445.5 | ) |
|
| (7.8 | ) |
|
| (3,929.2 | ) |
|
| (3,919.2 | ) |
|
| (10.0 | ) |
Net (loss) from continuing operations, net of tax |
|
| (3,947.9 | ) |
|
| (3,861.4 | ) |
|
| (86.5 | ) |
|
| (7,224.5 | ) |
|
| (7,077.4 | ) |
|
| (147.1 | ) | ||||||||||||||||||||||||
Provision for income taxes |
|
| 301.6 |
|
|
| 301.6 |
|
|
| - |
|
|
| 233.0 |
|
|
| 232.9 |
|
|
| 0.1 |
| ||||||||||||||||||||||||
Net (loss) |
|
| (3,954.0 | ) |
|
| (3,867.5 | ) |
|
| (86.5 | ) |
|
| (7,242.1 | ) |
|
| (7,095.0 | ) |
|
| (147.1 | ) |
|
| (1,754.9 | ) |
|
| (1,747.1 | ) |
|
| (7.8 | ) |
|
| (4,162.2 | ) |
|
| (4,152.1 | ) |
|
| (10.1 | ) |
Dividends on preferred shares |
|
| 69.6 |
|
|
| - |
|
|
| 69.6 |
|
|
| 208.8 |
|
|
| - |
|
|
| 208.8 |
| ||||||||||||||||||||||||
Net (loss) attributable to ordinary shareholders/members |
|
| (4,025.3 | ) |
|
| (3,869.2 | ) |
|
| (156.1 | ) |
|
| (7,455.6 | ) |
|
| (7,099.7 | ) |
|
| (355.9 | ) |
|
| (1,759.0 | ) |
|
| (1,751.2 | ) |
|
| (7.8 | ) |
|
| (4,167.0 | ) |
|
| (4,156.9 | ) |
|
| (10.1 | ) |
|
| Three Months Ended September 30, 2016 |
|
| Nine Months Ended September 30, 2016 |
|
| Three Months Ended June 30, 2018 |
|
| Six Months Ended June 30, 2018 |
| ||||||||||||||||||||||||||||||||||||
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
|
| Allergan plc |
|
| Warner Chilcott Limited |
|
| Difference |
| ||||||||||||
General and administrative expenses |
| $ | 361.2 |
|
| $ | 312.2 |
|
| $ | 49.0 |
|
| $ | 1,033.9 |
|
| $ | 966.2 |
|
| $ | 67.7 |
|
| $ | 334.1 |
|
| $ | 299.5 |
|
| $ | 34.6 |
|
| $ | 630.0 |
|
| $ | 593.6 |
|
| $ | 36.4 |
|
Operating (loss) |
|
| (266.4 | ) |
|
| (217.4 | ) |
|
| (49.0 | ) |
|
| (925.5 | ) |
|
| (857.8 | ) |
|
| (67.7 | ) |
|
| (467.0 | ) |
|
| (432.4 | ) |
|
| (34.6 | ) |
|
| (1,121.0 | ) |
|
| (1,084.6 | ) |
|
| (36.4 | ) |
Total other (expense), net |
|
| (272.6 | ) |
|
| (272.6 | ) |
|
| - |
|
|
| (795.2 | ) |
|
| (945.2 | ) |
|
| 150.0 |
| ||||||||||||||||||||||||
Interest income |
|
| 6.3 |
|
|
| 71.8 |
|
|
| (65.5 | ) |
|
| 23.6 |
|
|
| 142.1 |
|
|
| (118.5 | ) | ||||||||||||||||||||||||
(Loss) before income taxes and noncontrolling interest |
|
| (539.0 | ) |
|
| (490.0 | ) |
|
| (49.0 | ) |
|
| (1,720.7 | ) |
|
| (1,803.0 | ) |
|
| 82.3 |
|
|
| (475.3 | ) |
|
| (375.2 | ) |
|
| (100.1 | ) |
|
| (1,441.4 | ) |
|
| (1,286.5 | ) |
|
| (154.9 | ) |
Net (loss) from continuing operations, net of tax |
|
| (380.1 | ) |
|
| (331.1 | ) |
|
| (49.0 | ) |
|
| (894.9 | ) |
|
| (977.2 | ) |
|
| 82.3 |
| ||||||||||||||||||||||||
Net income |
|
| 15,221.8 |
|
|
| 15,270.8 |
|
|
| (49.0 | ) |
|
| 14,978.3 |
|
|
| 14,896.0 |
|
|
| 82.3 |
| ||||||||||||||||||||||||
Net (loss) |
|
| (470.1 | ) |
|
| (370.0 | ) |
|
| (100.1 | ) |
|
| (754.0 | ) |
|
| (599.1 | ) |
|
| (154.9 | ) | ||||||||||||||||||||||||
Dividends on preferred shares |
|
| 69.6 |
|
|
| - |
|
|
| 69.6 |
|
|
| 208.8 |
|
|
| - |
|
|
| 208.8 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 46.4 |
|
|
| - |
|
|
| 46.4 |
|
Net income attributable to ordinary shareholders/members |
|
| 15,150.4 |
|
|
| 15,269.0 |
|
|
| (118.6 | ) |
|
| 14,765.2 |
|
|
| 14,891.7 |
|
|
| (126.5 | ) | ||||||||||||||||||||||||
Net (loss) attributable to ordinary shareholders/members |
|
| (472.5 | ) |
|
| (372.4 | ) |
|
| (100.1 | ) |
|
| (805.0 | ) |
|
| (603.7 | ) |
|
| (201.3 | ) | ||||||||||||||||||||||||
The differencedifferences between general and administrative expenses in the three and ninesix months ended SeptemberJune 30, 20172019 and 20162018 were due to corporate related expenses incurred at Allergan plc as well as transaction costs.plc. The differencedifferences in other (expense), net in the nine months ended September 30, 2016 related to the payment received by Allergan plc relating to the reimbursement of expenses associated with the termination of the merger agreement with Pfizer, Inc. Movements intotal equity arewere due to historical differences in the results of operations of the companies and differences in equity awards.awards and dividends.
As of SeptemberDuring the three and six months ended June 30, 20172018, the difference in interest income between Allergan plc and December 31, 2016, Warner Chilcott Limited had $5.3was due to $5.8 billion and $9.3$4.0 billion in Receivables from the Parents respectively. As of September 30, 2017 and December 31, 2016, Warner Chilcott Limited had $4.0 billion and $4.0 billion in Non-current Receivables from the Parents, respectively. These receivablesReceivables were related to intercompany loans between Allergan plc and each of Allergan Capital S.à.r.l. (formerly known as Actavis Capital S.à.r.l.) and Forest Finance B.V., subsidiaries of Warner Chilcott Limited. These loans are interest-bearing loans with varying term dates. TotalLimited and caused a difference in interest income recognizedbetween the two entities in the prior year. These Receivables were contributed to the Parents during the threeyear ended December 31, 2018 as an equity contribution and nine months ended September 30, 2017 was $26.8 million and $73.5 million, respectively.were reclassified from receivables to equity.
NOTE 3 — Summary of Significant Accounting Policies
The following are interim updates to certain of the policies described in “Note 4” of the notes to the Company’s audited consolidated financial statements for the year ended December 31, 20162018 included in the Annual Report.
ReclassificationsImplementation of New Guidance
In MarchFebruary 2016, the Financial Accounting Standards Board (“FASB”) established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.
On January 1, 2019, the Company adopted the new standard using the modified retrospective transition approach applied to all leases existing at the effective date of initial application of January 1, 2019. Prior period amounts are not adjusted and continue to be reported in accordance with historical accounting practices and the disclosures under the new standard are not required for dates and periods prior to January 1, 2019.
When evaluating whether a contract contains a lease under the new standard, Allergan considers whether (1) the contract explicitly or implicitly identifies assets that are contractually defined and (2) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company does not have the right to use an identified asset if the supplier has the substantive right to substitute the asset throughout the period without the Company’s approval.
The new standard provides a number of optional practical expedients in transition. The Company elected the ‘package of practical expedients’ which permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs under the new standard. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter was not applicable to the Company.
This standard has a significant impact on our consolidated balance sheet but did not have a significant impact on our consolidated statements of operations. The most significant effects relate to the recognition of ROU assets and lease liabilities on our balance sheet for our real estate and fleet operating leases.
Upon adoption, the Company recognized lease liabilities and corresponding ROU assets as follows ($ in millions):
|
| ROU Asset |
|
| Lease Liability |
| ||
Real estate |
| $ | 304.2 |
|
| $ | 370.6 |
|
Fleet |
|
| 100.4 |
|
|
| 100.4 |
|
Other |
|
| 57.5 |
|
|
| 77.6 |
|
Total operating leases |
| $ | 462.1 |
|
| $ | 548.6 |
|
The cumulative effective adjustment as of the effective date of $22.0 million was recorded to opening retained earnings. The Company has an immaterial amount of finance leases.
The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the lease recognition exemption for all leases with lease terms of 12 months or less. For leases that qualify under this exception, the Company will not recognize ROU assets or lease liabilities and did not recognize ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for leases of real estate, fleet, IT and office equipment.
Refer to “NOTE 13 – Leases” for further information related to the Company’s leases.
In February 2018, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation2018-02, Income Statement-Reporting Comprehensive Income (Topic 718)220): ImprovementsReclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update allows for the optional reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”) from accumulated other comprehensive income to Employee Share-Based Payment Accounting.retained earnings. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspectsamount of the accounting for share-based payment award transactions are simplified, including: (a)reclassification is calculated as the difference between the historical and newly enacted tax rates on deferred taxes originally recorded through accumulated other comprehensive income. The Company adopted the standard as of January 1, 2019; however, due to the immaterial amount of the stranded tax effects, the Company elected not to reclassify the income tax consequences; (b) classification of awards aseffects from accumulated other comprehensive income to retained earnings. Tax effects unrelated to the TCJA are released from accumulated other comprehensive income using either equitythe specific identification approach or liabilities; and (c) classificationthe portfolio approach based on the statementnature of cash flows. the underlying item.
The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. As a result of implementation of this guidance, effectiveCompany adopted ASU 2016-01, Financial Instruments on January 1, 2017,2018. The new standard required modified retrospective adoption through 2018 beginning Retained Earnings and Accumulated Other Comprehensive Income. This was incorrectly recorded as a loss through Other Comprehensive Income of $63.0 million during the quarter ended March 31, 2018. This was corrected during 2018 and therefore, has no impact on the annual consolidated financial statements. The Company reducedhas determined that the adjustment was not material to any previously reported Retained Earnings by $62.4 million and increased previously reported Additional-Paid-In-Capital by $62.4 million. In addition, the Company decreased its net Deferred Tax Liabilities and increased Retained Earnings by $20.8 millioninterim period. The Consolidated Statement of Comprehensive (Loss) for the tax impact of this change. The Company also revised its presentation of previously reported cash flows by eliminating the presentation of “Excess tax benefit from stock-based compensation” which raised operating cash flows and reduced financing cash flows for the ninesix months ended SeptemberJune 30 2016 by $26.6 million., 2018 has been adjusted to correct for this error.
Revenue Recognition
General
Revenue
ASU No. 2014-09, “Revenue from product sales isContracts with Customers” (“Topic 606”) provides that revenues are recognized when title and riskcontrol of lossthe promised goods under a contract is transferred to a customer, in an amount that reflects the product transfers to the customer, which is based on the transaction shipping terms. Recognition of revenue also requires persuasive evidence of an arrangement, reasonable assurance of collection of sales proceeds, and the seller’s price to the buyerconsideration we expect to be fixed or determinable.entitled to in exchange for those goods as specified in the underlying terms with the customer. The Company warrants products against defects and for specific quality standards, permitting the return of products under certain circumstances. Product sales are recorded net of all sales-related deductions including, but not limited to: chargebacks, trade discounts, sales returns and allowances, commercial and government rebates, customer loyalty programs, and fee-for-service arrangements with certain distributors, returns, and other allowances which we refer to in the aggregate as sales returns and allowances (“SRAs”SRA”).
Royalty and commission revenue is recognized as a component of net revenues in accordance with the terms of the applicable contractual agreements when collectability is reasonably assured and when revenue can be reasonably measured.
Provisions for SRAs
As is customary in the pharmaceutical industry, our gross product sales are subject to a variety of deductions in arriving at reported net product sales. When the Company recognizes gross revenue from the sale of products, an estimate of SRA is recorded, which reduces the product revenues. Accounts receivable and/or accrued liabilities are also reduced and/or increased by the SRA amount depending on whether we have the right of offset with the customer. These provisions are estimated based on historical payment experience, historical relationship of the deductions to gross product revenues, government regulations, estimated utilization or redemption rates, estimated customer inventory levels and current contract sales terms. The estimation process used to determine our SRA provision has been applied on a consistent basis and no material revenue adjustments have been necessary to increase or decrease our reserves for SRA as a result of a significant change in underlying estimates. The Company uses a variety of methods to assess the adequacy of the SRA reserves to ensure that our financial statements are fairly stated.
Accounts receivable balancesThe Company’s performance obligations are primarily achieved when control of the products is transferred to the customer. Transfer of control is based on contractual performance obligations, but typically occurs upon receipt of the goods by the customer as that is when the customer has obtained control of significantly all of the economic benefits.
Refer to “NOTE 8 – Reportable Segments” for our revenues disaggregated by product and segment and our revenues disaggregated by geography for our international segment. We believe this level of disaggregation best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
The following table summarizes the activity from operations in the Company’s consolidated financial statements are presented netmajor categories of SRA estimates. SRA balances in accounts receivable were $204.9 million and $287.4 million at September 30, 2017 and December 31, 2016, respectively. SRA balances within accounts payable and accrued expenses were $1,985.4 million and $1,891.4 million at September 30, 2017 and December 31, 2016, respectively. The movements in the SRA reserve balances in the nine months ended September 30, 2017 are as follows ($ in millions):
Balance as of December 31, 2016 |
| $ | 2,178.8 |
|
Provision to reduce gross product sales to net product sales |
|
| 5,914.5 |
|
Acquired balances in the LifeCell and Zeltiq acquisitions |
|
| 41.3 |
|
Payments and other |
|
| (5,944.3 | ) |
Balance as of September 30, 2017 |
| $ | 2,190.3 |
|
|
| Chargebacks |
|
| Rebates |
|
| Returns and Other Allowances |
|
| Cash Discounts |
|
| Total |
| |||||
Balance at December 31, 2018 |
| $ | 61.8 |
|
| $ | 1,908.5 |
|
| $ | 566.6 |
|
| $ | 30.7 |
|
| $ | 2,567.6 |
|
Provision related to sales in 2019 |
|
| 553.2 |
|
|
| 2,876.3 |
|
|
| 835.8 |
|
|
| 159.2 |
|
|
| 4,424.5 |
|
Credits and payments |
|
| (545.1 | ) |
|
| (2,769.3 | ) |
|
| (781.5 | ) |
|
| (156.9 | ) |
|
| (4,252.8 | ) |
Balance at June 30, 2019 |
| $ | 69.9 |
|
| $ | 2,015.5 |
|
| $ | 620.9 |
|
| $ | 33.0 |
|
| $ | 2,739.3 |
|
Contra accounts receivable at June 30, 2019 |
| $ | 69.9 |
|
| $ | 81.1 |
|
| $ | 34.6 |
|
| $ | 33.0 |
|
| $ | 218.6 |
|
Accounts payable and accrued expenses at June 30, 2019 |
| $ | - |
|
| $ | 1,934.4 |
|
| $ | 586.3 |
|
| $ | - |
|
| $ | 2,520.7 |
|
The following table summarizes the balance sheet classification of our SRA reserves ($ in millions):
|
| June 30, 2019 |
|
| December 31, 2018 |
| ||
Contra accounts receivable |
| $ | 218.6 |
|
| $ | 207.7 |
|
Accounts payable and accrued expenses |
|
| 2,520.7 |
|
|
| 2,359.9 |
|
Total |
| $ | 2,739.3 |
|
| $ | 2,567.6 |
|
The SRA provisions recorded to reduce gross product sales to net product sales excluding discontinued operations, were as follows ($ in millions):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||||||
Gross product sales |
| $ | 5,994.9 |
|
| $ | 5,332.9 |
|
| $ | 17,265.7 |
|
| $ | 15,727.7 |
|
| $ | 6,295.6 |
|
| $ | 6,095.5 |
|
| $ | 11,955.5 |
|
| $ | 11,711.6 |
|
Provisions to reduce gross product sales to net product sales |
|
| (2,044.6 | ) |
|
| (1,757.3 | ) |
|
| (5,914.5 | ) |
|
| (5,153.0 | ) |
|
| (2,284.8 | ) |
|
| (2,087.3 | ) |
|
| (4,424.5 | ) |
|
| (4,122.4 | ) |
Net product sales |
| $ | 3,950.3 |
|
| $ | 3,575.6 |
|
| $ | 11,351.2 |
|
| $ | 10,574.7 |
|
| $ | 4,010.8 |
|
| $ | 4,008.2 |
|
| $ | 7,531.0 |
|
| $ | 7,589.2 |
|
Percentage of SRA provisions to gross sales |
|
| 34.1 | % |
|
| 33.0 | % |
|
| 34.3 | % |
|
| 32.8 | % |
|
| 36.3 | % |
|
| 34.2 | % |
|
| 37.0 | % |
|
| 35.2 | % |
Collectability Assessment
At the time of contract inception or customer account set-up, the Company performs a collectability assessment on the creditworthiness of such customer. The increaseCompany assesses the probability that the Company will collect the consideration to which it will be entitled in SRA provisionsexchange for the goods sold. In evaluating collectability, the Company considers the customer’s ability and intention to reduce gross product sales to net product sales was attributable primarilypay consideration when it is due. On a recurring basis, the Company estimates the amount of receivables considered uncollectible after sale to the US business with higher rebatescustomer to maintain broad coveragereflect allowances for key brands, an increasedoubtful accounts. Provision for bad debts, included in coupon/co-pay program participationgeneral and an annual price increase which drove increasesadministrative expenses, were $3.9 million and $4.0 million in statutory Medicaidthe three months ended June 30, 2019 and chargeback related discounts.2018, respectively. Provision for bad debts, included in general and administrative expenses, were $7.3 million and $14.1 million in the six months ended June 30, 2019 and 2018, respectively.
Goodwill and Intangible Assets with Indefinite-LivesIndefinite Lives
General
The Company tests goodwill and intangible assets with indefinite-livesindefinite lives for impairment annually in the second quarter. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit or an indefinite lived intangible asset below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.
The Company tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including Reporting Unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a Reporting Unit is less than its carrying amount, including goodwill. The Company may elect to bypass this qualitative assessment for some or all of its Reporting Units and perform a quantitative test as of the measurement date of the test.
Goodwill is considered impaired if the carrying amount of the net assets exceeds the fair value of the reporting unit. Impairment, if any, would be recorded in operating income / (loss) and this could result in a material impact to net income / (loss) and income / (loss) per share.
Prior to Allergan’s 2018 annual impairment test, the Company adopted the new guidance under Accounting Standard Update No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment which eliminated step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation to measure goodwill impairment loss as of January 1, 2018. A goodwill impairment loss under the new guidance is instead measured using a single step test based on the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.
Acquired in-process research and development (“IPR&D”) intangible assets represent the value assigned to acquired research and development projects acquired in a business combination that, as of the date acquired, represent the right to develop, use, sell and/or offer for sale a product or other intellectual property that the Company has acquired with respect to products and/or processes that have not been completed or approved. The IPR&D intangible assets are subject to impairment testing until completion or abandonment of each project. Upon abandonment, the assets are impaired if there is no future alternative use or ability to sell the asset. Impairment testing requires the development of significant estimates and assumptions involving the determination of estimated net cash flows for each year for each project or product (including net revenues, cost of sales, research and development (“R&D”) costs, probability of success of development projects, selling and marketing costs and other costs which may be allocated), determination of the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, and competitive trends impacting the asset and each cash flow stream as well as other factors. The major risks and uncertainties associated with the timely and successful completion of the IPR&D projects include legal risk, market risk and regulatory risk. Changes in theseour assumptions could result in future impairment charges. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change or the timely completion of each project and commercial success will occur. For these and other reasons, actual results may vary significantly from estimated results.
Upon successful completion of each project and approval of thea product, we will make a separate determination of the useful life of the intangible asset, transfer the amount to currently marketed products (“CMP”) and amortization expense will be recorded over the estimated useful life.
The Company evaluated goodwillRefer to “NOTE 11 –Goodwill, Product Rights, and Other Intangible Assets” for five reporting units during the second quarter of 2017. The Company performed its annual impairment test utilizing long-term growth rates for its reporting units ranging from 0.0% to 2.0% in its estimation of fair value and discount rates ranging from 7.5% to 8.5%. The factors used in evaluating goodwill for impairment are subject to change and are tracked against historical results by management. Changes in the key assumptions by management can change the results of testing. The Company determined there was no impairment associated with goodwill.
As part of the annual IPR&D impairment test performed by the Company during 2017, the following impairments were recorded:
The Company impaired a CNS IPR&D project obtained as part of the Allergan acquisition by $486.0 million related to an anticipated approval delay due to certain product specifications;
The Company impaired a women’s healthcare IPR&D project by $91.3 million basedfurther discussion on the Company’s intention to divest the non-strategic asset;
The Company impaired an IPR&D eye care project obtained as part of the Allergan acquisition by $44.0 million as a result of a decrease in projected cash flows due to a decline in market demand assumptions;
The Company impaired an IPR&D asset acquired as part of the Warner Chilcott acquisition by $57.0 million ($278.0 million in the nine months ended September 30, 2017) due to a delay in anticipated launch of a women’s healthcare project coupled with an anticipated decrease in product demand;goodwill and
The Company impaired an IPR&D eye care project obtained as part of the Allergan acquisition by $20.0 million.
In addition to the Company’s annual IPR&D impairment test, the Company noted the following IPR&D impairments based on triggering events during the nine months ended September 30, 2017:
The Company recorded IPR&D impairments of $164.0 million related to other Dry Eye IPR&D intangible assets obtained in the Allergan acquisition as a result of the dry eye market going generic;
The Company impaired an IPR&D medical aesthetics project obtained as part of the Allergan acquisition by $17.0 million;balances and
The Company terminated its License, Transfer and Development Agreement for SER-120 (nocturia) with Serenity Pharmaceuticals, LLC. As a result of this termination, the Company recorded an impairment of $140.0 million on the IPR&D intangible asset obtained as part of the Allergan acquisition during the first quarter of 2017.
During the nine months ending September 30, 2016, the Company impaired an international eye care pipeline project of $35.0 million based on a decrease in projected cash flows due to market conditions as well as an impairment of $20.0 million for a specified indication of a Botox therapeutic product based on a decrease in projected cash flows due to a decline in market demand assumptions, a women’s healthcare project for $24.0 million and osteoarthritis for approximately $190.0 million based on clinical results and during the three and nine months ended September 30, 2016, the Company impaired a gastroenterology project for $42.0 million based on the lack of future availability of active pharmaceutical ingredients.
Litigation and Contingencies
The Company is involved in various legal proceedings in the normal course of its business, including product liability litigation, intellectual property litigation, employment litigation and other litigation. Additionally, the Company, in consultation with its counsel, assesses the need to record a liability for contingencies on a case-by-case basis in accordance with FASB Accounting Standards Codification (“ASC”) Topic 450 “Contingencies” (“ASC 450”). For more information on litigation and contingencies, refer to “NOTE 20 — Commitments and Contingencies” in this Quarterly Report. impairments.
Earnings Per Share (“EPS”)
The Company computes EPS in accordance with ASCAccounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share” (“ASC 260”) and related guidance, which requires two calculations of EPS to be disclosed: basic and diluted. Basic EPS is computed by dividing net (loss) / income by the weighted average ordinary shares outstanding during a period. Diluted EPS is based on the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the exercise of stock options and restricted stock units. Diluted EPS also includes the impact of ordinary share equivalents to be issued upon the mandatory conversion of the Company’s preferred shares. Ordinary share equivalents have been excluded where their inclusion would be anti-dilutive.
A reconciliation of the numerators and denominators of basic and diluted EPS consisted of the followingfollows ($ in millions, except per share amounts):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net (loss) / income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to ordinary shareholders excluding income from discontinued operations, net of tax |
| $ | (4,019.2 | ) |
| $ | (451.5 | ) |
| $ | (7,438.0 | ) |
| $ | (1,108.0 | ) |
(Loss) / income from discontinued operations, net of tax |
|
| (6.1 | ) |
|
| 15,601.9 |
|
|
| (17.6 | ) |
|
| 15,873.2 |
|
Net (loss) / income attributable to ordinary shareholders |
| $ | (4,025.3 | ) |
| $ | 15,150.4 |
|
| $ | (7,455.6 | ) |
| $ | 14,765.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average ordinary shares outstanding |
|
| 333.5 |
|
|
| 392.7 |
|
|
| 334.6 |
|
|
| 394.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
| $ | (12.05 | ) |
| $ | (1.15 | ) |
| $ | (22.23 | ) |
| $ | (2.81 | ) |
Discontinued operations |
| $ | (0.02 | ) |
| $ | 39.73 |
|
| $ | (0.05 | ) |
| $ | 40.25 |
|
Net (loss) / income per share |
| $ | (12.07 | ) |
| $ | 38.58 |
|
| $ | (22.28 | ) |
| $ | 37.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per ordinary share |
| $ | 0.70 |
|
| $ | - |
|
| $ | 2.10 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average ordinary shares outstanding |
|
| 333.5 |
|
|
| 392.7 |
|
|
| 334.6 |
|
|
| 394.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
| $ | (12.05 | ) |
| $ | (1.15 | ) |
| $ | (22.23 | ) |
| $ | (2.81 | ) |
Discontinued operations |
| $ | (0.02 | ) |
| $ | 39.73 |
|
| $ | (0.05 | ) |
| $ | 40.25 |
|
Net (loss) / income per share |
| $ | (12.07 | ) |
| $ | 38.58 |
|
| $ | (22.28 | ) |
| $ | 37.44 |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||
Net (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) attributable to ordinary shareholders |
| $ | (1,759.0 | ) |
| $ | (472.5 | ) |
| $ | (4,167.0 | ) |
| $ | (805.0 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average ordinary shares outstanding |
|
| 327.8 |
|
|
| 339.1 |
|
|
| 329.9 |
|
|
| 336.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per share |
| $ | (5.37 | ) |
| $ | (1.39 | ) |
| $ | (12.63 | ) |
| $ | (2.39 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per ordinary share |
| $ | 0.74 |
|
| $ | 0.72 |
|
| $ | 1.48 |
|
| $ | 1.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average ordinary shares outstanding |
|
| 327.8 |
|
|
| 339.1 |
|
|
| 329.9 |
|
|
| 336.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per share |
| $ | (5.37 | ) |
| $ | (1.39 | ) |
| $ | (12.63 | ) |
| $ | (2.39 | ) |
Stock awards to purchase 3.71.6 million and 4.21.8 million ordinary shares for the three and ninesix months ended SeptemberJune 30, 2017,2019, respectively, were outstanding, but not included in the computation of diluted EPS, because the awards were anti-dilutive. The weighted average impact of ordinary share equivalents of 17.7 million forNo shares were repurchased in the three and nine months ended SeptemberJune 30, 2017, which are anticipated to result from the mandatory conversion of the Company’s preferred shares were not included in the calculation of diluted EPS as their impact would be anti-dilutive.2019. The impact of the share repurchase5.3 million shares repurchased in the six months ended June 30, 2019 on basic EPS was 3.0 million weighted average shares and 1.3 million weighted average shares for the three and nine months ended September 30, 2017, respectively. Refer to “NOTE 16 –Shareholder’s Equity” for further discussion on the Company’s Share Repurchase Program.
shares. Stock awards to purchase 4.4 million and 4.72.2 million ordinary shares for the three and ninesix months ended SeptemberJune 30, 2016, respectively,2018 were outstanding, but not included in the computation of diluted EPS, because the awards were anti-dilutive for continuing operations and as such the treatment for discontinued operations is also anti-dilutive.
The Company’s preferred shares were mandatorily converted to ordinary shares on March 1, 2018. The weighted average impact of ordinary share equivalents of 17.65.8 million for the three and ninesix months ended SeptemberJune 30, 2016,2018, which are anticipated towould result from the mandatory conversion of the Company’s preferred shares at the beginning of the period, were not included in the calculation of diluted EPS as their impact would be anti-dilutive.
Restructuring CostsRefer to “NOTE 16 –Shareholders’ Equity” for further discussion on the Company’s share repurchase programs.
The Company records liabilities forResearch and Development Activities
Research and development (“R&D”) activities are expensed as incurred and consist of self-funded R&D costs, the costs associated with exit or disposal activitieswork performed under collaborative R&D agreements, regulatory fees, and acquisition and license related milestone payments, if any.
As of June 30, 2019, we are developing a number of products, some of which utilize novel drug delivery systems, through a combination of internal and collaborative programs, and we additionally have products in the period in which the liability is incurred. In accordance with existing benefit arrangements, employee severance costs are accrued when the restructuring actions are probable and estimable. Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period. The Company also incurs costs with contract terminations and costs of transferring productsdevelopment as part of restructuring activities. Referour life-cycle management strategy for our existing product portfolio. These development projects include but are not limited to “NOTE 19 — Business Restructuring Charges” for more information.the following:
Product | Therapeutic Area | Indication | Expected Launch Year | Phase | ||||
Cariprazine | Central Nervous System | Bipolar Depression | 2019 | Approved | ||||
Ubrogepant | Central Nervous System | Acute Migraine | 2020 | Review | ||||
Bimatoprost SR | Eye Care | Glaucoma | 2020 | Review | ||||
Abicipar | Eye Care | Age Related Macular Degeneration | 2020 | III | ||||
Atogepant | Central Nervous System | Prophylaxis Migraine | 2021 | III | ||||
Presbysol | Eye Care | Presbyopia | 2021 | III | ||||
Cenicriviroc | Gastrointestinal | NASH | 2022 | III | ||||
Relamorelin | Gastrointestinal | Gastroparesis | 2023 | III | ||||
Brimonidine DDS | Eye Care | Geographic Atrophy | 2023 | II | ||||
Botox | Medical Aesthetics | Platysma/Masseter | 2025/2024 | II | ||||
Abicipar | Eye Care | Diabetic Macular Edema | 2025 | II | ||||
Brazikumab | Gastrointestinal | Crohn's Disease | 2025 | II | ||||
Brazikumab | Gastrointestinal | Ulcerative Colitis | 2026 | II |
Recent Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), with an effective date for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The effective date for ASU 2014-09 was deferred by one year through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Subsequent to the issuance of ASU 2014-09, the FASB issued multiple updates which are intended to improve the operability and understandability of the implementation guidance, and to provide clarifying guidance in certain narrow areas and add some practical expedients, which include guidance on principal versus agent considerations; identifying performance obligations; licensing implementation guidance; assessing the specific collectability criterion and accounting for certain contracts; presentation of sales taxes and other similar taxes collected from customers; noncash consideration; contract modifications at transition; and completed contracts at transition. The adoption of this guidance is not anticipated to have a material impact on the Company’s financial position or results of operations as the Company's sales primarily relate to standard bill and ship terms of pharmaceutical products to customers. The Company will adopt this standard inNovember 2018, using the modified retrospective approach.
In February 2016, the FASB issued ASU 2016-02, which statesNo. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606. The ASU provides more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants and only allows a company to present units of account in collaborative arrangements that a lesseeare within the scope of the revenue recognition standard together with revenue accounted for under the revenue recognition standard. The parts of the collaborative arrangement that are not in the scope of the revenue recognition standard should recognizebe presented separately from revenue accounted for under the assets and liabilities that arise from leases. This update isrevenue recognition standard. The amendments in ASU No. 2018-18 are effective for fiscal years beginning after December 15, 2018, including2019, and interim periods within those fiscal years. The Company is evaluating the impact, if any, that this pronouncement will have on our financial position and results of operations.
In June 2016,August 2018, the FASB issued ASU No. 2016-13, Financial Instruments2018-15, Intangibles – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intendedGoodwill and Other – Internal-Use Software (Subtopic 350-40), relating to improve financial reporting by requiring timelier recording of credit losses on loansa customer's accounting for implementation, set-up, and other financial instruments heldupfront costs incurred in a cloud computing arrangement that is hosted by financial institutionsa vendor (i.e., a service contract). Under the new guidance, a customer will apply the same criteria for capitalizing implementation costs as it would for an arrangement that has a software license. The new guidance also prescribes the balance sheet, income statement, and other organizations. The ASUcash flow classification of the capitalized implementation costs and related amortization expense, and requires the measurement of all expected credit losses for financial assets including trade receivables held at the reporting date based on historical experience, current conditions,additional quantitative and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.qualitative disclosures. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginningis permitted. The Company can choose to adopt the new guidance (1) prospectively to eligible costs incurred on or after December 15, 2018.the date this guidance is first applied or (2) retrospectively. The Company is evaluating the impact, if any, that this pronouncement will have on our financial position and results of operations.
In October 2016, August 2018, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This prohibition on recognition is an exception2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) – Disclosure Framework - Changes to the principle of comprehensive recognition of currentDisclosure Requirements for Defined Benefit Plans, which amends ASC 715 to add, remove, and deferred income taxes in GAAP.clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amendmentsrevisions to the guidance require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. Two common examples of assets included in the scope of the amendments are intellectual property and property, plant, and equipment. The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The amendments should be appliedon a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. While the Company has not completed its assessment, the adoption of the guidance may have a material impact on the Company’s financial position.
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments to the guidance are intended to help companies evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. When substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. This amendment introduces an initial required screening that, if met, eliminates the need for further assessment. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. To be a business without outputs, there will need to be an organized workforce. The ASU also narrows the definition of the term “outputs” to be consistent with how it is described in Topic 606, Revenue from Contracts with Customers. These amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The changes to the definition of a business may result in more acquisitions being accounted for as asset acquisitions.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments to the guidance eliminate Step 2 from the goodwill impairment test. The goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. These amendments also
eliminate thedisclosure requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. These amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. These amendments are effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of these amendments are not anticipated to have a material impact on the Company’s financial position or results of operations.
In March 2017, the FASB issued ASU No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments to the guidance require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. In addition, the amendments also allowaffect only the service cost componentyear-end financial statements of plan sponsors, as there are no changes related to be eligible for capitalization when applicable. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company does not anticipate the standard having an impact on our financial position and results of operations.
In March 2017, The FASB issued Accounting Standards Update (ASU) 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium and requires the premium to be amortized to the earliest call date, but does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments are effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Entities are required to apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The entity is required to provide disclosures about a change in accounting principle in the period of adoption. The Company is evaluating the impact these amendments will have on our financial position and results of operations.
In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718) — Scope of Modification Accounting. ASU 2017-09 applies to entities that change the terms or conditions of a share-based payment award. The amendments to the guidance in ASU 2017-09 include guidance on determining changes to the terms and conditions of share-based payment awards and require an entity to apply modification accounting under Topic 718 unless all of the following conditions are met: (1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 and should be applied prospectively to an award modified on or after the adoption date. The adoption of these amendments are not anticipated to have a material impact on the Company’s financial position or results of operations.
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815) — Targeted Improvements to Accounting for Hedging Activities. The amendments to the guidance will better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments also make certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. The amendments areASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.2020. Early adoptionapplication is permitted in any interim period or fiscal years before the effective date of the amendments. For cash flowpermitted. The ASU provisions will be applied on a retrospective basis to all periods presented. This pronouncement only has an impact to disclosure requirements and net investment hedges existing at the date of adoption,does not have an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments. The amended presentation and disclosure guidance is required only prospectively. The Company is evaluating the impact the amendments will have on our financial positions andposition or results of operations.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which removes, adds and modifies certain disclosure requirements for fair value measurements in Topic 820. The Company will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the valuation processes of Level 3 fair value measurements. However, the Company will be required to additionally disclose the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, and the range and weighted average of assumptions used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments relating to additional disclosure requirements will be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments will be applied retrospectively to all periods presented upon their effective date. The Company is permitted to early adopt either the entire ASU or only the provisions that eliminate or modify the requirements. This pronouncement only has an impact to disclosure requirements and does not have an impact on our financial position or results of operations.
NOTE 4 — Acquisitions and Other AgreementsBusiness Transactions
20172019 Transactions
The following are the significant transactions that were completed or announced in the ninesix months ended SeptemberJune 30, 2017. 2019.
Acquisitions
Keller Medical,AbbVie Inc.
On June 23, 201725, 2019, the Company announced that it entered into a transaction agreement (the “AbbVie Agreement”) under which AbbVie Inc. (“AbbVie”), a global, research-driven biopharmaceutical company, would acquire Allergan plc in a stock and cash transaction (the “AbbVie Transaction”), valued at $188.24 per Allergan share, or approximately $63.0 billion, based on AbbVie’s then-current stock price at the time the AbbVie Transaction was announced. At the closing of the proposed AbbVie Transaction, Company shareholders will receive 0.8660 shares of AbbVie common stock and $120.30 in cash for each of their existing shares. The AbbVie Transaction is subject to customary regulatory and shareholder approvals and other customary closing conditions. The AbbVie Transaction is anticipated to close in early 2020.
Envy Medical, Inc.
On March 26, 2019, the Company acquired KellerEnvy Medical, Inc. (“Keller”Envy”), a privately held medical deviceaesthetics company and developer of the Keller Funnel® (the “Keller Acquisition”). The acquisition combines the Keller Funnel®, a surgical device usedthat specializes in conjunction with breast implants, with the Company’s leading breast implants business.
ZELTIQ® Aesthetics, Inc.
On April 28, 2017 the Company acquired Zeltiq® Aesthetics, Inc. (“Zeltiq”)non-surgical, non-invasive skin resurfacing systems for an acquisition accounting purchase price of $2,405.4$81.4 million, (the “Zeltiq Acquisition”). Zeltiqwhich includes $67.4 million of product rights and other intangibles, $34.1 million of goodwill and other assets and liabilities. The transaction was focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform.treated as a business combination. The acquisition combined Zeltiq’s body contouring businesscombines Envy’s skin care product portfolio with the Company’s leading portfolio of medical aesthetics.aesthetics business.
NOTE 5 — Assets Acquired and Liabilities Assumed at Fair ValueHeld for Sale
The Zeltiq Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. As of September 30, 2017, certain amounts relating to the valuation of tax related matters and intangible assets have not been finalized. The finalization of these matters may result in changes to goodwill.
The following table summarizes the preliminary fair values ofrepresents the assets acquired and liabilities assumed at the acquisition date and reflects purchase accounting adjustments subsequent to the acquisition dateheld for sale ($ in millions):
| Preliminary Valuation as of June 30, 2017 |
|
| Measurement Period Adjustments |
|
| Preliminary Valuation as of September 30, 2017 |
| |||
Cash and cash equivalents | $ | 36.7 |
|
| $ | - |
|
| $ | 36.7 |
|
Accounts receivable |
| 47.0 |
|
|
| - |
|
|
| 47.0 |
|
Inventories |
| 59.3 |
|
|
| - |
|
|
| 59.3 |
|
Property, plant and equipment |
| 12.4 |
|
|
| - |
|
|
| 12.4 |
|
Intangible assets |
| 1,185.0 |
|
|
| - |
|
|
| 1,185.0 |
|
Goodwill |
| 1,204.6 |
|
|
| (0.3 | ) |
|
| 1,204.3 |
|
Other assets |
| 17.1 |
|
|
| - |
|
|
| 17.1 |
|
Accounts payable and accrued expenses |
| (93.6 | ) |
|
| - |
|
|
| (93.6 | ) |
Deferred revenue |
| (10.6 | ) |
|
| - |
|
|
| (10.6 | ) |
Deferred taxes, net |
| (51.2 | ) |
|
| 0.3 |
|
|
| (50.9 | ) |
Other liabilities |
| (1.3 | ) |
|
| - |
|
|
| (1.3 | ) |
Net assets acquired | $ | 2,405.4 |
|
| $ | - |
|
| $ | 2,405.4 |
|
|
| June 30, |
|
| December 31, |
| ||
|
| 2019 |
|
| 2018 |
| ||
Assets held for sale: |
|
|
|
|
|
|
|
|
Inventories |
| $ | - |
|
| $ | 34.0 |
|
Property, plant and equipment, net |
|
| 32.5 |
|
|
| 32.8 |
|
Product rights and other intangibles |
|
| - |
|
|
| 849.4 |
|
Total assets held for sale |
| $ | 32.5 |
|
| $ | 916.2 |
|
IPR&D
As of December 31, 2018, the Company had concluded that its Anti-Infectives business met the criteria for held for sale based on management’s intent and Intangibleability to divest the business within the next twelve months. Assets
The estimated fair value held for sale also include miscellaneous properties. As of June 30, 2019, and as a result of the proposed AbbVie Transaction, the Company concluded that the Anti-Infectives business no longer met the criteria for held for sale. The Anti-Infectives intangible assets including customer relationships, was determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherentand inventory were reclassified to held in the development of those asset valuations include the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, R&D costs, selling and marketing costs, other allocated costs, and working capital/contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream. This technique is referred to herein as the “IPR&D and Intangible Asset Valuation Technique.”
The fair value of the intangible assets acquired in the Zeltiq Acquisition was determined using the IPR&D and Intangible Asset Valuation Technique. The discount rate used to arriveuse at the present value for these acquired intangible assets ranged from 10.0% to 11.0% to reflectlower of their carrying amount before the internal rate of return and incremental commercial uncertainty in the cash flow projections. The discount rate of the Zeltiq Acquisition was driven by the life-cycle stage of the products and the therapeutic indication. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results.
The following table identifies the summarized amounts recognized and the weighted average useful lives using the economic benefit of intangible assets ($ in millions):
| Amount recognized as of the acquisition date |
|
| Weighted average useful lives (years) |
| ||
Definite-lived assets |
|
|
|
|
|
|
|
Consumables | $ | 985.0 |
|
|
| 6.7 |
|
System |
| 43.0 |
|
|
| 3.7 |
|
Total CMP |
| 1,028.0 |
|
|
|
|
|
Customer Relationships |
| 157.0 |
|
|
| 6.6 |
|
Total definite-lived assets |
| 1,185.0 |
|
|
|
|
|
Goodwill
Among the reasons the Company acquired Zeltiq and the factors that contributed to the preliminary recognition of goodwill was the expansion of the Company’s leading medical aesthetics portfolio. Goodwill from the Zeltiq Acquisition of $958.4 million was assigned to the US Specialized Therapeutic segment; and goodwill of $245.9 million was assigned to the International segment and is non-deductible for tax purposes.
Inventories
The fair value of inventories acquired included an acquisition accounting fair market value step-up of $22.9 million. In the three and nine months ended September 30, 2017, the Company recognized $11.0 million and $22.9 million, respectively, as a component of cost of sales as the inventory acquired was sold to the Company’s customers.
Long-Term Deferred Tax Liabilities and Other Tax Liabilities
Long-term deferred tax liabilities and other tax liabilities result from identifiable intangible assets’ fair value adjustments. These adjustments create excess book basis over the tax basis which is multiplied by the statutory tax rate for the jurisdiction in which the deferred taxes exist.
LifeCell Corporation
On February 1, 2017, the Company acquired LifeCell Corporation (“LifeCell”), a regenerative medicine company, for an acquisition accounting price of $2,883.1 million (the “LifeCell Acquisition”). The LifeCell Acquisition combines LifeCell's novel, regenerative medicines business, including its high-quality and durable portfolio of dermal matrix products, with Allergan's leading portfolio of medical aesthetic products, breast implants and tissue expanders. The acquisition of LifeCell expanded the Company’s medical aesthetics portfolio by adding Alloderm® and Strattice®.
Assets Acquired and Liabilities Assumed at Fair Value
The LifeCell Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. As of September 30, 2017, certain amounts relating to the valuation of tax related matters and intangible assets have not been finalized. The finalization of these matters may result in changes to goodwill.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date and reflects purchase accounting adjustments subsequent to the acquisition date ($ in millions):
| Preliminary Valuation as of March 31, 2017 |
|
| Measurement Period Adjustments |
|
| Preliminary Valuation as of September 30, 2017 |
| |||
Cash and cash equivalents | $ | 8.7 |
|
| $ | - |
|
| $ | 8.7 |
|
Accounts receivable |
| 50.8 |
|
|
| - |
|
|
| 50.8 |
|
Inventories |
| 175.4 |
|
|
| - |
|
|
| 175.4 |
|
Property, plant and equipment, net |
| 53.7 |
|
|
| - |
|
|
| 53.7 |
|
Currently marketed products ("CMP") intangible assets |
| 2,010.0 |
|
|
| - |
|
|
| 2,010.0 |
|
In-process research and development ("IPR&D") intangible assets |
| 10.0 |
|
|
| - |
|
|
| 10.0 |
|
Goodwill |
| 1,469.8 |
|
|
| (20.7 | ) |
|
| 1,449.1 |
|
Accounts payable and accrued expenses |
| (149.6 | ) |
|
| - |
|
|
| (149.6 | ) |
Deferred tax liabilities, net |
| (766.9 | ) |
|
| 20.7 |
|
|
| (746.2 | ) |
Other |
| 21.2 |
|
|
| - |
|
|
| 21.2 |
|
Net assets acquired | $ | 2,883.1 |
|
| $ | - |
|
| $ | 2,883.1 |
|
IPR&D and Intangible Assets
The fair value of the acquired intangible assets was determined using the IPR&D and Intangible Asset Valuation Technique. The discount rate used to arrive at the present value for these acquired intangible assets was 7.5% to reflect the internal rate of return and incremental commercial uncertainty in the cash flow projections in the LifeCell Acquisition. The discount rate of the LifeCell Acquisition was driven by the life-cycle stage of the products, the advanced nature of IPR&D projects, and IPR&D assets acquired and the therapeutic indication. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results.
The following table identifies the summarized amounts recognized and the weighted average useful lives using the economic benefit of intangible assets ($ in millions):
| Amount recognized as of the acquisition date |
|
| Weighted average useful lives (years) |
| ||
Definite-lived assets |
|
|
|
|
|
|
|
Alloderm® | $ | 1,385.0 |
|
|
| 6.9 |
|
Revolve® |
| 80.0 |
|
|
| 7.1 |
|
Strattice® |
| 320.0 |
|
|
| 5.1 |
|
Artia® |
| 115.0 |
|
|
| 8.8 |
|
Other |
| 10.0 |
|
|
| 2.8 |
|
Total CMP |
| 1,910.0 |
|
|
|
|
|
Customer Relationships |
| 100.0 |
|
|
| 6.3 |
|
Total definite-lived assets |
| 2,010.0 |
|
|
|
|
|
In-process research and development |
|
|
|
|
|
|
|
Other |
| 10.0 |
|
|
|
|
|
Total IPR&D |
| 10.0 |
|
|
|
|
|
Total intangible assets | $ | 2,020.0 |
|
|
|
|
|
Goodwill
Among the reasons the Company acquired LifeCell and the factors that contributed to the preliminary recognition of goodwill was the expansion of the Company’s leading product portfolio. Goodwill from the LifeCell Acquisition of $1,449.1 million was assigned to the US Specialized Therapeutic segment and is non-deductible for tax purposes.
The fair value of inventories acquired included an acquisition accounting fair market value step-up of $108.4 million. In the three and nine months ended September 30, 2017, the Company recognized $27.4 million and $103.3 million, respectively, as a component of cost of sales as the inventory acquired was sold to the Company’s customers.
Long-Term Deferred Tax Liabilities and Other Tax Liabilities
Long-term deferred tax liabilities and other tax liabilities result from identifiable intangible assets’ fair value adjustments. These adjustments create excess book basis over the tax basis which is multiplied by the statutory tax rate for the jurisdiction in which the deferred taxes exist.
Licenses and Other Transactions Accounted for as Asset Acquisitions
Lyndra, Inc.
On July 31, 2017, the Company entered into a collaboration, option and license agreement with Lyndra, Inc. (“Lyndra”) to develop orally administered ultra-long-acting (once-weekly) products for the treatment of Alzheimer’s disease and an additional, unspecified indication. The total upfront payment of $15.0 million was expensed as a component of R&D expense in the three and nine months ended September 30, 2017. The future option exercise payments, if any, and any future success based milestones relating to the licensed products of up to $85.0 million will be recorded if the corresponding events become probable.
Editas Medicine, Inc.
On March 14, 2017, the Company entered into a strategic alliance and option agreement with Editas Medicine, Inc. (“Editas”) for access to early stage, first-in-class eye care programs. Pursuant to the agreement, Allergan made an upfront payment of $90.0 million for the right to license up to five of Editas’ gene-editing programs in eye care, including its lead program for Leber Congenital Amaurosis (“LCA”), which is currently in pre-clinical development. Under the terms of the agreement, if an option is exercised, Editas is eligible to receive contingent research and development and commercial milestones plus royalties based on net sales. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing, as well as the lack of certain other inputs and processes, that the transaction did not qualify as a business. The total upfront payment of $90.0 million was expensed as a component of R&D expense in the nine months ended September 30, 2017. The future option exercise payments, if any, and any future success based milestones relating to the licensed products will be recorded if the corresponding events become probable.
Assembly Biosciences, Inc.
On January 9, 2017, the Company entered into a licensing agreement with Assembly Biosciences, Inc. (“Assembly”) for the worldwide rights to Assembly’s microbiome gastrointestinal development programs. Under the terms of the agreement, the Company made an upfront payment to Assembly of $50.0 million for the exclusive, worldwide rights to develop and commercialize certain development compounds. Additionally, Assembly will be eligible to receive success-based development and commercial milestone payments plus royalties based on net sales. The Company and Assembly will generally share development costs through proof-of-concept (“POC”) studies, and Allergan will assume all post-POC development costs. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing as well as the lack of certain other inputs and processes that the transaction did not qualify as a business. The total upfront payment of $50.0 million was expensed as a component of R&D expense in the nine months ended September 30, 2017 and the future success based milestone payments of up to $2,771.0 million will be recorded if the corresponding events become probable.
Lysosomal Therapeutics, Inc.
On January 9, 2017, the Company entered into a definitive agreement for the option to acquire Lysosomal Therapeutics, Inc. (“LTI”). LTI is focused on innovative small-molecule research and development in the field of neurodegeneration, yielding new treatment options for patients with severe neurological diseases. Pursuant to the agreement, Allergan acquired an option right directly from LTI shareholders to acquire LTI for $150.0 million plus future milestone payments following completion of a Phase 1b trial for LTI-291 as well as an upfront research and development payment. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing, as well as the lack of certain other inputs and processes, that the transaction did not qualify as a business. The aggregate upfront payment of $145.0 millionasset was recorded as a component of R&D expense in the nine months ended September 30, 2017.
Saint Regis Mohawk Tribe
On September 8, 2017, the Company entered into an agreement with the Saint Regis Mohawk Tribe, under which the Saint Regis Mohawk Tribe obtained the rights to Orange Book-listed patents covering Restasis® (Cyclosporine Ophthalmic Emulsion) 0.05%, and the Company was granted exclusive licenses under the patents related to the product. Pursuant to the agreement, the Company paid the Saint Regis Mohawk Tribe an upfront payment of $13.8 million, which was recorded as a component of cost of sales in the three and nine months ended September 30, 2017. Additionally, the Saint Regis Mohawk Tribe will be eligible to receive $15.0 million in annual royalties during the period that certain patent claims remain in effect.
2016 Transactions
The following are the significant transactions that were completed in the year ended December 31, 2016.
Acquisitions
Tobira Therapeutics, Inc.
On November 1, 2016, the Company acquired Tobira Therapeutics, Inc. (“Tobira”), a clinical-stage biopharmaceutical company focused on developing and commercializing therapies for non-alcoholic steatohepatitis (“NASH”) and other liver diseases for an acquisition accounting purchase price of $570.1 million, plus contingent consideration of up to $49.84 per share in contingent value rights (“CVR”), or up to $1,101.3 million, that may be payable based on the successful completion of certain development, regulatory and commercial milestones (the “Tobira Acquisition”), of which $303.1 million was paid in the nine months ended September 30, 2017. The CVR had an acquisition date fair value of $479.0 million. The acquisition added Cenicriviroc and Evogliptin, two differentiated, complementary development programs for the treatment of the multi-factorial elements of NASH, including inflammation, metabolic syndromes and fibrosis, to Allergan's global gastroenterology R&D pipeline.
Assets Acquired and Liabilities Assumed at Fair Value
The Tobira Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.
The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date and reflects purchase accounting adjustments subsequent to the acquisition date ($ in millions):
| Preliminary Valuation |
|
| Measurement Period Adjustments |
|
| Final Valuation |
| |||
Cash and cash equivalents | $ | 21.3 |
|
| $ | - |
|
| $ | 21.3 |
|
IPR&D intangible asset |
| 1,357.0 |
|
|
| - |
|
|
| 1,357.0 |
|
Goodwill |
| 112.7 |
|
|
| (14.1 | ) |
|
| 98.6 |
|
Indebtedness |
| (15.9 | ) |
|
| - |
|
|
| (15.9 | ) |
Contingent consideration |
| (479.0 | ) |
|
| - |
|
|
| (479.0 | ) |
Deferred tax liabilities, net |
| (395.9 | ) |
|
| 14.1 |
|
|
| (381.8 | ) |
Other assets and liabilities |
| (30.1 | ) |
|
| - |
|
|
| (30.1 | ) |
Net assets acquired | $ | 570.1 |
|
| $ | - |
|
| $ | 570.1 |
|
Contingent Consideration
As part of the Tobira Acquisition, the Company was required to pay the former shareholders of Tobira up to $1,101.3 million based on the timing of certain development, regulatory and commercial milestones, if any. The Company estimated the fair value of the contingent consideration to be $479.0 million using a probability weighted average approach that considered the possible outcomes of scenarios related to the specified product.
On October 25, 2016, the Company acquired Vitae Pharmaceuticals, Inc. (“Vitae”), a clinical-stage biotechnology company for an acquisition accounting purchase price of $621.4 million (the “Vitae Acquisition”). The Vitae Acquisition strengthens Allergan’s dermatology product pipeline, with the addition of a Phase II, orally active RORyt (retinoic acid receptor-related orphan receptor gamma) inhibitor for the potential treatment of psoriasis and other autoimmune disorders. In addition, the Company expanded its pipeline with the acquisition of a Phase II atopic dermatitis drug candidate.
Assets Acquired and Liabilities Assumed at Fair Value
The transaction has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.
The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date and reflects purchase accounting adjustments subsequent to the acquisition date ($ in millions):
| Preliminary Valuation |
|
| Measurement Period Adjustments |
|
| Final Valuation |
| |||
Cash and cash equivalents | $ | 44.7 |
|
| $ | - |
|
| $ | 44.7 |
|
Marketable securities |
| 20.2 |
|
|
| - |
|
|
| 20.2 |
|
Property, plant and equipment, net |
| 5.0 |
|
|
| - |
|
|
| 5.0 |
|
IPR&D assets |
| 686.0 |
|
|
| - |
|
|
| 686.0 |
|
Assets held for sale |
| 22.5 |
|
|
| - |
|
|
| 22.5 |
|
Goodwill |
| 34.4 |
|
|
| (3.8 | ) |
|
| 30.6 |
|
Other liabilities |
| (20.7 | ) |
|
| - |
|
|
| (20.7 | ) |
Deferred tax liabilities, net |
| (170.7 | ) |
|
| 3.8 |
|
|
| (166.9 | ) |
Net assets acquired | $ | 621.4 |
|
| $ | - |
|
| $ | 621.4 |
|
Assets held for sale
The Company held for sale certain intangible assets acquiredless any amortization that would have been recognized had the asset been continuously classified as partheld and used or their fair value at the date of the Vitae Acquisition for an acquisition accounting value of $22.5 million. In the nine months ended September 30, 2017, the Company sold these assets for $22.5 million.
ForSight VISION 5
On September 23, 2016, the Company acquired ForSight VISION5, Inc. (“ForSight”), a privately held, clinical-stage biotechnology company focused on eye care, in an all cash transaction of approximately $95.0 million with an acquisition accounting purchase price of $74.5 million plus the payment of outstanding indebtedness of $14.8 million and other miscellaneous charges(the “ForSight Acquisition”). ForSight shareholders are eligiblesubsequent decision not to receive contingent consideration of up to $125.0 million, which had an initial estimated fair value of $79.8 million, relating to commercialization milestones. The Company acquired ForSight for its lead development program, a peri-ocular ring designed for extended drug delivery and reducing elevated intraocular pressure (“IOP”) in glaucoma patients.
Assets Acquired and Liabilities Assumed at Fair Value
The ForSight Acquisition has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.
The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date and reflects purchase accounting adjustments subsequent to the acquisition date ($ in millions):
| Preliminary Valuation |
|
| Measurement Period Adjustments |
|
| Final Valuation |
| |||
Cash and cash equivalents | $ | 1.0 |
|
| $ | - |
|
| $ | 1.0 |
|
IPR&D intangible asset |
| 158.0 |
|
|
| - |
|
|
| 158.0 |
|
Goodwill |
| 51.6 |
|
|
| (1.1 | ) |
|
| 50.5 |
|
Current liabilities |
| (14.8 | ) |
|
| - |
|
|
| (14.8 | ) |
Contingent consideration |
| (79.8 | ) |
|
| - |
|
|
| (79.8 | ) |
Deferred tax liabilities, net |
| (38.3 | ) |
|
| 1.1 |
|
|
| (37.2 | ) |
Other |
| (3.2 | ) |
|
| - |
|
|
| (3.2 | ) |
Net assets acquired | $ | 74.5 |
|
| $ | - |
|
| $ | 74.5 |
|
Licenses and Other Transactions Accounted for as Asset Acquisitions
In the year ended December 31, 2016, none of the following completed transactions qualified as a business. The conclusion for each transaction was determined based on the stage of development of the specific assets acquired, the lack of acquired employees in the individual transactions and the lack of acquired manufacturing processes, as well as the lack of certain other inputs and processes. As a result, the initial consideration in these transactions was included as a component of R&D expenses in the year ended December 31, 2016 as follows ($ in millions):
| Initial Consideration |
| |
AstraZeneca plc agreement in the three months ended December 31, 2016 | $ | 250.0 |
|
Motus Therapeutics, Inc. acquisition in the three months ended December 31, 2016 |
| 199.5 |
|
Chase Pharmaceuticals Corporation acquisition in the three months ended December 31, 2016 |
| 122.9 |
|
RetroSense Therapeutics, LLC license agreement in the three months ended September 30, 2016 |
| 59.7 |
|
Akarna Therapeutics, Ltd acquisition in the three months ended September 30, 2016 |
| 48.2 |
|
Topokine Therapeutics, Inc. acquisition in the three months ended June 30, 2016 |
| 85.8 |
|
Heptares Therapeutics Ltd. license agreement in the three months ended June 30, 2016 |
| 125.0 |
|
Anterios, Inc. acquisition in the three months ended March 31, 2016 |
| 89.2 |
|
2015 Transactions
The following are the significant transactions that were completed in the year ended December 31, 2015.
Acquisitions
Allergan, Inc.
On March 17, 2015, the Company completed the acquisition of Allergan, Inc. (“Legacy Allergan”). The addition of Legacy Allergan’s therapeutic franchises in ophthalmology, neurosciences and medical aesthetics/dermatology/plastic surgery complemented the Company’s existing central nervous system, gastroenterology, women’s health and urology franchises. The combined company benefited from Legacy Allergan’s global brand equity and consumer awareness of key products. The transaction also expanded our presence and market and product reach across many international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.
Inventories
The fair value of inventories acquired included an acquisition accounting fair market value step-up of $923.9 million. In the nine months ended September 30, 2016, the Company recognized $21.6 million as a component of cost of sales as the inventory acquired was sold to the Company’s customers.
sell. As a result of the Allergan acquisition, the Company incurred the following transaction and integration costs in the three months ended September 30, 2017 and 2016, respectively ($ in millions):
|
| Three Months Ended September 30, 2017 |
|
| Three Months Ended September 30, 2016 |
| ||
Cost of sales |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
| $ | 1.1 |
|
| $ | 2.2 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 6.6 |
|
Research and development |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 5.8 |
|
|
| 9.3 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 6.8 |
|
Selling and marketing |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 7.5 |
|
|
| 15.8 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| (1.2 | ) |
General and administrative |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 2.9 |
|
|
| 9.9 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 50.4 |
|
Total transaction and integration costs |
| $ | 17.3 |
|
| $ | 99.8 |
|
As a result of the Allergan acquisition, the Company incurred the following transaction and integration costs in the nine months ended September 30, 2017 and 2016, respectively ($ in millions):
|
| Nine Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2016 |
| ||
Cost of sales |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
| $ | 3.8 |
|
| $ | 7.4 |
|
Acquisition, integration and restructuring related charges |
|
| 0.9 |
|
|
| 12.4 |
|
Research and development |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 19.7 |
|
|
| 32.6 |
|
Acquisition, integration and restructuring related charges |
|
| 0.5 |
|
|
| 10.6 |
|
Selling and marketing |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 21.4 |
|
|
| 53.0 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 11.7 |
|
General and administrative |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 10.3 |
|
|
| 28.2 |
|
Acquisition, integration and restructuring related charges |
|
| 9.2 |
|
|
| 144.0 |
|
Total transaction and integration costs |
| $ | 65.8 |
|
| $ | 299.9 |
|
NOTE 5 — Discontinued Operations
Global Generics Business
On July 27, 2015, the Company announced that it entered into the Teva Transaction, which closed on August 2, 2016. As a result of the Teva Transaction, the Company holds equity in Teva and purchases product manufactured by Teva for sale in our US General Medicine segment as part of ongoing transitional service and contract manufacturing agreements.
The Company notes the following reconciliation of the proceeds received in the Teva Transaction to the gain recognized in income from discontinued operations for the nine months ended September 30, 2016 ($ in millions):
Net cash proceeds received |
| $ | 33,304.5 |
|
August 2, 2016 fair value of Teva shares |
|
| 5,038.6 |
|
Total Proceeds |
| $ | 38,343.1 |
|
Net assets sold to Teva, excluding cash |
|
| (12,076.7 | ) |
Other comprehensive income disposed |
|
| (1,544.8 | ) |
Deferral of proceeds relating to additional elements of agreements with Teva |
|
| (518.9 | ) |
Pre-tax gain on sale of generics business |
| $ | 24,202.7 |
|
Income taxes |
|
| (8,321.2 | ) |
Net gain on sale of generics business |
| $ | 15,881.5 |
|
In October 2016, pursuant to our agreement with Teva, Teva provided the Company with its proposed estimated adjustment to the closing date working capital balance. The Company disagrees with Teva’s proposed adjustment, and, pursuant to our agreement with Teva, each of the Company’s and Teva’s proposed adjustments have been submitted to arbitration (“Working Capital Arbitration”) to determine the working capital amount in accordance with GAAP as applied by the Company consistent with past practice. Teva initially proposed an adjustment of approximately $1.4 billion and subsequently submitted a revised adjustment of approximately $1.5 billion to the arbitrator, and the final amount of any contractual adjustment as determined in accordance with the Working Capital Arbitration could vary materially from the adjustment calculated by the Company and would be reflected in our financial statements for discontinued operations. In addition, on October 30, 2017, Teva submitted a Notice of Direct and Third Party Claims seeking indemnification for virtually all of the same items for which Teva is seeking a proposed adjustment in the Working Capital Arbitration as well as several new items as to which no quantity of damages has been asserted, and which the Company is currently evaluating, and the Company has not determined that a loss is probable or estimable as to those additional items. Teva is not entitled to a “double recovery” for the same damages in the Working Capital Arbitration and under an indemnification theory and is subject to further limitations on recovery as set forth in the Master Purchase Agreement under which the global generics business was sold. Any adjustment to the Company’s proceeds from the Teva Transaction as a result of the Working Capital Arbitration or the indemnification claims could have a material adverse effect on the Company’s results of operations and cash flows, including the Company’s fiscal year 2017 results of operations and fiscal year 2018 cash flows. In the event the Working Capital Arbitration goes forward as scheduled, the Company anticipates a decision from the Working Capital Arbitration in the first quarter of 2018 in accordance with the current timeline agreed by the parties and arbitrator. Any potential resolution of the claims for indemnity will be subject to additional assertions of claims by Teva at a later date. Disputes related to matters asserted for indemnification would be subject to judicial resolution in accordance with the Master Purchase Agreement.
The fair value of Teva Shares owned are recorded within “Marketable securities” on the Company’s Consolidated Balance Sheet. The closing Teva Transaction date opening stock price discounted at a rate of 5.9 percent due to the lack of marketability was used to initially value the shares. At March 31, 2017, the Company determined that the decline in value since August 2, 2016 was other-than-temporary. As a result, the Company impaired the value of its investment by $1,978.0 million at March 31, 2017 as a component of other (expense) income.
As of September 30, 2017, the value of the Teva Shares was $1,765.1 million, which included no discount rate due to the lack of marketability as the restrictions have been lifted. At September 30, 2017, the Company determined that the decline in value since March 31, 2017 was other-than-temporary. As a result, the Company impaired the value of its investment by $1,295.5 million at September 30, 2017 as a component of other (expense) income (other-than-temporary impairment for the nine months ended September 30, 2017 totaled $3,273.5 million). The determination was made based on the amount of time that the stock price had been below the carrying value, intentions regarding the potential holding period of the shares, and the materiality of the decline in share price. The Company will continue to monitor the share price and additional impairments to the investment may occur.
On October 3, 2016, the Company completed the divestiture of the Anda Distribution business for $500.0 million.
Financial results of the global generics business and the Anda Distribution business are presented as "(Loss) / Income from discontinued operations, net of tax” on the Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016. The loss from discontinued operations, net of tax of $6.1 million and $17.6 million, respectively, in the three and nine months ended September 30, 2017, primarily related to ongoing matters with respect to the Teva Transaction.
The following table presents key financial results of the businesses included in "(Loss) / Income from discontinued operations" for the three and nine months ended September 30, 2016 ($ in millions):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||
|
| 2016 |
|
| 2016 |
| ||
Net revenues |
| $ | 756.5 |
|
| $ | 4,504.3 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| 531.0 |
|
|
| 2,798.3 |
|
Research and development |
|
| 37.3 |
|
|
| 269.6 |
|
Selling and marketing |
|
| 69.1 |
|
|
| 352.6 |
|
General and administrative |
|
| 90.3 |
|
|
| 399.4 |
|
Amortization |
|
| - |
|
|
| 4.8 |
|
Total operating expenses |
|
| 727.7 |
|
|
| 3,824.7 |
|
Operating income |
|
| 28.8 |
|
|
| 679.6 |
|
Other (expense) income, net |
|
| 15,881.5 |
|
|
| 15,881.1 |
|
Provision for income taxes |
|
| 308.4 |
|
|
| 687.5 |
|
Net income from discontinued operations |
| $ | 15,601.9 |
|
| $ | 15,873.2 |
|
For the year ended December 31, 2015,reclassification, the Company recorded a deferred tax benefitcharge of $5,738.8$129.6 million, primarily related to investments in certain subsidiaries. Foramortization that would have been recorded if the nine months ended September 30, 2016,assets were held and used, within Assets, sales and impairments, net for the Company recorded a deferred tax expense of $474.7 million to adjust its deferred tax asset related to investments in certain subsidiaries. The recognition of this expense has been reflected in “Income from discontinued operations, net of tax.” Uponsix month period the closing of the Teva Transaction, the Company recorded the reversal of the corresponding deferred tax asset of $5,273.9 million against the current income taxes payable in continuing operations.
Depreciation and amortizationassets were ceased upon the determination that the held for sale criteria were met, which were the announcement dates of the Teva Transaction and the divestiture of the Anda Distribution business. The depreciation, amortization and significant operating and investing non-cash items of the discontinued operations were as follows ($ in millions): sale.
|
| Nine Months Ended September 30, |
| |
|
| 2016 |
| |
Depreciation from discontinued operations |
| $ | 2.1 |
|
Amortization from discontinued operations |
|
| 4.8 |
|
Capital expenditures |
|
| 85.3 |
|
Deferred income tax expense |
|
| 5,893.4 |
|
NOTE 6 – Other (Expense) / Income
Other (expense) / income, net consisted of the following ($ in millions):
|
| Three Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Net income impact of other-than-temporary loss on investment in Teva securities |
| $ | (1,295.5 | ) |
| $ | - |
|
Dividend income |
|
| 8.5 |
|
|
| 34.1 |
|
Other (expense) income, net |
|
| (23.3 | ) |
|
| (0.5 | ) |
Other (expense) income, net |
| $ | (1,310.3 | ) |
| $ | 33.6 |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||
Teva Share Activity |
| $ | - |
|
| $ | 138.6 |
|
| $ | - |
|
| $ | 60.9 |
|
Sales of business |
|
| - |
|
|
| 53.0 |
|
|
| - |
|
|
| 53.0 |
|
Debt extinguishment other |
|
| 0.1 |
|
|
| 9.1 |
|
|
| (0.2 | ) |
|
| 9.1 |
|
Other (expense) / income, net |
|
| (4.8 | ) |
|
| 14.7 |
|
|
| 9.3 |
|
|
| 13.6 |
|
Other (expense) / income, net |
| $ | (4.7 | ) |
| $ | 215.4 |
|
| $ | 9.1 |
|
| $ | 136.6 |
|
| Nine Months Ended September 30, |
| ||||||
|
| 2017 |
|
| 2016 |
| ||
Net income impact of other-than-temporary loss on investment in Teva securities |
| $ | (3,273.5 | ) |
| $ | - |
|
Debt extinguishment costs as part of the debt tender offer |
|
| (161.5 | ) |
|
| - |
|
Dividend income |
|
| 76.7 |
|
|
| 34.1 |
|
Naurex recovery |
|
| 20.0 |
|
|
| - |
|
Pfizer termination fee (Allergan plc only) |
|
| - |
|
|
| 150.0 |
|
Other (expense) income, net |
|
| (28.3 | ) |
|
| 0.1 |
|
Other (expense) income, net |
| $ | (3,366.6 | ) |
| $ | 184.2 |
|
Teva SecuritiesShare Activity
As described in Note 5,During the three and six months ended June 30, 2018, the Company recognized an other-than-temporary impairment onrecorded the following movements in its investment in Teva securities (“Teva Share Activity”) ($ in millions except per share information):
|
| Shares |
|
| Carrying Value per Share |
|
| Market Price |
|
| Proceeds Received |
|
| Value of Marketable Securities |
|
| Unrealized Gain / (Loss) as a Component of Other Comprehensive Income |
|
| Gain / (Loss) Recognized in Other Income/ (Expense), Net |
|
| Derivative Instrument (Liability)/ Asset |
|
| Retained Earnings |
| |||||||||
Teva securities as of December 31, 2017 |
|
| 95.9 |
|
| $ | 17.60 |
|
| $ | 18.95 |
|
| n.a. |
|
| $ | 1,817.7 |
|
| $ | 129.3 |
|
| $ | - |
|
| $ | (62.9 | ) |
| $ | - |
| |
Impact of ASU No. 2016-01 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (129.3 | ) |
|
| - |
|
|
| - |
|
|
| 129.3 |
|
Settlement of initial accelerated share repurchase ("ASR"), net |
|
| (25.0 | ) |
|
| 18.95 |
|
|
| 16.53 |
| * |
| 413.3 |
|
|
| (473.8 | ) |
|
| - |
|
|
| 2.5 |
|
|
| 62.9 |
|
|
| - |
|
Forward sale entered into during the three months ended March 31, 2018 |
| ** |
|
| n.a. |
|
| n.a. |
|
|
| 372.3 |
|
| n.a. |
|
|
| - |
|
|
| 19.0 |
|
|
| (353.3 | ) |
|
| - |
| ||||
Open market sales |
|
| (11.5 | ) |
| n.a. |
|
|
| 19.95 |
|
|
| 229.9 |
|
|
| (218.5 | ) |
|
| - |
|
|
| 11.5 |
|
|
| - |
|
|
| - |
| |
Other fair value movements during the three months ended March 31, 2018 |
|
| - |
|
| n.a. |
|
| n.a. |
|
| n.a. |
|
|
| (110.7 | ) |
|
| - |
|
|
| (110.7 | ) |
|
| - |
|
|
| - |
| |||
Teva securities as of and for the three months ended March 31, 2018 |
|
| 59.4 |
|
| $ | 17.09 |
|
| $ | 17.09 |
|
| $ | 1,015.5 |
|
| $ | 1,014.7 |
|
| $ | - |
|
| $ | (77.7 | ) |
| $ | (353.3 | ) |
| $ | 129.3 |
|
Settlement of forward sale entered into during the three months ended March 31, 2018, net |
|
| (25.0 | ) |
|
| 17.09 |
|
|
| 18.61 |
| *** |
| 93.2 |
|
|
| (427.3 | ) |
|
| - |
|
|
| 19.2 |
|
|
| 353.3 |
|
|
| - |
|
Open market sales |
|
| (34.4 | ) |
| n.a. |
|
|
| 20.55 |
|
|
| 706.8 |
|
|
| (587.4 | ) |
|
| - |
|
|
| 119.4 |
|
|
| - |
|
|
| - |
| |
Teva securities as of and for the six months ended June 30, 2018 |
|
| - |
|
| $ | - |
|
| $ | - |
|
| $ | 1,815.5 |
|
| $ | - |
|
| $ | - |
|
| $ | 60.9 |
|
| $ | - |
|
| $ | 129.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Market price represented average price over the life of the contract. On the January 17, 2018 settlement date, the closing stock price of Teva securities was $21.48. |
| |||||||||||||||||||||||||||||||||||
** On February 13, 2018, the Company entered into a forward sale transaction under which we delivered 25.0 million Teva shares to the transaction counterparty and received proceeds of $372.3 million in exchange for the shares. The forward sale transaction settled during the second quarter of 2018. As a result of the transaction, and in accordance with ASC Topic 860 - Transfers and Servicing, the marketable securities were reported on the Company's balance sheet until the contract settled on May 7, 2018. |
| |||||||||||||||||||||||||||||||||||
***Market price represented average price over the life of the contract. On the May 7, 2018 settlement date, the closing stock price of Teva securities was $18.62. |
| |||||||||||||||||||||||||||||||||||
Sale of $1,295.5 million and $3,273.5 million inBusiness
During the three and ninesix months ended SeptemberJune 30, 2018, the Company completed the sale of a non-strategic asset group held for sale as of December 31, 2017, respectively. which was deemed a business based on the applicable guidance at the time, for $55.0 million in cash plus deferred consideration of $20.0 million. As a result of this transaction, the Company recognized a gain of $53.0 million.
Debt Extinguishment Other
As described in Note 13,During the three and six months ended June 30, 2019, the Company repaid $2,843.3repurchased $97.8 million and $249.8 million, respectively, of senior notes in the open market. The net gain / (loss) on the debt extinguishments was not material.
During the three and six months ended June 30, 2018, the Company repurchased $455.9 million of senior notes. Innotes in the nine months ended September 30, 2017, asopen market. As a result of the debt extinguishment, the Company recognized a lossnet gain of $161.5$9.1 million, within “Other income/income / (expense)” for the early tender payment andcash discount received of $13.1 million, including the non-cash write-off of premiums and debt fees related to the repurchasedrepaid notes including $170.5 million of a make-whole premium.$4.0 million.
Dividend income
As a result of the Teva Transaction, the Company acquired 100.3 million Teva ordinary shares. During the three and ninesix months ended SeptemberJune 30, 2017,2019 and 2018, the Company received dividendredeemed and retired the following senior notes ($ in millions):
|
| Three Months Ended June 30, 2019 |
|
| Six Months Ended June 30, 2019 |
|
|
|
|
| ||||||||||
Tranche |
| Face Value Retired |
|
| Cash Paid for Retirement |
|
| Face Value Retired |
|
| Cash Paid for Retirement |
|
| Remaining Value at June 30, 2019 |
| |||||
3.000% due 2020 |
| $ | 97.8 |
|
| $ | 97.8 |
|
| $ | 180.7 |
|
| $ | 180.7 |
|
| $ | 2,526.0 |
|
3.450% due 2022 |
|
| - |
|
|
| - |
|
|
| 62.3 |
|
|
| 62.3 |
|
|
| 2,878.2 |
|
3.800% due 2025 |
|
| - |
|
|
| - |
|
|
| 6.8 |
|
|
| 6.8 |
|
|
| 3,020.7 |
|
Total |
| $ | 97.8 |
|
| $ | 97.8 |
|
| $ | 249.8 |
|
| $ | 249.8 |
|
| $ | 8,424.9 |
|
|
| Three and Six Months Ended June 30, 2018 |
|
|
|
|
| |||||
Tranche |
| Face Value Retired |
|
| Cash Paid for Retirement |
|
| Remaining Value at June 30, 2018 |
| |||
2.450% due 2019 |
| $ | 8.8 |
|
| $ | 8.8 |
|
| $ | 491.2 |
|
3.000% due 2020 |
|
| 40.7 |
|
|
| 40.6 |
|
|
| 3,459.3 |
|
3.450% due 2022 |
|
| 59.5 |
|
|
| 58.6 |
|
|
| 2,940.5 |
|
3.850% due 2024 |
|
| 11.2 |
|
|
| 10.9 |
|
|
| 1,188.8 |
|
3.800% due 2025 |
|
| 85.0 |
|
|
| 82.6 |
|
|
| 3,915.0 |
|
4.550% due 2035 |
|
| 115.0 |
|
|
| 110.1 |
|
|
| 2,385.0 |
|
4.850% due 2044 |
|
| 59.0 |
|
|
| 57.3 |
|
|
| 1,441.0 |
|
4.750% due 2045 |
|
| 76.7 |
|
|
| 73.9 |
|
|
| 1,123.3 |
|
Total |
| $ | 455.9 |
|
| $ | 442.8 |
|
| $ | 16,944.1 |
|
Other (Expense) / Income, Net
Other (expense) / income, net includes the mark to market losses of $8.5$7.2 million and $76.7gains of $3.2 million, respectively. Therespectively, on equity securities held by the Company received $34.1 million during the three and ninesix months ended SeptemberJune 30, 2016.2019.
Other-than-temporary impairments
The Company recorded other-than-temporary impairment charges on other equity investments and cost method investments of $22.6 million and $26.1 million in the three and nine months ended September 30, 2017, respectively.
Naurex Recovery
On August 28, 2015, the Company acquired certain products in early stage development of Naurex, Inc. (“Naurex”) in an all-cash transaction, which was accounted for as an asset acquisition (the “Naurex Transaction”). The Company received a purchase price reduction of $20.0 million in the nine months ended September 30, 2017 based on the settlement of an open contract negotiation.
Pfizer termination fee
In the nine months ended September 30, 2016, the Company received a payment of $150.0 million from Pfizer Inc. (“Pfizer”) for reimbursement of expenses associated with the termination of a merger agreement between the Company and Pfizer which is reported as other income.
NOTE 7 — Share-Based Compensation
The Company recognizes compensation expense for all share-based compensation awards made to employees and directors based on the fair value of the awards on the date of grant. A summary of the Company’s share-based compensation plans is presented below.
Equity Award Plans
The Company has adopted several equity award plans which authorize the granting of options, restricted shares, restricted stock units and other forms of equity awards of the Company’s ordinary shares, subject to certain conditions.
The Company grants awards with the following features:
Time-based vesting restricted stock and restricted stock units awards;
• | Time-based restricted stock and restricted stock unit awards (including, in certain foreign jurisdictions, cash-settled restricted stock unit awards, which are recorded as a liability); |
• | Performance-based restricted stock unit awards measured against performance-based targets defined by the Company, including, but not limited to, total shareholder return metrics and R&D milestones, as defined by the Company; and |
• | Non-qualified options to purchase outstanding shares. |
The Company recognizes share-based compensation expense for granted awards measured to performance-based targets defined byover the Company, including, but not limited to, total shareholder return metrics, R&D milestones and EBITDA, as defined by the Company;
Non-qualified options to purchase outstanding shares; and
Cash-settled awards recorded as a liability. These cash settled awards are based on pre-established total shareholder returns metrics.
Option award plans require options to be granted at the fair market value of the shares underlying the options at the date of the grant and generally become exercisable over periods ranging from three to five years. Each option granted expires ten years from the date of the grant. Restricted stock awards are grants that entitle the holder to ordinary shares, subject to certain terms. Restricted stock unit awards are grants that entitle the holder the right to receive an ordinary share, subject to certain terms. Restricted stock and restricted stock unit awards (both time-based vesting and performance-based vesting) generally have restrictions that lapse over a one to four yearapplicable vesting period. Restrictions generally lapse for non-employee directors after one year. Certain restricted stock units are performance-based awards issued at a target number with the actual number of ordinary shares issued ranging based on achievement of the performance criteria. All restricted stock and restricted stock units which remain active under the Company’s equity award plans are eligible to receive cash dividend equivalent payments upon vesting.
Fair Value Assumptions
All restricted stock and restricted stock units (whether time-based vesting or performance-based vesting)performance-based) are granted and expensed using the fair value per share on the applicable grant date, over the applicable vesting period. Non-qualified options to purchase ordinary shares are granted to employees at exercise prices per share equal to the closing market price per share on the date of grant. The fair value of non-qualified options is determined on the applicable grant dates using the Black-Scholes method of valuation and that amount is recognized as an expense over the vesting period. Using the Black-Scholes valuation model, the fair value of options is based on the following assumptions:
|
| 2017 Grants |
| 2016 Grants |
| 2019 Grants |
|
| 2018 Grants |
|
Dividend yield |
| 1.2% |
| 0% |
| 1.7 - 1.8% |
|
| 1.5% |
|
Expected volatility |
| 27.0% |
| 27.0% |
| 26.4% |
|
| 27.0% |
|
Risk-free interest rate |
| 2.0 - 2.3% |
| 1.3 - 2.4% |
| 1.9% |
|
| 2.2 - 2.9% |
|
Expected term (years) |
| 7.0 |
| 7.0 - 7.5 |
| 7.0 |
|
| 7.0 |
|
Share-Based Compensation Expense
Share-based compensation expense recognized in the Company’s results of operations for the three and six months ended SeptemberJune 30, 20172019 and 20162018 was as follows ($ in millions):
|
| Three Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Equity based compensation awards |
| $ | 72.3 |
|
| $ | 81.1 |
|
Cash-settled awards in connection with the Forsight Acquisition |
|
| - |
|
|
| 3.1 |
|
Non-equity settled awards other |
|
| (32.6 | ) |
|
| 7.4 |
|
Total share-based compensation expense |
| $ | 39.7 |
|
| $ | 91.6 |
|
The income in non-equity settled awards other was due to an actuarial reversal based on the total shareholder return metrics declining in the three months ended September 30, 2017 of $32.6 million. These awards are cash-settled awards which are fair valued based on a pre-determined total shareholder return metric. Included in the table above is share-based compensation relating to discontinued operations of $3.2 million for the three months ended September 30, 2016.
Share-based compensation expense recognized in the Company’s results of operations for the nine months ended September 30, 2017 and 2016 were as follows ($ in millions):
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Equity-based compensation awards |
| $ | 220.8 |
|
| $ | 269.9 |
|
Cash-settled awards in connection with the Zeltiq Acquisition |
|
| 31.5 |
|
|
| - |
|
Cash-settled awards in connection with the Forsight Acquisition |
|
| - |
|
|
| 3.1 |
|
Non-equity settled awards other |
|
| (19.5 | ) |
|
| 14.0 |
|
Total share-based compensation expense |
| $ | 232.8 |
|
| $ | 287.0 |
|
Included in the table above is share-based compensation relating to discontinued operations of $16.0 million for the nine months ended September 30, 2016.
Included in the equity-based compensation awards for the three and nine months ended September 30, 2017 and 2016 is the impact of accelerations and step-ups relating to the acquisition accounting treatment of outstanding awards acquired in the Allergan, Forest Laboratories, Inc. (“Forest”), and Zeltiq acquisitions as follows ($ in millions):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Zeltiq Acquisition |
| $ | 5.8 |
|
| $ | - |
|
| $ | 43.5 |
|
| $ | - |
|
Allergan Acquisition |
|
| 9.7 |
|
|
| 26.8 |
|
|
| 37.5 |
|
|
| 86.8 |
|
Forest Acquisition |
|
| 1.5 |
|
|
| 10.3 |
|
|
| 9.0 |
|
|
| 37.5 |
|
Total |
| $ | 17.0 |
|
| $ | 37.1 |
|
| $ | 90.0 |
|
| $ | 124.3 |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||
Equity-based compensation awards |
| $ | 59.5 |
|
| $ | 54.9 |
|
| $ | 111.8 |
|
| $ | 127.4 |
|
Total share-based compensation expense |
| $ | 59.5 |
|
| $ | 54.9 |
|
| $ | 111.8 |
|
| $ | 127.4 |
|
Unrecognized future share-based compensation expense was $487.4$409.1 million as of SeptemberJune 30, 2017, including $46.0 million from the Allergan acquisition, $31.8 million from the Zeltiq Acquisition, and $5.2 million from the Forest Acquisition.2019. This amount will be recognized as an expense over a remaining weighted average period of 1.91.7 years. Share-based compensation is being amortized and charged to operations over the same period as the restrictions are eliminated for the participants, which is generally on a straight-line basis.
Share Activity
The following is a summary of equity award activity for unvested restricted stock and stock units in the period from December 31, 20162018 through SeptemberJune 30, 2017:2019 (in millions, except per share data):
(in millions, except per share data) |
| Shares |
|
| Weighted Average Grant Date Fair Value |
|
| Weighted Average Remaining Contractual Term (Years) |
|
| Aggregate Grant Date Fair Value |
| ||||
Restricted shares / units outstanding at December 31, 2016 |
|
| 1.5 |
|
| $ | 251.88 |
|
|
| 1.6 |
|
| $ | 388.0 |
|
Granted |
|
| 1.1 |
|
|
| 235.14 |
|
|
|
|
|
|
| 258.7 |
|
Assumed as part of the Zeltiq Acquisition * |
|
| 0.2 |
|
|
| 213.15 |
|
|
|
|
|
|
| 41.8 |
|
Vested |
|
| (0.3 | ) |
|
| 230.89 |
|
|
|
|
|
|
| (89.2 | ) |
Forfeited |
|
| (0.1 | ) |
|
| 256.09 |
|
|
|
|
|
|
| (28.8 | ) |
Restricted shares / units outstanding at September 30, 2017 |
|
| 2.4 |
|
| $ | 244.12 |
|
|
| 1.9 |
|
| $ | 570.5 |
|
|
| Shares |
|
| Weighted Average Grant Date Fair Value |
|
| Weighted Average Remaining Contractual Term (Years) |
|
| Aggregate Grant Date Fair Value |
| ||||
Restricted shares / units outstanding at December 31, 2018 |
|
| 2.5 |
|
| $ | 190.27 |
|
|
| 1.6 |
|
| $ | 472.9 |
|
Granted |
|
| 1.5 |
|
|
| 139.83 |
|
|
|
|
|
|
| 207.8 |
|
Vested |
|
| (0.7 | ) |
|
| 209.91 |
|
|
|
|
|
|
| (138.8 | ) |
Forfeited |
|
| (0.1 | ) |
|
| 177.79 |
|
|
|
|
|
|
| (19.3 | ) |
Restricted shares / units outstanding at June 30, 2019 |
|
| 3.2 |
|
| $ | 161.46 |
|
|
| 1.8 |
|
| $ | 522.6 |
|
|
|
The following is a summary of equity award activity for non-qualified options to purchase ordinary shares in the period from December 31, 20162018 through SeptemberJune 30, 2017:2019 (in millions, except per share data):
(in millions, except per share data) |
| Options |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Contractual Term (Years) |
|
| Aggregate Intrinsic Value |
| ||||||||||||||||||||
Outstanding, December 31, 2016 |
|
| 9.0 |
|
| $ | 113.77 |
|
|
| 5.9 |
|
| $ | 861.7 |
| ||||||||||||||||
|
| Options |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Contractual Term (Years) |
|
| Aggregate Intrinsic Value |
| ||||||||||||||||||||
Outstanding, vested and expected to vest at December 31, 2018 |
|
| 6.3 |
|
| $ | 122.74 |
|
|
| 4.4 |
|
| $ | 69.0 |
| ||||||||||||||||
Granted |
|
| 0.3 |
|
|
| 239.33 |
|
|
|
|
|
|
|
|
|
|
| 0.3 |
|
|
| 140.29 |
|
|
|
|
|
|
|
|
|
Exercised |
|
| (1.6 | ) |
|
| (92.61 | ) |
|
|
|
|
|
|
|
|
|
| (0.3 | ) |
|
| 82.45 |
|
|
|
|
|
|
|
|
|
Cancelled |
|
| (0.2 | ) |
|
| (121.60 | ) |
|
|
|
|
|
|
|
|
|
| (0.1 | ) |
|
| 217.07 |
|
|
|
|
|
|
|
|
|
Outstanding, vested and expected to vest at September 30, 2017 |
|
| 7.5 |
|
| $ | 119.78 |
|
|
| 4.6 |
|
| $ | 634.5 |
| ||||||||||||||||
Outstanding, vested and expected to vest at June 30, 2019 |
|
| 6.2 |
|
| $ | 124.78 |
|
|
| 4.3 |
|
| $ | 265.2 |
| ||||||||||||||||
The increase in the aggregate intrinsic value of the options is primarily related to an increase in the Company’s stock from $133.66 as of December 31, 2018 to $167.43 as of June 30, 2019.
NOTE 8 — Reportable Segments
The Company’s businesses are organized into the following segments: US Specialized Therapeutics, US General Medicine and International. In addition, certain revenues and shared costs, and the results of corporate initiatives, are managed outside of the three segments. During the second quarter of 2019, the Company changed the operational and management structure for its in-development calcitonin gene-related peptide (“CGRP”) receptors, Ubrogepant and Atogepant. These development products were previously reported within the US Specialized Therapeutics segment and have been transferred to the US General Medicine segment to align these development products with the management structure and reporting. The revenues and cost of sales related to these products in the prior periods were zero and any selling and marketing expenses and general and administrative expenses were de minimis and therefore it was not necessary to recast prior periods.
The operating segments are organized as follows:
The US Specialized Therapeutics segment includes sales and expenses relating to certain branded products within the U.S., including Medical Aesthetics, Medical Dermatology, Eye Care, Neurosciences and Urology therapeutic products.
• | The US Specialized Therapeutics segment includes sales and expenses relating to branded products within the U.S., including Medical Aesthetics, Medical Dermatology through September 20, 2018, Eye Care and Neuroscience and Urology therapeutic products. |
The US General Medicine segment includes sales and expenses relating to branded products within the U.S. that do not fall into the US Specialized Therapeutics business units, including Central Nervous System, Gastrointestinal, Women’s Health, Anti-Infectives and Diversified Brands.
• | The US General Medicine segment includes sales and expenses relating to branded products within the U.S. that do not fall into the US Specialized Therapeutics business units, including Central Nervous System, Gastrointestinal, Women’s Health, Anti-Infectives and Diversified Brands. |
The International segment includes sales and expenses relating to products sold outside the U.S.
• | The International segment includes sales and expenses relating to products sold outside the U.S. |
The Company evaluates segment performance based on segment contribution. Segment contribution for our segments represents net revenues less cost of sales (defined below), selling and marketing expenses, and select general and administrative expenses. Included in segment revenues are product sales that were sold through our former Anda Distribution business once the Anda Distribution business had sold the product to a third party customer. These sales are included in segment results and are reclassified into revenues from discontinued operations through a reduction of Corporate revenues which eliminates the sales made by our former Anda Distribution business from results of continuing operations prior to October 3, 2016. Cost of sales for these products in discontinued operations is equal to our average third party cost of sales for third party branded products distributed by our former Anda Distribution. The Company does not evaluate the following items at the segment level:
Revenues and operating expenses within cost of sales, selling and marketing expenses, and general and administrative expenses that result from the impact of corporate initiatives. Corporate initiatives primarily include integration, restructuring, acquisition and other shared costs.
• | Revenues and operating expenses within cost of sales, selling and marketing expenses, and general and administrative expenses that result from the impact of corporate initiatives. Corporate initiatives primarily include integration, restructuring, divestitures, acquisitions, certain milestones and other shared costs. |
General and administrative expenses that result from shared infrastructure, including certain expenses located within the United States.
• | General and administrative expenses that result from shared infrastructure, including certain expenses located within the United States. |
Total assets including capital expenditures.
• | Other select revenues and operating expenses including R&D expenses, amortization, IPR&D impairments, goodwill impairments and asset sales and impairments, net as not all such information has been accounted for at the segment level, or such information has not been used by all segments. |
• | Total assets including capital expenditures. |
Other select revenues and operating expenses including R&D expenses, amortization, IPR&D impairments and asset sales and impairments, net, as not all such information has been accounted for at the segment level, or such information has not been used by all segments.
The Company defines segment net revenues as product sales and other revenue derived from brandedour products or licensing agreements.
Cost of sales within segment contribution includes standard production and packaging costs for the products we manufacture, third party acquisition costs for products manufactured by others, profit-sharing or royalty payments for products sold pursuant to licensing agreements and finished goods inventory reserve charges. Cost of sales included within segment contribution does not includeexcludes non-standard production costs, such as non-finished goods inventory obsolescence charges, manufacturing variances and excess capacity utilization charges, where applicable. Cost of sales does not include amortization or impairment costs for acquired product rights or other acquired intangibles.
Selling and marketing expenses consist mainly of personnel-related costs, product promotion costs, distribution costs, professional service costs, insurance, depreciation and travel costs.
General and administrative expenses consist mainly of personnel-related costs, facilities costs, transaction costs, insurance, depreciation, litigation costs and professional services costs which are general in nature and attributable to the segment.
Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the three and six months ended SeptemberJune 30, 20172019 and 20162018 ($ in millions):
|
| Three Months Ended September 30, 2017 |
| |||||||||||||||||||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 2019 |
| |||||||||||||||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||||||
Net revenues |
| $ | 1,724.8 |
|
| $ | 1,497.4 |
|
| $ | 807.8 |
|
| $ | 4,030.0 |
|
| $ | 1,785.1 |
|
| $ | 1,455.7 |
|
| $ | 847.7 |
|
| $ | 4,088.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 131.4 |
|
|
| 225.5 |
|
|
| 116.3 |
|
|
| 473.2 |
|
|
| 151.0 |
|
|
| 231.3 |
|
|
| 145.6 |
|
|
| 527.9 |
|
Selling and marketing |
|
| 353.5 |
|
|
| 247.7 |
|
|
| 224.8 |
|
|
| 826.0 |
|
|
| 368.0 |
|
|
| 250.1 |
|
|
| 253.6 |
|
|
| 871.7 |
|
General and administrative |
|
| 54.8 |
|
|
| 47.7 |
|
|
| 28.3 |
|
|
| 130.8 |
|
|
| 37.6 |
|
|
| 30.4 |
|
|
| 28.4 |
|
|
| 96.4 |
|
Segment Contribution |
| $ | 1,185.1 |
|
| $ | 976.5 |
|
| $ | 438.4 |
|
| $ | 2,600.0 |
| ||||||||||||||||
Segment contribution |
| $ | 1,228.5 |
|
| $ | 943.9 |
|
| $ | 420.1 |
|
| $ | 2,592.5 |
| ||||||||||||||||
Contribution margin |
|
| 68.7 | % |
|
| 65.2 | % |
|
| 54.3 | % |
|
| 64.5 | % |
|
| 68.8 | % |
|
| 64.8 | % |
|
| 49.6 | % |
|
| 63.4 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 321.9 |
| ||||||||||||||||
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 352.2 |
| ||||||||||||||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 442.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 450.0 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,781.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,402.0 |
|
Goodwill impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,085.8 |
| ||||||||||||||||
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 202.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 436.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,874.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 129.4 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (4,022.3 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (1,262.9 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (99.8 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (30.9 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. | (1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| ||||||||||||||||||||||||||||||
(2) Corporate includes net revenues of $1.6 million. | (2) Corporate includes net revenues of $1.6 million. |
| ||||||||||||||||||||||||||||||
|
|
|
| Six Months Ended June 30, 2019 |
| |||||||||||||
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 3,328.0 |
|
| $ | 2,705.6 |
|
| $ | 1,649.2 |
|
| $ | 7,682.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 271.1 |
|
|
| 421.8 |
|
|
| 255.3 |
|
|
| 948.2 |
|
Selling and marketing |
|
| 724.8 |
|
|
| 460.6 |
|
|
| 491.2 |
|
|
| 1,676.6 |
|
General and administrative |
|
| 92.2 |
|
|
| 74.2 |
|
|
| 54.1 |
|
|
| 220.5 |
|
Segment contribution |
| $ | 2,239.9 |
|
| $ | 1,749.0 |
|
| $ | 848.6 |
|
| $ | 4,837.5 |
|
Contribution margin |
|
| 67.3 | % |
|
| 64.6 | % |
|
| 51.5 | % |
|
| 63.0 | % |
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 610.2 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 885.0 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,801.4 |
|
Goodwill impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,552.8 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 436.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 124.2 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (3,572.1 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (46.5 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||
(2) Corporate includes net revenues of $4.4 million. |
| |||||||||||||||
|
| Three Months Ended September 30, 2016 |
| |||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
| ||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 1,453.2 |
|
| $ | 1,488.1 |
|
| $ | 697.8 |
|
| $ | 3,639.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 69.2 |
|
|
| 215.1 |
|
|
| 95.1 |
|
|
| 379.4 |
|
Selling and marketing |
|
| 292.4 |
|
|
| 292.8 |
|
|
| 188.2 |
|
|
| 773.4 |
|
General and administrative |
|
| 41.2 |
|
|
| 42.3 |
|
|
| 28.0 |
|
|
| 111.5 |
|
Segment Contribution |
| $ | 1,050.4 |
|
| $ | 937.9 |
|
| $ | 386.5 |
|
| $ | 2,374.8 |
|
Contribution margin |
|
| 72.3 | % |
|
| 63.0 | % |
|
| 55.4 | % |
|
| 65.3 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 372.0 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 622.8 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,609.1 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 42.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4.7 | ) |
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (266.4 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (7.3 | )% |
|
|
|
| Three Months Ended June 30, 2018 |
| |||||||||||||
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 1,826.7 |
|
| $ | 1,320.0 |
|
| $ | 948.9 |
|
| $ | 4,095.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 148.7 |
|
|
| 201.8 |
|
|
| 139.4 |
|
|
| 489.9 |
|
Selling and marketing |
|
| 343.3 |
|
|
| 254.8 |
|
|
| 246.2 |
|
|
| 844.3 |
|
General and administrative |
|
| 48.1 |
|
|
| 34.7 |
|
|
| 33.9 |
|
|
| 116.7 |
|
Segment contribution |
| $ | 1,286.6 |
|
| $ | 828.7 |
|
| $ | 529.4 |
|
| $ | 2,644.7 |
|
Contribution margin |
|
| 70.4 | % |
|
| 62.8 | % |
|
| 55.8 | % |
|
| 64.6 | % |
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 189.8 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 689.2 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,697.1 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 276.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 259.6 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (467.0 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (11.4 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||
(2) Corporate includes net revenues of $28.6 million. |
| |||||||||||||||
|
| Six Months Ended June 30, 2018 |
| |||||||||||||
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 3,405.3 |
|
| $ | 2,543.7 |
|
| $ | 1,812.9 |
|
| $ | 7,761.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 282.9 |
|
|
| 384.4 |
|
|
| 260.3 |
|
|
| 927.6 |
|
Selling and marketing |
|
| 656.5 |
|
|
| 480.3 |
|
|
| 491.9 |
|
|
| 1,628.7 |
|
General and administrative |
|
| 98.3 |
|
|
| 73.6 |
|
|
| 65.3 |
|
|
| 237.2 |
|
Segment contribution |
| $ | 2,367.6 |
|
| $ | 1,605.4 |
|
| $ | 995.4 |
|
| $ | 4,968.4 |
|
Contribution margin |
|
| 69.5 | % |
|
| 63.1 | % |
|
| 54.9 | % |
|
| 64.0 | % |
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 460.1 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,163.9 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,394.7 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 798.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 272.7 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (1,121.0 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (14.4 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||
(2) Corporate includes net revenues of $34.4 million. |
| |||||||||||||||
The following is a reconciliation oftable presents our net revenuesrevenue disaggregated by geography for the operating segments to the Company’s net revenuesour international segment for the three and six months ended SeptemberJune 30, 20172019 and 2016 ($ in millions):
|
| Three Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Segment net revenues |
| $ | 4,030.0 |
|
| $ | 3,639.1 |
|
Corporate revenues |
|
| 4.3 |
|
|
| (16.9 | ) |
Net revenues |
| $ | 4,034.3 |
|
| $ | 3,622.2 |
|
No country outside of the United States represents ten percent or more of net revenues. The US Specialized Therapeutics and US General Medicine segments are comprised solely of sales within the United States.
Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the nine months ended September 30, 2017 and 20162018 ($ in millions):
|
| Nine Months Ended September 30, 2017 |
| |||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
| ||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 4,921.8 |
|
| $ | 4,270.9 |
|
| $ | 2,403.6 |
|
| $ | 11,596.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 349.4 |
|
|
| 623.2 |
|
|
| 341.6 |
|
|
| 1,314.2 |
|
Selling and marketing |
|
| 1,040.7 |
|
|
| 838.3 |
|
|
| 673.2 |
|
|
| 2,552.2 |
|
General and administrative |
|
| 149.4 |
|
|
| 129.7 |
|
|
| 86.5 |
|
|
| 365.6 |
|
Segment Contribution |
| $ | 3,382.3 |
|
| $ | 2,679.7 |
|
| $ | 1,302.3 |
|
| $ | 7,364.3 |
|
Contribution margin |
|
| 68.7 | % |
|
| 62.7 | % |
|
| 54.2 | % |
|
| 63.5 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,086.7 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,691.9 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,274.9 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,245.3 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,896.2 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,830.7 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (50.3 | )% |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||
Europe |
| $ | 386.2 |
|
| $ | 413.3 |
|
| $ | 740.6 |
|
| $ | 811.7 |
|
Asia Pacific, Middle East and Africa |
|
| 261.5 |
|
|
| 283.6 |
|
|
| 512.2 |
|
|
| 524.4 |
|
Latin America and Canada |
|
| 182.1 |
|
|
| 230.8 |
|
|
| 360.3 |
|
|
| 442.9 |
|
Other* |
|
| 17.9 |
|
|
| 21.2 |
|
|
| 36.1 |
|
|
| 33.9 |
|
Total International |
| $ | 847.7 |
|
| $ | 948.9 |
|
| $ | 1,649.2 |
|
| $ | 1,812.9 |
|
*Includes royalty and other revenue |
| |||||||||||||||
|
|
|
| Nine Months Ended September 30, 2016 |
| |||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
| ||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 4,240.8 |
|
| $ | 4,390.9 |
|
| $ | 2,128.1 |
|
| $ | 10,759.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 215.0 |
|
|
| 649.6 |
|
|
| 309.3 |
|
|
| 1,173.9 |
|
Selling and marketing |
|
| 844.8 |
|
|
| 902.8 |
|
|
| 582.7 |
|
|
| 2,330.3 |
|
General and administrative |
|
| 126.4 |
|
|
| 128.2 |
|
|
| 86.5 |
|
|
| 341.1 |
|
Segment Contribution |
| $ | 3,054.6 |
|
| $ | 2,710.3 |
|
| $ | 1,149.6 |
|
| $ | 6,914.5 |
|
Contribution margin |
|
| 72.0 | % |
|
| 61.7 | % |
|
| 54.0 | % |
|
| 64.3 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,052.8 |
|
Research and Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,662.4 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,831.9 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 316.9 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (24.0 | ) |
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (925.5 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (8.6 | )% |
|
|
The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the nine months ended September 30, 2017 and 2016 ($ in millions):
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Segment net revenues |
| $ | 11,596.3 |
|
| $ | 10,759.8 |
|
Corporate revenues |
|
| 18.3 |
|
|
| (53.5 | ) |
Net revenues |
| $ | 11,614.6 |
|
| $ | 10,706.3 |
|
No country outside of the United States represents ten percent or more of net revenues. The US Specialized Therapeutics and US General Medicine segments are comprised solely of sales within the United States.
The following tables present global net revenues for the top products greater than 10% of total revenues of the Company as well as a reconciliation of segment revenues to total net revenues for the three and ninesix months ended SeptemberJune 30, 20172019 and 20162018 ($ in millions):
| Three Months Ended September 30, 2017 |
|
| Three Months Ended June 30, 2019 |
| ||||||||||||||||||||||||||
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| |||||||||
Botox® | $ | 558.6 |
| $ | - |
| $ | 215.9 |
| $ | - |
| $ | 774.5 |
| ||||||||||||||||
Restasis® |
| 366.8 |
| - |
| 15.5 |
| - |
| 382.3 |
| ||||||||||||||||||||
Juvederm Collection** |
| 115.6 |
| - |
| 126.5 |
| - |
| 242.1 |
| ||||||||||||||||||||
Linzess®/Constella® |
| - |
| 190.9 |
| 5.7 |
| - |
| 196.6 |
| ||||||||||||||||||||
Lumigan®/Ganfort® |
| 83.3 |
| - |
| 91.5 |
| - |
| 174.8 |
| ||||||||||||||||||||
Bystolic® /Byvalson® |
| - |
| 164.2 |
| 0.5 |
| - |
| 164.7 |
| ||||||||||||||||||||
Alphagan®/Combigan® |
| 92.7 |
| - |
| 43.4 |
| - |
| 136.1 |
| ||||||||||||||||||||
Botox® |
| $ | 699.4 |
|
| $ | - |
|
| $ | 274.6 |
|
| $ | 974.0 |
| |||||||||||||||
Juvederm® Collection |
|
| 156.6 |
|
|
| - |
|
|
| 172.7 |
|
|
| 329.3 |
| |||||||||||||||
Restasis® |
|
| 310.9 |
|
|
| - |
|
|
| 11.9 |
|
|
| 322.8 |
| |||||||||||||||
Linzess®/Constella® |
|
| - |
|
|
| 196.0 |
|
|
| 4.8 |
|
|
| 200.8 |
| |||||||||||||||
Vraylar® |
|
| - |
|
|
| 196.1 |
|
|
| - |
|
|
| 196.1 |
| |||||||||||||||
Lumigan®/Ganfort® |
|
| 62.1 |
|
|
| - |
|
|
| 90.4 |
|
|
| 152.5 |
| |||||||||||||||
Bystolic® / Byvalson® |
|
| - |
|
|
| 150.5 |
|
|
| 0.5 |
|
|
| 151.0 |
| |||||||||||||||
Lo Loestrin® |
|
| - |
|
|
| 145.5 |
|
|
| - |
|
|
| 145.5 |
| |||||||||||||||
Alphagan®/Combigan® |
|
| 91.6 |
|
|
| - |
|
|
| 40.9 |
|
|
| 132.5 |
| |||||||||||||||
Eye Drops |
| 53.7 |
| - |
| 71.2 |
| - |
| 124.9 |
|
|
| 57.8 |
|
|
| - |
|
|
| 57.3 |
|
|
| 115.1 |
| ||||
Lo Loestrin® |
| - |
| 120.0 |
| - |
| - |
| 120.0 |
| ||||||||||||||||||||
Namenda XR® |
| - |
| 114.3 |
| - |
| - |
| 114.3 |
| ||||||||||||||||||||
Estrace® Cream |
| - |
| 101.6 |
| - |
| - |
| 101.6 |
| ||||||||||||||||||||
Ozurdex ® |
|
| 29.9 |
|
|
| - |
|
|
| 81.0 |
|
|
| 110.9 |
| |||||||||||||||
Viibryd®/Fetzima® |
|
| - |
|
|
| 107.8 |
|
|
| 2.7 |
|
|
| 110.5 |
| |||||||||||||||
Alloderm ® |
|
| 101.2 |
|
|
| - |
|
|
| 2.2 |
|
|
| 103.4 |
| |||||||||||||||
Coolsculpting ® Consumables |
|
| 60.7 |
|
|
| - |
|
|
| 20.3 |
|
|
| 81.0 |
| |||||||||||||||
Zenpep® |
|
| - |
|
|
| 70.0 |
|
|
| - |
|
|
| 70.0 |
| |||||||||||||||
Carafate ® / Sulcrate ® |
|
| - |
|
|
| 56.2 |
|
|
| 0.7 |
|
|
| 56.9 |
| |||||||||||||||
Armour Thyroid |
|
| - |
|
|
| 56.7 |
|
|
| - |
|
|
| 56.7 |
| |||||||||||||||
Viberzi® |
|
| - |
|
|
| 50.8 |
|
|
| 0.3 |
|
|
| 51.1 |
| |||||||||||||||
Skin Care |
|
| 42.6 |
|
|
| - |
|
|
| 3.7 |
|
|
| 46.3 |
| |||||||||||||||
Asacol®/Delzicol® |
|
| - |
|
|
| 31.6 |
|
|
| 9.7 |
|
|
| 41.3 |
| |||||||||||||||
Teflaro® |
|
| - |
|
|
| 37.0 |
|
|
| - |
|
|
| 37.0 |
| |||||||||||||||
Breast Implants |
| 58.0 |
| - |
| 38.1 |
| - |
| 96.1 |
|
|
| 67.6 |
|
|
| - |
|
|
| (31.4 | ) |
|
| 36.2 |
| ||||
Viibryd®/Fetzima® |
| - |
| 86.5 |
| 1.0 |
| - |
| 87.5 |
| ||||||||||||||||||||
Alloderm® |
| 84.6 |
| - |
| 1.5 |
| - |
| 86.1 |
| ||||||||||||||||||||
Vraylar™ |
| - |
| 80.2 |
| - |
| - |
| 80.2 |
| ||||||||||||||||||||
Ozurdex ® |
| 24.6 |
| - |
| 50.2 |
| - |
| 74.8 |
| ||||||||||||||||||||
Coolsculpting Consumables |
| 50.3 |
| - |
| 13.8 |
| - |
| 64.1 |
| ||||||||||||||||||||
Asacol®/Delzicol® |
| - |
| 49.5 |
| 11.9 |
| - |
| 61.4 |
| ||||||||||||||||||||
Carafate ® /Sulcrate ® |
| - |
| 58.7 |
| 0.7 |
| - |
| 59.4 |
| ||||||||||||||||||||
Zenpep® |
| - |
| 56.8 |
| - |
| - |
| 56.8 |
| ||||||||||||||||||||
Aczone® |
| 46.7 |
| - |
| 0.2 |
| - |
| 46.9 |
| ||||||||||||||||||||
Canasa®/Salofalk® |
| - |
| 39.0 |
| 4.6 |
| - |
| 43.6 |
| ||||||||||||||||||||
Coolsculpting Systems & Add On Applicators |
| 33.1 |
| - |
| 10.2 |
| - |
| 43.3 |
| ||||||||||||||||||||
Viberzi® |
| - |
| 40.9 |
| 0.2 |
| - |
| 41.1 |
| ||||||||||||||||||||
Armour Thyroid |
| - |
| 38.5 |
| - |
| - |
| 38.5 |
| ||||||||||||||||||||
Saphris® |
| - |
| 37.2 |
| - |
| - |
| 37.2 |
| ||||||||||||||||||||
Namzaric® |
| - |
| 37.0 |
| - |
| - |
| 37.0 |
| ||||||||||||||||||||
Rapaflo® |
| 28.3 |
| - |
| 1.8 |
| - |
| 30.1 |
| ||||||||||||||||||||
Teflaro® |
| - |
| 29.1 |
| - |
| - |
| 29.1 |
| ||||||||||||||||||||
Savella® |
| - |
| 24.0 |
| - |
| - |
| 24.0 |
| ||||||||||||||||||||
SkinMedica® |
| 18.7 |
| - |
| 1.4 |
| - |
| 20.1 |
| ||||||||||||||||||||
Avycaz® |
| - |
| 16.9 |
| - |
| - |
| 16.9 |
| ||||||||||||||||||||
Dalvance® |
| - |
| 16.1 |
| - |
| - |
| 16.1 |
| ||||||||||||||||||||
Latisse® |
| 13.6 |
| - |
| 1.9 |
| - |
| 15.5 |
| ||||||||||||||||||||
Tazorac® |
| 15.1 |
| - |
| 0.1 |
| - |
| 15.2 |
| ||||||||||||||||||||
Lexapro® |
| - |
| 12.9 |
| - |
| - |
| 12.9 |
| ||||||||||||||||||||
Kybella® /Belkyra® |
| 9.6 |
| - |
| 1.6 |
| - |
| 11.2 |
| ||||||||||||||||||||
Liletta® |
| - |
| 9.3 |
| - |
| - |
| 9.3 |
| ||||||||||||||||||||
Minastrin® 24 |
| - |
| 3.6 |
| - |
| - |
| 3.6 |
| ||||||||||||||||||||
Enablex® |
| - |
| 0.9 |
| - |
| - |
| 0.9 |
| ||||||||||||||||||||
Namenda® IR |
| - |
| - |
| - |
| - |
| - |
| ||||||||||||||||||||
Other Products Revenues |
| 71.5 |
| 169.3 |
| 98.4 |
| 4.3 |
| 343.5 |
| ||||||||||||||||||||
Less product sold through our former Anda Distribution business | n.a. |
| n.a. |
| n.a. |
|
| - |
|
| - |
| |||||||||||||||||||
Total Net Revenues | $ | 1,724.8 |
| $ | 1,497.4 |
| $ | 807.8 |
| $ | 4.3 |
| $ | 4,034.3 |
| ||||||||||||||||
Saphris® |
|
| - |
|
|
| 32.6 |
|
|
| - |
|
|
| 32.6 |
| |||||||||||||||
Coolsculpting ® Systems & Add On Applicators |
|
| 18.2 |
|
|
| - |
|
|
| 11.6 |
|
|
| 29.8 |
| |||||||||||||||
Avycaz® |
|
| - |
|
|
| 26.7 |
|
|
| - |
|
|
| 26.7 |
| |||||||||||||||
Namzaric® |
|
| - |
|
|
| 22.6 |
|
|
| - |
|
|
| 22.6 |
| |||||||||||||||
Dalvance® |
|
| - |
|
|
| 20.3 |
|
|
| 2.2 |
|
|
| 22.5 |
| |||||||||||||||
Savella® |
|
| - |
|
|
| 22.3 |
|
|
| - |
|
|
| 22.3 |
| |||||||||||||||
Liletta® |
|
| - |
|
|
| 21.9 |
|
|
| - |
|
|
| 21.9 |
| |||||||||||||||
Canasa®/Salofalk® |
|
| - |
|
|
| 8.0 |
|
|
| 4.1 |
|
|
| 12.1 |
| |||||||||||||||
Kybella® / Belkyra® |
|
| 8.5 |
|
|
| - |
|
|
| 0.6 |
|
|
| 9.1 |
| |||||||||||||||
Namenda® |
|
| - |
|
|
| 6.1 |
|
|
| - |
|
|
| 6.1 |
| |||||||||||||||
Rapaflo® |
|
| 4.5 |
|
|
| - |
|
|
| 1.4 |
|
|
| 5.9 |
| |||||||||||||||
Aczone® |
|
| 1.8 |
|
|
| - |
|
|
| - |
|
|
| 1.8 |
| |||||||||||||||
Other |
|
| 71.7 |
|
|
| 197.0 |
|
|
| 85.5 |
|
|
| 354.2 |
| |||||||||||||||
Total segment revenues |
| $ | 1,785.1 |
|
| $ | 1,455.7 |
|
| $ | 847.7 |
|
| $ | 4,088.5 |
| |||||||||||||||
Corporate revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.6 |
| |||||||||||||||
Total net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 4,090.1 |
| |||||||||||||||
| Three Months Ended September 30, 2016 |
|
| Six Months Ended June 30, 2019 |
| ||||||||||||||||||||||||||
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| |||||||||
Botox® | $ | 496.3 |
| $ | - |
| $ | 193.4 |
| $ | - |
| $ | 689.7 |
| ||||||||||||||||
Restasis® |
| 356.4 |
| - |
| 15.4 |
| - |
| 371.8 |
| ||||||||||||||||||||
Juvederm Collection** |
| 105.0 |
| - |
| 96.8 |
| - |
| 201.8 |
| ||||||||||||||||||||
Linzess®/Constella® |
| - |
| 164.4 |
| 4.3 |
| - |
| 168.7 |
| ||||||||||||||||||||
Lumigan®/Ganfort® |
| 78.3 |
| - |
| 86.6 |
| - |
| 164.9 |
| ||||||||||||||||||||
Bystolic® /Byvalson® |
| - |
| 165.1 |
| 0.5 |
| - |
| 165.6 |
| ||||||||||||||||||||
Alphagan®/Combigan® |
| 93.4 |
| - |
| 41.3 |
| - |
| 134.7 |
| ||||||||||||||||||||
Botox® |
| $ | 1,326.5 |
|
| $ | - |
|
| $ | 515.9 |
|
| $ | 1,842.4 |
| |||||||||||||||
Juvederm® Collection |
|
| 286.3 |
|
|
| - |
|
|
| 330.5 |
|
|
| 616.8 |
| |||||||||||||||
Restasis® |
|
| 542.6 |
|
|
| - |
|
|
| 22.3 |
|
|
| 564.9 |
| |||||||||||||||
Linzess®/Constella® |
|
| - |
|
|
| 357.3 |
|
|
| 10.3 |
|
|
| 367.6 |
| |||||||||||||||
Vraylar® |
|
| - |
|
|
| 339.8 |
|
|
| - |
|
|
| 339.8 |
| |||||||||||||||
Lumigan®/Ganfort® |
|
| 119.8 |
|
|
| - |
|
|
| 175.5 |
|
|
| 295.3 |
| |||||||||||||||
Bystolic® / Byvalson® |
|
| - |
|
|
| 278.8 |
|
|
| 0.9 |
|
|
| 279.7 |
| |||||||||||||||
Lo Loestrin® |
|
| - |
|
|
| 271.3 |
|
|
| - |
|
|
| 271.3 |
| |||||||||||||||
Alphagan®/Combigan® |
|
| 174.6 |
|
|
| - |
|
|
| 78.5 |
|
|
| 253.1 |
| |||||||||||||||
Eye Drops |
| 50.2 |
| - |
| 67.7 |
| - |
| 117.9 |
|
|
| 107.2 |
|
|
| - |
|
|
| 112.7 |
|
|
| 219.9 |
| ||||
Lo Loestrin® |
| - |
| 105.7 |
| - |
| - |
| 105.7 |
| ||||||||||||||||||||
Namenda XR® |
| - |
| 146.9 |
| - |
| - |
| 146.9 |
| ||||||||||||||||||||
Estrace® Cream |
| - |
| 98.6 |
| - |
| - |
| 98.6 |
| ||||||||||||||||||||
Ozurdex ® |
|
| 60.2 |
|
|
| - |
|
|
| 144.1 |
|
|
| 204.3 |
| |||||||||||||||
Alloderm ® |
|
| 196.2 |
|
|
| - |
|
|
| 3.8 |
|
|
| 200.0 |
| |||||||||||||||
Viibryd®/Fetzima® |
|
| - |
|
|
| 192.8 |
|
|
| 4.8 |
|
|
| 197.6 |
| |||||||||||||||
Coolsculpting ® Consumables |
|
| 108.5 |
|
|
| - |
|
|
| 38.1 |
|
|
| 146.6 |
| |||||||||||||||
Zenpep® |
|
| - |
|
|
| 133.0 |
|
|
| - |
|
|
| 133.0 |
| |||||||||||||||
Carafate ® / Sulcrate ® |
|
| - |
|
|
| 110.5 |
|
|
| 1.3 |
|
|
| 111.8 |
| |||||||||||||||
Breast Implants |
| 51.1 |
| - |
| 35.6 |
| - |
| 86.7 |
|
|
| 128.8 |
|
|
| - |
|
|
| (20.2 | ) |
|
| 108.6 |
| ||||
Viibryd®/Fetzima® |
| - |
| 87.6 |
| - |
| - |
| 87.6 |
| ||||||||||||||||||||
Alloderm® |
| - |
| - |
| - |
| - |
| - |
| ||||||||||||||||||||
Vraylar™ |
| - |
| 32.4 |
| - |
| - |
| 32.4 |
| ||||||||||||||||||||
Ozurdex ® |
| 20.9 |
| - |
| 43.4 |
| - |
| 64.3 |
| ||||||||||||||||||||
Coolsculpting Consumables |
| - |
| - |
| - |
| - |
| - |
| ||||||||||||||||||||
Asacol®/Delzicol® |
| - |
| 72.2 |
| 14.2 |
| - |
| 86.4 |
| ||||||||||||||||||||
Carafate ® /Sulcrate ® |
| - |
| 56.4 |
| 0.6 |
| - |
| 57.0 |
| ||||||||||||||||||||
Zenpep® |
| - |
| 52.5 |
| - |
| - |
| 52.5 |
| ||||||||||||||||||||
Aczone® |
| 69.0 |
| - |
| - |
| - |
| 69.0 |
| ||||||||||||||||||||
Canasa®/Salofalk® |
| - |
| 47.2 |
| 4.4 |
| - |
| 51.6 |
| ||||||||||||||||||||
Coolsculpting Systems & Add On Applicators |
| - |
| - |
| - |
| - |
| - |
| ||||||||||||||||||||
Viberzi® |
| - |
| 30.9 |
| - |
| - |
| 30.9 |
| ||||||||||||||||||||
Armour Thyroid |
| - |
| 39.1 |
| - |
| - |
| 39.1 |
|
|
| - |
|
|
| 106.7 |
|
|
| - |
|
|
| 106.7 |
| ||||
Saphris® |
| - |
| 40.8 |
| - |
| - |
| 40.8 |
| ||||||||||||||||||||
Namzaric® |
| - |
| 14.9 |
| - |
| - |
| 14.9 |
| ||||||||||||||||||||
Rapaflo® |
| 25.2 |
| - |
| 1.5 |
| - |
| 26.7 |
| ||||||||||||||||||||
Teflaro® |
| - |
| 33.3 |
| - |
| - |
| 33.3 |
| ||||||||||||||||||||
Savella® |
| - |
| 28.1 |
| - |
| - |
| 28.1 |
| ||||||||||||||||||||
SkinMedica® |
| 25.8 |
| - |
| - |
| - |
| 25.8 |
| ||||||||||||||||||||
Avycaz® |
| - |
| 4.8 |
| - |
| - |
| 4.8 |
| ||||||||||||||||||||
Dalvance® |
| - |
| 10.3 |
| - |
| - |
| 10.3 |
| ||||||||||||||||||||
Latisse® |
| 17.2 |
| - |
| 1.9 |
| - |
| 19.1 |
| ||||||||||||||||||||
Tazorac® |
| 27.5 |
| - |
| 0.2 |
| - |
| 27.7 |
| ||||||||||||||||||||
Lexapro® |
| - |
| 15.6 |
| - |
| - |
| 15.6 |
| ||||||||||||||||||||
Kybella® /Belkyra® |
| 14.2 |
| - |
| 0.5 |
| - |
| 14.7 |
| ||||||||||||||||||||
Liletta® |
| - |
| 4.4 |
| - |
| - |
| 4.4 |
| ||||||||||||||||||||
Minastrin® 24 |
| - |
| 84.9 |
| - |
| - |
| 84.9 |
| ||||||||||||||||||||
Enablex® |
| - |
| 1.9 |
| - |
| - |
| 1.9 |
| ||||||||||||||||||||
Namenda® IR |
| - |
| 2.9 |
| - |
| - |
| 2.9 |
| ||||||||||||||||||||
Other Products Revenues |
| 22.7 |
| 147.2 |
| 89.5 |
| 6.8 |
| 266.2 |
| ||||||||||||||||||||
Less product sold through our former Anda Distribution business | n.a. |
| n.a. |
| n.a. |
|
| (23.7 | ) |
| (23.7 | ) | |||||||||||||||||||
Total Net Revenues | $ | 1,453.2 |
| $ | 1,488.1 |
| $ | 697.8 |
| $ | (16.9 | ) | $ | 3,622.2 |
| ||||||||||||||||
Viberzi® |
|
| - |
|
|
| 88.0 |
|
|
| 0.6 |
|
|
| 88.6 |
| |||||||||||||||
Skin Care |
|
| 77.3 |
|
|
| - |
|
|
| 6.4 |
|
|
| 83.7 |
| |||||||||||||||
Asacol®/Delzicol® |
|
| - |
|
|
| 56.3 |
|
|
| 20.0 |
|
|
| 76.3 |
| |||||||||||||||
Teflaro® |
|
| - |
|
|
| 70.5 |
|
|
| 0.2 |
|
|
| 70.7 |
| |||||||||||||||
Saphris® |
|
| - |
|
|
| 64.5 |
|
|
| - |
|
|
| 64.5 |
| |||||||||||||||
Avycaz® |
|
| - |
|
|
| 56.4 |
|
|
| - |
|
|
| 56.4 |
| |||||||||||||||
Coolsculpting ® Systems & Add On Applicators |
|
| 33.3 |
|
|
| - |
|
|
| 22.2 |
|
|
| 55.5 |
| |||||||||||||||
Namzaric® |
|
| - |
|
|
| 46.0 |
|
|
| - |
|
|
| 46.0 |
| |||||||||||||||
Savella® |
|
| - |
|
|
| 43.0 |
|
|
| - |
|
|
| 43.0 |
| |||||||||||||||
Liletta® |
|
| - |
|
|
| 36.7 |
|
|
| - |
|
|
| 36.7 |
| |||||||||||||||
Dalvance® |
|
| - |
|
|
| 32.3 |
|
|
| 2.2 |
|
|
| 34.5 |
| |||||||||||||||
Canasa®/Salofalk® |
|
| - |
|
|
| 18.2 |
|
|
| 7.7 |
|
|
| 25.9 |
| |||||||||||||||
Rapaflo® |
|
| 16.3 |
|
|
| - |
|
|
| 2.0 |
|
|
| 18.3 |
| |||||||||||||||
Kybella® / Belkyra® |
|
| 15.8 |
|
|
| - |
|
|
| 2.2 |
|
|
| 18.0 |
| |||||||||||||||
Namenda® |
|
| - |
|
|
| 15.6 |
|
|
| - |
|
|
| 15.6 |
| |||||||||||||||
Aczone® |
|
| 3.4 |
|
|
| - |
|
|
| - |
|
|
| 3.4 |
| |||||||||||||||
Other |
|
| 131.2 |
|
|
| 387.9 |
|
|
| 167.2 |
|
|
| 686.3 |
| |||||||||||||||
Total segment revenues |
| $ | 3,328.0 |
|
| $ | 2,705.6 |
|
| $ | 1,649.2 |
|
| $ | 7,682.8 |
| |||||||||||||||
Corporate revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4.4 |
| |||||||||||||||
Total net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 7,687.2 |
| |||||||||||||||
| Nine Months Ended September 30, 2017 |
|
| Three Months Ended June 30, 2018 |
| ||||||||||||||||||||||||||
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| |||||||||
Botox® | $ | 1,642.0 |
| $ | - |
| $ | 662.6 |
| $ | - |
| $ | 2,304.6 |
| ||||||||||||||||
Restasis® |
| 1,012.0 |
| - |
| 46.7 |
| - |
| 1,058.7 |
| ||||||||||||||||||||
Juvederm Collection** |
| 361.6 |
| - |
| 386.0 |
| - |
| 747.6 |
| ||||||||||||||||||||
Linzess®/Constella® |
| - |
| 506.3 |
| 16.1 |
| - |
| 522.4 |
| ||||||||||||||||||||
Lumigan®/Ganfort® |
| 236.6 |
| - |
| 271.8 |
| - |
| 508.4 |
| ||||||||||||||||||||
Bystolic® /Byvalson® |
| - |
| 454.7 |
| 1.6 |
| - |
| 456.3 |
| ||||||||||||||||||||
Alphagan®/Combigan® |
| 275.5 |
| - |
| 128.4 |
| - |
| 403.9 |
| ||||||||||||||||||||
Botox® |
| $ | 658.5 |
|
| $ | - |
|
| $ | 276.0 |
|
| $ | 934.5 |
| |||||||||||||||
Restasis® |
|
| 318.2 |
|
|
| - |
|
|
| 16.0 |
|
|
| 334.2 |
| |||||||||||||||
Juvederm® Collection |
|
| 139.8 |
|
|
| - |
|
|
| 156.1 |
|
|
| 295.9 |
| |||||||||||||||
Linzess®/Constella® |
|
| - |
|
|
| 191.8 |
|
|
| 6.4 |
|
|
| 198.2 |
| |||||||||||||||
Lumigan®/Ganfort® |
|
| 73.0 |
|
|
| - |
|
|
| 100.5 |
|
|
| 173.5 |
| |||||||||||||||
Bystolic® / Byvalson® |
|
| - |
|
|
| 148.1 |
|
|
| 0.6 |
|
|
| 148.7 |
| |||||||||||||||
Alphagan®/Combigan® |
|
| 98.1 |
|
|
| - |
|
|
| 44.6 |
|
|
| 142.7 |
| |||||||||||||||
Lo Loestrin® |
|
| - |
|
|
| 127.8 |
|
|
| - |
|
|
| 127.8 |
| |||||||||||||||
Eye Drops |
| 152.2 |
| - |
| 207.2 |
| - |
| 359.4 |
|
|
| 53.8 |
|
|
| - |
|
|
| 72.4 |
|
|
| 126.2 |
| ||||
Namenda XR® |
| - |
| 355.0 |
| - |
| - |
| 355.0 |
| ||||||||||||||||||||
Lo Loestrin® |
| - |
| 332.8 |
| - |
| - |
| 332.8 |
| ||||||||||||||||||||
Breast Implants |
| 173.6 |
| - |
| 116.8 |
| - |
| 290.4 |
|
|
| 75.9 |
|
|
| - |
|
|
| 39.9 |
|
|
| 115.8 |
| ||||
Estrace® Cream |
| - |
| 265.1 |
| - |
| - |
| 265.1 |
| ||||||||||||||||||||
Viibryd®/Fetzima® |
| - |
| 244.2 |
| 2.1 |
| - |
| 246.3 |
| ||||||||||||||||||||
Alloderm® |
| 223.3 |
| - |
| 5.0 |
| - |
| 228.3 |
| ||||||||||||||||||||
Vraylar® |
|
| - |
|
|
| 114.2 |
|
|
| - |
|
|
| 114.2 |
| |||||||||||||||
Alloderm ® |
|
| 107.1 |
|
|
| - |
|
|
| 2.3 |
|
|
| 109.4 |
| |||||||||||||||
Ozurdex ® |
| 72.0 |
| - |
| 152.5 |
| - |
| 224.5 |
|
|
| 27.6 |
|
|
| - |
|
|
| 67.9 |
|
|
| 95.5 |
| ||||
Vraylar™ |
| - |
| 200.1 |
| - |
| - |
| 200.1 |
| ||||||||||||||||||||
Asacol®/Delzicol® |
| - |
| 152.7 |
| 36.8 |
| - |
| 189.5 |
| ||||||||||||||||||||
Carafate ® /Sulcrate ® |
| - |
| 176.6 |
| 2.1 |
| - |
| 178.7 |
| ||||||||||||||||||||
Zenpep® |
| - |
| 153.8 |
| - |
| - |
| 153.8 |
| ||||||||||||||||||||
Canasa®/Salofalk® |
| - |
| 115.7 |
| 13.3 |
| - |
| 129.0 |
| ||||||||||||||||||||
Aczone® |
| 128.3 |
| - |
| 0.3 |
| - |
| 128.6 |
| ||||||||||||||||||||
Coolsculpting Consumables |
| 98.2 |
| - |
| 26.3 |
| - |
| 124.5 |
| ||||||||||||||||||||
Coolsculpting ® Consumables |
|
| 71.9 |
|
|
| - |
|
|
| 18.5 |
|
|
| 90.4 |
| |||||||||||||||
Viibryd®/Fetzima® |
|
| - |
|
|
| 86.7 |
|
|
| 1.6 |
|
|
| 88.3 |
| |||||||||||||||
Zenpep® |
|
| - |
|
|
| 55.5 |
|
|
| - |
|
|
| 55.5 |
| |||||||||||||||
Carafate ® / Sulcrate ® |
|
| - |
|
|
| 54.3 |
|
|
| 0.7 |
|
|
| 55.0 |
| |||||||||||||||
Canasa®/Salofalk® |
|
| - |
|
|
| 45.0 |
|
|
| 4.5 |
|
|
| 49.5 |
| |||||||||||||||
Armour Thyroid |
| - |
| 117.8 |
| - |
| - |
| 117.8 |
|
|
| - |
|
|
| 49.2 |
|
|
| - |
|
|
| 49.2 |
| ||||
Saphris® |
| - |
| 117.5 |
| - |
| - |
| 117.5 |
| ||||||||||||||||||||
Viberzi® |
| - |
| 113.7 |
| 0.3 |
| - |
| 114.0 |
| ||||||||||||||||||||
Namzaric® |
| - |
| 94.0 |
| - |
| - |
| 94.0 |
| ||||||||||||||||||||
Teflaro® |
| - |
| 92.7 |
| - |
| - |
| 92.7 |
| ||||||||||||||||||||
Rapaflo® |
| 79.9 |
| - |
| 5.5 |
| - |
| 85.4 |
| ||||||||||||||||||||
Coolsculpting Systems & Add On Applicators |
| 64.1 |
| - |
| 20.4 |
| - |
| 84.5 |
| ||||||||||||||||||||
Savella® |
| - |
| 74.3 |
| - |
| - |
| 74.3 |
| ||||||||||||||||||||
SkinMedica® |
| 72.1 |
| - |
| 1.4 |
| - |
| 73.5 |
| ||||||||||||||||||||
Minastrin® 24 |
| - |
| 56.1 |
| - |
| - |
| 56.1 |
| ||||||||||||||||||||
Tazorac® |
| 51.3 |
| - |
| 0.5 |
| - |
| 51.8 |
| ||||||||||||||||||||
Latisse® |
| 40.5 |
| - |
| 6.2 |
| - |
| 46.7 |
| ||||||||||||||||||||
Avycaz® |
| - |
| 42.7 |
| - |
| - |
| 42.7 |
| ||||||||||||||||||||
Kybella® /Belkyra® |
| 37.4 |
| - |
| 5.1 |
| - |
| 42.5 |
| ||||||||||||||||||||
Dalvance® |
| - |
| 40.9 |
| 1.2 |
| - |
| 42.1 |
| ||||||||||||||||||||
Lexapro® |
| - |
| 39.4 |
| - |
| - |
| 39.4 |
| ||||||||||||||||||||
Liletta® |
| - |
| 23.1 |
| - |
| - |
| 23.1 |
| ||||||||||||||||||||
Enablex® |
| - |
| 2.8 |
| - |
| - |
| 2.8 |
| ||||||||||||||||||||
Namenda® IR |
| - |
| 0.1 |
| - |
| - |
| 0.1 |
| ||||||||||||||||||||
Coolsculpting ® Systems & Add On Applicators |
|
| 36.4 |
|
|
| - |
|
|
| 12.4 |
|
|
| 48.8 |
| |||||||||||||||
Viberzi® |
|
| - |
|
|
| 44.9 |
|
|
| 0.3 |
|
|
| 45.2 |
| |||||||||||||||
Asacol®/Delzicol® |
|
| - |
|
|
| 32.6 |
|
|
| 12.4 |
|
|
| 45.0 |
| |||||||||||||||
Skin Care |
|
| 34.3 |
|
|
| - |
|
|
| 4.1 |
|
|
| 38.4 |
| |||||||||||||||
Saphris® |
|
| - |
|
|
| 33.8 |
|
|
| - |
|
|
| 33.8 |
| |||||||||||||||
Teflaro® |
|
| - |
|
|
| 32.4 |
|
|
| 0.6 |
|
|
| 33.0 |
| |||||||||||||||
Namzaric® |
|
| - |
|
|
| 31.8 |
|
|
| - |
|
|
| 31.8 |
| |||||||||||||||
Avycaz® |
|
| - |
|
|
| 23.5 |
|
|
| - |
|
|
| 23.5 |
| |||||||||||||||
Rapaflo® |
|
| 19.7 |
|
|
| - |
|
|
| 1.6 |
|
|
| 21.3 |
| |||||||||||||||
Aczone® |
|
| 21.1 |
|
|
| - |
|
|
| 0.1 |
|
|
| 21.2 |
| |||||||||||||||
Savella® |
|
| - |
|
|
| 19.1 |
|
|
| - |
|
|
| 19.1 |
| |||||||||||||||
Dalvance® |
|
| - |
|
|
| 17.7 |
|
|
| 1.3 |
|
|
| 19.0 |
| |||||||||||||||
Liletta® |
|
| - |
|
|
| 15.5 |
|
|
| - |
|
|
| 15.5 |
| |||||||||||||||
Kybella® / Belkyra® |
|
| 11.2 |
|
|
| - |
|
|
| 2.3 |
|
|
| 13.5 |
| |||||||||||||||
Namenda® |
|
| - |
|
|
| 3.4 |
|
|
| - |
|
|
| 3.4 |
| |||||||||||||||
Other |
| 201.2 |
| 498.8 |
| 287.4 |
| �� | 18.3 |
| 1,005.7 |
|
|
| 80.1 |
|
|
| 192.7 |
|
|
| 105.8 |
|
|
| 378.6 |
| |||
Less product sold through our former Anda Distribution business | n.a. |
| n.a. |
| n.a. |
|
| - |
|
| - |
| |||||||||||||||||||
Total Net Revenues | $ | 4,921.8 |
| $ | 4,270.9 |
| $ | 2,403.6 |
| $ | 18.3 |
| $ | 11,614.6 |
| ||||||||||||||||
Total segment revenues |
| $ | 1,826.7 |
|
| $ | 1,320.0 |
|
| $ | 948.9 |
|
| $ | 4,095.6 |
| |||||||||||||||
Corporate revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 28.6 |
| |||||||||||||||
Total net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 4,124.2 |
| |||||||||||||||
| Nine Months Ended September 30, 2016 |
|
| Six Months Ended June 30, 2018 |
| ||||||||||||||||||||||||||
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| |||||||||
Botox® | $ | 1,454.0 |
| $ | - |
| $ | 592.9 |
| $ | - |
| $ | 2,046.9 |
| ||||||||||||||||
Restasis® |
| 1,026.4 |
| - |
| 49.7 |
| - |
| 1,076.1 |
| ||||||||||||||||||||
Juvederm Collection** |
| 325.3 |
| - |
| 304.2 |
| - |
| 629.5 |
| ||||||||||||||||||||
Linzess®/Constella® |
| - |
| 452.0 |
| 12.7 |
| - |
| 464.7 |
| ||||||||||||||||||||
Lumigan®/Ganfort® |
| 240.4 |
| - |
| 269.2 |
| - |
| 509.6 |
| ||||||||||||||||||||
Bystolic® /Byvalson® |
| - |
| 479.0 |
| 1.3 |
| - |
| 480.3 |
| ||||||||||||||||||||
Alphagan®/Combigan® |
| 274.3 |
| - |
| 127.3 |
| - |
| 401.6 |
| ||||||||||||||||||||
Botox® |
| $ | 1,231.0 |
|
| $ | - |
|
| $ | 520.8 |
|
| $ | 1,751.8 |
| |||||||||||||||
Restasis® |
|
| 574.0 |
|
|
| - |
|
|
| 34.3 |
|
|
| 608.3 |
| |||||||||||||||
Juvederm® Collection |
|
| 262.6 |
|
|
| - |
|
|
| 302.2 |
|
|
| 564.8 |
| |||||||||||||||
Linzess®/Constella® |
|
| - |
|
|
| 351.1 |
|
|
| 12.0 |
|
|
| 363.1 |
| |||||||||||||||
Lumigan®/Ganfort® |
|
| 139.8 |
|
|
| - |
|
|
| 200.9 |
|
|
| 340.7 |
| |||||||||||||||
Bystolic® / Byvalson® |
|
| - |
|
|
| 280.9 |
|
|
| 1.1 |
|
|
| 282.0 |
| |||||||||||||||
Alphagan®/Combigan® |
|
| 182.3 |
|
|
| - |
|
|
| 88.8 |
|
|
| 271.1 |
| |||||||||||||||
Lo Loestrin® |
|
| - |
|
|
| 242.4 |
|
|
| - |
|
|
| 242.4 |
| |||||||||||||||
Eye Drops |
| 140.1 |
| - |
| 206.9 |
| - |
| 347.0 |
|
|
| 100.0 |
|
|
| - |
|
|
| 141.2 |
|
|
| 241.2 |
| ||||
Namenda XR® |
| - |
| 486.5 |
| - |
| - |
| 486.5 |
| ||||||||||||||||||||
Lo Loestrin® |
| - |
| 296.0 |
| - |
| - |
| 296.0 |
| ||||||||||||||||||||
Breast Implants |
| 149.2 |
| - |
| 112.5 |
| - |
| 261.7 |
|
|
| 136.6 |
|
|
| - |
|
|
| 84.0 |
|
|
| 220.6 |
| ||||
Estrace® Cream |
| - |
| 276.4 |
| - |
| - |
| 276.4 |
| ||||||||||||||||||||
Viibryd®/Fetzima® |
| - |
| 252.6 |
| 0.1 |
| - |
| 252.7 |
| ||||||||||||||||||||
Alloderm® |
| - |
| - |
| - |
| - |
| - |
| ||||||||||||||||||||
Alloderm ® |
|
| 206.6 |
|
|
| - |
|
|
| 4.5 |
|
|
| 211.1 |
| |||||||||||||||
Vraylar® |
|
| - |
|
|
| 198.6 |
|
|
| - |
|
|
| 198.6 |
| |||||||||||||||
Ozurdex ® |
| 61.8 |
| - |
| 130.2 |
| - |
| 192.0 |
|
|
| 53.1 |
|
|
| - |
|
|
| 132.3 |
|
|
| 185.4 |
| ||||
Vraylar™ |
| - |
| 51.1 |
| - |
| - |
| 51.1 |
| ||||||||||||||||||||
Asacol®/Delzicol® |
| - |
| 297.9 |
| 40.5 |
| - |
| 338.4 |
| ||||||||||||||||||||
Carafate ® /Sulcrate ® |
| - |
| 167.7 |
| 1.7 |
| - |
| 169.4 |
| ||||||||||||||||||||
Zenpep® |
| - |
| 145.1 |
| - |
| - |
| 145.1 |
| ||||||||||||||||||||
Canasa®/Salofalk® |
| - |
| 135.0 |
| 13.0 |
| - |
| 148.0 |
| ||||||||||||||||||||
Aczone® |
| 156.1 |
| - |
| - |
| - |
| 156.1 |
| ||||||||||||||||||||
Coolsculpting Consumables |
| - |
| - |
| - |
| - |
| - |
| ||||||||||||||||||||
Viibryd®/Fetzima® |
|
| - |
|
|
| 158.4 |
|
|
| 3.1 |
|
|
| 161.5 |
| |||||||||||||||
Coolsculpting ® Consumables |
|
| 125.3 |
|
|
| - |
|
|
| 26.6 |
|
|
| 151.9 |
| |||||||||||||||
Carafate ® / Sulcrate ® |
|
| - |
|
|
| 110.3 |
|
|
| 1.4 |
|
|
| 111.7 |
| |||||||||||||||
Zenpep® |
|
| - |
|
|
| 108.4 |
|
|
| - |
|
|
| 108.4 |
| |||||||||||||||
Armour Thyroid |
| - |
| 121.8 |
| - |
| - |
| 121.8 |
|
|
| - |
|
|
| 97.4 |
|
|
| - |
|
|
| 97.4 |
| ||||
Saphris® |
| - |
| 123.6 |
| - |
| - |
| 123.6 |
| ||||||||||||||||||||
Viberzi® |
| - |
| 55.3 |
| - |
| - |
| 55.3 |
| ||||||||||||||||||||
Namzaric® |
| - |
| 38.0 |
| - |
| - |
| 38.0 |
| ||||||||||||||||||||
Teflaro® |
| - |
| 101.9 |
| - |
| - |
| 101.9 |
| ||||||||||||||||||||
Rapaflo® |
| 87.6 |
| - |
| 4.2 |
| - |
| 91.8 |
| ||||||||||||||||||||
Coolsculpting Systems & Add On Applicators |
| - |
| - |
| - |
| - |
| - |
| ||||||||||||||||||||
Savella® |
| - |
| 74.1 |
| - |
| - |
| 74.1 |
| ||||||||||||||||||||
SkinMedica® |
| 81.5 |
| - |
| - |
| - |
| 81.5 |
| ||||||||||||||||||||
Minastrin® 24 |
| - |
| 247.5 |
| 1.4 |
| - |
| 248.9 |
| ||||||||||||||||||||
Tazorac® |
| 68.0 |
| - |
| 0.6 |
| - |
| 68.6 |
| ||||||||||||||||||||
Latisse® |
| 54.7 |
| - |
| 6.2 |
| - |
| 60.9 |
| ||||||||||||||||||||
Avycaz® |
| - |
| 26.9 |
| - |
| - |
| 26.9 |
| ||||||||||||||||||||
Kybella® /Belkyra® |
| 38.2 |
| - |
| 1.6 |
| - |
| 39.8 |
| ||||||||||||||||||||
Dalvance® |
| - |
| 26.7 |
| - |
| - |
| 26.7 |
| ||||||||||||||||||||
Lexapro® |
| - |
| 50.8 |
| - |
| - |
| 50.8 |
| ||||||||||||||||||||
Liletta® |
| - |
| 15.0 |
| - |
| - |
| 15.0 |
| ||||||||||||||||||||
Enablex® |
| - |
| 14.7 |
| - |
| - |
| 14.7 |
| ||||||||||||||||||||
Namenda® IR |
| - |
| 12.8 |
| - |
| - |
| 12.8 |
| ||||||||||||||||||||
Asacol®/Delzicol® |
|
| - |
|
|
| 70.8 |
|
|
| 24.1 |
|
|
| 94.9 |
| |||||||||||||||
Canasa®/Salofalk® |
|
| - |
|
|
| 83.6 |
|
|
| 8.7 |
|
|
| 92.3 |
| |||||||||||||||
Coolsculpting ® Systems & Add On Applicators |
|
| 70.1 |
|
|
| - |
|
|
| 13.5 |
|
|
| 83.6 |
| |||||||||||||||
Viberzi® |
|
| - |
|
|
| 80.8 |
|
|
| 0.4 |
|
|
| 81.2 |
| |||||||||||||||
Skin Care |
|
| 66.2 |
|
|
| - |
|
|
| 7.9 |
|
|
| 74.1 |
| |||||||||||||||
Saphris® |
|
| - |
|
|
| 66.5 |
|
|
| - |
|
|
| 66.5 |
| |||||||||||||||
Namzaric® |
|
| - |
|
|
| 65.2 |
|
|
| - |
|
|
| 65.2 |
| |||||||||||||||
Teflaro® |
|
| - |
|
|
| 64.6 |
|
|
| 0.6 |
|
|
| 65.2 |
| |||||||||||||||
Rapaflo® |
|
| 42.5 |
|
|
| - |
|
|
| 2.8 |
|
|
| 45.3 |
| |||||||||||||||
Avycaz® |
|
| - |
|
|
| 45.3 |
|
|
| - |
|
|
| 45.3 |
| |||||||||||||||
Namenda® |
|
| - |
|
|
| 44.0 |
|
|
| - |
|
|
| 44.0 |
| |||||||||||||||
Savella® |
|
| - |
|
|
| 39.0 |
|
|
| - |
|
|
| 39.0 |
| |||||||||||||||
Aczone® |
|
| 37.1 |
|
|
| - |
|
|
| 0.2 |
|
|
| 37.3 |
| |||||||||||||||
Dalvance® |
|
| - |
|
|
| 29.6 |
|
|
| 1.3 |
|
|
| 30.9 |
| |||||||||||||||
Liletta® |
|
| - |
|
|
| 23.6 |
|
|
| - |
|
|
| 23.6 |
| |||||||||||||||
Kybella® / Belkyra® |
|
| 19.4 |
|
|
| - |
|
|
| 3.7 |
|
|
| 23.1 |
| |||||||||||||||
Other |
| 83.2 |
| 442.5 |
| 251.9 |
| 26.5 |
| 804.1 |
|
|
| 158.7 |
|
|
| 383.2 |
|
|
| 196.5 |
|
|
| 738.4 |
| ||||
Less product sold through our former Anda Distribution business | n.a. |
| n.a. |
| n.a. |
|
| (80.0 | ) |
| (80.0 | ) | |||||||||||||||||||
Total Net Revenues | $ | 4,240.8 |
| $ | 4,390.9 |
| $ | 2,128.1 |
| $ | (53.5 | ) | $ | 10,706.3 |
| ||||||||||||||||
Total segment revenues |
| $ | 3,405.3 |
|
| $ | 2,543.7 |
|
| $ | 1,812.9 |
|
| $ | 7,761.9 |
| |||||||||||||||
Corporate revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34.4 |
| |||||||||||||||
Total net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 7,796.3 |
| |||||||||||||||
|
|
Unless included above, no product represents ten percent or more of total net revenues.
On July 24, 2019, the Company announced a voluntary worldwide recall of BIOCELL® textured breast implants and tissue expanders as a precaution following notification of recently updated global safety information concerning the uncommon incidence of breast implant-associated anaplastic large cell lymphoma (BIA-ALCL) provided by the U.S. Food and Drug Administration (“FDA”).
In connection with the voluntary recall, the Company recorded an unfavorable adjustment to operating income of $95.9 million. Of this amount, $43.5 million related to estimated customer returns of product previously sold and was recorded as a reduction of net revenues, $44.2 million related to write-offs of inventory and other costs and was recorded in cost of sales, and $8.2 million related to the estimated penalties and costs to undertake the voluntary recall was recorded in selling, general and administrative expense.
NOTE 9 — Inventories
Inventories consist of finished goods held for sale and distribution, raw materials and work-in-process. Inventories are stated at the lower of cost (first-in, first-out method) or market (netnet realizable value).value. The Company writes down inventories to net realizable value based on forecasted demand, market conditions or other factors, which may differ from actual results.
Inventories consisted of the following ($ in millions):
|
| September 30, |
|
| December 31, |
| ||
|
| 2017 |
|
| 2016 |
| ||
Raw materials |
| $ | 316.0 |
|
| $ | 297.1 |
|
Work-in-process |
|
| 134.5 |
|
|
| 145.4 |
|
Finished goods |
|
| 544.8 |
|
|
| 357.7 |
|
|
|
| 995.3 |
|
|
| 800.2 |
|
Less: inventory reserves |
|
| 95.5 |
|
|
| 82.2 |
|
Total Inventories |
| $ | 899.8 |
|
| $ | 718.0 |
|
As of September 30, 2017, finished goods included $5.1 million related to the fair-value step-up of acquired inventory as a result of the LifeCell Acquisition.
NOTE 10 — Investments and Other Assets
Investments in marketable securities, other investments and other assetsInventories consisted of the following ($ in millions):
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
Marketable securities: |
|
|
|
|
|
|
|
|
Short-term investments |
| $ | 2,064.0 |
|
| $ | 8,062.3 |
|
Teva Shares |
|
| 1,765.1 |
|
|
| 3,439.2 |
|
Total marketable securities |
| $ | 3,829.1 |
|
| $ | 11,501.5 |
|
Investments and other assets: |
|
|
|
|
|
|
|
|
Legacy Allergan deferred executive compensation investments |
| $ | 112.4 |
|
| $ | 111.7 |
|
Equity method investments |
|
| 11.8 |
|
|
| 12.8 |
|
Cost method investments |
|
| - |
|
|
| 15.0 |
|
Other long-term investments |
|
| 64.9 |
|
|
| 67.2 |
|
Taxes receivable |
|
| 32.0 |
|
|
| 36.0 |
|
Other assets |
|
| 48.8 |
|
|
| 39.4 |
|
Total investments and other assets |
| $ | 269.9 |
|
| $ | 282.1 |
|
|
| June 30, |
|
| December 31, |
| ||
|
| 2019 |
|
| 2018 |
| ||
Raw materials |
| $ | 335.8 |
|
| $ | 303.2 |
|
Work-in-process |
|
| 145.5 |
|
|
| 145.7 |
|
Finished goods |
|
| 683.3 |
|
|
| 520.2 |
|
|
|
| 1,164.6 |
|
|
| 969.1 |
|
Less: inventory reserves |
|
| 160.1 |
|
|
| 122.2 |
|
Total Inventories |
| $ | 1,004.5 |
|
| $ | 846.9 |
|
Investments
In connection with the voluntary recall, the Company recorded a $44.2 million charge in securities, including those classified in cashCost of Sales to write down inventory held by the Company and cash equivalents dueother costs related to the maturity term of the instrument,recall as of SeptemberJune 30, 2017 and December 31, 2016 included the following ($ in millions):
|
| Investments in Securities as of September 30, 2017: |
| |||||||||||||||||||||
Level 1 |
| Carrying amount |
|
| Unrecognized gain |
|
| Unrecognized loss |
|
| Estimated fair value |
|
| Cash & cash equivalents |
|
| Marketable securities |
| ||||||
Money market funds |
| $ | 939.4 |
|
| $ | - |
|
| $ | - |
|
| $ | 939.4 |
|
| $ | 939.4 |
|
| $ | - |
|
Investment in Teva ordinary shares |
|
| 1,765.1 |
|
|
| - |
|
|
| - |
|
|
| 1,765.1 |
|
|
| - |
|
|
| 1,765.1 |
|
Total |
| $ | 2,704.5 |
|
| $ | - |
|
| $ | - |
|
| $ | 2,704.5 |
|
| $ | 939.4 |
|
| $ | 1,765.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 |
| Carrying amount |
|
| Unrecognized gain |
|
| Unrecognized loss |
|
| Estimated fair value |
|
| Cash & cash equivalents |
|
| Marketable securities |
| ||||||
Commercial paper and other |
| $ | 769.1 |
|
| $ | - |
|
| $ | - |
|
| $ | 769.1 |
|
| $ | - |
|
| $ | 769.1 |
|
Certificates of deposit |
|
| 1,295.6 |
|
|
| - |
|
|
| (0.7 | ) |
|
| 1,294.9 |
|
|
| - |
|
|
| 1,294.9 |
|
Total |
| $ | 2,064.7 |
|
| $ | - |
|
| $ | (0.7 | ) |
| $ | 2,064.0 |
|
| $ | - |
|
| $ | 2,064.0 |
|
|
| Investments in Securities as of December 31, 2016: |
| |||||||||||||||||||||
Level 1 |
| Carrying amount |
|
| Unrecognized gain |
|
| Unrecognized loss |
|
| Estimated fair value |
|
| Cash & cash equivalents |
|
| Marketable securities |
| ||||||
Money market funds |
| $ | 1,238.9 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,238.9 |
|
| $ | 1,238.9 |
|
| $ | - |
|
Total |
| $ | 1,238.9 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,238.9 |
|
| $ | 1,238.9 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 |
| Carrying amount |
|
| Unrecognized gain |
|
| Unrecognized loss |
|
| Estimated fair value |
|
| Cash & cash equivalents |
|
| Marketable securities |
| ||||||
Commercial paper and other |
| $ | 3,909.7 |
|
| $ | 0.2 |
|
| $ | - |
|
| $ | 3,909.9 |
|
| $ | - |
|
| $ | 3,909.9 |
|
Investment in Teva ordinary shares |
|
| 5,038.6 |
|
|
| - |
|
|
| (1,599.4 | ) |
|
| 3,439.2 |
|
|
| - |
|
|
| 3,439.2 |
|
Certificates of deposit |
|
| 4,152.4 |
|
|
| - |
|
|
| - |
|
|
| 4,152.4 |
|
|
| - |
|
|
| 4,152.4 |
|
Total |
| $ | 13,100.7 |
|
| $ | 0.2 |
|
| $ | (1,599.4 | ) |
| $ | 11,501.5 |
|
| $ | - |
|
| $ | 11,501.5 |
|
Companies are required to use a fair value hierarchy as defined in ASC Topic 820 “Fair Value Measurement,” (“ASC 820”) which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value (“Fair Value Leveling”). There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest:
Level 1 — Quoted prices (unadjusted) 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.
Level 3 — Unobservable inputs that are supported by little or no market activity. The Level 3 assets are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as instruments for which the determination of fair value requires significant judgment or estimation.
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. Fair values are determined based on Fair Value Leveling.
Marketable securities and investments consist of available-for-sale investments in money market securities, U.S. treasury and agency securities, and equity securities of publicly traded companies for which market prices are readily available. Unrealized gains or losses on marketable securities and investments are recorded in accumulated other comprehensive (loss) / income. Realized gains or losses on marketable securities and investments are recorded in interest income. The Company’s marketable securities and other long-term investments are classified as available-for-sale and are recorded at fair value based on quoted market prices using the specific identification method. These investments are classified as either current or non-current, as appropriate, in the Company’s consolidated balance sheets. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and maturity management.
Excluding the Company’s investment in Teva securities, the Company primarily considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. See Note 5 for further discussion of the Company’s investment in Teva Shares. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The Company’s policy requires investments to be investment grade with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio.2019.
NOTE 1110 — Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following ($ in millions):
|
| June 30, |
|
| December 31, |
| ||||||||||
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| 2019 |
|
| 2018 |
| ||||
Accrued expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued third-party rebates |
| $ | 1,645.9 |
|
| $ | 1,595.5 |
|
| $ | 1,934.4 |
|
| $ | 1,832.1 |
|
Accrued returns and other allowances |
|
| 586.3 |
|
|
| 527.8 |
| ||||||||
Accrued payroll and related benefits |
|
| 550.0 |
|
|
| 581.1 |
|
|
| 484.8 |
|
|
| 694.3 |
|
Accrued returns |
|
| 339.5 |
|
|
| 295.9 |
| ||||||||
Contractual commitments |
|
| 254.2 |
|
|
| 264.9 |
| ||||||||
Accrued R&D expenditures |
|
| 189.8 |
|
|
| 215.5 |
| ||||||||
Interest payable |
|
| 187.5 |
|
|
| 191.4 |
| ||||||||
Accrued pharmaceutical fees |
|
| 186.1 |
|
|
| 145.3 |
| ||||||||
Royalties payable |
|
| 181.6 |
|
|
| 146.6 |
|
|
| 161.8 |
|
|
| 155.1 |
|
Accrued pharmaceutical fees |
|
| 144.5 |
|
|
| 221.3 |
| ||||||||
Interest payable |
|
| 144.0 |
|
|
| 294.2 |
| ||||||||
Accrued R&D expenditures |
|
| 139.0 |
|
|
| 154.0 |
| ||||||||
Litigation-related reserves and legal fees |
|
| 129.4 |
|
|
| 101.1 |
|
|
| 158.0 |
|
|
| 92.0 |
|
Accrued severance, retention and other shutdown costs |
|
| 75.3 |
|
|
| 86.2 |
| ||||||||
Accrued non-provision taxes |
|
| 70.6 |
|
|
| 55.0 |
|
|
| 67.2 |
|
|
| 68.5 |
|
Accrued selling and marketing expenditures |
|
| 56.6 |
|
|
| 95.9 |
|
|
| 64.4 |
|
|
| 61.1 |
|
Accrued severance, retention and other shutdown costs |
|
| 24.6 |
|
|
| 71.6 |
| ||||||||
Current portion of contingent consideration obligations |
|
| 31.2 |
|
|
| 511.0 |
|
|
| 10.5 |
|
|
| 8.3 |
|
Dividends payable |
|
| 24.6 |
|
|
| 23.2 |
|
|
| 1.1 |
|
|
| 1.4 |
|
Other accrued expenses |
|
| 470.5 |
|
|
| 368.2 |
|
|
| 420.3 |
|
|
| 373.0 |
|
Total accrued expenses |
| $ | 4,256.9 |
|
| $ | 4,794.1 |
|
| $ | 4,476.8 |
|
| $ | 4,437.4 |
|
Accounts payable |
|
| 284.8 |
|
|
| 224.9 |
|
|
| 518.5 |
|
|
| 349.8 |
|
Total Accounts Payable and Accrued Expenses |
| $ | 4,541.7 |
|
| $ | 5,019.0 |
| ||||||||
Total accounts payable and accrued expenses |
| $ | 4,995.3 |
|
| $ | 4,787.2 |
| ||||||||
NOTE 1211 — Goodwill, Product Rights and Other Intangible Assets
TheGoodwill
Goodwill for the Company’s goodwill by segmentreporting segments consisted of the following ($ in millions):
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||
Balance as of December 31, 2016 |
| $ | 18,433.2 |
|
| $ | 21,426.6 |
|
| $ | 6,496.3 |
|
| $ | 46,356.1 |
|
Additions through acquisitions |
|
| 2,454.8 |
|
|
| - |
|
|
| 245.9 |
|
|
| 2,700.7 |
|
Measurement period adjustments |
|
| (25.9 | ) |
|
| (14.1 | ) |
|
| - |
|
|
| (40.0 | ) |
Foreign exchange and other adjustments |
|
| - |
|
|
| - |
|
|
| 754.1 |
|
|
| 754.1 |
|
Balance as of September 30, 2017 |
| $ | 20,862.1 |
|
| $ | 21,412.5 |
|
| $ | 7,496.3 |
|
| $ | 49,770.9 |
|
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||
Balance as of December 31, 2018 |
| $ | 20,675.6 |
|
| $ | 17,936.6 |
|
| $ | 7,301.1 |
|
| $ | 45,913.3 |
|
Acquisitions |
|
| 34.1 |
|
|
| - |
|
|
| - |
|
|
| 34.1 |
|
Impairments |
|
| - |
|
|
| (3,552.8 | ) |
|
| - |
|
|
| (3,552.8 | ) |
Re-allocation to current segments |
|
| (340.0 | ) |
|
| 340.0 |
|
|
| - |
|
|
| - |
|
Foreign exchange and other adjustments |
|
| - |
|
|
| - |
|
|
| (53.9 | ) |
|
| (53.9 | ) |
Balance as of June 30, 2019 |
| $ | 20,369.7 |
|
| $ | 14,723.8 |
|
| $ | 7,247.2 |
|
| $ | 42,340.7 |
|
During the second quarter of 2019, the Company changed the operational and management structure for its in-development CGRP receptors, Ubrogepant and Atogepant. The development products were previously reported within the US Specialized Therapeutics segment and have been transferred to the US General Medicine segment to align these development products with the management structure and reporting. These development products were acquired as part of an asset acquisition and were therefore expensed in prior years. Goodwill of $340.0 million was re-allocated from the US Specialized Therapeutics segment to the US General Medicine segment based on relative fair value as of June 30, 2019. As a result of the transfer of these development projects, the Company performed its annual goodwill impairment test, both prior to and after, transfer.
Annual Testing
The Company performed its annual goodwill impairment test during the second quarter of 2019 by quantitatively evaluating its five Reporting Units. As of June 30, 2019, the net asset value of the General Medicine Reporting Unit exceeded its fair value prior to the transfer of the products noted above and the Company recorded a $1,085.8 million goodwill impairment charge to its General Medicine Reporting Unit. The charge is due in part to delays in the clinical studies as well as a reduction in the expected value of certain R&D projects.
The fair value of each of the Company’s other four reporting units exceeded its fair value by less than five percent except for the U.S. Botox Therapeutic Reporting Unit. The General Medicine Reporting Unit, International Reporting Unit, US Eye Care Reporting Unit and US Medical Aesthetics Reporting Unit were the most sensitive to change in future valuation assumptions. The Company’s US Eye Care Reporting Unit and US Medical Aesthetics Reporting Unit, which are components of its US Specialized Therapeutics Segment and have an allocated goodwill balance of $9,824.8 million and $7,698.8 million, respectively. While management believes the assumptions used are reasonable and commensurate with the views of a market participant, changes in key assumptions for these Reporting Units, including increasing the discount rate, lowering revenue forecasts, lowering the operating margin, R&D pipeline delays, or lowering the long-term growth rate could result in a future impairment. Other market factors and conditions could also result in downward revisions of the Company’s forecasts on future projected cash flows for these reporting units. Negative events regarding R&D pipeline assets including, but not limited to, Abicipar, Atogepant, Bimatoprost SR, Ceniciviroc, and Ubrogepant, as well as next generation aesthetic products, could lead to further goodwill impairment charges. As a result of the proposed AbbVie Transaction, a component of the Company’s implied enterprise value contemplates the share price of AbbVie as attributed to the Company. If the AbbVie share price were to decline, the overall consideration associated with the AbbVie Transaction could be reduced which could result in a future goodwill impairment triggering event.
In performing the annual impairment test, the Company utilized discount rates ranging from 9.5% to 11.0%, which were consistent with the rates utilized in the impairment testing performed in the first quarter of 2019. These rates increased versus the prior year annual testing discount rates of 8.5% to 10.0% to reflect changes in market conditions. The Company also reduced long-term growth rate assumptions consistent with the implied enterprise value. The assumptions used in evaluating goodwill for impairment are significant estimates, are subject to change, are assessed against historical performance by management and could result in additional impairment charges.
Non-Annual Testing
As of SeptemberDecember 31, 2018, the net asset value of the General Medicine Reporting Unit equaled fair value. On March 6, 2019, Allergan announced negative topline results from three pivotal studies of rapastinel as an adjunctive treatment of Major Depressive Disorder (MDD). These results represented a triggering event to perform an impairment test for the Company’s General Medicine Reporting Unit. During the first quarter of 2019, primarily as a result of the impairment test noted above and a delay in clinical studies and anticipated launch of brazikumab, the Company recorded a $2,467.0 million goodwill impairment charge to its General Medicine Reporting Unit.
As of June 30, 20172019 and December 31, 2016,2018, the gross balance of goodwill, pre-impairments,prior to the consideration of impairments, was $49,788.2$48,751.9 million and $46,373.4$48,771.7 million, respectively.
The following items had a significant impact on goodwill in the nine months ended September 30, 2017:Product Rights and Other Intangible Assets
An increase in goodwill of $1,449.1 million resulting from the LifeCell Acquisition; and
An increase in goodwill of $1,204.3 million resulting from the Zeltiq Acquisition.
Product rights and other intangible assets consisted of the following ($ in millions):
Cost Basis |
| Balance as of December 31, 2016 |
|
| Acquisitions |
|
| Impairments |
|
| IPR&D to CMP Transfers |
|
| Held for sale |
|
| Foreign Currency Translation |
|
| Balance as of September 30, 2017 |
|
| Balance as of December 31, 2018 |
|
| Additions |
|
| Impairments |
|
| IPR&D to CMP Transfers |
|
| Foreign Currency Translation / Other |
|
| Balance as of June 30, 2019 |
| |||||||||||||
Intangibles with definite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product rights and other related intangibles |
| $ | 67,801.4 |
|
| $ | 3,866.9 |
|
| $ | - |
|
| $ | 1,119.1 |
|
| $ | - |
|
| $ | 705.2 |
|
| $ | 73,492.6 |
| ||||||||||||||||||||||||
Product rights and other intangibles |
| $ | 70,235.1 |
|
| $ | 90.9 |
|
| $ | - |
|
| $ | 75.6 |
|
| $ | 1,809.8 |
|
| $ | 72,211.4 |
| ||||||||||||||||||||||||||||
Trade name |
|
| 690.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 690.0 |
|
|
| 690.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 690.0 |
|
Total definite-lived intangible assets |
| $ | 68,491.4 |
|
| $ | 3,866.9 |
|
| $ | - |
|
| $ | 1,119.1 |
|
| $ | - |
|
| $ | 705.2 |
|
| $ | 74,182.6 |
| ||||||||||||||||||||||||
Total definite lived intangible assets |
| $ | 70,925.1 |
|
| $ | 90.9 |
|
| $ | - |
|
| $ | 75.6 |
|
| $ | 1,809.8 |
|
| $ | 72,901.4 |
| ||||||||||||||||||||||||||||
Intangibles with indefinite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPR&D |
| $ | 8,758.3 |
|
| $ | 10.0 |
|
| $ | (1,245.3 | ) |
| $ | (1,119.1 | ) |
| $ | (6.8 | ) |
| $ | 8.6 |
|
| $ | 6,405.7 |
|
| $ | 5,048.1 |
|
| $ | - |
|
| $ | (436.0 | ) |
| $ | (75.6 | ) |
| $ | - |
|
| $ | 4,536.5 |
|
Total indefinite-lived intangible assets |
| $ | 8,758.3 |
|
| $ | 10.0 |
|
| $ | (1,245.3 | ) |
| $ | (1,119.1 | ) |
| $ | (6.8 | ) |
| $ | 8.6 |
|
| $ | 6,405.7 |
| ||||||||||||||||||||||||
Total product rights and related intangibles |
| $ | 77,249.7 |
|
| $ | 3,876.9 |
|
| $ | (1,245.3 | ) |
| $ | - |
|
| $ | (6.8 | ) |
| $ | 713.8 |
|
| $ | 80,588.3 |
| ||||||||||||||||||||||||
Total indefinite lived intangible assets |
| $ | 5,048.1 |
|
| $ | - |
|
| $ | (436.0 | ) |
| $ | (75.6 | ) |
| $ | - |
|
| $ | 4,536.5 |
| ||||||||||||||||||||||||||||
Total product rights and other intangibles |
| $ | 75,973.2 |
|
| $ | 90.9 |
|
| $ | (436.0 | ) |
| $ | - |
|
| $ | 1,809.8 |
|
| $ | 77,437.9 |
| ||||||||||||||||||||||||||||
Accumulated Amortization |
| Balance as of December 31, 2016 |
|
| Amortization |
|
| Impairments |
|
| Foreign Currency Translation |
|
| Balance as of September 30, 2017 |
|
| Balance as of December 31, 2018 |
|
| Amortization |
|
| Impairments |
|
| IPR&D to CMP Transfers |
|
| Foreign Currency Translation / Other |
|
| Balance as of June 30, 2019 |
| |||||||||||
Intangibles with definite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product rights and other related intangibles |
| $ | (14,493.9 | ) |
| $ | (5,216.9 | ) |
| $ | (3,876.0 | ) |
| $ | (107.3 | ) |
| $ | (23,694.1 | ) | ||||||||||||||||||||||||
Product rights and other intangibles |
| $ | (31,985.0 | ) |
| $ | (2,761.4 | ) |
| $ | (129.6 | ) |
| $ | - |
|
| $ | (997.6 | ) |
| $ | (35,873.6 | ) | ||||||||||||||||||||
Trade name |
|
| (137.2 | ) |
|
| (58.1 | ) |
|
| - |
|
|
| - |
|
|
| (195.3 | ) |
|
| (292.8 | ) |
|
| (40.0 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (332.8 | ) |
Total definite-lived intangible assets |
| $ | (14,631.1 | ) |
| $ | (5,274.9 | ) |
| $ | (3,876.0 | ) |
| $ | (107.3 | ) |
| $ | (23,889.4 | ) | ||||||||||||||||||||||||
Total product rights and related intangibles |
| $ | (14,631.1 | ) |
| $ | (5,274.9 | ) |
| $ | (3,876.0 | ) |
| $ | (107.3 | ) |
| $ | (23,889.4 | ) | ||||||||||||||||||||||||
Total definite lived intangible assets |
| $ | (32,277.8 | ) |
| $ | (2,801.4 | ) |
| $ | (129.6 | ) |
| $ | - |
|
| $ | (997.6 | ) |
| $ | (36,206.4 | ) | ||||||||||||||||||||
Total product rights and other intangibles |
| $ | (32,277.8 | ) |
| $ | (2,801.4 | ) |
| $ | (129.6 | ) |
| $ | - |
|
| $ | (997.6 | ) |
| $ | (36,206.4 | ) | ||||||||||||||||||||
Net Product Rights and Other Intangibles |
| $ | 62,618.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 56,698.9 |
|
| $ | 43,695.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 41,231.5 |
|
The following items had a significant impact on net product rights and other intangibles inSix Months Ended June 30, 2019
During the nine months ended September 30, 2017:
The Company acquired $2,020.0 millionsecond quarter of intangible assets in connection with the LifeCell Acquisition in the nine months ended September 30, 2017;
The Company acquired $1,185.0 million of intangible assets in connection with the Zeltiq Acquisition in the nine months ended September 30, 2017;
The Company reacquired rights on select licensed products promoted in the Company’s US General Medicine segment in an aggregate value of $574.0 million in the nine months ended September 30, 2017. As part of the rights reacquired,2019, the Company is no longer obligated to pay royaltiesperformed its annual IPR&D impairment test and based on events occurring or decisions made within the specific products, which increasesquarter ended June 30, 2019, the Company’s segment gross margin percentage;Company recorded the following impairments:
| • |
|
| • |
|
• | a $127.0 million impairment for two pipeline programs that had previously been deprioritized and were subsequently deemed to have no alternative use in the period. |
TheSix Months Ended June 30, 2018
During the second quarter of 2018, the Company performed its annual IPR&D impairment test and based on events occurring or decisions made within the quarter ended June 30, 2018, the Company recorded the following impairments:
• | a $164.0 million impairment as a result of changes in launch plans based on clinical results of an eye care project obtained as part of the Allergan Acquisition; |
• | a $40.0 million impairment due to a delay in clinical studies and anticipated approval date of a project obtained as part of the acquisition of Vitae Pharmaceuticals, Inc. (the “Vitae Acquisition”); |
• | a $27.0 million impairment due to a delay in clinical studies and anticipated approval date of a medical dermatology project obtained as part of the Allergan Acquisition; |
• | a $20.0 million impairment as a result of a strategic decision to no longer pursue approval internationally of an eye care project obtained as part of the Allergan Acquisition; |
• | a $19.0 million impairment due to a delay in clinical studies and anticipated approval date for a CNS project obtained as part of the Allergan Acquisition; and |
• | a $6.0 million impairment due to a delay in clinical studies and anticipated approval date of an eye care project obtained as part of the Allergan Acquisition. |
In addition to the Company’s annual IPR&D impairment test, the Company impaired a CNSits retinoic acid receptor-related orphan receptor gamma (“RORyt”) IPR&D project obtained as part of the Allergan acquisitionVitae Acquisition by $486.0 million related to an anticipated approval delay due to certain product specifications in the nine months ended September 30, 2017;
The Company terminated its License, Transfer and Development Agreement for SER-120 (nocturia) with Serenity Pharmaceuticals, LLC. As a result of this termination, the Company recorded an impairment of $140.0 million on the IPR&D intangible asset obtained as part of the Allergan acquisition;
The Company impaired a women’s healthcare IPR&D project by $91.3 million based on the Company’s intention to divest the non-strategic asset in the nine months ended September 30, 2017;
The Company impaired an IPR&D eye care project obtained as part of the Allergan acquisition by $44.0$522.0 million as a result of decreasenegative clinical data related to the oral psoriasis indication received in projected cash flows due to a decline in market demand assumptions in the nine months ended September 30, 2017;March 2018.
The Company impaired an IPR&D eye care project obtained as part of the Allergan acquisition by $20.0 million in the nine months ended September 30, 2017;
The Company impaired an IPR&D medical aesthetics project obtained as part of the Allergan acquisition by $17.0 million in the three and nine months ended September 30, 2017; and
|
|
|
Assuming no additions, disposals or adjustments are made to the carrying values and/or useful lives of the intangible assets, annual amortization expense on product rights and other related intangibles as of SeptemberJune 30, 20172019 over the remainder of 20172019 and each of the next five years is estimated to be as follows ($ in millions):
|
| Amortization Expense |
|
| Amortization Expense |
| ||
2017 remaining |
| $ | 1,913.4 |
| ||||
2018 |
| $ | 6,420.4 |
| ||||
2019 |
| $ | 6,014.0 |
| ||||
2019 remaining |
| $ | 2,884.3 |
| ||||
2020 |
| $ | 5,692.8 |
|
| $ | 5,485.6 |
|
2021 |
| $ | 4,753.4 |
|
| $ | 4,560.6 |
|
2022 |
| $ | 4,387.1 |
|
| $ | 4,211.9 |
|
2023 |
| $ | 3,787.8 |
| ||||
2024 |
| $ | 2,955.6 |
| ||||
The above amortization expense is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, finalization of preliminary fair value estimates, potential impairments, accelerated amortization or other events. Additional amortization may occur as products are approved. In addition, the Company has certain currently marketed products for which operating contribution performance has been below that which was originally assumed in the products’ initial valuations.valuations, and certain IPR&D projects which are subject to delays in timing or other events which may negatively impact the asset’s value. The Company, on a quarterly basis, monitors the related intangible assets for these products for potential impairments. It is reasonably possible that impairments may occur in future periods, which may have a material adverse effect on the Company’s results of operations and financial position.
NOTE 1312 — Long-Term Debt and Capital Leases
Total debt and capital leasesDebt consisted of the following ($ in millions):
|
| Balance As of |
|
| Fair Market Value As of |
| ||||||||||
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||
Senior Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating Rate Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$500.0 million floating rate notes due March 12, 2018 * |
| $ | 500.0 |
|
| $ | 500.0 |
|
| $ | 501.8 |
|
| $ | 502.5 |
|
$500.0 million floating rate notes due March 12, 2020 ** |
|
| 500.0 |
|
|
| 500.0 |
|
|
| 509.0 |
|
|
| 509.4 |
|
|
|
| 1,000.0 |
|
|
| 1,000.0 |
|
|
| 1,010.8 |
|
|
| 1,011.9 |
|
Fixed Rate Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,000.0 million 1.850% notes due March 1, 2017 |
|
| - |
|
|
| 1,000.0 |
|
|
| - |
|
|
| 1,001.1 |
|
$500.0 million 1.300% notes due June 15, 2017 |
|
| - |
|
|
| 500.0 |
|
|
| - |
|
|
| 499.7 |
|
$1,200.0 million 1.875% notes due October 1, 2017 |
|
| - |
|
|
| 1,200.0 |
|
|
| - |
|
|
| 1,202.5 |
|
$3,000.0 million 2.350% notes due March 12, 2018 |
|
| 3,000.0 |
|
|
| 3,000.0 |
|
|
| 3,008.9 |
|
|
| 3,018.0 |
|
$250.0 million 1.350% notes due March 15, 2018 |
|
| 250.0 |
|
|
| 250.0 |
|
|
| 249.4 |
|
|
| 248.4 |
|
$1,050.0 million 4.375% notes due February 1, 2019 |
|
| 350.0 |
|
|
| 1,050.0 |
|
|
| 361.0 |
|
|
| 1,090.0 |
|
$500.0 million 2.450% notes due June 15, 2019 |
|
| 500.0 |
|
|
| 500.0 |
|
|
| 503.5 |
|
|
| 501.2 |
|
$400.0 million 6.125% notes due August 14, 2019 |
|
| 400.0 |
|
|
| 400.0 |
|
|
| 430.0 |
|
|
| 437.7 |
|
$3,500.0 million 3.000% notes due March 12, 2020 |
|
| 3,500.0 |
|
|
| 3,500.0 |
|
|
| 3,562.8 |
|
|
| 3,541.8 |
|
$650.0 million 3.375% notes due September 15, 2020 |
|
| 650.0 |
|
|
| 650.0 |
|
|
| 668.5 |
|
|
| 663.6 |
|
$750.0 million 4.875% notes due February 15, 2021 |
|
| 450.0 |
|
|
| 750.0 |
|
|
| 485.1 |
|
|
| 803.3 |
|
$1,200.0 million 5.000% notes due December 15, 2021 |
|
| 1,200.0 |
|
|
| 1,200.0 |
|
|
| 1,317.3 |
|
|
| 1,297.7 |
|
$3,000.0 million 3.450% notes due March 15, 2022 |
|
| 3,000.0 |
|
|
| 3,000.0 |
|
|
| 3,102.0 |
|
|
| 3,030.7 |
|
$1,700.0 million 3.250% notes due October 1, 2022 |
|
| 1,700.0 |
|
|
| 1,700.0 |
|
|
| 1,740.5 |
|
|
| 1,693.1 |
|
$350.0 million 2.800% notes due March 15, 2023 |
|
| 350.0 |
|
|
| 350.0 |
|
|
| 348.5 |
|
|
| 335.6 |
|
$1,200.0 million 3.850% notes due June 15, 2024 |
|
| 1,200.0 |
|
|
| 1,200.0 |
|
|
| 1,255.3 |
|
|
| 1,211.7 |
|
$4,000.0 million 3.800% notes due March 15, 2025 |
|
| 4,000.0 |
|
|
| 4,000.0 |
|
|
| 4,146.3 |
|
|
| 3,995.6 |
|
$2,500.0 million 4.550% notes due March 15, 2035 |
|
| 2,500.0 |
|
|
| 2,500.0 |
|
|
| 2,658.6 |
|
|
| 2,458.5 |
|
$1,000.0 million 4.625% notes due October 1, 2042 |
|
| 456.7 |
|
|
| 1,000.0 |
|
|
| 479.3 |
|
|
| 967.6 |
|
$1,500.0 million 4.850% notes due June 15, 2044 |
|
| 1,500.0 |
|
|
| 1,500.0 |
|
|
| 1,637.7 |
|
|
| 1,496.4 |
|
$2,500.0 million 4.750% notes due March 15, 2045 |
|
| 1,200.0 |
|
|
| 2,500.0 |
|
|
| 1,300.8 |
|
|
| 2,466.9 |
|
|
|
| 26,206.7 |
|
|
| 31,750.0 |
|
|
| 27,255.5 |
|
|
| 31,961.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro Denominated Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
€750.0 million 0.500% notes due June 1, 2021 |
|
| 884.0 |
|
|
| - |
|
|
| 887.4 |
|
|
| - |
|
€700.0 million 1.250% notes due June 1, 2024 |
|
| 825.0 |
|
|
| - |
|
|
| 832.0 |
|
|
| - |
|
€550.0 million 2.125% notes due June 1, 2029 |
|
| 648.2 |
|
|
| - |
|
|
| 662.2 |
|
|
| - |
|
€700.0 million floating rate notes due June 1, 2019 *** |
|
| 825.0 |
|
|
| - |
|
|
| 825.6 |
|
|
| - |
|
|
|
| 3,182.2 |
|
|
| - |
|
|
| 3,207.2 |
|
|
| - |
|
Total Senior Notes Gross |
|
| 30,388.9 |
|
|
| 32,750.0 |
|
|
| 31,473.5 |
|
|
| 32,973.0 |
|
Unamortized premium |
|
| 104.1 |
|
|
| 171.2 |
|
|
| - |
|
| - |
| |
Unamortized discount |
|
| (84.8 | ) |
|
| (95.8 | ) |
|
| - |
|
| - |
| |
Total Senior Notes Net |
|
| 30,408.2 |
|
|
| 32,825.4 |
|
|
| 31,473.5 |
|
|
| 32,973.0 |
|
Other Indebtedness |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Issuance Costs |
|
| (126.6 | ) |
|
| (144.6 | ) |
|
|
|
|
|
|
|
|
Other |
|
| 51.8 |
|
|
| 85.5 |
|
|
|
|
|
|
|
|
|
Total Other Borrowings |
|
| (74.8 | ) |
|
| (59.1 | ) |
|
|
|
|
|
|
|
|
Capital Leases |
|
| 2.7 |
|
|
| 2.4 |
|
|
|
|
|
|
|
|
|
Total Indebtedness |
| $ | 30,336.1 |
|
| $ | 32,768.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value in the table above is determined in accordance with Fair Value Leveling under Level 2 based upon quoted prices for similar items in active markets.
The Company has issued fixed rate notes over multiple issuances for various business needs. Interest on the various U.S. dollar denominated fixed rate and floating notes is generally payable semi-annually and quarterly, respectively with various payment dates. Interest on the various Euro denominated fixed rate and floating rate notes is generally payable annually and quarterly, respectively, with various payment dates.
Borrowings
|
|
|
|
|
|
|
| Balance As of |
|
| Fair Market Value As of |
| ||||||||||
|
| Guarantor |
| Issuance Date / Acquisition Date |
| Interest Payments |
| June 30, 2019 |
|
| December 31, 2018 |
|
| June 30, 2019 |
|
| December 31, 2018 |
| ||||
Senior Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating Rate Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$500.0 million floating rate notes due March 12, 2020 (1) |
| (4) |
| March 4, 2015 |
| Quarterly |
|
| 500.0 |
|
|
| 500.0 |
|
|
| 503.6 |
|
|
| 501.9 |
|
|
|
|
|
|
|
|
|
| 500.0 |
|
|
| 500.0 |
|
|
| 503.6 |
|
|
| 501.9 |
|
Fixed Rate Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$3,500.0 million 3.000% notes due March 12, 2020 |
| (4) |
| March 4, 2015 |
| Semi-annually |
|
| 2,526.0 |
|
|
| 2,706.7 |
|
|
| 2,533.7 |
|
|
| 2,694.8 |
|
$650.0 million 3.375% notes due September 15, 2020 |
| (5) |
| March 17, 2015 |
| Semi-annually |
|
| 650.0 |
|
|
| 650.0 |
|
|
| 655.6 |
|
|
| 648.7 |
|
$750.0 million 4.875% notes due February 15, 2021 |
| (6) |
| July 1, 2014 |
| Semi-annually |
|
| 450.0 |
|
|
| 450.0 |
|
|
| 463.5 |
|
|
| 459.4 |
|
$1,200.0 million 5.000% notes due December 15, 2021 |
| (6) |
| July 1, 2014 |
| Semi-annually |
|
| 1,200.0 |
|
|
| 1,200.0 |
|
|
| 1,258.5 |
|
|
| 1,234.8 |
|
$3,000.0 million 3.450% notes due March 15, 2022 |
| (4) |
| March 4, 2015 |
| Semi-annually |
|
| 2,878.2 |
|
|
| 2,940.5 |
|
|
| 2,929.9 |
|
|
| 2,891.0 |
|
$1,700.0 million 3.250% notes due October 1, 2022 |
| (5) |
| October 2, 2012 |
| Semi-annually |
|
| 1,700.0 |
|
|
| 1,700.0 |
|
|
| 1,707.6 |
|
|
| 1,652.2 |
|
$350.0 million 2.800% notes due March 15, 2023 |
| (5) |
| March 17, 2015 |
| Semi-annually |
|
| 350.0 |
|
|
| 350.0 |
|
|
| 348.2 |
|
|
| 332.8 |
|
$1,200.0 million 3.850% notes due June 15, 2024 |
| (4) |
| June 10, 2014 |
| Semi-annually |
|
| 1,036.7 |
|
|
| 1,036.7 |
|
|
| 1,073.1 |
|
|
| 1,021.0 |
|
$4,000.0 million 3.800% notes due March 15, 2025 |
| (4) |
| March 4, 2015 |
| Semi-annually |
|
| 3,020.7 |
|
|
| 3,027.5 |
|
|
| 3,119.0 |
|
|
| 2,956.0 |
|
$2,500.0 million 4.550% notes due March 15, 2035 |
| (4) |
| March 4, 2015 |
| Semi-annually |
|
| 1,789.0 |
|
|
| 1,789.0 |
|
|
| 1,818.0 |
|
|
| 1,690.7 |
|
$1,000.0 million 4.625% notes due October 1, 2042 |
| (5) |
| October 2, 2012 |
| Semi-annually |
|
| 456.7 |
|
|
| 456.7 |
|
|
| 447.9 |
|
|
| 412.4 |
|
$1,500.0 million 4.850% notes due June 15, 2044 |
| (4) |
| June 10, 2014 |
| Semi-annually |
|
| 1,079.4 |
|
|
| 1,079.4 |
|
|
| 1,108.8 |
|
|
| 1,019.1 |
|
$2,500.0 million 4.750% notes due March 15, 2045 |
| (4) |
| March 4, 2015 |
| Semi-annually |
|
| 881.0 |
|
|
| 881.0 |
|
|
| 900.2 |
|
|
| 836.6 |
|
|
|
|
|
|
|
|
|
| 18,017.7 |
|
|
| 18,267.5 |
|
|
| 18,364.0 |
|
|
| 17,849.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro Denominated Notes |
| |||||||||||||||||||||
€700.0 million floating rate notes due June 1, 2019 (2) | (4) | May 26, 2017 | Quarterly | - | 802.7 | - | 794.9 | |||||||||||||||
€700.0 million floating rate notes due November 15, 2020 (3) | (4) | November 15, 2018 | Quarterly | 796.1 | 802.7 | 795.1 | 791.3 | |||||||||||||||
€750.0 million 0.500% notes due June 1, 2021 | (4) | May 26, 2017 | Annually | 853.0 | 860.0 | 859.4 | 849.7 | |||||||||||||||
€500.0 million 1.500% notes due November 15, 2023 | (4) | November 15, 2018 | Annually | 568.7 | 573.4 | 591.7 | 572.4 | |||||||||||||||
€700.0 million 1.250% notes due June 1, 2024 | (4) | May 26, 2017 | Annually | 796.1 | 802.7 | 815.8 | 775.5 | |||||||||||||||
€500.0 million 2.625% notes due November 15, 2028 | (4) | November 15, 2018 | Annually | 568.7 | 573.4 | 623.6 | 573.4 | |||||||||||||||
€550.0 million 2.125% notes due June 1, 2029 | (4) | May 26, 2017 | Annually | 625.5 | 630.7 | 656.3 | 594.7 | |||||||||||||||
4,208.1 | 5,045.6 | 4,341.9 | 4,951.9 | |||||||||||||||||||
Total Senior Notes Gross | 22,725.8 | 23,813.1 | 23,209.5 | �� | 23,303.3 | |||||||||||||||||
Unamortized premium | 52.0 | 64.3 | - | - | ||||||||||||||||||
Unamortized discount | (59.6 | ) | (64.5 | ) | - | - | ||||||||||||||||
Total Senior Notes Net | $ | 22,718.2 | $ | 23,812.9 | $ | 23,209.5 | $ | 23,303.3 | ||||||||||||||
Other Indebtedness | ||||||||||||||||||||||
Debt Issuance Costs | (82.4 | ) | (92.1 | ) | ||||||||||||||||||
Other | 67.7 | 69.3 | ||||||||||||||||||||
Total Other Borrowings | (14.7 | ) | (22.8 | ) | ||||||||||||||||||
Capital Leases (7) | n.a. | 7.6 | ||||||||||||||||||||
Total Indebtedness | $ | 22,703.5 | $ | 23,797.7 | ||||||||||||||||||
(1) Interest on the 2020 floating rate note is three month USD LIBOR plus 1.255% per annum | ||||||||||||||||||||||
(2) Interest on the 2019 floating rate notes is the three month EURIBOR plus 0.350% per annum | ||||||||||||||||||||||
(3) Interest on the 2020 floating rate notes is the three month EURIBOR plus 0.350% per annum | ||||||||||||||||||||||
(4) Guaranteed by Warner Chilcott Limited, Allergan | ||||||||||||||||||||||
(5) Guaranteed by Allergan plc | ||||||||||||||||||||||
(6) Guaranteed by Allergan plc | ||||||||||||||||||||||
(7) The Company adopted ASU No. 2016-02 which changed the recognition of leases on the balance sheet. As of January 1, 2019, capital leases are no longer recognized within long-term debt. | ||||||||||||||||||||||
Fair market value in the table above is determined in accordance with Fair Value Leveling (defined below) under Level 2 based upon quoted prices for similar items in active markets.
Companies are required to use a fair value hierarchy as defined in ASC Topic 820 “Fair Value Measurement,” (“ASC 820”) which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value (“Fair Value Leveling”). There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest:
Level 1 — Quoted prices (unadjusted) 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.
Level 3 — Unobservable inputs that are supported by little or no market activity. The Level 3 assets are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as instruments for which the determination of fair value requires significant judgment or estimation.
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants.
The following represents the significant activity during the six months ended June 30, 2019 to the Company’s total indebtedness:
• | The Company repurchased and retired $249.8 million of senior notes at face value as a result of open market redemptions; and |
• | The Company repaid the scheduled maturity of the €700.0 million floating rate notes due
|
Annual Debt Maturities
As of June 30, 2017, the Company’s wholly owned subsidiaries Allergan Funding SCS, Allergan Finance LLC, Forest Laboratories, LLC and Allergan, Inc., each as co-offeror with Warner Chilcott Limited, completed the repurchase of certain debt securities issued by the entities for cash under a previously announced tender offer. As a result of the offering, the Company repurchased $300.0 million of the $750.0 million 4.875% notes due February 15, 2021, $543.3 million of the $1,000.0 million 4.625% notes due October 1, 2042, $700.0 million of the $1,050.0 million 4.375% notes due February 1, 2019, and $1,300.0 million of the $2,500.0 million 4.750% notes due March 15, 2045. The Company paid a total of $3,013.8 million, which included an early tender payment, to repurchase the notes of $170.5 million in cash. The Company recognized a net expense of $161.5 million within “Other income/ (expense)” for the early tender payment and non-cash write-off of premiums and debt fees related to the repurchased notes.
Other Activity
The $800.0 million 5.750% fixed rate notes due April 1, 2016 were paid in full at maturity.
The $500.0 million floating rate notes due September 1, 2016 were paid in full at maturity and bore interest at the three-month LIBOR plus 0.875%.
The $1,000.0 million 1.850% senior notes due March 1, 2017 were paid in full at maturity.
The $500.0 million 1.300% senior notes due June 15, 2017 were redeemed and paid in full on April 21, 2017.
The $1,200.0 million 1.875% senior notes due October 1, 2017 were redeemed and paid in full on June 29, 2017.
Credit Facility Indebtedness
On August 2, 2016, the Company repaid the remaining balances of all outstanding term-loan indebtedness and terminated its then-existing revolving credit facility with proceeds from the Teva Transaction. The interest expense on the then-outstanding indebtedness in the nine months ended September 30, 2016 was $116.2 million.
Revolving Credit Facility
On June 14, 2017, Allergan plc and certain of its subsidiaries entered into a revolving credit and guaranty agreement (the “Revolver Agreement”) among Allergan Capital, as borrower, Allergan plc, as Ultimate Parent; Warner Chilcott Limited, as Intermediate Parent and Subsidiary Guarantor; Allergan Finance LLC., Allergan Funding SCS, as Subsidiary Guarantors; the lenders from time to time party thereto (the “Revolving Lenders”); J.P. Morgan Chase Bank as Administrative Agent; J.P. Morgan Europe Limited, as London Agent; and the other financial institutions party thereto. Under the Revolver Agreement, the Revolving Lenders have committed to provide an unsecured five-year revolving credit facility in an aggregate principal amount of up to $1.5 billion, with the ability to increase the revolving credit facility by $500.0 million to an aggregate principal amount of up to $2.0 billion.
The Revolver Agreement provides that loans thereunder would bear interest, at our choice, of a per annum rate equal to either (a) a base rate, plus an applicable margin per annum varying from 0.00% per annum to 1.00% per annum depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from 0.875% per annum to 2.00% per annum depending on the Debt Rating. Additionally, to maintain availability of funds, the Company pays an unused commitment fee, which according to the pricing grid is set at 0.070% to 0.250% per annum, depending on the Debt Rating, of the unused portion of the revolver.
The obligations under the Revolver Agreement were guaranteed by Warner Chilcott Limited, Allergan Finance LLC and Allergan Funding SCS.
The Revolver Agreement contains customary affirmative covenants for facilities of this type, including, among others, covenants pertaining to the delivery of financial statements, notices of default, maintenance of corporate existence and rights and compliance with laws, as well as customary negative covenants for facilities of this type, including, among others, limitations secured indebtedness, non-guarantor subsidiary indebtedness, mergers and certain other fundamental changes and passive holding company status. The Revolver Agreement also contains a financial covenant requiring maintenance of a maximum consolidated leverage ratio.
In addition, the Revolver Agreement also contains customary events of default (with customary grace periods and materiality thresholds) and if and for so long as an event of default has occurred and is continuing, any amounts outstanding under the Revolver Agreement will accrue interest at an increased rate, the Revolving Lenders can terminate their commitments thereunder and payments of any outstanding amounts could be accelerated by the Revolving Lenders.
The Company was subject to, and as of September 30, 2017 was in compliance with all, financial and operational covenants under the terms of the Revolver Agreement. At September 30, 2017, there were no outstanding borrowings or letters of credit outstanding under the Revolver Agreement.
Annual Debt Maturities
As of September 30, 2017, annual debt maturities of senior notes gross were as follows ($ in millions):
|
| Total Payments |
| |
2019 remaining |
| $ | - |
|
2020 |
|
| 4,472.1 |
|
2021 |
|
| 2,503.0 |
|
2022 |
|
| 4,578.2 |
|
2023 |
|
| 918.7 |
|
2024 |
|
| 1,832.8 |
|
2025 and after |
|
| 8,421.0 |
|
Total senior notes gross |
| $ | 22,725.8 |
|
Amounts represent total anticipated cash payments assuming scheduled repayments.
NOTE 13 — Leases
Leases are accounted for under ASC Topic 842. The Company has entered into various lease contracts, mainly operating leases for the use of real estate, fleet, and operating equipment. The Company leases certain assets to limit exposure to the risks of ownership as well as to reduce administrative burdens inherent in the ownership of assets.
Term
The remaining terms for leases other than real estate leases are between 1 and 9 years as of June 30, 2019. For real estate leases, the remaining lease terms are between 1 and 14 years as of June 30, 2019.
The Company has an option for certain lease contracts, mainly for real estate lease contracts, to renew the lease term beyond the noncancelable lease period. The payments associated with the renewal will only be included in the measurement of the lease liability and ROU asset if the exercise of the renewal option is determined to be reasonably certain. The Company considers the timing of the renewal period and other economic factors such as the financial consequences of a decision to extend or not to extend a lease in determining if the renewal option is reasonably certain to be exercised.
Discount Rate
The Company is primarily a lessee, not a lessor. The Company discounts future lease payments to calculate the present value when determining the lease classification and measuring the lease liability. The rate utilized is either the implicit rate or the incremental borrowing rate. The incremental borrowing rate is not a commonly quoted rate and is derived through a combination of inputs including the Company’s credit rating and the impact of full collateralization. The incremental borrowing rate is based on the Company’s collateralized borrowing capabilities over a similar term of the lease payments. The Company utilizes the consolidated group incremental borrowing rate for all leases as the Company has centralized treasury operations.
Other
The Company does not have any material residual value guarantee terms in its lease contracts. The Company does not have material variable leases.
The Company has chosen to separate lease and non-lease components for its plant operations and research and development equipment. The Company allocates the contract consideration to the lease component using the standalone price from our supplier.
As of June 30, 2019, the Company had the following operating ROU assets and lease liabilities ($ in millions):
|
| June 30, 2019 |
| |||||
|
| ROU Asset |
|
| Lease Liability |
| ||
Real estate |
| $ | 283.9 |
|
| $ | 350.9 |
|
Fleet |
|
| 117.3 |
|
|
| 117.3 |
|
Other |
|
| 56.7 |
|
|
| 69.8 |
|
Total operating leases |
| $ | 457.9 |
|
| $ | 538.0 |
|
|
| June 30, 2019 |
| |
Current lease liability - operating |
| $ | 123.2 |
|
Long-term lease liability - operating |
|
| 414.8 |
|
Total lease liability - operating |
| $ | 538.0 |
|
Finance leases are not material as of June 30, 2019.
For the three and six months ended June 30, 2019, the Company noted the following lease expense ($ in millions):
|
| Three Months Ended June 30, 2019 |
|
| Six Months Ended June 30, 2019 |
| ||
Operating lease expense* |
| $ | 40.1 |
|
| $ | 72.4 |
|
Sublease (income) |
|
| (3.6 | ) |
|
| (7.0 | ) |
Net operating lease expense |
| $ | 36.5 |
|
| $ | 65.4 |
|
* Includes short-term and variable lease expenses of $0.7 million and $1.6 million, respectively, for the three and six months ended June 30, 2019. |
| |||||||
As of June 30, 2019, the Company had the following lease commitments ($ in millions):
|
| Total Payments |
| |
2019 remaining |
| $ | 66.8 |
|
2020 |
|
| 117.4 |
|
2021 |
|
| 103.8 |
|
2022 |
|
| 59.6 |
|
2023 |
|
| 45.8 |
|
2024 |
|
| 39.3 |
|
2025 and after |
|
| 152.3 |
|
Total undiscounted cash flows |
| $ | 585.0 |
|
Future interest |
|
| (47.0 | ) |
Total lease liability - operating |
| $ | 538.0 |
|
As of June 30, 2019, the weighted average remaining lease term for operating leases was 7.0 years with a weighted average discount rate of 2.7%.
The ROU assets obtained in exchange for operating lease obligations were $40.4 million and $63.8 million, respectively, for the three and six months ended June 30, 2019. The cash paid for amounts included in the measurement of operating lease liabilities were $33.6 million and $74.4 million, respectively, for the three and six months ended June 30, 2019.
As of December 31, 2018, the Company had operating leases for certain facilities, vehicles and equipment. Total property rental expense for operating leases for the year ended December 31, 2018 was $63.2 million. Total fleet rental expense for operating leases for the year ended December 31, 2018 was $41.1 million. The Company also had de minimis capital leases for certain facilities and equipment. As of December 31, 2018, the future anticipated property lease rental payments under both capital and operating leases that had remaining terms in excess of one year were ($ in millions):
|
| Total Payments |
| |
2019 |
| $ | 62.5 |
|
2020 |
|
| 52.5 |
|
2021 |
|
| 47.9 |
|
2022 |
|
| 43.3 |
|
2023 |
|
| 39.0 |
|
Thereafter |
|
| 173.8 |
|
Total minimum lease payments |
| $ | 419.0 |
|
NOTE 14 — Other Long-Term Liabilities
Other long-term liabilities consisted of the following ($ in millions):
|
| June 30, |
|
| December 31, |
| ||
|
| 2019 |
|
| 2018 |
| ||
Acquisition related contingent consideration liabilities |
| $ | 376.9 |
|
| $ | 336.3 |
|
Long-term pension and post retirement liability |
|
| 167.8 |
|
|
| 166.5 |
|
Legacy Allergan deferred executive compensation |
|
| 92.9 |
|
|
| 90.8 |
|
Accrued R&D milestone |
|
| 75.0 |
|
|
| 75.0 |
|
Deferred revenue |
|
| 32.8 |
|
|
| 36.1 |
|
Product warranties |
|
| 28.9 |
|
|
| 27.9 |
|
Long-term severance and restructuring liabilities |
|
| 11.0 |
|
|
| 14.2 |
|
Long-term contractual obligations |
|
| - |
|
|
| 43.2 |
|
Other long-term liabilities |
|
| 36.1 |
|
|
| 92.0 |
|
Total other long-term liabilities |
| $ | 821.4 |
|
| $ | 882.0 |
|
NOTE 15 — Income Taxes
The Company’s effective tax rate for the six months ended June 30, 2019 was a provision of 5.9%, compared to a benefit of 47.7% for the six months ended June 30, 2018. The effective tax rate for the six months ended June 30, 2019 was favorably impacted by tax benefits of $118.0 million related to excess tax over book basis in a U.S. subsidiary that will reverse in the foreseeable future, $50.8 million for a U.S. capital loss and $107.3 million related to the impairment of certain intangible assets. The effective tax rate was unfavorably impacted by a tax charge of $375.0 million to establish a valuation allowance on certain non-U.S. deferred tax assets, $49.0 million related to an uncertain tax position and the goodwill impairment charge of $3,552.8 million, for which no tax benefit was recorded.
The effective tax rate for the six months ended June 30, 2018 was favorably impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. This was offset by the additional U.S. tax on the earnings of certain non-U.S. subsidiaries which are considered Global Intangible Low Taxed Income (“GILTI”) and the tax impact of amortization of intangible assets at rates less than the Irish statutory rate. Additionally, the tax benefit for the six months ended June 30, 2018 included tax benefits of $421.9 million related to the restructuring of an acquired business, $231.0 million related to the impairment of certain intangible assets and $79.8 million related to excess tax over book basis in a U.S. subsidiary expected to reverse in the foreseeable future. This was partially offset by tax detriments of $21.2 million for the gain on sale of investments and $25.9 million related to a change in the applicable tax rate on certain temporary differences.
Tax Audits
The Company conducts business globally and, as a result, files U.S. federal, state and foreign tax returns. The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for amounts it believes are in accordance with the accounting standard, the final outcome with a tax authority may result in a tax liability that is different than that reflected in the consolidated financial statements. Furthermore, the Company may decide to challenge any assessments, if made, and may exercise its right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations with tax authorities, identification of new issues and issuance of new legislation, regulations or case law.
The Company has several concurrent audits open and pending with the IRS as set forth below:
|
| Total Payments |
| |
2017 remaining |
| $ | - |
|
2018 |
|
| 3,750.0 |
|
2019 |
|
| 2,075.0 |
|
2020 |
|
| 4,650.0 |
|
2021 |
|
| 2,534.0 |
|
2022 |
|
| 4,700.0 |
|
2023 and after |
|
| 12,679.9 |
|
|
| $ | 30,388.9 |
|
Capital leases |
|
| 2.7 |
|
Debt issuance costs |
|
| (126.6 | ) |
Other short-term borrowings |
|
| 51.8 |
|
Unamortized premium |
|
| 104.1 |
|
Unamortized discount |
|
| (84.8 | ) |
Total Indebtedness |
| $ | 30,336.1 |
|
NOTE 16 — Shareholders’ Equity
Share Repurchase Programs
On January 29, 2019, the Company announced that its Board of Directors approved a $2.0 billion share repurchase program, all of which remained outstanding as of June 30, 2019.
The Company’s Board of Directors previously approved a $2.0 billion share repurchase program in July 2018. As of June 30, 2019, the Company had completed the program and repurchased 12.5 million shares for $2.0 billion under the program, including $0.8 billion or 5.3 million shares in the six months ended June 30, 2019.
Preferred Shares
In the six months ended June 30, 2018, the Company paid $69.6 million of dividends on preferred shares. Each preferred share automatically converted to approximately 3.53 ordinary shares on March 1, 2018, for a total of 17,876,930 ordinary shares.
NOTE 17 — Derivative Instruments and Hedging Activities
The Company’s revenue, earnings, cash flows and fair value of its assets and liabilities can be impacted by fluctuations in foreign exchange and interest rates, as applicable. The Company manages the impact of foreign exchange risk and interest rate movements through operational means and through the use of various financial instruments, including derivative instruments such as foreign currency derivatives.
Internationally, the Company is a net recipient of currencies other than the U.S. dollar and, as such, benefits from a weaker dollar and is adversely affected by a stronger dollar relative to major currencies worldwide. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar may negatively affect the Company’s consolidated revenues and favorably impact operating expenses in U.S. dollars.
Derivatives Not Designated as Hedging Instruments
In November 2018, the Company entered into a 700.0 million Euro forward contract to buy Euros while selling USD. The derivative had a maturity of May 31, 2019. The derivative instrument was marked-to-market to the P&L, offsetting the revaluation (P&L) impact on the Euro 700.0 million variable interest debt which matured on June 1, 2019. As of December 31, 2018, the fair value of the Euro forward contract of $5.9 million was recorded in prepaid expenses and other current assets. For the three and six months ended June 30, 2019, the Company recorded a loss of $7.3 million and $29.8 million, respectively, relating to this instrument in general and administrative expenses.
As of June 30, 2019 and December 31, 2018, the Company had additional outstanding third-party foreign currency forward instruments of $21.7 million and $42.1 million, respectively. For the three and six months ended June 30, 2019, these additional outstanding third-party foreign currency forward instruments did not have material mark-to-market adjustments.
Derivatives Designated as Hedging Instruments
Cash Flow Hedge
In January 2019, Allergan entered into $500.0 million notional floating to fixed interest rate swaps maturing on March 12, 2020 whereby it fixed the interest rates on $500.0 million floating rate notes due March 12, 2020 to an average interest rate of 3.98%. The swaps are being accounted for using hedge accounting treatment. As of June 30, 2019, the fair value of the interest rate swaps of $2.2 million was recorded in accounts payable and accrued expenses. For the three and six months ended June 30, 2019, the corresponding unrealized loss of $1.2 million and $2.2 million, respectively, was recorded in accumulated other comprehensive income / (loss).
Net Investment Hedge
In the normal course of business, we manage certain foreign exchange risks through a variety of strategies, including hedging. Our hedging strategies include the use of derivatives, includingas well as net investment hedges.
For net investment hedges, the effective portion of the gains and losses on the instruments arising from the effects of foreign exchange are recorded in the currency translation adjustment component of accumulated other comprehensive income / (loss), consistent with the underlying hedged item. Hedging transactions are limited to an underlying exposure. As a result, any change in the value of our hedging instruments would be substantially offset by an opposite change in the value of the underlying hedged items. We doThe Company does not use derivative instruments for trading or speculative purposes.
The Company is exposed to foreign exchange risk in its international operations from foreign currency purchases, net investments in foreign subsidiaries, and foreign currency assets and liabilities created in the normal course of business, including theits Euro Denominated Notes. In the ninesix months ended SeptemberJune 30, 2017,2019, we used effective net investment hedges to partially offset the effects of foreign currency on our investments in certain of our foreign subsidiaries. The total notional amount of our instruments designated as net investment hedges was $3.5$5.1 billion as of SeptemberJune 30 2017., 2019 and December 31, 2018. During the three and ninesix months ended SeptemberJune 30 2017,, 2019, the impact of the net investment hedges recorded in other comprehensive loss was a loss of $69.0 million and a gain of $41.8 million, respectively, which offset the currency impact within our net investment in subsidiaries which are impacted by their Euro Denominated Notes. During the three and six months ended June 30, 2018, the impact of the net investment hedges on other comprehensive income was a lossgain of $94.1$197.1 million and $151.3$102.0 million, respectively.respectively, which offset the currency impact of the Euro Denominated Notes.
NOTE 18 — Fair Value Measurement
Assets and liabilities that are measured at fair value using Fair Value Leveling or that are disclosed at fair value on a recurring basis and as of SeptemberJune 30, 20172019 and December 31, 20162018 consisted of the following ($ in millions):
|
| Fair Value Measurements as of September 30, 2017 Using: |
|
| Fair Value Measurements as of June 30, 2019 Using: |
| ||||||||||||||||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents * |
| $ | 939.4 |
|
| $ | 939.4 |
|
| $ | - |
|
| $ | - |
| ||||||||||||||||
Cash equivalents* |
| $ | 1,154.1 |
|
| $ | 1,154.1 |
|
| $ | - |
|
| $ | - |
| ||||||||||||||||
Short-term investments |
|
| 2,064.0 |
|
| - |
|
|
| 2,064.0 |
|
|
| - |
|
|
| 322.3 |
|
|
| - |
|
|
| 322.3 |
|
|
| - |
| |
Deferred executive compensation investments |
|
| 112.4 |
|
|
| 92.0 |
|
|
| 20.4 |
|
|
| - |
|
|
| 92.9 |
|
|
| 78.0 |
|
|
| 14.9 |
|
|
| - |
|
Foreign currency derivatives |
|
| - |
|
| - |
|
|
| - |
|
|
| - |
| |||||||||||||||||
Investment in Teva ordinary shares |
|
| 1,765.1 |
|
|
| 1,765.1 |
|
|
| - |
|
|
| - |
| ||||||||||||||||
Royalty receivable |
|
| 50.3 |
|
|
| - |
|
|
| - |
|
|
| 50.3 |
| ||||||||||||||||
Investments and other |
|
| 76.7 |
|
|
| 76.7 |
|
|
| - |
|
|
| - |
|
|
| 55.1 |
|
|
| 39.6 |
|
|
| 15.5 |
|
|
| - |
|
Total assets |
| $ | 4,957.6 |
|
| $ | 2,873.2 |
|
| $ | 2,084.4 |
|
| $ | - |
|
| $ | 1,674.7 |
|
| $ | 1,271.7 |
|
| $ | 352.7 |
|
| $ | 50.3 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred executive compensation liabilities |
| $ | 114.0 |
|
| $ | 93.6 |
|
| $ | 20.4 |
|
| $ | - |
|
| $ | 92.9 |
|
| $ | 78.0 |
|
| $ | 14.9 |
|
| $ | - |
|
Contingent consideration obligations |
|
| 559.8 |
|
|
| - |
|
|
| - |
|
|
| 559.8 |
|
|
| 387.4 |
|
|
| - |
|
|
| - |
|
|
| 387.4 |
|
Total liabilities |
| $ | 673.8 |
|
| $ | 93.6 |
|
| $ | 20.4 |
|
| $ | 559.8 |
|
| $ | 480.3 |
|
| $ | 78.0 |
|
| $ | 14.9 |
|
| $ | 387.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
* Marketable securities with less than 90 days remaining until maturity at the time of acquisition are classified as cash equivalents. | * Marketable securities with less than 90 days remaining until maturity at the time of acquisition are classified as cash equivalents. |
| ||||||||||||||||||||||||||||||
|
| Fair Value Measurements as of December 31, 2016 Using: |
| |||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents* |
| $ | 1,238.9 |
|
| $ | 1,238.9 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 8,062.3 |
|
| - |
|
|
| 8,062.3 |
|
|
|
|
| |
Deferred executive compensation investments |
|
| 111.7 |
|
| 90.5 |
|
| 21.2 |
|
|
|
|
| ||
Foreign currency derivatives |
|
| 0.1 |
|
| - |
|
| 0.1 |
|
|
| - |
| ||
Investment in Teva ordinary shares |
|
| 3,439.2 |
|
| - |
|
|
| 3,439.2 |
|
|
| - |
| |
Investments and other |
|
| 95.0 |
|
|
| 95.0 |
|
| - |
|
|
| - |
| |
Total assets |
| $ | 12,947.2 |
|
| $ | 1,424.4 |
|
| $ | 11,522.8 |
|
| $ | - |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred executive compensation liabilities |
| $ | 111.7 |
|
| $ | 90.5 |
|
| $ | 21.2 |
|
| $ | - |
|
Contingent consideration obligations |
|
| 1,172.1 |
|
|
| - |
|
|
| - |
|
|
| 1,172.1 |
|
Total liabilities |
| $ | 1,283.8 |
|
| $ | 90.5 |
|
| $ | 21.2 |
|
| $ | 1,172.1 |
|
|
|
|
| Fair Value Measurements as of December 31, 2018 Using: |
| |||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents* |
| $ | 207.1 |
|
| $ | 207.1 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 1,026.9 |
|
|
| - |
|
|
| 1,026.9 |
|
|
| - |
|
Deferred executive compensation investments |
|
| 90.8 |
|
| 73.8 |
|
|
| 17.0 |
|
|
| - |
| |
Royalty receivable |
|
| 50.3 |
|
|
| - |
|
|
| - |
|
|
| 50.3 |
|
Investments and other |
|
| 46.0 |
|
|
| 38.5 |
|
|
| 7.5 |
|
|
| - |
|
Total assets |
| $ | 1,421.1 |
|
| $ | 319.4 |
|
| $ | 1,051.4 |
|
| $ | 50.3 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred executive compensation liabilities |
| $ | 90.8 |
|
| $ | 73.8 |
|
| $ | 17.0 |
|
| $ | - |
|
Contingent consideration obligations |
|
| 344.6 |
|
|
| - |
|
|
| - |
|
|
| 344.6 |
|
Total liabilities |
| $ | 435.4 |
|
| $ | 73.8 |
|
| $ | 17.0 |
|
| $ | 344.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Marketable securities with less than 90 days remaining until maturity at the time of acquisition are classified as cash equivalents. |
| |||||||||||||||
Marketable securities and investments consist of available-for-sale investments in money market securities, U.S. treasury and agency securities. Unrealized gains or losses on marketable securities are recorded in interest income, while unrealized gains or losses on marketable debt securities are recorded in accumulated other comprehensive income. Investments and other include equity and debt securities of publicly traded companies for which market prices are readily available. Unrealized gains or losses on marketable securities andlong-term equity investments are recorded in accumulated other comprehensive (loss)income / income. Realized gains or losses on(expense), net. The Company’s marketable securities and other long-term investments are recorded at fair value based on quoted market prices using the specific identification method. These investments are classified as either current or non-current, as appropriate, in interest income. the Company’s consolidated balance sheets. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and maturity management.
Contingent Consideration Obligations
The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs and is based on a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity, and is based on our own assumptions. Changes in the fair value of the contingent consideration obligations, including accretion, are recorded in our consolidated statements of operations as follows ($ in millions):
|
| Three Months Ended |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
Expense / (income) |
| September 30, 2017 |
|
| September 30, 2016 |
| ||||||||||||||||||
Expense / (Income) |
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||||||||||
Cost of sales |
| $ | (67.0 | ) |
| $ | 10.4 |
|
| $ | 25.8 |
|
| $ | (128.8 | ) |
| $ | 42.0 |
|
| $ | (125.4 | ) |
Research and development |
|
| 0.2 |
|
|
| 5.5 |
|
|
| 2.3 |
|
|
| 21.7 |
|
|
| 4.8 |
|
|
| 23.6 |
|
General and administrative |
|
| - |
|
|
| - |
| ||||||||||||||||
Total |
| $ | (66.8 | ) |
| $ | 15.9 |
|
| $ | 28.1 |
|
| $ | (107.1 | ) |
| $ | 46.8 |
|
| $ | (101.8 | ) |
|
| Nine Months Ended |
| |||||
Expense / (income) |
| September 30, 2017 |
|
| September 30, 2016 |
| ||
Cost of sales |
| $ | (127.3 | ) |
| $ | 13.4 |
|
Research and development |
|
| 75.7 |
|
|
| 65.8 |
|
General and administrative |
|
| - |
|
|
| 0.1 |
|
Total |
| $ | (51.6 | ) |
| $ | 79.3 |
|
The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the ninesix months ended SeptemberJune 30, 20172019 and 20162018 ($ in millions):
|
| Balance as of December 31, 2016 |
|
| Net transfers in to (out of) Level 3 |
|
| Purchases, settlements, and other net |
|
| Net accretion and fair value adjustments |
|
| Balance as of September 30, 2017 |
|
| Balance as of December 31, 2018 |
|
| Net transfers in to (out of) Level 3 |
|
| Purchases, settlements, and other net |
|
| Net accretion and fair value adjustments |
|
| Balance as of June 30, 2019 |
| ||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration obligations |
| $ | 1,172.1 |
|
| $ | - |
|
| $ | (560.7 | ) |
| $ | (51.6 | ) |
| $ | 559.8 |
|
| $ | 344.6 |
|
| $ | - |
|
| $ | (4.0 | ) |
| $ | 46.8 |
|
| $ | 387.4 |
|
|
| Balance as of December 31, 2017 |
|
| Net transfers in to (out of) Level 3 |
|
| Purchases, settlements, and other net |
|
| Net accretion and fair value adjustments |
|
| Balance as of June 30, 2018 |
| |||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration obligations |
| $ | 476.9 |
|
| $ | - |
|
| $ | (10.7 | ) |
| $ | (101.8 | ) |
| $ | 364.4 |
|
|
| Balance as of December 31, 2015 |
|
| Net transfers in to (out of) Level 3 |
|
| Purchases, settlements, and other net |
|
| Net accretion and fair value adjustments |
|
| Balance as of September 30, 2016 |
| |||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration obligations |
| $ | 868.0 |
|
| $ | - |
|
| $ | 3.8 |
|
| $ | 79.3 |
|
| $ | 951.1 |
|
During the ninesix months ended SeptemberJune 30, 2017,2019, the following activity in contingent consideration obligations fromby acquisition consisted of the following business acquisitions was incurred ($ in millions):
Business Acquisition |
| Balance as of December 31, 2016 |
|
| Fair Value Adjustments and Accretion |
|
| Payments and Other |
|
| Balance as of September 30, 2017 |
| ||||
Tobira Acquisition |
| $ | 514.4 |
|
| $ | 19.5 |
|
| $ | (301.6 | ) |
| $ | 232.3 |
|
Allergan Acquisition |
|
| 199.6 |
|
|
| (6.8 | ) |
|
| (110.0 | ) |
|
| 82.8 |
|
Medicines 360 acquisition |
|
| 127.5 |
|
|
| (69.6 | ) |
|
| (15.5 | ) |
|
| 42.4 |
|
AqueSys Acquisition |
|
| 103.9 |
|
|
| (35.5 | ) |
|
| (25.0 | ) |
|
| 43.4 |
|
Oculeve Acquisition |
|
| 99.5 |
|
|
| 54.3 |
|
|
| (100.0 | ) |
|
| 53.8 |
|
ForSight Acquisition |
|
| 65.4 |
|
|
| 2.0 |
|
|
| - |
|
|
| 67.4 |
|
Metrogel acquisition |
|
| 15.0 |
|
|
| 0.1 |
|
|
| (7.6 | ) |
|
| 7.5 |
|
Forest Acquisition |
|
| 11.0 |
|
|
| 3.2 |
|
|
| (1.5 | ) |
|
| 12.7 |
|
Uteron acquisition |
|
| 8.2 |
|
|
| (8.2 | ) |
|
| - |
|
|
| - |
|
Other |
|
| 27.6 |
|
|
| (10.6 | ) |
|
| 0.5 |
|
|
| 17.5 |
|
Total |
| $ | 1,172.1 |
|
| $ | (51.6 | ) |
| $ | (560.7 | ) |
| $ | 559.8 |
|
Business Acquisition |
| Balance as of December 31, 2018 |
|
| Fair Value Adjustments and Accretion |
|
| Payments and Other |
|
| Balance as of June 30, 2019 |
| ||||
Tobira acquisition |
| $ | 255.0 |
|
| $ | 4.6 |
|
| $ | - |
|
| $ | 259.6 |
|
Medicines 360 acquisition |
|
| 43.1 |
|
|
| 42.2 |
|
|
| (2.7 | ) |
|
| 82.6 |
|
ForSight acquisition |
|
| 24.1 |
|
|
| 0.2 |
|
|
| 0.1 |
|
|
| 24.4 |
|
Forest acquisition |
|
| 13.6 |
|
|
| (0.2 | ) |
|
| (1.2 | ) |
|
| 12.2 |
|
AqueSys acquisition |
|
| 5.4 |
|
|
| 0.1 |
|
|
| - |
|
|
| 5.5 |
|
Oculeve acquisition |
|
| 1.7 |
|
|
| - |
|
|
| - |
|
|
| 1.7 |
|
Other |
|
| 1.7 |
|
|
| (0.1 | ) |
|
| (0.2 | ) |
|
| 1.4 |
|
Total |
| $ | 344.6 |
|
| $ | 46.8 |
|
| $ | (4.0 | ) |
| $ | 387.4 |
|
Royalty Receivable
The Company has made contingent consideration milestone paymentsfair value measurement of $549.1 millionthe royalty receivable is determined using Level 3 inputs and is based on a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity, and is based on our own assumptions. There were no material changes noted in the ninefair value of the royalty receivable for the six months ended SeptemberJune 30, 2017, respectively, including $41.2 million within operating cash flows in the nine months ended September 30, 2017.2019.
NOTE 19 — Business Restructuring Charges
During 2017, activity related to our business restructuring and facility rationalization activities primarily related to the cost optimization initiatives in conjunction with the LifeCell and Zeltiq acquisitions, international restructurings and non-acquisition related restructurings. Restructuring activities for the ninesix months ended SeptemberJune 30, 20172019 were as follows ($ in millions):
|
| Severance and Retention |
|
| Share-Based Compensation |
|
| Other |
|
| Total |
|
| Severance and Retention |
|
| Other |
|
| Total |
| |||||||
Reserve balance at December 31, 2016 |
| $ | 68.5 |
|
| $ | - |
|
| $ | 39.7 |
|
| $ | 108.2 |
| ||||||||||||
Reserve balance at December 31, 2018 |
| $ | 71.4 |
|
| $ | 14.4 |
|
| $ | 85.8 |
| ||||||||||||||||
Charged to expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
| 40.4 |
|
|
| - |
|
|
| - |
|
|
| 40.4 |
|
|
| 1.2 |
|
|
| - |
|
|
| 1.2 |
|
Research and development |
|
| 17.8 |
|
|
| - |
|
|
| - |
|
|
| 17.8 |
| ||||||||||||
Selling and marketing |
|
| 46.6 |
|
|
| - |
|
|
| - |
|
|
| 46.6 |
|
|
| 0.3 |
|
|
| - |
|
|
| 0.3 |
|
General and administrative |
|
| 20.5 |
|
|
| 34.4 |
|
|
| 13.0 |
|
|
| 67.9 |
|
|
| 3.7 |
|
|
| 2.3 |
|
|
| 6.0 |
|
Total expense |
|
| 125.3 |
|
|
| 34.4 |
|
|
| 13.0 |
|
|
| 172.7 |
|
|
| 5.2 |
|
|
| 2.3 |
|
|
| 7.5 |
|
Cash payments |
|
| (77.9 | ) |
|
| (31.5 | ) |
|
| (35.8 | ) |
|
| (145.2 | ) |
|
| (54.8 | ) |
|
| (0.8 | ) |
|
| (55.6 | ) |
Other reserve impact |
|
| (7.6 | ) |
|
| (2.9 | ) |
|
| - |
|
|
| (10.5 | ) | ||||||||||||
Reserve balance at September 30, 2017 |
| $ | 108.3 |
|
| $ | - |
|
| $ | 16.9 |
|
| $ | 125.2 |
| ||||||||||||
Non-cash adjustments |
|
| (2.1 | ) |
|
| - |
|
|
| (2.1 | ) | ||||||||||||||||
Reserve balance at June 30, 2019 |
| $ | 19.7 |
|
| $ | 15.9 |
|
| $ | 35.6 |
| ||||||||||||||||
As part of the Company’s internal optimization restructuring programs, the Company incurred severance and other restructuring costs relating to the commercial organization of $20.0 million as the Company intends to eliminate approximately 400 commercial organization positions. In addition, restructuring charges in the nine months ended September 30, 2017 includes $13.7 million of severance and restructuring costs related to a planned internal reduction of approximately 100 employees within the Company’s R&D organization and $39.7 million of severance and restructuring costs relating to the global manufacturing operations initiating plans to close certain facilities. In the three months ended September 30, 2017, the Company reversed certain charges related to a portion of anticipated internal restructurings which are no longer occurring based on revised portfolio prioritizations and the timing of select R&D projects.
During the three and six months ended SeptemberJune 30, 2017 and 2016,2018, the Company recognized restructuring charges of $31.8$6.4 million and $37.7$24.3 million, respectively. During the nine months ended September 30, 2017respectively, including severance and 2016, the Company recognized restructuringother employee related charges of $172.7$6.4 million and $72.0 million, respectively. $21.6 million. The majority of these restructuring severance costs were paid during 2018.
NOTE 20 — Commitments & Contingencies
The Company and its affiliates are involved in various disputes, governmental and/or regulatory inspections, inquires, investigations and proceedings, and litigation matters that arise from time to time in the ordinary course of business. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect the Company, its results of operations, financial condition and cash flows. The Company’s general practice is to expense legal fees as services are rendered in connection with legal matters, and to accrue for liabilities when losses are probable and reasonably estimable.
The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued. As of SeptemberJune 30, 2017,2019, the Company’s consolidated balance sheet includes accrued loss contingencies of approximately $75.0$80.0 million. As of December 31, 2018, the Company’s consolidated balance sheet included accrued loss contingencies of approximately $65.0 million.
The Company’s legal proceedings range from cases brought by a single plaintiff to mass tort actions and class actions with thousands of putative class members. These legal proceedings, as well as other matters, involve various aspects of our business and a variety of claims (including, but not limited to, qui tam actions, antitrust, product liability, breach of contract, securities, patent infringement and trade practices), some of which present novel factual allegations and/or unique legal theories. In addition, a number of the matters pending against us are at very early stages of the legal process (which in complex proceedings of the sort faced by us often extend for several years). As a result, some matters have not yet progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss. In those proceedings in which plaintiffs do request publicly quantified amounts of relief, the Company does not believe that the quantified amounts are meaningful because they are merely stated jurisdictional limits, exaggerated and/or unsupported by the evidence or applicable burdens of proof.
In matters involving the assertion or defense of the Company’s intellectual property, the Company believes it has meritorious claims and intends to vigorously assert or defend the patents or other intellectual property at issue in such litigation. Similarly, in matters where the Company is a defendant, the Company believes it has meritorious defenses and intends to defend itself vigorously. However, the Company can offer no assurances that it will be successful in a litigation or, in the case of patent enforcement matters, that a generic version of the product at issue will not be launched or enjoined. Failing to prevail in a litigation could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.
Intellectual Property Litigation
Patent Enforcement Matters
Bystolic®. On July 2, 2019, subsidiaries of the Company brought an action for infringement of U.S. Patent No. 6,545,040 in the United States District Court for the District of Delaware against Ajanta Pharma Ltd. and Ajanta Pharma USA Inc. (collectively, “Ajanta”) in connection with an abbreviated new drug application filed with the FDA by Ajanta seeking approval to market a generic version of Bystolic® and challenging said patent. No trial date or case schedule has been set.
Combigan®. On October 30, 2017, subsidiaries of the Company filed an action for infringement of U.S. Patent Number 9,770,453 (the “‘453 Patent”) against Sandoz, Inc. and Alcon Laboratories, Inc. (“Sandoz”) in the U.S. District Court for the District of New Jersey, in connection with the abbreviated new drug applications respectively filed with the FDA by Sandoz and Alcon, seeking approval to market a generic version of Combigan®. On March 6, 2018, U.S. Patent Nos. 9,907,801 (the “‘801 Patent”) and 9,907,802 (the “‘802 Patent”) were added to the case. The ‘453, ‘801 and ‘802 Patents are listed in the Orange Book for Combigan® and expire on April 19, 2022. A trial date has not been set. On July 13, 2018, the district court adopted Allergan’s proposed claim construction and granted Allergan’s motion for preliminary injunction against Sandoz. On August 1, 2018, the district court entered an order setting a preliminary injunction bond in the amount of $157,300,000 under Federal Rule of Civil Procedure 65(c), which Allergan posted. Sandoz has appealed the grant of the injunction, and the appeal is ongoing.
Fetzima®. In October and November 2017, subsidiaries of the Company and Pierre Fabre Medicament S.A.S. brought actions for infringement of U.S. Patent Nos. RE43,879 (the “‘879 Patent”); 8,481,598 (the “‘598 Patent”); and 8,865,937 (the “‘937 Patent”) against MSN Laboratories Private Limited and MSN Pharmaceuticals Inc. (collectively, “MSN”), Prinston Pharmaceutical Inc. and Solco Healthcare U.S., LLC (collectively, “Prinston”), Torrent Pharmaceuticals Limited and Torrent Pharma Inc. (collectively, “Torrent”), West-Ward Pharmaceuticals International Limited and West-Ward Pharmaceuticals Corp. (collectively, “West-Ward”), Zydus Pharmaceuticals (USA) Inc. (“Zydus”), Aurobindo Pharma USA, Inc. and Aurobindo Pharma Limited (collectively, “Aurobindo”), and Amneal Pharmaceuticals LLC and Amneal Pharmaceuticals Private Limited (collectively, “Amneal”), in connection with abbreviated new drug applications, respectively filed with the FDA by MSN, Prinston, Torrent, West-Ward, Zydus, Aurobindo, and Amneal, each seeking approval to market generic versions of Fetzima® and challenging said patents. The ‘879 Patent expires in June 2023 (not including a pending application for patent term extension (“PTE”)), the ‘598 patent expires in March 2031, and the ‘937 Patent expires in May 2032. The case is currently in fact discovery, and no trial date has been set. Allergan entered into a settlement agreement with Amneal on December 18, 2018, and the case as against Amneal was dismissed. Allergan entered into a settlement agreement with Prinston on June 6, 2019, and the case as against Prinston was dismissed.
In April 2019, subsidiaries of the Company and Pierre Fabre Medicament S.A.S. brought an action for infringement of the ‘879, ‘598 and ‘937 Patents against Micro Labs Ltd. and Micro Labs USA, Inc. (“Micro”) in connection with Micro’s abbreviated new drug application seeking approval to market a generic version of Fetzima® and challenging said patents. No trial date has been set.
Juvéderm ®. On February 26, 2019, subsidiaries of the Company filed a complaint for infringement of U.S. Patent Nos. 8,450,475 (the “‘475 Patent), 8,357,795 (the “‘795 Patent”), 8,822,676 (the “‘676 Patent”), 9,089,519 (the “‘519 Patent”), 9,238,013 (the “‘013 Patent”) and 9,358,322 (the “‘322 Patent”) in the U.S. District Court for the District of Delaware against Prollenium US Inc. and Prollenium Medical Technologies Inc. (collectively, “Prollenium”). The complaint seeks, among other things, a judgment that Defendants have infringed these patents by making, selling, offering to sell, and importing Prollenium’s Revanesse® Versa+TM product within and into the United States. Plaintiffs seek injunctive relief and damages for Defendants’ infringement. Trial is scheduled for June 14, 2021.
Kybella®. On November 9, 2018, a subsidiary of the Company brought an action for infringement of U.S. Patent Nos. 8,101,593 (the “‘593 Patent”), 8,367,649 (the “‘649 Patent”) and 8,653,058 (the “‘058 Patent”) against Slayback Pharma LLC (“Slayback”) in the U.S. District Court for the District of New Jersey in connection with an abbreviated new drug application filed with the FDA by Slayback seeking approval to market a generic version of Kybella® and challenging said patents. The ‘593, ‘649, and ‘058 Patents expire in March 2030. On April 10, 2019, a subsidiary of the Company, together with Los Angeles Biomedical Research Institute at Harbor UCLA-Medical Center (“LA BioMed”) and The Regents of the University of California (the “Regents”) (all collectively, “Plaintiffs”), filed an amended complaint against Slayback asserting infringement of the ‘593, ‘649 and ‘058 Patents and U.S. Patent Nos. 7,622,130 (the “‘130 Patent”), 7,754,230 (the “‘230 Patent”), 8,298,556 (the “‘556 Patent”) and 8,846,066 (the “‘066 Patent”). The ‘130 and ‘230 Patents expire in December 2027 (not including pending applications for patent term extension (“PTE”)), the ‘556 Patent expires in August 2025, and the ‘066 Patent expires in February 2025. Plaintiffs entered into a settlement agreement with Slayback on June 12, 2019, and the case was dismissed.
Latisse® IV. In December 2016, Sandoz announced the U.S. market launch of its generic copy of Latisse®. In July 2017, subsidiaries of the Company and Duke University (collectively, “Plaintiffs”) filed a complaint for infringement of U.S. Patent Number 9,579,270 (“‘270 Patent”) against Defendants Sandoz Inc. (“Sandoz”) and Alcon Laboratories, Inc. (“Alcon”) in the U.S. District Court for the Eastern District of Texas (EDTX). The ‘270 patent expires in January 2021. In their complaint, Plaintiffs seek, among other things, a judgment that Defendants have infringed the ‘270 patent by making, selling, and offering to sell, and/or importing, their generic copy of Latisse® within the United States. Plaintiffs seek injunctive relief and damages for Defendants’ infringement. On April 3, 2018, the EDTX court issued an order, among other things, severing Plaintiff’s claims against Defendants and transferring Plaintiff’s claims against Alcon to the District Court of Delaware and Plaintiff’s claims against Sandoz to the District of Colorado. On October 5, 2018, the Delaware District Court entered an order dismissing the Delaware action against Alcon. Fact discovery is closed in the District of Colorado case against Sandoz and a trial date has not yet been set.
Latisse® V. On September 25, 2017, subsidiaries of the Company and Duke University brought an action for infringement of U.S. Patent No. 9,579,270 (the “‘270 Patent”) against Alembic Pharmaceuticals, Ltd., Alembic Global Holding SA, and Alembic Pharmaceuticals, Inc. (collectively, “Alembic”) in the U.S. District Court for the District of New Jersey in connection with an abbreviated new drug application filed with FDA by Alembic, seeking approval to market a generic version of Latisse® and challenging the ‘270 patent. Subsidiaries of the Company and Duke entered into a settlement agreement with Alembic and the case was dismissed on April 4, 2019.
Latisse® VI. On September 19, 2018, subsidiaries of the Company and Duke University brought an action for infringement of U.S. Patent No. 9,579,270 (the “‘270 Patent”) against Akorn, Inc. and Hi-Tech Pharmacal Co., Inc. (collectively, “Akorn”) in the U.S. District Court for the District of New Jersey in connection with an abbreviated new drug application filed with FDA by Akorn seeking approval to market a generic version of Latisse® and challenging the ‘270 patent. The case is currently in fact discovery and a trial date has not yet been set.
Linzess®. Beginning in November 2016 subsidiaries of the Company and Ironwood Pharmaceuticals, Inc. (collectively, “Plaintiffs”), brought multiple actions for infringement of some or all of U.S. Patent Nos. 7,304,036 (the “‘036 Patent”); 7,371,727 (the “‘727 Patent”); 7,704,947 (the “‘947 Patent”); 7,745,409 (the “‘409 Patent”); 8,080,526 (the “‘526 Patent”); 8,110,553 (the “‘553 Patent”); 8,748,573 (the “‘573 Patent”); 8,802,628 (the “‘628 Patent”); and 8,933,030 (the “‘030 Patent”) against Teva Pharmaceuticals USA, Inc. (“Teva”), Aurobindo Pharma Ltd. (“Aurobindo”), Mylan Pharmaceuticals Inc. (“Mylan”), Sandoz Inc. (“Sandoz”) and Sun Pharma Global FZE (“Sun”) in the U.S. District Court for the District of Delaware in connection with abbreviated new drug applications respectively filed with the FDA by Teva, Aurobindo, Mylan, Sandoz and Sun, each seeking approval to market generic versions of Linzess® 145 mcg and 290 mcg capsules and challenging some or all of said patents (“November 2016 Action”). The ‘727, ‘947, ‘409, ‘526 and ‘553 Patents expire in January 2024; the ‘036 Patent expires in August 2026; and the ‘573, ‘628 and ‘030 Patents expire in 2031. In the November 2016 Action, expert discovery has been completed. On May 31, 2019, due to a scheduling conflict, the bench trial set for June 2019 was postponed. Trial is now scheduled to begin on January 7, 2020.
On October 20, 2017, November 30, 2017 and January 20, 2018, Plaintiffs brought actions for infringement of U.S. Patent No. 9,708,371 (the “‘371 Patent”) in the U.S. District Court for the District of Delaware against Teva, Mylan and Sandoz, respectively. The ‘371 Patent expires in 2033. The ‘371 patent actions have been consolidated with the November 2016 Action.
On February 2, 2018 and March 29, 2018, Plaintiffs brought actions for infringement of some or all of the ‘036, ‘727, ‘947, ‘409, ‘526, ‘553, ‘030 and ‘371 Patents against Teva and Mylan in the U.S. District Court for the District of Delaware in connection with abbreviated new drug applications respectively filed with the FDA by Teva and Mylan, each seeking approval to market generic versions generic versions of Linzess® 72 mcg capsules (“72 mcg ANDA”) before the expiration said patents. The district court consolidated the 72 mcg ANDA actions with the November 2016 Action.
In May and August 2018, the district court granted joint stipulations and orders to dismiss without prejudice all claims, counterclaims, and defenses in the November 2016 Action with respect to the ‘371 Patent and the ‘030 Patent, respectively, as between Plaintiffs, Teva, Mylan and Sandoz.
On September 4, 2018, Plaintiffs filed an amended complaint as to Mylan to assert the ‘628 patent against Mylan’s 72 mcg ANDA product.
Plaintiffs entered into a settlement agreement with Sun and certain Sun affiliates and the case against Sun was dismissed on January 18, 2018. Plaintiffs entered into a settlement agreement with Aurobindo and the case against Aurobindo was dismissed on May 7, 2018. Plaintiffs entered into a settlement agreement with Mylan and the case against Mylan was dismissed on December 27, 2018. Under the terms of the settlement agreement, Plaintiffs will provide a license to Mylan to market its generic versions of Linzess® 145 mcg and 290 mcg in the United States beginning on February 5, 2030 (subject to FDA approval), and its generic version of Linzess® 72 mcg in the United States beginning on August 5, 2030, or earlier in certain circumstances.
Restasis®. Between August 2015 and July 2016, a subsidiary of the Company brought actions for infringement of U.S. Patent Nos. 8,629,111 (the “‘111 patent”), 8,633,162 (the “‘162 patent”), 8,642,556 (the “‘556 patent”), 8,648,048 (the “‘048 patent”), 8,685,930 (the “‘930 patent”) and 9,248,191 (the “’191 patent”) in the U.S. District Court for the Eastern District of Texas against Akorn, Inc., Apotex, Inc., Mylan Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Inc., InnoPharma, Inc., Famy Care Limited (“Famy Care”), TWi Pharmaceuticals, Inc. (“TWi”) and related subsidiaries and affiliates thereof.
The subsidiary entered into settlement agreements with Apotex, TWi, Famy Care and InnoPharma. As a result of certain of these settlements, Allergan will provide a license to certain parties to launch their generic versions of Restasis® beginning on February 27, 2024, or earlier in certain circumstances. Additionally, under certain circumstances, the Company will supply and authorize certain parties to launch an authorized generic version of Restasis® on August 28, 2024 or earlier in certain circumstances.
On September 8, 2017, the Company assigned all Orange Book-listed patents for Restasis® to the Saint Regis Mohawk Tribe (“the Tribe”), a recognized sovereign tribal government, and concurrently was granted an exclusive field-of-use license to practice the patents in the United States for all FDA-approved uses of the products under the Restasis® NDAs.
On October 16, 2017, the District Court issued a decision and final judgment finding that the asserted claims of the ‘111 patent, the ‘048 patent, the ‘930 patent and the ‘191 patent were infringed, but invalid on the ground of obviousness. The District Court also held that the asserted claims were not invalid as anticipated, for lack of enablement, or for improper inventorship. On November 13, 2018, the U.S. Court of Appeals for the Federal Circuit issued a decision affirming the district court’s finding of invalidity of the asserted claims of the ‘111, ‘048, ‘930 and ‘191 Patents. On March 6, 2019, the Federal Circuit denied Allergan and the Tribe’s petition for rehearing, and a mandate issued on March 13, 2019. On April 10, 2019, Allergan and the Tribe filed a petition for a writ of certiorari with the United States Supreme Court, which was denied on June 3, 2019.
On December 22, 2016, a subsidiary of the Company filed a complaint for infringement of the ’111 patent, ’162 patent, ’556 patent, ’048 patent, ’930 patent, and the ’191 patent in the U.S. District Court for the Eastern District of Texas against Deva Holding A.S. (“Deva”). On March 6, 2018, the district court granted in part and denied in part the parties’ joint motion for entry of a stipulated order, and stayed the case until such time as the Federal Circuit in the lead appeal case with Teva, Mylan and Akron issues a mandate. The parties’ stipulation provides that Deva will be bound by the outcome of that appeal. On April 30, 2019, the district court granted Deva’s motion for entry of final judgment and dismissal with prejudice, and the case was dismissed.
On August 10 and September 20, 2018, a subsidiary of the Company and the Tribe filed complaints for infringement of the ’162 patent and the ’556 patent in the U.S. District Court for the District of Delaware against Saptalis and against Amneal Pharmaceuticals, LLC and Amneal Pharmaceuticals Co. India Private Limited (collectively, “Amneal”), respectively. The cases were voluntarily dismissed on January 2, 2019.
Restasis® IPR. On June 6, 2016, a subsidiary of the Company received notification letters that Inter Partes Review of the USPTO (“IPR”) petitions were filed by Mylan Pharmaceuticals Inc. (“Mylan”) regarding U.S. Patent Nos. 8,629,111 (the “‘111 patent”), 8,633,162 (the “‘162 patent”), 8,642,556 (the “‘556 patent”), 8,648,048 (the “‘048 patent”), 8,685,930 (the “‘930 patent”), and 9,248,191 (the “‘191 patent”), which patents expire on August 27, 2024. Mylan filed the IPR petition on June 3, 2016. On June 23, 2016, a subsidiary of the Company received a notification letter that an IPR petition and motion for joinder was filed by Argentum Pharmaceuticals LLC (“Argentum”) regarding the ’111 patent. On December 7, 2016, the Company entered into a settlement agreement with Argentum and Argentum’s petition was withdrawn. On December 8, 2016, the USPTO granted Mylan’s petitions to institute IPRs with respect to these patents. On January 6, 2017, each of Akorn and Teva filed, and on January 9, 2017 the USPTO received, IPR petitions with respect to these patents and motions for joinder with the Mylan IPR. The USPTO granted Teva’s and Akorn’s joinder motions on March 31, 2017.
On September 8, 2017, Allergan assigned all Orange Book-listed patents for Restasis® to the Saint Regis Mohawk Tribe (“the Tribe”), a recognized sovereign tribal government, and concurrently was granted an exclusive field-of-use license to practice the patents in the United States for all FDA-approved uses of the products under the Restasis® NDAs. That same day, the Tribe filed an updated Mandatory Notice with the USPTO to reflect that the Tribe is the patent owner, and sought permission to file a motion to dismiss based on tribal sovereign immunity.
On February 23, 2018, the USPTO issued orders denying the Tribe’s motion to dismiss (or terminate).
On July 20, 2018, the Federal Circuit affirmed the USPTO’s denial of the Tribe’s motion to dismiss and Allergan’s motion to withdraw. On August 20, 2018, the Tribe and Allergan filed a petition for rehearing en banc, which the Federal Circuit denied on October 22, 2018. On December 21, 2018, the Company and the Tribe filed a petition for a writ of certiorari with the United States Supreme Court, which was denied on April 15, 2019.
Saphris®. Between September 2014 and May 2015, subsidiaries of the Company brought actions for infringement of some or all of U.S. Patent Nos. 5,763,476 (the “‘476 patent”), 7,741,358 (the “‘358 patent”) and 8,022,228 (the “‘228 patent”) against Sigmapharm Laboratories, LLC (“Sigmapharm”), Hikma Pharmaceuticals, LLC (“Hikma”), Breckenridge Pharmaceutical, Inc. (“Breckenridge”), Alembic Pharmaceuticals, Ltd. (“Alembic”) and Amneal Pharmaceuticals, LLC (“Amneal”), and related subsidiaries and affiliates thereof in the U.S. District Court for the District of Delaware in connection with an abbreviated new drug applications respectively filed with FDA by Sigmapharm, Hikma, Breckenridge, Alembic and Amneal, each seeking approval to market a generic versions of Saphris® and challenging each of said patents. Including a 6-month pediatric extension of regulatory exclusivity, the ‘476 patent expires in December 2020, and the ‘358 and ‘228 patents expire in October 2026. In 2016, the parties agreed to dismiss all claims related to the ‘358 and ‘228 patents, leaving only the ‘476 patent at issue. On October 13, 2016, the court stayed trial as to Sigmapharm and extended the 30-month stay as to Sigmapharm. On June 30, 2017, the district court issued an opinion and order finding all asserted claims of the ‘476 patent valid, that claims 1, 2, 5 and 6 were infringed by Alembic, Amneal, Breckenridge and Hikma, and that claims 4, 9 and 10 were not infringed by Alembic and Breckenridge. On July 11, 2017, the district court entered a final judgment that ordered, among other things, that Alembic’s, Amneal’s, Breckenridge’s and Hikma’s respective ANDAs not be granted final approval by FDA earlier than the date of expiration of the ‘476 patent inclusive of any applicable adjustments, extensions or exclusivities.
On March 14, 2019, the Federal Circuit vacated the district court’s July 2017 judgment that claims 1 and 4 are not invalid and remanded for the district court to consider a fact question and its impact on the obviousness analysis. On April 15, 2019, Plaintiffs filed a combined petition for panel rehearing and rehearing en banc with respect to this issue, which was denied on May 15, 2019. In its March 14, 2019 order, the Federal Circuit also vacated the judgment of non-infringement of claims 4, 9 and 10 as to Alembic and Breckenridge and remanded for the district court to consider their infringement under a revised claim construction.
A separate bench trial concerning Sigmapharm’s infringement of claim 1 of the ‘476 patent began on June 20, 2018, and on November 16, 2018, the court held that Sigmapharms’ proposed ANDA product would infringe claim 1 of the ‘476 patent On November 26, 2018, Sigmapharm sought relief from the November 16, 2018 decision. On November 30, 2018, the Company moved for entry of final judgment. Both motions are currently pending.
Trade Secret Matters
Botulinum Neurotoxin ITC Investigation. On January 30, 2019, subsidiaries of the Company and Medytox Inc. (collectively, “Complainants”) filed a complaint with the United States International Trade Commission (“ITC”) against Daewoong Pharmaceuticals Co., Ltd., Daewoong Co., Ltd., and Evolus Inc. (collectively, “Respondents”) requesting the ITC commence an investigation with respect to the Respondents’ importation into the United States of Respondents’ botulinum neurotoxin products, including DWP-450 (also known as JeuveauTM), which Complainants assert were developed, made and/or imported using Medytox’s trade secrets. Complainants seek, among other things, a permanent exclusionary order and cease and desist orders covering Respondents’ botulinum neurotoxin products, including DWP-450/JeuveauTM. On February 28, 2019, the ITC instituted an investigation into Respondents’ botulinum neurotoxin products, including DWP-450/JeuveauTM. Fact discovery closed on July 19, 2019. On July 24, 2019, the Administrative Law Judge issued an Order rescheduling the evidentiary hearing for February 4-7, 2020, and indicating that the target date for completion of the investigation would probably be extended to October 6, 2020.
Trademark Enforcement Matters
Juvéderm®. On April 5, 2017, a subsidiary of the Company brought an action for unfair competition, false advertising, dilution, conspiracy and infringement of Allergan’s Juvéderm ® trademarks in the U.S. District Court for the Central District of California against Dermavita Limited Partnership (“Dermavita”), Dima Corp. S.A. (“Dima Corp.”) and KBC Media Relations LLC (“KBC”). Dima Corp. had previously announced its acquisition of a license from Dermavita to develop and market in the U.S. cosmetic products under the Juvederm trademark. During June 2017, the Company entered into a settlement agreement with KBC. During July 2017, the Court preliminarily enjoined Dima Corp. from, inter alia, promoting or selling within the United States any product bearing the trademark Juvéderm® or any other trademark confusingly similar to it. During January 2018, the Court granted Dermavita’s renewed motion to dismiss the Company’s complaint based on purported lack of personal jurisdiction. During January 2019, the Company subsidiary and Dima Corp. resolved the action and the Court entered a permanent injunction and final judgment in favor of the Company subsidiary and against Dima Corp. for trademark infringement, unfair competition, dilution and false advertising.
Subsidiaries of the Company requested a preliminary injunction against Dermavita, Dima Corp, Aesthetic Services & Development, Jacqueline Sillam and Dimitri Sillam in the High Court of Paris, France. During June 2017, the Paris Court preliminarily enjoined the defendants, inter alia, to refrain from promoting or selling in France its Juvederm products, to transfer various domain names and to pay provisional damages to Allergan, on the basis that such use would infringe Allergan’s EU and French Juvéderm® trademarks and would amount to unfair competition. This injunction has become final. A subsidiary of the Company has also filed against Dermavita, Dima Corp. and others a full action of trademark infringement in the Paris court. Dermavita has submitted two requests that the full action be stayed pending the outcome of the Nanterre action and the EUIPO trademark proceedings, both mentioned below. The Paris court rejected Dermavita’s first stay request and subsequently ordered the defendants to pay more than 75,000 Euros in liquidated damages for violation of the preliminary injunction mentioned above. Dermavita’s second request for a stay remains pending. Furthermore, Dermavita filed an action against subsidiaries of the Company in the Nanterre, France court alleging that the subsidiaries have not used its Juvéderm trademark and requesting the court to revoke the Company’s trademark based on its purported lack of use or purportedly invalid license and assignment agreements. On February 21, 2019, the Nanterre Court ruled in the Company’s favor, holding that the license and assignment agreements were valid and that Allergan has used its trademark in commerce. Dermavita has appealed this decision.
On January 22, 2019, subsidiaries of the Company brought a related action for infringement of the Company’s Juvéderm®trademarks against Aesthetic Services and Development Limited, Juvederm Elite Clinics SARL and Jamal Hamadi in the (UK) High Court of Justice. The case is in its early stages and no trial date has been set.
Furthermore, more than 150 trademark opposition and cancellation actions between Allergan and Dermavita have been filed in front of the USPTO, EUIPO and various other national and regional trademark offices around the world. Most of these actions remain pending; however, Allergan has received favorable decisions in more than thirty (30) such actions.
Antitrust LitigationPatent Enforcement Matters
AsacolBystolic® Litigation. Two class. On July 2, 2019, subsidiaries of the Company brought an action complaints were filed on June 22, 2015, and three more on September 21, 2015, in federal court in Massachusetts on behalf of a putative class of indirect purchasers. In each complaint plaintiffs allege that they paid higher prices for Warner Chilcott’s Asacol® HD and Delzicol® products as a result of Warner Chilcott’s alleged actions preventing or delaying generic competition in the market for Warner Chilcott’s older Asacol® product in violationinfringement of U.S. federal antitrust laws and/or state laws. Plaintiffs seek unspecified injunctive relief, treble damages and/or attorneys’ fees. Defendants moved to dismiss the indirect purchasers’ complaint. A hearing was held on the motion to dismiss on May 11, 2016. On July 20, 2016, the court issued a decision granting the motion in part, dismissing the indirect purchaser plaintiffs’ claims based on purported reverse payments and dismissing several of indirect purchaser plaintiffs’ claims based on state laws. On August 15, 2016, the indirect purchaser plaintiffs filed a second amended complaint. The Company filed an answer to the second amended complaint on October 4, 2016. Complaints were also filed on behalf of a putative class of direct purchasers of Asacol® in federal court in New York on April 26, 2016, and on June 29, 2016, in each case making similar allegations to the complaints filed by the indirect purchaser plaintiffs. Those matters have been consolidated with the indirect purchaser cases in the federal court in Massachusetts. On October 11, 2016, the Company filed a motion to dismiss the direct purchasers’ consolidated complaint and oral argument on the motion was held on December 16, 2016. On February 10, 2017, the court issued an order granting in part and denying in part the Company’s motion to dismiss.The Company has reached a tentative agreement with the direct purchaser plaintiffs to settle their claims. The Company has filed a motion for summary judgment seeking dismissal of the indirect purchaser plaintiffs’ claims.
Botox® Litigation. A class action complaint was filed in federal court in California on February 24, 2015, and amended May 29, 2015, alleging unlawful market allocation in violation of Section 1 of the Sherman Act, 15 U.S.C. §1, agreement in restraint of trade in violation of 15 U.S.C. §1 of the Sherman Act, unlawful maintenance of monopoly market power in violation of Section 2 of the Sherman Act, 15 U.S.C. §2 of the Sherman Act, violations of California’s Cartwright Act, Section 16700 et seq. of Calif. Bus. and
Prof. Code, and violations of California’s unfair competition law, Section 17200 et seq. of Calif. Bus. and Prof. Code. In the complaint, plaintiffs seek an unspecified amount of treble damages. On July 19, 2016, plaintiffs filed a motion for class certification. On October 14, 2016, the Company filed an opposition to plaintiffs’ motion for class certification. Oral argument on the class certification motion was heard on January 13, 2017. On June 13, 2017, the court granted plaintiff’s motion for class certification. In September 2017, the parties filed cross motions for summary judgement, which were heard by the court on October 27, 2017.
Loestrin® 24 Litigation. On April 5, 2013, two putative class actions were filed in the federal district court against Warner Chilcott and certain affiliates alleging that Warner Chilcott’s 2009 patent lawsuit settlements with Watson Laboratories and Lupin related to Loestrin® 24 Fe were unlawful. The complaints, both asserted on behalf of putative classes of end-payors, generally allege that Watson and Lupin improperly delayed launching generic versions of Loestrin® 24 in exchange for substantial payments from Warner Chilcott in violation of federal and state antitrust and consumer protection laws. The complaints each seek declaratory and injunctive relief and damages. Additional complaints have been filed by different plaintiffs seeking to represent the same putative class of end-payors. In addition to the end-payor suits, two lawsuits have been filed on behalf of a class of direct payors and by direct purchasers in their individual capacities. After a hearing on September 26, 2013, the JPML issued an order transferring all related Loestrin® 24 cases to the federal court for the District of Rhode Island. On September 4, 2014, the court granted the defendants’ motion to dismiss the complaint. The plaintiffs appealed the district court’s decision to the First Circuit Court of Appeals and oral argument was held on December 7, 2015. On February 22, 2016, the First Circuit issued its decision vacating the decision of, and remanding the matter to, the district court. On June 11, 2016, defendants filed an omnibus motion to dismiss the claims of the direct purchaser class plaintiffs, end-payor class plaintiffs and individual direct purchaser plaintiffs. Oral argument on the motion to dismiss was held on January 13, 2017. On July 24, 2017, the court issued its decision denying the motion to dismiss.
Namenda® Litigation. On September 15, 2014, the State of New York, through the Office of the Attorney General of the State of New York, filed a lawsuitPatent No. 6,545,040 in the United States District Court for the Southern District of New York alleging that Forest was acting to prevent or delay generic competition to Forest’s immediate-release product Namenda® in violation of federalDelaware against Ajanta Pharma Ltd. and New York antitrust laws and committed other fraudulent actsAjanta Pharma USA Inc. (collectively, “Ajanta”) in connection with its commercial plans for Namendaan abbreviated new drug application filed with the FDA by Ajanta seeking approval to market a generic version of Bystolic® XR. and challenging said patent. No trial date or case schedule has been set.
Combigan®. On December 11, 2014, the district court issued a ruling granting the state’s preliminary injunction motion and issued an injunction on December 15, 2014 which the CourtOctober 30, 2017, subsidiaries of Appeals for the Second Circuit affirmed on May 22, 2015. Forest and the New York Attorney General reached a settlement on November 24, 2015. On May 29, 2015, a putative class action was filed on behalf of a class of direct purchasers and on June 8, 2015 a similar putative class action was filed on behalf of a class of indirect purchasers. Since that time, additional complaints have been filed on behalf of putative classes of direct and indirect purchasers. The class action complaints make claims similar to those asserted by the New York Attorney General and also include claims that Namenda® patent litigation settlements between Forest and generic companies also violated the antitrust laws. On December 22, 2015, Forest and its co-defendants filed motions to dismiss the pending complaints. On September 13, 2016, the court issued a decision denying the Company’s motion to dismiss. On September 27, 2016, the Company filed an answeraction for infringement of U.S. Patent Number 9,770,453 (the “‘453 Patent”) against Sandoz, Inc. and Alcon Laboratories, Inc. (“Sandoz”) in the U.S. District Court for the District of New Jersey, in connection with the abbreviated new drug applications respectively filed with the FDA by Sandoz and Alcon, seeking approval to market a generic version of Combigan®. On March 6, 2018, U.S. Patent Nos. 9,907,801 (the “‘801 Patent”) and 9,907,802 (the “‘802 Patent”) were added to the amended complaint.case. The ‘453, ‘801 and ‘802 Patents are listed in the Orange Book for Combigan® and expire on April 19, 2022. A trial date has not been set. On July 13, 2018, the district court adopted Allergan’s proposed claim construction and granted Allergan’s motion for preliminary injunction against Sandoz. On August 1, 2018, the district court entered an order setting a preliminary injunction bond in the amount of $157,300,000 under Federal Rule of Civil Procedure 65(c), which Allergan posted. Sandoz has appealed the grant of the injunction, and the appeal is ongoing.
Fetzima®. In October and November 2017, subsidiaries of the Company and Pierre Fabre Medicament S.A.S. brought actions for infringement of U.S. Patent Nos. RE43,879 (the “‘879 Patent”); 8,481,598 (the “‘598 Patent”); and 8,865,937 (the “‘937 Patent”) against MSN Laboratories Private Limited and MSN Pharmaceuticals Inc. (collectively, “MSN”), Prinston Pharmaceutical Inc. and Solco Healthcare U.S., LLC (collectively, “Prinston”), Torrent Pharmaceuticals Limited and Torrent Pharma Inc. (collectively, “Torrent”), West-Ward Pharmaceuticals International Limited and West-Ward Pharmaceuticals Corp. (collectively, “West-Ward”), Zydus Pharmaceuticals (USA) Inc. (“Zydus”), Aurobindo Pharma USA, Inc. and Aurobindo Pharma Limited (collectively, “Aurobindo”), and Amneal Pharmaceuticals LLC and Amneal Pharmaceuticals Private Limited (collectively, “Amneal”), in connection with abbreviated new drug applications, respectively filed with the FDA by MSN, Prinston, Torrent, West-Ward, Zydus, Aurobindo, and Amneal, each seeking approval to market generic versions of Fetzima® and challenging said patents. The ‘879 Patent expires in June 2023 (not including a pending application for patent term extension (“PTE”)), the ‘598 patent expires in March 2031, and the ‘937 Patent expires in May 2032. The case is currently in fact discovery, and no trial date has been set. Allergan entered into a settlement agreement with Amneal on December 18, 2018, and the case as against Amneal was dismissed. Allergan entered into a settlement agreement with Prinston on June 6, 2019, and the case as against Prinston was dismissed.
In April 2019, subsidiaries of the Company and Pierre Fabre Medicament S.A.S. brought an action for infringement of the ‘879, ‘598 and ‘937 Patents against Micro Labs Ltd. and Micro Labs USA, Inc. (“Micro”) in connection with Micro’s abbreviated new drug application seeking approval to market a generic version of Fetzima® and challenging said patents. No trial date has been set.
Juvéderm ®. On February 16,26, 2019, subsidiaries of the Company filed a complaint for infringement of U.S. Patent Nos. 8,450,475 (the “‘475 Patent), 8,357,795 (the “‘795 Patent”), 8,822,676 (the “‘676 Patent”), 9,089,519 (the “‘519 Patent”), 9,238,013 (the “‘013 Patent”) and 9,358,322 (the “‘322 Patent”) in the U.S. District Court for the District of Delaware against Prollenium US Inc. and Prollenium Medical Technologies Inc. (collectively, “Prollenium”). The complaint seeks, among other things, a judgment that Defendants have infringed these patents by making, selling, offering to sell, and importing Prollenium’s Revanesse® Versa+TM product within and into the United States. Plaintiffs seek injunctive relief and damages for Defendants’ infringement. Trial is scheduled for June 14, 2021.
Kybella®. On November 9, 2018, a subsidiary of the Company brought an action for infringement of U.S. Patent Nos. 8,101,593 (the “‘593 Patent”), 8,367,649 (the “‘649 Patent”) and 8,653,058 (the “‘058 Patent”) against Slayback Pharma LLC (“Slayback”) in the U.S. District Court for the District of New Jersey in connection with an abbreviated new drug application filed with the FDA by Slayback seeking approval to market a generic version of Kybella® and challenging said patents. The ‘593, ‘649, and ‘058 Patents expire in March 2030. On April 10, 2019, a subsidiary of the Company, together with Los Angeles Biomedical Research Institute at Harbor UCLA-Medical Center (“LA BioMed”) and The Regents of the University of California (the “Regents”) (all collectively, “Plaintiffs”), filed an amended complaint against Slayback asserting infringement of the ‘593, ‘649 and ‘058 Patents and U.S. Patent Nos. 7,622,130 (the “‘130 Patent”), 7,754,230 (the “‘230 Patent”), 8,298,556 (the “‘556 Patent”) and 8,846,066 (the “‘066 Patent”). The ‘130 and ‘230 Patents expire in December 2027 (not including pending applications for patent term extension (“PTE”)), the ‘556 Patent expires in August 2025, and the ‘066 Patent expires in February 2025. Plaintiffs entered into a settlement agreement with Slayback on June 12, 2019, and the case was dismissed.
Latisse® IV. In December 2016, Sandoz announced the U.S. market launch of its generic copy of Latisse®. In July 2017, subsidiaries of the Company and Duke University (collectively, “Plaintiffs”) filed a complaint for infringement of U.S. Patent Number 9,579,270 (“‘270 Patent”) against Defendants Sandoz Inc. (“Sandoz”) and Alcon Laboratories, Inc. (“Alcon”) in the U.S. District Court for the Eastern District of Texas (EDTX). The ‘270 patent expires in January 2021. In their complaint, Plaintiffs seek, among other things, a judgment that Defendants have infringed the ‘270 patent by making, selling, and offering to sell, and/or importing, their generic copy of Latisse® within the United States. Plaintiffs seek injunctive relief and damages for Defendants’ infringement. On April 3, 2018, the EDTX court issued an order, among other things, severing Plaintiff’s claims against Defendants and transferring Plaintiff’s claims against Alcon to the District Court of Delaware and Plaintiff’s claims against Sandoz to the District of Colorado. On October 5, 2018, the Delaware District Court entered an order dismissing the Delaware action against Alcon. Fact discovery is closed in the District of Colorado case against Sandoz and a trial date has not yet been set.
Latisse® V. On September 25, 2017, subsidiaries of the Company and Duke University brought an action for infringement of U.S. Patent No. 9,579,270 (the “‘270 Patent”) against Alembic Pharmaceuticals, Ltd., Alembic Global Holding SA, and Alembic Pharmaceuticals, Inc. (collectively, “Alembic”) in the U.S. District Court for the District of New Jersey in connection with an abbreviated new drug application filed with FDA by Alembic, seeking approval to market a generic version of Latisse® and challenging the ‘270 patent. Subsidiaries of the Company and Duke entered into a settlement agreement with Alembic and the case was dismissed on April 4, 2019.
Latisse® VI. On September 19, 2018, subsidiaries of the Company and Duke University brought an action for infringement of U.S. Patent No. 9,579,270 (the “‘270 Patent”) against Akorn, Inc. and Hi-Tech Pharmacal Co., Inc. (collectively, “Akorn”) in the U.S. District Court for the District of New Jersey in connection with an abbreviated new drug application filed with FDA by Akorn seeking approval to market a generic version of Latisse® and challenging the ‘270 patent. The case is currently in fact discovery and a trial date has not yet been set.
Linzess®. Beginning in November 2016 subsidiaries of the Company and Ironwood Pharmaceuticals, Inc. (collectively, “Plaintiffs”), brought multiple actions for infringement of some or all of U.S. Patent Nos. 7,304,036 (the “‘036 Patent”); 7,371,727 (the “‘727 Patent”); 7,704,947 (the “‘947 Patent”); 7,745,409 (the “‘409 Patent”); 8,080,526 (the “‘526 Patent”); 8,110,553 (the “‘553 Patent”); 8,748,573 (the “‘573 Patent”); 8,802,628 (the “‘628 Patent”); and 8,933,030 (the “‘030 Patent”) against Teva Pharmaceuticals USA, Inc. (“Teva”), Aurobindo Pharma Ltd. (“Aurobindo”), Mylan Pharmaceuticals Inc. (“Mylan”), Sandoz Inc. (“Sandoz”) and Sun Pharma Global FZE (“Sun”) in the U.S. District Court for the District of Delaware in connection with abbreviated new drug applications respectively filed with the FDA by Teva, Aurobindo, Mylan, Sandoz and Sun, each seeking approval to market generic versions of Linzess® 145 mcg and 290 mcg capsules and challenging some or all of said patents (“November 2016 Action”). The ‘727, ‘947, ‘409, ‘526 and ‘553 Patents expire in January 2024; the ‘036 Patent expires in August 2026; and the ‘573, ‘628 and ‘030 Patents expire in 2031. In the November 2016 Action, expert discovery has been completed. On May 31, 2019, due to a scheduling conflict, the bench trial set for June 2019 was postponed. Trial is now scheduled to begin on January 7, 2020.
On October 20, 2017, November 30, 2017 and January 20, 2018, Plaintiffs brought actions for infringement of U.S. Patent No. 9,708,371 (the “‘371 Patent”) in the U.S. District Court for the District of Delaware against Teva, Mylan and Sandoz, respectively. The ‘371 Patent expires in 2033. The ‘371 patent actions have been consolidated with the November 2016 Action.
On February 23, 2017, plaintiffs filed motions2, 2018 and March 29, 2018, Plaintiffs brought actions for summary judgment on twoinfringement of some or all of the counts‘036, ‘727, ‘947, ‘409, ‘526, ‘553, ‘030 and ‘371 Patents against Teva and Mylan in the U.S. District Court for the District of Delaware in connection with abbreviated new drug applications respectively filed with the FDA by Teva and Mylan, each seeking approval to market generic versions generic versions of Linzess® 72 mcg capsules (“72 mcg ANDA”) before the expiration said patents. The district court consolidated the 72 mcg ANDA actions with the November 2016 Action.
In May and August 2018, the district court granted joint stipulations and orders to dismiss without prejudice all claims, counterclaims, and defenses in the November 2016 Action with respect to the ‘371 Patent and the ‘030 Patent, respectively, as between Plaintiffs, Teva, Mylan and Sandoz.
On September 4, 2018, Plaintiffs filed an amended complaint as to Mylan to assert the ‘628 patent against Mylan’s 72 mcg ANDA product.
Plaintiffs entered into a settlement agreement with Sun and certain Sun affiliates and the case against Sun was dismissed on January 18, 2018. Plaintiffs entered into a settlement agreement with Aurobindo and the case against Aurobindo was dismissed on May 7, 2018. Plaintiffs entered into a settlement agreement with Mylan and the case against Mylan was dismissed on December 27, 2018. Under the terms of the settlement agreement, Plaintiffs will provide a license to Mylan to market its generic versions of Linzess® 145 mcg and 290 mcg in the United States beginning on February 5, 2030 (subject to FDA approval), and its generic version of Linzess® 72 mcg in the United States beginning on August 5, 2030, or earlier in certain circumstances.
Restasis®. Between August 2015 and July 2016, a subsidiary of the Company brought actions for infringement of U.S. Patent Nos. 8,629,111 (the “‘111 patent”), 8,633,162 (the “‘162 patent”), 8,642,556 (the “‘556 patent”), 8,648,048 (the “‘048 patent”), 8,685,930 (the “‘930 patent”) and 9,248,191 (the “’191 patent”) in the U.S. District Court for the Eastern District of Texas against Akorn, Inc., Apotex, Inc., Mylan Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Inc., InnoPharma, Inc., Famy Care Limited (“Famy Care”), TWi Pharmaceuticals, Inc. (“TWi”) and related subsidiaries and affiliates thereof.
The subsidiary entered into settlement agreements with Apotex, TWi, Famy Care and InnoPharma. As a result of certain of these settlements, Allergan will provide a license to certain parties to launch their complaint. generic versions of Restasis® beginning on February 27, 2024, or earlier in certain circumstances. Additionally, under certain circumstances, the Company will supply and authorize certain parties to launch an authorized generic version of Restasis® on August 28, 2024 or earlier in certain circumstances.
On MarchSeptember 8, 2017, the Company assigned all Orange Book-listed patents for Restasis® to the Saint Regis Mohawk Tribe (“the Tribe”), a recognized sovereign tribal government, and concurrently was granted an exclusive field-of-use license to practice the patents in the United States for all FDA-approved uses of the products under the Restasis® NDAs.
On October 16, 2017, the Company filed oppositions to the plaintiffs’ summary judgment motions and a cross motion for summary judgment on one count. The motions were argued before the court on May 5, 2017. On May 23, 2017, theDistrict Court issued itsa decision and final judgment finding that the asserted claims of the ‘111 patent, the ‘048 patent, the ‘930 patent and the ‘191 patent were infringed, but invalid on the parties’ summary judgment motions.ground of obviousness. The District Court granted plaintiffs’ motion in partalso held that the asserted claims were not invalid as to the collateral estoppel effect of a prior finding of anti-competitive conduct, and denied the cross-motions on whether the Company’s obtaining pediatric exclusivity was anti-competitive conduct.
Zymar®/Zymaxid® Litigation. On February 16, 2012, Apotex Inc. and Apotex Corp. filed a complaint in the federal district court in Delaware against Senju Pharmaceuticals Co., Ltd. (“Senju”), Kyorin Pharmaceutical Co., Ltd. (“Kyorin”), and Allergan, Inc. alleging monopolization in violation of Section 2 of the Sherman Act, conspiracy to monopolize, and unreasonable restraint of trade in the market for gatifloxacin ophthalmic formulations, which includes Allergan Inc.’s ZYMAR® gatifloxacin ophthalmic solution 0.3% and ZYMAXID® gatifloxacin ophthalmic solution 0.5% products. In the complaint, Plaintiffs seek an unspecified amount of treble damages and disgorgement of profits. Following the court’s denial of Allergan Inc.’s motions to dismiss, Allergan Inc. filed an answer to Apotex’s complaint on June 1, 2015. On March 27, 2017, the Company and Apotex settled this matter. On April 26, 2017, this matter was dismissed.
On June 6, 2014, a separate antitrust class action complaint was filed in the federal district court in Delaware against the same defendants as in the Apotex case. The complaint alleges that defendants unlawfully excluded or delayed generic competition in the gatifloxacin ophthalmic formulations market (generic versions of ZYMAR® and ZYMAXID®). On September 18, 2014, Allergan Inc. filed a motion to dismissanticipated, for lack of subject matter jurisdiction and joined in co-defendants’ motion to dismissenablement, or for failure to state a claim.improper inventorship. On August 19, 2015, the court granted Allergan Inc.’s motion to dismiss. On September 18, 2015, plaintiff filed a notice of appeal withNovember 13, 2018, the U.S. Court of Appeals for the Third Circuit. The ThirdFederal Circuit oral argument was held on June 13, 2016.issued a decision affirming the district court’s finding of invalidity of the asserted claims of the ‘111, ‘048, ‘930 and ‘191 Patents. On September 7, 2016,March 6, 2019, the U.S. Court of Appeals for the Third Circuit vacated the District Court’s granting of Allergan Inc.’s motion to dismiss and remanded to the District Court for further proceedings. The ThirdFederal Circuit denied Allergan and the Company’sTribe’s petition for rehearing, and a mandate issued on March 13, 2019. On April 10, 2019, Allergan and the Tribe filed a petition for a rehearing on October 4, 2016. On October 18, 2017,writ of certiorari with the parties reached a tentative settlement.
Celexa®/Lexapro® Class Actions. Forest and certain of its affiliates have been named as defendants in multiple federal court actions relating to the promotion of Celexa® and/or Lexapro® all ofUnited States Supreme Court, which have been consolidated in the Celexa®/Lexapro® MDL proceeding in the federal district court in Massachusetts. On November 13, 2013, an action was filed in federal court in Minnesota which sought to certify a nationwide class of third-party payor entities that purchased Celexa® and Lexapro® for pediatric use. The complaint asserts claims under the federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act, alleging that Forest engaged in an off-label marketing scheme and paid illegal kickbacks to physicians to induce prescriptions of Celexa® and Lexapro®. Forest moved to dismiss the complaint on December 12, 2014, and the court thereafter issued a ruling dismissing plaintiff’s claims under Minnesota’s Deceptive Trade Practices Act, but denying the remaining portions of the motion. A motion for class certification was filed in February, 2016, and denied on June 2, 2016. Thereafter, plaintiffs filed3, 2019.
On December 22, 2016, a 23(f) petition requesting leave to appeal the denialsubsidiary of class certification which the First Circuit denied on December 7, 2016. On January 19, 2017, plaintiff filed a motion for summary judgment on the Company’s statute of limitation affirmative defense and the Company filed a cross motioncomplaint for summary judgment on February 23, 2017. In addition, plaintiffinfringement of the ’111 patent, ’162 patent, ’556 patent, ’048 patent, ’930 patent, and the ’191 patent in the action filed a second motionU.S. District Court for class certification on February 28, 2017. Forest has filed a motion for summary judgment on all countsthe Eastern District of the complaint.
On August 28, 2014, an action was filed in the federal district court in Washington seeking to certify a nationwide class of consumers and subclasses of Washington and Massachusetts consumers that purchased Celexa® and Lexapro® for pediatric use. The complaint asserts claims under the federal RICO statute, alleging that Forest engaged in an off-label marketing scheme and paid illegal kickbacks to physicians to induce prescriptions of Celexa® and Lexapro®Texas against Deva Holding A.S. (“Deva”). Forest moved to dismiss the complaint on December 19, 2014. On June 16, 2015, the court issued a ruling on the motion to dismiss, granting it in part and denying it in part. Plaintiffs thereafter filed an amended complaint. Forest moved to dismiss the amended complaint. On June 9, 2016, the court denied Forest’s motion. On March 3, 2017, plaintiffs in this action filed a motion for class certification, which motion was denied by the court. On September 15, 2017, Forest filed a motion for summary judgment on all counts of the complaint.
Telephone Consumer Protection Act Litigation. In October 2012, Forest and certain of its affiliates were named as defendants in a putative class action in federal court in Missouri. This suit alleges that Forest and another defendant violated the Telephone Consumer Protection Act (the “TCPA”) and was filed on behalf of a proposed class that includes all persons who, from four years prior to the filing of the action, were sent telephone facsimile messages of material advertising the commercial availability of any property, goods, or services by or on behalf of defendants, which did not display an opt-out notice compliant with a certain regulation promulgated by the FCC. On July 17, 2013,6, 2018, the district court granted Forest’s motion to stay the action pending the administrative proceeding initiated by the pending FCC Petition and a separate petition Forest filed. On October 31, 2015, another class action complaint was filed in Missouri state court against Allergan USA, Inc., Warner Chilcott Corporation and Actavis, Inc., now known as Allergan Finance LLC, alleging violations of the Telephone Consumer Protection Act, the Missouri Consumer Fraud and Protection Act and conversion on behalf of a putative nationwide class of plaintiffs to who defendant Warner Chilcott Corporation sent unsolicited facsimile advertisements. Defendants removed this action to the federal district court for the Western District of Missouri on December 10, 2015 and responded to the complaint on February 8, 2016. On February 17, 2016, plaintiffs voluntarily dismissed defendants Allergan USA, Inc. and Actavis, Inc. from the litigation. In the wake of the Court of Appeals decision on the Petition discussed below, the parties reached an agreement to settle the action against Warner Chilcott.
In a related matter, on June 27, 2013, Forest filed a Petition for Declaratory Ruling with the FCC requesting that the FCC find that (1) the faxes at issue in the action complied, or substantially complied with the FCC regulation, and thus did not violate it, or (2) the FCC regulation was not properly promulgated under the TCPA. Warner Chilcott filed a similar petition with the FCC. On January 31, 2014, the FCC issued a Public Notice seeking comment on Forest’s and several other similar petitions. On October 30, 2014, the FCC issued a final order on the FCC Petition granting Forest and several other petitioners a retroactive waiver of the opt-out notice requirement for all faxes sent with express consent. The litigation plaintiffs, who had filed comments on the January 2014 Public Notice, have appealed the final order to the Court of Appeals for the District of Columbia. Forest and other petitioners intervened in the appeal seeking review of that portion of the FCC final order addressing the statutory basis for the opt out/express consent portion of the regulation. Oral argument before the appellate court took place on November 8, 2016. On March 31, 2017, the Court of Appeals issued a decision which held that the FCC regulation at issue was not properly promulgated under the TCPA.
Prescription Opioid Drug Abuse Litigation. The Company has been named as a defendant in approximately 82 matters relating to the promotion and sale of prescription opioid pain relievers and additional suits may be filed.
On May 21, 2014, the California counties Santa Clara and Orange filed a lawsuit in California state court on behalf of the State of California against several pharmaceutical manufacturers. Plaintiffs named Actavis plc in the suit. The California plaintiffs filed an amended complaint on June 9, 2014. The California complaint alleges that the manufacturer defendants engaged in a deceptive campaign to promote their products in violation of state laws. The complaint seeks an unspecified amount of monetary damages, penalties and injunctive relief. On August 27, 2015, the court stayed the action based on primary jurisdiction arguments raised in the
motions to dismiss. On June 3, 2016, the California plaintiffs filed a motion to lift the stay and a motion for leave to file a third amended complaint. On July 1, 2016, the Company and co-defendants filed joint oppositions to the California plaintiffs’ motion to lift the stay and motion for leave to file a third amended complaint. On July 27, 2016, the court ordered the California plaintiffs to file another motion for leave to file an amended complaint along with a proposed amended complaint. On October 19, 2016, the court in the California litigation lifted the stay in part permitting defendants to challenge the third amended complaint and for the parties to discuss settlement and maintaining the stay in all other respects. On July 6, 2017, Santa Clara and Orange Counties filed a fourth amended complaint.
On June 2, 2014, the City of Chicago also filed a complaint in Illinois state court against the same set of defendants, including Actavis plc, that were sued in the California Action. Co-defendants in the action removed the matter to the federal court in Illinois. The Chicago complaint contains similar allegations as the California complaint and also seeks unspecified monetary damages, penalties and injunctive relief. Defendants have moved to dismiss the complaints in each action. On May 8, 2015, the court granted the Company’s motion to dismiss the complaint. On August 26, 2015, the City of Chicago filed a second amended complaint. On September 29, 2016, the court in the Chicago litigation granted in part and denied in part defendants’the parties’ joint motion for entry of a stipulated order, and stayed the case until such time as the Federal Circuit in the lead appeal case with Teva, Mylan and Akron issues a mandate. The parties’ stipulation provides that Deva will be bound by the outcome of that appeal. On April 30, 2019, the district court granted Deva’s motion for entry of final judgment and dismissal with prejudice, and the case was dismissed.
On August 10 and September 20, 2018, a subsidiary of the Company and the Tribe filed complaints for infringement of the ’162 patent and the ’556 patent in the U.S. District Court for the District of Delaware against Saptalis and against Amneal Pharmaceuticals, LLC and Amneal Pharmaceuticals Co. India Private Limited (collectively, “Amneal”), respectively. The cases were voluntarily dismissed on January 2, 2019.
Restasis® IPR. On June 6, 2016, a subsidiary of the Company received notification letters that Inter Partes Review of the USPTO (“IPR”) petitions were filed by Mylan Pharmaceuticals Inc. (“Mylan”) regarding U.S. Patent Nos. 8,629,111 (the “‘111 patent”), 8,633,162 (the “‘162 patent”), 8,642,556 (the “‘556 patent”), 8,648,048 (the “‘048 patent”), 8,685,930 (the “‘930 patent”), and 9,248,191 (the “‘191 patent”), which patents expire on August 27, 2024. Mylan filed the IPR petition on June 3, 2016. On June 23, 2016, a subsidiary of the Company received a notification letter that an IPR petition and motion for joinder was filed by Argentum Pharmaceuticals LLC (“Argentum”) regarding the ’111 patent. On December 7, 2016, the Company entered into a settlement agreement with Argentum and Argentum’s petition was withdrawn. On December 8, 2016, the USPTO granted Mylan’s petitions to institute IPRs with respect to these patents. On January 6, 2017, each of Akorn and Teva filed, and on January 9, 2017 the USPTO received, IPR petitions with respect to these patents and motions for joinder with the Mylan IPR. The USPTO granted Teva’s and Akorn’s joinder motions on March 31, 2017.
On September 8, 2017, Allergan assigned all Orange Book-listed patents for Restasis® to the Saint Regis Mohawk Tribe (“the Tribe”), a recognized sovereign tribal government, and concurrently was granted an exclusive field-of-use license to practice the patents in the United States for all FDA-approved uses of the products under the Restasis® NDAs. That same day, the Tribe filed an updated Mandatory Notice with the USPTO to reflect that the Tribe is the patent owner, and sought permission to file a motion to dismiss based on tribal sovereign immunity.
On February 23, 2018, the second amended complaint. On October 25, 2016, Chicago filed a third amended complaint. On December 15, 2016,USPTO issued orders denying the Company movedTribe’s motion to dismiss the third amended complaint and filed an answer to the complaint. (or terminate).
On December 15, 2015,July 20, 2018, the StateFederal Circuit affirmed the USPTO’s denial of Mississippi filed a lawsuit in Mississippi state court against several pharmaceutical manufacturers. The Mississippi action parallels the allegations in the California and Chicago matters and seeks monetary and equitable relief. In March and April 2016, the defendants filed motionsTribe’s motion to dismiss stay, and transfer venue in the Mississippi action. On February 13, 2017, the defendants’Allergan’s motion to transfer venue was denied.withdraw. On March 6, 2017,August 20, 2018, the defendantsTribe and Allergan filed a petition for permission to appeal interlocutory order denying defendants’ motion to transfer venuerehearing en banc, which the Federal Circuit denied on October 22, 2018. On December 21, 2018, the Company and the Tribe filed a petition for a writ of certiorari with the MississippiUnited States Supreme Court. Court, which was denied on April 15, 2019.
OnSaphris®. Between September 2014 and May 31, 2017,2015, subsidiaries of the StateCompany brought actions for infringement of Ohio filed a lawsuit in Ohio state courtsome or all of U.S. Patent Nos. 5,763,476 (the “‘476 patent”), 7,741,358 (the “‘358 patent”) and 8,022,228 (the “‘228 patent”) against several pharmaceutical manufacturers. The Ohio action parallels the allegationsSigmapharm Laboratories, LLC (“Sigmapharm”), Hikma Pharmaceuticals, LLC (“Hikma”), Breckenridge Pharmaceutical, Inc. (“Breckenridge”), Alembic Pharmaceuticals, Ltd. (“Alembic”) and Amneal Pharmaceuticals, LLC (“Amneal”), and related subsidiaries and affiliates thereof in the Chicago matter and seeks monetary and equitable relief. Since the filing of the complaint by the State of Ohio, additional cases have been filed, including cases filed by the States of Oklahoma and New Mexico, but mainly by political subdivisions of states (ie., counties and municipalities) in state and federal courts across the country. In addition, a putative class action was filed in the United StatesU.S. District Court for the Western District of Arkansas on behalf of Arkansas residents who were prescribed an opioid product or were prescribed an opioid product and were treated for an overdose or addiction against several pharmaceutical manufacturers. The claims in the additional cases largely parallel the claims in the California, Chicago, Mississippi and Ohio matters. The Company is aware that other states and political subdivisions are considering filing comparable actions against, among others, manufacturers and parties that promoted prescription opioid pain relievers.
Testosterone Replacement Therapy Class Action. On November 24, 2014, the Company was served with a putative class action complaint filed on behalf a class of third party payers in federal court in Illinois. The suit alleges that the Company and other named pharmaceutical defendants violated various laws including the federal RICO statute and state consumer protection lawsDelaware in connection with the salean abbreviated new drug applications respectively filed with FDA by Sigmapharm, Hikma, Breckenridge, Alembic and marketingAmneal, each seeking approval to market a generic versions of certain testosterone replacement therapy pharmaceutical products (“TRT Products”), including the Company’s AndrodermSaphris® product. This matter was filedand challenging each of said patents. Including a 6-month pediatric extension of regulatory exclusivity, the ‘476 patent expires in December 2020, and the TRT Products Liability MDL, described‘358 and ‘228 patents expire in more detail below, notwithstanding that it is not a product liability matter. Plaintiff alleges that it reimbursed thirdOctober 2026. In 2016, the parties for dispensing TRT Products to beneficiaries of its insurance policies. Plaintiff seeks to obtain certain equitable relief, including injunctive relief and an order requiring restitution and/or disgorgement, and to recover damages and multiple damages in an unspecified amount. Defendants filed a joint motionagreed to dismiss the complaint, after which plaintiff amended its complaint. Defendants jointly filed a motion to dismiss the amended complaint, which was granted in part and denied in part on February 3, 2016. The Court dismissed plaintiff’s substantive RICO claims against the Company for mail and wire fraud for failure to plead with particularity under Rule 9(b) but granted plaintiffs leave to replead. The court also dismissed plaintiff’s state law statutory claims and common law claims for fraud and unjust enrichment. The Court declined to dismiss plaintiff’s conspiracy claims pursuant to 18 U.S.C. § 1962(d) and its claims for negligent misrepresentation. Plaintiff filed a third amended complaint on April 7, 2016. Defendants jointly filed a motion to dismiss the third amended complaint on May 5, 2016. On August 2, 2016, the court dismissed all claims inrelated to the Third Amended Complaint against‘358 and ‘228 patents, leaving only the Company except plaintiff’s RICO conspiracy claim.‘476 patent at issue. On August 29, 2016, the Company filed a Motion for Reconsideration or, in the alternative, Motion to Certify for Interlocutory Appeal, which the court denied on September 8, 2016. Discovery is in the early stages.
TNS Products Litigation. On March 19, 2014, a class action complaint was filed in the federal district court in California on behalf of a putative class of consumers. The complaint alleges violations of the California Unfair Competition Law, the Consumers Legal Remedies Act, and the False Advertising Law, and deceit. On June 2, 2014, plaintiff filed a first amended complaint. On June 23, 2014, Allergan filed a motion to dismiss the first amended complaint. On September 5, 2014, the court granted-in-part and denied-in-part Allergan’s motion to dismiss. On September 8, 2014, the court set trial for September 1, 2015. On November 4, 2014, Allergan and SkinMedica filed a motion to dismiss. On January 7, 2015, Allergan and SkinMedica’s motion to dismiss was denied. On February 19, 2015 plaintiff filed a third amended complaint. On May 27, 2015, the case was stayed pending the decision of the Ninth Circuit Court of Appeals in another matter involving similar legal issues.
Xaleron Dispute. On February 5, 2016, Xaleron Pharmaceuticals, Inc. filed a lawsuit against Allergan, Inc. and Actavis, Inc., now known as Allergan Finance, LLC, in state court in New York. The complaint, filed on February 26, 2016, alleges the defendants misappropriated Xaleron’s confidential business information and asserts claims for unfair competition, tortious interference with prospective economic advantage and unjust enrichment. The Company filed a motion to dismiss the complaint on April 15, 2016. On SeptemberOctober 13, 2016, the court stayed trial as to Sigmapharm and extended the 30-month stay as to Sigmapharm. On June 30, 2017, the district court issued an opinion and order finding all asserted claims of the ‘476 patent valid, that claims 1, 2, 5 and 6 were infringed by Alembic, Amneal, Breckenridge and Hikma, and that claims 4, 9 and 10 were not infringed by Alembic and Breckenridge. On July 11, 2017, the district court entered a decision denyingfinal judgment that ordered, among other things, that Alembic’s, Amneal’s, Breckenridge’s and Hikma’s respective ANDAs not be granted final approval by FDA earlier than the Company’s motion. Defendants filed an answer todate of expiration of the complaint and the parties are now engaged in discovery. ‘476 patent inclusive of any applicable adjustments, extensions or exclusivities.
Zeltiq Shareholder Litigation. On March 14, 2019, the Federal Circuit vacated the district court’s July 2017 judgment that claims 1 and 4 are not invalid and remanded for the district court to consider a putative shareholder class action lawsuit was filed against Zeltiq Aesthetics, Inc.fact question and various directors as well as Allergan entities in Delaware federal court. Plaintiffs allege that Zeltiq’s proxy statement misrepresents material information that is preventing Zeltiq’s shareholders from making a fully informed decisionits impact on the proposed saleobviousness analysis. On April 15, 2019, Plaintiffs filed a combined petition for panel rehearing and rehearing en banc with respect to Allergan, including failurethis issue, which was denied on May 15, 2019. In its March 14, 2019 order, the Federal Circuit also vacated the judgment of non-infringement of claims 4, 9 and 10 as to disclose GAAP reconciliation of Zeltiq’s non-GAAP projections. The Allergan entities were namedAlembic and Breckenridge and remanded for the district court to consider their infringement under a supervisory role theory.revised claim construction.
A separate bench trial concerning Sigmapharm’s infringement of claim 1 of the ‘476 patent began on June 20, 2018, and on November 16, 2018, the court held that Sigmapharms’ proposed ANDA product would infringe claim 1 of the ‘476 patent On March 29, 2017,November 26, 2018, Sigmapharm sought relief from the November 16, 2018 decision. On November 30, 2018, the Company moved for entry of final judgment. Both motions are currently pending.
Trade Secret Matters
Botulinum Neurotoxin ITC Investigation. On January 30, 2019, subsidiaries of the Company and Medytox Inc. (collectively, “Complainants”) filed a similar putative shareholder class action lawsuit was filed in California federal court against Zeltiq Aesthetics, Inc. and various directors seeking a preliminary injunction. Allergan was not named as a defendant. Zeltiq filed an amendment to its Definitive Proxy Statement on April 11, 2017, which includes supplemental disclosures that address plaintiffs’ claims. On the same date, plaintiffs in the California action withdrew their motion for a preliminary injunction. On May 23, 2017, plaintiffs in the California action voluntarily dismissed their complaint with prejudice asthe United States International Trade Commission (“ITC”) against Daewoong Pharmaceuticals Co., Ltd., Daewoong Co., Ltd., and Evolus Inc. (collectively, “Respondents”) requesting the ITC commence an investigation with respect to the named plaintiffRespondents’ importation into the United States of Respondents’ botulinum neurotoxin products, including DWP-450 (also known as JeuveauTM), which Complainants assert were developed, made and/or imported using Medytox’s trade secrets. Complainants seek, among other things, a permanent exclusionary order and without prejudice ascease and desist orders covering Respondents’ botulinum neurotoxin products, including DWP-450/JeuveauTM. On February 28, 2019, the ITC instituted an investigation into Respondents’ botulinum neurotoxin products, including DWP-450/JeuveauTM. Fact discovery closed on July 19, 2019. On July 24, 2019, the Administrative Law Judge issued an Order rescheduling the evidentiary hearing for February 4-7, 2020, and indicating that the target date for completion of the investigation would probably be extended to the class members. The parties have reached an agreement in principle to settle this dispute pursuant to which plaintiffs will voluntarily dismiss this action.October 6, 2020.
Trademark Enforcement Matters
Zeltiq Advertising LitigationJuvéderm®. On April 26,5, 2017, a putative classsubsidiary of the Company brought an action lawsuit was filed against Zeltiq Aesthetics, Inc.for unfair competition, false advertising, dilution, conspiracy and infringement of Allergan’s Juvéderm ® trademarks in state court in California alleging that Zeltiq misled customers regarding the promotion of its CoolSculpting product and the product’s premarket notification clearance status. On May 30, 2017, the case was removed to the United StatesU.S. District Court for the Central District of California. OnCalifornia against Dermavita Limited Partnership (“Dermavita”), Dima Corp. S.A. (“Dima Corp.”) and KBC Media Relations LLC (“KBC”). Dima Corp. had previously announced its acquisition of a license from Dermavita to develop and market in the U.S. cosmetic products under the Juvederm trademark. During June 2017, the Company entered into a settlement agreement with KBC. During July 20, 2017, Plaintiffs filed an amended complaint. In August 2017, Zeltiq filed athe Court preliminarily enjoined Dima Corp. from, inter alia, promoting or selling within the United States any product bearing the trademark Juvéderm® or any other trademark confusingly similar to it. During January 2018, the Court granted Dermavita’s renewed motion to dismiss the amended complaint.Company’s complaint based on purported lack of personal jurisdiction. During January 2019, the Company subsidiary and Dima Corp. resolved the action and the Court entered a permanent injunction and final judgment in favor of the Company subsidiary and against Dima Corp. for trademark infringement, unfair competition, dilution and false advertising.
Employment Litigation
In July 2012, Forest was named as defendants in an action brought by certain formerSubsidiaries of the Company sales representativesrequested a preliminary injunction against Dermavita, Dima Corp, Aesthetic Services & Development, Jacqueline Sillam and specialty sales representativesDimitri Sillam in the federal district courtHigh Court of Paris, France. During June 2017, the Paris Court preliminarily enjoined the defendants, inter alia, to refrain from promoting or selling in New York. The action is a putative classFrance its Juvederm products, to transfer various domain names and collective action, and alleges class claims under Title VII for gender discrimination with respect to pay and promotions, as well as discriminationprovisional damages to Allergan, on the basis of pregnancy,that such use would infringe Allergan’s EU and a collective action claim under the Equal Pay Act. The proposed Title VII gender class includes all currentFrench Juvéderm® trademarks and former female sales representatives employed by the Company throughout the U.S. from 2008would amount to the dateunfair competition. This injunction has become final. A subsidiary of judgment, and the proposed Title VII pregnancy sub-class includes all current and former female sales representatives who have been, are, or will become pregnant while employed by the Company throughout the U.S. from 2008 to the date of judgment. The proposed Equal Pay Act collective action class includes current, former, and future female sales representatives who were not compensated equally to similarly-situated male employees during the applicable liability period. The second amended complaint also includes non-class claims on behalf of certain of the named Plaintiffs for sexual harassment and retaliation under Title VII, and for violations of the Family and Medical Leave Act. On August 14, 2014, the court issued a decision on the Company’s motion to dismiss, granting it in part and denying it in part, striking the plaintiffs’ proposed class definition and instead limiting the proposed class to a smaller set of potential class members and dismissing certain of the individual plaintiffs’ claims. Plaintiffs filed a motion for conditional certification of an Equal Pay Act collective action on May 22, 2015 which the Company has opposed. On September 2, 2015,also filed against Dermavita, Dima Corp. and others a full action of trademark infringement in the Paris court. Dermavita has submitted two requests that the full action be stayed pending the outcome of the Nanterre action and the EUIPO trademark proceedings, both mentioned below. The Paris court rejected Dermavita’s first stay request and subsequently ordered the defendants to pay more than 75,000 Euros in liquidated damages for violation of the preliminary injunction mentioned above. Dermavita’s second request for a stay remains pending. Furthermore, Dermavita filed an action against subsidiaries of the Company in the Nanterre, France court alleging that the subsidiaries have not used its Juvéderm trademark and requesting the court granted plaintiffs motion to conditionally certifyrevoke the Company’s trademark based on its purported lack of use or purportedly invalid license and assignment agreements. On February 21, 2019, the Nanterre Court ruled in the Company’s favor, holding that the license and assignment agreements were valid and that Allergan has used its trademark in commerce. Dermavita has appealed this decision.
On January 22, 2019, subsidiaries of the Company brought a collective action. On April 3, 2017,related action for infringement of the parties agreed to settle this matter.Company’s Juvéderm®trademarks against Aesthetic Services and Development Limited, Juvederm Elite Clinics SARL and Jamal Hamadi in the (UK) High Court of Justice. The case is in its early stages and no trial date has been set.
Patent LitigationFurthermore, more than 150 trademark opposition and cancellation actions between Allergan and Dermavita have been filed in front of the USPTO, EUIPO and various other national and regional trademark offices around the world. Most of these actions remain pending; however, Allergan has received favorable decisions in more than thirty (30) such actions.
Patent Enforcement Matters
Aczone Bystolic® Gel, 7.5%. In June andOn July 2017, Allergan, Inc. brought actions for infringement2, 2019, subsidiaries of U.S. Patent No. 9,517,219 (the “‘219 patent”) in the U.S. District Court for the District of Delaware against Taro Pharmaceutical Industries Ltd. and Taro Pharmaceuticals, Inc. (collectively, “Taro”). Taro had notified Allergan in April and July 2017, that it filed an ANDA with the FDA seeking to obtain approval to market a generic version of Aczone® Gel, 7.5% before the ‘219 patent expires in November 2033. These lawsuits triggered automatic stays of approval of Taro’s ANDA that expire no earlier than October 2019 and January 2020, respectively (unless there is a final court decision adverse to Plaintiff sooner). Trial has been scheduled for February 4, 2019, assuming the parties consent to Magistrate Judge Fallon conducting all proceedings in the case. Otherwise, when the case is ready for trial the court will assign a district judge and the pre-trial and trial dates will be set depending on the district judge’s schedule.
Amrix®. In August 2014, Aptalis Pharmatech, Inc. (“Aptalis”) and Ivax International GmbH (“Ivax”), Aptalis’s licensee for Amrix,Company brought an action for infringement of U.S. Patent No. 7,790,199 (the “’199 patent”), and 7,829,121 (the “’121 patent”)6,545,040 in the U.S.United States District Court for the District of Delaware against ApotexAjanta Pharma Ltd. and Ajanta Pharma USA Inc. and Apotex Corp. (collectively, “Apotex”“Ajanta”). Apotex has notified Aptalis that it has filed in connection with an ANDAabbreviated new drug application filed with the FDA by Ajanta seeking to obtain approval to market a generic version of Amrix before these patents expire. (The ’199Bystolic® and ’121 patents expire in November 2023.) This lawsuit triggered an automatic stay of approval of Apotex’s ANDA until no earlier than December 27, 2016 (unless there is a final court decision adverse to Plaintiffs sooner, and subject to any other exclusivities, such as a first filer 180 day market exclusivity)challenging said patent. No trial date or case schedule has been set.
Combigan®. A bench trial concluded on November 17, 2015. Post-trial briefing concluded on April 8, 2016. On December 8, 2016, the court entered an order, opinion and judgment in favor of Plaintiffs and against Apotex, that Apotex infringes the asserted claimsOctober 30, 2017, subsidiaries of the ‘199 and ‘121 patents. On December 8, 2016, ApotexCompany filed a notice of appeal. Apotex filed its opening brief on February 15, 2017. Aptalis and Ivax’s responsive brief was filed on May 11, 2017. Apotex’s reply brief was filed on May 25, 2017. Oral argument is scheduled for December 5, 2017. On September 29, 2016, Adare Pharmaceuticals, Inc., and Ivax filed suit in U.S. District Court for the District of Delaware against Apotex asserting that Apotex’s generic product will infringe U.S. Patent No. 9,399,025 (the “’025 patent”). (The ‘025 patent expires in November 2023.). On March 17, 2017, the district court granted the parties’ joint stipulation to stay the action concerning the ‘025 patent.
Byvalson®. On September 18, 2017, Forest Laboratories, LLC and Forest Laboratories Holdings, Ltd. (collectively, “Forest”) brought an action for infringement of U.S. Patent Nos. 7,803,838Number 9,770,453 (the “‘838 patent”453 Patent”) against Sandoz, Inc. and 7,838,552 (the “‘552 patent”Alcon Laboratories, Inc. (“Sandoz”) in the U.S. District Court for the District of New Jersey, against Prinston Pharmaceutical Inc., Zhejiang Huahai Pharmaceutical Co., Ltd., Huahai US Inc. and Solco Healthcare US, LLC (collectively, “Prinston”). Prinston notified Forest that itin connection with the abbreviated new drug applications respectively filed an ANDA with the FDA by Sandoz and Alcon, seeking to obtain approval to market a generic version of ByvalsonCombigan®. On March 6, 2018, U.S. Patent Nos. 9,907,801 (the “‘801 Patent”) and 9,907,802 (the “‘802 Patent”) were added to the case. The ‘453, ‘801 and ‘802 Patents are listed in the Orange Book for Combigan® beforeand expire on April 19, 2022. A trial date has not been set. On July 13, 2018, the ‘838district court adopted Allergan’s proposed claim construction and ‘552 patents expire. The ‘838 patent expiresgranted Allergan’s motion for preliminary injunction against Sandoz. On August 1, 2018, the district court entered an order setting a preliminary injunction bond in August 2026,the amount of $157,300,000 under Federal Rule of Civil Procedure 65(c), which Allergan posted. Sandoz has appealed the grant of the injunction, and the ‘552 patent expires in October 2027. Prinston claims in its notice letter that the ‘838 patent and the ‘552 patent are invalid, unenforceable and/or would not be infringed. This lawsuit triggered an automatic stay of approval of the Prinston ANDA until February 2020 (unless a court issues a decision adverse to Forest sooner)appeal is ongoing. No schedule has been set.
CanasaFetzima®. In July 2013, Aptalis Pharma US, Inc.October and Aptalis Pharma Canada Inc.November 2017, subsidiaries of the Company and Pierre Fabre Medicament S.A.S. brought actions for infringement of U.S. Patent Nos. 8,217,083 (the “’083 patent”) and 8,436,051 (the “’051 patent”) in the U.S. District Court for the District of New Jersey against Mylan and Sandoz. These companies have notified Aptalis that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Canasa® before these patents expire. Amended complaints were filed against these companies in November 2013 adding claims for infringement of U.S. Patent No. 7,854,384 (the “’384 patent”). The ’083, ’051, and ’384 patents expire in June 2028. On November 11, 2015, Aptalis entered into a settlement agreement with Mylan. Under the terms of the settlement agreement, Mylan may launch its generic version of Canasa® on December 15, 2018, or earlier under certain circumstances. On March 22, 2016, Aptalis entered into a settlement agreement with Sandoz.
On December 14, 2015, Aptalis brought an action for infringement of the ’083, ’051, and ’384 patents in the U.S. District Court for the District of New Jersey against Pharmaceutical Sourcing Partners, Inc. (“PSP”). PSP had notified Aptalis that it had filed an ANDA with the FDA seeking to obtain approval to market generic versions of Canasa® before certain of these patents expire. This lawsuit triggered an automatic stay of approval of PSP’s ANDA that expires no earlier than May 2018 (unless a court issues a decision adverse to Aptalis sooner). On December 23 and 27, 2015, Aptalis brought actions for infringement of the ’083, ’051, and ’384 patents in the U.S. District Courts for the District of New Jersey and the District of Delaware, respectively, against Delcor Asset Corp., Renaissance Pharma, Inc. and Renaissance Acquisition Holdings, LLC (collectively, “Delcor”). Delcor has notified Aptalis that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Canasa before certain of these patents expire. These lawsuits triggered an automatic stay of approval of Delcor’s ANDA that expires no earlier than May 2018 (unless there is a final court decision adverse to Aptalis sooner). On March 14, 2016, Aptalis filed a motion to dismiss PSP’s Seventh and Eighth counterclaims alleging unfair competition and tortious interference under state law, or in the alternative, to bifurcate the trial and stay discovery relating to PSP’s Seventh and Eighth counterclaims. Trial is scheduled for November 2017 in the PSP action. On April 8, 2016, Aptalis entered into a settlement agreement with Delcor. On May 27, 2016, the court denied Aptalis’ motion to the extent that it concerns dismissal of PSP’s Seventh and Eighth counterclaims, denied without prejudice to the extent that the motion concerns bifurcation and a stay and granted leave to Aptalis to move again concerning bifurcation and a stay. On June 24, 2016, Aptalis filed an answer to PSP’s counterclaims. On October 13, 2016, Aptalis entered into a settlement agreement with PSP, and the case was dismissed on October 20, 2016.
On January 30, 2017, Aptalis brought an action for infringement of the ’083, ’051, and ’384 patents in the U.S. District Court for the District of New Jersey against Zydus Pharmaceuticals (USA) Inc., Zydus Healthcare USA LLC and Cadila Healthcare Limited (collectively “Zydus”). Zydus has notified Aptalis that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Canasa® before certain of these patents expire. This lawsuit triggered an automatic stay of approval of Zydus’s ANDA that expires no earlier than June 2019 (unless a court issues a decision adverse to Aptalis sooner). No trial schedule has been set.
On August 11, 2017, Aptalis brought actions for infringement of the ’083, ’051, and ’384 patents in the U.S. District Courts for the District of New Jersey and the District of Delaware against Amneal Pharmaceuticals LLC and Amneal Pharmaceuticals of New York, LLC (collectively “Amneal”). Amneal notified Aptalis that it filed an ANDA with the FDA seeking to obtain approval to market generic versions of Canasa before certain of these patents expire. These lawsuits triggered an automatic stay of approval of Amneal’s ANDA that expires no earlier than December 29, 2019 (unless there is a final court decision adverse to Aptalis sooner). On August 23, 2017, Aptalis entered into a settlement agreement with Amneal and the case was dismissed.
Combigan® II-III. In 2012, Allergan filed a complaint against Sandoz, Alcon, Apotex and Watson in the U.S. District Court for the Eastern District of Texas, Marshall Division, alleging that their proposed products infringe U.S. Patent Number 8,133,890 (the “890 Patent”), and subsequently amended their complaint to assert infringement of U.S. Patent Number 8,354,409. In March 2013, Allergan received a Paragraph IV invalidity and non-infringement certification from Sandoz, contending that the ‘890 Patent is invalid and not infringed by the proposed generic product. In October 2013, Allergan filed a motion to stay and administratively close the Combigan II matter, which was granted. In April 2015, Allergan filed a stipulation of dismissal and the U.S. District Court granted the Order with respect to the Watson defendants. In October 2015, the U.S. District Court entered an order consolidating the Combigan®III matter C.A. 2:15-cv-00347-JRG into this matter C.A. 2:12-cv-00207-JRG, as lead case. A Markman Hearing was held on March 2, 2016.
On May 19, 2016, Sandoz filed an opposed motion for leave to amend its answer and counterclaim seeking to add a count for declaratory judgment of invalidity of the ‘149 Patent. On July 20, 2016, Alcon and Sandoz filed motions for summary judgment of invalidity and non-infringement of claim 4 of the ‘149 Patent, and Allergan filed a motion for summary judgment of infringement of claim 4 of the ‘149 Patent and to preclude Sandoz from re-challenging the validity of that claim. On September 30, 2016, the court denied the parties’ motions for summary judgment. A bench trial concluded on October 27, 2016. On December 30, 2016, the court entered an opinion and final judgment in favor of Allergan and against Sandoz, that the asserted claims of the ‘149 Patent, and U.S. Patent Numbers 7,320,976 (“‘976 Patent”) and 8,748,425 (the “‘425 Patent”), were not invalid, and that Sandoz infringes the asserted claims of the ‘425 Patent. The court also held in favor of Sandoz and against Allergan, that Sandoz does not infringe the asserted claims of the ‘149 and ‘976 Patents. Sandoz filed a notice of appeal to U.S. Court of Appeals for the Federal Circuit on January 17, 2017, and Allergan filed a notice of cross appeal on January 27, 2017. On March 1, 2017, Sandoz filed its opening brief, on April 10, 2017, Allergan filed its responsive brief, and on May 15, 2017, Sandoz filed its reply brief. Oral argument was held on October 2, 2017.
Delzicol®. On August 28, 2015, Warner Chilcott Company, LLC, Warner Chilcott (US), LLC, and Qualicaps Co., Ltd. (collectively, “Plaintiffs”) brought an action for infringement of U.S. Patent No. 6,649,180 (the “‘180 patent”) in the United States District Court for the Eastern District of Texas against Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (collectively, “Teva”). Teva notified Plaintiffs that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Delzicol® before the ‘180 patent expires in April 2020. This lawsuit triggered an automatic stay of approval of Teva’s ANDA that expires no earlier than January 2018 (unless there is a final court decision adverse to Plaintiffs sooner). Trial is scheduled for October 2017. On November 9, 2015, Plaintiffs also brought an action for infringement of ‘180 patent in the United States District Court for the Eastern District of Texas against Mylan Pharmaceuticals, Inc., Mylan Laboratories Limited and Mylan, Inc. (collectively, “Mylan”). Mylan notified Plaintiffs that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Delzicol® before the ‘180 patent expires in April 2020. This lawsuit triggered an automatic stay of approval of Mylan’s ANDA that expires no earlier than March 2018 (unless a court issues a decision adverse to Plaintiffs sooner). On December 16, 2015, Mylan filed a motion to dismiss for failure to state a claim, lack of personal jurisdiction, and improper venue. Trial is scheduled for October 2017. In March 2016, the court entered an order consolidating the Mylan litigation (C.A. 2:15-cv-01740) with the Teva litigation (C.A. 2:15-cv-01471) matter as the lead case.
On April 1, 2016, Warner Chilcott Company, LLC, Warner Chilcott (US), LLC, Allergan Pharmaceuticals International Ltd., Allergan USA, LLC and Qualicaps Co., Ltd. (collectively, “Plaintiffs”) brought an action for infringement of the ‘180 patent in the United States District Court for the Eastern District of Texas against Zydus International Pvt. Ltd., Zydus Pharmaceuticals (USA) Inc. and Cadila Healthcare Ltd. (collectively, “Zydus”). Zydus notified the Company that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Delzicol® before the ‘180 patent expires. In May 2016, Plaintiffs filed a first amended complaint against Mylan and a first amended and second amended complaint against Teva. In June 2016, Plaintiffs filed a second amended complaint against Mylan and a third amended complaint against Teva. On June 27, 2016, Teva filed an answer and counterclaims and Mylan filed a motion to dismiss the second amended complaint for failure to state a claim, lack of personal jurisdiction, and improper venue. On June 9, 2016, Zydus filed an answer and counterclaims.
On July 21, 2016, the Plaintiffs filed an answer to Teva’s counterclaim and to Zydus’s counterclaim. On November 28, 2016, Plaintiffs entered into a settlement agreement with Zydus. Under the terms of the settlement agreement, Zydus may launch its generic version of Delzicol® on March 1, 2020, or earlier under certain circumstances. On January 19, 2017, the Magistrate Judge issued a Report and Recommendation denying Mylan’s motion to dismiss, which was adopted by the district court on February 14, 2017. On
March 31, 2017, Plaintiffs filed a motion to stay the litigation against Teva, and, on April 11, 2017, Plaintiffs filed a motion to dismiss the originally-filed action against Teva for lack of subject matter jurisdiction. On April 21, 2017, Plaintiffs brought an action for infringement of the ‘180 patent in the United States District Court for the Eastern District of Texas against Teva Pharmaceuticals USA, Inc., which had notified Plaintiffs that, on or before March 9, 2017, it had amended its ANDA seeking to obtain approval to market generic versions of Delzicol®. Teva also notified Plaintiffs that it had submitted to FDA a new paragraph IV certification for the ‘180 patent in connection with its ANDA. On July 25, 2017, the Magistrate Judge denied Plaintiffs’ motion to stay the originally-filed action against Teva and also issued a Report and Recommendation denying Plaintiffs’ motion to dismiss the same action. On August 7, 2017, Teva and Mylan filed motions for summary judgment of non-infringement, and Teva filed a motion for summary judgment for alleged improper Orange Book listing. On September 28, 2017, the Magistrate Judge issued a Report and Recommendation granting Teva’s and Mylan’s motions for summary on non-infringement and denying, as moot, Teva’s summary judgment motion concerning Orange Book listing. On October 13, 2017, Plaintiffs and Defendants filed objections to the Magistrate Judge’s Report and Recommendation on non-infringement.
Delzicol® IPR. On November 4, 2016, Mylan Pharmaceuticals Inc. (“Mylan”) filed a petition for Inter Partes Review (“IPR”) with the USPTO regarding U.S. Patent No. 6,649,180 (the “‘180 patent”). Qualicaps Co., Ltd.’s filed a patent owner preliminary response on February 17, 2017. On May 17, 2017, the USPTO granted Mylan’s petition to institute an IPR on certain grounds with respect to claims 1 and 4 of the ‘180 patent. On July 21, 2017, Qualicaps filed a patent owner response. September 15, 2017, Mylan filed a reply. A hearing is scheduled for January 25, 2018.
Fetzima®. In September and October 2017, certain Allergan subsidiaries and Pierre Fabre Medicament received Paragraph IV certification notice letters from Amneal Pharmaceuticals LLC, Aurobindo Pharma USA, Inc., MSN Laboratories Private Limited, Prinston Pharmaceutical Inc., Torrent Pharmaceuticals Limited, West-Ward Pharmaceuticals International Limited, and Zydus Pharmaceuticals (USA) Inc. indicating that they had submitted to FDA ANDAs seeking approval to manufacture and sell generic versions of FETZIMA® 20 mg, 40 mg, 80 mg, and 120 mg extended release capsules (“FETZIMA”) before the expiration of the three patents listed in the Orange Book, including U.S. Patent Nos. RE43,879 (the “‘879 Patent”); 8,481,598 (the “‘598 Patent”); and 8,865,937 (the “‘937 Patent”). against MSN Laboratories Private Limited and MSN Pharmaceuticals Inc. (collectively, “MSN”), Prinston Pharmaceutical Inc. and Solco Healthcare U.S., LLC (collectively, “Prinston”), Torrent Pharmaceuticals Limited and Torrent Pharma Inc. (collectively, “Torrent”), West-Ward Pharmaceuticals International Limited and West-Ward Pharmaceuticals Corp. (collectively, “West-Ward”), Zydus Pharmaceuticals (USA) Inc. (“Zydus”), Aurobindo Pharma USA, Inc. and Aurobindo Pharma Limited (collectively, “Aurobindo”), and Amneal Pharmaceuticals LLC and Amneal Pharmaceuticals Private Limited (collectively, “Amneal”), in connection with abbreviated new drug applications, respectively filed with the FDA by MSN, Prinston, Torrent, West-Ward, Zydus, Aurobindo, and Amneal, each seeking approval to market generic versions of Fetzima® and challenging said patents. The ‘879 Patent expires in June 2023 (not including a pending application for patent term extension (“PTE”)), the ‘598 patent expires in March 2031, and the ‘937 Patent expires in May 2032. These generic ANDA filers claimThe case is currently in their respective notice letters that the ‘879 Patent, the ‘598 Patentfact discovery, and no trial date has been set. Allergan entered into a settlement agreement with Amneal on December 18, 2018, and the ‘937 Patent are invalid and/or would not be infringed. The Company is evaluating patent infringement actions in response to these ANDA filings.case as against Amneal was dismissed. Allergan entered into a settlement agreement with Prinston on June 6, 2019, and the case as against Prinston was dismissed.
Juvéderm® XC IPRs. On August 2, 2017, Teoxane S.A. (“Teoxane”) filed a petition for Inter Partes Review (Trial number IPR2017-01906) with the USPTO regarding U.S. Patent No. 8,357,795, which was accorded a filing dateIn April 2019, subsidiaries of September 13, 2017. And on August 24, 2017, Teoxane filed a petition for Inter Partes Review (Trial Number IPR2017-02002) with the USPTO regarding U.S. Patent Number 8,450,475, which was accorded a filing date of September 13, 2017.
Lastacaft®. In July 2017, the Company and Vistakon Pharmaceuticals, LLC received a Paragraph IV certification notice letter from Aurobindo Pharma USA Inc. (“Aurobindo”) indicating that it had submitted to FDA an ANDA seeking approval to manufacture and sell a generic version of LASTACAFT® (“LASTACAFT”) before the expiration of U.S. Patent No. 8,664,215 (the “‘215 Patent) listed in the Orange Book. The ‘215 Patent expires December 2027. Aurobindo claims that the patent listed in its notice letter is invalid, unenforceable and/or would not be infringed. On September 8, 2017, Allergan, Inc. and Vistakon Pharmaceuticals, LLC (collectively, “Plaintiffs”),Pierre Fabre Medicament S.A.S. brought an action for infringement of the ‘215‘879, ‘598 and ‘937 Patents against Micro Labs Ltd. and Micro Labs USA, Inc. (“Micro”) in connection with Micro’s abbreviated new drug application seeking approval to market a generic version of Fetzima® and challenging said patents. No trial date has been set.
Juvéderm ®. On February 26, 2019, subsidiaries of the Company filed a complaint for infringement of U.S. Patent Nos. 8,450,475 (the “‘475 Patent), 8,357,795 (the “‘795 Patent”), 8,822,676 (the “‘676 Patent”), 9,089,519 (the “‘519 Patent”), 9,238,013 (the “‘013 Patent”) and 9,358,322 (the “‘322 Patent”) in the U.S. District Court for the District of Delaware against Aurobindo Pharma Ltd., Aurobindo Pharma USA,Prollenium US Inc. and AuromedicsProllenium Medical Technologies Inc. (collectively, “Prollenium”). The complaint seeks, among other things, a judgment that Defendants have infringed these patents by making, selling, offering to sell, and importing Prollenium’s Revanesse® Versa+TM product within and into the United States. Plaintiffs seek injunctive relief and damages for Defendants’ infringement. Trial is scheduled for June 14, 2021.
Kybella®. On November 9, 2018, a subsidiary of the Company brought an action for infringement of U.S. Patent Nos. 8,101,593 (the “‘593 Patent”), 8,367,649 (the “‘649 Patent”) and 8,653,058 (the “‘058 Patent”) against Slayback Pharma LLC (collectively, “Defendants”(“Slayback”). This lawsuit triggered in the U.S. District Court for the District of New Jersey in connection with an automatic stayabbreviated new drug application filed with the FDA by Slayback seeking approval to market a generic version of approvalKybella® and challenging said patents. The ‘593, ‘649, and ‘058 Patents expire in March 2030. On April 10, 2019, a subsidiary of the applicable ANDA thatCompany, together with Los Angeles Biomedical Research Institute at Harbor UCLA-Medical Center (“LA BioMed”) and The Regents of the University of California (the “Regents”) (all collectively, “Plaintiffs”), filed an amended complaint against Slayback asserting infringement of the ‘593, ‘649 and ‘058 Patents and U.S. Patent Nos. 7,622,130 (the “‘130 Patent”), 7,754,230 (the “‘230 Patent”), 8,298,556 (the “‘556 Patent”) and 8,846,066 (the “‘066 Patent”). The ‘130 and ‘230 Patents expire in December 2027 (not including pending applications for patent term extension (“PTE”)), the ‘556 Patent expires no earlier than January 2020 (unless there isin August 2025, and the ‘066 Patent expires in February 2025. Plaintiffs entered into a final court decision adverse to Plaintiffs sooner)settlement agreement with Slayback on June 12, 2019, and the case was dismissed. No trial schedule has been set.
Latisse® IV. In December 2016, Sandoz announced the U.S. market launch of its generic copy of Latisse®. In July 2017, Plaintiffs Allergansubsidiaries of the Company and Duke University (collectively, “Plaintiffs”) filed a complaint for infringement of U.S. Patent Number 9,579,270 (“‘270 Patent”) against Defendants Sandoz Inc. (“Sandoz”) and Alcon Laboratories, Inc. (“Alcon”) in the U.S. District Court for the Eastern District of Texas. (TheTexas (EDTX). The ‘270 patent expires in January 2021.) In December 2016, Sandoz announced the U.S. market launch of Defendants’ generic copy of LATISSE®. In their complaint, Plaintiffs seek, among other things, a judgment that Defendants have infringed the ‘270 patent by making, selling, and offering to sell, and/or importing, their generic copy of LATISSELatisse® within the United States. Plaintiffs seek injunctive relief and damages for Defendants’ infringement. On September 14, 2017, Alcon filed its answer, Sandoz filed its answer and counterclaims, and Defendants filed a joint motion to transfer venue toApril 3, 2018, the Middle District of North Carolina (“MDNC”). Defendants filed a complaint in the MDNC for declaratory judgment seeking,EDTX court issued an order, among other things, a declarationsevering Plaintiff’s claims against Defendants and transferring Plaintiff’s claims against Alcon to the District Court of invalidity, unenforceabilityDelaware and non-infringementPlaintiff’s claims against Sandoz to the District of Colorado. On October 5, 2018, the ‘270 patent, a declaration precluding Allergan and Duke University from assertingDelaware District Court entered an order dismissing the ‘270 based on collateral estoppelDelaware action against Alcon. Fact discovery is closed in the District of Colorado case against Sandoz and a declaratory judgment that assertion of the ‘270 patent constitutes patent misuse, sham litigation and a violation of the Sherman Act. In the MDNC complaint Sandoz and Alcon seek an unspecified amount of treble damages.trial date has not yet been set.
Latisse® V. On September 14,25, 2017, Sandoz and Alcon filed a joint motion for summary judgment based on collateral estoppel.
In addition, in August 2017,subsidiaries of the Company and Duke University received a Paragraph IV certification notice letter from Alembic Pharmaceuticals, Ltd. (“Alembic”) indicating that it had submitted to FDA an ANDA seeking approval to manufacture and sell a generic version of LATISSE® (“LATISSE”) before the expiration of U.S. Patent Nos. 8,038,988 (the “‘988 Patent”), 8,101,161 (the “‘161 Patent”), 8,263,054 (the “‘054 Patent”), 8,541,466 (the “‘466 Patent”), 8,632,760 (the “‘760 Patent”), 8,758,733 (the “‘733 Patent”), 8,906,962 (the “‘962 Patent”), 8,986,715 (the “‘715 Patent”), 9,216,183 (the “‘183” Patent), 9,226,931 (the “‘931 Patent) and 9,579,270 (the “‘270 Patent”). (The ‘466, ‘962 and ‘270 Patents expire in January 2021; the ‘054, ‘760, ‘733, ‘715, ‘183, and ‘931 Patents expire in January 2023; the ‘988 Patent expires in August 2023; and the ‘161 Patent expires in May 2024). Alembic claims that the patents listed in its notice letter are invalid, unenforceable and/or would not be infringed. On September 25, 2017, Allergan, Inc., Allergan Sales, LLC and Duke University (collectively, “Plaintiffs”), brought an action for infringement of the ‘270U.S. Patent in the U.S. District Court for the District of New JerseyNo. 9,579,270 (the “‘270 Patent”) against Alembic Pharmaceuticals, Ltd., Alembic Global Holding SA, and Alembic Pharmaceuticals, Inc. This lawsuit triggered(collectively, “Alembic”) in the U.S. District Court for the District of New Jersey in connection with an automatic stayabbreviated new drug application filed with FDA by Alembic, seeking approval to market a generic version of approvalLatisse® and challenging the ‘270 patent. Subsidiaries of the applicable ANDA that expires no earlier than February 2020 (unless thereCompany and Duke entered into a settlement agreement with Alembic and the case was dismissed on April 4, 2019.
Latisse® VI. On September 19, 2018, subsidiaries of the Company and Duke University brought an action for infringement of U.S. Patent No. 9,579,270 (the “‘270 Patent”) against Akorn, Inc. and Hi-Tech Pharmacal Co., Inc. (collectively, “Akorn”) in the U.S. District Court for the District of New Jersey in connection with an abbreviated new drug application filed with FDA by Akorn seeking approval to market a generic version of Latisse® and challenging the ‘270 patent. The case is currently in fact discovery and a final court decision adverse to Plaintiffs sooner). No trial scheduledate has not yet been set.
Linzess®. In October and Beginning in November 2016 subsidiaries of the Company and Ironwood received Paragraph IV certification notice letters from Teva Pharmaceuticals USA, Inc. (“Teva”) , Aurobindo Pharma Ltd., Mylan Pharmaceuticals, Inc. (“Mylan”(collectively, “Plaintiffs”), and Sandoz Inc. (“Sandoz”) indicating that they had submitted to FDA ANDAs seeking approval to manufacture and sell generics version of LINZESS® 145 mcg and 290 mcg capsules (“LINZESS”) before the expirationbrought multiple actions for infringement of some or all of the nine patents then listed in the Orange Book, including U.S. Patent Nos. 7,304,036 (the “‘036 Patent”); 7,371,727 (the “‘727 Patent”); 7,704,947 (the “‘947 Patent”); 7,745,409 (the “‘409 Patent”); 8,080,526 (the “‘526 Patent”); 8,110,553 (the “‘553 Patent”); 8,748,573 (the “‘573 Patent”); 8,802,628 (the “‘628 Patent”); and 8,933,030 (the “‘030 Patent”) against Teva Pharmaceuticals USA, Inc. (“Teva”), Aurobindo Pharma Ltd. (“Aurobindo”), Mylan Pharmaceuticals Inc. (“Mylan”), Sandoz Inc. (“Sandoz”) and Sun Pharma Global FZE (“Sun”) in the U.S. District Court for the District of Delaware in connection with abbreviated new drug applications respectively filed with the FDA by Teva, Aurobindo, Mylan, Sandoz and Sun, each seeking approval to market generic versions of Linzess® 145 mcg and 290 mcg capsules and challenging some or all of said patents (“November 2016 Action”). (TheThe ‘727, ‘947, ‘409, ‘526 and ‘553 Patents expire in January 2024; the ‘036 Patent expires in August 2026; and the ‘573, ‘628 and ‘030 Patents expire in 2031. In the November 2016 Action, expert discovery has been completed. On May 31, 2019, due to a scheduling conflict, the bench trial set for June 2019 was postponed. Trial is now scheduled to begin on January 7, 2020.
On October 20, 2017, November 30, 2017 and January 20, 2018, Plaintiffs brought actions for infringement of U.S. Patent No. 9,708,371 (the “‘371 Patent”) in the U.S. District Court for the District of Delaware against Teva, Aurobindo Pharma Ltd., Mylan and Sandoz, claim thatrespectively. The ‘371 Patent expires in 2033. The ‘371 patent actions have been consolidated with the patents discussed in their respective notice letters are invalid, unenforceable and/or would not be infringed. November 2016 Action.
On November 30, 2016, Forest Laboratories, LLC, Forest Laboratories Holdings, Ltd., Allergan USA, Inc.February 2, 2018 and Ironwood Pharmaceuticals, Inc. (collectively, “Plaintiffs”),March 29, 2018, Plaintiffs brought an actionactions for infringement of some or all of the ‘036, ‘727, ‘947, ‘409, ‘526, ‘553, ‘573, ‘628‘030 and ‘030‘371 Patents against Teva and Mylan in the U.S. District Court for the District of Delaware against Aurobindo Pharma Ltd., Aurobindo Pharma USA, Inc. (collectively, “Aurobindo”), Teva, Mylan and Sandoz. This lawsuit triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than February 2020 (unless there is a final court decision adverse to Plaintiffs sooner). Mylanin connection with abbreviated new drug applications respectively filed its answer on December 22, 2016. Teva and Sandoz filed their respective answers and counterclaims on January 20 and January 30, 2017. Aurobindo filed its answer and counterclaims on April 6, 2017. On May 19, 2017, the district court entered a scheduling order. Trial is scheduled for June 2019. On July 13, 2017, Mylan filed a motion to dismiss for improper venue.
In May 2017, the Company and Ironwood also received a Paragraph IV certification notice letter from Sun Pharma Global FZE indicating that it had submitted to FDA an ANDA seeking approval to manufacture and sell a generic version of LINZESS before the expiration of the ‘573, ‘628 and ‘030 Patents. Sun Pharma Global FZE claims that the patents are invalid and/or would not be infringed. On June 30, 2017, Plaintiffs brought an action for infringement of the ‘573, ‘628 and ‘030 Patents in the U.S. District Court for the District of Delaware against Sun Pharma Global FZE and Sun Pharmaceutical Industries Inc. (collectively, “Sun”). This lawsuit triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than February 2020 (unless there is a final court decision adverse to Plaintiffs sooner). No schedule has been set.
In July 2017, the Company and Ironwood received a second Notice Letter relating to the ANDA submitted towith the FDA by Aurobindo. Aurobindo claims that the ‘036, ‘727, ‘947, ‘409, ‘526, ‘553 Patents, as well as the ‘573, ‘628Teva and ‘030 Patents, are invalid and/or would not be infringed. On August 25, 2017, Plaintiffs brought an action for infringement of these patents in the U.S. District Court for the District of Delaware against Aurobindo. On September 28, 2017, this action was consolidated with the first action filed against Aurobindo.
In September 2017, the Company and Ironwood received a second Notice Letter relating to the ANDA submitted to the FDA by Teva. Teva claims that U.S. Patent No. 9,708,371 (the “‘371 Patent”) is invalid and/or would not be infringed. (The ‘371 Patent expires in 2033.) On October 20, 2017, Plaintiffs brought an action for infringement of the ‘371 patent in the U.S. District Court for the District of Delaware against Teva. No schedule has been set.
Namenda XR®. Between January and October 2014, Forest Laboratories, Inc., Forest Laboratories Holdings, Ltd. (collectively, “Forest”) and Merz Pharma and Adamas Pharmaceuticals, Forest’s licensors for Namenda XR® (all collectively, “Plaintiffs”), brought actions for infringement of some or all of U.S. Patent Nos. 5,061,703 (the “‘703 patent”), 8,039,009 (the “‘009 patent”), 8,168,209 (the “‘209 patent”), 8,173,708 (the “‘708 patent”), 8,283,379 (the “‘379 patent”), 8,329,752 (the “‘752 patent”), 8,362,085 (the “‘085 patent”), and 8,598,233 (the “‘233 patent”) in the U.S. District Court for the District of Delaware against Wockhardt, Teva, Sun, Apotex, Anchen, Zydus, Watson, Par, Mylan, Amneal, Ranbaxy, and Amerigen, and related subsidiaries and affiliates thereof. These companies have notified Plaintiffs that they have filed ANDAs with the FDAeach seeking to obtain approval to market generic versions generic versions of Namenda XRLinzess® 72 mcg capsules (“72 mcg ANDA”) before these certain patents expire. Including a 6-month pediatric extension of regulatory exclusivity, the ‘703 patent expires in October 2015,expiration said patents. The district court consolidated the ‘009 patent expires in September 2029, and72 mcg ANDA actions with the ‘209, ‘708, ‘379, ‘752, ‘085,November 2016 Action.
In May and ‘233 patents expire in May 2026. These lawsuits triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than June 2016 (unless there is a final court decision adverse to Plaintiffs sooner). On June 11, 2014, Mylan filed a motion to dismiss for lack of personal jurisdiction, whichAugust 2018, the district court denied on March 30, 2015. On December 18, 2014, Ranbaxy filed an IPR beforegranted joint stipulations and orders to dismiss without prejudice all claims, counterclaims, and defenses in the Patent Trial and Appeal Board, U.S. Patent and Trademark Office,November 2016 Action with respect to the ‘085 patent. Adamas‘371 Patent and the ‘030 Patent, respectively, as between Plaintiffs, Teva, Mylan and Sandoz.
On September 4, 2018, Plaintiffs filed a preliminary response on April 14, 2015. On May 1, 2015, Forest entered into a settlement agreement with Ranbaxy. On May 15, 2015,an amended complaint as to Mylan to assert the Patent Trial and Appeal Board granted Adamas and Ranbaxy’s joint motion to terminate the case. On October 17, 2014, Forest and Actavis Laboratories FL, Inc. (f/k/a Watson Laboratories, Inc. - Florida) filed a stipulation dismissing their respective claims without prejudice. On November 3, 2014, ‘628 patent against Mylan’s 72 mcg ANDA product.
Plaintiffs entered into a settlement agreement with Wockhardt.Sun and certain Sun affiliates and the case against Sun was dismissed on January 18, 2018. Plaintiffs entered into a settlement agreement with Aurobindo and the case against Aurobindo was dismissed on May 7, 2018. Plaintiffs entered into a settlement agreement with Mylan and the case against Mylan was dismissed on December 27, 2018. Under the terms of the settlement agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide a license to Wockhardt that will permit itMylan to launchmarket its generic versions of Linzess® 145 mcg and 290 mcg in the United States beginning on February 5, 2030 (subject to FDA approval), and its generic version of Namenda XRLinzess® as of 72 mcg in the date that is the later of (a) two (2) calendar months prior to the expiration date of the last to expire of the ‘703 patent, the ‘209 patent, the ‘708 patent, the ‘379 patent, the ‘752 patent, the ‘085 patent, and the ‘233 patent, including any extensions and/or pediatric exclusivities; or (b) the date that Wockhardt obtains final FDA approval of its ANDA,United States beginning on August 5, 2030, or earlier in certain circumstances.
On January 13, 2015, Plaintiffs entered into settlement agreements with Anchen and Par. Under the terms of the settlement agreements, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide licenses to Anchen and Par that will permit them to launch their generic versions of Namenda XR® as of the date that is the later of (a) two (2) calendar months prior to the expiration date of the last to expire of the ‘209 patent, the ‘708 patent, the ‘379 patent, the ‘752 patent, the ‘085 patent, and the ‘233 patent, as well as the ‘009 patent for Par only, including any extensions and/or pediatric exclusivities; or (b) the dates that Anchen and Par obtain final FDA approval of their respective ANDAs, or earlier in certain circumstances. On May 11, 2015, Forest entered into a settlement agreement with Sun. On August 18, 2015, Forest entered into a settlement agreement with Zydus. On September 9, 2015, Forest entered into a settlement agreement with Amneal. Under the terms of the settlement agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide a license to Amneal that will permit it to launch its generic version of Namenda XR® beginning January 31, 2020, following receipt by Amneal of final approval from the FDA on its ANDA for generic Namenda XR®; or (b) under certain circumstances, Amneal has an option to launch an authorized generic version of Namenda XR® beginning on January 31, 2021. The Company entered into a settlement agreement with Amerigen on October 20, 2015. The Company entered into a settlement agreement with Mylan on November 16, 2015. The Company entered into a settlement agreement with Lupin on December 22, 2015. On January 5, 2016, the district court issued a claim construction ruling that included findings of indefiniteness as to certain claim terms in the asserted patents. On February 11, 2016, the Company settled with Apotex. Trial began on February 16, 2016 with the remaining defendant Teva with respect to the ‘009 patent. Post-trial briefing concluded on April 29, 2016. The Parties have reached agreement on settlement with Teva subject to Court approval.
In June 2016, after reaching an agreement to settle, the parties filed and the court entered a judgment of infringement in favor of Plaintiffs and against Teva regarding the ‘009 patent. On July 26, 2016, the court entered a final judgment of invalidity of claim 1 of the ‘209 patent, claims 1, 6, 10 and 15 of the ‘708 patent, claim 1 of the ‘379 patent, claims 1 and 9 of the ‘752 patent, claims 1 and 7 of the ‘085 patent and claim 1 of the ‘233 patent in favor of Teva. On August 23, 2016, the Company filed a Notice of Appeal to the U.S. Court of Appeals for the Federal Circuit in the actions involving Teva with respect to the district court’s January 5, 2016 claim construction opinion and order, and the July 26, 2016 final judgment of invalidity. On August 24, 2016, the U.S. Court of Appeals for the Federal Circuit docketed the appeal filed by the Company. The Company filed its opening brief on December 8, 2016. Teva filed its responsive brief on February 1, 2017. The Company filed its reply brief on March 17, 2017. Oral argument is scheduled for November 9, 2017. The Company believes that its arguments on appeal are substantial and meritorious. On September 29, 2016, the Company issued a press release following announcement of ANDA approvals, including FDA final approval by Lupin. If the district court ruling is upheld on appeal to the U.S. Court of Appeals for the Federal Circuit, there is a possibility that generic entry for Namenda XR could occur following an adverse decision.
On October 9, 2015, the Company also brought an action for infringement of the ‘009, ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents in the U.S. District Court for the District of Delaware against Accord Healthcare, Inc. and Intas Pharmaceuticals Limited (collectively, “Accord”). The Accord defendants have notified Plaintiffs that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namenda XR® before these patents expire. On January 14, 2016, Forest entered into a settlement agreement with Accord. On December 8, 2015, the Company also brought an action for infringement of the ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents in the U.S. District Court for the District of Delaware against Panacea Biotec, Ltd. (“Panacea”). Panacea has notified Plaintiffs that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namenda XR® before these patents expire. On May 17, 2016, the Company entered into a settlement agreement with Panacea.
In April 2017, Forest Laboratories, LLC received a Paragraph IV certification notice letter from Macleods Pharmaceuticals, Ltd. indicating that it had submitted to FDA an ANDA seeking approval to manufacture and sell a generic version of Namenda XR® before the expiration of the ‘009, ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents. Macleods Pharmaceuticals, Ltd. claims that these patents are invalid, unenforceable and/or would not be infringed. The Company is evaluating a patent infringement action in response to this ANDA filing. On June 2, 2017, the Company and Adamas Pharma, LLC brought an action for infringement of the ‘009, ‘209, ‘708 and ‘379 patents in the U.S. District Court for the District of Delaware against Macleods Pharmaceuticals, Ltd. and Macleods Pharma USA, Inc. (collectively, “Macleods”). This lawsuit triggered an automatic stay of approval of the Macleods ANDA that expires no earlier than October 2019 (unless there is a final court decision adverse to Plaintiffs sooner). No trial schedule has been set.
Namzaric®. On August 27, 2015, Forest Laboratories, LLC, Forest Laboratories Holdings, Ltd. and Adamas Pharmaceuticals, Inc. (all collectively, “Plaintiffs”), brought an action for infringement of some or all of U.S. Patent Nos. 8,039,009 (the “’009 patent”), 8,058,291 (the “‘291 patent”), 8,168,209 (the “‘209 patent”), 8,173,708 (the “‘708 patent”), 8,283,379 (the “‘379 patent”), 8,293,794 (the “‘794 patent”), 8,329,752 (the “‘752 patent”), 8,338,485 (the “‘485 patent”), 8,338,486 (the “‘486 patent”), 8,362,085 (the “‘085 patent”), 8,580,858 (the “‘858 patent”) and 8,598,233 (the “‘233 patent”) in the U.S. District Court for the District of Delaware against Amneal Pharmaceuticals LLC and Par Pharmaceutical, Inc., and related subsidiaries and affiliates thereof. These companies have notified Plaintiffs that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Namzaric® before these certain patents expire. Including a 6-month pediatric extension of regulatory exclusivity, the ‘009 patent expires in September 2029, and the ‘209, ‘708, ‘379, ‘752, ‘085, and ‘233 patents expire in May 2026. The ‘291 patent expires in December 2029, and the ‘794, ‘485, ‘486, and ‘858 patents expire in November 2025. These lawsuits triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than January 2018 (unless there is a final court decision adverse to Plaintiffs sooner). On October 23, 2015, the Company also brought an action for infringement of the ‘009, ‘291, ‘209, ‘708, ‘379, ‘794, ‘752, ‘485, ‘486, ‘085, ‘858 and ‘233 patents in the U.S. District Court for the District of Delaware against Amerigen Pharmaceuticals, Inc. and Amerigen Pharmaceuticals Ltd. (collectively, “Amerigen”). The Amerigen defendants have notified Plaintiffs that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namzaric® before these certain patents expire. On January 5, 2016, the district court in the Namenda XR® patent litigations issued a claim construction ruling that included findings of indefiniteness as to certain claim terms in certain of the patents also asserted in the pending Namzaric® patent litigations. The Company entered into a settlement agreement with Par on April 29, 2016. Under the terms of the settlement agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide a license to Par that will permit it to launch its generic version of Namzaric® as of June 5, 2029, or earlier in certain circumstances. Trial is scheduled for October 2017. In June 2016, Forest filed a motion for leave to file an amended complaint to add the ‘009 patent against Amneal, which the District Court granted on July 19, 2016. On May 20, 2016, the Company also brought an action for infringement of the ‘009, ‘291, ‘209, ‘708, ‘379, ‘794, ‘752, ‘485, ‘486, ‘085, ‘858 and ‘233 patents in the U.S. District Court for the District of Delaware against Accord Healthcare Inc. USA and Intas Pharmaceuticals Limited (collectively, “Accord”). The Accord defendants have notified Plaintiffs that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namzaric® before these certain patents expire. The Company entered into a settlement agreement with Accord on July 20, 2016. On August 30, 2016, Plaintiffs entered into a settlement agreement with Amneal, who is believed to be a first applicant with respect to certain dosage strengths (memantine hydrochloride extended-release and donepezil hydrochloride, 14 mg/10 mg and 28 mg/10 mg) of Namzaric®. Under the terms of the agreement, and subject to review of the settlement terms by the U.S. Federal Trade Commission, Plaintiffs will provide a license to Amneal that will permit it to launch its generic version of Namzaric® as of January 1, 2025, or earlier in certain circumstances. Alternatively, under certain circumstances, Amneal has an option to launch an authorized generic version of Namzaric beginning on January 1, 2026. On October 21, 2016, Plaintiffs entered into a settlement agreement with Amerigen, and the case was dismissed.
On November 10, 2016, the Company also brought an action for infringement of the ‘009, ‘291, ‘485, ‘486, and ‘858 patents in the U.S. District Court for the District of Delaware against Apotex Corp and Apotex Inc. (“Apotex”). Apotex has notified Plaintiffs that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Namzaric® before these patents expire. This lawsuit triggered an automatic stay of approval of Apotex’s ANDA that expires no earlier than March 2019 (unless there is a final court decision adverse to Plaintiffs sooner). On April 10, 2017, Plaintiffs entered into a settlement agreement with Apotex, and the case was dismissed.
In April 2017, Forest Laboratories, LLC received a Paragraph IV certification notice letter from Macleods Pharmaceuticals, Ltd. (“Macleods”) indicating that it had submitted to FDA an ANDA seeking approval to manufacture and sell generic versions of Namzaric® donepezil and memantine hydrochloride extended release capsules (10 mg/14 mg and 10 mg/28 mg) before the expiration of the ‘009, ‘291, ‘209, ‘708, ‘379, ‘794, ‘752, ‘485, ‘486, ‘085, ‘858 and ‘233 patents. Macleods claims that these patents are invalid, unenforceable and/or would not be infringed. The Company is evaluating a patent infringement action in response to this ANDA filing. On June 2, 2017, the Company and Adamas Pharma, LLC brought an action for infringement of the ‘009, ‘291, ‘485, ‘486, and ‘858 patents in the U.S. District Court for the District of Delaware against Macleods Pharmaceuticals, Ltd. and Macleods Pharma USA, Inc. (collectively, “Macleods”). This lawsuit triggered an automatic stay of approval of the Macleods ANDA that expires no earlier than October 2019 (unless there is a final court decision adverse to Plaintiffs sooner). No trial schedule has been set.
Rapaflo®. On June 17, 2013, Actavis, Inc, now known as Allergan Finance, LLC., Watson Laboratories, Inc., (collectively, “Actavis”) and Kissei Pharmaceutical Co., Ltd. (“Kissei”) sued Hetero USA Inc., Hetero Labs Limited, and Hetero Labs Limited, Unit 3 (collectively, “Hetero”) in the United States District Court for the District of Delaware, alleging that sales of silodosin tablets, a generic version of Actavis’ Rapaflo® tablets, would infringe U.S. Patent No. 5,387,603 (the “‘603 patent”). On June 17, 2013 Actavis and Kissei sued Sandoz Inc. (“Sandoz”) in the United States District Court for the District of Delaware, alleging that sales of Sandoz’s generic version of Rapaflo® would infringe the ‘603 patent. The complaint seeks injunctive relief. On December 22, 2014, the Parties completed a settlement agreement with Hetero. Actavis and Kissei’s lawsuit against Sandoz have been consolidated. Pursuant to the provisions of the Hatch-Waxman Act, the FDA is precluded from granting final approval to the generic applicants prior to April 8, 2016. On April 13, 2017, the Sandoz action was dismissed pursuant to a settlement agreement.
In July 2017, the Company and Kissei received a notice letter from Aurobindo indicating that it had filed a Paragraph IV certification and had submitted to FDA an ANDA seeking approval to manufacture and sell a generic version of RAPAFLO® (“RAPAFLO”) before the expiration of U.S. Patent No. 5,387,603 (the “‘603 Patent”) listed in the Orange Book. (The ‘603 Patent expires in December 2018). Alembic claims that the patent listed in its notice letter is invalid, unenforceable and/or would not be infringed. On August 18, 2017, Allergan, Finance, LLC, Allergan Sales, LLC and Kissei Pharmaceutical Co., Ltd. (collectively, “Plaintiffs”), brought an action for infringement of the ‘603 Patent in the U.S. District Court for the District of Delaware against Aurobindo Pharma Ltd., Aurobindo Pharma U.S.A., Inc., and Aurobindo Pharma USA LLC (collectively, “Aurobindo”). This lawsuit triggered an automatic stay of approval of the applicable ANDA through to patent expiration (unless there is a final court decision adverse to Plaintiffs sooner). On September 13, 2017, Aurobindo filed an answer, affirmative defenses and counterclaims. On October 4, 2017 Plaintiffs filed an answer to Aurobindo’s counterclaims. No trial schedule has been set.
Restasis®. Between August 2015 and September 2015, AllerganJuly 2016, a subsidiary of the Company brought actions for infringement of U.S. Patent Nos. 8,629,111 (the “‘111 patent”), 8,633,162 (the “‘162 patent”), 8,642,556 (the “‘556 patent”), 8,648,048 (the “‘048 patent”), and 8,685,930 (the “‘930 patent”) and 9,248,191 (the “’191 patent”) in the U.S. District Court for the Eastern District of Texas against Akorn, Inc., Apotex, Inc., Mylan Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Inc., InnoPharma, Inc., and Pfizer,Famy Care Limited (“Famy Care”), TWi Pharmaceuticals, Inc., (“TWi”) and related subsidiaries and affiliates thereof. On September 14, 2015, Allergan brought an action for infringement
The subsidiary entered into settlement agreements with Apotex, TWi, Famy Care and InnoPharma. As a result of certain of these patents in the U.S. District Court for the District of Delaware against InnoPharma, Inc. and Pfizer, Inc. These companies have notified Allergan that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Restasis® before these patents expire in August 2024. In the Texas actions the District Court granted joint motions to dismiss without prejudice Teva Pharmaceutical Industries Ltd. and Pfizer, Inc., on October 12 and October 22, 2015, respectively. Teva Pharmaceuticals USA, Inc. (“Teva”) and InnoPharma, Inc. (“InnoPharma”) remain defendants in the respective actions. In October 2015, Mylan Pharmaceuticals, Inc. and Mylan, Inc. (“Mylan”) filed a motion to dismiss for lack of personal jurisdiction and improper venue, and for failure to state a claim as to Mylan, Inc.; Teva filed a motion to dismiss for lack of personal jurisdiction and improper venue; Apotex, Inc. and Apotex Corp. (“Apotex”) filed an answer, affirmative defenses and counterclaim; Akorn, Inc. (“Akorn”) filed an answer and counterclaim; and Teva filed an answer, counterclaim and motion to dismiss. Allergan entered into a settlement agreement with Apotex on December 15, 2015. In December 2015, Allergan and Apotex filed a joint stipulation of dismissal and the U.S. District Court granted the Order with respect to the Apotex defendants. In January 2016, the court scheduled a bench trial for August 28, 2017.
In February 2016, Allergan filed an amended complaint to include U.S. Patent Number 9,248,191 (the “’191 patent”). In February and March 2016, Allergan received Paragraph IV letters from Apotex, Mylan and Teva notifying Allergan that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Restasis® before the patents expire in August 2024, contending that the ‘191 patent is invalid and not infringed by their respective proposed generic products.
On March 1, 2016, Allergan received a Paragraph IV letter from Famy Care Limited (“Famy Care”) notifying Allergan that they have filed an ANDA with the FDA seeking to obtain approval to market generic versions of Restasis® before the patents expire in August 2024, contending that the ‘111 patent, the ʼ162 patent, the ‘556 patent, the ‘048 patent, the ‘930 patent, and the ‘191 patent are invalid and not infringed by their respective proposed generic products. In March 2016, the court entered an order requesting supplemental briefs on the effect of the Federal Circuit’s Acorda decision (No. 2014-1456) on Teva’s and Mylan’s pending motions to dismiss. In their supplemental briefs, Teva acknowledged that, under the Acorda decision, it is subject to specific personal jurisdiction in the Eastern District of Texas and that venue is proper, and Mylan requested that the District Court refrain from taking action on its pending motion until after Mylan has sought panel and en banc rehearing in the Acorda action. In April 2016, the court issued a memorandum and opinion denying Mylan’s and Teva’s motions to dismiss. On April 12, 2016, Allergan filed a complaint for infringement of the ʼ111 patent, ʼ162 patent, ʼ556 patent, ʼ048 patent, ʼ930 patent, and the ʼ191 patent in the U.S. District Court for the Eastern District of Texas against Famy Care. In March and April 2016, Allergan filed answers to Teva, Akorn and InnoPharma’s counterclaims. On June 6, 2016, Famy Care filed an answer, affirmative defenses and counterclaims. In June 2016, Allergan filed a motion for consolidation and the court entered an order consolidating the Famy Care matter, C.A. 2:16-cv-00401-WCB, into C.A. 2:15-cv-01455-WCB, (the “Lead” case).
On May 30, 2017, Defendants filed motions for summary judgment for noninfringement, lack of enablement, and for lack of standing, or in the alternative for invalidity under 35 U.S.C. § 102(f). Allergan opposed these summary judgment motions, and briefing was completed on June 27, 2017.
On August 1, 2017, the Court conducted a pre-trial conference and motion hearing. During the conference, (i) Mylan waived its venue objection; and (ii) the court issued oral rulings denying each of Defendants’ three motions for summary judgment and stated that written opinions on those motions would follow. Trial began on August 28, 2017, in Marshall, Texas and concluded on September 1, 2017.
On July 20, 2016, Allergan filed a complaint for infringement of the ʼ111 patent, ʼ162 patent, ʼ556 patent, ʼ048 patent, ʼ930 patent, and the ʼ191 patent in the U.S. District Court for the District of Delaware and, on July 21, 2016, a complaint in the U.S. District Court for the Eastern District of Texas against TWi Pharmaceuticals, Inc. and TWi Pharmaceuticals USA, Inc. (“TWi”). TWi notified Allergan that it has filed an ANDA with the FDA seeking to obtain approval to market generic versions of Restasis® before these certain patents expire. Allergan entered into a settlement agreement with TWi on January 11, 2017. Allergan entered into a settlement agreement with Famy Care on August 28, 2017. Under the terms of the settlement,settlements, Allergan will provide a license to Famy Care that will permit itcertain parties to launch itstheir generic version of Restasis beginning on February 27, 2024, or earlier in certain circumstances. Allergan entered into a settlement agreement with Innopharma on October 12, 2017. Under the terms of the settlement, Allergan will provide a license to Innopharma that will permit it to launch its generic versionversions of Restasis® beginning on February 27, 2024, or earlier in certain circumstances. Additionally, under certain circumstances, Allerganthe Company will supply and authorize InnoPharmacertain parties to launch an authorized generic version of Restasis®Restasis® on August 28, 2024.2024 or earlier in certain circumstances.
On September 8, 2017, Allerganthe Company assigned all Orange Book-listed patents for Restasis®to the Saint Regis Mohawk Tribe (“the Tribe”), a recognized sovereign tribal government, and concurrently was granted an exclusive field-of-use license to practice the patents in the United States for all FDA-approved uses of the products under the Restasis®Restasis® NDAs. On October 13, 2017, Allergan filed an opposed motion to join the Tribe as a co-plaintiff in the pending action against Teva, Mylan and Akorn.
On October 16, 2017, the District Court issued a decision and final judgment finding that the asserted claims of the ‘111 patent, the ‘048 patent, the ‘930 patent and the ‘191 patent were infringed, but invalid on the ground of obviousness. The District Court also held that the asserted claims were not invalid as anticipated, for lack of enablement, or for improper inventorship,inventorship. On November 13, 2018, the U.S. Court of Appeals for the Federal Circuit issued a decision affirming the district court’s finding of invalidity of the asserted claims of the ‘111, ‘048, ‘930 and ‘191 Patents. On March 6, 2019, the Federal Circuit denied Akorn’s counterclaimsAllergan and the Tribe’s petition for attorney feesrehearing, and a mandate issued on the grounds that this was not an exceptional case. In a separate Order, the District Court joinedMarch 13, 2019. On April 10, 2019, Allergan and the Tribe asfiled a co-plaintiff under Federal Rulepetition for a writ of Civil Procedure 25(c) and declined to rulecertiorari with the United States Supreme Court, which was denied on the validity of the patent assignment to the Tribe.June 3, 2019.
On December 22, 2016, Allergana subsidiary of the Company filed a complaint for infringement of the ʼ111’111 patent, ʼ162’162 patent, ʼ556’556 patent, ʼ048’048 patent, ʼ930’930 patent, and the ʼ191’191 patent in the U.S. District Court for the Eastern District of Texas against Deva Holding A.S. (“Deva”). On March 6, 2018, the district court granted in part and denied in part the parties’ joint motion for entry of a stipulated order, and stayed the case until such time as the Federal Circuit in the lead appeal case with Teva, Mylan and Akron issues a mandate. The parties’ stipulation provides that Deva notified Allerganwill be bound by the outcome of that it hasappeal. On April 30, 2019, the district court granted Deva’s motion for entry of final judgment and dismissal with prejudice, and the case was dismissed.
On August 10 and September 20, 2018, a subsidiary of the Company and the Tribe filed an ANDA withcomplaints for infringement of the FDA seeking to obtain approval to market generic versions’162 patent and the ’556 patent in the U.S. District Court for the District of Delaware against Saptalis and against Amneal Pharmaceuticals, LLC and Amneal Pharmaceuticals Co. India Private Limited (collectively, “Amneal”), respectively. The cases were voluntarily dismissed on January 2, 2019.
Restasis® before these certain patents expire. On February 20, 2017, Deva filed an answer, affirmative defenses and counterclaims. On March 28, 2017, Deva filed a motion to stay pending either the USPTO’s final written decision in the pending IPR proceedings, or the district court’s issuance of a trial opinion in the consolidated actions originally brought in 2015. On July 28, 2017, Deva’s stay motion was denied without prejudice. Trial in the Deva matter is scheduled in October 2018.
Restasis® IPR.. On June 6, 2016, Allergan, Inc.a subsidiary of the Company received notification letters that Inter Partes Review of the USPTO (“IPR”) petitions were filed by Mylan Pharmaceuticals Inc. (“Mylan”) regarding U.S. Patent Nos. 8,629,111 (the “‘111 patent”), 8,633,162 (the “‘162 patent”), 8,642,556 (the “‘556 patent”), 8,648,048 (the “‘048 patent”), 8,685,930 (the “‘930 patent”), and 9,248,191 (the “‘191 patent”), which patents expire on August 27, 2024. Mylan filed the IPR petition on June 3, 2016. On June 23, 2016, Allergana subsidiary of the Company received a notification letter that aan IPR petition and motion for joinder was filed by Argentum Pharmaceuticals LLC (“Argentum”) regarding the ’111 patent. On December 7, 2016, Allerganthe Company entered into a settlement agreement with Argentum and Argentum’s petition was withdrawn. On December 8, 2016, the USPTO granted Mylan’s petitions to institute IPRs with respect to these patents. On January 6, 2017, each of Akorn Famy Care and Teva filed, and on January 9, 2017 the USPTO received, IPR petitions with respect to these patents and motions for joinder with the Mylan IPR. On February 6, 2017, Allergan opposed joinder. On March 20, 2017, Allergan filed patent owner responses. The USPTO granted Teva’s and Akorn’s joinder motions on March 31, 2017. On April 27, 2017, the USPTO decided not to join Famy Care as a petitioner to the earlier-filed IPR petitions. On July 10, 2017, the USPTO denied Famy Care’s motion for joinder with the IPRs instituted in December 2016, and on July 10 and 12, 2017, granted Famy Care’s petitions to institute IPRs with respect to these same patents. On May 31, 2017, the USPTO granted-in part a motion by Mylan for additional discovery. On July 14, 2017, Allergan filed a patent owner sur-reply. On July 20, Allergan and Mylan filed requests for oral argument. On July 28, 2017, the USPTO rescheduled the hearing for September 13, 2017.
On September 8, 2017,Allergan assigned all Orange Book-listed patents for Restasis®to the Saint Regis Mohawk Tribe (“the Tribe”), a recognized sovereign tribal government, and concurrently was granted an exclusive field-of-use license to practice the patents in the United States for all FDA-approved uses of the products under the Restasis® NDAs. That same day, the Tribe filed an updated Mandatory Notice with the USPTO to reflect that the Tribe is the patent owner, and sought permission to file a motion to dismiss based on tribal sovereign immunity. During a September 11, 2017 teleconference,
On February 23, 2018, the USPTO postponed the September 13, 2017 hearing and set a
briefing schedule onissued orders denying the Tribe’s motion to dismiss. Thedismiss (or terminate).
On July 20, 2018, the Federal Circuit affirmed the USPTO’s denial of the Tribe’s motion to dismiss and Allergan’s motion to withdraw. On August 20, 2018, the Tribe and Allergan filed its opening brief on September 22, 2017, Petitioners filed their opposition briefa petition for rehearing en banc, which the Federal Circuit denied on October 13, 2017,22, 2018. On December 21, 2018, the Company and the Tribe filed its reply briefa petition for a writ of certiorari with the United States Supreme Court, which was denied on October 20, 2017. On October 4, 2017, the USPTO denied Mylan’s request for authorization to file a motion for additional discovery, and denied without prejudice Allergan’s counsel’s request to withdraw from the IPR proceedings. A rescheduled hearing date has not been set.April 15, 2019.
Saphris®. Between September 2014 and May 2015, Forest Laboratories, LLC, and Forest Laboratories Holdings Ltd. (collectively, “Forest”)subsidiaries of the Company brought actions for infringement of some or all of U.S. Patent Nos. 5,763,476 (the “‘476 patent”), 7,741,358 (the “‘358 patent”) and 8,022,228 (the “‘228 patent”) against Sigmapharm Laboratories, LLC (“Sigmapharm”), Hikma Pharmaceuticals, LLC (“Hikma”), Breckenridge Pharmaceutical, Inc. (“Breckenridge”), Alembic Pharmaceuticals, Ltd. (“Alembic”) and Amneal Pharmaceuticals, LLC (“Amneal”), and related subsidiaries and affiliates thereof in the U.S. District Court for the District of Delaware againstin connection with an abbreviated new drug applications respectively filed with FDA by Sigmapharm, Laboratories, LLC, Hikma, Pharmaceuticals, LLC, Breckenridge, Pharmaceutical, Inc., Alembic Pharmaceuticals, Ltd. and Amneal, Pharmaceuticals, LLC,each seeking approval to market a generic versions of Saphris® and related subsidiaries and affiliates thereof.challenging each of said patents. Including a 6-month pediatric extension of regulatory exclusivity, the ‘476 patent expires in December 2020, and the ‘358 and ‘228 patents expire in October 2026. These lawsuits triggered an automatic stay of approval of the applicable ANDAs that expires no earlier than August 13, 2017 (unless a court issues a decision adverse to Forest sooner). On February 3, 2015, the District Court consolidated the then-pending actions for all purposes. On September 30, 2015, the District Court consolidated all pending actions. On March 28,In 2016, the court entered Forest and Hikma’s proposed joint stipulation and order of adverse judgment and dismissal ofparties agreed to dismiss all claims related to the ‘358 and ‘228 patents. In April 2016, the court granted the proposed consent judgment of non-infringement and order of dismissal of counterclaims related to the ‘358 and ‘228 patents, as well as a stipulation and order with respect to infringement of Claims 1, 2, and 6 of the ʼ476 patent, between Plaintiffs and Breckenridge. The Court also granted the proposed stipulation of entry and proposed order of adverse judgment and dismissal of counterclaims related to the ʼ358 and ʼ228 patents between Plaintiffs and Sigmapharm. Trial is scheduled to begin in October 2016 with respect toleaving only the ‘476 patent the only remaining patent-in-suit. In April, May and July 2016, the court granted the proposed stipulations and orders of infringement of certain claims of the ‘476 patent as to Hikma, Breckenridge and Alembic.at issue. On October 13, 2016, the court stayed trial as to Sigmapharm and extended the 30-month stay as to Sigmapharm. Trial concluded on November 3, 2016. The parties filed their opening post-trial briefs on January 23, 2017 and their responsive briefs on March 17, 2017. On June 30, 2017, the district court issued an opinion and order finding all asserted claims of the ‘476 patent valid, that claims 1, 2, 5 and 6 were infringed by Alembic, Amneal, Breckenridge and Hikma, and that claims 4, 9 and 10 were not infringed by Alembic and Breckenridge. On July 11, 2017, the district court entered a final judgment that ordered, among other things, that Alembic’s, Amneal’s, Breckenridge’s and Hikma’s respective ANDAs not be granted final approval by FDA earlier than the date of expiration of the ‘476 patent inclusive of any applicable adjustments, extensions or exclusivities.
On March 14, 2019, the Federal Circuit vacated the district court’s July 2017 judgment that claims 1 and 4 are not invalid and remanded for the district court to consider a fact question and its impact on the obviousness analysis. On April 15, 2019, Plaintiffs filed a combined petition for panel rehearing and rehearing en banc with respect to this issue, which was denied on May 15, 2019. In its March 14, 2019 order, the Federal Circuit also vacated the judgment of non-infringement of claims 4, 9 and 10 as to Alembic and Breckenridge and remanded for the district court to consider their infringement under a revised claim construction.
A separate bench trial concerning Sigmapharm’s infringement of claim 1 of the ‘476 patent began on June 20, 2018, and on November 16, 2018, the court held that Sigmapharms’ proposed ANDA product would infringe claim 1 of the ‘476 patent On November 26, 2018, Sigmapharm sought relief from the November 16, 2018 decision. On November 30, 2018, the Company moved for entry of final judgment. Both motions are currently pending.
Trade Secret Matters
Botulinum Neurotoxin ITC Investigation. On January 30, 2019, subsidiaries of the Company and Medytox Inc. (collectively, “Complainants”) filed a complaint with the United States International Trade Commission (“ITC”) against Daewoong Pharmaceuticals Co., Ltd., Daewoong Co., Ltd., and Evolus Inc. (collectively, “Respondents”) requesting the ITC commence an investigation with respect to the Respondents’ importation into the United States of Respondents’ botulinum neurotoxin products, including DWP-450 (also known as JeuveauTM), which Complainants assert were developed, made and/or imported using Medytox’s trade secrets. Complainants seek, among other things, a permanent exclusionary order and cease and desist orders covering Respondents’ botulinum neurotoxin products, including DWP-450/JeuveauTM. On February 28, 2019, the ITC instituted an investigation into Respondents’ botulinum neurotoxin products, including DWP-450/JeuveauTM. Fact discovery closed on July 19, 2019. On July 28, 2017, Alembic, Amneal, Breckenridge24, 2019, the Administrative Law Judge issued an Order rescheduling the evidentiary hearing for February 4-7, 2020, and Hikma filed notices of appeal. The issue of infringement as to Sigmapharm remains stayed. On July 25, 2017,indicating that the District Court actions were reassigned to Judge Mitchel S. Goldbergtarget date for completion of the U.S. District Court for the Eastern District of Pennsylvania. On September 15, 2017, Sigmapharm filed a motioninvestigation would probably be extended to lift the stay and proceed to trial on the issue of infringement. Plaintiffs filed an opposition on September 29, 2017, and Simapharm filed a reply on October 6, 2017. A hearing on Sigmapharm’s motion is scheduled for November 7, 2017.
Savella®. On October 5 and 6, 2017, Forest Laboratories Holdings, Ltd., Allergan Sales, LLC and Allergan USA, Inc. (collectively, “Allergan and Forest”) brought actions for infringement of U.S. Patent Nos. 6,602,911 (the “‘911 patent”), 7,888,342 (the “‘342 patent”), and 7,994,220 (the “‘220 patent”) in the U.S. District Court for the District of Delaware and the District of New Jersey, respectively, against Strides Pharma Global Pte Limited and Strides Pharma Inc. (collectively, Strides”). Strides notified Forest that it filed an ANDA with the FDA seeking to obtain approval to market a generic version of Savella® before the ‘911, ‘342 and ‘220 patents expire. (The ‘342 patent expires in November 2021, the ‘911 patent expires in January 2023, and the ‘220 patent expires in September 2029.) Strides claims in its notice letter that the ‘911 Patent, the ‘342 Patent, and the ‘220 Patent are invalid and/or would not be infringed. These lawsuits triggered an automatic stay of approval of the Strides ANDA until February 2020 (unless a court issues a decision adverse to Forest sooner). No schedule has been set.
Previously, the Company, along with Royalty Pharma Collection Trust (“Royalty Pharma”), asserted these patents in actions against Amneal, Apotex, First Time US Generics, Glenmark, Hetero, Lupin, Par, and Ranbaxy, and related subsidiaries and affiliates thereof, and reached settlements terminating those actions. The Company and Royalty Pharma voluntarily dismissed, without prejudice, its claims against Sandoz. The Company and Royalty Pharma also asserted these patents against Mylan and, on July 11, 2016, the U.S. District Court for the District of Delaware entered an order, opinion and judgment in favor of plaintiffs and against Mylan, that Mylan infringes the asserted claims of the ‘911, ‘342 and ‘220 patents, and that the asserted claims of the ‘911, ‘342 and ‘220 patents are valid. On September 30, 2016, Forest and Royalty entered into a settlement agreement with Mylan. Pursuant to the settlement agreement, Mylan may enter the market as of March 19, 2026, or earlier under certain circumstances.
Viibryd®. In March 2015, Forest Laboratories, LLC, Forest Laboratories Holdings Ltd., (collectively, “Forest”) and Merck KGaA and Merck Patent Gesellschaft Mit Beschränkter Haftung (collectively, “Merck”), Forest’s licensor for Viibryd, brought actions for infringement of U.S. Patent Nos. 7,834,020 (the “‘020 patent”), 8,193,195 (the “‘195 patent”), 8,236,804 (the “‘804 patent”) and 8,673,921 (the “‘921 patent”) in the U.S. District Court for the District of Delaware against Accord Healthcare Inc. (“Accord”), Alembic Pharmaceuticals, Ltd. (“Alembic”), Apotex, Inc. (“Apotex”), InvaGen Pharmaceuticals, Inc. (“InvaGen”), and Teva Pharmaceuticals USA, Inc. (“Teva”), and related subsidiaries and affiliates thereof. These companies have notified Forest and/or Merck that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Viibryd before the ‘020,2020.
‘195, ‘804 and ‘921 patents expire in June 2022. These lawsuits triggered an automatic stay of approval of the applicable ANDAs until July 21, 2018 (unless a court issues a decision adverse to Forest and Merck sooner). On August 24, 2015, the District Court consolidated the actions for all purposes and issued a scheduling order setting a trial date in January 2018. On November 23, 2015, Forest and Merck brought an action for infringement of the ‘020, ‘195, ‘804 and ‘921 patents in the U.S. District Court for the District of Delaware against InvaGen, which matter was consolidated with the earlier-filed action against InvaGen. On March 29, 2017, the District Court granted plaintiffs and Teva’s joint stipulation to stay the action as to Teva until May 11, 2017, due to the parties’ settlement discussions. On April 20, 2017, plaintiffs entered into a settlement agreement with Alembic, and the case was dismissed. On May 15, 2017, plaintiffs entered into a settlement agreement with Accord, and the case was dismissed. On June 29, 2017, plaintiffs entered into a settlement agreement with Teva, and the case was dismissed.On July 28, 2017, plaintiffs entered into a settlement agreement with Apotex, and the case was dismissed. Under the terms of the settlement with Apotex, Allergan will provide a license to Apotex that will permit it to launch its generic version of Viibryd beginning six months and one day prior to the expiration of the last to expire of the ‘020, ‘195, ‘804 and ‘921 patents, including any extensions or pediatric exclusivities, or earlier in certain circumstances. On October 23, 2017, plaintiffs entered into a settlement agreement with InvaGen, and the parties filed a joint stipulation of dismissal.
Trademark Enforcement Matters
Juvéderm®. On April 5, 2017, Allergan, Inc. (“Allergan”)a subsidiary of the Company brought an action for unfair competition, false advertising, dilution, conspiracy and infringement of Allergan’s JUVÉDERMJuvéderm ® trademarks in the U.S. District Court for the Central District of California against Dermavita Limited Partnership (“Dermavita”), Dima Corp. S.A. (“Dima Corp.”) and KBC Media Relations LLC (“KBC”). Dima Corp. had previously announced its acquisition of a license from Dermavita to develop and market in the U.S. cosmetic products under the Juvederm trademark. During June 2017, Allerganthe Company entered into a settlement agreement with KBC. During July 2017, the Court preliminarily enjoined Dima Corp. from, inter alia,, promoting or selling within the United States any product bearing the trademark JUVEDERMJuvéderm® or any other trademark confusingly similar to it. Also during July 2017,During January 2018, the Court deniedgranted Dermavita’s renewed motion to dismiss Allergan’sthe Company’s complaint based on alleged improper service and purported lack of personal jurisdiction. During January 2019, the Company subsidiary and Dima Corp. resolved the action and the Court entered a permanent injunction and final judgment in favor of the Company subsidiary and against Dima Corp. for trademark infringement, unfair competition, dilution and false advertising.
Allergan Holdings France SAS and Allergan France SASSubsidiaries of the Company requested a preliminary injunction against Dermavita, Dima Corp, Aesthetic Services & Development, Jacqueline Sillam and Dimitri Sillam in the High Court of Paris, France. During June 2017, the Paris Court preliminarily enjoined the defendants, from, inter alia,, to refrain from promoting or selling in France its Juvederm products, requiring theto transfer of various domain names and payment ofto pay provisional damages to Allergan, on the basis that such use would infringe Allergan’s EU and French JUVÉDERMJuvéderm® trademarks and would amount to unfair competition. This injunction has been appealed. Allergan Francebecome final. A subsidiary of the Company has also filed against Dermavita, Dima Corp. and others a full action of trademark infringement in the Paris court. The first case management hearing is scheduled for November 7, 2017. Dermavita has submitted two requests that the full action be stayed pending the outcome of the Nanterre action and the EUIPO trademark proceedings, both mentioned below. The Paris court rejected Dermavita’s first stay request and subsequently ordered the defendants to pay more than 75,000 Euros in liquidated damages for violation of the preliminary injunction mentioned above. Dermavita’s second request for a stay remains pending. Furthermore, Dermavita filed an action against Allergansubsidiaries of the Company in the Nanterre, France court alleging that Allergan hasthe subsidiaries have not used its JUVÉDERMJuvéderm trademark and requesting the court to revoke Allergan’s trademark. Allergan’s response papers are due December 4, 2017. the Company’s trademark based on its purported lack of use or purportedly invalid license and assignment agreements. On February 21, 2019, the Nanterre Court ruled in the Company’s favor, holding that the license and assignment agreements were valid and that Allergan has used its trademark in commerce. Dermavita has appealed this decision.
On January 22, 2019, subsidiaries of the Company brought a related action for infringement of the Company’s Juvéderm®trademarks against Aesthetic Services and Development Limited, Juvederm Elite Clinics SARL and Jamal Hamadi in the (UK) High Court of Justice. The case is in its early stages and no trial date has been set.
Furthermore, more than 50150 trademark opposition and cancellation actions between Allergan and Dermavita remain pendinghave been filed in front of the USPTO, EUIPO and various other national and regional trademark offices around the world. Most of these actions remain pending; however, Allergan has received favorable decisions in more than thirty (30) such actions.
Antitrust Litigation
Asacol® Litigation. Class action complaints have been filed against certain subsidiaries of the Company on behalf of putative classes of direct and indirect purchasers. The lawsuits have been consolidated in the U.S. District Court for the District of Massachusetts. The complaints allege that plaintiffs paid higher prices for Asacol® HD and Delzicol® as a result of alleged actions preventing or delaying generic competition in the market for an older Asacol® product in violation of U.S. federal antitrust laws and/or state laws. Plaintiffs seek unspecified injunctive relief, treble damages and/or attorneys’ fees. The Company has settled the claims brought by the direct purchaser plaintiffs. While the district court granted the indirect purchaser plaintiffs’ motion for class certification, the Court of Appeals for the First Circuit later issued a decision reversing the lower court’s decision on class certification. The appellate court denied plaintiffs’ motion for rehearing en banc and remanded the case back to the District Court where the court denied plaintiffs’ renewed motion for class certification. Recently, defendants made offers of judgment to the three remaining individual plaintiffs pursuant to Rule 68 of the Federal Rules of Civil Procedures which the plaintiffs have accepted. The Rule 68 letters have been presented to the court so that it can enter final judgment in these cases.
Loestrin® 24 Litigation. Putative classes of direct and indirect purchasers as well as opt-out direct purchasers have filed complaints that have been consolidated in the U.S. District Court for the District of Rhode Island. The lawsuits allege that subsidiaries of the Company engaged in anticompetitive conduct, including when settling patent lawsuits related to Loestrin® 24 Fe, in violation of federal and state antitrust and consumer protection laws. The complaints each seek declaratory and injunctive relief and damages. The court recently granted the direct purchaser plaintiffs’ class certification motion and has yet to rule on the indirect purchaser plaintiffs’ class motion. Summary judgement briefs are now fully briefed.
Namenda® Litigation. In 2014, the State of New York filed a lawsuit in the U.S. District Court for the Southern District of New York alleging that Forest was acting to prevent or delay generic competition to Namenda® in violation of federal and New York antitrust laws and committed other fraudulent acts in connection with its commercial plans for Namenda® XR. The district court granted the state’s motion for a preliminary injunction which was later affirmed by the Court of Appeals for the Second Circuit. The parties in that case then reached a settlement to resolve the dispute. Following the conclusion of the New York Attorney General Matter, putative class actions were filed on behalf of direct and indirect purchasers in the same federal court. The class action complaints make claims similar to those asserted by the New York Attorney General and also include claims that Namenda® patent litigation settlements between a Company subsidiary and generic companies also violated the antitrust laws. Plaintiffs seek unspecified injunctive relief, treble damages and attorneys’ fees. The court has denied defendants’ motion for summary judgement in the direct purchaser action, certified the direct purchaser class of plaintiffs and set a trial date for October 2019. The court granted defendants’ motion to bifurcate the trial into separate phases in which the claims relating to the patent litigation settlements will be tried to verdict followed by the claims relating to Forest’s plans for Namenda XR.
Restasis® Competitor Litigation. Shire, which offers the dry-eye disease drug Xiidra®, sued subsidiaries of the Company in U.S. District Court for the District of New Jersey alleging that defendants unlawfully harmed competition by foreclosing Xiidra® from sales to Medicare Part D plans (and the members of such plans) through the use of discounts (a) contingent on Restasis® receiving preferential formulary treatment; and/or (b) across a bundle of Allergan’s products, including Restasis®. The complaint seeks injunctive relief and damages under federal and state law. The court issued a decision on March 22, 2019 granting the defendants’ motion to dismiss the complaint. On April 25, 2019, Shire filed an amended complaint. Defendants have moved to dismiss the amended complaint. At the request of the parties, the court entered an Order on June 28, 2019, staying the action through December 27, 2019.
Restasis® Class Action Litigation. Several class actions were filed on behalf of putative classes of direct and indirect purchasers of Restasis® alleging that subsidiaries of the company harmed competition by engaging in conduct to delay the market entry of generic versions of Restasis® in violation of the federal antitrust laws as well as state antitrust and consumer-protection laws and unjust enrichment. The cases have been consolidated in the U.S. District Court for the District of New Jersey. All plaintiffs seek damages, declaratory relief, and injunctive relief. The parties are currently engaged in discovery.
Commercial Litigation
Celexa®/Lexapro® Class Actions. Certain subsidiaries of the Company were named in federal court actions relating to the promotion of Celexa® and/or Lexapro® all of which were consolidated in an MDL proceeding in the U.S. District Court for the District of Massachusetts. Most of these claims were resolved through a settlement in September 2014. However, two lawsuits remain which assert claims under the federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act. The court had entered summary judgment in favor of the defendants in both actions and denied plaintiffs’ class certification motions. Plaintiffs in both cases appealed the dismissal of their claims and denial of class certification to the United States Court of Appeals for the First Circuit and the appeals court issued a decision in January 2019 affirming the denial of the class certification motions but reversing the lower court’s decision granting the defendants’ summary judgment motions.
Warner Chilcott Marketing Practices. A putative nationwide class of private payer entities, or their assignees, that paid Medicare benefits on behalf of their beneficiaries filed a complaint against certain subsidiaries of the Company in the U.S. District Court for the District of Massachusetts. The complaint asserts claims under the federal RICO statute, state consumer protection statutes, common law fraud, and unjust enrichment with respect to the sale and marketing of certain products. The Court recently granted Defendants’ motion to dismiss the amended complaint.
Generic Drug Pricing Securities and ERISA Litigation. Putative classes of shareholders and two individual opt-out plaintiffs filed class action lawsuits against the Company and certain of its current and former officers alleging that defendants made materially false and misleading statements between February 2014 and November 2016 regarding the Company’s internal controls over its financial reporting and that it failed to disclose that its former Actavis generics unit had engaged in illegal, anticompetitive price-fixing with its generic industry peers. These lawsuits have been consolidated in the U.S. District Court for the District of New Jersey. The complaints seek unspecified monetary damages. On April 11, 2019, the court heard oral arguments on the Company’s motion to dismiss the complaint. In addition, class action complaints have been filed premised on the same alleged underlying conduct that is at issue in the securities litigation but that assert claims under the Employee Retirement Income Security Act of 1974 (“ERISA”). These complaints have been consolidated in the district court in New Jersey. The court granted the Company’s motion to dismiss this complaint. The ERISA plaintiffs have appealed this decision to the Third Circuit Court of Appeals.
Prescription Opioid Drug Abuse Litigation. The Company has been named as a defendant, along with several other manufacturers and distributors of opioid products, in over 2,000 matters relating to the promotion and sale of prescription opioid pain relievers and additional suits have been filed. The lawsuits allege generally that the manufacturer defendants engaged in a deceptive campaign to promote their products in violation of state laws and seek unspecified monetary damages, penalties and injunctive relief. Plaintiffs in these suits include states, political subdivisions of states (i.e., counties and municipalities), Native American tribes and other private litigants such as insurance plans, hospital systems and consumers who were prescribed opioid products and were subsequently treated for an overdose or addiction. Cases are pending in both federal and state courts. The federal court cases have been consolidated in an MDL in the U.S. District Court for the Northern District of Ohio, with a first set of cases set for trial in October 2019.
Testosterone Replacement Therapy Class Action. Subsidiaries of the Company were named in a class action complaint filed on behalf a putative class of third-party payers in the U.S. District Court for the Northern District of Illinois. The suit alleges that the Company’s subsidiaries violated various laws including the federal RICO statute and state consumer protection laws in connection with the sale and marketing of Androderm®. The class plaintiffs seek to obtain certain equitable relief, including injunctive relief and an order requiring restitution and/or disgorgement, and to recover damages and multiple damages in an unspecified amount. While the lawsuit is ongoing, the court has denied plaintiff’s class certification motion. On February 14, 2019, the court granted Defendants’ motion for summary judgment, dismissing the case in its entirety. On June 12, 2019, plaintiffs/appellants filed their opening brief in the Seventh Circuit. Appellees’ Seventh Circuit brief was filed on July 17, 2019.
Oculeve Shareholder Dispute. On February 26, 2019, Fortis Advisors LLC, as a representative of the former stockholders of Oculeve, Inc., filed a lawsuit against a subsidiary of the Company in state court in Delaware. The lawsuit centers on a claim that the Company breached the terms of a July 2015 merger agreement. The Company subsidiary has moved to dismiss the complaint.
Product Liability Litigation
Actonel® Litigation. Warner ChilcottA subsidiary of the Company is a defendant in approximately 168over 500 filed cases in federal and a potential defendant with respect to approximately 369 unfiled claims involving a total of approximately 539 claimantsvarious state courts, relating to Warner Chilcott’sthe bisphosphonate prescription drug Actonel®. In addition, there are three cases pending in provincial courts in Canada, two involving single plaintiffs, and a third on behalf of a purported class of injured plaintiffs. The claimantscomplaints allege, among other things, that Actonel® caused them to suffer osteonecrosis of the jaw (“ONJ”), a rare but serious condition that involves severe loss or destruction of the jawbone, and/or atypical fractures of the femur. Warner Chilcott is in the initial stages of discovery in these litigations. All of the filed casesPlaintiffs are in either federal or state courts in the United States, with the exception of one purported product liability class action involving a total of two plaintiffs that was brought against Warner Chilcott in a provincial court in Canada. The Canadian action alleges, among other things, that Actonel® caused the plaintiffs and the proposed class members who ingested Actonel® to suffer ONJ or other side effects. It is expected that these plaintiffs will seek class certification. Plaintiffs have typically asked forseeking unspecified monetary and injunctive relief, as well as attorneys’ fees. Warner ChilcottThe Company subsidiary is being indemnified by Sanofi for certain Actonel claims pursuant to a collaborationan agreement relating to the two parties’ co-promotion of the product in the United Stateswith Sanofi and other countries. In addition, Warner Chilcott is alsobeing partially indemnified by the Procter & Gamble Company (“P&G”) for ONJ claims that were pending at the time Warner Chilcottthe Company subsidiary acquired P&G’s global pharmaceutical business in October 2009. In May and September 2013, Warner Chilcott entered into two settlement agreementsSettlements have been reached that have resolved a majoritymost of the then-existingpending ONJ-related claims.
AlloDerm Litigation. LifeCell Corporation is named as Recently, all pending Actonel cases in New Jersey state court were dismissed without prejudice subject to refilling after the U.S. Supreme Court issues a defendantdecision in approximately 335 lawsuitsMerck Sharp & Dohme Corp. v. Albrecht, Doc. No. 17-290. The U.S. Supreme Court issued its decision on May 20, 2019 and remanded the Merck case to the Third Circuit.
Breast Implant Litigation. Certain Company subsidiaries are defendants in more than a dozen cases alleging that its biologic mesh product AlloDerm did not performAllergan’s textured breast implants caused women to develop an uncommon condition known as intendedbreast implant associated anaplastic large cell lymphoma (“BIA-ALCL”), and caused various injuries. Plaintiffs allegethat the product was defectively designed or manufactured and/or did not have proper warnings. These cases are consolidated in Superior Court of New Jersey, Middlesex County. Priordefendants failed to properly warn against this risk and failed to promptly and properly report the close of its sale to Allergan, LifeCell mediated the New Jersey cases in December 2016 and negotiated a settlement of its pending New Jersey cases, which was paid by LifeCell on April 19, 2017. Approximately 332results of the post-marketing studies relating to these products. These cases have been dismissed, with the balance anticipated to be dismissed pending estate filings. LifeCell’s insurers participatedfiled in both federal and state courts in the settlement. One other case is pendingUnited States and well as provincial courts in Oklahoma butCanada. Five of the Canadian cases have been asserted on behalf putative classes of consumers. On July 24, 2019, Allergan announced a voluntary worldwide recall of unused BIOCELL textured breast implants and tissue expanders. This announcement may impact the number of product liability lawsuits related to BIA-ALCL filed.
Benicar® Litigation. A subsidiary of the Company has not yet been served.
Benicar® Litigation. Forest is named in approximately 1,759 actionsa number of lawsuits involving allegations that Benicar®, a treatment for hypertension that Forest co-promoted with Daiichi Sankyo between 2002 and 2008, caused certain gastrointestinal injuries. Under Forest’s Co-Promotion Agreement,a co-promotion agreement, Daiichi Sankyo is defending Forestthe Company subsidiary in these lawsuits. On August 1, 2017, Daiichilawsuits and has announced that it has agreed to enter into a program to settle all of the pending cases on behalf of all defendants, this pending product liability litigation against various Daiichi Sankyo and Forest entities.including the Company subsidiary.
Celexa®/Lexapro® Litigation. Certain Forest entitiesCompany subsidiaries are defendants in approximately 166over 150 actions alleging that Celexa®Celexa® or Lexapro® caused various birth defects. Several of the cases involve multiple minor-plaintiffs. The majority of these actions have been consolidated in state court in Missouri. The Company has reached an agreement with plaintiffs to settle fiveMissouri; none of the pending cases. There are birth defect cases pending in other jurisdictions, none of whichactions are set for trial.
RepliForm Litigation. LifeCell Corporation is® Litigation. A Company subsidiary has been named as a defendant in approximately 250over 300 cases alleging that its biologic mesh product RepliForm® did not perform as intended and caused various injuries. Plaintiffs allege the product was defectively designed or manufactured and/or did not have proper warnings. In allThe majority of those cases Boston Scientific Corporation, LifeCell’s distributor, has been named as a co-defendant. In addition, a significant portion of those cases also name another manufacturer as a defendant whose product was implanted at the same time. All but a few of thethese cases have been consolidated for centralized management in the Superior Court of Massachusetts, Middlesex County. The other cases are venued in federalstate court in West Virginia, andMassachusetts, with the rest pending in state courts in Delaware and Minnesota. TheMinnesota and the federal court in West Virginia. Approximately 200 of these cases are still in the early stages of pleadings and discovery has not yet begun.have been settled or dismissed.
Testosterone Litigation. Beginning in 2014, aA number of product liability suits were filed against Actavis, Inc., now known as Allergan Finance, LLC, and one or more of its formercertain Company subsidiaries as well as other manufacturers and distributors of testosterone products, for personal injuries including but not limited to cardiovascular events allegedly arising out of the use of Androderm.Androderm® There are approximately 565 currently pending actions which. The cases have been consolidated in an MDL in federal court inthe U.S. District Court for Northern District of Illinois. The defendants have respondedIn mid-2018, the parties reached an agreement to settle all of the plaintiffs’ master complaint in the MDL and discovery is ongoing. The Company anticipates that additional suits will be filed.pending cases.
Government Investigations, Government Litigation and Qui Tam Litigation
Forest. Forest received a subpoena, dated April 29, 2015, from the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”). The subpoena requests documents relating to Average Manufacturer (“AMP”) and Best Price calculations for several of its products. Subsequently, Forest received a Civil Investigative Demand (“CID”) from the OIG, dated August 16, 2016 primarily related to the calculation of Best Price. The Company is cooperating fully with the OIG’s requests.
In April 2014, the federal district court in Massachusetts unsealed a qui tam complaint which asserts claims under the False Claims Act and contains allegations regarding off-label promotion of Namenda®. The Company filed a motion to dismiss the relator’s Second Amended Complaint and the court granted in part and denied in part Forest’s motion, dismissing the False Claims Act conspiracy claim only. On October 7, 2016, the Company filed a second motion to dismiss the relator’s second amended complaint based on newly discovered evidence. On April 28, 2017, the court issued a decision in which it granted the Company’s motion. Plaintiff has agreed to withdraw his appeal of the district court’s decision. The U.S. Attorney’s Office declined to intervene in this action but has reserved the right to do so at a later date.
Forest and certain of its affiliates are defendants in three state court actions pending in Illinois, Utah and Wisconsin involving qui tam actions alleging generally that the plaintiffs (all government agencies) were overcharged for their share of Medicaid drug reimbursement costs. Forest and the other defendants filed a motion to dismiss Utah’s amended complaint. This motion to dismiss was denied in part. On October 30, 2017, the Company reached an agreement to settle the Utah action. On February 17, 2014, the Wisconsin state court granted defendants’ motion to dismiss plaintiff’s second amended complaint. However, the relator filed a separate action making the same basic allegations as in its amended complaint in the original action. On May 17, 2017, the Wisconsin state court granted defendants’ motion to dismiss the amended complaint.
On December 28, 2015, a putative class action complaint was filed in state court in Pennsylvania on behalf of a putative class of private payers. Defendants removed the complaint to the federal court in Pennsylvania. The complaint alleges that manufacturers of generic drugs, including a subsidiary of Forest Laboratories, Inc. that in the past had marketed generic products, caused plaintiffs to overpay for prescription drug products through the use of inflated AWPs. The complaint alleges violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, negligent misrepresentation/fraud, unjust enrichment, civil conspiracy and aiding and abetting. Plaintiffs filed an amended complaint on March 29, 2016. On May 3, 2016, the court issued an order staying this action. On June 26, 2017, the Company filed a motion to dismiss the complaint which the court granted on September 25, 2016. An additional complaint was filed in state court in Pennsylvania on behalf an individual indirect purchaser containing similar allegations to the class complaint. On January 18, 2017, defendants filed a motion to dismiss the complaint. On July 24, 2017, the state court issued a decision on the Company’s individual motion to dismiss, granting it in part and denying it in part.
Allergan. On April 18, 2017, the Company received a CID, dated April 12, 2017, from the Department of Justice. The CID seeks information relating to the Company’s sales and marketing practices of Botox to urology practices. The Company is cooperating fully with DOJ requests.
On October 3, 2017, the Company received a letter from the House of Representatives Committee on Oversight and Government Reform. The letter seeks information relating to the Saint Regis Mohawk Tribe’s acquisition of six Restasis® patents and the granting of exclusive licenses to the Restasis® product to the Company. The Company has received other information requests from regulatory agencies concerning the transaction and is cooperating fully with these requests.
Actavis/Watson. On October 16, 2017, the Company received a CID from the State of North Carolina Department of Justice. The CID seeks information relating to the legacy Watson company’s reporting of AMP calculations. The Company is cooperating fully with the state’s requests.
The Company has received subpoenas from multiple states relating to the legacy Actavis and Watson companies’ promotional efforts relating to opioid products, none of which are currently promoted and many of which the Company no longer sells. The Company is cooperating fully with the states’ requests.
The Company and its affiliatessubsidiaries are involved in various other disputes, governmental and/or regulatory inspections, inquires, investigations and proceedings that could result in litigation, and other litigation matters that arise from time to time.
Company subsidiaries have received subpoenas and/or Civil Investigative Demands (“CID”) from the United States Department of Justice, the United States Health and Human Services, Office of Inspector General, United States Congressional Committees as well as various state regulatory and enforcement authorities. Each of the subpoenas and CIDs seek documents and information relating to discrete topics, including but not limited to: the calculation and reporting by certain Company subsidiaries of their Average Manufacturer Prices, Average Wholesale Prices and Best Prices for several of their products; sales and marketing practices of Botox to urology practices; the promotion and sale of two gastroenterology products; the Saint Regis Mohawk Tribe’s acquisition of six Restasis patents and the granting of exclusive licenses to the Restasis product to the Company; and, the promotion and sale of opioid products. In each case, the Company and its subsidiaries are cooperating fully with the governmental authority’s requests.
Certain states have initiated lawsuits and qui tam lawsuits have been filed by private parties, also known as relators, on behalf of the federal or state governments. Certain Company subsidiaries have been named as defendants in lawsuits that allege generally that state Medicaid agencies were overcharged for their share of Medicaid drug reimbursement costs due to inflated Average Wholesale Prices (“AWP”) reported by the Company subsidiaries. AWP lawsuits are currently pending in Illinois, Utah and Wisconsin.
Namenda XR®/Namzaric® Qui Tam. A relator filed a qui tam lawsuit on behalf of the United States government and several individual states against the Company and certain of its subsidiaries along with Adamas Pharma LLC and Adamas Pharmaceuticals, Inc. (collectively, “Adamas”). The lawsuit, filed in the U.S. District Court for the Northern District of California, was unsealed on February 6, 2019. The federal and state governments have declined to intervene in this action. The complaint alleges generally that the Adamas and Allergan defendants each engaged in conduct that delayed generic versions of Namenda XR® and/or Namzaric® from entering the market and that such conduct resulted in the submission of false claims to the government. The Company defendants and Adamas have moved to dismiss the complaint.
Medical Aesthetics Qui Tam. A subsidiary of the Company was recently served with a qui tam lawsuit that was filed in the U.S. District Court for the Central District of California on behalf of the United States and several individual states. The federal and state governments have declined to intervene in this action. The complaint alleges that certain promotional programs and sampling practices of the Company’s Medical Aesthetics business result in price reporting violations and violate anti-kickback statutes. The Company subsidiary has moved to dismiss this complaint.
Matters Relating to the Company’s Divested Generics Business
The following matters relate to the former generics business of the Company or the transaction pursuant to which that business was sold to Teva, effective August 2, 2016. TheTeva has agreed to indemnify and defend the Company believes that with respect to claims by Tevaagainst all matters asserted in litigation against the Company it has substantial meritorious defenses. Furthermore,arising out of the Master Purchase Agreement under which the globalformer generics business, was sold provides for assumption by Teva of liabilitiesincluding litigations and claimsinvestigations relating to generic opioid products including, without limitation, the generics business and indemnification by Teva for losses imposed on, sustained, incurred or suffered by or asserted against the Company for third party claims relating to the generics business. With respect to third party claims, it has substantial and meritorious claims for indemnification by Teva for these matters and failing same, substantial and meritorious defenses with respect to the underlying claims against the Company and/or its current subsidiaries; and in each case the Company intends to assert and/or defends claims vigorously. However, it is impossible to predict with certainty the outcome of any litigation or indemnity claims.actions described below.
Lidoderm® Litigation. On March 30, 2016, theThe U.S. Federal Trade Commission filed a lawsuit in federal district court in the Eastern District of Pennsylvania against the Company and one of its former global generics business subsidiaries Watson Laboratories, Inc., Endo Pharmaceuticals Inc. and others arising out ofalleging that patent litigation settlements relating to Lidoderm and Opana ER.were anticompetitive. The Lidoderm settlement was reached by Endo Pharmaceuticals Inc. and Watson Laboratories, Inc. in May 2012, prior to it’s being affiliated with the Company, and all allegations against the Company and Watson Laboratories, Inc. related to the Lidoderm settlement only. On October 25, 2016, the FTC voluntarily withdrew its complaint in federal courtPennsylvania and filed a similar complaint in Pennsylvania. Similarthe U.S. District Court for the Northern District California where similar lawsuits filed by private plaintiffs were already pending inand where the federal district court in California. On January 23, 2017, both the FTC and State of California filed complaintsa similar complaint against the Watson Laboratories, Endo Pharmaceuticals as well as the Company and its subsidiary Allergan Finance LLCsame defendants. Defendants in the same federal court in California alleging violations of federal and state antitrust laws. The FTC and California complaints contain allegations relating to the Lidoderm settlement only and seek injunctive relief, restitution or disgorgement of profits and, in the CaliforniaPennsylvania action statutory penalties. On January 27, 2017, Allergan Finance LLC filed a declaratory judgment action against the FTC in the samePennsylvania federal district court inbut the Eastern District of Pennsylvania wherecourt granted the FTC’s original action had been pending. The court consolidated Allergan Finance’s action with declaratory judgment actions that had already been filed by other parties that were named as defendants in the original FTC action in Pennsylvania and the plaintiffs filed a consolidated, amended complaint on February 14, 2017. On March 2, 2017, the FTC filed a motion to dismiss the amended complaint. In April 2017, thethis lawsuit. The FTC and State of California’s actions were stayed pending the declaratory judgment action in the Eastern District of Pennsylvania. On May 9, 2017,The former global generics entities reached agreements with the government and private plaintiffs filed a motion for summary judgmentto resolve this action in the Eastern District of Pennsylvania.
Generic Drug Pricing Securities and ERISA Litigation. On November 4, 2016, a class action was filed by a putative class of Allergan shareholders in federal court in Californiaits entirety, including with respect to any claims against the Company and certain of its current and former officers alleging that the Company and certain of its current and former officers made materially false and misleading statements. The complaint alleges generally that between February 2014 and November 2016, Allergan and certain of its officers made materially false and misleading statements regarding the Company’s internal controls over its financial reporting and failed to disclose that its Actavis generics unit had engaged in illegal, anticompetitive price-fixing with its generic industry peers. The complaint seeks unspecified monetary damages. Additional complaints have been filed in other federal district courts. On February 2, 2017, the actions were consolidated in the federal district court in New Jersey. Plaintiffs filed a consolidated amended complaint on May 1, 2017. The Company filed a motion to dismiss plaintiffs’ consolidated amended complaint on July 17, 2107. Plaintiffs filed their opposition on September 15 and the Company filed its reply on October 6, 2017. On February 14, 2017, a separate complaint was filed in the federal district court in California that is premised on the same alleged underlying conduct that is at issue in the securities litigation but that asserts claims under the Employee Retirement Income Security Act of 1974 (“ERISA). A similar lawsuit was filed in the federal district court in New Jersey on March 7, 2017. The ERISA complaints assert claims on behalf of a putative class of individuals who participated in the Company’s retirement plans and seek an unspecified amount of damages and other injunctive relief. On June 26, 2017, the Company filed a motion to stay or transfer venue in the California ERISA matter to the District of New Jersey, after which time plaintiffs agreed to stipulate to the transfer. The Company’s motion to consolidate the matters was granted on August 21, 2017, and a consent discovery order entered. Plaintiffs have until October 18 to file an amended consolidated complaint. Company.
Hydrocortisone Investigation. On November 10,In 2016, the Company received notice from the UK Competition and Markets Authority (“CMA”) that it would be included within the scope of the CMA’s formal investigation under Section 25 of the Competition Act of 1998 (“CA98”) into suspected abuse of dominance by a former generics business subsidiary of the Company in relation to the supply of 10mg and 20mg hydrocortisone tablets. The CMA is investigatinginvestigating: (i) alleged excessive and unfair prices with respect to hydrocortisone tablets and (ii) whether the former generics business subsidiary entered into anti-competitive agreements with a potential competitor relating to the hydrocortisonefor this product. The CMA is investigating whether the conduct infringes the Chapter II prohibition of the CA98 and/or Article 102 of the Treaty on the Functioning of the European Union. The CMAhas issued a statementstatements of objection with respect to the alleged excessive and unfair pricing in December 2016 and a separate statementboth parts of objection with respect to the alleged anti-competitive agreements in March 2017.its investigation. The Company intends to cooperate fully with the investigation.
Teva Shareholder Derivative Litigation. On or about February 26,In 2017, Allergan plcthe Company was named as defendant in a proposed Teva shareholder derivative litigation filed in the Economic Division of the Tel Aviv District Court in Israel. In order to proceed with the lawsuit, plaintiffs have to secure court approval and have filed a motion seeking such approval. The lawsuit contains allegations directed atthat the Company aided and abetted Teva’s board of directors andviolations of Israeli securities laws. To date, the approval process needed by Teva to approve the Master Purchase Agreement and also includes claims regarding the amount and form of consideration Teva paid in connection with the Master Purchase Agreement. The Israeli court recently granted a procedural motion to consolidate a separate action that was filed against Teva only with the action that was filed on February 26th. Pursuant to the court’s order, plaintiffs have filed a consolidated motion seeking approval from the court to commence the shareholder derivative suit.
Teva Working Capital Dispute. In October 2016, pursuant to our agreement with Teva, Teva provided the Company with its proposed estimated adjustment to the closing date working capital balance. The Company disagrees with Teva’s proposed adjustment, and, pursuant to our agreement with Teva, each of the Company’s and Teva’s proposed adjustments have been submitted to arbitration to determine the working capital amount in accordance with GAAP as applied by the Company consistent with past practice. Teva initially proposed an adjustment of approximately $1.4 billion and subsequently submitted a revised adjustment of approximately $1.5 billion to the arbitrator, and the final amount of any contractual adjustment as determined in accordance with the Working Capital Arbitration could vary materially from the adjustment calculated by the Company and would be reflected in our financial statements for discontinued operations. In addition, on October 30, 2017, Teva submitted a Notice of Direct and Third Party Claims seeking indemnification for virtually all of the same items for which Teva is seeking a proposed adjustment in the Working Capital Arbitration as well as several new items as to which no quantity of damages has been asserted, and which the Company is currently evaluating, and the Company has not determined that a loss is probable or estimable aswhether it will allow plaintiffs to those additional items. Teva is not entitled to a “double recovery” for the same damages in the Working Capital Arbitration and under an indemnification theory and is subject to further limitations on recovery as set forth in the Master Purchase Agreement under which the global generics business was sold. Any adjustment to the Company’s proceeds from the Teva Transaction as a result of the Working Capital Arbitration or the indemnification claims could have a material adverse effect on the Company’s results of operations and cash flows, including the Company’s fiscal year 2017 results of operations and fiscal year 2018 cash flows. In the event the Working Capital Arbitration goes forward as scheduled, the Company anticipates a decision from the Working Capital Arbitration in the first quarter of 2018 in accordanceproceed with the current timeline agreed by the parties and arbitrator. Any potential resolution of the claims for indemnity will be subject to additional assertions of claims by Teva at a later date. Disputes related to matters asserted for indemnification would be subject to judicial resolution in accordance with the Master Purchase Agreement.
this action.
NOTE 21 — Warner Chilcott Limited (“WCL”) Guarantor and Non-Guarantor Condensed Consolidating Financial Information
The following financial information is presented to segregate the financial results of WCL, Allergan Funding SCS, and Allergan Finance, LLC (the issuers of the long-term notes), the guarantor subsidiaries for the long-term notes and the non-guarantor subsidiaries. The guarantors jointly and severally, and fully and unconditionally, guarantee the Company’s obligation under the long-term notes.
The information includes elimination entries necessary to consolidate the guarantor and the non-guarantor subsidiaries. Investments in subsidiaries are accounted for using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries, equity and intercompany balances and transactions.
WCL, Allergan Capital S.à.r.l. and Allergan Finance, LLC are guarantors of the long-term notes. The Company anticipates future legal entity structure changes which may impact the presentation of this footnote in the near future.
WCL has revised its consolidating balance sheets as previously presented in Footnote 2526 of the December 31, 20162018 Annual Report on Form 10-K and its consolidating financial statements as previously presented in Footnote 2120 of the SeptemberJune 30 2016, 2018 Quarterly Report on Form 10-Q due to a change in the Company’s legal entity structure and other reclassifications that occurred during the ninesix months ended SeptemberJune 30 2017., 2019. As a result, prior period information has been recast to conform to the current period presentation.
The following financial information presents the consolidating balance sheets as of SeptemberJune 30 2017, 2019 and December 31, 2016,2018, the related statementstatements of operations for the three and ninesix months ended SeptemberJune 30 2017, 2019 and 20162018 and the statementstatements of cash flows for the ninesix months ended SeptemberJune 30 2017, 2019 and 2016.2018.
Consolidating Balance Sheets
As of SeptemberJune 30, 20172019
(Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||||||||||||||||||||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Current assets: |
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Cash and cash equivalents |
| $ | 0.1 |
|
| $ | 29.7 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,578.7 |
|
| $ | - |
|
| $ | 1,608.5 |
|
| $ | 0.1 |
|
| $ | 8.1 |
|
| $ | 0.1 |
|
| $ | - |
|
| $ | 1,641.7 |
|
| $ | - |
|
| $ | 1,650.0 |
|
Marketable securities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,829.1 |
|
|
| - |
|
|
| 3,829.1 |
|
|
| - |
|
|
| 100.1 |
|
|
| - |
|
|
| - |
|
|
| 222.2 |
|
|
| - |
|
|
| 322.3 |
|
Accounts receivable, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,808.6 |
|
|
| - |
|
|
| 2,808.6 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,086.3 |
|
|
| - |
|
|
| 3,086.3 |
|
Receivable from Parents |
|
| - |
|
|
| 4,824.2 |
|
|
| - |
|
|
| - |
|
|
| 484.7 |
|
|
| - |
|
|
| 5,308.9 |
| ||||||||||||||||||||||||||||
Inventories, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 899.8 |
|
|
| - |
|
|
| 899.8 |
| ||||||||||||||||||||||||||||
Receivables from Parents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 210.6 |
|
|
| - |
|
|
| 210.6 |
| ||||||||||||||||||||||||||||
Inventories |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,004.5 |
|
|
| - |
|
|
| 1,004.5 |
| ||||||||||||||||||||||||||||
Intercompany receivables |
|
| - |
|
|
| 9,481.2 |
|
|
| 5,308.4 |
|
|
| 75.9 |
|
|
| 30,134.2 |
|
|
| (44,999.7 | ) |
|
| - |
|
|
| - |
|
|
| 3,298.1 |
|
|
| 217.2 |
|
|
| 28.2 |
|
|
| 27,235.6 |
|
|
| (30,779.1 | ) |
|
| - |
|
Prepaid expenses and other current assets |
|
| - |
|
|
| 5.0 |
|
|
| - |
|
|
| 89.7 |
|
|
| 866.3 |
|
|
| - |
|
|
| 961.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33.3 |
|
|
| 2,471.7 |
|
|
| - |
|
|
| 2,505.0 |
|
Total current assets |
|
| 0.1 |
|
|
| 14,340.1 |
|
|
| 5,308.4 |
|
|
| 165.6 |
|
|
| 40,601.4 |
|
|
| (44,999.7 | ) |
|
| 15,415.9 |
|
|
| 0.1 |
|
|
| 3,406.3 |
|
|
| 217.3 |
|
|
| 61.5 |
|
|
| 35,872.6 |
|
|
| (30,779.1 | ) |
|
| 8,778.7 |
|
Property, plant and equipment, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,802.2 |
|
|
| - |
|
|
| 1,802.2 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,821.0 |
|
|
| - |
|
|
| 1,821.0 |
|
Right of use asset - operating leases |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 457.9 |
|
|
| - |
|
|
| 457.9 |
| ||||||||||||||||||||||||||||
Investments and other assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 269.9 |
|
|
| - |
|
|
| 269.9 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 335.2 |
|
|
| - |
|
|
| 335.2 |
|
Investment in subsidiaries |
|
| 78,649.5 |
|
|
| 84,325.9 |
|
|
| - |
|
|
| 70,820.7 |
|
|
| - |
|
|
| (233,796.1 | ) |
|
| - |
|
|
| 57,413.8 |
|
|
| 65,995.6 |
|
|
| 25,114.8 |
|
|
| 95,506.7 |
|
|
| - |
|
|
| (244,030.9 | ) |
|
| - |
|
Non current intercompany receivables |
|
| - |
|
|
| 31,706.5 |
|
|
| 20,938.0 |
|
|
| - |
|
|
| 30,867.5 |
|
|
| (83,512.0 | ) |
|
| - |
|
|
| - |
|
|
| 15,939.7 |
|
|
| - |
|
|
| - |
|
|
| 1,115.4 |
|
|
| (17,055.1 | ) |
|
| - |
|
Non current receivables from Parents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,964.0 |
|
|
| - |
|
|
| 3,964.0 |
| ||||||||||||||||||||||||||||
Non current assets held for sale |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 11.1 |
|
|
| - |
|
|
| 11.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 32.5 |
|
|
| - |
|
|
| 32.5 |
|
Deferred tax assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 326.9 |
|
|
| - |
|
|
| 326.9 |
|
|
| - |
|
|
| 49.6 |
|
|
| - |
|
|
| - |
|
|
| 639.5 |
|
|
| - |
|
|
| 689.1 |
|
Product rights and other intangibles |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 56,698.9 |
|
|
| - |
|
|
| 56,698.9 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 41,231.5 |
|
|
| - |
|
|
| 41,231.5 |
|
Goodwill |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 49,770.9 |
|
|
| - |
|
|
| 49,770.9 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 42,340.7 |
|
|
| - |
|
|
| 42,340.7 |
|
Total assets |
| $ | 78,649.6 |
|
| $ | 130,372.5 |
|
| $ | 26,246.4 |
|
| $ | 70,986.3 |
|
| $ | 184,312.8 |
|
| $ | (362,307.8 | ) |
| $ | 128,259.8 |
|
| $ | 57,413.9 |
|
| $ | 85,391.2 |
|
| $ | 25,332.1 |
|
| $ | 95,568.2 |
|
| $ | 123,846.3 |
|
| $ | (291,865.1 | ) |
| $ | 95,686.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
| - |
|
|
| - |
|
|
| 77.9 |
|
|
| - |
|
|
| 4,438.2 |
|
|
| - |
|
|
| 4,516.1 |
|
|
| - |
|
|
| 0.1 |
|
|
| 154.5 |
|
|
| 95.6 |
|
|
| 4,745.0 |
|
|
| - |
|
|
| 4,995.2 |
|
Intercompany payables |
|
| - |
|
|
| 17,174.7 |
|
|
| 1,756.9 |
|
|
| 11,202.6 |
|
|
| 14,865.5 |
|
|
| (44,999.7 | ) |
|
| - |
|
|
| - |
|
|
| 16,431.5 |
|
|
| 356.5 |
|
|
| 10,447.6 |
|
|
| 3,543.5 |
|
|
| (30,779.1 | ) |
|
| - |
|
Payable to Parents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,816.5 |
|
|
| - |
|
|
| 1,816.5 |
| ||||||||||||||||||||||||||||
Payables to Parents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,491.7 |
|
|
| - |
|
|
| 2,491.7 |
| ||||||||||||||||||||||||||||
Income taxes payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 221.1 |
|
|
| - |
|
|
| 221.1 |
|
|
| - |
|
|
| - |
|
|
| 2.4 |
|
|
| - |
|
|
| 91.2 |
|
|
| - |
|
|
| 93.6 |
|
Current portion of long-term debt and capital leases |
|
| - |
|
|
| - |
|
|
| 3,472.6 |
|
|
| - |
|
|
| 324.4 |
|
|
| - |
|
|
| 3,797.0 |
| ||||||||||||||||||||||||||||
Current portion of long-term debt |
|
| - |
|
|
| - |
|
|
| 3,006.4 |
|
|
| - |
|
|
| 87.8 |
|
|
| - |
|
|
| 3,094.2 |
| ||||||||||||||||||||||||||||
Current portion of lease liability - operating |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 123.2 |
|
|
| - |
|
|
| 123.2 |
| ||||||||||||||||||||||||||||
Total current liabilities |
|
| - |
|
|
| 17,174.7 |
|
|
| 5,307.4 |
|
|
| 11,202.6 |
|
|
| 21,665.7 |
|
|
| (44,999.7 | ) |
|
| 10,350.7 |
|
|
| - |
|
|
| 16,431.6 |
|
|
| 3,519.8 |
|
|
| 10,543.2 |
|
|
| 11,082.4 |
|
|
| (30,779.1 | ) |
|
| 10,797.9 |
|
Long-term debt and capital leases |
|
| - |
|
|
| - |
|
|
| 20,938.0 |
|
|
| 2,530.3 |
|
|
| 3,070.8 |
|
|
| - |
|
|
| 26,539.1 |
| ||||||||||||||||||||||||||||
Long-term debt |
|
| - |
|
|
| - |
|
|
| 14,795.2 |
|
|
| 2,141.0 |
|
|
| 2,673.1 |
|
|
| - |
|
|
| 19,609.3 |
| ||||||||||||||||||||||||||||
Lease liability - operating |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 414.8 |
|
|
| - |
|
|
| 414.8 |
| ||||||||||||||||||||||||||||
Other long-term liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,007.0 |
|
|
| - |
|
|
| 1,007.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 821.4 |
|
|
| - |
|
|
| 821.4 |
|
Long-term intercompany payables |
|
| - |
|
|
| 30,718.5 |
|
|
| - |
|
|
| 149.0 |
|
|
| 52,644.5 |
|
|
| (83,512.0 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,115.4 |
|
|
| 15,939.7 |
|
|
| (17,055.1 | ) |
|
| - |
|
Other taxes payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 911.4 |
|
|
| - |
|
|
| 911.4 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,660.8 |
|
|
| - |
|
|
| 1,660.8 |
|
Deferred tax liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,802.0 |
|
|
| - |
|
|
| 10,802.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,968.5 |
|
|
| - |
|
|
| 4,968.5 |
|
Total liabilities |
|
| - |
|
|
| 47,893.2 |
|
|
| 26,245.4 |
|
|
| 13,881.9 |
|
|
| 90,101.4 |
|
|
| (128,511.7 | ) |
|
| 49,610.2 |
|
|
| - |
|
|
| 16,431.6 |
|
|
| 18,315.0 |
|
|
| 13,799.6 |
|
|
| 37,560.7 |
|
|
| (47,834.2 | ) |
|
| 38,272.7 |
|
Total equity / (deficit) |
|
| 78,649.6 |
|
|
| 82,479.3 |
|
|
| 1.0 |
|
|
| 57,104.4 |
|
|
| 94,211.4 |
|
|
| (233,796.1 | ) |
|
| 78,649.6 |
|
|
| 57,413.9 |
|
|
| 68,959.6 |
|
|
| 7,017.1 |
|
|
| 81,768.6 |
|
|
| 86,285.6 |
|
|
| (244,030.9 | ) |
|
| 57,413.9 |
|
Total liabilities and equity |
| $ | 78,649.6 |
|
| $ | 130,372.5 |
|
| $ | 26,246.4 |
|
| $ | 70,986.3 |
|
| $ | 184,312.8 |
|
| $ | (362,307.8 | ) |
| $ | 128,259.8 |
|
| $ | 57,413.9 |
|
| $ | 85,391.2 |
|
| $ | 25,332.1 |
|
| $ | 95,568.2 |
|
| $ | 123,846.3 |
|
| $ | (291,865.1 | ) |
| $ | 95,686.6 |
|
Consolidating Balance Sheets
As of December 31, 20162018
($Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||||||||||||||||||||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Current assets: |
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Cash and cash equivalents |
| $ | 0.1 |
|
| $ | 513.9 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,199.2 |
|
| $ | - |
|
| $ | 1,713.2 |
|
| $ | 0.1 |
|
| $ | 1.8 |
|
| $ | 0.8 |
|
| $ | - |
|
| $ | 875.9 |
|
| $ | - |
|
| $ | 878.6 |
|
Marketable securities |
| - |
|
|
| 6,351.8 |
|
|
| - |
|
|
| - |
|
|
| 5,149.7 |
|
|
| - |
|
|
| 11,501.5 |
|
|
| - |
|
|
| 489.9 |
|
|
| - |
|
|
| - |
|
|
| 537.0 |
|
|
| - |
|
|
| 1,026.9 |
| |
Accounts receivable, net |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,531.0 |
|
|
| - |
|
|
| 2,531.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,868.1 |
|
|
| - |
|
|
| 2,868.1 |
| ||
Receivable from Parents |
| - |
|
|
| 4,196.9 |
|
|
| - |
|
|
| - |
|
|
| 5,092.3 |
|
|
| - |
|
|
| 9,289.2 |
| |||||||||||||||||||||||||||||
Receivables from Parents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 640.9 |
|
|
| - |
|
|
| 640.9 |
| ||||||||||||||||||||||||||||
Inventories |
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 718.0 |
|
|
| - |
|
|
| 718.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 846.9 |
|
|
| - |
|
|
| 846.9 |
| ||
Intercompany receivables |
| - |
|
|
| 24,348.6 |
|
|
| 3,343.5 |
|
|
| 81.6 |
|
|
| 66,840.8 |
|
|
| (94,614.5 | ) |
|
| - |
|
|
| - |
|
|
| 3,534.7 |
|
|
| 961.0 |
|
|
| 16.7 |
|
|
| 24,779.3 |
|
|
| (29,291.7 | ) |
|
| - |
| |
Current assets held for sale |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 34.0 |
|
|
| - |
|
|
| 34.0 |
| ||||||||||||||||||||||||||||
Prepaid expenses and other current assets |
| - |
|
|
| 14.2 |
|
|
| - |
|
|
| 42.7 |
|
|
| 1,325.2 |
|
|
| - |
|
|
| 1,382.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33.3 |
|
|
| 785.4 |
|
|
| - |
|
|
| 818.7 |
| |
Total current assets |
|
| 0.1 |
|
|
| 35,425.4 |
|
|
| 3,343.5 |
|
|
| 124.3 |
|
|
| 82,856.2 |
|
|
| (94,614.5 | ) |
|
| 27,135.0 |
|
|
| 0.1 |
|
|
| 4,026.4 |
|
|
| 961.8 |
|
|
| 50.0 |
|
|
| 31,367.5 |
|
|
| (29,291.7 | ) |
|
| 7,114.1 |
|
Property, plant and equipment, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,611.3 |
|
|
| - |
|
|
| 1,611.3 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,787.0 |
|
|
| - |
|
|
| 1,787.0 |
|
Investments and other assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15.8 |
|
|
| 266.3 |
|
|
| - |
|
|
| 282.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,970.6 |
|
|
| - |
|
|
| 1,970.6 |
|
Investment in subsidiaries |
|
| 88,093.4 |
|
|
| 89,276.0 |
|
|
| - |
|
|
| 73,757.8 |
|
| - |
|
|
| (251,127.2 | ) |
|
| - |
|
|
| 62,940.2 |
|
|
| 73,846.0 |
|
|
| 26,428.5 |
|
|
| 99,328.5 |
|
|
| - |
|
|
| (262,543.2 | ) |
|
| - |
| |
Non current intercompany receivables |
|
| - |
|
|
| 27,706.6 |
|
|
| 22,540.1 |
|
|
| - |
|
|
| 9,686.6 |
|
|
| (59,933.3 | ) |
|
| - |
|
|
| - |
|
|
| 28,239.4 |
|
|
| 18,090.2 |
|
|
| - |
|
|
| 19,674.2 |
|
|
| (66,003.8 | ) |
|
| - |
|
Non current receivables from Parents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,964.0 |
|
|
| - |
|
|
| 3,964.0 |
| ||||||||||||||||||||||||||||
Non current assets held for sale |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 27.0 |
|
|
| - |
|
|
| 27.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 882.2 |
|
|
| - |
|
|
| 882.2 |
|
Deferred tax assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 233.3 |
|
|
| - |
|
|
| 233.3 |
|
|
| - |
|
|
| 43.6 |
|
|
| - |
|
|
| - |
|
|
| 1,020.1 |
|
|
| - |
|
|
| 1,063.7 |
|
Product rights and other intangibles |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 62,618.6 |
|
|
| - |
|
|
| 62,618.6 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 43,695.4 |
|
|
| - |
|
|
| 43,695.4 |
|
Goodwill |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 46,356.1 |
|
|
| - |
|
|
| 46,356.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 45,913.3 |
|
|
| - |
|
|
| 45,913.3 |
|
Total assets |
| $ | 88,093.5 |
|
| $ | 152,408.0 |
|
| $ | 25,883.6 |
|
| $ | 73,897.9 |
|
| $ | 207,619.4 |
|
| $ | (405,675.0 | ) |
| $ | 142,227.4 |
|
| $ | 62,940.3 |
|
| $ | 106,155.4 |
|
| $ | 45,480.5 |
|
| $ | 99,378.5 |
|
| $ | 146,310.3 |
|
| $ | (357,838.7 | ) |
| $ | 102,426.3 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
| - |
|
|
| - |
|
|
| 208.9 |
|
|
| - |
|
|
| 4,784.4 |
|
|
| - |
|
|
| 4,993.3 |
|
|
| - |
|
|
| 0.1 |
|
|
| 156.3 |
|
|
| 92.9 |
|
|
| 4,538.1 |
|
|
| - |
|
|
| 4,787.4 |
|
Intercompany payables |
|
| - |
|
|
| 55,828.8 |
|
|
| 1,652.9 |
|
|
| 9,359.1 |
|
|
| 27,773.7 |
|
|
| (94,614.5 | ) |
|
| - |
|
|
| - |
|
|
| 14,315.0 |
|
|
| 21.7 |
|
|
| 10,442.6 |
|
|
| 4,512.4 |
|
|
| (29,291.7 | ) |
|
| - |
|
Payable to Parents |
|
| - |
|
|
| 334.1 |
|
| - |
|
| - |
|
|
| 1,038.7 |
|
|
| - |
|
|
| 1,372.8 |
| ||||||||||||||||||||||||||||||
Payables to Parents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,829.2 |
|
|
| - |
|
|
| 2,829.2 |
| ||||||||||||||||||||||||||||
Income taxes payable |
|
| - |
|
|
| - |
|
| - |
|
| - |
|
|
| 57.8 |
|
|
| - |
|
|
| 57.8 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 72.4 |
|
|
| - |
|
|
| 72.4 |
| ||
Current portion of long-term debt and capital leases |
|
| - |
|
|
| - |
|
|
| 1,478.1 |
|
|
| 1,197.4 |
|
|
| 122.4 |
|
|
| - |
|
|
| 2,797.9 |
| ||||||||||||||||||||||||||||
Current portion of long-term debt |
|
| - |
|
|
| - |
|
|
| 779.6 |
|
|
| - |
|
|
| 88.7 |
|
|
| - |
|
|
| 868.3 |
| ||||||||||||||||||||||||||||
Total current liabilities |
|
| - |
|
|
| 56,162.9 |
|
|
| 3,339.9 |
|
|
| 10,556.5 |
|
|
| 33,777.0 |
|
|
| (94,614.5 | ) |
|
| 9,221.8 |
|
|
| - |
|
|
| 14,315.1 |
|
|
| 957.6 |
|
|
| 10,535.5 |
|
|
| 12,040.8 |
|
|
| (29,291.7 | ) |
|
| 8,557.3 |
|
Long-term debt and capital leases |
|
| - |
|
|
| - |
|
|
| 22,540.1 |
|
|
| 3,079.0 |
|
|
| 4,351.7 |
|
|
| - |
|
|
| 29,970.8 |
| ||||||||||||||||||||||||||||
Long-term debt |
|
| - |
|
|
| - |
|
|
| 18,090.2 |
|
|
| 2,135.9 |
|
|
| 2,703.3 |
|
|
| - |
|
|
| 22,929.4 |
| ||||||||||||||||||||||||||||
Other long-term liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,086.0 |
|
|
| - |
|
|
| 1,086.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 882.0 |
|
|
| - |
|
|
| 882.0 |
|
Long-term intercompany payables |
|
| - |
|
|
| 9,537.6 |
|
|
| - |
|
|
| 149.0 |
|
|
| 50,246.7 |
|
|
| (59,933.3 | ) |
|
| - |
|
|
| - |
|
|
| 18,597.4 |
|
|
| - |
|
|
| 1,076.8 |
|
|
| 46,329.6 |
|
|
| (66,003.8 | ) |
|
| - |
|
Other taxes payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 886.2 |
|
|
| - |
|
|
| 886.2 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,615.5 |
|
|
| - |
|
|
| 1,615.5 |
|
Deferred tax liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 12,969.1 |
|
|
| - |
|
|
| 12,969.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,501.8 |
|
|
| - |
|
|
| 5,501.8 |
|
Total liabilities |
|
| - |
|
|
| 65,700.5 |
|
|
| 25,880.0 |
|
|
| 13,784.5 |
|
|
| 103,316.7 |
|
|
| (154,547.8 | ) |
|
| 54,133.9 |
|
|
| - |
|
|
| 32,912.5 |
|
|
| 19,047.8 |
|
|
| 13,748.2 |
|
|
| 69,073.0 |
|
|
| (95,295.5 | ) |
|
| 39,486.0 |
|
Total equity / (deficit) |
|
| 88,093.5 |
|
|
| 86,707.5 |
|
|
| 3.6 |
|
|
| 60,113.4 |
|
|
| 104,302.7 |
|
|
| (251,127.2 | ) |
|
| 88,093.5 |
|
|
| 62,940.3 |
|
|
| 73,242.9 |
|
|
| 26,432.7 |
|
|
| 85,630.3 |
|
|
| 77,237.3 |
|
|
| (262,543.2 | ) |
|
| 62,940.3 |
|
Total liabilities and equity |
| $ | 88,093.5 |
|
| $ | 152,408.0 |
|
| $ | 25,883.6 |
|
| $ | 73,897.9 |
|
| $ | 207,619.4 |
|
| $ | (405,675.0 | ) |
| $ | 142,227.4 |
|
| $ | 62,940.3 |
|
| $ | 106,155.4 |
|
| $ | 45,480.5 |
|
| $ | 99,378.5 |
|
| $ | 146,310.3 |
|
| $ | (357,838.7 | ) |
| $ | 102,426.3 |
|
Consolidating Statements of Operations
For the Three Months Ended SeptemberJune 30, 20172019
(Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 4,034.3 |
|
| $ | - |
|
| $ | 4,034.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 586.5 |
|
|
| - |
|
|
| 586.5 |
|
Research and development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 442.6 |
|
|
| - |
|
|
| 442.6 |
|
Selling and marketing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 832.8 |
|
|
| - |
|
|
| 832.8 |
|
General and administrative |
|
| - |
|
|
| - |
|
|
| (0.9 | ) |
|
| - |
|
|
| 278.1 |
|
|
| - |
|
|
| 277.2 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,781.0 |
|
|
| - |
|
|
| 1,781.0 |
|
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 202.0 |
|
|
| - |
|
|
| 202.0 |
|
Asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,874.8 |
|
|
| - |
|
|
| 3,874.8 |
|
Total operating expenses |
|
| - |
|
|
| - |
|
|
| (0.9 | ) |
|
| - |
|
|
| 7,997.8 |
|
|
| - |
|
|
| 7,996.9 |
|
Operating (loss) |
|
| - |
|
|
| - |
|
|
| 0.9 |
|
|
| - |
|
|
| (3,963.5 | ) |
|
| - |
|
|
| (3,962.6 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income / (expense), net |
|
| - |
|
|
| 193.6 |
|
|
| 52.5 |
|
|
| (26.3 | ) |
|
| (447.1 | ) |
|
| - |
|
|
| (227.3 | ) |
Other (expense), net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,310.3 | ) |
|
| - |
|
|
| (1,310.3 | ) |
Total other income (expense), net |
|
| - |
|
|
| 193.6 |
|
|
| 52.5 |
|
|
| (26.3 | ) |
|
| (1,757.4 | ) |
|
| - |
|
|
| (1,537.6 | ) |
Income / (loss) before income taxes and noncontrolling interest |
|
| - |
|
|
| 193.6 |
|
|
| 53.4 |
|
|
| (26.3 | ) |
|
| (5,720.9 | ) |
|
| - |
|
|
| (5,500.2 | ) |
(Benefit) / provision for income taxes |
|
| - |
|
|
| - |
|
|
| 0.3 |
|
|
| (14.4 | ) |
|
| (1,624.7 | ) |
|
| - |
|
|
| (1,638.8 | ) |
Losses / (earnings) of equity interest subsidiaries |
|
| 3,869.2 |
|
|
| 4,077.9 |
|
|
| - |
|
|
| 2,564.2 |
|
|
| - |
|
|
| (10,511.3 | ) |
|
| - |
|
Net (loss) / income from continuing operations, net of tax |
| $ | (3,869.2 | ) |
| $ | (3,884.3 | ) |
| $ | 53.1 |
|
| $ | (2,576.1 | ) |
| $ | (4,096.2 | ) |
| $ | 10,511.3 |
|
| $ | (3,861.4 | ) |
(Loss) from discontinued operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6.1 | ) |
|
| - |
|
|
| (6.1 | ) |
Net (loss) / income |
| $ | (3,869.2 | ) |
| $ | (3,884.3 | ) |
| $ | 53.1 |
|
| $ | (2,576.1 | ) |
| $ | (4,102.3 | ) |
| $ | 10,511.3 |
|
| $ | (3,867.5 | ) |
(Income) attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1.7 | ) |
|
| - |
|
|
| (1.7 | ) |
Net (loss) / income attributable to ordinary shareholders |
| $ | (3,869.2 | ) |
| $ | (3,884.3 | ) |
| $ | 53.1 |
|
| $ | (2,576.1 | ) |
| $ | (4,104.0 | ) |
| $ | 10,511.3 |
|
| $ | (3,869.2 | ) |
Other comprehensive income / (loss) |
|
| 86.2 |
|
|
| 176.0 |
|
|
| - |
|
|
| (50.2 | ) |
|
| 86.2 |
|
|
| (212.0 | ) |
|
| 86.2 |
|
Comprehensive income / (loss) |
| $ | (3,783.0 | ) |
| $ | (3,708.3 | ) |
| $ | 53.1 |
|
| $ | (2,626.3 | ) |
| $ | (4,017.8 | ) |
| $ | 10,299.3 |
|
| $ | (3,783.0 | ) |
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 4,090.1 |
|
| $ | - |
|
| $ | 4,090.1 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 652.3 |
|
|
| - |
|
|
| 652.3 |
|
Research and development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 450.0 |
|
|
| - |
|
|
| 450.0 |
|
Selling and marketing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 873.3 |
|
|
| - |
|
|
| 873.3 |
|
General and administrative |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 316.4 |
|
|
| - |
|
|
| 316.4 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,402.0 |
|
|
| - |
|
|
| 1,402.0 |
|
Goodwill impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,085.8 |
|
|
| - |
|
|
| 1,085.8 |
|
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 436.0 |
|
|
| - |
|
|
| 436.0 |
|
Asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 129.4 |
|
|
| - |
|
|
| 129.4 |
|
Total operating expenses |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,345.2 |
|
|
| - |
|
|
| 5,345.2 |
|
Operating (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,255.1 | ) |
|
| - |
|
|
| (1,255.1 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) / income, net |
|
| - |
|
|
| (23.5 | ) |
|
| 48.0 |
|
|
| (20.0 | ) |
|
| (190.2 | ) |
|
| - |
|
|
| (185.7 | ) |
Other (expense), net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.7 | ) |
|
| - |
|
|
| (4.7 | ) |
Total other (expense) / income, net |
|
| - |
|
|
| (23.5 | ) |
|
| 48.0 |
|
|
| (20.0 | ) |
|
| (194.9 | ) |
|
| - |
|
|
| (190.4 | ) |
(Loss) / income before income taxes and noncontrolling interest |
|
| - |
|
|
| (23.5 | ) |
|
| 48.0 |
|
|
| (20.0 | ) |
|
| (1,450.0 | ) |
|
| - |
|
|
| (1,445.5 | ) |
Provision for income taxes |
|
| - |
|
|
| 1.8 |
|
|
| - |
|
|
| - |
|
|
| 299.8 |
|
|
| - |
|
|
| 301.6 |
|
Losses / (earnings) of equity interest subsidiaries |
|
| 1,751.2 |
|
|
| 1,715.8 |
|
|
| 373.9 |
|
|
| 1,004.6 |
|
|
| - |
|
|
| (4,845.5 | ) |
|
| - |
|
Net (loss) / income |
| $ | (1,751.2 | ) |
| $ | (1,741.1 | ) |
| $ | (325.9 | ) |
| $ | (1,024.6 | ) |
| $ | (1,749.8 | ) |
| $ | 4,845.5 |
|
| $ | (1,747.1 | ) |
(Income) attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.1 | ) |
|
| - |
|
|
| (4.1 | ) |
Net (loss) / income attributable to members |
| $ | (1,751.2 | ) |
| $ | (1,741.1 | ) |
| $ | (325.9 | ) |
| $ | (1,024.6 | ) |
| $ | (1,753.9 | ) |
| $ | 4,845.5 |
|
| $ | (1,751.2 | ) |
Other comprehensive income / (loss), net of tax |
|
| 65.3 |
|
|
| (33.0 | ) |
|
| 42.6 |
|
|
| 145.9 |
|
|
| 65.3 |
|
|
| (220.8 | ) |
|
| 65.3 |
|
Comprehensive (loss) / income attributable to members |
| $ | (1,685.9 | ) |
| $ | (1,774.1 | ) |
| $ | (283.3 | ) |
| $ | (878.7 | ) |
| $ | (1,688.6 | ) |
| $ | 4,624.7 |
|
| $ | (1,685.9 | ) |
Consolidating Statements of Operations
For the NineSix Months Ended SeptemberJune 30, 20172019
(Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Net revenues |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 11,614.6 |
|
|
| - |
|
|
| 11,614.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,587.1 |
|
|
| - |
|
|
| 1,587.1 |
|
Research and development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,691.9 |
|
|
| - |
|
|
| 1,691.9 |
|
Selling and marketing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,637.1 |
|
|
| - |
|
|
| 2,637.1 |
|
General and administrative |
|
| - |
|
|
| - |
|
|
| 9.2 |
|
|
| 1.1 |
|
|
| 1,028.9 |
|
|
| - |
|
|
| 1,039.2 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,274.9 |
|
|
| - |
|
|
| 5,274.9 |
|
In process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,245.3 |
|
|
| - |
|
|
| 1,245.3 |
|
Asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,896.2 |
|
|
| - |
|
|
| 3,896.2 |
|
Total operating expenses |
|
| - |
|
|
| - |
|
|
| 9.2 |
|
|
| 1.1 |
|
|
| 17,361.4 |
|
|
| - |
|
|
| 17,371.7 |
|
Operating (loss) |
|
| - |
|
|
| - |
|
|
| (9.2 | ) |
|
| (1.1 | ) |
|
| (5,746.8 | ) |
|
| - |
|
|
| (5,757.1 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income / (expense), net |
|
| - |
|
|
| 721.7 |
|
|
| 117.3 |
|
|
| (104.3 | ) |
|
| (1,440.5 | ) |
|
| - |
|
|
| (705.8 | ) |
Other income (expense), net |
|
| - |
|
|
| - |
|
|
| (110.4 | ) |
|
| (39.9 | ) |
|
| (3,216.3 | ) |
|
| - |
|
|
| (3,366.6 | ) |
Total other income (expense), net |
|
| - |
|
|
| 721.7 |
|
|
| 6.9 |
|
|
| (144.2 | ) |
|
| (4,656.8 | ) |
|
| - |
|
|
| (4,072.4 | ) |
Income / (loss) before income taxes and noncontrolling interest |
|
| - |
|
|
| 721.7 |
|
|
| (2.3 | ) |
|
| (145.3 | ) |
|
| (10,403.6 | ) |
|
| - |
|
|
| (9,829.5 | ) |
(Benefit) / provision for income taxes |
|
| - |
|
|
| (0.2 | ) |
|
| 0.3 |
|
|
| (73.4 | ) |
|
| (2,678.8 | ) |
|
| - |
|
|
| (2,752.1 | ) |
Losses / (earnings) of equity interest subsidiaries |
|
| 7,099.7 |
|
|
| 7,901.8 |
|
|
| - |
|
|
| 2,579.5 |
|
|
| - |
|
|
| (17,581.0 | ) |
|
| - |
|
Net (loss) / income from continuing operations, net of tax |
| $ | (7,099.7 | ) |
| $ | (7,179.9 | ) |
| $ | (2.6 | ) |
| $ | (2,651.4 | ) |
| $ | (7,724.8 | ) |
| $ | 17,581.0 |
|
| $ | (7,077.4 | ) |
(Loss) from discontinued operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (17.6 | ) |
|
| - |
|
|
| (17.6 | ) |
Net (loss) / income |
| $ | (7,099.7 | ) |
| $ | (7,179.9 | ) |
| $ | (2.6 | ) |
| $ | (2,651.4 | ) |
| $ | (7,742.4 | ) |
| $ | 17,581.0 |
|
| $ | (7,095.0 | ) |
(Income) attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.7 | ) |
|
| - |
|
|
| (4.7 | ) |
Net (loss) / income attributable to ordinary shareholders |
| $ | (7,099.7 | ) |
| $ | (7,179.9 | ) |
| $ | (2.6 | ) |
| $ | (2,651.4 | ) |
| $ | (7,747.1 | ) |
| $ | 17,581.0 |
|
| $ | (7,099.7 | ) |
Other comprehensive income / (loss) |
|
| 2,749.6 |
|
|
| 2,894.5 |
|
|
| - |
|
|
| (357.7 | ) |
|
| 2,749.6 |
|
|
| (5,286.4 | ) |
|
| 2,749.6 |
|
Comprehensive (loss) / income |
| $ | (4,350.1 | ) |
| $ | (4,285.4 | ) |
| $ | (2.6 | ) |
| $ | (3,009.1 | ) |
| $ | (4,997.5 | ) |
| $ | 12,294.6 |
|
| $ | (4,350.1 | ) |
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 7,687.2 |
|
| $ | - |
|
| $ | 7,687.2 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,150.1 |
|
|
| - |
|
|
| 1,150.1 |
|
Research and development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 885.0 |
|
|
| - |
|
|
| 885.0 |
|
Selling and marketing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,677.3 |
|
|
| - |
|
|
| 1,677.3 |
|
General and administrative |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 622.5 |
|
|
| - |
|
|
| 622.5 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,801.4 |
|
|
| - |
|
|
| 2,801.4 |
|
Goodwill impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,552.8 |
|
|
| - |
|
|
| 3,552.8 |
|
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 436.0 |
|
|
| - |
|
|
| 436.0 |
|
Asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 124.2 |
|
|
| - |
|
|
| 124.2 |
|
Total operating expenses |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 11,249.3 |
|
|
| - |
|
|
| 11,249.3 |
|
Operating (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,562.1 | ) |
|
| - |
|
|
| (3,562.1 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense), net |
|
| - |
|
|
| (46.9 | ) |
|
| (11.6 | ) |
|
| (39.9 | ) |
|
| (267.8 | ) |
|
| - |
|
|
| (366.2 | ) |
Other (expense) / income, net |
|
| - |
|
|
| - |
|
|
| (0.1 | ) |
|
| - |
|
|
| 9.2 |
|
|
| - |
|
|
| 9.1 |
|
Total other (expense), net |
|
| - |
|
|
| (46.9 | ) |
|
| (11.7 | ) |
|
| (39.9 | ) |
|
| (258.6 | ) |
|
| - |
|
|
| (357.1 | ) |
(Loss) before income taxes and noncontrolling interest |
|
| - |
|
|
| (46.9 | ) |
|
| (11.7 | ) |
|
| (39.9 | ) |
|
| (3,820.7 | ) |
|
| - |
|
|
| (3,919.2 | ) |
Provision for income taxes |
|
| - |
|
|
| 1.8 |
|
|
| - |
|
|
| - |
|
|
| 231.1 |
|
|
| - |
|
|
| 232.9 |
|
Losses / (earnings) of equity interest subsidiaries |
|
| 4,156.9 |
|
|
| 4,060.8 |
|
|
| 1,183.4 |
|
|
| 3,382.7 |
|
|
| - |
|
|
| (12,783.8 | ) |
|
| - |
|
Net (loss) / income |
| $ | (4,156.9 | ) |
| $ | (4,109.5 | ) |
| $ | (1,195.1 | ) |
| $ | (3,422.6 | ) |
| $ | (4,051.8 | ) |
| $ | 12,783.8 |
|
| $ | (4,152.1 | ) |
(Income) attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.8 | ) |
|
| - |
|
|
| (4.8 | ) |
Net (loss) / income attributable to members |
| $ | (4,156.9 | ) |
| $ | (4,109.5 | ) |
| $ | (1,195.1 | ) |
| $ | (3,422.6 | ) |
| $ | (4,056.6 | ) |
| $ | 12,783.8 |
|
| $ | (4,156.9 | ) |
Other comprehensive (loss) / income, net of tax |
|
| (63.5 | ) |
|
| (173.8 | ) |
|
| (130.3 | ) |
|
| (439.1 | ) |
|
| (63.5 | ) |
|
| 806.7 |
|
|
| (63.5 | ) |
Comprehensive (loss) / income attributable to members |
| $ | (4,220.4 | ) |
| $ | (4,283.3 | ) |
| $ | (1,325.4 | ) |
| $ | (3,861.7 | ) |
| $ | (4,120.1 | ) |
| $ | 13,590.5 |
|
| $ | (4,220.4 | ) |
Consolidating Statements of Operations
For the Three Months Ended SeptemberJune 30, 20162018
(Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 3,622.2 |
|
| $ | - |
|
| $ | 3,622.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 462.2 |
|
|
| - |
|
|
| 462.2 |
|
Research and development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 622.8 |
|
|
| - |
|
|
| 622.8 |
|
Selling and marketing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 796.0 |
|
|
| - |
|
|
| 796.0 |
|
General and administrative |
|
| - |
|
|
| 4.1 |
|
|
| - |
|
|
| - |
|
|
| 308.1 |
|
|
| - |
|
|
| 312.2 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,609.1 |
|
|
| - |
|
|
| 1,609.1 |
|
In process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 42.0 |
|
|
| - |
|
|
| 42.0 |
|
Asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.7 | ) |
|
| - |
|
|
| (4.7 | ) |
Total operating expenses |
|
| - |
|
|
| 4.1 |
|
|
| - |
|
|
| - |
|
|
| 3,835.5 |
|
|
| - |
|
|
| 3,839.6 |
|
Operating (loss) |
|
| - |
|
|
| (4.1 | ) |
|
| - |
|
|
| - |
|
|
| (213.3 | ) |
|
| - |
|
|
| (217.4 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income / (expense), net |
|
| - |
|
|
| 911.6 |
|
|
| (216.6 | ) |
|
| (40.3 | ) |
|
| (960.9 | ) |
|
| - |
|
|
| (306.2 | ) |
Other income, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33.6 |
|
|
| - |
|
|
| 33.6 |
|
Total other income (expense), net |
|
| - |
|
|
| 911.6 |
|
|
| (216.6 | ) |
|
| (40.3 | ) |
|
| (927.3 | ) |
|
| - |
|
|
| (272.6 | ) |
(Loss) / income before income taxes and noncontrolling interest |
|
| - |
|
|
| 907.5 |
|
|
| (216.6 | ) |
|
| (40.3 | ) |
|
| (1,140.6 | ) |
|
| - |
|
|
| (490.0 | ) |
Provision / (benefit) for income taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (22.6 | ) |
|
| (136.3 | ) |
|
| - |
|
|
| (158.9 | ) |
Losses / (earnings) of equity interest subsidiaries |
|
| (15,269.0 | ) |
|
| (11,485.0 | ) |
|
| - |
|
|
| 747.6 |
|
|
| - |
|
|
| 26,006.4 |
|
|
| - |
|
Net (loss) / income from continuing operations, net of tax |
| $ | 15,269.0 |
|
| $ | 12,392.5 |
|
| $ | (216.6 | ) |
| $ | (765.3 | ) |
| $ | (1,004.3 | ) |
| $ | (26,006.4 | ) |
| $ | (331.1 | ) |
(Loss) from discontinued operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15,601.9 |
|
|
| - |
|
|
| 15,601.9 |
|
Net (loss) / income |
| $ | 15,269.0 |
|
| $ | 12,392.5 |
|
| $ | (216.6 | ) |
| $ | (765.3 | ) |
| $ | 14,597.6 |
|
| $ | (26,006.4 | ) |
| $ | 15,270.8 |
|
(Income) attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1.8 | ) |
|
| - |
|
|
| (1.8 | ) |
Net (loss) / income attributable to ordinary shareholders |
| $ | 15,269.0 |
|
| $ | 12,392.5 |
|
| $ | (216.6 | ) |
| $ | (765.3 | ) |
| $ | 14,595.8 |
|
| $ | (26,006.4 | ) |
| $ | 15,269.0 |
|
Other comprehensive (loss) / income |
|
| 916.4 |
|
|
| 958.4 |
|
| - |
|
|
| 900.2 |
|
|
| 916.4 |
|
|
| (2,775.0 | ) |
|
| 916.4 |
| |
Comprehensive income / (loss) |
| $ | 16,185.4 |
|
| $ | 13,350.9 |
|
| $ | (216.6 | ) |
| $ | 134.9 |
|
| $ | 15,512.2 |
|
| $ | (28,781.4 | ) |
| $ | 16,185.4 |
|
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 4,124.2 |
|
| $ | - |
|
| $ | 4,124.2 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 481.8 |
|
|
| - |
|
|
| 481.8 |
|
Research and development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 689.2 |
|
|
| - |
|
|
| 689.2 |
|
Selling and marketing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 853.4 |
|
|
| - |
|
|
| 853.4 |
|
General and administrative |
|
| - |
|
|
| - |
|
|
| 1.2 |
|
|
| - |
|
|
| 298.3 |
|
|
| - |
|
|
| 299.5 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,697.1 |
|
|
| - |
|
|
| 1,697.1 |
|
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 276.0 |
|
|
| - |
|
|
| 276.0 |
|
Asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 259.6 |
|
|
| - |
|
|
| 259.6 |
|
Total operating expenses |
|
| - |
|
|
| - |
|
|
| 1.2 |
|
|
| - |
|
|
| 4,555.4 |
|
|
| - |
|
|
| 4,556.6 |
|
Operating (loss) |
|
| - |
|
|
| - |
|
|
| (1.2 | ) |
|
| - |
|
|
| (431.2 | ) |
|
| - |
|
|
| (432.4 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income / (expense), net |
|
| - |
|
|
| 267.4 |
|
|
| (5.1 | ) |
|
| (20.7 | ) |
|
| (399.8 | ) |
|
| - |
|
|
| (158.2 | ) |
Other (expense) / income, net |
|
| - |
|
|
| - |
|
|
| 9.2 |
|
|
| - |
|
|
| 206.2 |
|
|
| - |
|
|
| 215.4 |
|
Total other income / (expense), net |
|
| - |
|
|
| 267.4 |
|
|
| 4.1 |
|
|
| (20.7 | ) |
|
| (193.6 | ) |
|
| - |
|
|
| 57.2 |
|
Income / (loss) before income taxes and noncontrolling interest |
|
| - |
|
|
| 267.4 |
|
|
| 2.9 |
|
|
| (20.7 | ) |
|
| (624.8 | ) |
|
| - |
|
|
| (375.2 | ) |
(Benefit) / provision for income taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.4 | ) |
|
| (0.8 | ) |
|
| - |
|
|
| (5.2 | ) |
Losses / (earnings) of equity interest subsidiaries |
|
| 372.4 |
|
|
| 512.4 |
|
|
| (118.7 | ) |
|
| (550.8 | ) |
|
| - |
|
|
| (215.3 | ) |
|
| - |
|
Net (loss) / income |
| $ | (372.4 | ) |
| $ | (245.0 | ) |
| $ | 121.6 |
|
| $ | 534.5 |
|
| $ | (624.0 | ) |
| $ | 215.3 |
|
| $ | (370.0 | ) |
(Income) attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2.4 | ) |
|
| - |
|
|
| (2.4 | ) |
Net (loss) / income attributable to members |
| $ | (372.4 | ) |
| $ | (245.0 | ) |
| $ | 121.6 |
|
| $ | 534.5 |
|
| $ | (626.4 | ) |
| $ | 215.3 |
|
| $ | (372.4 | ) |
Other comprehensive (loss) / income, net of tax |
|
| (448.6 | ) |
|
| (295.6 | ) |
|
| (59.7 | ) |
|
| (195.6 | ) |
|
| (448.6 | ) |
|
| 999.5 |
|
|
| (448.6 | ) |
Comprehensive (loss) / income attributable to members |
| $ | (821.0 | ) |
| $ | (540.6 | ) |
| $ | 61.9 |
|
| $ | 338.9 |
|
| $ | (1,075.0 | ) |
| $ | 1,214.8 |
|
| $ | (821.0 | ) |
Consolidating Statements of Operations
For the NineSix Months Ended SeptemberJune 30, 20162018
(Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| ||||||||||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 10,706.3 |
|
| $ | - |
|
| $ | 10,706.3 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 7,796.3 |
|
| $ | - |
|
| $ | 7,796.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,381.1 |
|
|
| - |
|
|
| 1,381.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,004.6 |
|
|
| - |
|
|
| 1,004.6 |
|
Research and development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,662.4 |
|
|
| - |
|
|
| 1,662.4 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,163.9 |
|
|
| - |
|
|
| 1,163.9 |
|
Selling and marketing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,429.6 |
|
|
| - |
|
|
| 2,429.6 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,653.4 |
|
|
| - |
|
|
| 1,653.4 |
|
General and administrative |
|
| - |
|
|
| 4.6 |
|
|
| - |
|
|
| 19.8 |
|
|
| 941.8 |
|
|
| - |
|
|
| 966.2 |
|
|
| - |
|
|
| - |
|
|
| 0.5 |
|
|
| - |
|
|
| 593.1 |
|
|
| - |
|
|
| 593.6 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,831.9 |
|
|
| - |
|
|
| 4,831.9 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,394.7 |
|
|
| - |
|
|
| 3,394.7 |
|
In process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 316.9 |
|
|
| - |
|
|
| 316.9 |
| ||||||||||||||||||||||||||||
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 798.0 |
|
|
| - |
|
|
| 798.0 |
| ||||||||||||||||||||||||||||
Asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (24.0 | ) |
|
| - |
|
|
| (24.0 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 272.7 |
|
|
| - |
|
|
| 272.7 |
|
Total operating expenses |
|
| - |
|
|
| 4.6 |
|
|
| - |
|
|
| 19.8 |
|
|
| 11,539.7 |
|
|
| - |
|
|
| 11,564.1 |
|
|
| - |
|
|
| - |
|
|
| 0.5 |
|
|
| - |
|
|
| 8,880.4 |
|
|
| - |
|
|
| 8,880.9 |
|
Operating (loss) |
|
| - |
|
|
| (4.6 | ) |
|
| - |
|
|
| (19.8 | ) |
|
| (833.4 | ) |
|
| - |
|
|
| (857.8 | ) |
|
| - |
|
|
| - |
|
|
| (0.5 | ) |
|
| - |
|
|
| (1,084.1 | ) |
|
| - |
|
|
| (1,084.6 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Interest income / (expense), net |
|
| - |
|
|
| 1,349.2 |
|
|
| 2.2 |
|
|
| (117.2 | ) |
|
| (2,213.6 | ) |
|
| - |
|
|
| (979.4 | ) |
|
| - |
|
|
| 526.4 |
|
|
| (8.4 | ) |
|
| (41.9 | ) |
|
| (814.6 | ) |
|
| - |
|
|
| (338.5 | ) |
Other income (expense), net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 34.2 |
|
|
| - |
|
|
| 34.2 |
| ||||||||||||||||||||||||||||
Total other income (expense), net |
|
| - |
|
|
| 1,349.2 |
|
|
| 2.2 |
|
|
| (117.2 | ) |
|
| (2,179.4 | ) |
|
| - |
|
|
| (945.2 | ) | ||||||||||||||||||||||||||||
Other income, net |
|
| - |
|
|
| - |
|
|
| 9.2 |
|
|
| - |
|
|
| 127.4 |
|
|
| - |
|
|
| 136.6 |
| ||||||||||||||||||||||||||||
Total other income / (expense), net |
|
| - |
|
|
| 526.4 |
|
|
| 0.8 |
|
|
| (41.9 | ) |
|
| (687.2 | ) |
|
| - |
|
|
| (201.9 | ) | ||||||||||||||||||||||||||||
Income / (loss) before income taxes and noncontrolling interest |
|
| - |
|
|
| 1,344.6 |
|
|
| 2.2 |
|
|
| (137.0 | ) |
|
| (3,012.8 | ) |
|
| - |
|
|
| (1,803.0 | ) |
|
| - |
|
|
| 526.4 |
|
|
| 0.3 |
|
|
| (41.9 | ) |
|
| (1,771.3 | ) |
|
| - |
|
|
| (1,286.5 | ) |
Provision / (benefit) for income taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (51.4 | ) |
|
| (774.4 | ) |
|
| - |
|
|
| (825.8 | ) |
|
| - |
|
|
| - |
|
|
| 0.3 |
|
|
| (16.6 | ) |
|
| (671.1 | ) |
|
| - |
|
|
| (687.4 | ) |
Losses / (earnings) of equity interest subsidiaries |
|
| (14,891.7 | ) |
|
| (10,701.3 | ) |
|
| - |
|
|
| 198.6 |
|
|
| - |
|
|
| 25,394.4 |
|
|
| - |
|
|
| 603.7 |
|
|
| 1,018.4 |
|
|
| 214.4 |
|
|
| 99.2 |
|
|
| - |
|
|
| (1,935.7 | ) |
|
| - |
|
Net (loss) / income from continuing operations, net of tax |
| $ | 14,891.7 |
|
| $ | 12,045.9 |
|
| $ | 2.2 |
|
| $ | (284.2 | ) |
| $ | (2,238.4 | ) |
| $ | (25,394.4 | ) |
| $ | (977.2 | ) | ||||||||||||||||||||||||||||
Income from discontinued operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15,873.2 |
|
|
| - |
|
|
| 15,873.2 |
| ||||||||||||||||||||||||||||
Net (loss) / income |
| $ | 14,891.7 |
|
| $ | 12,045.9 |
|
| $ | 2.2 |
|
| $ | (284.2 | ) |
| $ | 13,634.8 |
|
| $ | (25,394.4 | ) |
| $ | 14,896.0 |
|
| $ | (603.7 | ) |
| $ | (492.0 | ) |
| $ | (214.4 | ) |
| $ | (124.5 | ) |
| $ | (1,100.2 | ) |
| $ | 1,935.7 |
|
| $ | (599.1 | ) |
(Income) attributable to noncontrolling interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.3 | ) |
|
| - |
|
|
| (4.3 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.6 | ) |
|
| - |
|
|
| (4.6 | ) |
Net (loss) / income income attributable to ordinary shareholders |
| $ | 14,891.7 |
|
| $ | 12,045.9 |
|
| $ | 2.2 |
|
| $ | (284.2 | ) |
| $ | 13,630.5 |
|
| $ | (25,394.4 | ) |
| $ | 14,891.7 |
| ||||||||||||||||||||||||||||
Other comprehensive income / (loss) |
|
| 1,093.4 |
|
|
| 1,213.8 |
|
|
| - |
|
|
| 871.1 |
|
|
| 1,093.4 |
|
|
| (3,178.3 | ) |
|
| 1,093.4 |
| ||||||||||||||||||||||||||||
Comprehensive (loss) / income |
| $ | 15,985.1 |
|
| $ | 13,259.7 |
|
| $ | 2.2 |
|
| $ | 586.9 |
|
| $ | 14,723.9 |
|
| $ | (28,572.7 | ) |
| $ | 15,985.1 |
| ||||||||||||||||||||||||||||
Net (loss) / income attributable to members |
| $ | (603.7 | ) |
| $ | (492.0 | ) |
| $ | (214.4 | ) |
| $ | (124.5 | ) |
| $ | (1,104.8 | ) |
| $ | 1,935.7 |
|
| $ | (603.7 | ) | ||||||||||||||||||||||||||||
Other comprehensive (loss) / income, net of tax |
|
| (264.8 | ) |
|
| (25.0 | ) |
|
| 59.2 |
|
|
| 164.4 |
|
|
| (264.8 | ) |
|
| 66.2 |
|
|
| (264.8 | ) | ||||||||||||||||||||||||||||
Comprehensive (loss) / income attributable to members |
| $ | (868.5 | ) |
| $ | (517.0 | ) |
| $ | (155.2 | ) |
| $ | 39.9 |
|
| $ | (1,369.6 | ) |
| $ | 2,001.9 |
|
| $ | (868.5 | ) | ||||||||||||||||||||||||||||
Consolidating StatementStatements of Cash Flows
For the NineSix Months Ended SeptemberJune 30, 20172019
(Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income |
| $ | (7,099.7 | ) |
| $ | (7,179.9 | ) |
| $ | (2.6 | ) |
| $ | (2,651.4 | ) |
| $ | (7,742.4 | ) |
| $ | 17,581.0 |
|
| $ | (7,095.0 | ) |
Reconciliation to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses / (earnings) of equity interest subsidiaries |
|
| 7,099.7 |
|
|
| 7,901.8 |
|
|
| - |
|
|
| 2,579.5 |
|
|
| - |
|
|
| (17,581.0 | ) |
|
| - |
|
Depreciation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 123.2 |
|
|
| - |
|
|
| 123.2 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,274.9 |
|
|
| - |
|
|
| 5,274.9 |
|
Provision for inventory reserve |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 77.3 |
|
|
| - |
|
|
| 77.3 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 220.8 |
|
|
| - |
|
|
| 220.8 |
|
Deferred income tax benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,205.3 | ) |
|
| - |
|
|
| (3,205.3 | ) |
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,245.3 |
|
|
| - |
|
|
| 1,245.3 |
|
Loss on asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,896.2 |
|
|
| - |
|
|
| 3,896.2 |
|
Net income impact of other-than-temporary loss on investment in Teva securities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,273.5 |
|
|
| - |
|
|
| 3,273.5 |
|
Amortization of inventory step up |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 126.2 |
|
|
| - |
|
|
| 126.2 |
|
Non-cash debt extinguishment |
|
| - |
|
|
| - |
|
|
| 17.6 |
|
|
| 12.2 |
|
|
| (38.0 | ) |
|
| - |
|
|
| (8.2 | ) |
Amortization of deferred financing costs |
|
| - |
|
|
| - |
|
|
| 17.0 |
|
|
| 2.6 |
|
|
| - |
|
|
| - |
|
|
| 19.6 |
|
Contingent consideration adjustments, including accretion |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (51.6 | ) |
|
| - |
|
|
| (51.6 | ) |
Dividends from subsidiaries |
|
| 917.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (917.0 | ) |
|
| - |
|
Other, net |
|
| - |
|
|
| (10.0 | ) |
|
| - |
|
|
| - |
|
|
| (8.2 | ) |
|
| - |
|
|
| (18.2 | ) |
Changes in assets and liabilities (net of effects of acquisitions) |
|
| - |
|
|
| (5,072.9 | ) |
|
| (235.4 | ) |
|
| 1,800.4 |
|
|
| 3,591.6 |
|
|
| - |
|
|
| 83.7 |
|
Net cash provided by / (used in) operating activities |
|
| 917.0 |
|
|
| (4,361.0 | ) |
|
| (203.4 | ) |
|
| 1,743.3 |
|
|
| 6,783.5 |
|
|
| (917.0 | ) |
|
| 3,962.4 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (234.0 | ) |
|
| - |
|
|
| (234.0 | ) |
Additions to product rights and other intangibles |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (604.3 | ) |
|
| - |
|
|
| (604.3 | ) |
Additions to investments |
|
| - |
|
|
| (3,989.6 | ) |
|
| - |
|
|
| - |
|
|
| (4,444.2 | ) |
|
| - |
|
|
| (8,433.8 | ) |
Proceeds from sale of investments and other assets |
|
| - |
|
|
| 7,866.4 |
|
|
| - |
|
|
| - |
|
|
| 6,608.0 |
|
|
| - |
|
|
| 14,474.4 |
|
Proceeds from sales of property, plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5.8 |
|
|
| - |
|
|
| 5.8 |
|
Acquisitions of business, net of cash acquired |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (5,290.4 | ) |
|
| - |
|
|
| (5,290.4 | ) |
Net cash provided by / (used in) investing activities |
|
| - |
|
|
| 3,876.8 |
|
|
| - |
|
|
| - |
|
|
| (3,959.1 | ) |
|
| - |
|
|
| (82.3 | ) |
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings of long-term indebtedness |
|
| - |
|
|
| - |
|
|
| 3,020.9 |
|
|
| - |
|
|
| 4.1 |
|
|
| - |
|
|
| 3,025.0 |
|
Debt issuance costs |
|
| - |
|
|
| - |
|
|
| (17.5 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (17.5 | ) |
Payments on debt, including capital lease obligations |
|
| - |
|
|
| - |
|
|
| (2,800.0 | ) |
|
| (1,743.3 | ) |
|
| (1,035.9 | ) |
|
| - |
|
|
| (5,579.2 | ) |
Payments of contingent consideration and other financing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (515.2 | ) |
|
| - |
|
|
| (515.2 | ) |
Dividends to Parent |
|
| (917.0 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (917.0 | ) |
|
| 917.0 |
|
|
| (917.0 | ) |
Net cash (used in) / provided by financing activities |
|
| (917.0 | ) |
|
| - |
|
|
| 203.4 |
|
|
| (1,743.3 | ) |
|
| (2,464.0 | ) |
|
| 917.0 |
|
|
| (4,003.9 | ) |
Effect of currency exchange rate changes on cash and cash equivalents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 19.1 |
|
|
| - |
|
|
| 19.1 |
|
Net (decrease) in cash and cash equivalents |
|
| - |
|
|
| (484.2 | ) |
|
| - |
|
|
| - |
|
|
| 379.5 |
|
|
| - |
|
|
| (104.7 | ) |
Cash and cash equivalents at beginning of period |
|
| 0.1 |
|
|
| 513.9 |
|
|
| - |
|
|
| - |
|
|
| 1,199.2 |
|
|
| - |
|
|
| 1,713.2 |
|
Cash and cash equivalents at end of period |
| $ | 0.1 |
|
| $ | 29.7 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,578.7 |
|
| $ | - |
|
| $ | 1,608.5 |
|
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income |
| $ | (4,156.9 | ) |
| $ | (4,109.5 | ) |
| $ | (1,195.1 | ) |
| $ | (3,422.6 | ) |
| $ | (4,051.8 | ) |
| $ | 12,783.8 |
|
| $ | (4,152.1 | ) |
Reconciliation to net cash provided by / (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses / (earnings) of equity interest subsidiaries |
|
| 4,156.9 |
|
|
| 4,060.8 |
|
|
| 1,183.4 |
|
|
| 3,382.7 |
|
|
| - |
|
|
| (12,783.8 | ) |
|
| - |
|
Depreciation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 96.2 |
|
|
| - |
|
|
| 96.2 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,801.4 |
|
|
| - |
|
|
| 2,801.4 |
|
Provision for inventory reserve |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 83.4 |
|
|
| - |
|
|
| 83.4 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 111.8 |
|
|
| - |
|
|
| 111.8 |
|
Deferred income tax benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (166.4 | ) |
|
| - |
|
|
| (166.4 | ) |
Goodwill impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,552.8 |
|
|
| - |
|
|
| 3,552.8 |
|
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 436.0 |
|
|
| - |
|
|
| 436.0 |
|
Loss on asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 124.2 |
|
|
| - |
|
|
| 124.2 |
|
Non-cash extinguishment of debt |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 0.2 |
|
|
| - |
|
|
| 0.2 |
|
Amortization of deferred financing costs |
|
| - |
|
|
| - |
|
|
| 8.3 |
|
|
| 0.8 |
|
|
| - |
|
|
| - |
|
|
| 9.1 |
|
Non-cash lease expense |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 68.0 |
|
|
| - |
|
|
| 68.0 |
|
Contingent consideration adjustments, including accretion |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 46.8 |
|
|
| - |
|
|
| 46.8 |
|
Dividends from subsidiaries |
|
| 1,288.5 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,288.5 | ) |
|
| - |
|
Other, net |
|
| - |
|
|
| - |
|
|
| (2.5 | ) |
|
| (0.9 | ) |
|
| (15.9 | ) |
|
| - |
|
|
| (19.3 | ) |
Changes in assets and liabilities (net of effects of acquisitions) |
|
| - |
|
|
| (134.4 | ) |
|
| 1,036.8 |
|
|
| 40.0 |
|
|
| (1,300.0 | ) |
|
| - |
|
|
| (357.6 | ) |
Net cash provided by / (used in) operating activities |
|
| 1,288.5 |
|
|
| (183.1 | ) |
|
| 1,030.9 |
|
|
| - |
|
|
| 1,786.7 |
|
|
| (1,288.5 | ) |
|
| 2,634.5 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (152.3 | ) |
|
| - |
|
|
| (152.3 | ) |
Additions to product rights and other intangibles |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (46.0 | ) |
|
| - |
|
|
| (46.0 | ) |
Additions to investments |
|
| - |
|
|
| (100.0 | ) |
|
| - |
|
|
| - |
|
|
| (638.2 | ) |
|
| - |
|
|
| (738.2 | ) |
Proceeds from sale of investments and other assets |
|
| - |
|
|
| 289.4 |
|
|
| - |
|
|
| - |
|
|
| 1,172.6 |
|
|
| - |
|
|
| 1,462.0 |
|
Proceeds from sales of property, plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 17.7 |
|
|
| - |
|
|
| 17.7 |
|
Acquisitions of businesses, net of cash acquired |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (80.6 | ) |
|
| - |
|
|
| (80.6 | ) |
Net cash provided by investing activities |
|
| - |
|
|
| 189.4 |
|
|
| - |
|
|
| - |
|
|
| 273.2 |
|
|
| - |
|
|
| 462.6 |
|
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings of long-term indebtedness, including credit facility |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3.3 |
|
|
| - |
|
|
| 3.3 |
|
Payments on debt, including finance lease obligations and credit facility |
|
| - |
|
|
| - |
|
|
| (1,031.6 | ) |
|
| - |
|
|
| (7.5 | ) |
|
| - |
|
|
| (1,039.1 | ) |
Payments of contingent consideration and other financing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4.1 | ) |
|
| - |
|
|
| (4.1 | ) |
Dividends to Parents |
|
| (1,288.5 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,288.5 | ) |
|
| 1,288.5 |
|
|
| (1,288.5 | ) |
Net cash (used in) / provided by financing activities |
|
| (1,288.5 | ) |
|
| - |
|
|
| (1,031.6 | ) |
|
| - |
|
|
| (1,296.8 | ) |
|
| 1,288.5 |
|
|
| (2,328.4 | ) |
Effect of currency exchange rate changes on cash and cash equivalents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2.7 |
|
|
| - |
|
|
| 2.7 |
|
Net increase / (decrease) in cash and cash equivalents |
|
| - |
|
|
| 6.3 |
|
|
| (0.7 | ) |
|
| - |
|
|
| 765.8 |
|
|
| - |
|
|
| 771.4 |
|
Cash and cash equivalents at beginning of period |
|
| 0.1 |
|
|
| 1.8 |
|
|
| 0.8 |
|
|
| - |
|
|
| 875.9 |
|
|
| - |
|
|
| 878.6 |
|
Cash and cash equivalents at end of period |
| $ | 0.1 |
|
| $ | 8.1 |
|
| $ | 0.1 |
|
| $ | - |
|
| $ | 1,641.7 |
|
| $ | - |
|
| $ | 1,650.0 |
|
Consolidating StatementStatements of Cash Flows
For the NineSix Months Ended SeptemberJune 30, 20162018
(Unaudited; in millions)
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income |
| $ | 14,891.7 |
|
| $ | 12,045.9 |
|
| $ | 2.2 |
|
| $ | (284.2 | ) |
| $ | 13,634.8 |
|
| $ | (25,394.4 | ) |
| $ | 14,896.0 |
|
Reconciliation to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Earnings) / losses of equity interest subsidiaries |
|
| (14,891.7 | ) |
|
| (10,701.3 | ) |
|
| - |
|
|
| 198.6 |
|
|
| - |
|
|
| 25,394.4 |
|
|
| - |
|
Depreciation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 117.6 |
|
|
| - |
|
|
| 117.6 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,836.7 |
|
|
| - |
|
|
| 4,836.7 |
|
Provision for inventory reserve |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 162.7 |
|
|
| - |
|
|
| 162.7 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 269.9 |
|
|
| - |
|
|
| 269.9 |
|
Deferred income tax benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (517.1 | ) |
|
| - |
|
|
| (517.1 | ) |
Pre-tax gain on sale of generics business |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (24,203.1 | ) |
|
| - |
|
|
| (24,203.1 | ) |
Non-cash tax effect of gain on sale of generics business |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,749.9 |
|
|
| - |
|
|
| 5,749.9 |
|
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 316.9 |
|
|
| - |
|
|
| 316.9 |
|
(Gain) on asset sales and impairments, net |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (24.0 | ) |
|
|
|
|
|
| (24.0 | ) |
Amortization of inventory step-up |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 42.4 |
|
|
| - |
|
|
| 42.4 |
|
Amortization of deferred financing costs |
|
| - |
|
|
| 21.7 |
|
|
| 18.3 |
|
|
| 3.2 |
|
|
| 1.4 |
|
|
| - |
|
|
| 44.6 |
|
Contingent consideration adjustments, including accretion |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 76.7 |
|
|
| - |
|
|
| 76.7 |
|
Dividends from subsidiaries |
|
| 1,244.8 |
|
|
| 1,244.8 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,489.6 | ) |
|
| - |
|
Other, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (16.0 | ) |
|
| - |
|
|
| (16.0 | ) |
Changes in assets and liabilities (net of effects of acquisitions) |
|
| 0.1 |
|
|
| 8,487.2 |
|
|
| 479.5 |
|
|
| 80.4 |
|
|
| (10,821.9 | ) |
|
| - |
|
|
| (1,774.7 | ) |
Net cash provided by / (used in) operating activities |
|
| 1,244.9 |
|
|
| 11,098.3 |
|
|
| 500.0 |
|
|
| (2.0 | ) |
|
| (10,373.1 | ) |
|
| (2,489.6 | ) |
|
| (21.5 | ) |
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (250.5 | ) |
|
| - |
|
|
| (250.5 | ) |
Additions to product rights and other intangibles |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Sale of generics business |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33,304.5 |
|
|
| - |
|
|
| 33,304.5 |
|
Additions to investments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (15,445.5 | ) |
|
| - |
|
|
| (15,445.5 | ) |
Proceeds from the sale of investments and other assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 40.0 |
|
|
| - |
|
|
| 40.0 |
|
Proceeds from sales of property, plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33.3 |
|
|
| - |
|
|
| 33.3 |
|
Acquisitions of businesses, net of cash acquired |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (74.5 | ) |
|
| - |
|
|
| (74.5 | ) |
Net cash (used in) investing activities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 17,607.3 |
|
|
| - |
|
|
| 17,607.3 |
|
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings on credit facility |
|
| - |
|
|
| 1,050.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,050.0 |
|
Payments on debt, including capital lease obligations |
|
| - |
|
|
| (8,815.9 | ) |
|
| (500.0 | ) |
|
| - |
|
|
| (1,515.1 | ) |
|
| - |
|
|
| (10,831.0 | ) |
Payments of contingent consideration |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (77.7 | ) |
|
| - |
|
|
| (77.7 | ) |
Dividends to Parent |
|
| (1,244.8 | ) |
|
| (1,244.8 | ) |
|
| - |
|
|
| - |
|
|
| (1,244.8 | ) |
|
| 2,489.6 |
|
|
| (1,244.8 | ) |
Net cash (used in) / provided by financing activities |
|
| (1,244.8 | ) |
|
| (9,010.7 | ) |
|
| (500.0 | ) |
|
| - |
|
|
| (2,837.6 | ) |
|
| 2,489.6 |
|
|
| (11,103.5 | ) |
Effect of currency exchange rate changes on cash and cash equivalents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4.3 |
|
|
| - |
|
|
| 4.3 |
|
Net increase / (decrease) in cash and cash equivalents |
|
| 0.1 |
|
|
| 2,087.6 |
|
|
| - |
|
|
| (2.0 | ) |
|
| 4,400.9 |
|
|
| - |
|
|
| 6,486.6 |
|
Cash and cash equivalents at beginning of period |
|
| - |
|
|
| 13.5 |
|
|
| - |
|
|
| 2.0 |
|
|
| 1,020.7 |
|
|
| - |
|
|
| 1,036.2 |
|
Cash and cash equivalents at end of period |
| $ | 0.1 |
|
| $ | 2,101.1 |
|
| $ | - |
|
| $ | - |
|
| $ | 5,421.6 |
|
| $ | - |
|
| $ | 7,522.8 |
|
|
| Warner Chilcott Limited (Parent Guarantor) |
|
| Allergan Capital S.a.r.l. (Guarantor) |
|
| Allergan Funding SCS (Issuer) |
|
| Allergan Finance, LLC (Issuer and Guarantor) |
|
| Non- guarantors |
|
| Eliminations |
|
| Consolidated Warner Chilcott Limited |
| |||||||
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) / income |
| $ | (603.7 | ) |
| $ | (492.0 | ) |
| $ | (214.4 | ) |
| $ | (124.5 | ) |
| $ | (1,100.2 | ) |
| $ | 1,935.7 |
|
| $ | (599.1 | ) |
Reconciliation to net cash provided by / (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses / (earnings) of equity interest subsidiaries |
|
| 603.7 |
|
|
| 1,018.4 |
|
|
| 214.4 |
|
|
| 99.2 |
|
|
| - |
|
|
| (1,935.7 | ) |
|
| - |
|
Depreciation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 105.2 |
|
|
| - |
|
|
| 105.2 |
|
Amortization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,394.7 |
|
|
| - |
|
|
| 3,394.7 |
|
Provision for inventory reserve |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 45.4 |
|
|
| - |
|
|
| 45.4 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 127.4 |
|
|
| - |
|
|
| 127.4 |
|
Deferred income tax benefit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,359.6 | ) |
|
| - |
|
|
| (1,359.6 | ) |
In-process research and development impairments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 798.0 |
|
|
| - |
|
|
| 798.0 |
|
Loss on asset sales and impairments, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 272.7 |
|
|
| - |
|
|
| 272.7 |
|
Gain on sale of Teva securities, net |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (60.9 | ) |
|
| - |
|
|
| (60.9 | ) |
Gain on sale of business |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (53.0 | ) |
|
| - |
|
|
| (53.0 | ) |
Non-cash extinguishment of debt |
|
| - |
|
|
| - |
|
|
| 4.0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4.0 |
|
Cash charge related to extinguishment of debt |
|
| - |
|
|
| - |
|
|
| (13.1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13.1 | ) |
Amortization of deferred financing costs |
|
| - |
|
|
| - |
|
|
| 11.1 |
|
|
| 0.8 |
|
|
| - |
|
|
| - |
|
|
| 11.9 |
|
Contingent consideration adjustments, including accretion |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (101.8 | ) |
|
| - |
|
|
| (101.8 | ) |
Dividends from subsidiaries |
|
| 2,103.7 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,103.7 | ) |
|
| - |
|
Other, net |
|
| - |
|
|
| - |
|
|
| (1.5 | ) |
|
| (0.4 | ) |
|
| 1.6 |
|
|
| - |
|
|
| (0.3 | ) |
Changes in assets and liabilities (net of effects of acquisitions) |
|
| - |
|
|
| (1,225.0 | ) |
|
| 3,942.3 |
|
|
| 24.9 |
|
|
| (2,578.4 | ) |
|
| - |
|
|
| 163.8 |
|
Net cash provided by / (used in) operating activities |
|
| 2,103.7 |
|
|
| (698.6 | ) |
|
| 3,942.8 |
|
|
| - |
|
|
| (508.9 | ) |
|
| (2,103.7 | ) |
|
| 2,735.3 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (106.5 | ) |
|
| - |
|
|
| (106.5 | ) |
Additions to investments |
|
| - |
|
|
| (400.0 | ) |
|
| - |
|
|
| - |
|
|
| (1,055.9 | ) |
|
| - |
|
|
| (1,455.9 | ) |
Proceeds from sale of investments and other assets |
|
| - |
|
|
| 800.0 |
|
|
| - |
|
|
| - |
|
|
| 4,851.3 |
|
|
| - |
|
|
| 5,651.3 |
|
Payments to settle Teva related matters |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (466.0 | ) |
|
| - |
|
|
| (466.0 | ) |
Proceeds from sales of property, plant and equipment |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 11.5 |
|
|
| - |
|
|
| 11.5 |
|
Net cash provided by investing activities |
|
| - |
|
|
| 400.0 |
|
|
| - |
|
|
| - |
|
|
| 3,234.4 |
|
|
| - |
|
|
| 3,634.4 |
|
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings of long-term indebtedness, including credit facility |
|
| - |
|
|
| 700.0 |
|
|
| - |
|
|
| - |
|
|
| 9.0 |
|
|
| - |
|
|
| 709.0 |
|
Payments on debt, including finance lease obligations and credit facility |
|
| - |
|
|
| (700.0 | ) |
|
| (3,956.0 | ) |
|
| - |
|
|
| (710.8 | ) |
|
| - |
|
|
| (5,366.8 | ) |
Cash charge related to extinguishment of debt |
|
| - |
|
|
| - |
|
|
| 13.1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 13.1 |
|
Payments of contingent consideration and other financing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (10.6 | ) |
|
| - |
|
|
| (10.6 | ) |
Proceeds from forward sale of Teva securities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 465.5 |
|
|
| - |
|
|
| 465.5 |
|
Payments to settle Teva related matters |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (234.0 | ) |
|
| - |
|
|
| (234.0 | ) |
Dividends to Parents |
|
| (2,103.7 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,103.7 | ) |
|
| 2,103.7 |
|
|
| (2,103.7 | ) |
Net cash (used in) / provided by financing activities |
|
| (2,103.7 | ) |
|
| - |
|
|
| (3,942.9 | ) |
|
| - |
|
|
| (2,584.6 | ) |
|
| 2,103.7 |
|
|
| (6,527.5 | ) |
Effect of currency exchange rate changes on cash and cash equivalents |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15.0 |
|
|
| - |
|
|
| 15.0 |
|
Net (decrease) / increase in cash and cash equivalents |
|
| - |
|
|
| (298.6 | ) |
|
| (0.1 | ) |
|
| - |
|
|
| 155.9 |
|
|
| - |
|
|
| (142.8 | ) |
Cash and cash equivalents at beginning of period |
|
| 0.1 |
|
|
| 593.1 |
|
|
| 0.1 |
|
|
| - |
|
|
| 1,223.0 |
|
|
| - |
|
|
| 1,816.3 |
|
Cash and cash equivalents at end of period |
| $ | 0.1 |
|
| $ | 294.5 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,378.9 |
|
| $ | - |
|
| $ | 1,673.5 |
|
NOTE 22 – Subsequent Events
Tax Structure
As a result of changes to the internal structure of the Company that occurred in October 2017, we estimate that a net tax benefit of approximately $795.0 million will be accounted for as a discrete item in our Q4 2017 tax provision. This is due to certain temporary differences expected to reverse at tax rates different than what was originally recorded.
The following discussion of our financial condition and the results of operations should be read in conjunction with the “Consolidated Financial Statements” and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 20162018 (the “Annual Report”). This discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, among others, those identified under “Risk Factors” in our Annual Report, and elsewhere in this Quarterly Report.
References throughout to “we,” “our,” “us,” the “Company” or “Allergan” refer to financial information and transactions of Allergan plc. References to “Warner Chilcott Limited” refer to Warner Chilcott Limited, the Company’s indirect wholly-owned subsidiary, and, unless the context otherwise requires, its subsidiaries. Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc, the ultimate parent of the group.group (together with other direct or indirect parents of Warner Chilcott Limited, the “Parents”). The results of Warner Chilcott Limited are consolidated into the results of Allergan plc. Due to the deminimis activity between Allergan plc and Warner Chilcott Limited referencesand the Parents (including Allergan plc), content throughout this filing relaterelates to both Allergan plc and Warner Chilcott Limited. Warner Chilcott Limited representationsdisclosures relate only to itself and not to any other company.
Overview
Allergan plc is a global pharmaceutical company and a leader in a new industry model – Growth Pharma. Allergan is focused on developing, manufacturing and commercializing branded pharmaceutical (“brand”, “branded” or “specialty brand”), device, biologic, surgical and regenerative medicine products for patients around the world. The Company has operations in more than 100 countries. Warner Chilcott Limited is an indirect wholly-owned subsidiary of Allergan plc and has the same principal business activities.
On August 2, 2016 we completed the divestiture of our global generics business and certain other assets to Teva Pharmaceutical Industries Ltd. (“Teva”) (the “Teva Transaction”) in exchange for which we received $33.3 billion in cash, net of cash acquired by Teva, which includes estimated working capital and other contractual adjustments, and 100.3 million unregistered Teva ordinary shares (or American Depository Shares with respect thereto), which approximated $5.0 billion in value using the closing date Teva opening stock price discounted at a rate of 5.9 percent due to the lack of marketability.
As part of the Teva Transaction, Teva acquired our global generics business, including the United States (“U.S.”) and international generic commercial units, our third-party supplier Medis, our global generic manufacturing operations, our global generic research and development (“R&D”) unit, our international over-the-counter (“OTC”) commercial unit (excluding OTC eye care products) and certain established international brands.
On October 3, 2016, the Company completed the divestiture of the Anda Distribution business to Teva for $500.0 million. The Anda Distribution business distributed generic, branded, specialty and OTC pharmaceutical products from more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the U.S.
The Company recognized a combined gain on the sale of the Anda Distribution business and the Teva Transaction of $15,932.2 million in the year ended December 31, 2016, as well as deferred liabilities relating to other elements of our arrangements with Teva of $299.2 million. In the three and nine months ended September 30, 2016, the Company recognized a gain on the sale of the generics business of $15,881.5 million.
As a result of the Teva Transaction and the divestiture of the Company’s Anda Distribution business, and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) number 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, the financial results of the businesses held for sale have been reclassified to discontinued operations for all periods presented in our consolidated financial statements. The results of our discontinued operations include the results of our generic product development, manufacturing and distribution of off-patent pharmaceutical products, certain established international brands marketed similarly to generic products and out-licensed generic pharmaceutical products primarily in Europe through our Medis third-party business through August 2, 2016, as well as our Anda Distribution business through October 3, 2016.
2017Recent Business Transactions
The following are the materialsignificant transactions that were completed or announced in the ninesix months ended SeptemberJune 30, 2017.2019.
Acquisitions
KellerAbbVie Inc.
On June 25, 2019, the Company announced that it entered into a transaction agreement (the “AbbVie Agreement”) under which AbbVie Inc. (“AbbVie”), a global, research-driven biopharmaceutical company, would acquire Allergan plc in a stock and cash transaction (the “AbbVie Transaction”), valued at $188.24 per Allergan share, or approximately $63.0 billion, based on AbbVie’s then-current stock price at the time the AbbVie Transaction was announced. At the closing of the proposed AbbVie Transaction, Company shareholders will receive 0.8660 shares of AbbVie common stock and $120.30 in cash for each of their existing shares. The AbbVie Transaction is subject to customary regulatory and shareholder approvals and other customary closing conditions. The AbbVie Transaction is anticipated to close in early 2020.
Envy Medical, Inc.
On June 23, 2017March 26, 2019, the Company acquired KellerEnvy Medical, Inc. (“Keller”Envy”), a privately held medical deviceaesthetics company and developer of the Keller Funnel® (the “Keller Acquisition”). The acquisition combines the Keller Funnel® with the Company’s leading breast implants business.
Zeltiq® Aesthetics, Inc.
On April 28, 2017 the Company acquired ZELTIQ® Aesthetics, Inc. (“Zeltiq”)that specializes in non-surgical, non-invasive skin resurfacing systems for an acquisition accounting purchase price of $2,405.4$81.4 million, (the “Zeltiq Acquisition”). Zeltiqwhich includes $67.4 million of product rights and other intangibles, $34.1 million of goodwill and other assets and liabilities. The transaction was focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform.treated as a business combination. The acquisition combined Zeltiq’s body contouring businesscombines Envy’s skin care product portfolio with the Company’s leading portfolio of medical aesthetics.
As a result of the Zeltiq Acquisition, the Company incurred the following transaction and integration costs in the three and nine months ended September 30, 2017 ($ in millions):
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
| ||
Cost of sales |
|
|
|
|
|
|
|
Stock-based compensation acquired for legacy Zeltiq employees | $ | 0.8 |
|
| $ | 1.3 |
|
Research and development |
|
|
|
|
|
|
|
Stock-based compensation acquired for legacy Zeltiq employees |
| 1.3 |
|
|
| 2.1 |
|
Acquisition, integration and restructuring related charges |
| 0.7 |
|
|
| 1.0 |
|
Selling and marketing |
|
|
|
|
|
|
|
Stock-based compensation acquired for legacy Zeltiq employees |
| 4.3 |
|
|
| 7.9 |
|
Acquisition, integration and restructuring related charges |
| 2.1 |
|
|
| 12.4 |
|
General and administrative |
|
|
|
|
|
|
|
Stock-based compensation acquired for legacy Zeltiq employees |
| 1.9 |
|
|
| 36.1 |
|
Acquisition, integration and restructuring related charges |
| 8.2 |
|
|
| 37.9 |
|
Total Integration Costs | $ | 19.3 |
|
| $ | 98.7 |
|
LifeCell Corporation
On February 1, 2017, the Company acquired the LifeCell Corporation (“LifeCell”), a regenerative medicine company, for an acquisition accounting price of $2,883.1 million (the “LifeCell Acquisition”). The acquisition combined LifeCell's novel, regenerative medicines business, including its high-quality and durable portfolio of dermal matrix products with the Company’s leading portfolio of medical aesthetics breast implants and tissue expanders. The acquisition of LifeCell expanded the Company’s marketed product portfolio by adding Alloderm® and Strattice®.business.
As a result of the LifeCell Acquisition, the Company incurred the following transaction and integration costs in the three and nine months ended September 30, 2017 ($ in millions):
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
| ||
Cost of sales |
|
|
|
|
|
|
|
Acquisition, integration and restructuring related charges | $ | - |
|
| $ | 0.2 |
|
Research and development |
|
|
|
|
|
|
|
Acquisition, integration and restructuring related charges |
| - |
|
|
| 0.6 |
|
Selling and marketing |
|
|
|
|
|
|
|
Acquisition, integration and restructuring related charges |
| - |
|
|
| 2.9 |
|
General and administrative |
|
|
|
|
|
|
|
Acquisition, integration and restructuring related charges |
| 7.8 |
|
|
| 37.3 |
|
Total Integration Costs | $ | 7.8 |
|
| $ | 41.0 |
|
Licenses and Other Transactions Accounted for as Asset Acquisitions
Lyndra, Inc.
On July 28, 2017, the Company entered into a collaboration, option and license agreement with Lyndra, Inc. (“Lyndra”) to develop orally administered ultra-long-acting (once-weekly) productsOperating Results for the treatment of Alzheimer’s diseaseThree and an additional, unspecified indication. The total upfront payment of $15.0 million was expensed as a component of R&D expense in the three and nine months ended September 30, 2017. The future option exercise payments, if any, and any future success based milestones relating to the licensed products of up to $85.0 million will be recorded if the corresponding events become probable.
Editas Medicine, Inc.
On March 14, 2017, the Company entered into a strategic alliance and option agreement with Editas Medicine, Inc. (“Editas”) for access to early stage, first-in-class eye care programs. Pursuant to the agreement, Allergan made an upfront payment of $90.0 million for the right to license up to five of Editas’ gene-editing programs in eye care, including its lead program for Leber Congenital Amaurosis (“LCA”), which is currently in pre-clinical development. Under the terms of the agreement, if an option is exercised, Editas is eligible to receive contingent research and development and commercial milestones plus royalties based on net sales. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing, as well as the lack of certain other inputs and processes, that the transaction did not qualify as a business. The total upfront payment of $90.0 million was expensed as a component of R&D expense in the nine months ended September 30, 2017. The future option exercise payments, if any, and any future success based milestones relating to the licensed products will be recorded if the corresponding events become probable.
Assembly Biosciences, Inc.
On January 9, 2017 the Company entered into a licensing agreement with Assembly Biosciences, Inc. (“Assembly”) for the worldwide rights to Assembly’s microbiome gastrointestinal development programs. Pursuant to the agreement, Allergan made an upfront payment to Assembly of $50.0 million for the exclusive, worldwide rights to develop and commercialize certain development compounds. Additionally, Assembly will be eligible to receive success-based development and commercial milestone payments plus royalties based on net sales. Allergan and Assembly will generally share development costs through proof-of-concept (“POC”) studies, and Allergan will assume all post-POC development costs. The Company concluded based on the stage of development of the assets, the lack of acquired employees and manufacturing, as well as the lack of certain other inputs and processes, that the transaction did not qualify as a business. The total upfront payment of $50.0 million was expensed as a component of R&D expense in the nine months ended September 30, 2017 and the future success based milestone payments of up to $2,771.0 million will be recorded if the corresponding events become probable.
Lysosomal Therapeutics, Inc.
On January 9, 2017 the Company entered into a definitive agreement for the option to acquire Lysosomal Therapeutics, Inc. (“LTI”). LTI is focused on innovative small-molecule research and development in the field of neurodegeneration, yielding new treatment options for patients with severe neurological diseases. Under the agreement, Allergan acquired an option right directly from LTI shareholders to acquire LTI for $150.0 million plus future milestone payments following completion of a Phase 1b trial for LTI-291 as well as an upfront research and development payment. The Company concluded based on the stage of development of the
assets, the lack of acquired employees and manufacturing, as well as the lack of certain other inputs and processes, that the transaction did not qualify as a business. The aggregate upfront payment of $145.0 million was recorded as a component of R&D expense in the nine months ended September 30, 2017.
Other Transactions
Saint Regis Mohawk Tribe
On September 8, 2017, the Company entered into an agreement with the Saint Regis Mohawk Tribe, under which the Saint Regis Mohawk Tribe obtained the rights to Orange Book-listed patents covering Restasis® (Cyclosporine Ophthalmic Emulsion) 0.05%, and the Company was granted exclusive licenses under the patents related to the product. Pursuant to the agreement, the Company paid the Saint Regis Mohawk Tribe an upfront payment of $13.8 million, which was recorded as a component of cost of sales in the three and nine months ended September 30, 2017. Additionally, the Saint Regis Mohawk Tribe will be eligible to receive $15.0 million in annual royalties, during the period that certain patent claims remain in effect.
2016 Transactions
The following are the material transactions that were completed in the year ended December 31, 2016.
Acquisitions
Tobira Therapeutics, Inc.
On November 1, 2016, the Company acquired Tobira Therapeutics, Inc. (“Tobira”), a clinical-stage biopharmaceutical company focused on developing and commercializing therapies for non-alcoholic steatohepatitis (“NASH”) and other liver diseases, for an acquisition accounting purchase price of $570.1 million, plus contingent consideration of up to $49.84 per share in contingent value rights (“CVR”), or up to $1,101.3 million, that may be payable based on the successful completion of certain development, regulatory and commercial milestones (the “Tobira Acquisition”), of which $303.1 million was paid during the second quarter of 2017. The CVR had an aggregate acquisition date fair value of $479.0 million. The Tobira Acquisition added to the Company’s pipeline Cenicriviroc and Evogliptin, two differentiated, complementary development programs for the treatment of the multi-factorial elements of NASH, including inflammation, metabolic syndromes and fibrosis.
Vitae Pharmaceuticals, Inc.
On October 25, 2016, the Company acquired Vitae Pharmaceuticals, Inc. (“Vitae”), a clinical-stage biotechnology company, for an acquisition accounting purchase price of $621.4 million (the “Vitae Acquisition”). The Vitae Acquisition strengthens Allergan’s dermatology product pipeline with the addition of a Phase II orally active RORyt (retinoic acid receptor-related orphan receptor gamma) inhibitor for the potential treatment of psoriasis and other autoimmune disorders. In addition, as a result of the Vitae Acquisition, the Company expanded its pipeline with the acquisition of a Phase II atopic dermatitis drug candidate.
ForSight VISION5, Inc.
On September 23, 2016, the Company acquired ForSight VISION5, Inc. (“ForSight’), a privately held, clinical-stage biotechnology company focused on eye care, in an all cash transaction of approximately $95.0 million (the “ForSight Acquisition”). Under the terms of the ForSight Acquisition, the Company acquired ForSight for an acquisition accounting purchase price of $74.5 million plus the payment of outstanding indebtedness of $14.8 million and other miscellaneous charges. ForSight shareholders are eligible to receive contingent consideration of up to $125.0 million, which has an initial estimated fair value of $79.8 million, relating to commercialization milestones. The Company acquired ForSight for its lead development program, a peri-ocular ring designed for extended drug delivery and reducing elevated intraocular pressure (“IOP”) in glaucoma patients.
Licenses and Asset Acquisitions
In the year ended December 31, 2016, none of the following completed transactions qualified as a business. The conclusion for each transaction was determined based on the stage of development of the specific assets acquired, the lack of acquired employees in the individual transactions and the lack of acquired manufacturing processes, as well as the lack of certain other inputs and processes. As a result, the initial consideration in these transactions was included as a component of R&D expenses in the year ended December 31, 2016 as follows ($ in millions):
| Initial Consideration |
| |
AstraZeneca plc agreement in the three months ended December 31, 2016 | $ | 250.0 |
|
Motus Therapeutics, Inc. acquisition in the three months ended December 31, 2016 |
| 199.5 |
|
Chase Pharmaceuticals Corporation acquisition in the three months ended December 31, 2016 |
| 122.9 |
|
RetroSense Therapeutics, LLC license agreement in the three months ended September 30, 2016 |
| 59.7 |
|
Akarna Therapeutics, Ltd acquisition in the three months ended September 30, 2016 |
| 48.2 |
|
Topokine Therapeutics, Inc. acquisition in the three months ended June 30, 2016 |
| 85.8 |
|
Heptares Therapeutics Ltd. license agreement in the three months ended June 30, 2016 |
| 125.0 |
|
Anterios, Inc. acquisition in the three months ended March 31, 2016 |
| 89.2 |
|
2015 Transactions
The following are the material transactions that were completed in the year ended December 31, 2015.
Allergan, Inc.
On March 17, 2015, the Company completed the acquisition of Allergan, Inc. (“Legacy Allergan”). The addition of Legacy Allergan’s therapeutic franchises in ophthalmology, neurosciences and medical aesthetics/dermatology/plastic surgery complemented the Company’s existing central nervous system, gastroenterology, women’s health and urology franchises. The combined company benefited from Legacy Allergan’s global brand equity and consumer awareness of key products. The transaction also expanded our presence and market and product reach across many international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.
Acquisition-Related Expenses
As a result of the Allergan acquisition, the Company incurred the following transaction and integration costs in the three months ended September 30, 2017 and 2016, respectively ($ in millions):
|
| Three Months Ended September 30, 2017 |
|
| Three Months Ended September 30, 2016 |
| ||
Cost of sales |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
| $ | 1.1 |
|
| $ | 2.2 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 6.6 |
|
Research and development |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 5.8 |
|
|
| 9.3 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 6.8 |
|
Selling and marketing |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 7.5 |
|
|
| 15.8 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| (1.2 | ) |
General and administrative |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 2.9 |
|
|
| 9.9 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 50.4 |
|
Total transaction and integration costs |
| $ | 17.3 |
|
| $ | 99.8 |
|
As a result of the Allergan acquisition, the Company incurred the following transaction and integration costs in the nine months ended September 30, 2017 and 2016, respectively ($ in millions):
|
| Nine Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2016 |
| ||
Cost of sales |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
| $ | 3.8 |
|
| $ | 7.4 |
|
Acquisition, integration and restructuring related charges |
|
| 0.9 |
|
|
| 12.4 |
|
Research and development |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 19.7 |
|
|
| 32.6 |
|
Acquisition, integration and restructuring related charges |
|
| 0.5 |
|
|
| 10.6 |
|
Selling and marketing |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 21.4 |
|
|
| 53.0 |
|
Acquisition, integration and restructuring related charges |
|
| - |
|
|
| 11.7 |
|
General and administrative |
|
|
|
|
|
|
|
|
Stock-based compensation acquired for Legacy Allergan employees |
|
| 10.3 |
|
|
| 28.2 |
|
Acquisition, integration and restructuring related charges |
|
| 9.2 |
|
|
| 144.0 |
|
Total transaction and integration costs |
| $ | 65.8 |
|
| $ | 299.9 |
|
Operating results
Segments
The Company’s businesses are organized into the following segments: US Specialized Therapeutics, US General Medicine and International. In addition, certain revenues and shared costs, and the results of corporate initiatives, are managed outside of the three segments.
The operating segments are organized as follows:
The US Specialized Therapeutics segment includes sales and expenses relating to certain branded products within the U.S., including Medical Aesthetics, Medical Dermatology, Eye Care, Neurosciences and Urology therapeutic products.
The US General Medicine segment includes sales and expenses relating to branded products within the U.S. that do not fall into the US Specialized Therapeutics business units, including Central Nervous System, Gastrointestinal, Women’s Health, Anti-Infectives and Diversified Brands.
The International segment includes sales and expenses relating to products sold outside the U.S.
The Company evaluates segment performance based on segment contribution. Segment contribution for our segments represents net revenues less cost of sales (defined below), selling and marketing expenses, and select general and administrative expenses. Included in segment revenues are product sales that were sold through our former Anda Distribution business once the Anda Distribution business had sold the product to a third party customer. These sales are included in segment results and are reclassified into revenues from discontinued operations through a reduction of Corporate revenues which eliminates the sales made by our former Anda Distribution business from results of continuing operations prior to October 3, 2016. Cost of sales for these products in discontinued operations is equal to our average third party cost of sales for third party branded products distributed by our former Anda Distribution. The Company does not evaluate the following items at the segment level:
Revenues and operating expenses within cost of sales, selling and marketing expenses, and general and administrative expenses that result from the impact of corporate initiatives. Corporate initiatives primarily include integration, restructuring, acquisition and other shared costs.
General and administrative expenses that result from shared infrastructure, including certain expenses located within the United States.
Total assets including capital expenditures.
Other select revenues and operating expenses including R&D expenses, amortization, IPR&D impairments and asset sales and impairments, net as not all such information has been accounted for at the segment level, or such information has not been used by all segments.
The Company defines segment net revenues as product sales and other revenue derived from branded products or licensing agreements.
Cost of sales within segment contribution includes standard production and packaging costs for the products we manufacture, third party acquisition costs for products manufactured by others, profit-sharing or royalty payments for products sold pursuant to licensing agreements and finished goods inventory reserve charges. Cost of sales included within segment contribution does not include non-standard production costs, such as non-finished goods inventory obsolescence charges, manufacturing variances and excess capacity utilization charges, where applicable. Cost of sales does not include amortization or impairment costs for acquired product rights or other acquired intangibles.
Selling and marketing expenses consist mainly of personnel-related costs, product promotion costs, distribution costs, professional service costs, insurance, depreciation and travel costs.
General and administrative expenses consist mainly of personnel-related costs, facilities costs, transaction costs, insurance, depreciation, litigation costs and professional services costs which are general in nature and attributable to the segment.
ThreeSix Months Ended SeptemberJune 30, 20172019 and 20162018
SegmentResults of operations, including segment net revenues, segment operating expenses and segment contribution information consisted of the following for the three and six months ended SeptemberJune 30, 20172019 and 2016 ($2018($ in millions):
|
| Three Months Ended September 30, 2017 |
| |||||||||||||||||||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 2019 |
| |||||||||||||||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||||||
Net revenues |
| $ | 1,724.8 |
|
| $ | 1,497.4 |
|
| $ | 807.8 |
|
| $ | 4,030.0 |
|
| $ | 1,785.1 |
|
| $ | 1,455.7 |
|
| $ | 847.7 |
|
| $ | 4,088.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 131.4 |
|
|
| 225.5 |
|
|
| 116.3 |
|
|
| 473.2 |
|
|
| 151.0 |
|
|
| 231.3 |
|
|
| 145.6 |
|
|
| 527.9 |
|
Selling and marketing |
|
| 353.5 |
|
|
| 247.7 |
|
|
| 224.8 |
|
|
| 826.0 |
|
|
| 368.0 |
|
|
| 250.1 |
|
|
| 253.6 |
|
|
| 871.7 |
|
General and administrative |
|
| 54.8 |
|
|
| 47.7 |
|
|
| 28.3 |
|
|
| 130.8 |
|
|
| 37.6 |
|
|
| 30.4 |
|
|
| 28.4 |
|
|
| 96.4 |
|
Segment Contribution |
| $ | 1,185.1 |
|
| $ | 976.5 |
|
| $ | 438.4 |
|
| $ | 2,600.0 |
| ||||||||||||||||
Segment contribution |
| $ | 1,228.5 |
|
| $ | 943.9 |
|
| $ | 420.1 |
|
| $ | 2,592.5 |
| ||||||||||||||||
Contribution margin |
|
| 68.7 | % |
|
| 65.2 | % |
|
| 54.3 | % |
|
| 64.5 | % |
|
| 68.8 | % |
|
| 64.8 | % |
|
| 49.6 | % |
|
| 63.4 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 321.9 |
| ||||||||||||||||
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 352.2 |
| ||||||||||||||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 442.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 450.0 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,781.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,402.0 |
|
Goodwill impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,085.8 |
| ||||||||||||||||
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 202.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 436.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,874.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 129.4 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (4,022.3 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (1,262.9 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (99.8 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (30.9 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. | (1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| ||||||||||||||||||||||||||||||
(2) Corporate includes net revenues of $1.6 million. | (2) Corporate includes net revenues of $1.6 million. |
| ||||||||||||||||||||||||||||||
|
|
|
| Six Months Ended June 30, 2019 |
| |||||||||||||
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 3,328.0 |
|
| $ | 2,705.6 |
|
| $ | 1,649.2 |
|
| $ | 7,682.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 271.1 |
|
|
| 421.8 |
|
|
| 255.3 |
|
|
| 948.2 |
|
Selling and marketing |
|
| 724.8 |
|
|
| 460.6 |
|
|
| 491.2 |
|
|
| 1,676.6 |
|
General and administrative |
|
| 92.2 |
|
|
| 74.2 |
|
|
| 54.1 |
|
|
| 220.5 |
|
Segment contribution |
| $ | 2,239.9 |
|
| $ | 1,749.0 |
|
| $ | 848.6 |
|
| $ | 4,837.5 |
|
Contribution margin |
|
| 67.3 | % |
|
| 64.6 | % |
|
| 51.5 | % |
|
| 63.0 | % |
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 610.2 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 885.0 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,801.4 |
|
Goodwill impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,552.8 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 436.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 124.2 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (3,572.1 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (46.5 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||
(2) Corporate includes net revenues of $4.4 million. |
| |||||||||||||||
|
| Three Months Ended September 30, 2016 |
| |||||||||||||||||||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 2018 |
| |||||||||||||||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||||||
Net revenues |
| $ | 1,453.2 |
|
| $ | 1,488.1 |
|
| $ | 697.8 |
|
| $ | 3,639.1 |
|
| $ | 1,826.7 |
|
| $ | 1,320.0 |
|
| $ | 948.9 |
|
| $ | 4,095.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 69.2 |
|
|
| 215.1 |
|
|
| 95.1 |
|
|
| 379.4 |
|
|
| 148.7 |
|
|
| 201.8 |
|
|
| 139.4 |
|
|
| 489.9 |
|
Selling and marketing |
|
| 292.4 |
|
|
| 292.8 |
|
|
| 188.2 |
|
|
| 773.4 |
|
|
| 343.3 |
|
|
| 254.8 |
|
|
| 246.2 |
|
|
| 844.3 |
|
General and administrative |
|
| 41.2 |
|
|
| 42.3 |
|
|
| 28.0 |
|
|
| 111.5 |
|
|
| 48.1 |
|
|
| 34.7 |
|
|
| 33.9 |
|
|
| 116.7 |
|
Segment Contribution |
| $ | 1,050.4 |
|
| $ | 937.9 |
|
| $ | 386.5 |
|
| $ | 2,374.8 |
| ||||||||||||||||
Segment contribution |
| $ | 1,286.6 |
|
| $ | 828.7 |
|
| $ | 529.4 |
|
| $ | 2,644.7 |
| ||||||||||||||||
Contribution margin |
|
| 72.3 | % |
|
| 63.0 | % |
|
| 55.4 | % |
|
| 65.3 | % |
|
| 70.4 | % |
|
| 62.8 | % |
|
| 55.8 | % |
|
| 64.6 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 372.0 |
| ||||||||||||||||
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 189.8 |
| ||||||||||||||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 622.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 689.2 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,609.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,697.1 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 42.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 276.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4.7 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 259.6 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (266.4 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (467.0 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (7.3 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (11.4 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. | (1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| ||||||||||||||||||||||||||||||
(2) Corporate includes net revenues of $28.6 million. | (2) Corporate includes net revenues of $28.6 million. |
| ||||||||||||||||||||||||||||||
|
|
|
| Six Months Ended June 30, 2018 |
| |||||||||||||
|
| US Specialized Therapeutics |
|
| US General Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 3,405.3 |
|
| $ | 2,543.7 |
|
| $ | 1,812.9 |
|
| $ | 7,761.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 282.9 |
|
|
| 384.4 |
|
|
| 260.3 |
|
|
| 927.6 |
|
Selling and marketing |
|
| 656.5 |
|
|
| 480.3 |
|
|
| 491.9 |
|
|
| 1,628.7 |
|
General and administrative |
|
| 98.3 |
|
|
| 73.6 |
|
|
| 65.3 |
|
|
| 237.2 |
|
Segment contribution |
| $ | 2,367.6 |
|
| $ | 1,605.4 |
|
| $ | 995.4 |
|
| $ | 4,968.4 |
|
Contribution margin |
|
| 69.5 | % |
|
| 63.1 | % |
|
| 54.9 | % |
|
| 64.0 | % |
Corporate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 460.1 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,163.9 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,394.7 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 798.0 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 272.7 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (1,121.0 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (14.4 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||
(2) Corporate includes net revenues of $34.4 million. |
| |||||||||||||||
The
On July 24, 2019, the Company announced a voluntary worldwide recall of BIOCELL® textured breast implants and tissue expanders as a precaution following isnotification of recently updated global safety information concerning the uncommon incidence of breast implant-associated anaplastic large cell lymphoma (BIA-ALCL) provided by the U.S. Food and Drug Administration (“FDA”).
In connection with the voluntary recall, the Company recorded an unfavorable adjustment to operating income of $95.9 million. Of this amount, $43.5 million related to estimated customer returns of product previously sold and was recorded as a reconciliationreduction of net revenues, for the operating segments$44.2 million related to write-offs of inventory and other costs and was recorded in cost of sales, and $8.2 million related to the Company’s net revenues forestimated penalties and costs to undertake the three months ended September 30, 2017voluntary recall was recorded in selling, general and 2016 ($ in millions):
administrative expense.
|
| Three Months Ended September 30, |
|
| Change |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Segment net revenues |
| $ | 4,030.0 |
|
| $ | 3,639.1 |
|
| $ | 390.9 |
|
|
| 10.7 | % |
Corporate revenues |
|
| 4.3 |
|
|
| (16.9 | ) |
|
| 21.2 |
|
|
| 125.4 | % |
Net revenues |
| $ | 4,034.3 |
|
| $ | 3,622.2 |
|
| $ | 412.1 |
|
|
| 11.4 | % |
No country outside of the United States represents ten percent or more of net revenues. The US Specialized Therapeutics and US General Medicine segments are comprised solely of sales within the United States.
The following table represents global net revenues for the top products for the three months ended September 30, 2017 and 2016 ($ in millions):
| Three Months Ended September 30, 2017 |
| Three Months Ended September 30, 2016 |
| Total Change |
| ||||||||||||||||||||||||||||||
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
| Dollars |
| Percentage |
| ||||||||||||
Botox® | $ | 558.6 |
| $ | - |
| $ | 215.9 |
| $ | - |
| $ | 774.5 |
| $ | 496.3 |
| $ | - |
| $ | 193.4 |
| $ | - |
| $ | 689.7 |
| $ | 84.8 |
|
| 12.3 | % |
Restasis® |
| 366.8 |
|
| - |
|
| 15.5 |
|
| - |
|
| 382.3 |
|
| 356.4 |
|
| - |
|
| 15.4 |
|
| - |
|
| 371.8 |
|
| 10.5 |
|
| 2.8 | % |
Juvederm Collection** |
| 115.6 |
|
| - |
|
| 126.5 |
|
| - |
|
| 242.1 |
|
| 105.0 |
|
| - |
|
| 96.8 |
|
| - |
|
| 201.8 |
|
| 40.3 |
|
| 20.0 | % |
Linzess®/Constella® |
| - |
|
| 190.9 |
|
| 5.7 |
|
| - |
|
| 196.6 |
|
| - |
|
| 164.4 |
|
| 4.3 |
|
| - |
|
| 168.7 |
|
| 27.9 |
|
| 16.5 | % |
Lumigan®/Ganfort® |
| 83.3 |
|
| - |
|
| 91.5 |
|
| - |
|
| 174.8 |
|
| 78.3 |
|
| - |
|
| 86.6 |
|
| - |
|
| 164.9 |
|
| 9.9 |
|
| 6.0 | % |
Bystolic® /Byvalson® |
| - |
|
| 164.2 |
|
| 0.5 |
|
| - |
|
| 164.7 |
|
| - |
|
| 165.1 |
|
| 0.5 |
|
| - |
|
| 165.6 |
|
| (0.9 | ) |
| (0.5 | )% |
Alphagan®/Combigan® |
| 92.7 |
|
| - |
|
| 43.4 |
|
| - |
|
| 136.1 |
|
| 93.4 |
|
| - |
|
| 41.3 |
|
| - |
|
| 134.7 |
|
| 1.4 |
|
| 1.0 | % |
Eye Drops |
| 53.7 |
|
| - |
|
| 71.2 |
|
| - |
|
| 124.9 |
|
| 50.2 |
|
| - |
|
| 67.7 |
|
| - |
|
| 117.9 |
|
| 7.0 |
|
| 5.9 | % |
Lo Loestrin® |
| - |
|
| 120.0 |
|
| - |
|
| - |
|
| 120.0 |
|
| - |
|
| 105.7 |
|
| - |
|
| - |
|
| 105.7 |
|
| 14.3 |
|
| 13.5 | % |
Namenda XR® |
| - |
|
| 114.3 |
|
| - |
|
| - |
|
| 114.3 |
|
| - |
|
| 146.9 |
|
| - |
|
| - |
|
| 146.9 |
|
| (32.6 | ) |
| (22.2 | )% |
Estrace® Cream |
| - |
|
| 101.6 |
|
| - |
|
| - |
|
| 101.6 |
|
| - |
|
| 98.6 |
|
| - |
|
| - |
|
| 98.6 |
|
| 3.0 |
|
| 3.0 | % |
Breast Implants |
| 58.0 |
|
| - |
|
| 38.1 |
|
| - |
|
| 96.1 |
|
| 51.1 |
|
| - |
|
| 35.6 |
|
| - |
|
| 86.7 |
|
| 9.4 |
|
| 10.8 | % |
Viibryd®/Fetzima® |
| - |
|
| 86.5 |
|
| 1.0 |
|
| - |
|
| 87.5 |
|
| - |
|
| 87.6 |
|
| - |
|
| - |
|
| 87.6 |
|
| (0.1 | ) |
| (0.1 | )% |
Alloderm® |
| 84.6 |
|
| - |
|
| 1.5 |
|
| - |
|
| 86.1 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 86.1 |
| n.a. |
| |
Vraylar™ |
| - |
|
| 80.2 |
|
| - |
|
| - |
|
| 80.2 |
|
| - |
|
| 32.4 |
|
| - |
|
| - |
|
| 32.4 |
|
| 47.8 |
|
| 147.5 | % |
Ozurdex ® |
| 24.6 |
|
| - |
|
| 50.2 |
|
| - |
|
| 74.8 |
|
| 20.9 |
|
| - |
|
| 43.4 |
|
| - |
|
| 64.3 |
|
| 10.5 |
|
| 16.3 | % |
Coolsculpting Consumables |
| 50.3 |
|
| - |
|
| 13.8 |
|
| - |
|
| 64.1 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 64.1 |
| n.a. |
| |
Asacol®/Delzicol® |
| - |
|
| 49.5 |
|
| 11.9 |
|
| - |
|
| 61.4 |
|
| - |
|
| 72.2 |
|
| 14.2 |
|
| - |
|
| 86.4 |
|
| (25.0 | ) |
| (28.9 | )% |
Carafate ® /Sulcrate ® |
| - |
|
| 58.7 |
|
| 0.7 |
|
| - |
|
| 59.4 |
|
| - |
|
| 56.4 |
|
| 0.6 |
|
| - |
|
| 57.0 |
|
| 2.4 |
|
| 4.2 | % |
Zenpep® |
| - |
|
| 56.8 |
|
| - |
|
| - |
|
| 56.8 |
|
| - |
|
| 52.5 |
|
| - |
|
| - |
|
| 52.5 |
|
| 4.3 |
|
| 8.2 | % |
Aczone® |
| 46.7 |
|
| - |
|
| 0.2 |
|
| - |
|
| 46.9 |
|
| 69.0 |
|
| - |
|
| - |
|
| - |
|
| 69.0 |
|
| (22.1 | ) |
| (32.0 | )% |
Canasa®/Salofalk® |
| - |
|
| 39.0 |
|
| 4.6 |
|
| - |
|
| 43.6 |
|
| - |
|
| 47.2 |
|
| 4.4 |
|
| - |
|
| 51.6 |
|
| (8.0 | ) |
| (15.5 | )% |
Coolsculpting Systems & Add On Applicators |
| 33.1 |
|
| - |
|
| 10.2 |
|
| - |
|
| 43.3 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 43.3 |
| n.a. |
| |
Viberzi® |
| - |
|
| 40.9 |
|
| 0.2 |
|
| - |
|
| 41.1 |
|
| - |
|
| 30.9 |
|
| - |
|
| - |
|
| 30.9 |
|
| 10.2 |
|
| 33.0 | % |
Armour Thyroid |
| - |
|
| 38.5 |
|
| - |
|
| - |
|
| 38.5 |
|
| - |
|
| 39.1 |
|
| - |
|
| - |
|
| 39.1 |
|
| (0.6 | ) |
| (1.5 | )% |
Saphris® |
| - |
|
| 37.2 |
|
| - |
|
| - |
|
| 37.2 |
|
| - |
|
| 40.8 |
|
| - |
|
| - |
|
| 40.8 |
|
| (3.6 | ) |
| (8.8 | )% |
Namzaric® |
| - |
|
| 37.0 |
|
| - |
|
| - |
|
| 37.0 |
|
| - |
|
| 14.9 |
|
| - |
|
| - |
|
| 14.9 |
|
| 22.1 |
|
| 148.3 | % |
Rapaflo® |
| 28.3 |
|
| - |
|
| 1.8 |
|
| - |
|
| 30.1 |
|
| 25.2 |
|
| - |
|
| 1.5 |
|
| - |
|
| 26.7 |
|
| 3.4 |
|
| 12.7 | % |
Teflaro® |
| - |
|
| 29.1 |
|
| - |
|
| - |
|
| 29.1 |
|
| - |
|
| 33.3 |
|
| - |
|
| - |
|
| 33.3 |
|
| (4.2 | ) |
| (12.6 | )% |
Savella® |
| - |
|
| 24.0 |
|
| - |
|
| - |
|
| 24.0 |
|
| - |
|
| 28.1 |
|
| - |
|
| - |
|
| 28.1 |
|
| (4.1 | ) |
| (14.6 | )% |
SkinMedica® |
| 18.7 |
|
| - |
|
| 1.4 |
|
| - |
|
| 20.1 |
|
| 25.8 |
|
| - |
|
| - |
|
| - |
|
| 25.8 |
|
| (5.7 | ) |
| (22.1 | )% |
Avycaz® |
| - |
|
| 16.9 |
|
| - |
|
| - |
|
| 16.9 |
|
| - |
|
| 4.8 |
|
| - |
|
| - |
|
| 4.8 |
|
| 12.1 |
| n.m. |
| |
Dalvance® |
| - |
|
| 16.1 |
|
| - |
|
| - |
|
| 16.1 |
|
| - |
|
| 10.3 |
|
| - |
|
| - |
|
| 10.3 |
|
| 5.8 |
|
| 56.3 | % |
Latisse® |
| 13.6 |
|
| - |
|
| 1.9 |
|
| - |
|
| 15.5 |
|
| 17.2 |
|
| - |
|
| 1.9 |
|
| - |
|
| 19.1 |
|
| (3.6 | ) |
| (18.8 | )% |
Tazorac® |
| 15.1 |
|
| - |
|
| 0.1 |
|
| - |
|
| 15.2 |
|
| 27.5 |
|
| - |
|
| 0.2 |
|
| - |
|
| 27.7 |
|
| (12.5 | ) |
| (45.1 | )% |
Lexapro® |
| - |
|
| 12.9 |
|
| - |
|
| - |
|
| 12.9 |
|
| - |
|
| 15.6 |
|
| - |
|
| - |
|
| 15.6 |
|
| (2.7 | ) |
| (17.3 | )% |
Kybella® /Belkyra® |
| 9.6 |
|
| - |
|
| 1.6 |
|
| - |
|
| 11.2 |
|
| 14.2 |
|
| - |
|
| 0.5 |
|
| - |
|
| 14.7 |
|
| (3.5 | ) |
| (23.8 | )% |
Liletta® |
| - |
|
| 9.3 |
|
| - |
|
| - |
|
| 9.3 |
|
| - |
|
| 4.4 |
|
| - |
|
| - |
|
| 4.4 |
|
| 4.9 |
|
| 111.4 | % |
Minastrin® 24 |
| - |
|
| 3.6 |
|
| - |
|
| - |
|
| 3.6 |
|
| - |
|
| 84.9 |
|
| - |
|
| - |
|
| 84.9 |
|
| (81.3 | ) |
| (95.8 | )% |
Enablex® |
| - |
|
| 0.9 |
|
| - |
|
| - |
|
| 0.9 |
|
| - |
|
| 1.9 |
|
| - |
|
| - |
|
| 1.9 |
|
| (1.0 | ) |
| (52.6 | )% |
Namenda® IR |
| - |
|
| - |
|
| - |
|
| - |
|
| 0.0 |
|
| - |
|
| 2.9 |
|
| - |
|
| - |
|
| 2.9 |
|
| (2.9 | ) |
| (100.0 | )% |
Other Products Revenues |
| 71.5 |
|
| 169.3 |
|
| 98.4 |
|
| 4.3 |
|
| 343.5 |
|
| 22.7 |
|
| 147.2 |
|
| 89.5 |
|
| 6.8 |
|
| 266.2 |
|
| 77.3 |
|
| 29.0 | % |
Less product sold through our former Anda Distribution business | n.a. |
| n.a. |
| n.a. |
|
| - |
|
| - |
| n.a. |
| n.a. |
| n.a. |
|
| (23.7 | ) |
| (23.7 | ) |
| 23.7 |
| n.a. |
| |||||||
Total Net Revenues | $ | 1,724.8 |
| $ | 1,497.4 |
| $ | 807.8 |
| $ | 4.3 |
| $ | 4,034.3 |
| $ | 1,453.2 |
| $ | 1,488.1 |
| $ | 697.8 |
| $ | (16.9 | ) | $ | 3,622.2 |
| $ | 412.1 |
|
| 11.4 | % |
|
|
US Specialized Therapeutics Segment
The following table presents top product sales and net contribution for the US Specialized Therapeutics segment for the three and six months ended SeptemberJune 30, 20172019 and 2016 ($2018($ in millions):
| Three Months Ended September 30, |
|
| Change |
|
| Three Months Ended June 30, |
|
| Change |
| ||||||||||||||||||||
| 2017 |
|
| 2016 (1) |
|
| Dollars |
|
| % |
|
| 2019 |
|
| 2018 |
|
| Dollars |
|
| % |
| ||||||||
Total Eye Care | $ | 635.3 |
|
| $ | 608.5 |
|
| $ | 26.8 |
|
|
| 4.4 | % |
| $ | 572.0 |
|
| $ | 587.0 |
|
| $ | (15.0 | ) |
|
| (2.6 | )% |
Restasis® |
| 366.8 |
|
|
| 356.4 |
|
|
| 10.4 |
|
|
| 2.9 | % |
|
| 310.9 |
|
|
| 318.2 |
|
|
| (7.3 | ) |
|
| (2.3 | )% |
Alphagan®/Combigan® |
| 92.7 |
|
|
| 93.4 |
|
|
| (0.7 | ) |
|
| (0.7 | )% |
|
| 91.6 |
|
|
| 98.1 |
|
|
| (6.5 | ) |
|
| (6.6 | )% |
Lumigan®/Ganfort® |
| 83.3 |
|
|
| 78.3 |
|
|
| 5.0 |
|
|
| 6.4 | % |
|
| 62.1 |
|
|
| 73.0 |
|
|
| (10.9 | ) |
|
| (14.9 | )% |
Eye Drops |
|
| 57.8 |
|
|
| 53.8 |
|
|
| 4.0 |
|
|
| 7.4 | % | |||||||||||||||
Ozurdex® |
| 24.6 |
|
|
| 20.9 |
|
|
| 3.7 |
|
|
| 17.7 | % |
|
| 29.9 |
|
|
| 27.6 |
|
|
| 2.3 |
|
|
| 8.3 | % |
Eye Drops |
| 53.7 |
|
|
| 50.2 |
|
|
| 3.5 |
|
|
| 7.0 | % | ||||||||||||||||
Other Eye Care |
| 14.2 |
|
|
| 9.3 |
|
|
| 4.9 |
|
|
| 52.7 | % |
|
| 19.7 |
|
|
| 16.3 |
|
|
| 3.4 |
|
|
| 20.9 | % |
Total Medical Aesthetics |
| 602.3 |
|
|
| 388.9 |
|
|
| 213.4 |
|
|
| 54.9 | % |
|
| 735.5 |
|
|
| 743.6 |
|
|
| (8.1 | ) |
|
| (1.1 | )% |
Facial Aesthetics |
| 314.9 |
|
|
| 293.7 |
|
|
| 21.2 |
|
|
| 7.2 | % |
|
| 417.5 |
|
|
| 387.5 |
|
|
| 30.0 |
|
|
| 7.7 | % |
Botox® Cosmetics |
| 189.7 |
|
|
| 174.5 |
|
|
| 15.2 |
|
|
| 8.7 | % |
|
| 252.4 |
|
|
| 236.5 |
|
|
| 15.9 |
|
|
| 6.7 | % |
Juvederm Collection |
| 115.6 |
|
|
| 105.0 |
|
|
| 10.6 |
|
|
| 10.1 | % | ||||||||||||||||
Juvederm® Collection |
|
| 156.6 |
|
|
| 139.8 |
|
|
| 16.8 |
|
|
| 12.0 | % | |||||||||||||||
Kybella® |
| 9.6 |
|
|
| 14.2 |
|
|
| (4.6 | ) |
|
| (32.4 | )% |
|
| 8.5 |
|
|
| 11.2 |
|
|
| (2.7 | ) |
|
| (24.1 | )% |
Plastic Surgery |
| 58.0 |
|
|
| 52.2 |
|
|
| 5.8 |
|
|
| 11.1 | % |
|
| 67.6 |
|
|
| 75.9 |
|
|
| (8.3 | ) |
|
| (10.9 | )% |
Breast Implants |
| 58.0 |
|
|
| 51.1 |
|
|
| 6.9 |
|
|
| 13.5 | % |
|
| 67.6 |
|
|
| 75.9 |
|
|
| (8.3 | ) |
|
| (10.9 | )% |
Other Plastic Surgery |
| - |
|
|
| 1.1 |
|
|
| (1.1 | ) |
|
| (100.0 | )% | ||||||||||||||||
Regenerative Medicine |
| 113.7 |
|
|
| - |
|
|
| 113.7 |
|
| n.a. |
|
|
| 128.9 |
|
|
| 137.6 |
|
|
| (8.7 | ) |
|
| (6.3 | )% | |
Alloderm® |
| 84.6 |
|
|
| - |
|
|
| 84.6 |
|
| n.a. |
|
|
| 101.2 |
|
|
| 107.1 |
|
|
| (5.9 | ) |
|
| (5.5 | )% | |
Other Regenerative Medicine |
| 29.1 |
|
|
| - |
|
|
| 29.1 |
|
| n.a. |
|
|
| 27.7 |
|
|
| 30.5 |
|
|
| (2.8 | ) |
|
| (9.2 | )% | |
Body Contouring |
| 83.4 |
|
|
| - |
|
|
| 83.4 |
|
| n.a. |
|
|
| 78.9 |
|
|
| 108.3 |
|
|
| (29.4 | ) |
|
| (27.1 | )% | |
Coolsculpting® Consumables |
|
| 60.7 |
|
|
| 71.9 |
|
|
| (11.2 | ) |
|
| (15.6 | )% | |||||||||||||||
Coolsculpting® Systems & Add On Applicators |
| 33.1 |
|
|
| - |
|
|
| 33.1 |
|
| n.a. |
|
|
| 18.2 |
|
|
| 36.4 |
|
|
| (18.2 | ) |
|
| (50.0 | )% | |
Coolsculpting® Consumables |
| 50.3 |
|
|
| - |
|
|
| 50.3 |
|
| n.a. |
| |||||||||||||||||
Skin Care |
| 32.3 |
|
|
| 43.0 |
|
|
| (10.7 | ) |
|
| (24.9 | )% | ||||||||||||||||
SkinMedica® |
| 18.7 |
|
|
| 25.8 |
|
|
| (7.1 | ) |
|
| (27.5 | )% | ||||||||||||||||
Latisse® |
| 13.6 |
|
|
| 17.2 |
|
|
| (3.6 | ) |
|
| (20.9 | )% | ||||||||||||||||
Skin Care(3) |
|
| 42.6 |
|
|
| 34.3 |
|
|
| 8.3 |
|
|
| 24.2 | % | |||||||||||||||
Total Medical Dermatology |
| 86.9 |
|
|
| 116.1 |
|
|
| (29.2 | ) |
|
| (25.2 | )% |
|
| 9.3 |
|
|
| 39.2 |
|
|
| (29.9 | ) |
|
| (76.3 | )% |
Aczone® |
| 46.7 |
|
|
| 69.0 |
|
|
| (22.3 | ) |
|
| (32.3 | )% |
|
| 1.8 |
|
|
| 21.1 |
|
|
| (19.3 | ) |
|
| (91.5 | )% |
Tazorac® |
| 15.1 |
|
|
| 27.5 |
|
|
| (12.4 | ) |
|
| (45.1 | )% | ||||||||||||||||
Botox® Hyperhidrosis |
| 16.8 |
|
|
| 16.3 |
|
|
| 0.5 |
|
|
| 3.1 | % | ||||||||||||||||
Other Medical Dermatology |
| 8.3 |
|
|
| 3.3 |
|
|
| 5.0 |
|
|
| 151.5 | % | ||||||||||||||||
Other Medical Dermatology(4) |
|
| 7.5 |
|
|
| 18.1 |
|
|
| (10.6 | ) |
|
| (58.6 | )% | |||||||||||||||
Total Neuroscience and Urology |
| 380.4 |
|
|
| 330.7 |
|
|
| 49.7 |
|
|
| 15.0 | % |
|
| 451.5 |
|
|
| 441.7 |
|
|
| 9.8 |
|
|
| 2.2 | % |
Botox® Therapeutics |
| 352.1 |
|
|
| 305.5 |
|
|
| 46.6 |
|
|
| 15.3 | % | ||||||||||||||||
Botox® Therapeutics(5) |
|
| 447.0 |
|
|
| 422.0 |
|
|
| 25.0 |
|
|
| 5.9 | % | |||||||||||||||
Rapaflo® |
| 28.3 |
|
|
| 25.2 |
|
|
| 3.1 |
|
|
| 12.3 | % |
|
| 4.5 |
|
|
| 19.7 |
|
|
| (15.2 | ) |
|
| (77.2 | )% |
Other Neuroscience and Urology |
| - |
|
|
| - |
|
|
| - |
|
| n.a. |
| |||||||||||||||||
Other Revenues |
| 19.9 |
|
|
| 9.0 |
|
|
| 10.9 |
|
|
| 121.1 | % | ||||||||||||||||
Other revenues |
|
| 16.8 |
|
|
| 15.2 |
|
|
| 1.6 |
|
|
| 10.5 | % | |||||||||||||||
Net revenues | $ | 1,724.8 |
|
| $ | 1,453.2 |
|
| $ | 271.6 |
|
|
| 18.7 | % |
| $ | 1,785.1 |
|
| $ | 1,826.7 |
|
| $ | (41.6 | ) |
|
| (2.3 | )% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(2) |
| 131.4 |
|
|
| 69.2 |
|
|
| 62.2 |
|
|
| 89.9 | % | ||||||||||||||||
Cost of sales(1) |
|
| 151.0 |
|
|
| 148.7 |
|
|
| 2.3 |
|
|
| 1.5 | % | |||||||||||||||
Selling and marketing |
| 353.5 |
|
|
| 292.4 |
|
|
| 61.1 |
|
|
| 20.9 | % |
|
| 368.0 |
|
|
| 343.3 |
|
|
| 24.7 |
|
|
| 7.2 | % |
General and administrative |
| 54.8 |
|
|
| 41.2 |
|
|
| 13.6 |
|
|
| 33.0 | % |
|
| 37.6 |
|
|
| 48.1 |
|
|
| (10.5 | ) |
|
| (21.8 | )% |
Segment contribution | $ | 1,185.1 |
|
| $ | 1,050.4 |
|
| $ | 134.7 |
|
|
| 12.8 | % |
| $ | 1,228.5 |
|
| $ | 1,286.6 |
|
| $ | (58.1 | ) |
|
| (4.5 | )% |
Segment margin |
| 68.7 | % |
|
| 72.3 | % |
|
|
|
|
|
| (3.6 | )% |
|
| 68.8 | % |
|
| 70.4 | % |
|
|
|
|
|
| (1.6 | )% |
Segment gross margin(3) |
| 92.4 | % |
|
| 95.2 | % |
|
|
|
|
|
| (2.8 | )% | ||||||||||||||||
Segment gross margin(2) |
|
| 91.5 | % |
|
| 91.9 | % |
|
|
|
|
|
| (0.4 | )% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. | (1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||||||||||||||||
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. | (2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. |
| |||||||||||||||||||||||||||||
(3) Includes SkinMedica® and Latisse®. | (3) Includes SkinMedica® and Latisse®. |
| |||||||||||||||||||||||||||||
(4) Includes Tazorac® sales of $6.4 million which were previously disclosed separately in the three months ended June 30, 2018. | (4) Includes Tazorac® sales of $6.4 million which were previously disclosed separately in the three months ended June 30, 2018. |
| |||||||||||||||||||||||||||||
(5) Includes Botox® Hyperhidrosis sales of $17.3 million which were previously disclosed under Medical Dermatology in the three months ended June 30, 2018. | (5) Includes Botox® Hyperhidrosis sales of $17.3 million which were previously disclosed under Medical Dermatology in the three months ended June 30, 2018. |
| |||||||||||||||||||||||||||||
|
|
|
| Six Months Ended June 30, |
|
| Change |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| Dollars |
|
| % |
| ||||
Total Eye Care |
| $ | 1,037.1 |
|
| $ | 1,078.1 |
|
| $ | (41.0 | ) |
|
| (3.8 | )% |
Restasis® |
|
| 542.6 |
|
|
| 574.0 |
|
|
| (31.4 | ) |
|
| (5.5 | )% |
Alphagan®/Combigan® |
|
| 174.6 |
|
|
| 182.3 |
|
|
| (7.7 | ) |
|
| (4.2 | )% |
Lumigan®/Ganfort® |
|
| 119.8 |
|
|
| 139.8 |
|
|
| (20.0 | ) |
|
| (14.3 | )% |
Eye Drops |
|
| 107.2 |
|
|
| 100.0 |
|
|
| 7.2 |
|
|
| 7.2 | % |
Ozurdex® |
|
| 60.2 |
|
|
| 53.1 |
|
|
| 7.1 |
|
|
| 13.4 | % |
Other Eye Care |
|
| 32.7 |
|
|
| 28.9 |
|
|
| 3.8 |
|
|
| 13.1 | % |
Total Medical Aesthetics |
|
| 1,383.7 |
|
|
| 1,379.2 |
|
|
| 4.5 |
|
|
| 0.3 | % |
Facial Aesthetics |
|
| 784.0 |
|
|
| 715.2 |
|
|
| 68.8 |
|
|
| 9.6 | % |
Botox® Cosmetics |
|
| 481.9 |
|
|
| 433.2 |
|
|
| 48.7 |
|
|
| 11.2 | % |
Juvederm® Collection |
|
| 286.3 |
|
|
| 262.6 |
|
|
| 23.7 |
|
|
| 9.0 | % |
Kybella® |
|
| 15.8 |
|
|
| 19.4 |
|
|
| (3.6 | ) |
|
| (18.6 | )% |
Plastic Surgery |
|
| 128.8 |
|
|
| 136.6 |
|
|
| (7.8 | ) |
|
| (5.7 | )% |
Breast Implants |
|
| 128.8 |
|
|
| 136.6 |
|
|
| (7.8 | ) |
|
| (5.7 | )% |
Regenerative Medicine |
|
| 251.8 |
|
|
| 265.8 |
|
|
| (14.0 | ) |
|
| (5.3 | )% |
Alloderm® |
|
| 196.2 |
|
|
| 206.6 |
|
|
| (10.4 | ) |
|
| (5.0 | )% |
Other Regenerative Medicine |
|
| 55.6 |
|
|
| 59.2 |
|
|
| (3.6 | ) |
|
| (6.1 | )% |
Body Contouring |
|
| 141.8 |
|
|
| 195.4 |
|
|
| (53.6 | ) |
|
| (27.4 | )% |
Coolsculpting® Consumables |
|
| 108.5 |
|
|
| 125.3 |
|
|
| (16.8 | ) |
|
| (13.4 | )% |
Coolsculpting® Systems & Add On Applicators |
|
| 33.3 |
|
|
| 70.1 |
|
|
| (36.8 | ) |
|
| (52.5 | )% |
Skin Care(3) |
|
| 77.3 |
|
|
| 66.2 |
|
|
| 11.1 |
|
|
| 16.8 | % |
Total Medical Dermatology |
|
| 15.4 |
|
|
| 75.9 |
|
|
| (60.5 | ) |
|
| (79.7 | )% |
Aczone® |
|
| 3.4 |
|
|
| 37.1 |
|
|
| (33.7 | ) |
|
| (90.8 | )% |
Other Medical Dermatology(4) |
|
| 12.0 |
|
|
| 38.8 |
|
|
| (26.8 | ) |
|
| (69.1 | )% |
Total Neuroscience and Urology |
|
| 860.9 |
|
|
| 840.3 |
|
|
| 20.6 |
|
|
| 2.5 | % |
Botox® Therapeutics(5) |
|
| 844.6 |
|
|
| 797.8 |
|
|
| 46.8 |
|
|
| 5.9 | % |
Rapaflo® |
|
| 16.3 |
|
|
| 42.5 |
|
|
| (26.2 | ) |
|
| (61.6 | )% |
Other Revenues |
|
| 30.9 |
|
|
| 31.8 |
|
|
| (0.9 | ) |
|
| (2.8 | )% |
Net revenues |
| $ | 3,328.0 |
|
| $ | 3,405.3 |
|
| $ | (77.3 | ) |
|
| (2.3 | )% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 271.1 |
|
|
| 282.9 |
|
|
| (11.8 | ) |
|
| (4.2 | )% |
Selling and marketing |
|
| 724.8 |
|
|
| 656.5 |
|
|
| 68.3 |
|
|
| 10.4 | % |
General and administrative |
|
| 92.2 |
|
|
| 98.3 |
|
|
| (6.1 | ) |
|
| (6.2 | )% |
Segment contribution |
| $ | 2,239.9 |
|
| $ | 2,367.6 |
|
| $ | (127.7 | ) |
|
| (5.4 | )% |
Segment margin |
|
| 67.3 | % |
|
| 69.5 | % |
|
|
|
|
|
| (2.2 | )% |
Segment gross margin(2) |
|
| 91.9 | % |
|
| 91.7 | % |
|
|
|
|
|
| 0.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. |
| |||||||||||||||
(3) Includes SkinMedica® and Latisse®. |
| |||||||||||||||
(4) Includes Tazorac® sales of $15.8 million which were previously disclosed separately in the six months ended June 30, 2018. |
| |||||||||||||||
(5) Includes Botox® Hyperhidrosis sales of $34.6 million which were previously disclosed under Medical Dermatology in the six months ended June 30, 2018. |
| |||||||||||||||
|
|
|
Net Revenues Three and Six Months Ended June 30, 2019 and 2018 The decrease in net revenues |
As a result of the Zeltiq and LifeCell acquisitions, the Company received the following segment contribution in the three and six months ended SeptemberJune 30, 2017 ($ in millions):
|
| LifeCell |
|
| Zeltiq |
|
| Combined Contribution |
| |||
Net revenues |
| $ | 114.4 |
|
| $ | 83.4 |
|
| $ | 197.8 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
| 28.6 |
|
|
| 23.8 |
|
|
| 52.4 |
|
Selling and marketing |
|
| 24.9 |
|
|
| 35.3 |
|
|
| 60.2 |
|
General and administrative |
|
| 3.6 |
|
|
| 2.6 |
|
|
| 6.2 |
|
Net Revenues
The increase in segment net revenues for the three months ended September 30, 2017 over the prior year period2019 was primarily driven by decreases in Restasis®, Body Contouring and the third quarter 2018 divestiture of our Medical Dermatology business, partially offset by growth in Botox® Therapeutics, Facial Aesthetics and the LifeCell and Zeltiq acquisitions, offset, in part, by decreases in Medical Dermatology.
Cosmetics, Botox® Therapeutics increased $46.6 million, or 15.3%,and Juvederm® Collection. The decline in Restasis® revenues was primarily due to price and volume declines. Body Contouring decreased versus the prior year period driven by demand growth.
The increase in Facial Aesthetics revenues was driven in part byprimarily due to a lower volume of system sales. Botox® Cosmetics, whichBotox® Therapeutics and Juvederm® Collection increased $15.2 million, or 8.7%, versus the prior year period primarily due to demand growth. Also contributing was an increaseWithin Total Medical Aesthetics, the voluntary worldwide recall of textured breast implants and tissue expanders announced on July 24, 2019 lowered revenues by $3.0 million in Juvederm Collection revenuesthe three and six months ended June 30, 2019.
Cost of $10.6 million, or 10.1% versus the prior year period driven by strong demand offset, in part, by an increase in discounts due to competitive entries.Sales
Six Months Ended June 30, 2019 and 2018
The declinedecrease in Aczone® revenuescost of $22.3 million, or 32.3%,sales in the six months ended June 30, 2019 was primarily due to generic pressure on the branded acne categorydecrease in net revenues and higher discounts for formulary coverage.
Cost of Sales
Excluding the LifeCell and Zeltiq acquisitions, segment gross margin decreased to 94.8% in the three months ended September 30, 2017 versus 95.2% in the prior year period due to product mix.
Selling and Marketing Expenses
Three and Six Months Ended June 30, 2019 and 2018
The increase in selling and marketing expenses in the three and six months ended June 30, 2019 was primarily relatesrelated to the increased promotional costs from the LifeCell and Zeltiq acquisitions of $60.2 million.sales force expansion for Facial Aesthetics products and additional promotional expenses for anticipated launches.
General and Administrative Expenses
The increase in generalThree and Six Months Ended June 30, 2019 and 2018
General and administrative costs is dueexpenses decreased $10.5 million and $6.1 million in part to the acquisitions of LifeCellthree and Zeltiq.six months ended June 30, 2019, respectively, period over period.
The following table presents top product sales and net contribution for the US General Medicine segment for the three and six months ended SeptemberJune 30, 20172019 and 20162018 ($ in millions):
| Three Months Ended September 30, |
|
| Change |
|
| Three Months Ended June 30, |
|
| Change |
| ||||||||||||||||||||
| 2017 |
|
| 2016 (1) |
|
| Dollars |
|
| % |
|
| 2019 |
|
| 2018 |
|
| Dollars |
|
| % |
| ||||||||
Total Central Nervous System (CNS) | $ | 355.2 |
|
| $ | 325.5 |
|
| $ | 29.7 |
|
|
| 9.1 | % |
| $ | 365.2 |
|
| $ | 269.9 |
|
| $ | 95.3 |
|
|
| 35.3 | % |
Namenda XR® |
| 114.3 |
|
|
| 146.9 |
|
|
| (32.6 | ) |
|
| (22.2 | )% | ||||||||||||||||
Vraylar® |
|
| 196.1 |
|
|
| 114.2 |
|
|
| 81.9 |
|
|
| 71.7 | % | |||||||||||||||
Viibryd®/Fetzima® |
| 86.5 |
|
|
| 87.6 |
|
|
| (1.1 | ) |
|
| (1.3 | )% |
|
| 107.8 |
|
|
| 86.7 |
|
|
| 21.1 |
|
|
| 24.3 | % |
Saphris® |
| 37.2 |
|
|
| 40.8 |
|
|
| (3.6 | ) |
|
| (8.8 | )% |
|
| 32.6 |
|
|
| 33.8 |
|
|
| (1.2 | ) |
|
| (3.6 | )% |
Vraylar™ |
| 80.2 |
|
|
| 32.4 |
|
|
| 47.8 |
|
|
| 147.5 | % | ||||||||||||||||
Namzaric® |
| 37.0 |
|
|
| 14.9 |
|
|
| 22.1 |
|
|
| 148.3 | % |
|
| 22.6 |
|
|
| 31.8 |
|
|
| (9.2 | ) |
|
| (28.9 | )% |
Namenda® IR |
| - |
|
|
| 2.9 |
|
|
| (2.9 | ) |
|
| (100.0 | )% | ||||||||||||||||
Namenda®(3) |
|
| 6.1 |
|
|
| 3.4 |
|
|
| 2.7 |
|
|
| 79.4 | % | |||||||||||||||
Total Gastrointestinal (GI) |
| 443.5 |
|
|
| 431.4 |
|
|
| 12.1 |
|
|
| 2.8 | % |
|
| 419.2 |
|
|
| 431.9 |
|
|
| (12.7 | ) |
|
| (2.9 | )% |
Linzess® |
| 190.9 |
|
|
| 164.4 |
|
|
| 26.5 |
|
|
| 16.1 | % |
|
| 196.0 |
|
|
| 191.8 |
|
|
| 4.2 |
|
|
| 2.2 | % |
Zenpep® |
|
| 70.0 |
|
|
| 55.5 |
|
|
| 14.5 |
|
|
| 26.1 | % | |||||||||||||||
Carafate®/Sulcrate® |
|
| 56.2 |
|
|
| 54.3 |
|
|
| 1.9 |
|
|
| 3.5 | % | |||||||||||||||
Viberzi® |
|
| 50.8 |
|
|
| 44.9 |
|
|
| 5.9 |
|
|
| 13.1 | % | |||||||||||||||
Asacol®/Delzicol® |
| 49.5 |
|
|
| 72.2 |
|
|
| (22.7 | ) |
|
| (31.4 | )% |
|
| 31.6 |
|
|
| 32.6 |
|
|
| (1.0 | ) |
|
| (3.1 | )% |
Carafate®/Sulcrate® |
| 58.7 |
|
|
| 56.4 |
|
|
| 2.3 |
|
|
| 4.1 | % | ||||||||||||||||
Zenpep® |
| 56.8 |
|
|
| 52.5 |
|
|
| 4.3 |
|
|
| 8.2 | % | ||||||||||||||||
Canasa®/Salofalk® |
| 39.0 |
|
|
| 47.2 |
|
|
| (8.2 | ) |
|
| (17.4 | )% |
|
| 8.0 |
|
|
| 45.0 |
|
|
| (37.0 | ) |
|
| (82.2 | )% |
Viberzi® |
| 40.9 |
|
|
| 30.9 |
|
|
| 10.0 |
|
|
| 32.4 | % | ||||||||||||||||
Other GI |
| 7.7 |
|
|
| 7.8 |
|
|
| (0.1 | ) |
|
| (1.3 | )% |
|
| 6.6 |
|
|
| 7.8 |
|
|
| (1.2 | ) |
|
| (15.4 | )% |
Total Women's Health |
| 265.7 |
|
|
| 305.3 |
|
|
| (39.6 | ) |
|
| (13.0 | )% |
|
| 226.0 |
|
|
| 196.5 |
|
|
| 29.5 |
|
|
| 15.0 | % |
Lo Loestrin® |
| 120.0 |
|
|
| 105.7 |
|
|
| 14.3 |
|
|
| 13.5 | % |
|
| 145.5 |
|
|
| 127.8 |
|
|
| 17.7 |
|
|
| 13.8 | % |
Estrace® Cream |
| 101.6 |
|
|
| 98.6 |
|
|
| 3.0 |
|
|
| 3.0 | % | ||||||||||||||||
Minastrin® 24 |
| 3.6 |
|
|
| 84.9 |
|
|
| (81.3 | ) |
|
| (95.8 | )% | ||||||||||||||||
Liletta® |
| 9.3 |
|
|
| 4.4 |
|
|
| 4.9 |
|
|
| 111.4 | % |
|
| 21.9 |
|
|
| 15.5 |
|
|
| 6.4 |
|
|
| 41.3 | % |
Other Women's Health |
| 31.2 |
|
|
| 11.7 |
|
|
| 19.5 |
|
|
| 166.7 | % | ||||||||||||||||
Other Women's Health(4) |
|
| 58.6 |
|
|
| 53.2 |
|
|
| 5.4 |
|
|
| 10.2 | % | |||||||||||||||
Total Anti-Infectives |
| 67.2 |
|
|
| 52.5 |
|
|
| 14.7 |
|
|
| 28.0 | % |
|
| 91.4 |
|
|
| 79.8 |
|
|
| 11.6 |
|
|
| 14.5 | % |
Teflaro® |
| 29.1 |
|
|
| 33.3 |
|
|
| (4.2 | ) |
|
| (12.6 | )% |
|
| 37.0 |
|
|
| 32.4 |
|
|
| 4.6 |
|
|
| 14.2 | % |
Avycaz® |
|
| 26.7 |
|
|
| 23.5 |
|
|
| 3.2 |
|
|
| 13.6 | % | |||||||||||||||
Dalvance® |
| 16.1 |
|
|
| 10.3 |
|
|
| 5.8 |
|
|
| 56.3 | % |
|
| 20.3 |
|
|
| 17.7 |
|
|
| 2.6 |
|
|
| 14.7 | % |
Avycaz® |
| 16.9 |
|
|
| 4.8 |
|
|
| 12.1 |
|
| n.m. |
| |||||||||||||||||
Other Anti-Infectives |
| 5.1 |
|
|
| 4.1 |
|
|
| 1.0 |
|
|
| 24.4 | % |
|
| 7.4 |
|
|
| 6.2 |
|
|
| 1.2 |
|
|
| 19.4 | % |
Diversified Brands |
| 318.7 |
|
|
| 319.3 |
|
|
| (0.6 | ) |
|
| (0.2 | )% |
|
| 306.0 |
|
|
| 284.9 |
|
|
| 21.1 |
|
|
| 7.4 | % |
Bystolic®/ Byvalson® |
| 164.2 |
|
|
| 165.1 |
|
|
| (0.9 | ) |
|
| (0.5 | )% |
|
| 150.5 |
|
|
| 148.1 |
|
|
| 2.4 |
|
|
| 1.6 | % |
Armour Thyroid |
| 38.5 |
|
|
| 39.1 |
|
|
| (0.6 | ) |
|
| (1.5 | )% |
|
| 56.7 |
|
|
| 49.2 |
|
|
| 7.5 |
|
|
| 15.2 | % |
Savella® |
| 24.0 |
|
|
| 28.1 |
|
|
| (4.1 | ) |
|
| (14.6 | )% |
|
| 22.3 |
|
|
| 19.1 |
|
|
| 3.2 |
|
|
| 16.8 | % |
Lexapro® |
| 12.9 |
|
|
| 15.6 |
|
|
| (2.7 | ) |
|
| (17.3 | )% | ||||||||||||||||
Enablex® |
| 0.9 |
|
|
| 1.9 |
|
|
| (1.0 | ) |
|
| (52.6 | )% | ||||||||||||||||
PacPharma |
| 3.0 |
|
|
| 6.2 |
|
|
| (3.2 | ) |
|
| (51.6 | )% | ||||||||||||||||
Other Diversified Brands |
| 75.2 |
|
|
| 63.3 |
|
|
| 11.9 |
|
|
| 18.8 | % | ||||||||||||||||
Other Revenues |
| 47.1 |
|
|
| 54.1 |
|
|
| (7.0 | ) |
|
| (12.9 | )% | ||||||||||||||||
Other Diversified Brands(5) |
|
| 76.5 |
|
|
| 68.5 |
|
|
| 8.0 |
|
|
| 11.7 | % | |||||||||||||||
Other revenues |
|
| 47.9 |
|
|
| 57.0 |
|
|
| (9.1 | ) |
|
| (16.0 | )% | |||||||||||||||
Net revenues | $ | 1,497.4 |
|
| $ | 1,488.1 |
|
| $ | 9.3 |
|
|
| 0.6 | % |
| $ | 1,455.7 |
|
| $ | 1,320.0 |
|
| $ | 135.7 |
|
|
| 10.3 | % |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(2) |
| 225.5 |
|
|
| 215.1 |
|
|
| 10.4 |
|
|
| 4.8 | % | ||||||||||||||||
Cost of sales(1) |
|
| 231.3 |
|
|
| 201.8 |
|
|
| 29.5 |
|
|
| 14.6 | % | |||||||||||||||
Selling and marketing |
| 247.7 |
|
|
| 292.8 |
|
|
| (45.1 | ) |
|
| (15.4 | )% |
|
| 250.1 |
|
|
| 254.8 |
|
|
| (4.7 | ) |
|
| (1.8 | )% |
General and administrative |
| 47.7 |
|
|
| 42.3 |
|
|
| 5.4 |
|
|
| 12.8 | % |
|
| 30.4 |
|
|
| 34.7 |
|
|
| (4.3 | ) |
|
| (12.4 | )% |
Segment contribution | $ | 976.5 |
|
| $ | 937.9 |
|
| $ | 38.6 |
|
|
| 4.1 | % |
| $ | 943.9 |
|
| $ | 828.7 |
|
| $ | 115.2 |
|
|
| 13.9 | % |
Segment margin |
| 65.2 | % |
|
| 63.0 | % |
|
|
|
|
|
| 2.2 | % |
|
| 64.8 | % |
|
| 62.8 | % |
|
|
|
|
|
| 2.0 | % |
Segment gross margin(3) |
| 84.9 | % |
|
| 85.5 | % |
|
|
|
|
|
| (0.6 | )% | ||||||||||||||||
Segment gross margin(2) |
|
| 84.1 | % |
|
| 84.7 | % |
|
|
|
|
|
| (0.6 | )% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. | (1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||||||||||||||||
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. | (2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. |
| |||||||||||||||||||||||||||||
(3) Includes Namenda XR® and Namenda® IR. | (3) Includes Namenda XR® and Namenda® IR. |
| |||||||||||||||||||||||||||||
(4) Includes Estrace® Cream and Minastrin® 24 sales of $13.1 million and $0.8 million, respectively, which were previously disclosed separately in the three months ended June 30, 2018. | (4) Includes Estrace® Cream and Minastrin® 24 sales of $13.1 million and $0.8 million, respectively, which were previously disclosed separately in the three months ended June 30, 2018. |
| |||||||||||||||||||||||||||||
(5) Includes Lexapro® and PacPharma sales of $14.5 million and $3.7 million, respectively, which were previously disclosed separately in the three months ended June 30, 2018. | (5) Includes Lexapro® and PacPharma sales of $14.5 million and $3.7 million, respectively, which were previously disclosed separately in the three months ended June 30, 2018. |
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| Six Months Ended June 30, |
|
| Change |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| Dollars |
|
| % |
| ||||
Total Central Nervous System (CNS) |
| $ | 658.7 |
|
| $ | 532.7 |
|
| $ | 126.0 |
|
|
| 23.7 | % |
Vraylar® |
|
| 339.8 |
|
|
| 198.6 |
|
|
| 141.2 |
|
|
| 71.1 | % |
Viibryd®/Fetzima® |
|
| 192.8 |
|
|
| 158.4 |
|
|
| 34.4 |
|
|
| 21.7 | % |
Saphris® |
|
| 64.5 |
|
|
| 66.5 |
|
|
| (2.0 | ) |
|
| (3.0 | )% |
Namzaric® |
|
| 46.0 |
|
|
| 65.2 |
|
|
| (19.2 | ) |
|
| (29.4 | )% |
Namenda®(3) |
|
| 15.6 |
|
|
| 44.0 |
|
|
| (28.4 | ) |
|
| (64.5 | )% |
Total Gastrointestinal (GI) |
|
| 777.4 |
|
|
| 820.6 |
|
|
| (43.2 | ) |
|
| (5.3 | )% |
Linzess® |
|
| 357.3 |
|
|
| 351.1 |
|
|
| 6.2 |
|
|
| 1.8 | % |
Zenpep® |
|
| 133.0 |
|
|
| 108.4 |
|
|
| 24.6 |
|
|
| 22.7 | % |
Carafate®/Sulcrate® |
|
| 110.5 |
|
|
| 110.3 |
|
|
| 0.2 |
|
|
| 0.2 | % |
Viberzi® |
|
| 88.0 |
|
|
| 80.8 |
|
|
| 7.2 |
|
|
| 8.9 | % |
Asacol®/Delzicol® |
|
| 56.3 |
|
|
| 70.8 |
|
|
| (14.5 | ) |
|
| (20.5 | )% |
Canasa®/Salofalk® |
|
| 18.2 |
|
|
| 83.6 |
|
|
| (65.4 | ) |
|
| (78.2 | )% |
Other GI |
|
| 14.1 |
|
|
| 15.6 |
|
|
| (1.5 | ) |
|
| (9.6 | )% |
Total Women's Health |
|
| 427.0 |
|
|
| 359.8 |
|
|
| 67.2 |
|
|
| 18.7 | % |
Lo Loestrin® |
|
| 271.3 |
|
|
| 242.4 |
|
|
| 28.9 |
|
|
| 11.9 | % |
Liletta® |
|
| 36.7 |
|
|
| 23.6 |
|
|
| 13.1 |
|
|
| 55.5 | % |
Other Women's Health(4) |
|
| 119.0 |
|
|
| 93.8 |
|
|
| 25.2 |
|
|
| 26.9 | % |
Total Anti-Infectives |
|
| 173.0 |
|
|
| 151.4 |
|
|
| 21.6 |
|
|
| 14.3 | % |
Teflaro® |
|
| 70.5 |
|
|
| 64.6 |
|
|
| 5.9 |
|
|
| 9.1 | % |
Avycaz® |
|
| 56.4 |
|
|
| 45.3 |
|
|
| 11.1 |
|
|
| 24.5 | % |
Dalvance® |
|
| 32.3 |
|
|
| 29.6 |
|
|
| 2.7 |
|
|
| 9.1 | % |
Other Anti-Infectives |
|
| 13.8 |
|
|
| 11.9 |
|
|
| 1.9 |
|
|
| 16.0 | % |
Diversified Brands |
|
| 576.9 |
|
|
| 559.8 |
|
|
| 17.1 |
|
|
| 3.1 | % |
Bystolic®/ Byvalson® |
|
| 278.8 |
|
|
| 280.9 |
|
|
| (2.1 | ) |
|
| (0.7 | )% |
Armour Thyroid |
|
| 106.7 |
|
|
| 97.4 |
|
|
| 9.3 |
|
|
| 9.5 | % |
Savella® |
|
| 43.0 |
|
|
| 39.0 |
|
|
| 4.0 |
|
|
| 10.3 | % |
Other Diversified Brands(5) |
|
| 148.4 |
|
|
| 142.5 |
|
|
| 5.9 |
|
|
| 4.1 | % |
Other revenues |
|
| 92.6 |
|
|
| 119.4 |
|
|
| (26.8 | ) |
|
| (22.4 | )% |
Net revenues |
| $ | 2,705.6 |
|
| $ | 2,543.7 |
|
| $ | 161.9 |
|
|
| 6.4 | % |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 421.8 |
|
|
| 384.4 |
|
|
| 37.4 |
|
|
| 9.7 | % |
Selling and marketing |
|
| 460.6 |
|
|
| 480.3 |
|
|
| (19.7 | ) |
|
| (4.1 | )% |
General and administrative |
|
| 74.2 |
|
|
| 73.6 |
|
|
| 0.6 |
|
|
| 0.8 | % |
Segment contribution |
| $ | 1,749.0 |
|
| $ | 1,605.4 |
|
| $ | 143.6 |
|
|
| 8.9 | % |
Segment margin |
|
| 64.6 | % |
|
| 63.1 | % |
|
|
|
|
|
| 1.5 | % |
Segment gross margin(2) |
|
| 84.4 | % |
|
| 84.9 | % |
|
|
|
|
|
| (0.5 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. |
| |||||||||||||||
(3) Includes Namenda XR® and Namenda® IR. |
| |||||||||||||||
(4) Includes Estrace® Cream and Minastrin® 24 sales of $19.5 million and $6.0 million, respectively, which were previously disclosed separately in the six months ended June 30, 2018. |
| |||||||||||||||
(5) Includes Lexapro® and PacPharma sales of $29.2 million and $8.1 million, respectively, which were previously disclosed separately in the six months ended June 30, 2018. |
| |||||||||||||||
Three Months Ended June 30, 2019 and 2018
The increase in segment net revenues forin the three months ended SeptemberJune 30, 2017 over the prior year is2019 was primarily due primarily to increasesgrowth in Central Nervous System, Anti-Infectives,CNS and Gastrointestinal revenues,Women’s Health, offset, in part, by a decline in Women’s HealthGI revenues.
The increase in Central Nervous System revenues of $29.7 million, or 9.1%, was driven by the launch of Vraylar™ and Namzaric® offset, in part, by the continued decline in Namenda XR® due to decreased demand and conversion to Namzaric®.
Growth within our Gastrointestinal franchise of $12.1 million, or 2.8%, was primarily driven by growth in Linzess® and newly launched Viberzi®. Linzess® CNS revenues increased $26.5 million, or 16.1%, versus the prior year period primarily due to strong demand growth for Vraylar® and positive year over year trade buying patterns. Offsetting these increases, in part, was a reductionViibryd®. Women’s Health revenues increased primarily due to an increase in demand for AsacolLo Loestrin® HD following. GI was negatively affected by the launch of an authorized generic in August 2016. Offsetting this decline, in part, was royalty revenue of $20.2 million relating to our authorized generic version of Asacolimpact on Canasa® HD, which is included within “Other Revenues”.
Women’s Health revenues declined $39.6 million, or 13.0%, primarily due to a decline of $81.3 million resulting from the loss of exclusivity on Minastrin/Salofalk® 24,, offset, in part by an increase in demand growth for Zenpep®.
Six Months Ended June 30, 2019 and 2018
The increase in net revenues on our new product, Taytullain the six months ended June 30, 2019 was primarily due to growth in CNS and Women’s Health, offset, in part, by a decline in GI revenues. CNS revenues increased primarily due to strong demand growth for Vraylar® and Viibryd®, offset, in part by the decline in Namenda® as a result of $21.0 million andloss of exclusivity. Women’s Health revenues increased sales ofprimarily due to an increase in demand for Lo Loestrin® of 13.5% due primarily to strong. GI was negatively affected by the generic impact on Canasa®/Salofalk® and Asacol®, offset, in part by an increase in demand growth.growth for Zenpep®.
Cost of Sales
Three and Six Months Ended June 30, 2019 and 2018
The increase in cost of sales wasin the result of higher product revenuesthree and unfavorable product mix, offset in part, by the impact of the Company reacquiring rights on select licensed products during the ninesix months ended SeptemberJune 30, 2017. As part of the rights reacquired, the Company is no longer obligated2019 was primarily due to pay royalties on the specific products, which increases the Company’s segment gross margin percentage. In the three months ended September 30, 2016, royalties incurred relating to the reacquired product rights were $14.9 million.an increase in net revenues.
Selling and Marketing Expenses
Three Months Ended June 30, 2019 and 2018
Selling and marketing expenses are consistent period over period reflecting lower promotional costs offset by field force investments.
Six Months Ended June 30, 2019 and 2018
The decrease in selling and marketing expenses relatesin the six months ended June 30, 2019 was related to lower promotional spending in the current year primarily related to Linzess®, Viberzi® and Vralyar™ and lower selling expenses due to headcount reductions and lower launch costs.
General and Administrative Expenses
Three Months Ended June 30, 2019 and 2018
General and administrative expenses decreased $4.3 million period over period.
Six Months Ended June 30, 2019 and 2018
General and administrative expenses are in line period-over-period.consistent period over period.
The following table presents top product sales and net contribution for the International segment for the three and six months ended SeptemberJune 30, 20172019 and 20162018 ($ in millions):
| Three Months Ended September 30, |
|
| Change |
|
| Three Months Ended June 30, |
|
| Change |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 |
|
| 2016 |
|
| $ Overall Change |
|
| $ Currency Change |
|
| $ Operational Change |
|
| % Overall Change |
|
| % Currency Change |
|
| % Operational Change |
|
| 2019 |
|
| 2018 |
|
| $ Overall Change |
|
| $ Operational Change (3) |
|
| $ Currency Change |
|
| % Overall Change |
|
| % Operational Change (3) |
|
| % Currency Change |
| ||||||||||||||||
Total Eye Care | $ | 317.9 |
|
| $ | 294.2 |
|
| $ | 23.7 |
|
| $ | 7.9 |
|
| $ | 15.8 |
|
|
| 8.1 | % |
|
| 2.7 | % |
|
| 5.4 | % |
| $ | 327.0 |
|
| $ | 353.7 |
|
| $ | (26.7 | ) |
| $ | (3.5 | ) |
| $ | (23.2 | ) |
|
| (7.5 | )% |
|
| (1.0 | )% |
|
| (6.5 | )% |
Lumigan®/Ganfort® |
| 91.5 |
|
|
| 86.6 |
|
|
| 4.9 |
|
|
| 3.3 |
|
|
| 1.6 |
|
|
| 5.7 | % |
|
| 3.8 | % |
|
| 1.9 | % |
|
| 90.4 |
|
|
| 100.5 |
|
|
| (10.1 | ) |
|
| (4.3 | ) |
|
| (5.8 | ) |
|
| (10.0 | )% |
|
| (4.3 | )% |
|
| (5.7 | )% |
Ozurdex® |
|
| 81.0 |
|
|
| 67.9 |
|
|
| 13.1 |
|
|
| 19.1 |
|
|
| (6.0 | ) |
|
| 19.3 | % |
|
| 28.1 | % |
|
| (8.8 | )% | |||||||||||||||||||||||||||||||
Eye Drops(4) |
|
| 57.3 |
|
|
| 72.4 |
|
|
| (15.1 | ) |
|
| (11.2 | ) |
|
| (3.9 | ) |
|
| (20.9 | )% |
|
| (15.5 | )% |
|
| (5.4 | )% | |||||||||||||||||||||||||||||||
Alphagan®/Combigan® |
| 43.4 |
|
|
| 41.3 |
|
|
| 2.1 |
|
|
| 0.6 |
|
|
| 1.5 |
|
|
| 5.1 | % |
|
| 1.5 | % |
|
| 3.6 | % |
|
| 40.9 |
|
|
| 44.6 |
|
|
| (3.7 | ) |
|
| (0.8 | ) |
|
| (2.9 | ) |
|
| (8.3 | )% |
|
| (1.8 | )% |
|
| (6.5 | )% |
Ozurdex® |
| 50.2 |
|
|
| 43.4 |
|
|
| 6.8 |
|
|
| 1.6 |
|
|
| 5.2 |
|
|
| 15.7 | % |
|
| 3.7 | % |
|
| 12.0 | % | ||||||||||||||||||||||||||||||||
Optive® |
| 28.4 |
|
|
| 25.6 |
|
|
| 2.8 |
|
|
| 1.0 |
|
|
| 1.8 |
|
|
| 10.9 | % |
|
| 3.9 | % |
|
| 7.0 | % | ||||||||||||||||||||||||||||||||
Other Eye Drops |
| 42.8 |
|
|
| 42.1 |
|
|
| 0.7 |
|
|
| 0.7 |
|
|
| 0.0 |
|
|
| 1.7 | % |
|
| 1.7 | % |
|
| 0.0 | % | ||||||||||||||||||||||||||||||||
Restasis® |
| 15.5 |
|
|
| 15.4 |
|
|
| 0.1 |
|
|
| (0.1 | ) |
|
| 0.2 |
|
|
| 0.6 | % |
|
| (0.6 | )% |
|
| 1.2 | % |
|
| 11.9 |
|
|
| 16.0 |
|
|
| (4.1 | ) |
|
| (2.8 | ) |
|
| (1.3 | ) |
|
| (25.6 | )% |
|
| (17.5 | )% |
|
| (8.1 | )% |
Other Eye Care |
| 46.1 |
|
|
| 39.8 |
|
|
| 6.3 |
|
|
| 0.8 |
|
|
| 5.5 |
|
|
| 15.8 | % |
|
| 2.0 | % |
|
| 13.8 | % |
|
| 45.5 |
|
|
| 52.3 |
|
|
| (6.8 | ) |
|
| (3.5 | ) |
|
| (3.3 | ) |
|
| (13.0 | )% |
|
| (6.7 | )% |
|
| (6.3 | )% |
Total Medical Aesthetics |
| 331.1 |
|
|
| 251.0 |
|
|
| 80.1 |
|
|
| 2.0 |
|
|
| 78.1 |
|
|
| 31.9 | % |
|
| 0.8 | % |
|
| 31.1 | % |
|
| 357.2 |
|
|
| 409.8 |
|
|
| (52.6 | ) |
|
| (24.7 | ) |
|
| (27.9 | ) |
|
| (12.8 | )% |
|
| (6.0 | )% |
|
| (6.8 | )% |
Facial Aesthetics |
| 259.6 |
|
|
| 212.6 |
|
|
| 47.0 |
|
|
| 1.5 |
|
|
| 45.5 |
|
|
| 22.1 | % |
|
| 0.7 | % |
|
| 21.4 | % |
|
| 349.1 |
|
|
| 329.8 |
|
|
| 19.3 |
|
|
| 44.5 |
|
|
| (25.2 | ) |
|
| 5.9 | % |
|
| 13.5 | % |
|
| (7.6 | )% |
Botox® Cosmetics |
| 131.5 |
|
|
| 115.3 |
|
|
| 16.2 |
|
|
| (1.4 | ) |
|
| 17.6 |
|
|
| 14.1 | % |
|
| (1.2 | )% |
|
| 15.3 | % |
|
| 175.8 |
|
|
| 171.4 |
|
|
| 4.4 |
|
|
| 18.3 |
|
|
| (13.9 | ) |
|
| 2.6 | % |
|
| 10.7 | % |
|
| (8.1 | )% |
Juvederm Collection |
| 126.5 |
|
|
| 96.8 |
|
|
| 29.7 |
|
|
| 2.8 |
|
|
| 26.9 |
|
|
| 30.7 | % |
|
| 2.9 | % |
|
| 27.8 | % | ||||||||||||||||||||||||||||||||
Juvederm® Collection |
|
| 172.7 |
|
|
| 156.1 |
|
|
| 16.6 |
|
|
| 27.8 |
|
|
| (11.2 | ) |
|
| 10.6 | % |
|
| 17.8 | % |
|
| (7.2 | )% | |||||||||||||||||||||||||||||||
Belkyra® (Kybella®) |
| 1.6 |
|
|
| 0.5 |
|
|
| 1.1 |
|
|
| 0.1 |
|
|
| 1.0 |
|
| n.m. |
|
|
| 20.0 | % |
| n.m. |
|
|
| 0.6 |
|
|
| 2.3 |
|
|
| (1.7 | ) |
|
| (1.6 | ) |
|
| (0.1 | ) |
|
| (73.9 | )% |
|
| (69.6 | )% |
|
| (4.3 | )% | ||
Plastic Surgery |
| 38.5 |
|
|
| 35.8 |
|
|
| 2.7 |
|
|
| - |
|
|
| 2.7 |
|
|
| 7.5 | % |
|
| 0.0 | % |
|
| 7.5 | % |
|
| (31.1 | ) |
|
| 40.3 |
|
|
| (71.4 | ) |
|
| (70.2 | ) |
|
| (1.2 | ) |
|
| (177.2 | )% |
|
| (174.2 | )% |
|
| (3.0 | )% |
Breast Implants |
| 38.1 |
|
|
| 35.6 |
|
|
| 2.5 |
|
|
| - |
|
|
| 2.5 |
|
|
| 7.0 | % |
|
| 0.0 | % |
|
| 7.0 | % |
|
| (31.4 | ) |
|
| 39.9 |
|
|
| (71.3 | ) |
|
| (70.1 | ) |
|
| (1.2 | ) |
|
| (178.7 | )% |
|
| (175.7 | )% |
|
| (3.0 | )% |
Earfold™ |
| 0.4 |
|
|
| 0.2 |
|
|
| 0.2 |
|
|
| - |
|
|
| 0.2 |
|
|
| 100.0 | % |
|
| 0.0 | % |
|
| 100.0 | % | ||||||||||||||||||||||||||||||||
Other Plastic Surgery |
|
| 0.3 |
|
|
| 0.4 |
|
|
| (0.1 | ) |
|
| (0.1 | ) |
|
| - |
|
|
| (25.0 | )% |
|
| (25.0 | )% |
|
| 0.0 | % | |||||||||||||||||||||||||||||||
Regenerative Medicine |
| 5.1 |
|
|
| - |
|
|
| 5.1 |
|
|
| 0.2 |
|
|
| 4.9 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
|
|
| 3.6 |
|
|
| 4.7 |
|
|
| (1.1 | ) |
|
| (0.9 | ) |
|
| (0.2 | ) |
|
| (23.4 | )% |
|
| (19.1 | )% |
|
| (4.3 | )% | |||
Alloderm® |
| 1.5 |
|
|
| - |
|
|
| 1.5 |
|
|
| - |
|
|
| 1.5 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
|
|
| 2.2 |
|
|
| 2.3 |
|
|
| (0.1 | ) |
|
| - |
|
|
| (0.1 | ) |
|
| (4.3 | )% |
|
| 0.0 | % |
|
| (4.3 | )% | |||
Other Regenerative Medicine |
| 3.6 |
|
|
| - |
|
|
| 3.6 |
|
|
| 0.2 |
|
|
| 3.4 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
|
|
| 1.4 |
|
|
| 2.4 |
|
|
| (1.0 | ) |
|
| (0.9 | ) |
|
| (0.1 | ) |
|
| (41.7 | )% |
|
| (37.5 | )% |
|
| (4.2 | )% | |||
Body Contouring |
| 24.0 |
|
|
| - |
|
|
| 24.0 |
|
|
| 0.2 |
|
|
| 23.8 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
|
|
| 31.9 |
|
|
| 30.9 |
|
|
| 1.0 |
|
|
| 2.2 |
|
|
| (1.2 | ) |
|
| 3.2 | % |
|
| 7.1 | % |
|
| (3.9 | )% | |||
Coolsculpting® Consumables |
|
| 20.3 |
|
|
| 18.5 |
|
|
| 1.8 |
|
|
| 2.4 |
|
|
| (0.6 | ) |
|
| 9.7 | % |
|
| 13.0 | % |
|
| (3.3 | )% | |||||||||||||||||||||||||||||||
Coolsculpting® Systems & Add On Applicators |
| 10.2 |
|
|
| - |
|
|
| 10.2 |
|
|
| 0.1 |
|
|
| 10.1 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
|
|
| 11.6 |
|
|
| 12.4 |
|
|
| (0.8 | ) |
|
| (0.2 | ) |
|
| (0.6 | ) |
|
| (6.5 | )% |
|
| (1.6 | )% |
|
| (4.9 | )% | |||
Coolsculpting® Consumables |
| 13.8 |
|
|
| - |
|
|
| 13.8 |
|
|
| 0.1 |
|
|
| 13.7 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
| |||||||||||||||||||||||||||||||||||
Skin Care |
| 3.9 |
|
|
| 2.6 |
|
|
| 1.3 |
|
|
| 0.1 |
|
|
| 1.2 |
|
|
| 50.0 | % |
|
| 3.8 | % |
|
| 46.2 | % |
|
| 3.7 |
|
|
| 4.1 |
|
|
| (0.4 | ) |
|
| (0.3 | ) |
|
| (0.1 | ) |
|
| (9.8 | )% |
|
| (7.3 | )% |
|
| (2.5 | )% |
Botox® Therapeutics and Other |
| 141.8 |
|
|
| 134.6 |
|
|
| 7.2 |
|
|
| 4.4 |
|
|
| 2.8 |
|
|
| 5.3 | % |
|
| 3.3 | % |
|
| 2.0 | % |
|
| 148.9 |
|
|
| 166.6 |
|
|
| (17.7 | ) |
|
| (8.6 | ) |
|
| (9.1 | ) |
|
| (10.6 | )% |
|
| (5.2 | )% |
|
| (5.4 | )% |
Botox® Therapeutics |
| 84.4 |
|
|
| 78.1 |
|
|
| 6.3 |
|
|
| 2.5 |
|
|
| 3.8 |
|
|
| 8.1 | % |
|
| 3.2 | % |
|
| 4.9 | % |
|
| 98.8 |
|
|
| 104.6 |
|
|
| (5.8 | ) |
|
| 1.3 |
|
|
| (7.1 | ) |
|
| (5.5 | )% |
|
| 1.2 | % |
|
| (6.7 | )% |
Asacol®/Delzicol® |
| 11.9 |
|
|
| 14.2 |
|
|
| (2.3 | ) |
|
| 0.2 |
|
|
| (2.5 | ) |
|
| (16.2 | )% |
|
| 1.4 | % |
|
| (17.6 | )% |
|
| 9.7 |
|
|
| 12.4 |
|
|
| (2.7 | ) |
|
| (2.2 | ) |
|
| (0.5 | ) |
|
| (21.8 | )% |
|
| (17.7 | )% |
|
| (4.1 | )% |
Constella® |
| 5.7 |
|
|
| 4.3 |
|
|
| 1.4 |
|
|
| 0.2 |
|
|
| 1.2 |
|
|
| 32.6 | % |
|
| 4.7 | % |
|
| 27.9 | % |
|
| 4.8 |
|
|
| 6.4 |
|
|
| (1.6 | ) |
|
| (1.4 | ) |
|
| (0.2 | ) |
|
| (25.0 | )% |
|
| (21.9 | )% |
|
| (3.1 | )% |
Other Products |
| 39.8 |
|
|
| 38.0 |
|
|
| 1.8 |
|
|
| 1.5 |
|
|
| 0.3 |
|
|
| 4.7 | % |
|
| 3.9 | % |
|
| 0.8 | % |
|
| 35.6 |
|
|
| 43.2 |
|
|
| (7.6 | ) |
|
| (6.3 | ) |
|
| (1.3 | ) |
|
| (17.6 | )% |
|
| (14.6 | )% |
|
| (3.0 | )% |
Other Revenues |
| 17.0 |
|
|
| 18.0 |
|
|
| (1.0 | ) |
|
| - |
|
|
| (1.0 | ) |
|
| (5.6 | )% |
|
| 0.0 | % |
|
| (5.6 | )% | ||||||||||||||||||||||||||||||||
Other revenues |
|
| 14.6 |
|
|
| 18.8 |
|
|
| (4.2 | ) |
|
| (4.1 | ) |
|
| (0.1 | ) |
|
| (22.3 | )% |
|
| (21.8 | )% |
|
| (0.5 | )% | |||||||||||||||||||||||||||||||
Net revenues | $ | 807.8 |
|
| $ | 697.8 |
|
| $ | 110.0 |
|
| $ | 14.3 |
|
| $ | 95.7 |
|
|
| 15.8 | % |
|
| 2.0 | % |
|
| 13.8 | % |
| $ | 847.7 |
|
| $ | 948.9 |
|
| $ | (101.2 | ) |
| $ | (40.9 | ) |
| $ | (60.3 | ) |
|
| (10.7 | )% |
|
| (4.3 | )% |
|
| (6.4 | )% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
| 116.3 |
|
|
| 95.1 |
|
|
| 21.2 |
|
|
| 2.6 |
|
|
| 18.6 |
|
|
| 22.3 | % |
|
| 2.7 | % |
|
| 19.6 | % |
|
| 145.6 |
|
|
| 139.4 |
|
|
| 6.2 |
|
|
| 14.7 |
|
|
| (8.5 | ) |
|
| 4.4 | % |
|
| 10.5 | % |
|
| (6.1 | )% |
Selling and marketing |
| 224.8 |
|
|
| 188.2 |
|
|
| 36.6 |
|
|
| 5.3 |
|
|
| 31.3 |
|
|
| 19.4 | % |
|
| 2.8 | % |
|
| 16.6 | % |
|
| 253.6 |
|
|
| 246.2 |
|
|
| 7.4 |
|
|
| 23.7 |
|
|
| (16.3 | ) |
|
| 3.0 | % |
|
| 9.6 | % |
|
| (6.6 | )% |
General and administrative |
| 28.3 |
|
|
| 28.0 |
|
|
| 0.3 |
|
|
| 0.6 |
|
|
| (0.3 | ) |
|
| 1.1 | % |
|
| 2.1 | % |
|
| (1.0 | )% |
|
| 28.4 |
|
|
| 33.9 |
|
|
| (5.5 | ) |
|
| (4.9 | ) |
|
| (0.6 | ) |
|
| (16.2 | )% |
|
| (14.5 | )% |
|
| (1.7 | )% |
Segment contribution | $ | 438.4 |
|
| $ | 386.5 |
|
| $ | 51.9 |
|
| $ | 5.8 |
|
| $ | 46.1 |
|
|
| 13.4 | % |
|
| 1.5 | % |
|
| 11.9 | % |
| $ | 420.1 |
|
| $ | 529.4 |
|
| $ | (109.3 | ) |
| $ | (74.4 | ) |
| $ | (34.9 | ) |
|
| (20.6 | )% |
|
| (14.1 | )% |
|
| (6.5 | )% |
Segment margin |
| 54.3 | % |
|
| 55.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1.1 | )% |
|
|
|
|
|
|
|
|
|
| 49.6 | % |
|
| 55.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (6.2 | )% |
|
|
|
|
|
|
|
|
Segment gross margin(2) |
| 85.6 | % |
|
| 86.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (0.8 | )% |
|
|
|
|
|
|
|
|
|
| 82.8 | % |
|
| 85.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2.5 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. | (1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. | (2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Defined as overall change excluding foreign exchange impact. | (3) Defined as overall change excluding foreign exchange impact. |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Includes Optive® sales of $30.7 million which were previously disclosed separately in the three months ended June 30, 2018. | (4) Includes Optive® sales of $30.7 million which were previously disclosed separately in the three months ended June 30, 2018. |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Six Months Ended June 30, |
|
| Change |
| ||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Overall Change |
|
| $ Operational Change (3) |
|
| $ Currency Change |
|
| % Overall Change |
|
| % Operational Change (3) |
|
| % Currency Change |
| ||||||||
Total Eye Care |
| $ | 618.8 |
|
| $ | 697.4 |
|
| $ | (78.6 | ) |
| $ | (25.8 | ) |
| $ | (52.8 | ) |
|
| (11.3 | )% |
|
| (3.7 | )% |
|
| (7.6 | )% |
Lumigan®/Ganfort® |
|
| 175.5 |
|
|
| 200.9 |
|
|
| (25.4 | ) |
|
| (12.1 | ) |
|
| (13.3 | ) |
|
| (12.6 | )% |
|
| (6.0 | )% |
|
| (6.6 | )% |
Ozurdex® |
|
| 144.1 |
|
|
| 132.3 |
|
|
| 11.8 |
|
|
| 23.4 |
|
|
| (11.6 | ) |
|
| 8.9 | % |
|
| 17.7 | % |
|
| (8.8 | )% |
Eye Drops(4) |
|
| 112.7 |
|
|
| 141.2 |
|
|
| (28.5 | ) |
|
| (18.5 | ) |
|
| (10.0 | ) |
|
| (20.2 | )% |
|
| (13.1 | )% |
|
| (7.1 | )% |
Alphagan®/Combigan® |
|
| 78.5 |
|
|
| 88.8 |
|
|
| (10.3 | ) |
|
| (3.2 | ) |
|
| (7.1 | ) |
|
| (11.6 | )% |
|
| (3.6 | )% |
|
| (8.0 | )% |
Restasis® |
|
| 22.3 |
|
|
| 34.3 |
|
|
| (12.0 | ) |
|
| (9.3 | ) |
|
| (2.7 | ) |
|
| (35.0 | )% |
|
| (27.1 | )% |
|
| (7.9 | )% |
Other Eye Care |
|
| 85.7 |
|
|
| 99.9 |
|
|
| (14.2 | ) |
|
| (6.1 | ) |
|
| (8.1 | ) |
|
| (14.2 | )% |
|
| (6.1 | )% |
|
| (8.1 | )% |
Total Medical Aesthetics |
|
| 710.0 |
|
|
| 768.3 |
|
|
| (58.3 | ) |
|
| 1.3 |
|
|
| (59.6 | ) |
|
| (7.6 | )% |
|
| 0.2 | % |
|
| (7.8 | )% |
Facial Aesthetics |
|
| 655.9 |
|
|
| 625.9 |
|
|
| 30.0 |
|
|
| 84.1 |
|
|
| (54.1 | ) |
|
| 4.8 | % |
|
| 13.4 | % |
|
| (8.6 | )% |
Juvederm® Collection |
|
| 330.5 |
|
|
| 302.2 |
|
|
| 28.3 |
|
|
| 54.5 |
|
|
| (26.2 | ) |
|
| 9.4 | % |
|
| 18.0 | % |
|
| (8.6 | )% |
Botox® Cosmetics |
|
| 323.2 |
|
|
| 320.0 |
|
|
| 3.2 |
|
|
| 30.9 |
|
|
| (27.7 | ) |
|
| 1.0 | % |
|
| 9.7 | % |
|
| (8.7 | )% |
Belkyra® (Kybella®) |
|
| 2.2 |
|
|
| 3.7 |
|
|
| (1.5 | ) |
|
| (1.3 | ) |
|
| (0.2 | ) |
|
| (40.5 | )% |
|
| (35.1 | )% |
|
| (5.4 | )% |
Plastic Surgery |
|
| (19.5 | ) |
|
| 84.8 |
|
|
| (104.3 | ) |
|
| (102.0 | ) |
|
| (2.3 | ) |
|
| (123.0 | )% |
|
| (120.3 | )% |
|
| (2.7 | )% |
Breast Implants |
|
| (20.2 | ) |
|
| 84.0 |
|
|
| (104.2 | ) |
|
| (101.9 | ) |
|
| (2.3 | ) |
|
| (124.0 | )% |
|
| (121.3 | )% |
|
| (2.7 | )% |
Other Plastic Surgery |
|
| 0.7 |
|
|
| 0.8 |
|
|
| (0.1 | ) |
|
| (0.1 | ) |
|
| - |
|
|
| (12.5 | )% |
|
| (12.5 | )% |
|
| 0.0 | % |
Regenerative Medicine |
|
| 6.9 |
|
|
| 9.6 |
|
|
| (2.7 | ) |
|
| (2.3 | ) |
|
| (0.4 | ) |
|
| (28.1 | )% |
|
| (24.0 | )% |
|
| (4.1 | )% |
Alloderm® |
|
| 3.8 |
|
|
| 4.5 |
|
|
| (0.7 | ) |
|
| (0.6 | ) |
|
| (0.1 | ) |
|
| (15.6 | )% |
|
| (13.3 | )% |
|
| (2.3 | )% |
Other Regenerative Medicine |
|
| 3.1 |
|
|
| 5.1 |
|
|
| (2.0 | ) |
|
| (1.7 | ) |
|
| (0.3 | ) |
|
| (39.2 | )% |
|
| (33.3 | )% |
|
| (5.9 | )% |
Body Contouring |
|
| 60.3 |
|
|
| 40.1 |
|
|
| 20.2 |
|
|
| 22.7 |
|
|
| (2.5 | ) |
|
| 50.4 | % |
|
| 56.6 | % |
|
| (6.2 | )% |
Coolsculpting® Consumables |
|
| 38.1 |
|
|
| 26.6 |
|
|
| 11.5 |
|
|
| 12.9 |
|
|
| (1.4 | ) |
|
| 43.2 | % |
|
| 48.5 | % |
|
| (5.3 | )% |
Coolsculpting® Systems & Add On Applicators |
|
| 22.2 |
|
|
| 13.5 |
|
|
| 8.7 |
|
|
| 9.8 |
|
|
| (1.1 | ) |
|
| 64.4 | % |
|
| 72.6 | % |
|
| (8.2 | )% |
Skin Care |
|
| 6.4 |
|
|
| 7.9 |
|
|
| (1.5 | ) |
|
| (1.2 | ) |
|
| (0.3 | ) |
|
| (19.0 | )% |
|
| (15.2 | )% |
|
| (3.8 | )% |
Botox® Therapeutics and Other |
|
| 287.7 |
|
|
| 316.3 |
|
|
| (28.6 | ) |
|
| (7.8 | ) |
|
| (20.8 | ) |
|
| (9.0 | )% |
|
| (2.5 | )% |
|
| (6.5 | )% |
Botox® Therapeutics |
|
| 192.7 |
|
|
| 200.8 |
|
|
| (8.1 | ) |
|
| 7.7 |
|
|
| (15.8 | ) |
|
| (4.0 | )% |
|
| 3.8 | % |
|
| (7.8 | )% |
Asacol®/Delzicol® |
|
| 20.0 |
|
|
| 24.1 |
|
|
| (4.1 | ) |
|
| (2.9 | ) |
|
| (1.2 | ) |
|
| (17.0 | )% |
|
| (12.0 | )% |
|
| (5.0 | )% |
Constella® |
|
| 10.3 |
|
|
| 12.0 |
|
|
| (1.7 | ) |
|
| (1.1 | ) |
|
| (0.6 | ) |
|
| (14.2 | )% |
|
| (9.2 | )% |
|
| (5.0 | )% |
Other Products |
|
| 64.7 |
|
|
| 79.4 |
|
|
| (14.7 | ) |
|
| (11.5 | ) |
|
| (3.2 | ) |
|
| (18.5 | )% |
|
| (14.5 | )% |
|
| (4.0 | )% |
Other revenues |
|
| 32.7 |
|
|
| 30.9 |
|
|
| 1.8 |
|
|
| 2.2 |
|
|
| (0.4 | ) |
|
| 5.8 | % |
|
| 7.1 | % |
|
| (1.3 | )% |
Net revenues |
| $ | 1,649.2 |
|
| $ | 1,812.9 |
|
| $ | (163.7 | ) |
| $ | (30.1 | ) |
| $ | (133.6 | ) |
|
| (9.0 | )% |
|
| (1.7 | )% |
|
| (7.3 | )% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 255.3 |
|
|
| 260.3 |
|
|
| (5.0 | ) |
|
| 12.8 |
|
|
| (17.8 | ) |
|
| (1.9 | )% |
|
| 4.9 | % |
|
| (6.8 | )% |
Selling and marketing |
|
| 491.2 |
|
|
| 491.9 |
|
|
| (0.7 | ) |
|
| 35.9 |
|
|
| (36.6 | ) |
|
| (0.1 | )% |
|
| 7.3 | % |
|
| (7.4 | )% |
General and administrative |
|
| 54.1 |
|
|
| 65.3 |
|
|
| (11.2 | ) |
|
| (8.3 | ) |
|
| (2.9 | ) |
|
| (17.2 | )% |
|
| (12.7 | )% |
|
| (4.5 | )% |
Segment contribution |
| $ | 848.6 |
|
| $ | 995.4 |
|
| $ | (146.8 | ) |
| $ | (70.5 | ) |
| $ | (76.3 | ) |
|
| (14.7 | )% |
|
| (7.1 | )% |
|
| (7.6 | )% |
Segment margin |
|
| 51.5 | % |
|
| 54.9 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3.4 | )% |
|
|
|
|
|
|
|
|
Segment gross margin(2) |
|
| 84.5 | % |
|
| 85.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1.1 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights, as well as indirect cost of sales not attributable to segment results. |
| |||||||||||||||||||||||||||||||
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues. |
| |||||||||||||||||||||||||||||||
(3) Defined as overall change excluding foreign exchange impact. |
| |||||||||||||||||||||||||||||||
(4) Includes Optive® sales of $58.5 million which were previously disclosed separately in the six months ended June 30, 2018. |
| |||||||||||||||||||||||||||||||
The following table presents our revenue disaggregated by geography for our International segment ($ in millions):
|
| Three Months Ended June 30, |
| |||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Overall Change |
|
| $ Operational Change |
|
| % Overall Change |
|
| % Operational Change |
| ||||||
Europe |
| $ | 386.2 |
|
| $ | 413.3 |
|
| $ | (27.1 | ) |
| $ | 2.3 |
|
|
| (6.6 | )% |
|
| 0.6 | % |
Asia Pacific, Middle East and Africa |
|
| 261.5 |
|
|
| 283.6 |
|
|
| (22.1 | ) |
|
| (6.4 | ) |
|
| (7.8 | )% |
|
| (2.3 | )% |
Latin America and Canada |
|
| 182.1 |
|
|
| 230.8 |
|
|
| (48.7 | ) |
|
| (33.6 | ) |
|
| (21.1 | )% |
|
| (14.6 | )% |
Other* |
|
| 17.9 |
|
|
| 21.2 |
|
|
| (3.3 | ) |
|
| (3.2 | ) |
|
| (15.6 | )% |
|
| (15.1 | )% |
Total International |
| $ | 847.7 |
|
| $ | 948.9 |
|
| $ | (101.2 | ) |
| $ | (40.9 | ) |
|
| (10.7 | )% |
|
| (4.3 | )% |
*Includes royalty and other revenue |
| |||||||||||||||||||||||
Six Months Ended June 30, 2019 2018 $ Overall Change $ Operational Change % Overall Change % Operational Change Europe $ 740.6 $ 811.7 $ (71.1 ) $ (4.2 ) (8.8 )% (0.5 )% Asia Pacific, Middle East and Africa 512.2 524.4 (12.2 ) 19.5 (2.3 )% 3.7 % Latin America and Canada 360.3 442.9 (82.6 ) (48.3 ) (18.6 )% (10.9 )% Other* 36.1 33.9 2.2 2.9 6.5 % 8.6 % Total International $ 1,649.2 $ 1,812.9 $ (163.7 ) $ (30.1 ) (9.0 )% (1.7 )% *Includes royalty and other revenue |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Net Revenues
Three Months Ended June 30, 2019 and 2018
The increasedecrease in segment net revenues in the three months ended SeptemberJune 30, 2017 over the prior period is2019 was primarily due to the operational growthnegative impact of total Facial Aesthetics and EyeCare,foreign currency exchange of $60.3 million as well as the acquisition of Zeltiq, which contributed $24.0 milliondeclines in net revenues during the three months ended September 30, 2017.
Within total Eye Care and Plastic Surgery, offset, in part, by operational growth in Facial Aesthetics. Within Eye Care, the decrease in sales is due to a loss from foreign currency and a decline in Eye Drops due to market competition, timing of shipments and supply constraints in certain markets, offset by an increase in Ozurdex® increased $6.8 million, or 15.7% due to a replenishment of supply and demand growth. Plastic Surgery decreased versus the prior year period, primarily driven by a fourth quarter 2018 suspension of sales and voluntary recall of the remaining textured breast implants from the market in Europe as well as the voluntary worldwide recall of textured breast implants and tissue expanders announced on July 24, 2019 which lowered revenues by $40.5 million in the three months ended June 30, 2019. The operational growth in Facial Aesthetics was due to an increase in demand growth. Within
Six Months Ended June 30, 2019 and 2018
The decrease in net revenues in the six months ended June 30, 2019 was primarily due to the negative impact of foreign currency exchange of $133.6 million as well as declines in Eye Care and Plastic Surgery, offset, in part, by operational growth in Facial Aesthetics Juvederm Collection revenues increased $29.7 million, or 30.7%and Body Contouring. Within Eye Care, the decrease in sales is due to a loss from foreign currency and a decline in Eye Drops due to market competition, timing of shipments and supply constraints in certain markets, offset by an increase in Ozurdex® due to a replenishment of supply and demand growth. Plastic Surgery decreased versus the prior year period, primarily resultingdriven by a fourth quarter 2018 suspension of sales and voluntary recall of the remaining textured breast implants from the market in Europe as well as the voluntary worldwide recall of textured breast implants and tissue expanders announced on July 24, 2019 which lowered revenues by $40.5 million in the six months ended June 30, 2019. The operational growth in Facial Aesthetics and Body Contouring was due to an increase in demand growth. Botox® Cosmetic sales grew 14.1% driven by demand growth. Botox® Therapeutics sales also grew 8.1% driven by demand growth.
In the first quarter of 2017, the Company announced a realignment of its International Commercial organization. As a result of this realignment, future promotional priorities among the International portfolio may shift and, as such, revenues by product may be impacted.
Cost of Sales
Three Months Ended June 30, 2019 and 2018
The increase in cost of sales in the three months ended June 30, 2019 was primarily due to higher costs related to the voluntary worldwide recall of textured breast implants and tissue expanders, offset, in part, by a decrease in net revenues, a loss from foreign currency and favorable product mix. Segment gross margin was negatively impacted by the voluntary worldwide recall of textured breast implants and tissue expanders which resulted in inventory write-offs of $15.7 million.
Six Months Ended June 30, 2019 and 2018
The decrease in cost of sales in the six months ended June 30, 2019 was primarily due to the increasedecrease in net revenues, a loss from foreign currency and an increase in manufacturing costs.favorable product mix. Segment gross margins declined to 85.6% formargin was negatively impacted by the three months ended September 30, 2017 compared to 86.4% for the three months ended September 30, 2016.voluntary worldwide recall of textured breast implants and tissue expanders which resulted in inventory write-offs of $15.7 million.
Selling and Marketing Expenses
Three Months Ended June 30, 2019 and 2018
The increase in selling and marketing expenses relatesin the three months ended June 30, 2019 was primarily due to an increase in promotional spending associated with Ozurdex®, Botox® Cosmetic and the Juvederm Collection, as well as $13.3 million relatingcosts related to the Zeltiq Acquisition.Medical Aesthetics business, offset, in part, by the impact from foreign currency.
Six Months Ended June 30, 2019 and 2018
The decrease in selling and marketing expenses in the six months ended June 30, 2019 was primarily due to the impact from foreign currency, offset, in part, by an increase in promotional costs related to the Medical Aesthetics business.
General and Administrative Expenses
Three and Six Months Ended June 30, 2019 and 2018
General and administrative expenses aredecreased $5.5 million and $11.2 million in line period-over-period.the three and six months ended June 30, 2019, respectively, period over period. General and administrative expenses were negatively impacted by the voluntary worldwide recall of textured breast implants by $8.2 million relating to costs associated in undertaking the product recall.
Corporate
Corporate represents the results of corporate initiatives as well as the impact of select revenues and shared costs. The following represents the corporateCorporate amounts for the three and six months ended SeptemberJune 30, 20172019 and 20162018 ($ in millions):
|
| Three Months Ended September 30, 2017 |
|
| Three Months Ended June 30, 2019 |
| |||||||||||||||||||||||||||||||||||||||||
|
| Integration and Restructuring |
| Fair Value Adjustments |
| Effect of Purchase Accounting |
| Other |
| Revenues and Shared Costs |
| Total |
|
| Integration / Divestiture |
|
| Non- Acquisition Related Restructuring |
|
| Fair Value Adjustments |
|
| Effect of Purchase Accounting |
|
| Other |
|
| Revenues and Shared Costs |
|
| Total |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Net Sales |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 4.3 |
| $ | 4.3 |
| ||||||||||||||||||||||||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 1.6 |
|
| $ | 1.6 |
| |||||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of sales(1) |
|
| 41.3 |
| (67.0 | ) |
| 39.6 |
| 13.8 |
| 85.6 |
| 113.3 |
|
|
| - |
|
|
| 0.3 |
|
|
| 25.8 |
|
|
| 0.2 |
|
|
| 0.1 |
|
|
| 98.0 |
|
|
| 124.4 |
| ||||
Selling and marketing |
|
| (3.1 | ) |
| - |
| 8.1 |
| 1.3 |
| 0.5 |
| 6.8 |
|
|
| 0.1 |
|
|
| 0.9 |
|
|
| - |
|
|
| 0.7 |
|
|
| - |
|
|
| (0.1 | ) |
|
| 1.6 |
| ||||
General and administrative |
|
| 29.8 |
|
| - |
|
| 3.4 |
|
| 30.6 |
|
| 142.3 |
|
| 206.1 |
|
|
| 23.6 |
|
|
| 2.1 |
|
|
| - |
|
|
| 0.2 |
|
|
| 7.1 |
|
|
| 194.8 |
|
|
| 227.8 |
|
Contribution |
| $ | (68.0 | ) | $ | 67.0 |
| $ | (51.1 | ) | $ | (45.7 | ) | $ | (224.1 | ) | $ | (321.9 | ) |
| $ | (23.7 | ) |
| $ | (3.3 | ) |
| $ | (25.8 | ) |
| $ | (1.1 | ) |
| $ | (7.2 | ) |
| $ | (291.1 | ) |
| $ | (352.2 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights. | (1) Excludes amortization and impairment of acquired intangibles including product rights. |
| |||||||||||||||||||||||||||||||||||||||||||||
|
| Six Months Ended June 30, 2019 |
| |||||||||||||||||||||||||
|
| Integration / Divestiture |
|
| Non- Acquisition Related Restructuring |
|
| Fair Value Adjustments |
|
| Effect of Purchase Accounting |
|
| Other |
|
| Revenues and Shared Costs |
|
| Total |
| |||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 4.4 |
|
| $ | 4.4 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| - |
|
|
| 4.9 |
|
|
| 42.0 |
|
|
| 0.5 |
|
|
| 0.1 |
|
|
| 154.4 |
|
|
| 201.9 |
|
Selling and marketing |
|
| 0.1 |
|
|
| (0.9 | ) |
|
| - |
|
|
| 1.6 |
|
|
| - |
|
|
| (0.1 | ) |
|
| 0.7 |
|
General and administrative |
|
| 28.9 |
|
|
| 2.2 |
|
|
| - |
|
|
| 0.5 |
|
|
| 18.4 |
|
|
| 362.0 |
|
|
| 412.0 |
|
Contribution |
| $ | (29.0 | ) |
| $ | (6.2 | ) |
| $ | (42.0 | ) |
| $ | (2.6 | ) |
| $ | (18.5 | ) |
| $ | (511.9 | ) |
| $ | (610.2 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights. |
| |||||||||||||||||||||||||||
|
| Three Months Ended June 30, 2018 |
| |||||||||||||||||||||||||
|
| Integration / Divestiture |
|
| Non- Acquisition Related Restructuring |
|
| Fair Value Adjustments |
|
| Effect of Purchase Accounting |
|
| Other |
|
| Revenues and Shared Costs |
|
| Total |
| |||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 28.6 |
|
| $ | 28.6 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 1.0 |
|
|
| 9.3 |
|
|
| (128.8 | ) |
|
| 0.4 |
|
|
| (0.1 | ) |
|
| 110.1 |
|
|
| (8.1 | ) |
Selling and marketing |
|
| 0.5 |
|
|
| 6.9 |
|
|
| - |
|
|
| 1.7 |
|
|
| - |
|
|
| - |
|
|
| 9.1 |
|
General and administrative |
|
| 14.9 |
|
|
| (3.0 | ) |
|
| - |
|
|
| 0.5 |
|
|
| 31.6 |
|
|
| 173.4 |
|
|
| 217.4 |
|
Contribution |
| $ | (16.4 | ) |
| $ | (13.2 | ) |
| $ | 128.8 |
|
| $ | (2.6 | ) |
| $ | (31.5 | ) |
| $ | (254.9 | ) |
| $ | (189.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights. |
| |||||||||||||||||||||||||||
|
|
|
| Three Months Ended September 30, 2016 |
|
| Six Months Ended June 30, 2018 |
| ||||||||||||||||||||||||||||||||||||||||||||
|
| Integration and Restructuring |
| Fair Value Adjustments |
| Effect of Purchase Accounting |
| Reclassification of Sales Distributed Through Anda to Discontinued Operations |
| Other |
| Revenues and Shared Costs |
| Total |
|
| Integration / Divestiture |
|
| Non- Acquisition Related Restructuring |
|
| Fair Value Adjustments |
|
| Effect of Purchase Accounting |
|
| Other |
|
| Revenues and Shared Costs |
|
| Total |
| ||||||||||||||
Net Sales |
| $ | - |
| $ | - |
| $ | - |
| $ | (23.7 | ) | $ | - |
| $ | 6.8 |
| $ | (16.9 | ) | ||||||||||||||||||||||||||||
Net revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 34.4 |
|
| $ | 34.4 |
| ||||||||||||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cost of sales(1) |
|
| 8.0 |
| 10.4 |
| 1.7 |
| (23.0 | ) |
| (0.1 | ) |
| 85.8 |
| 82.8 |
|
|
| 1.5 |
|
|
| 21.9 |
|
|
| (125.4 | ) |
|
| 1.5 |
|
|
| (0.1 | ) |
|
| 177.6 |
|
|
| 77.0 |
| ||||
Selling and marketing |
|
| 4.1 |
| - |
| 16.3 |
| - |
| - |
| 2.2 |
| 22.6 |
|
|
| 1.4 |
|
|
| 17.2 |
|
|
| - |
|
|
| 6.0 |
|
|
| - |
|
|
| 0.1 |
|
|
| 24.7 |
| ||||||
General and administrative |
|
| 60.2 |
|
| - |
|
| 12.0 |
|
| - |
|
| 57.7 |
|
| 119.8 |
|
| 249.7 |
|
|
| 28.7 |
|
|
| 4.3 |
|
|
| - |
|
|
| 2.1 |
|
|
| 40.6 |
|
|
| 317.1 |
|
|
| 392.8 |
|
Contribution |
| $ | (72.3 | ) | $ | (10.4 | ) | $ | (30.0 | ) | $ | (0.7 | ) | $ | (57.6 | ) | $ | (201.0 | ) | $ | (372.0 | ) |
| $ | (31.6 | ) |
| $ | (43.4 | ) |
| $ | 125.4 |
|
| $ | (9.6 | ) |
| $ | (40.5 | ) |
| $ | (460.4 | ) |
| $ | (460.1 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
(1) Excludes amortization and impairment of acquired intangibles including product rights. | (1) Excludes amortization and impairment of acquired intangibles including product rights. |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Integration / Divestiture Three and Six Months Ended June 30, 2019 and 2018 |
|
In the three and six months ended SeptemberJune 30, 2017,2019 and 2018, integration and restructuring charges included costs related to the integration of LifeCell Corporation (“LifeCell’) and Zeltiq® Aesthetics, Inc. (“Zeltiq”) and $19.5 million of integration costs related to the AbbVie Transaction.
Non-Acquisition Related Restructuring
Three and Six Months Ended June 30, 2018
In the three and six months ended June 30, 2018, the Company incurred charges related to the restructuring of its internal infrastructure. The restructuring programs included charges associated with scaling our manufacturing plants as well as the Company’s internal restructuring programs. As partacceleration of share-based compensation charges for severed employees over their shortened vesting periods.
Fair Value Adjustments
Fair value adjustments primarily relate to changes in estimated contingent liabilities for future amounts to be paid based on achievement of sales levels for the Company’s internal restructuring programs, the Company incurred severancerespective products.
Three and other restructuring costs relating to the global manufacturing operations of $39.7 million as the Company intends to close certain facilities. Six Months Ended June 30, 2019
In the three and six months ended SeptemberJune 30, 20172019, the Company incurred purchase accounting effects of $38.4 millionexpense in cost of sales primarily related to an increase in commercial sales forecasts for Liletta®.
Three and Six Months Ended June 30, 2018
In the three and six months ended June 30, 2018, the income in cost of sales primarily related to the fair value inventory step-up fromCompany’s True Tear product not achieving a milestone event, as well as a corresponding decrease in commercial forecasts.
Effect of Purchase Accounting
Three and Six Months Ended June 30, 2019 and 2018
In the LifeCellthree and Zeltiq acquisitions as products were sold tosix months ended June 30, 2019 and 2018, the Company’s third party customers. The Company also incurred charges related to the purchase accounting impact on stock-basedshare-based compensation related to the Zeltiq and Allergan, Forest Laboratories, Inc. (“Forest”Legacy Allergan”) and Zeltiq acquisitions, which increased cost of sales, selling and marketing and general and administrative expenses.
Other
Three and Six Months Ended June 30, 2019 and 2018
In the three months ended SeptemberJune 30, 2017,2019 and 2018, general and administrative costs included legal settlement charges of $32.9 million.
$7.8 million and $29.0 million, respectively. In the threesix months ended SeptemberJune 30, 2016, integration2019 and restructuring charges were primarily related to the integration of the Legacy Allergan business as well as charges incurred with the terminated merger with Pfizer, Inc. of $15.8 million. The Company incurred charges related to the purchase accounting impact on stock-based compensation related to the Allergan and Forest acquisitions, which increased cost of sales, selling and marketing and2018, general and administrative expenses. Included in other in the three months ended September 30, 2016 are mark-to-market unrealized losses for foreign currency option contracts that were entered into in order to offset future exposure to movements in currencies of $18.2 million as well ascosts included legal settlement charges of $40.8 million.$18.2 million and $39.3 million, respectively.
Revenues and Shared Costs
Shared costs primarily include above site and unallocated costs associated with running our global manufacturing facilities and corporate General & Administrativegeneral and administrative expenses.
Three and Six Months Ended June 30, 2019 and 2018
In the three and six months ended June 30, 2018, the Company recorded milestone revenue related to an on-going intellectual property agreement of $25.0 million. In the three months ended SeptemberJune 30, 2017,2019, the Company incurred transactional foreign exchange gains of $3.3 million, compared with transactional foreign exchanges losses of $11.2 million in the three months ended June 30, 2018. In the six months ended June 30, 2019 and 2018, the Company incurred transactional foreign exchange losses of $24.5$3.5 million versus transactional foreign exchange gains of $41.5and $16.1 million, which excludes mark-to-market unrealized losses on foreign currency option contracts, in the three months ended September 30, 2016.respectively.
Research and Development Expenses
R&D expenses consist predominantly of personnel-related costs, investigator costs for clinical trials, active pharmaceutical ingredient costs, contract research, license and milestone fees, biostudy and facilityfacilities costs associated with product development.
R&D expenses consisted of the following components in the three and six months ended SeptemberJune 30, 20172019 and 20162018 ($ in millions):
|
| Three Months Ended September 30, |
|
| Change |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Ongoing operating expenses |
| $ | 405.3 |
|
| $ | 386.4 |
|
| $ | 18.9 |
|
|
| 4.9 | % |
Brand related milestone payments and upfront license payments |
|
| 42.6 |
|
|
| 207.9 |
|
|
| (165.3 | ) |
|
| (79.5 | )% |
Acquisition accounting fair market value adjustment to stock-based compensation |
|
| 4.3 |
|
|
| 8.0 |
|
|
| (3.7 | ) |
|
| (46.3 | )% |
Acquisition, integration, and restructuring charges |
|
| (9.8 | ) |
|
| 15.0 |
|
|
| (24.8 | ) |
|
| (165.3 | )% |
Contingent consideration adjustments, net |
|
| 0.2 |
|
|
| 5.5 |
|
|
| (5.3 | ) |
|
| (96.4 | )% |
Total expenditures |
| $ | 442.6 |
|
| $ | 622.8 |
|
| $ | (180.2 | ) |
|
| (28.9 | )% |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| ||||||||
Ongoing operating expenses |
| $ | 447.0 |
|
| $ | 388.9 |
|
| $ | 58.1 |
|
|
| 14.9 | % |
| $ | 844.9 |
|
| $ | 744.7 |
|
| $ | 100.2 |
|
|
| 13.5 | % |
Milestone expenses and upfront license payments |
|
| - |
|
|
| 277.3 |
|
|
| (277.3 | ) |
|
| (100.0 | )% |
|
| 34.1 |
|
|
| 390.7 |
|
|
| (356.6 | ) |
|
| (91.3 | )% |
Contingent consideration adjustments, net |
|
| 2.3 |
|
|
| 21.7 |
|
|
| (19.4 | ) |
|
| (89.4 | )% |
|
| 4.8 |
|
|
| 23.6 |
|
|
| (18.8 | ) |
|
| (79.7 | )% |
Acquisition accounting fair market value adjustment to share-based compensation |
|
| 0.3 |
|
|
| 0.8 |
|
|
| (0.5 | ) |
|
| (62.5 | )% |
|
| 0.7 |
|
|
| 3.6 |
|
|
| (2.9 | ) |
|
| (80.6 | )% |
Acquisition, integration, and restructuring charges |
|
| 0.4 |
|
|
| 0.5 |
|
|
| (0.1 | ) |
|
| (20.0 | )% |
|
| 0.5 |
|
|
| 1.3 |
|
|
| (0.8 | ) |
|
| (61.5 | )% |
Total R&D Expenses |
| $ | 450.0 |
|
| $ | 689.2 |
|
| $ | (239.2 | ) |
|
| (34.7 | )% |
| $ | 885.0 |
|
| $ | 1,163.9 |
|
| $ | (278.9 | ) |
|
| (24.0 | )% |
Three and Six Months Ended June 30, 2019 and 2018
The increase in ongoing operating expenses in the three and six months ended SeptemberJune 30, 2017 versus the prior year period2019 is primarilymainly due to increased product development spending primarily driven by latein early stage development campaigns withinprograms and for the Gastrointestinal therapeutic areas offset, in part, by lower spending in the Central Nervous System and Gastrointestinal therapeutic areas. In the three months ended September 30, 2017, the Company reversed certain charges related to a portion of anticipated internal restructurings which are no longer occurring based on revised portfolio prioritizations
Milestone Expenses and the timing of select R&D projects.Upfront License Payments
The following represents brand related milestone paymentsexpenses, asset acquisitions and upfront license payments in the three and six months ended SeptemberJune 30, 20172019 and 2016,2018, respectively ($ in millions):
|
| Three Months Ended September 30, |
| |||||
($ in millions) |
| 2017 |
|
| 2016 |
| ||
Heptares Therapeutics Ltd. |
| $ | 15.0 |
|
| $ | - |
|
Lyndra, Inc. |
|
| 15.0 |
|
|
| - |
|
Akarna Therapeutics, Ltd. |
|
| - |
|
|
| 48.2 |
|
RetroSense Therapeutics, LLC |
|
| - |
|
|
| 59.7 |
|
Merck & Co. |
|
| - |
|
|
| 100.0 |
|
Other |
|
| 12.6 |
|
|
| - |
|
|
| $ | 42.6 |
|
| $ | 207.9 |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||
Akarna Therapeutics, Ltd. |
| $ | - |
|
| $ | - |
|
| $ | 10.0 |
|
| $ | - |
|
Elastagen Pty Ltd |
|
| - |
|
|
| 96.1 |
|
|
| - |
|
|
| 96.1 |
|
AstraZeneca plc |
|
| - |
|
|
| 90.0 |
|
|
| - |
|
|
| 90.0 |
|
Merck & Co. |
|
| - |
|
|
| 85.0 |
|
|
| - |
|
|
| 85.0 |
|
Chase Pharmaceuticals Corporation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 75.0 |
|
Repros Therapeutics, Inc. |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33.2 |
|
Other |
|
| - |
|
|
| 6.2 |
|
|
| 24.1 |
|
|
| 11.4 |
|
Total |
| $ | - |
|
| $ | 277.3 |
|
| $ | 34.1 |
|
| $ | 390.7 |
|
Amortization
Amortization in the three and six months ended SeptemberJune 30, 20172019 and 20162018 was as follows:follows ($ in millions):
|
| Three Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Amortization |
| $ | 1,781.0 |
|
| $ | 1,609.1 |
|
| $ | 171.9 |
|
|
| 10.7 | % |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| ||||||||
Amortization |
| $ | 1,402.0 |
|
| $ | 1,697.1 |
|
| $ | (295.1 | ) |
|
| (17.4 | )% |
| $ | 2,801.4 |
|
| $ | 3,394.7 |
|
| $ | (593.3 | ) |
|
| (17.5 | )% |
Three and Six Months Ended June 30, 2019 and 2018
Amortization for the three and six months ended SeptemberJune 30, 2017 increased2019 decreased as compared to the prior periodthree and six months ended June 30, 2018 primarily as a result of a decrease in amortization relatedfor Restasis® due to the acquired LifeCella reduced book value and Zeltiq productsremaining life as a result of $50.0 million as well as amortization from approved products during the year ended December 31, 2016an anticipated launch of a generic.
Goodwill, IPR&D and the nine months ended September 30, 2017.
IPR&DOther Impairments and Asset Sales, and Impairments, Net
Goodwill, IPR&D and other impairments and Assetasset sales, and impairments, net consisted of the following components in the three and six months ended SeptemberJune 30, 20172019 and 2016:2018 ($ in millions):
|
| Three Months Ended September 30, |
|
| Change |
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||||||||||||||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % | |||||||||||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| ||||||||||||||||||||||
Goodwill impairments |
| $ | 1,085.8 |
|
| $ | - |
|
| $ | 1,085.8 |
|
| n.a |
|
| $ | 3,552.8 |
|
| $ | - |
|
| $ | 3,552.8 |
|
| n.a |
| ||||||||||||||||
IPR&D impairments |
| $ | 202.0 |
|
| $ | 42.0 |
|
| $ | 160.0 |
|
| n.m. |
|
| 436.0 |
|
|
| 276.0 |
|
|
| 160.0 |
|
|
| 58.0 | % |
|
| 436.0 |
|
|
| 798.0 |
|
|
| (362.0 | ) |
|
| (45.4 | )% |
Asset sales and impairments, net |
|
| 3,874.8 |
|
|
| (4.7 | ) |
|
| 3,879.5 |
|
| n.m. |
|
| 129.4 |
|
|
| 259.6 |
|
|
| (130.2 | ) |
|
| (50.2 | )% |
|
| 124.2 |
|
|
| 272.7 |
|
|
| (148.5 | ) |
|
| (54.5 | )% |
InRefer to “NOTE 11 – Goodwill, Product Rights and Other Intangible Assets” for the three months ended September 30, 2017, the Company evaluated all of its dry eye related assets for impairment as a resultdescription of the U.S. District Court for the Eastern District of Texas issuing an adverse trial decision finding that the four asserted patents covering Restasis® (Cyclosporine Ophthalmic Emulsion) 0.05% are invalid. As a result of our review of all potential scenarios relating to these assetsgoodwill impairments and a decrease in our assessment of the likelihood of revenue extending through the full patent term of 2024, the Company recognized an impairment of $3,230.0 million related to Restasis® as well as $164.0 million related to other Dry Eye IPR&D assets obtained in the Allergan acquisition.
In the three months ended September 30, 2017, the Company impaired the intangible asset related to Aczone® by $646.0 million s a result of recent market dynamics, including erosion in the brand acne market, an anticipated decline in the market outlook, and recent generic entrants. In the three months ended September 30, 2017,impairments that the Company recorded IPR&D an impairments of $17.0 million of a medical aesthetics project obtained as part of the Allergan acquisition and a $21.0 million impairment due to a delay in anticipated launch of a women’s healthcare project coupled with an anticipated decrease in product demand.
In the three and six months ended SeptemberJune 30, 2016, the Company recorded $42.0 million in IPR&D impairments on a gastroenterology project as a result of the lack of future availability of active pharmaceutical ingredients.2019 and 2018.
Interest Income
Interest income in the three and six months ended SeptemberJune 30, 20172019 and 20162018 was as follows:follows ($ in millions):
|
| Three Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Interest income |
| $ | 11.1 |
|
| $ | 18.1 |
|
| $ | (7.0 | ) |
|
| (38.7 | )% |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| ||||||||
Interest income |
| $ | 9.7 |
|
| $ | 6.3 |
|
| $ | 3.4 |
|
|
| 54.0 | % |
| $ | 31.0 |
|
| $ | 23.6 |
|
| $ | 7.4 |
|
|
| 31.4 | % |
Interest income in the three months ended September 30, 2017 decreased versus the three months ended September 30, 2016 resulting from the use ofrepresents interest earned on cash and cash equivalents and marketable securities primarily for share buybacksheld during the fourth quarter of 2016.respective periods.
Interest Expense
Interest expense consisted of the following components in the three and six months ended SeptemberJune 30, 20172019 and 2016:2018 ($ in millions):
|
| Three Months Ended September 30, |
|
| Change |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||||||||||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||||||||||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| ||||||||||||||||||||||||
Fixed Rate Notes |
| $ | 241.6 |
|
| 284.7 |
|
|
| (43.1 | ) |
|
| (15.1 | )% |
| $ | 172.8 |
|
| $ | 209.4 |
|
| $ | (36.6 | ) |
|
| (17.5 | )% |
| $ | 346.6 |
|
| $ | 438.3 |
|
| $ | (91.7 | ) |
|
| (20.9 | )% | |
Euro Denominated Notes |
|
| 14.6 |
|
|
| 8.8 |
|
|
| 5.8 |
|
|
| 65.9 | % |
|
| 29.5 |
|
|
| 17.4 |
|
|
| 12.1 |
|
|
| 69.5 | % | ||||||||||||||||
Floating Rate Notes |
|
| 6.6 |
|
| 5.8 |
|
|
| 0.8 |
|
|
| 13.8 | % |
|
| 4.8 |
|
|
| 4.6 |
|
|
| 0.2 |
|
|
| 4.3 | % |
|
| 9.8 |
|
|
| 11.0 |
|
|
| (1.2 | ) |
|
| (10.9 | )% | |
Euro Denominated Notes |
|
| 8.3 |
|
|
| - |
|
|
| 8.3 |
|
| n.a. |
| |||||||||||||||||||||||||||||||||
Term loan indebtedness |
|
| - |
|
|
| 28.1 |
|
|
| (28.1 | ) |
|
| (100.0 | )% | ||||||||||||||||||||||||||||||||
Revolving Credit Facility |
|
| - |
|
|
| - |
|
|
| - |
|
| n.a. |
| |||||||||||||||||||||||||||||||||
Other |
|
| 8.7 |
|
| 5.7 |
|
|
| 3.0 |
|
|
| 52.6 | % |
|
| 3.2 |
|
|
| 7.2 |
|
|
| (4.0 | ) |
|
| (55.6 | )% |
|
| 11.3 |
|
|
| 13.9 |
|
|
| (2.6 | ) |
|
| (18.7 | )% | |
Interest expense |
| $ | 265.2 |
|
| $ | 324.3 |
|
| $ | (59.1 | ) |
|
| (18.2 | )% |
| $ | 195.4 |
|
| $ | 230.0 |
|
| $ | (34.6 | ) |
|
| (15.0 | )% |
| $ | 397.2 |
|
| $ | 480.6 |
|
| $ | (83.4 | ) |
|
| (17.4 | )% |
Three and Six Months Ended June 30, 2019 and 2018
Interest expense in the three and six months ended SeptemberJune 30, 20172019 decreased versus the three and six months ended SeptemberJune 30, 20162018 due to the pay down of term loan indebtedness with use of proceeds received in the Teva Transaction as well as scheduled maturities and early debt extinguishment of senior secured notes andperiod-over-period, as well as the reduction of interest related toimpact from debt refinancing in the repayment of $2,843.3 million existing senior secured notes which were refinanced into lower coupon euro denominated notes.prior year.
Other (Expense) / Income , Net
Other (expense) income, net
Other (expense)/ income, net consisted of the following components in the three and six months ended SeptemberJune 30, 20172019 and 2016:2018 ($ in millions):
|
| Three Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Net income impact of other-than-temporary loss on investment in Teva securities |
| $ | (1,295.5 | ) |
| $ | - |
|
| $ | (1,295.5 | ) |
| n.a. |
| |
Dividend income |
|
| 8.5 |
|
|
| 34.1 |
|
|
| (25.6 | ) |
|
| (75.1 | )% |
Other (expense) income, net |
|
| (23.3 | ) |
|
| (0.5 | ) |
|
| (22.8 | ) |
| n.m. |
| |
Other (expense) income, net |
| $ | (1,310.3 | ) |
| $ | 33.6 |
|
| $ | (1,343.9 | ) |
| n.a. |
| |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| ||||||||
Teva Share Activity |
| $ | - |
|
| $ | 138.6 |
|
| $ | (138.6 | ) |
|
| (100.0 | )% |
| $ | - |
|
| $ | 60.9 |
|
| $ | (60.9 | ) |
|
| (100.0 | )% |
Sales of business |
|
| - |
|
|
| 53.0 |
|
|
| (53.0 | ) |
|
| (100.0 | )% |
|
| - |
|
|
| 53.0 |
|
|
| (53.0 | ) |
|
| (100.0 | )% |
Debt extinguishment other |
|
| 0.1 |
|
|
| 9.1 |
|
|
| (9.0 | ) |
|
| (98.9 | )% |
|
| (0.2 | ) |
|
| 9.1 |
|
|
| (9.3 | ) |
| n.m. |
| |
Other (expense) / income, net |
|
| (4.8 | ) |
|
| 14.7 |
|
|
| (19.5 | ) |
| n.m. |
|
|
| 9.3 |
|
|
| 13.6 |
|
|
| (4.3 | ) |
|
| (31.6 | )% | |
Other (expense) / income, net |
| $ | (4.7 | ) |
| $ | 215.4 |
|
| $ | (220.1 | ) |
| n.m. |
|
| $ | 9.1 |
|
| $ | 136.6 |
|
| $ | (127.5 | ) |
|
| (93.3 | )% | |
At September 30, 2017,Refer to “NOTE 6 –Other (Expense) / Income” for further details regarding the Company determined that the decline in value of its investment in Teva securities since March 31, 2017 was other-than-temporary. As a result, the Company impaired the value of its investment by $1,295.5 million at September 30, 2017 as a componentcomponents of other (expense) income. The determination was made based on the amount of time that the stock price had been below the carrying value, intentions regarding the potential holding period of the shares, and the materiality of the decline in share price. / income, net.
Dividend income
As a result of the Teva Transaction, the Company acquired 100.3 million Teva ordinary shares. During three months ended September 30, 2017 and 2016, the Company received dividend income of $8.5 million and $34.1 million, respectively.
Other-than-temporary impairments
The Company recorded other-than-temporary impairment charges on other equity investments and cost method investments of $22.6 million in the three months ended September 30, 2017.
Provision / (Benefit) for Income Taxes
Provision / (benefit) for income taxes in the three and six months ended June 30, 2019 and 2018 was as follows: ($ in millions):
|
| Three Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
(Benefit) for income taxes |
| $ | (1,638.8 | ) |
| $ | (158.9 | ) |
| $ | (1,479.9 | ) |
|
| 931.3 | % |
Effective tax rate |
|
| 29.3 | % |
|
| 29.5 | % |
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| |||||||||||||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| |||||||
Provision / (benefit) for income taxes |
| $ | 301.6 |
|
| $ | (5.2 | ) |
| $ | 306.8 |
|
| n.m. |
| $ | 233.0 |
|
| $ | (687.4 | ) |
| $ | 920.4 |
|
|
| (133.9 | )% |
Effective tax rate |
|
| (20.8 | )% |
|
| 1.1 | % |
|
|
|
|
|
|
|
| (5.9 | )% |
|
| 47.7 | % |
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 and 2018
The Company’s effective tax rate for the three months ended SeptemberJune 30, 20172019 was 29.3%a provision of 20.8% compared to 29.5%a benefit of 1.1% for the three months ended SeptemberJune 30, 2016.2018. The effective tax rate for the three months ended SeptemberJune 30, 20172019 was favorably impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses, including the impairment of intangible assets, tax benefited at rates greater than the Irish statutory rate. The tax benefits of $50.8 million for a U.S. capital loss and $107.3 million related to the impairment of certain intangible assets recorded during the three months ended September 30, 2017 were $1,517.7 million.assets. The effective tax rate was unfavorably impacted by a pre-taxtax charge forof $375.0 million to establish a valuation allowance on certain non-U.S. deferred tax assets, $49.0 million related to an uncertain tax position and the goodwill impairment charge of the Company’s investment in Teva Shares of $1,295.5$1,085.8 million, for which no tax benefit was recorded.
The effective tax rate for the three months ended SeptemberJune 30, 2016 was impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. Additionally, the tax benefit for the three months ended September 30, 2016 included the following items: a benefit of $48.2 million related to the change in tax rates applicable to certain temporary differences, a benefit of $37.9 million for the New Jersey Grow income tax credit and a benefit of $15.7 million primarily related to a valuation allowance release in Ireland.
Nine Months Ended September 30, 2017 and 2016
Segment net revenues, segment operating expenses and segment contribution information consisted of the following for the nine months ended September 30, 2017 and 2016 ($ in millions):
|
| Nine Months Ended September 30, 2017 |
| |||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
| ||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 4,921.8 |
|
| $ | 4,270.9 |
|
| $ | 2,403.6 |
|
| $ | 11,596.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 349.4 |
|
|
| 623.2 |
|
|
| 341.6 |
|
|
| 1,314.2 |
|
Selling and marketing |
|
| 1,040.7 |
|
|
| 838.3 |
|
|
| 673.2 |
|
|
| 2,552.2 |
|
General and administrative |
|
| 149.4 |
|
|
| 129.7 |
|
|
| 86.5 |
|
|
| 365.6 |
|
Segment Contribution |
| $ | 3,382.3 |
|
| $ | 2,679.7 |
|
| $ | 1,302.3 |
|
| $ | 7,364.3 |
|
Contribution margin |
|
| 68.7 | % |
|
| 62.7 | % |
|
| 54.2 | % |
|
| 63.5 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,086.7 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,691.9 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,274.9 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,245.3 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,896.2 |
|
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,830.7 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (50.3 | )% |
|
|
|
| Nine Months Ended September 30, 2016 |
| |||||||||||||
|
| US Specialized |
|
| US General |
|
|
|
|
|
|
|
|
| ||
|
| Therapeutics |
|
| Medicine |
|
| International |
|
| Total |
| ||||
Net revenues |
| $ | 4,240.8 |
|
| $ | 4,390.9 |
|
| $ | 2,128.1 |
|
| $ | 10,759.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 215.0 |
|
|
| 649.6 |
|
|
| 309.3 |
|
|
| 1,173.9 |
|
Selling and marketing |
|
| 844.8 |
|
|
| 902.8 |
|
|
| 582.7 |
|
|
| 2,330.3 |
|
General and administrative |
|
| 126.4 |
|
|
| 128.2 |
|
|
| 86.5 |
|
|
| 341.1 |
|
Segment Contribution |
| $ | 3,054.6 |
|
| $ | 2,710.3 |
|
| $ | 1,149.6 |
|
| $ | 6,914.5 |
|
Contribution margin |
|
| 72.0 | % |
|
| 61.7 | % |
|
| 54.0 | % |
|
| 64.3 | % |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,052.8 |
|
Research and Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,662.4 |
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,831.9 |
|
In-process research and development impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 316.9 |
|
Asset sales and impairments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (24.0 | ) |
Operating (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (925.5 | ) |
Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (8.6 | )% |
|
|
The following is a reconciliation of net revenues for the operating segments to the Company’s net revenues for the nine months ended September 30, 2017 and 2016 ($ in millions):
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Segment net revenues |
| $ | 11,596.3 |
|
| $ | 10,759.8 |
|
| $ | 836.5 |
|
|
| 7.8 | % |
Corporate revenues |
|
| 18.3 |
|
|
| (53.5 | ) |
|
| 71.8 |
|
|
| 134.2 | % |
Net revenues |
| $ | 11,614.6 |
|
| $ | 10,706.3 |
|
| $ | 908.3 |
|
|
| 8.5 | % |
No country outside of the United States represents ten percent or more of net revenues. The US Specialized Therapeutics and US General Medicine segments are comprised solely of sales within the United States.
The following tables represent global net revenues for the top products for the nine months ended September 30, 2017 and 2016 ($ in millions):
| Nine Months Ended September 30, 2017 |
| Nine Months Ended September 30, 2016 |
| Total Change |
| ||||||||||||||||||||||||||||||
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
| US Specialized Therapeutics |
| US General Medicine |
| International |
| Corporate |
| Total |
| Dollars |
| Percentage |
| ||||||||||||
Botox® | $ | 1,642.0 |
| $ | - |
| $ | 662.6 |
| $ | - |
| $ | 2,304.6 |
| $ | 1,454.0 |
| $ | - |
| $ | 592.9 |
| $ | - |
| $ | 2,046.9 |
| $ | 257.7 |
|
| 12.6 | % |
Restasis® |
| 1,012.0 |
|
| - |
|
| 46.7 |
|
| - |
|
| 1,058.7 |
|
| 1,026.4 |
|
| - |
|
| 49.7 |
|
| - |
|
| 1,076.1 |
|
| (17.4 | ) |
| (1.6 | )% |
Juvederm Collection** |
| 361.6 |
|
| - |
|
| 386.0 |
|
| - |
|
| 747.6 |
|
| 325.3 |
|
| - |
|
| 304.2 |
|
| - |
|
| 629.5 |
|
| 118.1 |
|
| 18.8 | % |
Linzess®/Constella® |
| - |
|
| 506.3 |
|
| 16.1 |
|
| - |
|
| 522.4 |
|
| - |
|
| 452.0 |
|
| 12.7 |
|
| - |
|
| 464.7 |
|
| 57.7 |
|
| 12.4 | % |
Lumigan®/Ganfort® |
| 236.6 |
|
| - |
|
| 271.8 |
|
| - |
|
| 508.4 |
|
| 240.4 |
|
| - |
|
| 269.2 |
|
| - |
|
| 509.6 |
|
| (1.2 | ) |
| (0.2 | )% |
Bystolic® /Byvalson® |
| - |
|
| 454.7 |
|
| 1.6 |
|
| - |
|
| 456.3 |
|
| - |
|
| 479.0 |
|
| 1.3 |
|
| - |
|
| 480.3 |
|
| (24.0 | ) |
| (5.0 | )% |
Alphagan®/Combigan® |
| 275.5 |
|
| - |
|
| 128.4 |
|
| - |
|
| 403.9 |
|
| 274.3 |
|
| - |
|
| 127.3 |
|
| - |
|
| 401.6 |
|
| 2.3 |
|
| 0.6 | % |
Eye Drops |
| 152.2 |
|
| - |
|
| 207.2 |
|
| - |
|
| 359.4 |
|
| 140.1 |
|
| - |
|
| 206.9 |
|
| - |
|
| 347.0 |
|
| 12.4 |
|
| 3.6 | % |
Namenda XR® |
| - |
|
| 355.0 |
|
| - |
|
| - |
|
| 355.0 |
|
| - |
|
| 486.5 |
|
| - |
|
| - |
|
| 486.5 |
|
| (131.5 | ) |
| (27.0 | )% |
Lo Loestrin® |
| - |
|
| 332.8 |
|
| - |
|
| - |
|
| 332.8 |
|
| - |
|
| 296.0 |
|
| - |
|
| - |
|
| 296.0 |
|
| 36.8 |
|
| 12.4 | % |
Breast Implants |
| 173.6 |
|
| - |
|
| 116.8 |
|
| - |
|
| 290.4 |
|
| 149.2 |
|
| - |
|
| 112.5 |
|
| - |
|
| 261.7 |
|
| 28.7 |
|
| 11.0 | % |
Estrace® Cream |
| - |
|
| 265.1 |
|
| - |
|
| - |
|
| 265.1 |
|
| - |
|
| 276.4 |
|
| - |
|
| - |
|
| 276.4 |
|
| (11.3 | ) |
| (4.1 | )% |
Viibryd®/Fetzima® |
| - |
|
| 244.2 |
|
| 2.1 |
|
| - |
|
| 246.3 |
|
| - |
|
| 252.6 |
|
| 0.1 |
|
| - |
|
| 252.7 |
|
| (6.4 | ) |
| (2.5 | )% |
Alloderm® |
| 223.3 |
|
| - |
|
| 5.0 |
|
| - |
|
| 228.3 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 228.3 |
| n.a. |
| |
Ozurdex ® |
| 72.0 |
|
| - |
|
| 152.5 |
|
| - |
|
| 224.5 |
|
| 61.8 |
|
| - |
|
| 130.2 |
|
| - |
|
| 192.0 |
|
| 32.5 |
|
| 16.9 | % |
Vraylar™ |
| - |
|
| 200.1 |
|
| - |
|
| - |
|
| 200.1 |
|
| - |
|
| 51.1 |
|
| - |
|
| - |
|
| 51.1 |
|
| 149.0 |
| n.m. |
| |
Asacol®/Delzicol® |
| - |
|
| 152.7 |
|
| 36.8 |
|
| - |
|
| 189.5 |
|
| - |
|
| 297.9 |
|
| 40.5 |
|
| - |
|
| 338.4 |
|
| (148.9 | ) |
| (44.0 | )% |
Carafate ® /Sulcrate ® |
| - |
|
| 176.6 |
|
| 2.1 |
|
| - |
|
| 178.7 |
|
| - |
|
| 167.7 |
|
| 1.7 |
|
| - |
|
| 169.4 |
|
| 9.3 |
|
| 5.5 | % |
Zenpep® |
| - |
|
| 153.8 |
|
| - |
|
| - |
|
| 153.8 |
|
| - |
|
| 145.1 |
|
| - |
|
| - |
|
| 145.1 |
|
| 8.7 |
|
| 6.0 | % |
Canasa®/Salofalk® |
| - |
|
| 115.7 |
|
| 13.3 |
|
| - |
|
| 129.0 |
|
| - |
|
| 135.0 |
|
| 13.0 |
|
| - |
|
| 148.0 |
|
| (19.0 | ) |
| (12.8 | )% |
Aczone® |
| 128.3 |
|
| - |
|
| 0.3 |
|
| - |
|
| 128.6 |
|
| 156.1 |
|
| - |
|
| - |
|
| - |
|
| 156.1 |
|
| (27.5 | ) |
| (17.6 | )% |
Coolsculpting Consumables |
| 98.2 |
|
| - |
|
| 26.3 |
|
| - |
|
| 124.5 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 124.5 |
| n.a. |
| |
Armour Thyroid |
| - |
|
| 117.8 |
|
| - |
|
| - |
|
| 117.8 |
|
| - |
|
| 121.8 |
|
| - |
|
| - |
|
| 121.8 |
|
| (4.0 | ) |
| (3.3 | )% |
Saphris® |
| - |
|
| 117.5 |
|
| - |
|
| - |
|
| 117.5 |
|
| - |
|
| 123.6 |
|
| - |
|
| - |
|
| 123.6 |
|
| (6.1 | ) |
| (4.9 | )% |
Viberzi® |
| - |
|
| 113.7 |
|
| 0.3 |
|
| - |
|
| 114.0 |
|
| - |
|
| 55.3 |
|
| - |
|
| - |
|
| 55.3 |
|
| 58.7 |
|
| 106.1 | % |
Namzaric® |
| - |
|
| 94.0 |
|
| - |
|
| - |
|
| 94.0 |
|
| - |
|
| 38.0 |
|
| - |
|
| - |
|
| 38.0 |
|
| 56.0 |
|
| 147.4 | % |
Teflaro® |
| - |
|
| 92.7 |
|
| - |
|
| - |
|
| 92.7 |
|
| - |
|
| 101.9 |
|
| - |
|
| - |
|
| 101.9 |
|
| (9.2 | ) |
| (9.0 | )% |
Rapaflo® |
| 79.9 |
|
| - |
|
| 5.5 |
|
| - |
|
| 85.4 |
|
| 87.6 |
|
| - |
|
| 4.2 |
|
| - |
|
| 91.8 |
|
| (6.4 | ) |
| (7.0 | )% |
Coolsculpting Systems & Add On Applicators |
| 64.1 |
|
| - |
|
| 20.4 |
|
| - |
|
| 84.5 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 84.5 |
| n.a. |
| |
Savella® |
| - |
|
| 74.3 |
|
| - |
|
| - |
|
| 74.3 |
|
| - |
|
| 74.1 |
|
| - |
|
| - |
|
| 74.1 |
|
| 0.2 |
|
| 0.3 | % |
SkinMedica® |
| 72.1 |
|
| - |
|
| 1.4 |
|
| - |
|
| 73.5 |
|
| 81.5 |
|
| - |
|
| - |
|
| - |
|
| 81.5 |
|
| (8.0 | ) |
| (9.8 | )% |
Minastrin® 24 |
| - |
|
| 56.1 |
|
| - |
|
| - |
|
| 56.1 |
|
| - |
|
| 247.5 |
|
| 1.4 |
|
| - |
|
| 248.9 |
|
| (192.8 | ) |
| (77.5 | )% |
Tazorac® |
| 51.3 |
|
| - |
|
| 0.5 |
|
| - |
|
| 51.8 |
|
| 68.0 |
|
| - |
|
| 0.6 |
|
| - |
|
| 68.6 |
|
| (16.8 | ) |
| (24.5 | )% |
Latisse® |
| 40.5 |
|
| - |
|
| 6.2 |
|
| - |
|
| 46.7 |
|
| 54.7 |
|
| - |
|
| 6.2 |
|
| - |
|
| 60.9 |
|
| (14.2 | ) |
| (23.3 | )% |
Avycaz® |
| - |
|
| 42.7 |
|
| - |
|
| - |
|
| 42.7 |
|
| - |
|
| 26.9 |
|
| - |
|
| - |
|
| 26.9 |
|
| 15.8 |
|
| 58.7 | % |
Kybella® /Belkyra® |
| 37.4 |
|
| - |
|
| 5.1 |
|
| - |
|
| 42.5 |
|
| 38.2 |
|
| - |
|
| 1.6 |
|
| - |
|
| 39.8 |
|
| 2.7 |
|
| 6.8 | % |
Dalvance® |
| - |
|
| 40.9 |
|
| 1.2 |
|
| - |
|
| 42.1 |
|
| - |
|
| 26.7 |
|
| - |
|
| - |
|
| 26.7 |
|
| 15.4 |
|
| 57.7 | % |
Lexapro® |
| - |
|
| 39.4 |
|
| - |
|
| - |
|
| 39.4 |
|
| - |
|
| 50.8 |
|
| - |
|
| - |
|
| 50.8 |
|
| (11.4 | ) |
| (22.4 | )% |
Liletta® |
| - |
|
| 23.1 |
|
| - |
|
| - |
|
| 23.1 |
|
| - |
|
| 15.0 |
|
| - |
|
| - |
|
| 15.0 |
|
| 8.1 |
|
| 54.0 | % |
Enablex® |
| - |
|
| 2.8 |
|
| - |
|
| - |
|
| 2.8 |
|
| - |
|
| 14.7 |
|
| - |
|
| - |
|
| 14.7 |
|
| (11.9 | ) |
| (81.0 | )% |
Namenda® IR |
| - |
|
| 0.1 |
|
| - |
|
| - |
|
| 0.1 |
|
| - |
|
| 12.8 |
|
| - |
|
| - |
|
| 12.8 |
|
| (12.7 | ) |
| (99.2 | )% |
Other |
| 201.2 |
|
| 498.8 |
|
| 287.4 |
|
| 18.3 |
|
| 1,005.7 |
|
| 83.2 |
|
| 442.5 |
|
| 251.9 |
|
| 26.5 |
|
| 804.1 |
|
| 201.6 |
|
| 25.1 | % |
Less product sold through our former Anda Distribution business | n.a. |
| n.a. |
| n.a. |
|
| - |
|
| - |
| n.a. |
| n.a. |
| n.a. |
|
| (80.0 | ) |
| (80.0 | ) |
| 80.0 |
|
| (100.0 | )% | ||||||
Total Net Revenues | $ | 4,921.8 |
| $ | 4,270.9 |
| $ | 2,403.6 |
| $ | 18.3 |
| $ | 11,614.6 |
| $ | 4,240.8 |
| $ | 4,390.9 |
| $ | 2,128.1 |
| $ | (53.5 | ) | $ | 10,706.3 |
| $ | 908.3 |
|
| 8.5 | % |
|
|
US Specialized Therapeutics Segment
The following table presents top product sales and net contribution for the US Specialized Therapeutics segment for the nine months ended September 30, 2017 and 2016 ($ in millions):
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
| 2017 |
|
| 20161) |
|
| Dollars |
|
| % |
| ||||
Total Eye Care | $ | 1,788.5 |
|
| $ | 1,777.6 |
|
| $ | 10.9 |
|
|
| 0.6 | % |
Restasis® |
| 1,012.0 |
|
|
| 1,026.4 |
|
|
| (14.4 | ) |
|
| (1.4 | )% |
Alphagan®/Combigan® |
| 275.5 |
|
|
| 274.3 |
|
|
| 1.2 |
|
|
| 0.4 | % |
Lumigan®/Ganfort® |
| 236.6 |
|
|
| 240.4 |
|
|
| (3.8 | ) |
|
| (1.6 | )% |
Ozurdex® |
| 72.0 |
|
|
| 61.8 |
|
|
| 10.2 |
|
|
| 16.5 | % |
Eye Drops |
| 152.2 |
|
|
| 140.1 |
|
|
| 12.1 |
|
|
| 8.6 | % |
Other Eye Care |
| 40.2 |
|
|
| 34.6 |
|
|
| 5.6 |
|
|
| 16.2 | % |
Total Medical Aesthetics |
| 1,736.3 |
|
|
| 1,182.6 |
|
|
| 553.7 |
|
|
| 46.8 | % |
Facial Aesthetics |
| 982.8 |
|
|
| 893.3 |
|
|
| 89.5 |
|
|
| 10.0 | % |
Botox® Cosmetics |
| 583.8 |
|
|
| 529.8 |
|
|
| 54.0 |
|
|
| 10.2 | % |
Juvederm Collection |
| 361.6 |
|
|
| 325.3 |
|
|
| 36.3 |
|
|
| 11.2 | % |
Kybella® |
| 37.4 |
|
|
| 38.2 |
|
|
| (0.8 | ) |
|
| (2.1 | )% |
Plastic Surgery |
| 173.6 |
|
|
| 153.1 |
|
|
| 20.5 |
|
|
| 13.4 | % |
Breast Implants |
| 173.6 |
|
|
| 149.2 |
|
|
| 24.4 |
|
|
| 16.4 | % |
Other Plastic Surgery |
| - |
|
|
| 3.9 |
|
|
| (3.9 | ) |
|
| (100.0 | )% |
Regenerative Medicine |
| 305.0 |
|
|
| - |
|
|
| 305.0 |
|
| n.a. |
| |
Alloderm® |
| 223.3 |
|
|
| - |
|
|
| 223.3 |
|
| n.a. |
| |
Other Regenerative Medicine |
| 81.7 |
|
|
| - |
|
|
| 81.7 |
|
| n.a. |
| |
Body Contouring |
| 162.3 |
|
|
| - |
|
|
| 162.3 |
|
| n.a. |
| |
Coolsculpting® Systems & Add On Applicators |
| 64.1 |
|
|
| - |
|
|
| 64.1 |
|
| n.a. |
| |
Coolsculpting® Consumables |
| 98.2 |
|
|
| - |
|
|
| 98.2 |
|
| n.a. |
| |
Skin Care |
| 112.6 |
|
|
| 136.2 |
|
|
| (23.6 | ) |
|
| (17.3 | )% |
SkinMedica® |
| 72.1 |
|
|
| 81.5 |
|
|
| (9.4 | ) |
|
| (11.5 | )% |
Latisse® |
| 40.5 |
|
|
| 54.7 |
|
|
| (14.2 | ) |
|
| (26.0 | )% |
Total Medical Dermatology |
| 255.3 |
|
|
| 282.2 |
|
|
| (26.9 | ) |
|
| (9.5 | )% |
Aczone® |
| 128.3 |
|
|
| 156.1 |
|
|
| (27.8 | ) |
|
| (17.8 | )% |
Tazorac® |
| 51.3 |
|
|
| 68.0 |
|
|
| (16.7 | ) |
|
| (24.6 | )% |
Botox® Hyperhidrosis |
| 50.4 |
|
|
| 48.9 |
|
|
| 1.5 |
|
|
| 3.1 | % |
Other Medical Dermatology |
| 25.3 |
|
|
| 9.2 |
|
|
| 16.1 |
|
|
| 175.0 | % |
Total Neuroscience and Urology |
| 1,087.7 |
|
|
| 963.8 |
|
|
| 123.9 |
|
|
| 12.9 | % |
Botox® Therapeutics |
| 1,007.8 |
|
|
| 875.3 |
|
|
| 132.5 |
|
|
| 15.1 | % |
Rapaflo® |
| 79.9 |
|
|
| 87.6 |
|
|
| (7.7 | ) |
|
| (8.8 | )% |
Other Neuroscience and Urology |
| - |
|
|
| 0.9 |
|
|
| (0.9 | ) |
|
| (100.0 | )% |
Other Revenues |
| 54.0 |
|
|
| 34.6 |
|
|
| 19.4 |
|
|
| 56.1 | % |
Net revenues | $ | 4,921.8 |
|
| $ | 4,240.8 |
|
| $ | 681.0 |
|
|
| 16.1 | % |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(2) |
| 349.4 |
|
|
| 215.0 |
|
|
| 134.4 |
|
|
| 62.5 | % |
Selling and marketing |
| 1,040.7 |
|
|
| 844.8 |
|
|
| 195.9 |
|
|
| 23.2 | % |
General and administrative |
| 149.4 |
|
|
| 126.4 |
|
|
| 23.0 |
|
|
| 18.2 | % |
Segment contribution | $ | 3,382.3 |
|
| $ | 3,054.6 |
|
| $ | 327.7 |
|
|
| 10.7 | % |
Segment margin |
| 68.7 | % |
|
| 72.0 | % |
|
|
|
|
|
| (3.3 | )% |
Segment gross margin(3) |
| 92.9 | % |
|
| 94.9 | % |
|
|
|
|
|
| (2.0 | )% |
|
|
|
|
|
|
As a result of the Zeltiq and LifeCell acquisitions, the Company received the following segment contribution in the nine months ended September 30, 2017 ($ in millions):
|
| LifeCell |
|
| Zeltiq |
|
| Combined Contribution |
| |||
Net revenues |
| $ | 306.6 |
|
| $ | 162.3 |
|
| $ | 468.9 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
| 74.6 |
|
|
| 46.0 |
|
|
| 120.6 |
|
Selling and marketing |
|
| 69.2 |
|
|
| 61.4 |
|
|
| 130.6 |
|
General and administrative |
|
| 9.3 |
|
|
| 4.9 |
|
|
| 14.2 |
|
Net Revenues
The increase in segment net revenues in the nine months ended September 30, 2017 over the prior period was primarily driven by growth in Botox® Therapeutics, Facial Aesthetics and the LifeCell and Zeltiq acquisitions.
Botox® Therapeutics increased $132.5 million, or 15.1%, versus the prior year period driven by demand.
The increase in Facial Aesthetics revenues was driven in part by Botox® Cosmetics which increased $54.0 million, or 10.2%, versus the prior year period primarily due to demand growth. Also contributing was an increase in Juvederm Collection revenues of $36.3 million, or 11.2% versus the prior year period driven primarily by demand, offset, in part, by an increase in discounts due to competitors.
The decline in Restasis® revenues of $14.4 million, or 1.4%, was primarily due to differences in year-over-year trade buying patterns. As a result of the U.S. District Court for the Eastern District of Texas issuing an adverse trial decision finding that the four asserted patents covering Restasis® (Cyclosporine Ophthalmic Emulsion) 0.05% are invalid, there is a potential risk for future declines in Restasis® revenues.
Cost of Sales
Excluding the LifeCell Acquisition and the Zeltiq Acquisition, segment gross margin remained flat at 94.9% in the nine months ended September 30, 2017 versus the prior year period.
Selling and Marketing Expenses
The increase in selling and marketing expenses primarily relates to the increased costs from the LifeCell Acquisition and Zeltiq Acquisition of $130.6 million as well as increased promotional costs for key brands and new products Rhofade®, Xen® and Kybella®.
General and Administrative Expenses
The increase in general and administrative costs is primarily due to the acquisitions of LifeCell and Zeltiq.
The following table presents top product sales and net contribution for the US General Medicine segment for the nine months ended September 30, 2017 and 2016 ($ in millions):
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
| 2017 |
|
| 2016(1) |
|
| Dollars |
|
| % |
| ||||
Total Central Nervous System (CNS) | $ | 1,010.9 |
|
| $ | 964.6 |
|
| $ | 46.3 |
|
|
| 4.8 | % |
Namenda XR® |
| 355.0 |
|
|
| 486.5 |
|
|
| (131.5 | ) |
|
| (27.0 | )% |
Viibryd®/Fetzima® |
| 244.2 |
|
|
| 252.6 |
|
|
| (8.4 | ) |
|
| (3.3 | )% |
Saphris® |
| 117.5 |
|
|
| 123.6 |
|
|
| (6.1 | ) |
|
| (4.9 | )% |
Vraylar™ |
| 200.1 |
|
|
| 51.1 |
|
|
| 149.0 |
|
| n.m. |
| |
Namzaric® |
| 94.0 |
|
|
| 38.0 |
|
|
| 56.0 |
|
|
| 147.4 | % |
Namenda® IR |
| 0.1 |
|
|
| 12.8 |
|
|
| (12.7 | ) |
|
| (99.2 | )% |
Total Gastrointestinal (GI) |
| 1,241.8 |
|
|
| 1,277.0 |
|
|
| (35.2 | ) |
|
| (2.8 | )% |
Linzess® |
| 506.3 |
|
|
| 452.0 |
|
|
| 54.3 |
|
|
| 12.0 | % |
Asacol®/Delzicol® |
| 152.7 |
|
|
| 297.9 |
|
|
| (145.2 | ) |
|
| (48.7 | )% |
Carafate®/Sulcrate® |
| 176.6 |
|
|
| 167.7 |
|
|
| 8.9 |
|
|
| 5.3 | % |
Zenpep® |
| 153.8 |
|
|
| 145.1 |
|
|
| 8.7 |
|
|
| 6.0 | % |
Canasa®/Salofalk® |
| 115.7 |
|
|
| 135.0 |
|
|
| (19.3 | ) |
|
| (14.3 | )% |
Viberzi® |
| 113.7 |
|
|
| 55.3 |
|
|
| 58.4 |
|
|
| 105.6 | % |
Other GI |
| 23.0 |
|
|
| 24.0 |
|
|
| (1.0 | ) |
|
| (4.2 | )% |
Total Women's Health |
| 758.4 |
|
|
| 865.1 |
|
|
| (106.7 | ) |
|
| (12.3 | )% |
Lo Loestrin® |
| 332.8 |
|
|
| 296.0 |
|
|
| 36.8 |
|
|
| 12.4 | % |
Estrace® Cream |
| 265.1 |
|
|
| 276.4 |
|
|
| (11.3 | ) |
|
| (4.1 | )% |
Minastrin® 24 |
| 56.1 |
|
|
| 247.5 |
|
|
| (191.4 | ) |
|
| (77.3 | )% |
Liletta® |
| 23.1 |
|
|
| 15.0 |
|
|
| 8.1 |
|
|
| 54.0 | % |
Other Women's Health |
| 81.3 |
|
|
| 30.2 |
|
|
| 51.1 |
|
|
| 169.2 | % |
Total Anti-Infectives |
| 190.7 |
|
|
| 167.1 |
|
|
| 23.6 |
|
|
| 14.1 | % |
Teflaro® |
| 92.7 |
|
|
| 101.9 |
|
|
| (9.2 | ) |
|
| (9.0 | )% |
Avycaz® |
| 42.7 |
|
|
| 26.9 |
|
|
| 15.8 |
|
|
| 58.7 | % |
Dalvance® |
| 40.9 |
|
|
| 26.7 |
|
|
| 14.2 |
|
|
| 53.2 | % |
Other Anti-Infectives |
| 14.4 |
|
|
| 11.6 |
|
|
| 2.8 |
|
|
| 24.1 | % |
Diversified Brands |
| 923.2 |
|
|
| 1,038.8 |
|
|
| (115.6 | ) |
|
| (11.1 | )% |
Bystolic®/ Byvalson® |
| 454.7 |
|
|
| 479.0 |
|
|
| (24.3 | ) |
|
| (5.1 | )% |
Armour Thyroid |
| 117.8 |
|
|
| 121.8 |
|
|
| (4.0 | ) |
|
| (3.3 | )% |
Savella® |
| 74.3 |
|
|
| 74.1 |
|
|
| 0.2 |
|
|
| 0.3 | % |
Lexapro® |
| 39.4 |
|
|
| 50.8 |
|
|
| (11.4 | ) |
|
| (22.4 | )% |
Enablex® |
| 2.8 |
|
|
| 14.7 |
|
|
| (11.9 | ) |
|
| (81.0 | )% |
PacPharma |
| 9.7 |
|
|
| 49.7 |
|
|
| (40.0 | ) |
|
| (80.5 | )% |
Other Diversified Brands |
| 224.5 |
|
|
| 248.7 |
|
|
| (24.2 | ) |
|
| (9.7 | )% |
Other Revenues |
| 145.9 |
|
|
| 78.3 |
|
|
| 67.6 |
|
|
| 86.3 | % |
Net revenues | $ | 4,270.9 |
|
| $ | 4,390.9 |
|
| $ | (120.0 | ) |
|
| (2.7 | )% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(2) |
| 623.2 |
|
|
| 649.6 |
|
|
| (26.4 | ) |
|
| (4.1 | )% |
Selling and marketing |
| 838.3 |
|
|
| 902.8 |
|
|
| (64.5 | ) |
|
| (7.1 | )% |
General and administrative |
| 129.7 |
|
|
| 128.2 |
|
|
| 1.5 |
|
|
| 1.2 | % |
Segment contribution | $ | 2,679.7 |
|
| $ | 2,710.3 |
|
| $ | (30.6 | ) |
|
| (1.1 | )% |
Segment margin |
| 62.7 | % |
|
| 61.7 | % |
|
|
|
|
|
| 1.0 | % |
Segment gross margin(3) |
| 85.4 | % |
|
| 85.2 | % |
|
|
|
|
|
| 0.2 | % |
|
|
|
|
|
|
The decrease in segment revenues in the nine months ended September 30, 2017 over the prior period is primarily due to a decline in Diversified Brand revenues, Women’s Health revenues, and Gastrointestinal revenues versus the prior year period, offset, in part, by increase in Other Revenues and CNS revenues.
Diversified Brand revenues declined $115.6 million, or 11.1% versus the prior year period, due in part to a decline of $40.0 million in PacPharma revenues as the Company out licensed these product rights. Included within “Other Revenues” for the nine months ended September 30, 2017 is an increase in royalty revenues related to these products of $30.6 million. Also contributing to the decline in Diversified Brands is a decline in Bystolic® / Byvalson® revenues of $24.3 million, or 5.1% as a result of decreased demand, and the impact of loss of exclusivity on certain products including Enablex®. Other Diversified Brands declined $24.2 million or 9.7% due to demand declines.
Women’s Health revenues declined $106.7 million, or 12.3%, primarily due to the loss of exclusivity on Minastrin® 24. Offsetting this decline, in part, are revenues on our new product, Taytulla® of $50.1 million and increased sales of Lo Loestrin® of 12.4% due primarily to strong demand growth and higher average selling prices.
Declines within our Gastrointestinal franchise of $35.2 million, or 2.8%, were primarily driven by a reduction in demand for Asacol® HD following the launch of an authorized generic in August 2016. Offsetting this decline, in part, is an increase in royalty revenue of $30.7 million relating to our authorized generic version of Asacol® HD, which is included within “Other Revenues”. Further offsetting this decline was growth in Linzess® and newly launched Viberzi®. Linzess® revenues increased $54.3 million, or 12.0%, versus the prior year period primarily due to strong demand growth.
The increase in Central Nervous System revenues of $46.3 million, or 4.8%, was driven by the launch of Vraylar™ and Namzaric® offset, in part, by the continued decline in Namenda XR® due to decreased demand and conversion to Namzaric®.
Cost of Sales
The decrease in cost of sales was the result of lower product revenues and the impact of the Company reacquiring rights on select licensed products in the nine months ended September 30, 2017. As part of the rights reacquired, the Company is no longer obligated to pay royalties on the specific products, which increases the Company’s segment gross margin percentage. In the nine months ended September 30, 2016, royalties incurred relating to the reacquired product rights were $50.1 million, offset, in part by, unfavorable product mix.
Selling and Marketing Expenses
The decrease in selling and marketing expenses relates to headcount reductions and lower launch costs.
General and Administrative Expenses
General and administrative expenses are in line period-over-period.
The following table presents top products sales and net contribution for the International segment for the nine months ended September 30, 2017 and 2016 ($ in millions):
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||||||||||||||||||
| 2017 |
|
| 2016 |
|
| $ Overall Change |
|
| $ Currency Change |
|
| $ Operational Change |
|
| % Overall Change |
|
| % Currency Change |
|
| % Operational Change |
| ||||||||
Total Eye Care | $ | 939.4 |
|
| $ | 904.4 |
|
| $ | 35.0 |
|
| $ | (1.8 | ) |
| $ | 36.8 |
|
|
| 3.9 | % |
|
| (0.2 | )% |
|
| 4.1 | % |
Lumigan®/Ganfort® |
| 271.8 |
|
|
| 269.2 |
|
|
| 2.6 |
|
|
| (1.3 | ) |
|
| 3.9 |
|
|
| 1.0 | % |
|
| (0.5 | )% |
|
| 1.5 | % |
Ozurdex® |
| 152.5 |
|
|
| 130.2 |
|
|
| 22.3 |
|
|
| (1.6 | ) |
|
| 23.9 |
|
|
| 17.1 | % |
|
| (1.2 | )% |
|
| 18.3 | % |
Alphagan®/Combigan® |
| 128.4 |
|
|
| 127.3 |
|
|
| 1.1 |
|
|
| 0.2 |
|
|
| 0.9 |
|
|
| 0.9 | % |
|
| 0.2 | % |
|
| 0.7 | % |
Optive® |
| 83.5 |
|
|
| 75.7 |
|
|
| 7.8 |
|
|
| 1.2 |
|
|
| 6.6 |
|
|
| 10.3 | % |
|
| 1.6 | % |
|
| 8.7 | % |
Restasis® |
| 46.7 |
|
|
| 49.7 |
|
|
| (3.0 | ) |
|
| (1.2 | ) |
|
| (1.8 | ) |
|
| (6.0 | )% |
|
| (2.4 | )% |
|
| (3.6 | )% |
Other Eye Drops |
| 123.7 |
|
|
| 131.2 |
|
|
| (7.5 | ) |
|
| (0.5 | ) |
|
| (7.0 | ) |
|
| (5.7 | )% |
|
| (0.4 | )% |
|
| (5.3 | )% |
Other Eye Care |
| 132.8 |
|
|
| 121.1 |
|
|
| 11.7 |
|
|
| 1.4 |
|
|
| 10.3 |
|
|
| 9.7 | % |
|
| 1.2 | % |
|
| 8.5 | % |
Total Medical Aesthetics |
| 977.3 |
|
|
| 780.0 |
|
|
| 197.3 |
|
|
| (10.0 | ) |
|
| 207.3 |
|
|
| 25.3 | % |
|
| (1.3 | )% |
|
| 26.6 | % |
Facial Aesthetics |
| 793.1 |
|
|
| 658.7 |
|
|
| 134.4 |
|
|
| (8.9 | ) |
|
| 143.3 |
|
|
| 20.4 | % |
|
| (1.4 | )% |
|
| 21.8 | % |
Botox® Cosmetics |
| 402.0 |
|
|
| 352.9 |
|
|
| 49.1 |
|
|
| (8.9 | ) |
|
| 58.0 |
|
|
| 13.9 | % |
|
| (2.5 | )% |
|
| 16.4 | % |
Juvederm Collection |
| 386.0 |
|
|
| 304.2 |
|
|
| 81.8 |
|
|
| (0.1 | ) |
|
| 81.9 |
|
|
| 26.9 | % |
|
| 0.0 | % |
|
| 26.9 | % |
Belkyra® (Kybella®) |
| 5.1 |
|
|
| 1.6 |
|
|
| 3.5 |
|
|
| 0.1 |
|
|
| 3.4 |
|
| n.m. |
|
|
| 6.3 | % |
| n.m. |
| ||
Plastic Surgery |
| 118.0 |
|
|
| 112.9 |
|
|
| 5.1 |
|
|
| (1.2 | ) |
|
| 6.3 |
|
|
| 4.5 | % |
|
| (1.1 | )% |
|
| 5.6 | % |
Breast Implants |
| 116.8 |
|
|
| 112.5 |
|
|
| 4.3 |
|
|
| (1.2 | ) |
|
| 5.5 |
|
|
| 3.8 | % |
|
| (1.1 | )% |
|
| 4.9 | % |
Earfold™ |
| 1.2 |
|
|
| 0.4 |
|
|
| 0.8 |
|
|
| - |
|
|
| 0.8 |
|
|
| 200.0 | % |
|
| 0.0 | % |
|
| 200.0 | % |
Regenerative Medicine |
| 10.7 |
|
|
| - |
|
|
| 10.7 |
|
|
| 0.1 |
|
|
| 10.6 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
| |||
Alloderm® |
| 5.0 |
|
|
| - |
|
|
| 5.0 |
|
|
| - |
|
|
| 5.0 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
| |||
Other Regenerative Medicine |
| 5.7 |
|
|
| - |
|
|
| 5.7 |
|
|
| 0.1 |
|
|
| 5.6 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
| |||
Body Contouring |
| 46.7 |
|
|
| - |
|
|
| 46.7 |
|
|
| (0.2 | ) |
|
| 46.9 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
| |||
Coolsculpting® Systems & Add On Applicators |
| 20.4 |
|
|
| - |
|
|
| 20.4 |
|
|
| - |
|
|
| 20.4 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
| |||
Coolsculpting® Consumables |
| 26.3 |
|
|
| - |
|
|
| 26.3 |
|
|
| (0.2 | ) |
|
| 26.5 |
|
| n.a. |
|
| n.a. |
|
| n.a. |
| |||
Skin Care |
| 8.8 |
|
|
| 8.4 |
|
|
| 0.4 |
|
|
| 0.2 |
|
|
| 0.2 |
|
|
| 4.8 | % |
|
| 2.4 | % |
|
| 2.4 | % |
Botox® Therapeutics and Other |
| 426.8 |
|
|
| 399.0 |
|
|
| 27.8 |
|
|
| (1.5 | ) |
|
| 29.3 |
|
|
| 7.0 | % |
|
| (0.4 | )% |
|
| 7.4 | % |
Botox® Therapeutics |
| 260.6 |
|
|
| 240.0 |
|
|
| 20.6 |
|
|
| (0.2 | ) |
|
| 20.8 |
|
|
| 8.6 | % |
|
| (0.1 | )% |
|
| 8.7 | % |
Asacol®/Delzicol® |
| 36.8 |
|
|
| 40.5 |
|
|
| (3.7 | ) |
|
| (2.0 | ) |
|
| (1.7 | ) |
|
| (9.1 | )% |
|
| (4.9 | )% |
|
| (4.2 | )% |
Constella® |
| 16.1 |
|
|
| 12.7 |
|
|
| 3.4 |
|
|
| (0.3 | ) |
|
| 3.7 |
|
|
| 26.8 | % |
|
| (2.4 | )% |
|
| 29.2 | % |
Other Products |
| 113.3 |
|
|
| 105.8 |
|
|
| 7.5 |
|
|
| 1.0 |
|
|
| 6.5 |
|
|
| 7.1 | % |
|
| 0.9 | % |
|
| 6.2 | % |
Other Revenues |
| 60.1 |
|
|
| 44.7 |
|
|
| 15.4 |
|
|
| - |
|
|
| 15.4 |
|
|
| 34.5 | % |
|
| 0.0 | % |
|
| 34.5 | % |
Net revenues | $ | 2,403.6 |
|
| $ | 2,128.1 |
|
| $ | 275.5 |
|
| $ | (13.3 | ) |
| $ | 288.8 |
|
|
| 12.9 | % |
|
| (0.6 | )% |
|
| 13.5 | % |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
| 341.6 |
|
|
| 309.3 |
|
|
| 32.3 |
|
|
| (0.2 | ) |
|
| 32.5 |
|
|
| 10.4 | % |
|
| (0.1 | )% |
|
| 10.5 | % |
Selling and marketing |
| 673.2 |
|
|
| 582.7 |
|
|
| 90.5 |
|
|
| (1.2 | ) |
|
| 91.7 |
|
|
| 15.5 | % |
|
| (0.2 | )% |
|
| 15.7 | % |
General and administrative |
| 86.5 |
|
|
| 86.5 |
|
|
| - |
|
|
| (0.5 | ) |
|
| 0.5 |
|
|
| 0.0 | % |
|
| (0.6 | )% |
|
| 0.6 | % |
Segment contribution | $ | 1,302.3 |
|
| $ | 1,149.6 |
|
| $ | 152.7 |
|
| $ | (11.4 | ) |
| $ | 164.1 |
|
|
| 13.3 | % |
|
| (1.0 | )% |
|
| 14.3 | % |
Segment margin |
| 54.2 | % |
|
| 54.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0.2 | % |
|
|
|
|
|
|
|
|
Segment gross margin(2) |
| 85.8 | % |
|
| 85.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues
The increase in segment net revenues in the nine months ended September 30, 2017 over the prior period is primarily due to the operational growth of total Facial Aesthetics, Eye Care and Botox® Therapeutics, as well as the acquisition of Zeltiq, which contributed $46.7 million of net revenues during the nine months ended September 30, 2017. Within total Eye Care, Ozurdex® increased $22.3 million, or 17.1% versus the prior year period, primarily driven by demand growth. Within Facial Aesthetics, Juvederm Collection revenues increased $81.8 million, or 26.9% versus the prior year period, primarily resulting from demand
growth. Botox® Cosmetic sales grew 13.9% driven by demand growth. Botox® Therapeutics sales also grew 8.6% driven by demand growth.
In the first quarter of 2017, the Company announced a realignment of its International Commercial organization. As a result of this realignment, future promotional priorities among the International portfolio may shift and, as such, revenues by product may be impacted.
Cost of Sales
The increase in cost of sales was primarily due to the increase in net revenues, offset, in part, by favorable product mix. Segment gross margins improved to 85.8% for the nine months ended September 30, 2017 compared to 85.5% for the nine months ended September 30, 2016.
Selling and Marketing Expenses
The increase in selling and marketing expenses relates to the addition of Zeltiq, which contributed spending of $22.8 million, as well as increased promotional spending associated with Ozurdex®, Botox® Cosmetic and the Juvederm Collection and recent product launches.
General and Administrative Expenses
General and administrative expenses are in line period-over-period.
Corporate
Corporate represents the results of corporate initiatives as well as the impact of select revenues and shared costs. The following represents the corporate amounts for the nine months ended September 30, 2017 and 2016 ($ in millions):
|
| Nine Months Ended September 30, 2017 |
| ||||||||||||||||
|
| Integration and Restructuring |
| Fair Value Adjustments |
| Effect of Purchase Accounting |
| Other |
| Revenues and Shared Costs |
| Total |
| ||||||
Net Sales |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 18.3 |
| $ | 18.3 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 50.8 |
|
| (127.3 | ) |
| 129.5 |
|
| 12.5 |
|
| 207.4 |
|
| 272.9 |
|
Selling and marketing |
|
| 53.5 |
|
| - |
|
| 26.4 |
|
| 1.5 |
|
| 3.5 |
|
| 84.9 |
|
General and administrative |
|
| 126.9 |
|
| - |
|
| 45.8 |
|
| 73.8 |
|
| 500.7 |
|
| 747.2 |
|
Contribution |
| $ | (231.2 | ) | $ | 127.3 |
| $ | (201.7 | ) | $ | (87.8 | ) | $ | (693.3 | ) | $ | (1,086.7 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights. |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Nine Months Ended September 30, 2016 |
| |||||||||||||||||||
|
| Integration and Restructuring |
| Fair Value Adjustments |
| Effect of Purchase Accounting |
| Reclassification of Sales Distributed Through Anda to Discontinued Operations |
| Other |
| Revenues and Shared Costs |
| Total |
| |||||||
Net Sales |
| $ | - |
| $ | - |
| $ | - |
| $ | (80.0 | ) | $ | - |
| $ | 26.5 |
| $ | (53.5 | ) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(1) |
|
| 16.0 |
|
| 13.4 |
|
| 48.8 |
|
| (78.2 | ) |
| - |
|
| 207.2 |
|
| 207.2 |
|
Selling and marketing |
|
| 38.0 |
|
| - |
|
| 55.3 |
|
| - |
|
| 0.1 |
|
| 5.9 |
|
| 99.3 |
|
General and administrative |
|
| 196.8 |
|
| 0.1 |
|
| 35.7 |
|
| - |
|
| 122.9 |
|
| 337.3 |
|
| 692.8 |
|
Contribution |
| $ | (250.8 | ) | $ | (13.5 | ) | $ | (139.8 | ) | $ | (1.8 | ) | $ | (123.0 | ) | $ | (523.9 | ) | $ | (1,052.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes amortization and impairment of acquired intangibles including product rights. |
| |||||||||||||||||||||
In the nine months ended September 30, 2017, integration and restructuring charges included costs related to the integration of LifeCell and Zeltiq as well as the Company’s internal restructuring programs. As part of the Company’s internal restructuring programs, the Company incurred severance and other restructuring costs relating to the commercial organization of $20.0 million as the Company intends to eliminate approximately 400 commercial organization positions, as well as severance and other restructuring costs relating to the global manufacturing operations of $45.1 million as the Company intends to close select facilities. In the nine months ended September 30, 2017 the Company incurred purchase accounting effects of $126.2 million in cost of sales related to the fair value inventory step-up from the LifeCell and Zeltiq acquisitions as products were sold to the Company’s third party customers. The Company also incurred charges related to the purchase accounting impact on stock-based compensation related to the Allergan, Forest and Zeltiq acquisitions, which increased cost of sales, selling and marketing and general and administrative expenses, including cash stock-based compensation charge of $31.5 million associated with the Zeltiq Acquisition. In the nine months ended September 30, 2017, general and administrative costs included legal settlement charges of $74.3 million.
In the nine months ended September 30, 2016, integration and restructuring charges primarily related to the integration of the Legacy Allergan business as well as charges incurred with the terminated merger with Pfizer, Inc. of $87.2 million. In the nine months ended September 30, 2016, the Company incurred purchase accounting effects of $42.4 million in cost of sales primarily related to the fair value inventory step-up from the Allergan and Forest acquisitions as products were sold to the Company’s third party customers. The Company also incurred charges related to the purchase accounting impact on stock-based compensation related to the Allergan and Forest acquisitions, which increased cost of sales, selling and marketing and general and administrative expenses. In the nine months ended September 30, 2016, general and administrative costs included legal settlement charges of $100.0 million.
Shared costs primarily include above site and unallocated costs associated with running our global manufacturing facilities and corporate General & Administrative expenses. In the nine months ended September 30, 2017, the Company incurred transactional foreign exchange losses of $94.5 million versus transactional foreign exchange gains of $61.2 million, excluding mark-to-market unrealized losses for foreign currency option contracts, in the nine months ended September 30, 2016.
Research and Development Expenses
R&D expenses consisted of the following components in the nine months ended September 30, 2017 and 2016 ($ in millions):
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Ongoing operating expenses |
| $ | 1,193.1 |
|
| $ | 1,007.9 |
|
| $ | 185.2 |
|
|
| 18.4 | % |
Brand-related milestone payments and upfront license payments |
|
| 386.5 |
|
|
| 542.1 |
|
|
| (155.6 | ) |
|
| (28.7 | )% |
Acquisition accounting fair market value adjustment to stock-based compensation |
|
| 14.5 |
|
|
| 31.8 |
|
|
| (17.3 | ) |
|
| (54.4 | )% |
Acquisition, integration, and restructuring charges |
|
| 22.1 |
|
|
| 14.8 |
|
|
| 7.3 |
|
|
| 49.3 | % |
Contingent consideration adjustments, net |
|
| 75.7 |
|
|
| 65.8 |
|
|
| 9.9 |
|
|
| 15.0 | % |
Total expenditures |
| $ | 1,691.9 |
|
| $ | 1,662.4 |
|
| $ | 29.5 |
|
|
| 1.8 | % |
The increase in ongoing operating expenses in the nine months ended September 30, 2017 versus the prior year period is primarily due to increased product development spending primarily in the Central Nervous System and Gastrointestinal therapeutic areas coupled with higher personnel costs.
Acquisition, integration and restructuring charges in the nine months ended September 30, 2017 includes $13.6 million of severance and restructuring costs related to a planned internal reduction of approximately 100 R&D employees.
The following represents brand related milestone payments and upfront license payments in the nine months ended September 30, 2017 and 2016, respectively ($ in millions):
|
| Nine Months Ended September 30, |
| |||||
($ in millions) |
| 2017 |
|
| 2016 |
| ||
Lysosomal Therapeutics, Inc. |
| $ | 145.0 |
|
| $ | - |
|
Editas Medicine, Inc. |
|
| 90.0 |
|
|
| - |
|
Assembly Biosciences, Inc. |
|
| 50.0 |
|
|
| - |
|
Akarna Therapeutics, Ltd. |
|
| 39.6 |
|
|
| 48.2 |
|
Heptares Therapeutics Ltd. |
|
| 15.0 |
|
|
| 125.0 |
|
Lyndra, Inc. |
|
| 15.0 |
|
|
| - |
|
Merck & Co. |
|
| - |
|
|
| 100.0 |
|
Topokine Therapeutics, Inc. |
|
| - |
|
|
| 85.8 |
|
Anterios, Inc. |
|
| - |
|
|
| 89.2 |
|
RetroSense Therapeutics, LLC |
|
| - |
|
|
| 59.7 |
|
Other |
|
| 31.9 |
|
|
| 34.2 |
|
|
| $ | 386.5 |
|
| $ | 542.1 |
|
In the nine months ended September 30, 2017, the adjustment to contingent consideration primarily related to the advancement of the Company’s True TearTM product and products acquired as part of the Tobira Acquisition. In the nine months ended September 30, 2016, the adjustment to contingent consideration included charges related to the advancement of Rhofade®.
Amortization
Amortization in the nine months ended September 30, 2017 and 2016 was as follows:
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Amortization |
| $ | 5,274.9 |
|
| $ | 4,831.9 |
|
| $ | 443.0 |
|
|
| 9.2 | % |
Amortization for the nine months ended September 30, 2017 increased as compared to the prior period primarily as a result of amortization related to the acquired LifeCell and Zeltiq products of $122.0 million as well as amortization from approved products during the year ended December 31, 2016 and the nine months ended September 30, 2017.
IPR&D Impairments and Asset Sales and Impairments, Net
IPR&D impairments and Asset sales and impairments, net consisted of the following components in the nine months ended September 30, 2017 and 2016:
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
IPR&D impairments |
| $ | 1,245.3 |
|
| $ | 316.9 |
|
| $ | 928.4 |
|
|
| 293.0 | % |
Asset sales and impairments, net |
|
| 3,896.2 |
|
|
| (24.0 | ) |
|
| 3,920.2 |
|
| n.m. |
| |
In the nine months ended September 30, 2017, the Company evaluated all of its dry eye related assets for impairment as a result of the U.S. District Court for the Eastern District of Texas issuing an adverse trial decision finding that the four asserted patents covering Restasis® (Cyclosporine Ophthalmic Emulsion) 0.05% are invalid. As a result of our review of all potential scenarios relating to these assets and a decrease in our assessment of the likelihood of revenue extending through the full patent term of 2024, the Company recognized an impairment of $3,230.0 million related to Restasis® as well as $164.0 million related to other Dry Eye IPR&D assets obtained in the Allergan acquisition.
In the nine months ended September 30, 2017, the Company impaired the intangible asset related to Aczone® by $646.0 million as a result of recent market dynamics, including erosion in the brand acne market, an anticipated decline in the market outlook, and recent generic entrants. In the nine months ended September 30, 2017, IPR&D impairments included $486.0 million related to an anticipated approval delay due to certain product specifications for a CNS project obtained as part of the Allergan acquisition, a $91.3 million impairment of a women’s healthcare project based on the Company’s intention to divest the non-strategic asset, a $278.0 million impairment due to a delay in anticipated launch of a women’s healthcare project coupled with an anticipated decrease in product demand, a $44.0 million impairment due to a decrease in projected cash flows due to a decline in market demand assumptions of an eye care project obtained as part of the Allergan acquisition, a $20.0 million impairment of an eye care project obtained as part of the Allergan acquisition and a $17.0 million of a medical aesthetics project obtained as part of the Allergan acquisition. In addition, the Company terminated its License, Transfer and Development Agreement for SER-120 (nocturia) with Serenity Pharmaceuticals, LLC which resulted in an impairment of $140.0 million.
During the nine months ended September 30, 2016, the Company recorded an impairment of an international eye care pipeline project of $35.0 million based on a decrease in projected cash flows due to market conditions as well as an impairment of $20.0 million for a specified indication of a Botox® therapeutic product based on a decrease in projected cash flows due to a decline in market demand assumptions. In addition, during the nine months ended September 30, 2016, the Company impaired IPR&D projects relating to women’s healthcare of $24.0 million and osteoarthritis of approximately $190.0 million based on clinical trial results. Also in the nine months ended September 30, 2016, the Company recorded a $42.0 million IPR&D impairments on a gastroenterology project based on the lack of future availability of active pharmaceutical ingredients.
Asset sales and impairments, net in the nine months ended September 30, 2016, included the gain on the sale of certain investments.
Interest Income
Interest income in the nine months ended September 30, 2017 and 2016 was as follows:
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Interest income |
| $ | 53.0 |
|
| $ | 23.5 |
|
| $ | 29.5 |
|
|
| 125.5 | % |
Interest income in the nine months ended September 30, 2017 increased versus the nine months ended September 30, 2016 resulting from the investment of proceeds received in the Teva Transaction.
Interest expense consisted of the following components in the nine months ended September 30, 2017 and 2016:
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Fixed Rate Notes |
| $ | 791.6 |
|
| 855.9 |
|
| $ | (64.3 | ) |
|
| (7.5 | )% | |
Floating Rate Notes |
|
| 18.7 |
|
| 17.6 |
|
|
| 1.1 |
|
|
| 6.2 | % | |
Euro Denominated Notes |
|
| 11.3 |
|
|
| - |
|
|
| 11.3 |
|
| n.a. |
| |
Term loan indebtedness |
|
| - |
|
| 116.2 |
|
|
| (116.2 | ) |
|
| (100.0 | )% | |
Revolving Credit Facility |
|
| - |
|
| 2.6 |
|
|
| (2.6 | ) |
|
| (100.0 | )% | |
Other |
|
| 10.7 |
|
| 10.6 |
|
|
| 0.1 |
|
|
| 0.9 | % | |
Interest expense |
| $ | 832.3 |
|
| $ | 1,002.9 |
|
| $ | (170.6 | ) |
|
| (17.0 | )% |
Interest expense in the nine months ended September 30, 2017 decreased versus the nine months ended September 30, 2016 due to the pay down of term loan indebtedness with use of proceeds received in the Teva Transaction as well as scheduled maturities and early debt extinguishment of senior secured notes.
Other (expense) income, net
Other (expense) income, net consisted of the following components in the nine months ended September 30, 2017 and 2016:
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
Net income impact of other-than-temporary loss on investment in Teva securities |
| $ | (3,273.5 | ) |
| $ | - |
|
| $ | (3,273.5 | ) |
| n.a. |
| |
Debt extinguishment costs as part of the debt tender offer |
|
| (161.5 | ) |
|
| - |
|
|
| (161.5 | ) |
| n.a. |
| |
Dividend income |
|
| 76.7 |
|
|
| 34.1 |
|
|
| 42.6 |
|
|
| 124.9 | % |
Naurex recovery |
|
| 20.0 |
|
|
| - |
|
|
| 20.0 |
|
| n.a. |
| |
Pfizer termination fee (Allergan plc only) |
|
| - |
|
|
| 150.0 |
|
|
| (150.0 | ) |
|
| (100.0 | )% |
Other (expense) income, net |
|
| (28.3 | ) |
|
| 0.1 |
|
|
| (28.4 | ) |
| n.m. |
| |
Other (expense) income, net |
| $ | (3,366.6 | ) |
| $ | 184.2 |
|
| $ | (3,550.8 | ) |
| n.a. |
| |
Teva Securities
The closing Teva Transaction date opening stock price discounted at a rate of 5.9 percent due to the lack of marketability was used to initially value the shares. At March 31, 2017, the Company determined that the decline in value since August 2, 2016 was other-than-temporary. At March 31, 2017, the Company impaired the value of its investment by $1,978.0 million as a component of other (expense) income. At September 30, 2017, the Company determined that the decline in value since March 31, 2017 was also other-than-temporary. As a result, the Company impaired the value of its investment by $1,295.5 million at September 30, 2017 as a component of other (expense) income. The determinations were made based on the amount of time that the stock price had been below the initial value, intentions regarding the potential holding period of the shares, and the materiality of the decline in share price. The Company will continue to monitor the share price and additional impairments to the investment may occur.
Debt Extinguishment
In the nine months ended September 30, 2017, the Company repaid $2,843.3 million of senior notes. As a result of the extinguishment, the Company recognized a loss of $161.5 million, within “Other income/ (expense)” for the early tender payment and non-cash write-off of premiums and debt fees related to the repurchased notes, including $170.5 million of a make-whole premium.
Dividend income
As a result of the Teva Transaction, the Company acquired 100.3 million Teva ordinary shares. During the nine months ended September 30, 2017 and 2016, the Company received dividend income of $76.7 million and $34.1 million, respectively.
Other-than-temporary impairments
The Company recorded other-than-temporary impairment charges on other equity investments and cost method investments of $26.1 million in the nine months ended September 30, 2017.
Naurex Recovery
On August 28, 2015, the Company acquired certain products in early stage development of Naurex, Inc. (“Naurex”) in an all-cash transaction, which was accounted for as an asset acquisition (the “Naurex Transaction”). The Company received a purchase price reduction of $20.0 million in the nine months ended September 30, 2017 based on the settlement of an open contract negotiation.
Pfizer termination fee
In the nine months ended September 30, 2016, the Company received a payment of $150.0 million from Pfizer Inc. (“Pfizer”) for reimbursement of expenses associated with the termination of a merger agreement between the Company and Pfizer which is reported as other income.
(Benefit) for Income Taxes
|
| Nine Months Ended September 30, |
|
| Change |
| ||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
|
| Dollars |
|
| % |
| ||||
(Benefit) for income taxes |
| $ | (2,752.1 | ) |
| $ | (825.8 | ) |
| $ | (1,926.3 | ) |
|
| 233.3 | % |
Effective tax rate |
|
| 27.6 | % |
|
| 48.0 | % |
|
|
|
|
|
|
|
|
The Company’s effective tax rate for the nine months ended September 30, 2017 was 27.6% compared to 48.0% for the nine months ended September 30, 2016. The effective tax rate for the nine months ended September 30, 2017 was favorably impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses, including the impairment of intangible assets, tax benefited at rates greater than the Irish statutory rate. The tax benefits related to the impairment of intangible assets recorded during the nine months ended September 30, 2017 were $1,805.9 million. The effective tax rate was unfavorably impacted by pre-tax charges for the impairment of the Company’s investment in Teva Shares of $3,273.5 million and the tax impact of amortization of intangible assets, both at rates less than the Irish statutory rate. During the nine months ended September 30, 2017, the Company determined that a temporary difference related to excess tax over book basis in a U.S. subsidiary will reverse in the foreseeable future and recorded a corresponding tax benefit of $175.0 million.
The effective tax rate for the nine months ended September 30, 20162018 was favorably impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. This was offset by the additional U.S. tax on the earnings of certain non-U.S. subsidiaries which are considered Global Intangible Low Taxed Income (“GILTI”) and the tax impact of amortization of intangible assets at rates less than the Irish statutory rate. Additionally, the tax benefit for the ninethree months ended SeptemberJune 30, 20162018 included tax benefits due to the following items: an expenseimpairment of $179.5 million primarily related to a change in a valuation allowance on a portion of U.S. capital loss carryforwards resulting from restructuring associated with the sale of the global generics business, a benefit of $48.2 millioncertain intangible assets offset by tax detriments related to the change in tax rates applicable to certain temporary differences, a benefitintegration of $40.3 millionacquired assets and investments sold and held for the recognition of previously unrecognized tax benefits and a benefit of $37.9 million for the New Jersey Grow income tax credit.sale.
The effective tax rate for the ninethree months ended SeptemberJune 30, 2017 as2019 was less favorable compared to the ninethree months ended SeptemberJune 30, 20162018 primarily due to the goodwill impairment with no associated tax benefits and the tax charge for a valuation allowance.
Six Months Ended June 30, 2019 and 2018
The Company’s effective tax rate for the six months ended June 30, 2019 was a provision of 5.9%, compared to a benefit of 47.7% for the six months ended June 30, 2018. The effective tax rate for the six months ended June 30, 2019 was favorably impacted by tax benefits of $118.0 million related to excess tax over book basis in a U.S. subsidiary that will reverse in the foreseeable future, $50.8 million for a U.S. capital loss and $107.3 million related to the impairment chargesof certain intangible assets. The effective tax rate was unfavorably impacted by a tax charge of $375.0 million to establish a valuation allowance on certain non-U.S. deferred tax assets, $49.0 million related to an uncertain tax position and the goodwill impairment charge of $3,552.8 million, for which no tax benefit was recorded.
The effective tax rate for the six months ended June 30, 2018 was favorably impacted by income earned in jurisdictions with tax rates lower than the Irish statutory rate and U.S. losses tax benefited at rates greater than the Irish statutory rate. This was offset by the additional U.S. tax on the earnings of certain non-U.S. subsidiaries which are considered GILTI and the tax impact of amortization of intangible assets at rates less than the Irish statutory rate. Additionally, the tax benefit for the six months ended June 30, 2018 included tax benefits of $421.9 million related to the restructuring of an acquired business, $231.0 million related to the impairment of certain intangible assets and $79.8 million related to excess tax over book basis in a U.S. subsidiary expected to reverse in the foreseeable future. This was partially offset by tax detriments of $21.2 million for the gain on sale of investments and $25.9 million related to a change in the applicable tax rate on certain temporary differences.
The effective tax rate for the six months ended June 30, 2019 was less favorable rate.
Discontinued Operations
On July 27, 2015, the Company announced that it entered into the Teva Transaction, which closed on August 2, 2016. On October 3, 2016, the Company completed the divestiture of the Anda Distribution business for $500.0 million.
The Company notes the following reconciliation of the proceeds received in the Teva Transactioncompared to the gain recognized in income from discontinued operations for the ninesix months ended SeptemberJune 30, 2016 ($ in millions):
Net cash proceeds received |
| $ | 33,304.5 |
|
August 2, 2016 fair value of Teva shares |
|
| 5,038.6 |
|
Total Proceeds |
| $ | 38,343.1 |
|
Net assets sold to Teva, excluding cash |
|
| (12,076.7 | ) |
Other comprehensive income disposed |
|
| (1,544.8 | ) |
Deferral of proceeds relating to additional elements of agreements with Teva |
|
| (518.9 | ) |
Pre-tax gain on sale of generics business |
| $ | 24,202.7 |
|
Income taxes |
|
| (8,321.2 | ) |
Net gain on sale of generics business |
| $ | 15,881.5 |
|
Financial results of2018 primarily due to the global generics businessgoodwill impairments with no associated tax benefits, the tax charge for a valuation allowance and the Anda Distribution business are presented as "(Loss) / Income from discontinued operations, netabsence of tax” on the Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016. The loss from discontinued operations, net ofcertain discrete tax of $6.1 million and $17.6 million, respectively,benefits recorded in the three and nine months ended September 30, 2017, primarily related to ongoing matters with respect to the Teva Transaction. 2018.
The following table presents key financial results of the businesses included in "(Loss) / Income from discontinued operations" for the three and nine months ended September 30, 2016 ($ in millions):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||
|
| 2016 |
|
| 2016 |
| ||
Net revenues |
| $ | 756.5 |
|
| $ | 4,504.3 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Cost of sales (excludes amortization and impairment of acquired intangibles including product rights) |
|
| 531.0 |
|
|
| 2,798.3 |
|
Research and development |
|
| 37.3 |
|
|
| 269.6 |
|
Selling and marketing |
|
| 69.1 |
|
|
| 352.6 |
|
General and administrative |
|
| 90.3 |
|
|
| 399.4 |
|
Amortization |
|
| - |
|
|
| 4.8 |
|
Total operating expenses |
|
| 727.7 |
|
|
| 3,824.7 |
|
Operating income |
|
| 28.8 |
|
|
| 679.6 |
|
Other (expense) income, net |
|
| 15,881.5 |
|
|
| 15,881.1 |
|
Provision for income taxes |
|
| 308.4 |
|
|
| 687.5 |
|
Net income from discontinued operations |
| $ | 15,601.9 |
|
| $ | 15,873.2 |
|
Liquidity and Capital Resources
Working Capital Position
Working capital at SeptemberJune 30, 20172019 and December 31, 20162018 is summarized as follows:follows ($ in millions):
| September 30, |
|
| December 31, |
|
| Increase |
| June 30, |
|
| December 31, |
|
| Increase |
| ||||||
($ in millions): | 2017 |
|
| 2016 |
|
| (Decrease) |
| ||||||||||||||
| 2019 |
|
| 2018 |
|
| (Decrease) |
| ||||||||||||||
Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents | $ | 1,612.7 |
|
| $ | 1,724.0 |
|
| $ | (111.3 | ) | $ | 1,651.4 |
|
| $ | 880.4 |
|
| $ | 771.0 |
|
Marketable securities |
| 3,829.1 |
|
|
| 11,501.5 |
|
|
| (7,672.4 | ) |
| 322.3 |
|
|
| 1,026.9 |
|
|
| (704.6 | ) |
Accounts receivable, net |
| 2,808.6 |
|
|
| 2,531.0 |
|
|
| 277.6 |
|
| 3,086.3 |
|
|
| 2,868.1 |
|
|
| 218.2 |
|
Inventories |
| 899.8 |
|
|
| 718.0 |
|
|
| 181.8 |
|
| 1,004.5 |
|
|
| 846.9 |
|
|
| 157.6 |
|
Current assets held for sale |
| - |
|
|
| 34.0 |
|
|
| (34.0 | ) | |||||||||||
Prepaid expenses and other current assets |
| 962.6 |
|
|
| 1,383.4 |
|
|
| (420.8 | ) |
| 2,508.3 |
|
|
| 819.1 |
|
|
| 1,689.2 |
|
Total current assets |
| 10,112.8 |
|
|
| 17,857.9 |
|
|
| (7,745.1 | ) |
| 8,572.8 |
|
|
| 6,475.4 |
|
|
| 2,097.4 |
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses | $ | 4,541.7 |
|
| $ | 5,019.0 |
|
| $ | (477.3 | ) | $ | 4,995.3 |
|
| $ | 4,787.2 |
|
| $ | 208.1 |
|
Income taxes payable |
| 221.1 |
|
|
| 57.8 |
|
|
| 163.3 |
|
| 91.0 |
|
|
| 72.4 |
|
|
| 18.6 |
|
Current portion of long-term debt and capital leases |
| 3,797.0 |
|
|
| 2,797.9 |
|
|
| 999.1 |
| |||||||||||
Current portion of long-term debt |
| 3,094.2 |
|
|
| 868.3 |
|
|
| 2,225.9 |
| |||||||||||
Current portion of lease liability - operating |
| 123.2 |
|
|
| - |
|
|
| 123.2 |
| |||||||||||
Total current liabilities |
| 8,559.8 |
|
|
| 7,874.7 |
|
|
| 685.1 |
|
| 8,303.7 |
|
|
| 5,727.9 |
|
|
| 2,575.8 |
|
Working Capital | $ | 1,553.0 |
|
| $ | 9,983.2 |
|
| $ | (8,430.2 | ) | $ | 269.1 |
|
| $ | 747.5 |
|
| $ | (478.4 | ) |
Current Ratio |
| 1.18 |
|
|
| 2.27 |
|
|
|
|
|
| 1.03 |
|
|
| 1.13 |
|
|
|
|
|
Working capital decreased $8,430.2 millionmovements were primarily due to the following uses of working capital:following:
• | The Company generated cash flows from operations of $2,644.3 million; |
• | The Company paid dividends of $488.8 million and repurchased ordinary shares of $833.5 million in the six months ended June 30, 2019; |
• | The Company repaid the scheduled maturity of the €700.0 million floating rate notes due June 1, 2019, repurchased $249.8 million face value of senior notes through open market debt purchases and had senior notes of $3,026.0 million classified as current based on their maturity date as of June 30, 2019; and |
• | The increase in other current assets relates to a reclassification of a $1.6 billion income tax receivable from other non-current assets. |
Cash Flows
The Company acquired LifeCell for $2,874.4 million, net ofCompany’s cash acquired,flows are summarized as follows ($ in the nine months ended September 30, 2017, which primarily is reflected in long-term assets and liabilities;
The Company acquired Zeltiq for $2,368.7 million, net of cash acquired, in the nine months ended September 30, 2017, which primarily is reflected in long-term assets and liabilities;
The Company repaid $2,700.0 million of indebtedness which were maturing during 2017 in the nine months ended September 30, 2017 and reclassified $3,750.0 million of indebtedness from long-term liabilities to current liabilities;
A decrease in the value of Teva securities of $1,674.1 million;
The Company utilized cash and cash equivalents to pay dividends in the nine months ended September 30, 2017 of $917.0 million and to purchase intangible assets of $604.3 million; and
A decrease in income tax receivables of $448.7 million as the amount prepaid in the year ended December 31, 2016 begins to be realized.
Cash Flows from Operations
Summarized cash flow from operations is as follows:millions):
|
| Nine Months Ended September 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||
($ in millions) |
| 2017 |
|
| 2016 |
| ||||||||||||||
|
| 2019 |
|
| 2018 |
|
| $ Change |
| |||||||||||
Net cash provided by operating activities |
| $ | 3,825.0 |
|
| $ | 1,535.2 |
|
| $ | 2,644.3 |
|
| $ | 2,698.5 |
|
| $ | (54.2 | ) |
Net cash provided by investing activities |
| $ | 462.6 |
|
| $ | 3,634.4 |
|
| $ | (3,171.8 | ) | ||||||||
Net cash (used in) financing activities |
| $ | (2,338.6 | ) |
| $ | (6,490.4 | ) |
| $ | 4,151.8 |
| ||||||||
Cash flows from operations represent net income adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities increased $2,289.8 millionremained relatively consistent in the ninesix months ended SeptemberJune 30, 20172019 versus the prior year period, due primarily to $2,571.7 million in cash tax payments made in connection with the sale of the generics business in the nine months ended September 30, 2016. Excluding this payment, cash flows from operations decreased $281.9 million. The nine months ended September 30, 2016 included the contribution of the former Generics Business and Anda Distribution Business.period.
Management expects that available cash balances and the remaining 20172019 cash flows from operating activities will provide sufficient resources to fund our operating liquidity needs and expected 2017 capital expenditure funding requirements.requirements for at least the next twelve months.
Our cash flows from investing activities are summarized as follows:
|
| Nine Months Ended September 30, |
| |||||
($ in millions) |
| 2017 |
|
| 2016 |
| ||
Net cash provided by / (used in) investing activities |
| $ | (82.3 | ) |
| $ | 17,607.3 |
|
Investing cash flows consist primarily of cash used in acquisitions of businesses and intangible assets (primarily product rights), capital expenditures and purchases of investments and marketable securities partially offset by proceeds fromfor the sale of a business, investments and marketable securities. Included in the ninesix months ended SeptemberJune 30, 2017 was2019 reflect the net cash provided by the net sale of marketable securitiesinvestments of $6,040.6$723.8 million offset, in part, by the cash purchasesused in acquisitions of LifeCellbusinesses of $80.6 million. Investing cash flows for $2,874.4 million and Zeltiq of $2,346.7 million, net of cash acquired, and the purchase of intangible assets of $604.3 million. Included in the ninesix months ended SeptemberJune 30, 2016 were2018 reflect the net cash proceeds received fromprovided by the net sale of the generics business to Tevainvestments of $33,304.5$4,140.4 million offset, in part, by purchasespayments to settle Teva related matters of marketable securities of $15,445.5 million, cash used for capital expenditures of $250.5 million and cash used in connection with the ForSight Acquisition of $74.5$466.0 million.
Financing Cash Flows
Our cash flows from financing activities are summarized as follows:
|
| Nine Months Ended September 30, |
| |||||
($ in millions) |
| 2017 |
|
| 2016 |
| ||
Net cash (used in) financing activities |
| $ | (3,873.1 | ) |
| $ | (12,688.1 | ) |
Financing cash flows consist primarily of borrowings and repayments of debt, repurchases of ordinary shares, dividend payments and proceeds from the exercise of stock options. Cash used in financing activities in the ninesix months ended SeptemberJune 30, 20172019 primarily related to the repayment of indebtedness of $5,579.2$1,039.1 million, which included debt repurchased under the tender offer completed on May 30, 2017repurchase of ordinary shares of $833.5 million and the early redemption of certain debt securities, the payment of dividends of $917.0 million and payments relating to contingent consideration and other financing of $515.2 million, offset, in part by the long-term borrowings of $3,025.0$488.8 million. Cash used in financing activities in the ninesix months ended SeptemberJune 30, 2016 included payments2018 primarily related to the repayment of debtindebtedness of $10,831.0$5,366.8 million, contingent consideration of $77.7 million, dividends of $208.8 million and the repurchase of ordinary shares of $2,758.6$1,572.1 million, including $2,689.9the payment of dividends of $563.7 million repurchased under the Company’s share repurchase program,and payments to settle Teva related matters of $234.0 million, which was outstanding greater than one year, offset, in part, by borrowings under the credit facility of $1,050.0 million.
Total debt and capital leases consisted of the following ($ in millions):
|
| Balance As of |
|
| Fair Market Value As of |
| ||||||||||
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||
Senior Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating Rate Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$500.0 million floating rate notes due March 12, 2018 * |
| $ | 500.0 |
|
| $ | 500.0 |
|
| $ | 501.8 |
|
| $ | 502.5 |
|
$500.0 million floating rate notes due March 12, 2020 ** |
|
| 500.0 |
|
|
| 500.0 |
|
|
| 509.0 |
|
|
| 509.4 |
|
|
|
| 1,000.0 |
|
|
| 1,000.0 |
|
|
| 1,010.8 |
|
|
| 1,011.9 | �� |
Fixed Rate Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,000.0 million 1.850% notes due March 1, 2017 |
|
| - |
|
|
| 1,000.0 |
|
|
| - |
|
|
| 1,001.1 |
|
$500.0 million 1.300% notes due June 15, 2017 |
|
| - |
|
|
| 500.0 |
|
|
| - |
|
|
| 499.7 |
|
$1,200.0 million 1.875% notes due October 1, 2017 |
|
| - |
|
|
| 1,200.0 |
|
|
| - |
|
|
| 1,202.5 |
|
$3,000.0 million 2.350% notes due March 12, 2018 |
|
| 3,000.0 |
|
|
| 3,000.0 |
|
|
| 3,008.9 |
|
|
| 3,018.0 |
|
$250.0 million 1.350% notes due March 15, 2018 |
|
| 250.0 |
|
|
| 250.0 |
|
|
| 249.4 |
|
|
| 248.4 |
|
$1,050.0 million 4.375% notes due February 1, 2019 |
|
| 350.0 |
|
|
| 1,050.0 |
|
|
| 361.0 |
|
|
| 1,090.0 |
|
$500.0 million 2.450% notes due June 15, 2019 |
|
| 500.0 |
|
|
| 500.0 |
|
|
| 503.5 |
|
|
| 501.2 |
|
$400.0 million 6.125% notes due August 14, 2019 |
|
| 400.0 |
|
|
| 400.0 |
|
|
| 430.0 |
|
|
| 437.7 |
|
$3,500.0 million 3.000% notes due March 12, 2020 |
|
| 3,500.0 |
|
|
| 3,500.0 |
|
|
| 3,562.8 |
|
|
| 3,541.8 |
|
$650.0 million 3.375% notes due September 15, 2020 |
|
| 650.0 |
|
|
| 650.0 |
|
|
| 668.5 |
|
|
| 663.6 |
|
$750.0 million 4.875% notes due February 15, 2021 |
|
| 450.0 |
|
|
| 750.0 |
|
|
| 485.1 |
|
|
| 803.3 |
|
$1,200.0 million 5.000% notes due December 15, 2021 |
|
| 1,200.0 |
|
|
| 1,200.0 |
|
|
| 1,317.3 |
|
|
| 1,297.7 |
|
$3,000.0 million 3.450% notes due March 15, 2022 |
|
| 3,000.0 |
|
|
| 3,000.0 |
|
|
| 3,102.0 |
|
|
| 3,030.7 |
|
$1,700.0 million 3.250% notes due October 1, 2022 |
|
| 1,700.0 |
|
|
| 1,700.0 |
|
|
| 1,740.5 |
|
|
| 1,693.1 |
|
$350.0 million 2.800% notes due March 15, 2023 |
|
| 350.0 |
|
|
| 350.0 |
|
|
| 348.5 |
|
|
| 335.6 |
|
$1,200.0 million 3.850% notes due June 15, 2024 |
|
| 1,200.0 |
|
|
| 1,200.0 |
|
|
| 1,255.3 |
|
|
| 1,211.7 |
|
$4,000.0 million 3.800% notes due March 15, 2025 |
|
| 4,000.0 |
|
|
| 4,000.0 |
|
|
| 4,146.3 |
|
|
| 3,995.6 |
|
$2,500.0 million 4.550% notes due March 15, 2035 |
|
| 2,500.0 |
|
|
| 2,500.0 |
|
|
| 2,658.6 |
|
|
| 2,458.5 |
|
$1,000.0 million 4.625% notes due October 1, 2042 |
|
| 456.7 |
|
|
| 1,000.0 |
|
|
| 479.3 |
|
|
| 967.6 |
|
$1,500.0 million 4.850% notes due June 15, 2044 |
|
| 1,500.0 |
|
|
| 1,500.0 |
|
|
| 1,637.7 |
|
|
| 1,496.4 |
|
$2,500.0 million 4.750% notes due March 15, 2045 |
|
| 1,200.0 |
|
|
| 2,500.0 |
|
|
| 1,300.8 |
|
|
| 2,466.9 |
|
|
|
| 26,206.7 |
|
|
| 31,750.0 |
|
|
| 27,255.5 |
|
|
| 31,961.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro Denominated Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
€750.0 million 0.500% notes due June 1, 2021 |
|
| 884.0 |
|
|
| - |
|
|
| 887.4 |
|
|
| - |
|
€700.0 million 1.250% notes due June 1, 2024 |
|
| 825.0 |
|
|
| - |
|
|
| 832.0 |
|
|
| - |
|
€550.0 million 2.125% notes due June 1, 2029 |
|
| 648.2 |
|
|
| - |
|
|
| 662.2 |
|
|
| - |
|
€700.0 million floating rate notes due June 1, 2019 *** |
|
| 825.0 |
|
|
| - |
|
|
| 825.6 |
|
|
| - |
|
|
|
| 3,182.2 |
|
|
| - |
|
|
| 3,207.2 |
|
|
| - |
|
Total Senior Notes Gross |
|
| 30,388.9 |
|
|
| 32,750.0 |
|
|
| 31,473.5 |
|
|
| 32,973.0 |
|
Unamortized premium |
|
| 104.1 |
|
|
| 171.2 |
|
|
| - |
|
| - |
| |
Unamortized discount |
|
| (84.8 | ) |
|
| (95.8 | ) |
|
| - |
|
| - |
| |
Total Senior Notes Net |
|
| 30,408.2 |
|
|
| 32,825.4 |
|
|
| 31,473.5 |
|
|
| 32,973.0 |
|
Other Indebtedness |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Issuance Costs |
|
| (126.6 | ) |
|
| (144.6 | ) |
|
|
|
|
|
|
|
|
Other |
|
| 51.8 |
|
|
| 85.5 |
|
|
|
|
|
|
|
|
|
Total Other Borrowings |
|
| (74.8 | ) |
|
| (59.1 | ) |
|
|
|
|
|
|
|
|
Capital Leases |
|
| 2.7 |
|
|
| 2.4 |
|
|
|
|
|
|
|
|
|
Total Indebtedness |
| $ | 30,336.1 |
|
| $ | 32,768.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value in the table above is determined in accordance with ASC Topic 820 “Fair Value Measurement” (“ASC 820”) under Level 2 based upon quoted prices for similar items in active markets.
The Company has issued fixed rate notes over multiple issuances for various business needs. Interest on the various U.S. dollar denominated fixed rate and floating notes is generally payable semi-annually and quarterly, respectively with various payment dates. Interest on the various Euro denominated fixed rate and floating rate notes is generally payable annually and quarterly, respectively, with various payment dates.
Euro Denominated Notes
On May 26, 2017, Allergan Funding SCS, a limited partnership (société en commandite simple) organized under the laws of the Grand Duchy of Luxembourg and an indirect wholly-owned subsidiary of Allergan plc, issued a €700.0 million floating rate notes due 2019 (the “2019 Floating Rate Notes”), €700.0 million 0.500% notes due 2021 (the “0.500% 2021 Notes”), €750.0 million 1.250% notes due 2024 (the “1.250% 2024 Notes”), and €550.0 million 2.125% notes due 2029 (the “2.125% 2029 Notes”), collectively the “Euro Denominated Notes”. The notes are fully and unconditionally guaranteed by Allergan Funding SCS’s indirect parents, Warner Chilcott Limited and Allergan Capital S.a.r.l. (“Allergan Capital”), and by Allergan Finance, LLC, a subsidiary of Allergan Capital, on an unsecured and unsubordinated basis.
Interest on the 2019 Floating Rate Notes is payable quarterly on March 1, June 1, September 1 and December 1 of each year, and began on September 1, 2017. Interest on the 0.500% 2021 Notes, the 1.250% 2024 Notes, and the 2.125% 2029 Notes is payable annually on June 1 of each year and will begin on June 1, 2018.
These notes were issued to fund, in part, the payment of the tender offers described below.
Repayments
Tender Offer
On May 30, 2017, the Company’s wholly owned subsidiaries Allergan Funding SCS, Allergan Finance LLC, Forest Laboratories, LLC and Allergan, Inc., each as co-offeror with Warner Chilcott Limited, completed the repurchase of certain debt securities issued by the entities for cash under a previously announced tender offer. As a result of the offering, the Company repurchased $300.0 million of the $750.0 million 4.875% notes due February 15, 2021, $543.3 million of the $1,000.0 million 4.625% notes due October 1, 2042, $700.0 million of the $1,050.0 million 4.375% notes due February 1, 2019, and $1,300.0 million of the $2,500.0 million 4.750% notes due March 15, 2045. The Company paid a total of $3,013.8 million, which included an early tender payment, to repurchase the notes of $170.5 million in cash. The Company recognized a net expense of $161.5 million within “Other income/ (expense)” for the early tender payment and non-cash write-off of premiums and debt fees related to the repurchased notes.
Other Activity
The $800.0 million 5.750% fixed rate notes due April 1, 2016 were paid in full at maturity.
The $500.0 million floating rate notes due September 1, 2016 were paid in full at maturity and bore interest at the three-month LIBOR plus 0.875%.
The $1,000.0 million 1.850% senior notes due March 1, 2017 were paid in full at maturity.
The $500.0 million 1.300% senior notes due June 15, 2017 were redeemed and paid in full on April 21, 2017.
The $1,200.0 million 1.875% senior notes due October 1, 2017 were redeemed and paid in full on June 29, 2017.
Credit Facility Indebtedness
On August 2, 2016, the Company repaid the remaining balances of all outstanding term-loan indebtedness and terminated its then-existing revolving credit facility withand other borrowings of $709.0 million and proceeds from the forward sale of Teva Transaction. The interest expense on the then-outstanding indebtedness in the nine months ended September 30, 2016 was $116.2shares of $465.5 million.
Revolving Credit Facility
On June 14, 2017, Allergan plc and certain of its subsidiaries entered into a revolving credit and guaranty agreement (the “Revolver Agreement”) among Allergan Capital, as borrower; Allergan plc, as Ultimate Parent; Warner Chilcott Limited, as Intermediate Parent and Subsidiary Guarantor; Allergan Finance LLC., Allergan Funding SCS, as Subsidiary Guarantors; the lenders from time to time party thereto (the “Revolving Lenders”), J.P. Morgan Chase Bank as Administrative Agent; J.P. Morgan Europe Limited, as London Agent; and the other financial institutions party thereto. Under the Revolver Agreement, the Revolving Lenders have committed to provide an unsecured five-year revolving credit facility in an aggregate principal amount of up to $1.5 billion with the ability to increase the revolving credit facility by $500.0 million to an aggregate principal amount of up to $2.0 billion.
The Revolver Agreement provides that loans thereunder would bear interest, at our choice, of a per annum rate equal to either (a) a base rate, plus an applicable margin per annum varying from 0.00% per annum to 1.00% per annum depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from 0.875% per annum to 2.00% per annum depending on the Debt Rating. Additionally, to maintain availability of funds, the Company pays an unused commitment fee, which according to the pricing grid is set at 0.070% to 0.250% per annum, depending on the Debt Rating, of the unused portion of the revolver.
The obligations under the Revolver Agreement were guaranteed by Warner Chilcott Limited, Allergan Finance LLC and Allergan Funding SCS.
The Revolver Agreement contains customary affirmative covenants for facilities of this type, including, among others, covenants pertaining to the delivery of financial statements, notices of default, maintenance of corporate existence and rights and compliance with laws, as well as customary negative covenants for facilities of this type, including, among others, limitations secured indebtedness, non-guarantor subsidiary indebtedness, mergers and certain other fundamental changes and passive holding company status. The Revolver Agreement also contains a financial covenant requiring maintenance of a maximum consolidated leverage ratio.
In addition, the Revolver Agreement also contains customary events of default (with customary grace periods and materiality thresholds) and if and for so long as an event of default has occurred and is continuing, any amounts outstanding under the Revolver Agreement will accrue interest at an increased rate, the Revolving Lenders can terminate their commitments thereunder and payments of any outstanding amounts could be accelerated by the Revolving Lenders.
The Company was subject to, and as of September 30, 2017 was in compliance with all, financial and operational covenants under the terms of the Revolver Agreement. At September 30, 2017, there were no outstanding borrowings or letter of credits outstanding under the Revolver Agreement.
Long-term obligations
The following table lists certain of our enforceable and legally binding obligations resulting from collaboration agreements as of SeptemberJune 30, 2017.2019. Certain amounts included herein are based on management’s estimates and assumptions about these obligations, including their duration, the possibility of renewal of lease agreements, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the enforceable and legally binding obligation we will actually pay in future periods may vary from those reflected in the table.
In addition, suchThe following is a summary of select contractual commitments as of June 30, 2019, including amounts accrued as of the balance sheet date to be paid in future periods ($ in millions):
|
| Payments Due by Period |
| |||||||||||||||||
|
| Total |
|
| Six Months Ending December 31, 2019 |
|
| 2020-2021 |
|
| 2022-2023 |
|
| Thereafter |
| |||||
Sales based and other milestone obligations |
|
| 10,197.9 |
|
|
| 9.0 |
|
|
| 53.0 |
|
|
| 416.0 |
|
|
| 9,719.9 |
|
R&D / approval milestone obligations |
|
| 6,010.8 |
|
|
| 133.7 |
|
|
| 982.5 |
|
|
| 624.5 |
|
|
| 4,270.1 |
|
Total |
| $ | 16,208.7 |
|
| $ | 142.7 |
|
| $ | 1,035.5 |
|
| $ | 1,040.5 |
|
| $ | 13,990.0 |
|
The table above reflects the anticipated timing of R&D and approval related milestones and sales based milestones. Certain agreements also include royalties based on commercial sales which are excluded from the table above. The following are contractual commitments relating to the R&D and approval related milestones and sales based milestones ($ in millions):
Transaction |
| Product |
| Maximum Milestones |
|
| R&D / Approval Milestones |
|
| Sales Based and Other Milestones |
| |||
Heptares Therapeutics, Ltd |
| Neurological disorders |
| $ | 3,224.5 |
|
| $ | 649.5 |
|
| $ | 2,575.0 |
|
Assembly Biosciences, Inc. |
| Gastrointestinal products |
|
| 2,459.0 |
|
|
| 1,069.0 |
|
|
| 1,390.0 |
|
AstraZeneca plc License |
| Brazikumab |
|
| 1,250.0 |
|
|
| 210.0 |
|
|
| 1,040.0 |
|
Akarna Therapeutics, Ltd |
| Inflammatory and fibrotic diseases |
|
| 965.0 |
|
|
| 590.0 |
|
|
| 375.0 |
|
Tobira Therapeutics, Inc. |
| Cenicriviroc |
|
| 800.1 |
|
|
| 400.1 |
|
|
| 400.0 |
|
Chase Pharmaceuticals Corporation |
| Neurodegenerative disorders |
|
| 800.0 |
|
|
| 250.0 |
|
|
| 550.0 |
|
Merck & Co. |
| Ubrogepant & Atogepant |
|
| 750.0 |
|
|
| 320.0 |
|
|
| 430.0 |
|
Retrosense Therapeutics, LLC |
| RST-001 |
|
| 495.0 |
|
|
| 245.0 |
|
|
| 250.0 |
|
AqueSys, Inc. |
| Xen Gel Stent |
|
| 300.0 |
|
|
| - |
|
|
| 300.0 |
|
Topokine Therapeutics, Inc. |
| XAF5 |
|
| 260.0 |
|
|
| 110.0 |
|
|
| 150.0 |
|
Oculeve, Inc. |
| TrueTear® |
|
| 150.0 |
|
|
| 50.0 |
|
|
| 100.0 |
|
Forsight VISION5, Inc. |
| Bimatoprost Ring |
|
| 125.0 |
|
|
| 125.0 |
|
|
| - |
|
All Other |
|
|
|
| 4,630.1 |
|
|
| 1,992.2 |
|
|
| 2,637.9 |
|
Total |
|
|
| $ | 16,208.7 |
|
| $ | 6,010.8 |
|
| $ | 10,197.9 |
|
Such milestone payments will only be payable in the event that the Company achieves contractually defined, success-based milestones, such as:
• the advancement of the specified research and development programs;
• the receipt of regulatory approval for the specified compounds or products; and/or
• sales threshold of the specified compounds or products.
The following is a summary of contractual commitments as of September 30, 2017:
|
| Payment by Period |
| |||||||||||||||||
($ in millions): |
| Total |
|
| Three Months Ending December 31, 2017 |
|
| 2018-2019 |
|
| 2020-2021 |
|
| Thereafter |
| |||||
Sales based and other milestone obligations |
| $ | 10,057.1 |
|
| $ | 0.5 |
|
| $ | 25.5 |
|
| $ | 205.5 |
|
| $ | 9,825.6 |
|
R&D / approval milestone obligations |
|
| 6,012.6 |
|
|
| 7.3 |
|
|
| 648.0 |
|
|
| 1,037.7 |
|
|
| 4,319.6 |
|
Total |
| $ | 16,069.7 |
|
| $ | 7.8 |
|
| $ | 673.5 |
|
| $ | 1,243.2 |
|
| $ | 14,145.2 |
|
• | the advancement of the specified research and development programs; |
• | the receipt of regulatory approval for the specified compounds or products; and/or |
The table above reflects the anticipated timing of R&D and approval related milestones with sales based milestones included in the period thereafter as the achievement of sales targets is variable. Certain agreements also include royalties based on commercial sales. The following table lists the contractual commitments relating to these milestones ($ in millions):
Transaction |
| Product |
| Maximum Milestones |
|
| R&D / Approval Milestones |
|
| Sales Based and Other Milestones |
| |||
Heptares Therapeutics Ltd |
| Neurological disorders |
| $ | 3,224.5 |
|
| $ | 649.5 |
|
| $ | 2,575.0 |
|
Assembly Biosciences, Inc. |
| Gastrointestinal products |
|
| 2,379.0 |
|
|
| 989.0 |
|
|
| 1,390.0 |
|
AstraZeneca license |
| Brazikumab |
|
| 1,265.0 |
|
|
| 225.0 |
|
|
| 1,040.0 |
|
Akarna Therapeutics, Ltd. |
| Inflammatory and fibrotic diseases |
|
| 975.0 |
|
|
| 600.0 |
|
|
| 375.0 |
|
Tobira Therapeutics, Inc. |
| Cenicriviroc |
|
| 898.1 |
|
|
| 433.1 |
|
|
| 465.0 |
|
Chase Pharmaceuticals Corporation |
| Neurodegenerative disorders |
|
| 875.0 |
|
|
| 325.0 |
|
|
| 550.0 |
|
Merck & Co. |
| Ubrogepant & Atogepant |
|
| 865.0 |
|
|
| 435.0 |
|
|
| 430.0 |
|
Retrosense Therapeutics, LLC |
| RST-001 |
|
| 495.4 |
|
|
| 245.4 |
|
|
| 250.0 |
|
Naurex, Inc. |
| GLYX-13 |
|
| 475.0 |
|
|
| 75.0 |
|
|
| 400.0 |
|
Anterios, Inc. |
| Botulinum toxin type A |
|
| 387.5 |
|
|
| 207.5 |
|
|
| 180.0 |
|
AqueSys, Inc. |
| Xen Gel Stent |
|
| 300.0 |
|
| - |
|
|
| 300.0 |
| |
Topokine Therapeutics, Ltd |
| XAF5 |
|
| 260.0 |
|
|
| 110.0 |
|
|
| 150.0 |
|
Oculeve, Inc. |
| TrueTear™ |
|
| 200.0 |
|
|
| 100.0 |
|
|
| 100.0 |
|
Forsight VISION5, Inc. |
| Bimatoprost Ring |
|
| 125.0 |
|
|
| 125.0 |
|
| - |
| |
All Other |
|
|
|
| 3,345.2 |
|
|
| 1,493.1 |
|
|
| 1,852.1 |
|
Total |
|
|
| $ | 16,069.7 |
|
| $ | 6,012.6 |
|
| $ | 10,057.1 |
|
• | reaching a sales threshold of the specified compounds or products. |
Off-Balance Sheet Arrangements
We do not have any material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, net revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Available Information
From time to time, we use our website, our Facebook, Instagram, LinkedIn and Twitter accounts and other social media channels as additional means of disclosing public information to investors, the media and others interested in the Company. Additionally, our Chairman, President and Chief Executive Officer, Brent L. Saunders, and our Executive Vice President and Chief Commercial Officer, Bill Meury, may use similar social media channels to disclose public information. It is possible that certain information we post on our website and on social media could be deemed to be material information, and we encourage investors, the media and others interested in the Company to review the business and financial information we post on our website and on the social media channels identified above. The information on our website and those social media channels is not incorporated by reference into this Form 10-Q.
Cautionary note regarding forward-looking statements
Any statements made in this report that are not statements of historical fact or that refer to estimated or anticipated future events are “forward‑looking statements”, as contemplated in the Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “intend,” “could,” “would,” “should,” “estimate,” “continue,” or “pursue,” or the negative or other variations thereof or comparable terminology, are intended to identify forward‑looking statements. We have based our forward‑looking statements on management’s beliefs and assumptions based on information available to our management at the time these statements are made. Such forward‑looking statements reflect our current perspective of our business, future performance, existing trends and information as of the date of this filing. The statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. We caution the reader that these statements are based on certain assumptions, risks and uncertainties, many of which are beyond our control. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report.
Actual results may differ materially from our current expectations depending upon a number of factors affecting our business. These factors include, among others:
• | global economic and trade conditions; |
• | our ability to successfully develop and commercialize new products; |
• | uncertainty associated with the continued success of major products; |
• | generic product competition with our branded products; |
• | expiration of our patents on our branded products and the potential for increased competition from generic manufacturers; |
• | the highly competitive nature of the pharmaceutical industry; |
• | our ability to protect our technology rights, patents or other intellectual property; |
• | costs and efforts to defend or enforce technology rights, patents or other intellectual property; |
• | our ability to obtain and afford third-party licenses and proprietary technology that we need; |
• | our potential infringement of others’ proprietary rights; |
• | our dependency on third-party service providers and third-party manufacturers and suppliers that in some cases may be the only source of finished products or raw materials that we need; |
• | availability of raw materials and other key ingredients; |
• | our vulnerability to and ability to defend against product liability claims and obtain sufficient or any product liability insurance; |
• | difficulties or delays in manufacturing; |
• | the effect of regulation including our ability to comply with and operate successfully under regulatory regimes that apply to us, including healthcare and privacy regulations; |
• | uncertainty and costs of legal actions and government investigations; |
• | the difficulty of predicting the timing or outcome of product development efforts and regulatory agency approvals or actions, if any; |
• | our ability to successfully navigate consolidation of our distribution network and concentration of our customer base; |
• | risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs, and adverse tax consequences; |
• | the inherent uncertainty associated with financial projections; |
• | fluctuations in our operating results and financial conditions; |
• | the adverse impact of substantial debt and other financial obligations on the ability to fulfill and/or refinance debt obligations; |
• | the effect of goodwill and intangible assets and resulting impairment testing and impairment charges on our financial condition; |
• | our ability to obtain additional debt or raise additional equity on terms that are favorable to us; |
• | our ability to retain qualified employees and key personnel; |
• | risks associated with cyber-security and vulnerability of our information and employee, customer and business information that we store digitally; |
• | our ability to manage environmental liabilities; |
• | our ability to continue foreign operations in countries and to maintain global operations; |
• | uncertainty related to our dividend plan and share repurchase program; |
• | risks associated with tax liabilities, or changes in U.S. federal or international tax laws or tax rulings to which we and our affiliates are subject, including changes that impact our effective tax rate and the risk that the Internal Revenue Service disagrees that we are a foreign corporation for U.S. federal tax purposes; |
• | risks of fluctuations in foreign currency exchange rates; |
• | our ability to maintain internal control over financial reporting; |
• | the ability of Irish law to protect our shareholders; |
• | the impact of Irish laws and regulations on our business, including limitations on capital management; |
• | uncertainty on the enforceability of judgements against our officers and directors in an Irish court; |
• | risks associated with Irish tax liabilities, which could subject us or our shareholders to Irish stamp duty, dividend withholding tax, income tax and/or capital acquisition tax; and |
• | other risks and uncertainties including those discussed in “Risk Factors” in our Annual Report on Form 10-K. |
The following discussion provides forward-looking quantitative and qualitative information about our potential exposure to market risk. Market risk represents the potential loss arising from adverse changes in the value of financial instruments. The risk of loss is assessed based on the likelihood of adverse changes in fair values, cash flows or future earnings. We are exposed to market risk for changes in the market values of our investments (Investment Risk), the impact of interest rate changes (Interest Rate Risk) and the impact of foreign currency exchange changes (Foreign Currency Exchange Risk).
We maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including both government and government agency obligations with ratings of A or better and money market funds. Our investments in marketable securities are governed by our investment policy which seeks to preserve the value of our principal, provide liquidity and maximize return on the Company’s investment against minimal interest rate risk. Consequently, our interest rate and principal risk are minimal on our non-equity investment portfolio. The quantitative and qualitative disclosures about market risk are set forth below.
Investment Risk
As of SeptemberJune 30, 20172019, our total investments in marketable and equity securities of other companies, including equity method investments, but excluding securities considered cash and cash equivalents, were $3,905.8$377.4 million (included in marketable securities and investments and other assets). The fair values of these investments are subject to significant fluctuations due to volatility of the stock market and changes in general economic conditions.
As of September 30, 2017, the Company owns 100.3 million Teva ordinary shares, which are subject to changes in value based on the price of Teva shares.
We regularly review the carrying value of our investments and identify and recognize losses for income statement purposes, when events and circumstances indicate that any declines in the fair values of such investments below our accounting basis are other-than-temporary, including the other-than-temporary impairment of Teva securities in the nine months ended September 30, 2017 of $3,273.5 million.purposes.
Interest Rate Risk
Our exposure to interest rate risk relates primarily to our non-equity investment portfolio. Our cash is invested in money market securities.
Our portfolio ofpermitted investments in marketable securities includesinclude highly liquid money market securities classified as available-for-sale securities, with nosecurities. No security havingas of June 30, 2019 has a maturity in excess of one year. These investments include floating rate securities that are exposed to interest rate fluctuations. Because of the short-term nature of these investments, we are subject to minimal interest rate risk and do not believe that an increase in market rates would have a significant negative impact on the realized value of our portfolio.
Floating Rate Debt
At SeptemberJune 30, 2017,2019, borrowings outstanding under the floating rate notes were $1,825.0$1,296.1 million. Assuming a one percent increase in the applicable interest rate on the Company’s floating rates notes, annual interest expense would increase by approximately $18.3$11.7 million over the next twelve months.
In January 2019, Allergan entered into $500.0 million notional floating to fixed interest rate swaps maturing on March 12, 2020 whereby it fixed the interest rates on $500.0 million floating rate notes due March 12, 2020 to an average interest rate of 3.98%. The swaps are being accounted for using hedge accounting treatment.
Fixed Rate Debt
The Company has outstanding borrowings under its fixed rate notes. Changes in market interest rates generally affect the fair value of fixed-rate debt, but do not impact earnings or cash flows.
Euro Denominated Debt
The Company has outstanding borrowings under its Euro Denominated Notes. Changes in foreign exchange rates may impact cash flows for principal and interest.
Interest Rate
The Company may use interest rate swap contracts on certain investing and borrowing transactions to manage its net exposure to interest rate changes and its overall cost of borrowing. The Company does not use leveraged swaps and does not leverage any of its fixed income investments that would put principal capital at risk.
Foreign Currency Exchange Risk
Overall, we are a net recipient of currencies other than the U.S. dollar and, as such, benefit from a weaker dollar and are adversely affected by a stronger dollar relative to major currencies worldwide. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may negatively affect our consolidated revenues or operating costs and expenses as expressed in U.S. dollars.
From time to time, we have enteredenter into foreign currency option and forward contracts. Accordingly, we have entered into various contracts which change in value as foreign exchange rates change to allow the Company at its option to economically offset the effect of changes in the value of foreign currency assets and liabilities, commitments and anticipated foreign currency denominated sales and operating expenses.liabilities. We have entered into foreign currency option and forward contracts in amounts between minimum and maximum existing or anticipated foreign exchange exposures.
From timeThe Company is subject to time, we have usedtransactions which are denominated in currencies other than the functional currency and therefore movements in exchange rates may impact the results of operations. Net foreign currency option contracts, which providelosses reflected in general and administrative expenses were $3.5 million and $16.1 million for the sale or purchasesix months ended June 30, 2019 and 2018, respectively.
The currency for Argentina was deemed hyperinflationary in the third quarter of 2018 and is now being accounted for using the Company’s functional currency. The impact is immaterial to the Company’s operations.
In November 2018, the Company entered into a 700.0 million Euro forward contract to buy Euros while selling USD. The derivative had a maturity of May 31, 2019. The derivative instrument was marked-to-market to the P&L, offsetting the revaluation (P&L) impact on the Euro 700.0 million variable interest debt which matured on June 1, 2019. For the six months ended June 30, 2019, the Company recorded a loss of $29.8 million relating to this instrument in general and administrative expenses.
The Company is exposed to foreign currencies, if exercised, to economically hedge theexchange risk in its international operations from foreign currency exchange risks associated with probable but not firmly committed transactions that arisepurchases, net investments in foreign subsidiaries, and foreign currency assets and liabilities created in the normal course of business, including its Euro Denominated Notes. In the six months ended June 30, 2019, we used effective net investment hedges to partially offset the effects of foreign currency on our business. Probable but not firmly committed transactions are comprised primarilyinvestments in certain of salesour foreign subsidiaries. The total notional amount of productsour instruments designated as net investment hedges was $5.1 billion as of June 30, 2019 and purchases of raw material in currencies other thanDecember 31, 2018. During the U.S. dollar. While these instruments were subject to fluctuations in value, such fluctuations were anticipated to offset changes insix months ended June 30, 2019 and 2018, the valueimpact of the underlying exposures. net investment hedges recorded in other comprehensive (loss) / income was a gain of $41.8 million and $102.0 million, respectively.
Other
We do not believe that inflation has had a significant impact on our revenues or operations, nor do we have any material commodity price risks.
Evaluation of Disclosure Controls and Procedures
Allergan plc maintains “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed in Allergan plc’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Allergan plc’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective.
As required by SEC Rule 13a-15(b), Allergan plc carried out an evaluation, under the supervision and with the participation of Allergan plc’s management, including Allergan’sAllergan plc’s Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Allergan plc splc’s disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation and because of the material weakness described below Allergan plc’s Principal Executive Officer and Principal Financial Officer concluded that Allergan plc’s disclosure controls and procedures were not effective at the reasonable assurance level as of SeptemberJune 30, 2017.2019.
Warner Chilcott Limited maintains “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Warner Chilcott Limited’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective.
As required by SEC Rule 13a-15(b), Warner Chilcott Limited carried out an evaluation, under the supervision and with the participation of Warner Chilcott Limited’s management, including Warner Chilcott Limited’s Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of Warner Chilcott Limited’s disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation and because of the material weakness described below Warner Chilcott Limited’s Principal Executive Officer and Principal Financial Officer concluded that Warner Chilcott Limited’s disclosure controls and procedures were not effective at the reasonable assurance level as of SeptemberJune 30, 2017.
Material Weakness and Remediation
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.
Our internal controls did not operate effectively to appropriately assess the tax implications of certain transactions between our subsidiaries. This control deficiency did not result in the material misstatement of our current or prior period consolidated financial statements. However, this control deficiency could have resulted in a misstatement to the income tax accounts and disclosures, which would have resulted in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.2019.
Changes in Internal Control Over Financial Reporting of Allergan plc and Warner Chilcott Limited
InDuring the quarter ended SeptemberJune 30, 2017, the Company has implemented certain2019, there were no changes to its procedures andin our internal control over financial reporting as it continues to remediate its previously reported material weakness. Wethat have made significant progress towards remediation during the quarter ended September 30, 2017, including enhancing the reports utilized in assessing the tax implications of certain transactions between our subsidiaries and also refining our internal reporting structure. We expect to complete testing of the operating effectiveness of the controls in place to remediate the material weakness in the fourth quarter of 2017. There have been no other changes in the Company’s internal control over financial reporting, during the fiscal quarter ended September 30, 2017, that has materially affected, or are reasonably likely to materially affect, the Company’sAllergan plc and Warner Chilcott Limited’s internal control over financial reporting.
PART II. OTHEROTHER INFORMATION
For information regarding legal proceedings, refer to “PART I, ITEM 3. LEGAL PROCEEDINGS,” of our Annual Report on Form 10-K for the year ended December 31, 20162018 and “Legal Matters” in “NOTE 20 — Commitments and Contingencies” in the accompanying “Notes to the Consolidated Financial Statements” in this Quarterly Report.
Except
Risks Relating to our pending transaction with AbbVie
The transaction is subject to customary closing conditions, including conditions related to required shareholder approvals and required regulatory approvals, and may not be completed on a timely basis, or at all.
The completion of the transaction is subject to a number of customary conditions and there can be no assurance that the conditions to the closing of the transaction will be satisfied or waived (to the extent permitted by law). The failure to satisfy the required conditions could delay the completion of the transaction for a significant period of time or prevent the completion from occurring at all. These closing conditions include the approval of the transaction by a majority in number of our shareholders of record, such shareholders representing 75% or more in value of the Allergan ordinary shares held by such holders, present and voting either in person or by proxy, at the meeting directed by the Irish High Court, and the approval by our shareholders of certain other transaction-related resolutions at the extraordinary general meeting.
These closing conditions also include certain antitrust related approvals, including (i) that all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as set forth below, thereamended, in connection with the transaction having expired or having been terminated, and termination or expiration of any agreement between Allergan and AbbVie, on the one hand, and the U.S. Federal Trade Commission or the Antitrust Division of the U.S. Department of Justice, on the other hand, not to consummate the transaction, (ii) all required clearances of any governmental entity having been obtained and remaining in full force and effect and all applicable waiting periods having expired, lapsed or been terminated (as appropriate), in each case in connection with the transaction, under the antitrust laws of the U.S., European Union, China, Brazil, Canada, Israel, Mexico, Japan, South Africa, South Korea, Turkey and the United Kingdom (only in the event of any exit by the United Kingdom from, or suspension or termination of its membership in, the European Union such that a United Kingdom governmental entity has jurisdiction to review the acquisition under antitrust laws) (each a “Required Antitrust Jurisdiction)”, (iii) to the extent (a) the transaction constitutes a concentration within the scope of Article 6(1)(c) of the Council EC Merger Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings in respect of the transaction (the “EC Merger Regulation”) or otherwise is a concentration that is subject to the EC Merger Regulation, the European Commission having decided to allow the closing of the transaction, and (b) that all or part of the transaction is referred by the European Commission to the relevant authority of one or more member countries of the European Economic Area, such relevant authority(ies) (in the case of a partial referral in conjunction with a final decision of the European Commission) having issued a final decision or decisions which satisfies (or together satisfy) the prior clause (a). The governmental agencies from which the parties will seek certain approvals related to these conditions have broad discretion in administering the governing regulations. As a condition to their approval of the transaction, agencies may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of the combined company’s business after the closing. Such requirements, limitations, costs or restrictions could delay or prevent the consummation of the transaction or have a material adverse effect on the combined company’s business and results of operations.
In addition, the closing conditions include other legal and regulatory conditions, such as (i) the sanction by the Irish High Court of the transaction and registration of the court order with the Irish Registrar of Companies, (ii) the approval by the New York Stock Exchange of the listing of all of the shares of AbbVie common stock to be issued in connection with the transaction, and (iii) (a) no order, writ, decree, judgment or injunction (whether temporary or permanent) having been issued, promulgated, made, rendered or entered into by any court or other tribunal of competent jurisdiction, and (b) no law (excluding any antitrust law other than those of a Required Antitrust Jurisdiction) having been enacted, issued, promulgated, enforced or entered and continuing in effect and, in each case of clauses (a) and (b), that restrains, enjoins, makes illegal or otherwise prohibits the consummation of the transaction.
The transaction is also subject to other customary closing conditions, including: (i) the transaction agreement not having been terminated in accordance with its terms, (ii) the accuracy of each party’s representations and warranties made in the transaction agreement, subject to specified materiality standards, (iii) the absence of a material adverse effect with respect to each party since June 25, 2019 and (iv) the performance and compliance by each party of all of its obligations and compliance with all of its covenants under the transaction agreement in all material respects. There can be no assurance that the conditions to completion of the transaction will be satisfied or waived or that the transaction will be completed within the expected time frame, or at all.
Failure to consummate the transaction could negatively impact the share price and the future business and financial results of Allergan.
If the transaction is not consummated, the ongoing business of Allergan may be adversely affected and, without realizing any of the potential benefits of having consummated the transaction, Allergan will be subject to a number of risks, including the following:
• | Allergan will be required to pay certain costs and expenses relating to the proposed transaction; |
• | if the transaction agreement is terminated under specified circumstances, Allergan may be obligated to reimburse certain expenses of AbbVie; |
• | matters relating to the transaction (including integration planning) may require substantial commitments of time and resources by Allergan management, which could otherwise have been devoted to other opportunities that may have been beneficial to Allergan; |
• | the transaction agreement restricts Allergan, without AbbVie’s consent and subject to certain exceptions, from making certain acquisitions and taking other specified actions until the transaction occurs or the transaction agreement terminates. These restrictions may prevent Allergan from pursuing otherwise attractive business opportunities and making other changes to its business that may arise prior to completion of the transaction or termination of the transaction agreement; and |
• | Allergan could be subject to litigation related to any failure to consummate the transaction or related to any enforcement proceeding commenced against Allergan to perform its obligations under the transaction agreement. |
If the transaction is not consummated, these risks may materialize and may adversely affect Allergan’s business, financial results and share price.
The transaction agreement contains provisions that limit Allergan’s ability to pursue alternatives to the transaction and, in specified circumstances, could require Allergan to reimburse certain of AbbVie’s expenses.
Under the transaction agreement, Allergan is subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, engage in discussion or negotiations with respect to such proposals or provide information in connection with such proposals, subject to customary exceptions. Allergan may terminate the transaction agreement and enter into an agreement providing for a superior proposal only if specified conditions have been no materialsatisfied, including a determination by the Allergan board of directors (after consultation with a financial advisor of nationally recognized reputation and outside legal counsel) that such proposal is more favorable to our shareholders from a financial point of view than the transaction, and such a termination would result in Allergan being required to reimburse certain of AbbVie’s expenses under the expenses reimbursement agreement. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Allergan from considering or proposing that acquisition, even if such third party were prepared to pay consideration with a higher value than the value of the transaction consideration.
Because the number of AbbVie shares that our shareholders will be entitled to receive as a result of the transaction will be based on a fixed exchange ratio (except for adjustments in limited circumstances pursuant to the transaction agreement), the value of the AbbVie shares that our shareholders receive could vary based on market price fluctuations of AbbVie shares.
At completion, our shareholders will be entitled to receive (i) $120.30 in cash and (ii) 0.8660 of a newly issued share of AbbVie common stock, in exchange for each Allergan ordinary share held by our shareholders. Because the exchange ratio will not be adjusted to reflect any changes in the Company’s riskmarket value of AbbVie common stock or Allergan ordinary shares, such market price fluctuations may affect the value that our shareholders will be entitled to receive upon completion of the transaction. Share price changes may result from a variety of factors, from those disclosedincluding changes in the Company’s Form 10-Kbusiness, operations or prospects of AbbVie or Allergan, market assessments of the likelihood that the transaction will be completed, the timing of the transaction, regulatory considerations, general market and economic conditions and other factors.
Our shareholders will have a reduced ownership and voting interest after the transaction and will exercise less influence over management.
AbbVie will issue new shares of AbbVie common stock to our shareholders in the transaction. Immediately following the completion of the transaction, current shareholders are expected to hold approximately 17% of the outstanding shares of AbbVie common stock on a fully diluted basis. Our shareholders currently have the right to vote for their directors and on other matters affecting Allergan. Following completion of the transaction, the AbbVie common stock that each of our shareholders receives in exchange for its Allergan ordinary shares will represent a percentage ownership of AbbVie that is smaller than our shareholders’ percentage ownership of Allergan before the effective time. As a result of this reduced ownership percentage, our shareholders will have less influence on the management and policies of the combined company than they have as to Allergan prior to the transaction.
While the transaction is pending, Allergan will be subject to business uncertainties related to its relationships with employees, customers and suppliers, which could adversely affect Allergan’s business and operations.
Uncertainty about the effect of the transaction on employees, customers and suppliers may have an adverse effect on Allergan. These uncertainties may impair Allergan’s ability to attract, retain and motivate key personnel until the transaction is consummated and for a period of time thereafter, and could cause customers, suppliers and others who deal with Allergan to seek to change or terminate existing business relationships with Allergan. Employee retention may be particularly challenging during the pendency of the transaction because employees may experience uncertainty about their future roles with the combined company. If, despite Allergan’s retention efforts, key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company, the combined company’s business could be harmed and its ability to realize the anticipated benefits of the transaction could be adversely affected.
While the transaction is pending, Allergan will be subject to contractual restrictions, which could adversely affect Allergan’s business and operations.
Under the terms of the transaction agreement, Allergan is also subject to certain restrictions on the conduct of its business prior to completing the transaction, which may adversely affect its ability to execute certain of its business strategies, including the ability in certain cases to enter into contracts or incur capital expenditures to grow its business. Such limitations could negatively affect Allergan’s businesses and operations prior to the completion of the transaction. Furthermore, the process of planning to integrate two businesses and organizations for the year ended December 31, 2016.post-transaction period can divert management attention and resources and could ultimately have an adverse effect on Allergan.
If completed, the transaction may not achieve its intended results.
Allergan and AbbVie entered into the transaction agreement with the expectation that the transaction will result in various benefits, including, among other things, synergies at the combined company, a comprehensive product portfolio, diversified growth profile and broad geographic reach. Achieving the anticipated benefits of the transaction is subject to a number of uncertainties, including whether the businesses of AbbVie and Allergan can be integrated in an efficient and effective manner. Failure to achieve these anticipated benefits could result in increased costs or decreases in the amount of expected revenues and could adversely affect the combined company’s future business, financial condition, operating results and cash flows.
Allergan and AbbVie may be unable to successfully integrate their operations. Failure to successfully integrate the businesses of Allergan and AbbVie in the expected timeframe may adversely affect the future results of the combined organization, and, consequently, the value of the shares of AbbVie common stock that our shareholders receive as the transaction consideration.
It is possible that the integration process could take longer than anticipated and could result in the loss of valuable employees, the disruption of each company’s ongoing businesses, processes and systems or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect the combined company’s ability to achieve the anticipated benefits of the transaction. The combined company’s results of operations could also be adversely affected by any issues attributable to either company’s operations that arise or are based on events or actions that occur prior to the completion of the transaction. The companies may have difficulty addressing possible differences in corporate cultures and management philosophies. The integration process is subject to a number of uncertainties, and no assurance can be given that the anticipated benefits will be realized or, if realized, the timing of their realization.
Allergan and AbbVie will incur substantial transaction fees and costs in connection with the transaction.
Allergan and AbbVie expect to incur a number of non-recurring transaction-related costs associated with completing the transaction, combining the operations of the two organizations and achieving desired synergies. These fees and costs will be substantial. Non-recurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, retention, severance, change in control and other integration-related costs, filing fees and printing costs. Additional unanticipated costs may be incurred in the integration of the businesses of Allergan and AbbVie. There can be no assurance that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, will offset the incremental transaction-related costs over time. Thus, any net benefit may not be achieved in the near term, the long term or at all.
Following the transaction, the combined company will have a substantial amount of debt, which could adversely affect its business, financial condition or results of operations and prevent it from fulfilling its debt-related obligations.
Following the transaction, the combined company will have a substantial amount of debt. The combined company’s substantial debt could adversely affect it in a number of ways including but not limited to making it more difficult for the combined
company to satisfy its obligations with respect to its debt or to its trade or other creditors and requiring a substantial portion of the combined company’s cash flows from operations and the proceeds of any capital markets offerings or loan borrowings for the payment of interest on the combined company’s debt. If the combined company cannot service its indebtedness, it may have to take actions such as selling assets, seeking additional debt or equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances.
Statements Required by the Irish Takeover Rules
To the extent that any of the information contained, referred to or summarized in this document constitutes a profit forecast for the purposes of Rule 28 of the Irish Takeover Panel Act, 1997, Takeover Rules, 2013, such information will (unless the Irish Takeover Panel consents otherwise) be reported on in accordance with that rule in the proxy statement. Except as described in the previous sentence, no statement in this document is intended to constitute a profit forecast for any period, nor should any statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for Allergan. No statement in this document constitutes an asset valuation.
The directors of Allergan accept responsibility for the information contained in this document. To the best of the knowledge and belief of the directors of Allergan (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.
Any holder of 1% or more of any class of relevant securities of Allergan may have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2013.
Recent Sale of Unregistered Securities; Uses of Proceeds from Registered Securities
None.
Issuer Purchases of Equity Securities
During the quarter ended SeptemberJune 30, 2017,2019, we repurchased 13,94429,202 of our ordinary sharesAllergan plc’s Ordinary Shares to satisfy tax withholding obligations in connection with the vesting of restricted sharesstock issued to employees. employees and directors. On January 29, 2019, the Company announced that its Board of Directors approved a $2.0 billion share repurchase program, all of which remained outstanding as of June 30, 2019.
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publically Announced Program |
| Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program ($ in millions) | ||
July 1 - 31, 2017 |
|
| 2,660 |
|
| $ | 251.70 |
|
| - |
| - |
August 1 - 31, 2017 |
|
| 8,966 |
|
| $ | 242.35 |
|
| - |
| - |
September 1 - 30, 2017 |
|
| 2,318 |
|
| $ | 226.97 |
|
| - |
| - |
July 1 – September 30, 2017 |
|
| 13,944 |
|
| $ | 241.58 |
|
| - |
| - |
Period |
| Total Number of Shares Purchased |
|
| Total Number of Shares Purchased to Satisfy Tax Withholdings |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Share Repurchase Program |
|
| Average Price Paid per Share as Part of Share Repurchase Program |
|
| Approximate Dollar Value of Shares that May Yet Be Purchased Under the Share Repurchase Program ($ in millions) |
| ||||||
April 1 - 30, 2019 |
|
| 24,502 |
|
|
| 24,502 |
|
| $ | 146.41 |
|
|
| - |
|
| $ | - |
|
| $ | 2,000.0 |
|
May 1 - 31, 2019 |
|
| 4,002 |
|
|
| 4,002 |
|
| $ | 141.90 |
|
|
| - |
|
| $ | - |
|
| $ | 2,000.0 |
|
June 1 - 30, 2019 |
|
| 698 |
|
|
| 698 |
|
| $ | 122.92 |
|
|
| - |
|
| $ | - |
|
| $ | 2,000.0 |
|
April 1 - June 30, 2019 |
|
| 29,202 |
|
|
| 29,202 |
|
| $ | 145.23 |
|
|
| - |
|
| $ | - |
|
|
|
|
|
In the year ended December 31, 2016, the Company entered into a $10.0 billion accelerated share repurchase program. As part of this program, the Company received and cancelled outstanding shares of 2,039,368 as partial settlement of the program in August 2017.
Reference is hereby made to the Exhibit Index on page 123.91.
Exhibit |
| Description |
|
|
|
2.1 | ||
2.2 | ||
2.3 | ||
31.1* |
| |
31.2* |
| |
32.1** |
| |
32.2** |
| |
101.INS |
| XBRL Instance Document. |
101.SCH |
| XBRL Taxonomy Extension Scheme Document. |
101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF |
| XBRL Taxonomy Extension Label Definition Document. |
101.LAB |
| XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document. |
# | Indicates a management contract or compensatory plan or arrangement. |
* | Filed herewith. |
** | Furnished herewith and not “filed” for purposes of Section 18 of the Exchange Act. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 1, 2017.August 8, 2019.
ALLERGAN PLC WARNER CHILCOTT LIMITED | |||
|
|
| |
By: |
| /s/ | |
Name: |
|
| |
Title: |
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |
|
|
| |
By: |
| /s/ James C. D’Arecca | |
Name: |
| James C. D’Arecca | |
Title: |
| Chief Accounting Officer (Principal Accounting Officer) | |
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