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Actavis Net Revenue Increases 83% to $3.7 Billion in Third Quarter 2014; Non-GAAP EPS Increases 53% to $3.19
Date:11/5/2014

DUBLIN, Nov. 5, 2014 /PRNewswire/ -- Actavis plc (NYSE: ACT) today reported net revenue increased 83 percent to $3.7 billion for the third quarter ended September 30, 2014, compared to $2.0 billion in the third quarter 2013. On a non-GAAP basis, diluted earnings per share for the third quarter 2014 increased to $3.19, compared to $2.09 per diluted share in the third quarter 2013.  GAAP loss per diluted share for the third quarter 2014 was $3.95, compared to GAAP earnings per share of $0.49 in the prior year period.

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For the third quarter 2014, adjusted EBITDA increased 158 percent to $1.3 billion, compared to $489 million for the third quarter 2013.
Cash flow from operations for the third quarter of 2014 was $522 million and cash and marketable securities were $340 million as of September 30, 2014.

"Our 53 percent year-over-year growth in non-GAAP EPS reflects the strong contributions of our new brand pharmaceutical portfolios, resulting from the acquisitions of Warner Chilcott and Forest, as well as the continued strong performance of our U.S. Generics and International businesses and the Anda Distribution business," said Brent Saunders, CEO and President.  "During the quarter, our North American Brands business was driven by strong sales from key products including our Namenda® products, Bystolic®, Linzess®, Lo Loestrin® Fe, Estrace® Cream, Daliresp® and Tudorza.  During the quarter we completed the harmonization of our U.S. brand sales and marketing functions, and we now have a fully operational sales team in place to support our seven core therapeutic categories across all prescriber audiences.  Within our North American Generics business, we capitalized on continued strength across the business.  We also saw strong commercial performance in key international markets, particularly the UK and Russia.

"Our commitment to invest in organic growth through development-focused R&D resulted in a number of milestones during the quarter, including the acceptance for filing of New Drug Applications for eluxadoline, ceftazidime-avibactam and Liletta™ by the U.S. Food and Drug Administration (FDA).  Our investment in generic R&D is reflected in 228 Abbreviated New Drug Applications (ANDAs) pending at the FDA; the initiation of patent challenges for generic forms of Ampyra®, Butrans® and Neupro®; and more than 570 marketing authorizations approved outside the United States," Saunders added.

"Additionally, we continue to execute on smart, targeted business development opportunities.  Shortly after the close of the quarter we announced our planned acquisition of Durata Therapeutics, including Durata's novel antibiotic Dalvance™, as well as our exclusive option to acquire Rhythm Health, Inc., which is developing relamorelin, a peptide ghrelin agonist, for the treatment of diabetic gastroparesis and other GI functional disorders.
These transactions complement our existing product franchises and position the Company for continued long-term growth.

"When I outlined our roadmap for accelerated growth last quarter, we committed to driving balanced performance across brands and generics, retaining our commitment to invest in organic growth and accelerating integration and synergy capture.  We can report substantial progress across the board."

Third Quarter 2014 Business Segment ResultsThird quarter 2014 results for Actavis plc include the contribution from the Forest acquisition, which closed on July 1, 2014. Actavis presents its operating results in three revenue-producing segments: North American Brands, North American Generics and International (which includes generic, branded generic, brands outside of North America and over-the-counter pharmaceutical products) and Anda Distribution. Prior year comparable results have been included. Refer to the attached reconciliation tables for adjustments to GAAP earnings.

 North America Brands Segment InformationThree Months EndedNine Months EndedSeptember 30,September 30,2014201320142013Product sales

$
,608.3
$
36.9
$
2,754.6
$
379.0
Other revenue

11.016.145.948.4  Net revenues

1,619.3153.02,800.5427.4Operating expenses:  Cost of sales(1)

706.341.41,055.6105.6  Selling and marketing

503.346.1694.9136.6  General and administrative

377.032.8529.878.9Segment contribution

$
32.7
$
32.7
$
520.2
$
.3
Segment margin

2.0%21.4%18.6%24.9%Adjusted gross profit (2)

$
,367.4
$
.8
$
2,402.8
$
327.3
Adjusted gross margin as a percentage of adjusted net revenues (2)

84.4%76.1%85.8%76.5%Adjusted SG&A percentage of adjusted net revenues (3)

29.7%37.9%27.0%40.3%(1)Cost of sales excludes amortization and impairment of acquired intangibles. (2)Refer to Table 7  included in this release for the reconciliation of net revenues and cost of sales to adjusted gross profit and adjusted gross margin as a percentage of adjusted net revenues.(3)Refer to Table 8  included in this release for the reconciliation of net revenues and SG&A to adjusted SG&A as a percentage of adjusted net revenues. 

North American Brands revenue increased to $1.6 billion for the third quarter 2014, driven by the acquisitions of Warner Chilcott and Forest, which includes strong sales of key promoted products including our Namenda® products, Bystolic®, Linzess®, Lo Loestrin® Fe,  Estrace® Cream, Daliresp™ and Tudorza®. Additional product revenue detail is presented in table 2 at the end of this press release.

The Company continues to enhance manufacturing efficiencies related to its once-daily dosing of Namenda XR®, and is now producing product at capacities sufficient to support transitioning all Namenda IR twice daily tablet patients to its Namenda XR® once-daily product.  Assuming a favorable ruling from the court later in November denying the injunction sought by the New York State Attorney General, the Company will discontinue the general sale and distribution of Namenda® IR immediate-release tablets in January 2015.  After that date, the Company has determined that it will make Namenda IR® immediate release tablets available for prescribing to patients upon an indication of medical need as determined by their physician.  The immediate release product will be made available through Foundation Care, a full service specialty mail-order pharmacy serving patients nationwide.

"Our previous survey of 250 physicians treating Alzheimer's patients and 250 caregivers found once-daily administration was important in their decision to use Namenda XR® when compared to Namenda® IR tablets," said Saunders.  "However, in that survey a small number of doctors suggested that for select groups of patients, perhaps less than 3 percent, the continued utilization of the twice-a-day tablet dosing of Namenda® might be necessary for treatment. We listened to these physicians and have tailored the Foundation Care program to permit physicians to exercise their medical judgment to prescribe Namenda® IR to this specific patient population."

Adjusted gross margin as a percentage of adjusted net revenues within North American Brands increased to 84.4 percent in the third quarter of 2014 from 76.1 percent in the third quarter of 2013, primarily as a result of the acquisitions of Warner Chilcott and Forest.

Selling, General & Administrative (SG&A) expenses within North American Brands increased to $880.3 million in the third quarter of 2014 compared to $78.9 million in the third quarter of 2013, driven primarily by the acquisitions of Warner Chilcott and Forest.

On a non-GAAP basis, adjusted SG&A as a percent of adjusted net revenue for the North American Brands segment was 29.7 percent, down from 37.9 percent in the third quarter of 2013.

 North America Generics and International Segment InformationThree Months EndedNine Months EndedSeptember 30,September 30,2014201320142013Product sales

$
,613.2
$
,528.0
$
4,872.6
$
4,578.6
Other revenue

27.424.991.978.4  Net revenues

1,640.61,552.94,964.54,657.0Operating expenses:  Cost of sales(1)

811.9774.62,346.42,414.0  Selling and marketing

175.1153.8503.9483.5  General and administrative

181.2190.7557.7540.9Segment contribution

$
472.4
$
433.8
$
,556.5
$
,218.6
Segment margin

28.8%27.9%31.4%26.2%Adjusted gross profit (2)

$
891.1
$
799.9
$
2,693.6
$
2,397.4
Adjusted gross margin as a percentage of adjusted net revenues (2)

55.3%51.5%56.2%51.4%Adjusted SG&A percentage of adjusted net revenues (3)

20.3%19.2%20.1%19.8%(1)Cost of sales excludes amortization and impairment of acquired intangibles. (2)Refer to Table 7  included in this release for the reconciliation of net revenues and cost of sales to adjusted gross profit and adjusted gross margin as a percentage of adjusted net revenues.(3)Refer to Table 8  included in this release for the reconciliation of net revenues and SG&A to adjusted SG&A as a percentage of adjusted net revenues.North American Generics revenue was $979.9 million for the third quarter 2014, driven by strong base business performance partially offset by additional generic competition of certain key products including our generic version of Lidoderm® and our authorized generic version of Concerta®. North American Generics revenue consists of non-branded pharmaceutical revenue in the United States, Latin America and Canada.

International revenue increased 15 percent to $660.7 million for the third quarter 2014 as a result of the acquisitions of Warner Chilcott and Forest and strong growth in key markets including the UK and Russia/CIS. International revenue consists of all brand, branded generic, generic and over-the-counter pharmaceutical revenue derived outside North America.

Adjusted gross margin as a percentage of adjusted net revenues within North American Generics and International increased to 55.3 percent in the third quarter of 2014 from 51.5 percent in the third quarter of 2013, primarily as a result of strong base business performance and additional products added to our international markets as a result of the acquisition of Warner Chilcott in the fourth quarter of 2013 and the acquisition of Forest in the third quarter of 2014.

Selling, General & Administrative (SG&A) expenses within North American Generics and International increased three percent to $356.3 million in the third quarter of 2014 compared to $344.5 million in the third quarter of 2013. On a non-GAAP basis, adjusted SG&A as a percent of adjusted net revenue for our North American Generics and International segment was 20.3 percent.

 Anda Distribution Segment InformationThree Months EndedNine Months EndedSeptember 30,September 30,2014201320142013Net revenues

$
423.2
$
307.1
$
,240.4
$
813.9
Operating expenses:  Cost of sales

364.8267.21,070.5700.5  Selling and marketing

28.823.783.066.3  General and administrative

9.18.625.723.9Segment contribution

$
20.5
$
7.6
$
.2
$
23.2
Segment margin

4.8%2.5%4.9%2.9%Gross profit

$
58.4
$
39.9
$
9.9
$
3.4
Gross margin

13.8%13.0%13.7%13.9%SG&A as a percentage of net revenues

9.0%10.5%8.8%11.1%Anda Distribution segment net revenues for the third quarter 2014 increased 38 percent to $423.2 million, compared to $307.1 million in the third quarter 2013, as a result of volume increases for products within the Anda portfolio and new launches. Anda Distribution segment revenues consist only of sales of third-party products and exclude sales of Actavis' brand and generic products.

Anda Distribution segment gross margin was 13.8 percent in the third quarter of 2014 compared to 13.0 percent in the prior year period.

SG&A expenses within Anda Distribution increased to $37.9 million in the third quarter of 2014 compared to $32.3 million in the third quarter of 2013. SG&A as a percent of revenue for our Anda Distribution segment was 9.0 percent.

Other Operating Expenses
In the third quarter 2014, consolidated SG&A expenses were $1.27 billion, compared to $456 million in the third quarter 2013, primarily as a result of the Warner Chilcott and Forest Laboratories acquisitions.

R&D expense increased to $391.8 million in the third quarter of 2014 compared to $163.7 million in the third quarter of 2013, driven by the acquisitions of Warner Chilcott and Forest. Within R&D, $115.3 million was invested in generic development, $248.0 million was invested in brand development and $28.5 million was invested in biosimilar development during the quarter.

Amortization expense for the third quarter 2014 was $874 million, compared to $146 million in the third quarter of 2013, primarily due to amortization expense associated with the Warner Chilcott and Forest acquisitions.

Integration and Pipeline Update
Actavis also made significant progress in the integration of the legacy Actavis and legacy Forest organizations and R&D activities during the quarter.  The Company has now completed the restructuring of the U.S. sales and marketing organization, made initial decisions regarding the rationalization of certain brand R&D projects and announced the planned closure of Forest's Earth City, Missouri facilities and consolidation of facilities in the New York and New Jersey area.  Rationalization of the North American Brands pipeline is focused on identifying candidates in development where maximization of return on R&D investment is better served through the reallocation of resources to other ongoing projects.  The Company intends to provide a complete review of its brand R&D investment strategy, development rationale and pipeline update in early 2015. 

Updated Second Half and Full Year 2014 Financial Outlook
Actavis' estimates include the Forest business.  Estimates are based on actual results for the first nine months of 2014 and management's current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events.

Actavis estimates the following for the second half and full year 2014:

Second Half 2014

  • Total net revenue is expected to be approximately $7.4 billion.
  • Non-GAAP R&D investment is expected to be approximately $650 million.
  • Non-GAAP SG&A expense is expected be approximately $1.7 billion.
  • Non-GAAP tax rate is anticipated to be approximately 16%.
  • For the second half of 2014, Actavis expects to report non-GAAP earnings per share of between $6.60 and $6.70 based upon a weighted average fully diluted share count of approximately 268 million shares. 
  • Full Year 2014

  • For the full year 2014, Actavis now expects non-GAAP earnings per share of between $13.51 to $13.61 based upon a weighted average fully diluted share count of approximately 220 million shares.
  • In keeping with standard practice, the Company expects to provide an updated full year 2015 financial outlook early next year.

    Webcast and Conference Call Details
    Actavis plc will host a conference call and webcast today at 8:00 a.m. Eastern Time to discuss third quarter 2014 results.  The dial-in number to access the call is US/Canada (877) 251-7980, International (706) 643-1573.  The Conference ID is 8164798. To access the live webcast, go to Actavis' Investor Relations Web site at http://ir.actavis.com.

    A replay of the conference call will also be available beginning approximately two hours after the call's conclusion and will remain available through 12:00 midnight Eastern Time on November 19, 2014.  The replay may be accessed by dialing (855) 859-2056 and entering Conference ID# 8164798.  From international locations, the replay may be accessed by dialing (404) 537-3406 and entering the same Conference ID#.  To access the webcast replay, go to Actavis' Investor Relations Web site at http://ir.actavis.com.

    About ActavisAbout Actavis plc (NYSE: ACT), headquartered in Dublin, Ireland, is a unique specialty pharmaceutical company focused on developing, manufacturing and commercializing high quality affordable generic and innovative branded pharmaceutical products for patients around the world.

    Actavis markets a broad portfolio of branded and generic pharmaceuticals and develops innovative medicines for patients suffering from diseases principally in the central nervous system, gastroenterology, women's health, urology, cardiovascular, respiratory and anti-infective therapeutic categories. The Company is an industry leader in product research and development, with one of the broadest brand development pipelines in the pharmaceutical industry, and a leading position in the submission of generic product applications. Actavis has commercial operations in more than 60 countries and operates more than 30 manufacturing and distribution facilities around the world.

    For more information, visit Actavis' website at www.actavis.com.

    Actavis Cautionary Statement Regarding Forward-Looking Statements Statements contained in this communication that refer to Actavis' estimated or anticipated future results, including estimated synergies, or other non-historical facts are forward-looking statements that reflect Actavis' current perspective of existing trends and information as of the date of this communication. Forward looking statements generally will be accompanied by words such as "anticipate," "believe," "plan," "could," "should," "estimate," "expect," "forecast," "outlook," "guidance," "intend," "may," "might," "will," "possible," "potential," "predict," "project," or other similar words, phrases or expressions. Such forward-looking statements include, but are not limited to, statements about the benefits of the Forest acquisition, including future financial and operating results, Actavis' plans, objectives, expectations and intentions. It is important to note that Actavis' goals and expectations are not predictions of actual performance. Actual results may differ materially from Actavis' current expectations depending upon a number of factors affecting Actavis' business. These factors include, among others, the inherent uncertainty associated with financial projections; restructuring and integration in connection with the Forest acquisition and other announced acquisitions, including the ability to recognize the anticipated synergies and benefits of the Forest acquisition and other announced acquisitions;  the anticipated size of the markets and continued demand for Actavis'  products; the impact of competitive products and pricing; access to available financing  on a timely basis and on reasonable terms; the risks of fluctuations in foreign currency exchange rates; the risks and uncertainties normally incident to the pharmaceutical industry, including product liability claims and the availability of product liability insurance on reasonable terms; outcomes in material litigation involving Actavis, including without limitation the decision, expected later this year, on a preliminary injunction motion brought before the U.S. District Court in the Southern District of New York, seeking to prevent Actavis from executing its strategy to withdraw Namenda IR tablets from distribution; the difficulty of predicting the timing or outcome of pending or future litigation or government investigations; periodic dependence on a small number of products for a material source of net revenue or income; variability of trade buying patterns; changes in generally accepted accounting principles; risks that the carrying values of assets may be negatively impacted by future events and circumstances; the timing and success of product launches; the difficulty of predicting the timing or outcome of product development efforts and regulatory agency approvals or actions, if any; market acceptance of and continued demand for Actavis'  products; costs and efforts to defend or enforce intellectual property rights; difficulties or delays in manufacturing; the availability and pricing of third party sourced products and materials; successful compliance with governmental regulations applicable to Actavis'  facilities, products and/or businesses; changes in the laws and regulations affecting, among other things, pricing and reimbursement of pharmaceutical products; changes in tax laws or interpretations that could increase Actavis' consolidated tax liabilities; the loss of key senior management or scientific staff; and such other risks and uncertainties detailed in Actavis' periodic public filings with the Securities and Exchange Commission, including but not limited to Actavis' Annual Report on form 10-K for the year ended December 31, 2013, Current Report on Form 8-K filed on May 20, 2014 and from time to time in Actavis' other investor communications, in Warner Chilcott Limited's Registration Statement on Form S-4 effective as of October 16, 2014, in Forest Laboratories, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2014 and in Furiex Pharmaceuticals, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 and such companies' other filings with the Securities and Exchange Commission. Except as expressly required by law, Actavis disclaims any intent or obligation to update or revise these forward-looking statements.

    The following table presents Actavis plc's results of operations for the three and nine months ended September 30, 2014 and 2013: Table 1ACTAVIS PLCCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited; in millions, except per share amounts)Three Months EndedNine Months EndedSeptember 30,September 30,2014201320142013Net revenues$
    3,683.1
    $
    2,013.0
    $
    9,005.4
    $
    5,898.3
    Operating expenses:  Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)1,883.01,083.24,472.53,220.1  Research and development391.8163.7721.3432.1  Selling, general and administrative1,274.5455.72,395.01,330.1  Goodwill impairment---647.5  In-process research and development impairments305.0-321.34.4  Amortization873.6146.31,720.7454.3  Asset sales, impairments and contingent consideration adjustment, net7.313.612.7165.0Total operating expenses4,735.21,862.59,643.56,253.5Operating (loss) / income(1,052.1)150.5(638.1)(355.2)Non-operating income (expense):  Interest income1.61.43.83.4  Interest expense(132.1)(52.9)(284.0)(162.1)  Other income (expense), net31.9(2.1)1.122.3Total other income (expense), net(98.6)(53.6)(279.1)(136.4)(Loss) / income before income taxes and noncontrolling interest(1,150.7)96.9(917.2)(491.6)(Benefit) / provision for income taxes(107.9)31.4(19.9)111.0Net (loss) / income(1,042.8)65.5(897.3)(602.6)  Loss / (income) attributable to noncontrolling interest-0.1(0.3)0.6Net (loss) / income attributable to ordinary shareholders$
    (1,042.8)
    $
    5.6
    $
    (897.6)
    $
    (602.0)
    (Loss) / earnings per share attributable to ordinary shareholders:  Basic$
    (3.95)
    $
    .50
    $
    (4.39)
    $
    (4.57)
      Diluted$
    (3.95)
    $
    .49
    $
    (4.39)
    $
    (4.57)
    Weighted average shares outstanding:  Basic264.3132.5204.4131.7  Diluted264.3134.4204.4131.7 

     

    The following table details product revenue for significant products within the North American Brands segment for the three and nine months ending September 30, 2014.

     Table 2ACTAVIS PLCNORTH AMERICA BRANDS SEGMENT REVENUE(Unaudited; in millions)Three Months Ended Nine Months Ended September 30September 302014201320142013North American BrandsCNS  Namenda franchise $
    427.6
    $
    -
    $
    427.6
    $
    -
    Viibyrd® / Fetzima®66.4-66.4-  Saphris ® 36.8-36.8-Other CNS23.8-23.8-
    Total CNS
    554.6-554.6-GastroenterologyDelzicol®/Asacol® HD141.2-418.4-  Linzess®/Costella ™ 80.0-80.0-Carafate ® / Sulcrate ®42.3-42.3-Canasa ® / Salofalk ®34.8-34.8-Zenpep ®, Ultrase ® & Viokace ®34.1-34.1-Other Gastroenterology8.5-8.5-
    Total Gastroenterology
    340.9-618.1-Women's Health  Lo Loestrin® Fe 71.6-202.0-Estrace® Cream66.7-177.9-Minastrin® 24 Fe54.0-158.4-Other Women's Health49.226.9146.568.2
    Total Women's Health
    241.526.9684.868.2Cardiovascular & Respiratory Bystolic®138.6-138.6-Daliresp ®30.0-30.0-Tudorza ®28.4-28.4-
    Total Cardiovascular & Respiratory 
    197.0-197.0-  Urology73.560.1213.3172.6  Anti-Infectives20.2-20.2-  Dermatology/Established Brands191.666.0512.5186.6Total North American Brands$
    ,619.3
    $
    53.0
    $
    2,800.5
    $
    427.4
      

    The following table presents Actavis plc's Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013.

     Table 3ACTAVIS PLCCONDENSED CONSOLIDATED  BALANCE SHEETS(Unaudited; in millions)September 30,December 31,20142013AssetsCash and cash equivalents$
    339.4
    $
    329.0
    Marketable securities1.02.5Accounts receivable, net 2,229.31,404.9Inventories, net2,627.31,786.3Other current assets930.6641.0Assets held for sale124.7271.0Property, plant and equipment, net1,704.31,616.8Investments and other assets376.8242.3Product rights and other intangibles, net19,957.38,234.5Goodwill25,176.78,197.6Total assets$
    53,467.4
    $
    22,725.9
    Liabilities & EquityCurrent liabilities$
    4,481.3
    $
    3,048.3
    Liabilities held for sale-246.6Long-term debt and capital leases15,093.88,517.4Deferred income taxes and other liabilities4,747.31,376.5Total equity29,145.09,537.1Total liabilities and equity$
    53,467.4
    $
    22,725.9
     The following table presents Actavis plc's Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2014 and 2013.

     Table 4ACTAVIS PLCCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited; In millions)Three Months Ended September 30,Nine Months Ended September 30,2014201320142013Cash Flows From Operating Activities:Net (loss) income$
    (1,042.8)
    $
    5.5
    $
    (897.3)
    $
    (602.6)
    Reconciliation to net cash provided by operating activities:  Depreciation64.650.1169.7147.7  Amortization873.6146.31,720.7454.3  Provision for inventory reserve34.921.0110.250.5  Share-based compensation228.249.5259.475.8  Deferred income tax benefit(261.0)(32.5)(412.5)(170.0)  (Earnings) on equity method investments

    (0.5)(1.6)(2.3)(3.3)  Goodwill impairment---647.5  In-process research and development impairments

    305.0-321.34.4  Loss / (gain) on sale of securities and asset sales and impairments, net

    6.823.034.224.1  Amortization of inventory step up

    493.3-703.393.5  Amortization of deferred financing costs

    8.01.934.45.7  Increase / (decrease) in allowance for doubtful accounts

    7.30.510.3(0.5)  Accretion of contingent payment consideration

    5.15.113.66.5  Contingent consideration fair value adjustment

    (1.4)5.9(37.8)156.2  Non-cash impact of debt extingushemnt

    (91.7)-(91.7)-  Excess tax benefit from stock-based compensation

    -(55.0)(22.7)(69.2)  Other, net(15.9)1.1(27.1)2.3  Changes in assets and liabilities (net of effects of acquisitions):Decrease / (increase) in accounts receivable, net

    (202.7)17.4(365.6)(28.7)Decrease / (increase) in inventories

    (112.3)(51.5)(266.7)(266.5)Decrease / (increase) in prepaid expenses and other current assets

    38.840.869.362.0Increase / (decrease) in accounts payable and accrued expenses

    239.338.0292.319.5Increase / (decrease) in deferred revenue

    (2.6)0.9(11.2)23.7Increase / (decrease) in income and other taxes payable

    (39.5)(52.1)(140.9)(71.9)Increase / (decrease) in other assets and liabilities

    (12.2)(3.5)(31.5)0.8Total adjustments

    1,565.1205.32,328.71,164.4Net cash provided by operating activities

    522.3270.81,431.4561.8Cash Flows From Investing Activities:Additions to property, plant and equipment

    (93.3)(43.6)(174.1)(117.4)Additions to product rights and other intangibles

    (0.1)(2.6)(0.1)(5.0)Proceeds from the sale of assets433.213.1451.225.0Proceeds from sales of property, plant and equipment

    7.8-12.05.9Net proceeds from marketable securities

    1.5-1.5-Acquisition of business, net of cash acquired

    (4,803.4)-(4,922.6)(194.6)Net cash (used in) investing activities

    (4,454.3)(33.1)(4,632.1)(286.1)Cash Flows From Financing Activities:Proceeds from borrowings on the revolving credit facility

    --80.0125.0Proceeds from borrowings of long-term indebtedness

    4,400.0-8,076.2-Debt issuance costs(6.3)(0.5)(58.2)(0.5)Payments on debt, including capital lease obligations

    (4,407.7)(43.9)(4,875.5)(260.6)Proceeds from stock plans35.238.543.344.0Payments of contingent consideration

    (4.8)(0.9)(12.6)(3.1)Repurchase of ordinary shares(40.3)(142.9)(99.7)(165.4)Acquisition of noncontrolling interest

    ---(10.4)Excess tax benefit from stock-based compensation

    -55.022.769.2Net cash (used in) / provided by financing activities

    (23.9)(94.7)3,176.2(201.8)Effect of currency exchange rate changes on cash and cash equivalents

    1.7(1.9)(2.1)(24.9)Movement in cash held for sale--37.0-Net (decrease) / increase in cash and cash equivalents

    (3,954.2)141.110.449.0Cash and cash equivalents at beginning of period

    4,293.6226.9329.0319.0Cash and cash equivalents at end of period

    $
    339.4
    $
    368.0
    $
    339.4
    $
    368.0
     

    The following table presents a reconciliation of reported net (loss) / income and diluted earnings per share to non-GAAP net income and diluted earnings per share for the three and nine months ended September 30, 2014 and 2013:

     Table 5ACTAVIS PLCRECONCILIATION TABLE(Unaudited; in millions except per share amounts)Three Months EndedNine Months EndedSeptember 30, September 30, 2014201320142013GAAP to non-GAAP net income calculationReported GAAP net (loss) / income attributable to
      ordinary shareholders

    $
    (1,042.8)
    $
    5.6
    $
    (897.6)
    $
    (602.0)
    Adjusted for:Amortization

    873.6146.31,720.7454.3Global supply chain initiative(1)

    8.318.538.650.5Acquisition and licensing charges (2)

    907.183.11,217.1380.3Accretion on contingent liabilities

    5.15.113.56.5Impairment/asset sales and related costs

    303.513.6326.1666.6Non-recurring losses (gains) 

    85.97.984.5(1.9)Legal settlements

    (10.0)15.0(8.5)45.8Income taxes on items above

    (277.7)(73.7)(432.3)(182.5)Non-GAAP net income attributable to
      ordinary shareholders

    $
    853.0
    $
    281.4
    $
    2,062.1
    $
    817.6
    Diluted earnings per share Diluted (loss) earnings per share - GAAP 

    $
    (3.95)
    $
    .49
    $
    (4.39)
    $
    (4.57)
    Diluted earnings per share - Non-GAAP

    $
    3.19
    $
    2.09
    $
    9.98
    $
    .12
    Basic weighted average common shares outstanding

    264.3132.5204.4131.7Effect of dilutive securities:Dilutive share-based compensation arrangements

    3.11.92.22.0Diluted weighted average common shares outstanding

    267.4134.4206.6133.7(1)

    Includes accelerated depreciation charges.(2)

    Includes stock-based compensation due to the Warner Chilcott, Furiex and Forest acquisitions.The following table presents a reconciliation of reported net income / (loss) for the three and nine months ended September 30, 2014 and 2013 to adjusted EBITDA:

     Table 6ACTAVIS PLCADJUSTED EBITDA, RECONCILIATION TABLE(Unaudited; in millions)Three Months EndedNine Months EndedSeptember 30,September 30,2014201320142013GAAP net (loss) / income attributable to ordinary shareholders$
    (1,042.8)
    $
    5.6
    $
    (897.6)
    $
    (602.0)
    Plus:Interest expense132.152.9284.0162.1Interest income(1.6)(1.4)(3.8)(3.4)Provision for income taxes(107.9)31.4(19.9)111.0Depreciation (includes accelerated depreciation)64.650.1169.7147.7Amortization873.6146.31,720.7454.3EBITDA(82.0)344.91,253.1269.7Adjusted for:Global supply chain initiative8.38.324.822.7Acquisition and licensing  and other charges705.944.91,014.2342.1Impairment/asset sales and related costs303.513.6326.1666.6Non-recurring losses (gains) 85.97.984.5(1.9)Legal settlements(10.0)15.0(8.5)45.8Accretion on contingent liabilities5.15.113.56.5Share-based compensation244.849.5276.075.8Adjusted EBITDA$
    ,261.5
    $
    489.2
    $
    2,983.7
    $
    ,427.3
     The following table presents a reconciliation of reported net revenues and cost of sales by segment for the three and nine months ended September 30, 2014 and 2013 to adjusted net revenues, adjusted cost of sales, adjusted gross profit and adjusted gross margin as a percentage of adjusted net revenues:Table 7ACTAVIS PLCADJUSTED GROSS MARGIN AS A PERCENTAGE OF ADJUSTED NET REVENUESThree Months EndedThree Months EndedSeptember 30, 2014September 30, 2013(Unaudited; $ in millions)North American BrandsNorth American Generics and InternationalAnda DistributionTotalNorth American BrandsNorth American Generics and InternationalAnda DistributionTotalNet Revenues:Net revenues$
    ,619.3
    $
    ,640.6
    $
    423.2
    $
    3,683.1
    $
    53.0
    $
    ,552.9
    $
    307.1
    $
    2,013.0
    Adjustments to net revenue ((remove from) / add to)Purchase accounting adjustments-4.8-4.80.40.3-0.7Operating results of assets held for sale / sold-(34.3)-(34.3)----Manufacturing and supply contract termination payment--------Adjusted net revenues$
    ,619.3
    $
    ,611.1
    $
    423.2
    $
    3,653.6
    $
    53.4
    $
    ,553.2
    $
    307.1
    $
    2,013.7
    Cost of Sales (1):Cost of Sales$
    706.3
    $
    811.9
    $
    364.8
    $
    ,883.0
    $
    41.4
    $
    774.6
    $
    267.2
    $
    ,083.2
    Adjustments to cost of sales ((remove from) / add to)Integration and restructuring(9.6)0.3-(9.3)-(2.5)-(2.5)Contingent consideration fair value and accretion adjustment(1.1)0.2-(0.9)(4.8)(1.4)-(6.2)Operating results of assets held for sale / sold-(28.0)-(28.0)----Operational Excellence Initiative-(8.3)-(8.3)-(17.4)-(17.4)Acquisition accounting fair market value adjustment to stock-based compensation(5.9)--(5.9)----Purchase accounting adjustments(437.8)(56.1)-(493.9)----Adjusted cost of sales$
    251.9
    $
    720.0
    $
    364.8
    $
    ,336.7
    $
    36.6
    $
    753.3
    $
    267.2
    $
    ,057.1
    Adjusted gross profit1,367.4891.158.42,316.9116.8799.939.9956.6Adjusted gross margin as a percentage of adjusted net revenues84.4%55.3%13.8%63.4%76.1%51.5%13.0%47.5%(1)Cost of sales excludes amortization and impairment of acquired intangibles.Nine Months EndedNine Months EndedSeptember 30, 2014September 30, 2013(Unaudited; $ in millions)North American BrandsNorth American Generics and InternationalAnda DistributionTotalNorth American BrandsNorth American Generics and InternationalAnda DistributionTotalNet Revenues:Net revenues$
    2,800.5
    $
    4,964.5
    $
    ,240.4
    $
    9,005.4
    $
    427.4
    $
    4,657.0
    $
    813.9
    $
    5,898.3
    Adjustments to net revenue ((remove from) / add to)Purchase accounting adjustments-10.3-10.30.45.9-6.3Operating results of assets held for sale / sold-(183.8)-(183.8)----Manufacturing and supply contract termination payment-----5.0-5.0Adjusted net revenues$
    2,800.5
    $
    4,791.0
    $
    ,240.4
    $
    8,831.9
    $
    427.8
    $
    4,667.9
    $
    813.9
    $
    5,909.6
    Cost of Sales (1):Cost of Sal
    '/>"/>

    SOURCE Actavis plc
    Copyright©2014 PR Newswire.
    All rights reserved


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