There was a very famous conference call once where Highfields Capital analyst Richard Grubman asked for a balance sheet with Enron's earnings statement. Jeff Skilling's response is a key part of the Enron legend.
Grubman: You’re the only financial institution that can’t produce a balance sheet or cash flow statement with their earnings.
Skilling: You…you…you. Well, uh…thank you very much. We appreciate it. Asshole.
The "asshole" quip disappeared from the conference call transcript but everyone remembered it.
Well today Valeant produced a earnings result with only cursory balance sheet data and no balance sheet. Linked here is the SEC release. And here is all they say about balance sheet.
| Valeant Pharmaceuticals International, Inc. | Table 5 |
Consolidated Balance Sheet and Other Data
(In millions)
5.1 Cash
| As of | As of | |||||||
| September 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| Cash and cash equivalents | $ | 808.8 | $ | 600.3 | ||||
| Marketable securities | — | — | ||||||
| Total cash and marketable securities | $ | 808.8 | $ | 600.3 | ||||
| Debt | ||||||||
| Series A-1 Tranche A Term Loan Facility | $ | 182.3 | $ | 259.0 | ||||
| Series A-2 Tranche A Term Loan Facility | 166.3 | 228.1 | ||||||
| Series A-3 Tranche A Term Loan Facility | 1,813.9 | 1,935.7 | ||||||
| Series D-2 Tranche B Term Loan Facility | 1,088.6 | 1,256.7 | ||||||
| Series C-2 Tranche B Term Loan Facility | 837.5 | 966.8 | ||||||
| Series E-1 Tranche B Term Loan Facility | 2,544.8 | 3,090.5 | ||||||
| Senior Notes | 9,629.5 | 9,618.9 | ||||||
| Other | 12.0 | 12.0 | ||||||
| 16,274.9 | 17,367.7 | |||||||
| Less: current portion | (191.7 | ) | (204.8 | ) | ||||
| Total long-term debt | $ | 16,083.2 | $ | 17,162.9 | ||||
Okay - net debt was $15,466.1 million (being $16,274.9 minus 808.8).
Lets go back a quarter ago. Here is the balance sheet from the 10Q:
VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(All dollar amounts expressed in millions of U.S. dollars)
(Unaudited)
|
As of June 30, 2014 | As of December 31, 2013 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 531.2 | $ | 600.3 | |||
| Trade receivables, net | 1,770.7 | 1,676.4 | |||||
| Inventories, net | 942.5 | 883.0 | |||||
| Prepaid expenses and other current assets | 452.6 | 343.4 | |||||
| Assets held for sale | 1,156.9 | 15.9 | |||||
| Deferred tax assets, net | 309.8 | 366.9 | |||||
| Total current assets | 5,163.7 | 3,885.9 | |||||
| Property, plant and equipment, net | 1,319.6 | 1,234.2 | |||||
| Intangible assets, net | 11,751.4 | 12,848.2 | |||||
| Goodwill | 9,436.3 | 9,752.1 | |||||
| Deferred tax assets, net | 18.3 | 54.9 | |||||
| Other long-term assets, net | 206.3 | 195.5 | |||||
| Total assets | $ | 27,895.6 | $ | 27,970.8 | |||
| Liabilities | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 327.7 | $ | 327.0 | |||
| Accrued and other current liabilities | 1,774.9 | 1,800.2 | |||||
| Acquisition-related contingent consideration | 88.9 | 114.5 | |||||
| Current portion of long-term debt | 266.7 | 204.8 | |||||
| Liability held for sale | 27.1 | — | |||||
| Deferred tax liabilities, net | 11.0 | 66.0 | |||||
| Total current liabilities | 2,496.3 | 2,512.5 | |||||
| Acquisition-related contingent consideration | 238.1 | 241.3 | |||||
| Long-term debt | 17,058.8 | 17,162.9 | |||||
| Pension and other benefit liabilities | 165.5 | 172.0 | |||||
| Liabilities for uncertain tax positions | 115.8 | 169.1 | |||||
| Deferred tax liabilities, net | 2,238.8 | 2,319.2 | |||||
| Other long-term liabilities | 215.0 | 160.5 | |||||
| Total liabilities | 22,528.3 | 22,737.5 | |||||
| Commitments and contingencies (note 17) | |||||||
| Equity | |||||||
| Common shares, no par value, unlimited shares authorized, 333,777,181 and | |||||||
| 333,036,637 issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 8,325.9 | 8,301.2 | |||||
| Additional paid-in capital | 212.2 | 228.8 | |||||
| Accumulated deficit | (3,175.3 | ) | (3,278.5 | ) | |||
| Accumulated other comprehensive loss | (104.7 | ) | (132.8 | ) | |||
| Total Valeant Pharmaceuticals International, Inc. shareholders’ equity | 5,258.1 | 5,118.7 | |||||
| Noncontrolling interest | 109.2 | 114.6 | |||||
| Total equity | 5,367.3 | 5,233.3 | |||||
| Total liabilities and equity | $ | 27,895.6 | $ | 27,970.8 | |||
Cash and equivalents was $531 million. Long term debt was $17058 million. Current debt was $266.7 million.
Net debt was thus $16793 million.
Net debt thus dropped $1327 million in the quarter. That looks pretty good.
Except that they sold the Aesthetics business during the quarter.
Slide 165 of this presentation (reproduced below) indicates net proceeds of $1240 million.
Net of this they generated only $88 million of cash in the quarter.
Which given they had $2 billion of sales and everyone thinks their cash margin is about 50 percent does not seem to compute.
We could of course work it out with a balance sheet and cash flow statement. It is probably all sweet and innocent.
So at the risk of being called an "asshole" please Mr Pearson will you give me a balance sheet and a cash flow statement with your earnings?
John
