ENDO INTERNATIONAL PLC (NASDAQ:ENDP) Files An 8-K Regulation FD Disclosure
Item7.01.
| Regulation FD Disclosure. |
On January9, 2017, Endo International plc (the Company) intends
to make an investor presentation at the J.P. Morgan
Healthcare Conference (the Presentation), a copy of which is
furnished as Exhibit 99.1 hereto and incorporated herein by
reference. The Presentation will also be available on the
Companys website at www.endo.com.
The Presentation includes certain financial measures that are not
prescribed by or prepared in accordance with accounting
principles generally accepted in the U.S. (GAAP). The Company
utilizes these financial measures, commonly referred to as
non-GAAP, because (i)they are used by the Company, along with
financial measures in accordance with GAAP, to evaluate the
Companys operating performance; (ii)the Company believes that
they will be used by certain investors to measure the Companys
operating results; (iii)adjusted diluted EPS is used by the
Compensation Committee of the Companys Board of Directors in
assessing the performance and compensation of substantially all
of its employees, including its executive officers and (iv)the
Companys leverage and interest coverage ratios as defined by the
Companys credit facility are calculated based on non-GAAP
financial measures. The Company believes that presenting these
non-GAAP measures provide useful information about the Companys
performance across reporting periods on a consistent basis by
excluding items, which may be favorable or unfavorable.
The initial identification and review of the non-GAAP adjustments
to continuing operations is performed by a team of finance
professionals that include the Chief Accounting Officer and
segment finance leaders, and are identified in accordance with
the Companys Adjusted Income Statement Policy, which is reviewed
and approved by the Companys Audit Committee. The Companys tax
professionals, including the Senior Vice President of Tax, review
and determine the tax effect of adjusted pre-tax income at
applicable tax rates and other tax adjustments as described
below. Proposed adjustments, along with any items considered but
excluded, are presented to the Chief Executive Officer and the
Chief Financial Officer for their consideration. In turn, the
non-GAAP adjustments are presented to the Audit Committee on a
quarterly basis as part of the Companys standard procedures for
preparation and reviewing the earnings release and other
quarterly materials.
These non-GAAP measures should be considered supplemental to and
not a substitute for financial information prepared in accordance
with GAAP. The Companys definition of these non-GAAP measures may
differ from similarly titled measures used by others. The
definitions of the most commonly used non-GAAP financial measures
are presented below:
Adjusted income from continuing
operations
Adjusted income from continuing operations represents income
(loss) from continuing operations, prepared in accordance with
GAAP, adjusted for certain items. Adjustments to GAAP amounts may
include, but are not limited to, certain upfront and milestone
payments to partners; acquisition-related and integration items,
including transaction costs, earn-out payments or adjustments,
changes in the fair value of contingent consideration and bridge
financing costs; cost reduction and integration-related
initiatives such as separation benefits, retention payments,
excess inventory reserves, other exit costs and certain costs
associated with integrating an acquired companys operations;
excess costs that will be eliminated to integration plans; asset
impairment charges; amortization of intangible assets; inventory
step-up recorded as part of our acquisitions; certain non-cash
interest expense; litigation-related and other contingent
matters; gains or losses from early termination of debt and
hedging activities; foreign currency gains or losses on
intercompany financing arrangements; certain other items; and the
tax effect of adjusted pre-tax income at applicable tax rates and
other tax adjustments as described below.
Adjusted diluted earnings per share from continuing
operations
Adjusted diluted earnings per share from continuing operations
represent adjusted income from continuing operations divided by
the number of diluted shares.
Adjusted gross margin
Adjusted gross margin represents total revenues less cost of
revenues, prepared in accordance with GAAP, adjusted for certain
items that may include, but are not limited to, amortization of
intangible assets and inventory step-up recorded as part of our
acquisitions, excess inventory reserves resulting from
restructuring initiatives, separation benefits and certain excess
costs that will be eliminated to integration plans.
Adjusted operating expenses
Adjusted operating expenses represent operating expenses,
prepared in accordance with GAAP, adjusted for certain items that
may include, but are not limited to, acquisition and integration
items, including transaction costs, earn out payments or
adjustments, changes in the fair value of contingent
consideration and bridge financing costs; cost reduction and
integration related initiatives such as separation benefits,
retention payments, other exit costs and certain costs associated
with integrating an acquired companys operations; excess costs
that will be eliminated to integration plans; asset impairment
charges; and litigation-related and other contingent matters.
Adjusted interest expense
Adjusted interest expense represents interest expense, net,
prepared in accordance with GAAP, adjusted for non-cash interest
expense and penalty interest.
Adjusted income taxes
Adjusted income taxes are calculated by tax effecting adjusted
pre-tax income from continuing operations at the applicable
effective tax rate that will be determined by reference to
statutory tax rates in the relevant jurisdictions in which the
Company operates and includes current and deferred income tax
expense. Adjustments are then made for certain items relating to
prior years and for tax planning actions that are expected to be
distortive to the underlying effective tax rate and trend in the
effective tax rate. The adjusted effective tax rate represents
the rate generated when dividing adjusted income tax expense or
benefit as described above by the amount of adjusted pre-tax
income from continuing operations as described above.
EBITDA
EBITDA represents net (loss) income, prepared in accordance with
GAAP, before interest expense, net; income tax; depreciation and
amortization. Adjusted EBITDA further adjusts EBITDA by excluding
inventory step-up amortization recorded as part of our
acquisitions, other (income) expense, net; stock-based
compensation; certain upfront and milestone payments to partners;
acquisition-related
and integration items, including transaction costs, earn-out
payments or adjustments, changes in the fair value of contingent
consideration and bridge financing costs; cost reduction and
integration-related initiatives such as separation benefits,
retention payments, excess inventory reserves, other exit costs
and certain costs associated with integrating an acquired
companys operations; excess costs that will be eliminated to
integration plans; asset impairment charges; litigation-related
and other contingent matters; gains or losses from early
termination of debt and hedging activities; discontinued
operations, net of tax and certain other items. Implied Adjusted
EBITDA is calculated as Adjusted income from continuing
operations (as defined above), adjusted to exclude the impact of
Adjusted interest expense, Adjusted income taxes, depreciation
and stock-based compensation.
Net Debt Leverage Ratio
The net debt leverage ratio is calculated as net debt (total
principal debt outstanding less unrestricted cash) divided by
adjusted EBITDA for the trailing twelve-month period.
Underlying revenue growth
U.S. Generics underlying revenue growth is calculated as the
change in total revenues period-over-period, prepared in
accordance with GAAP, adjusted to include Par Pharmaceutical pro
forma revenues and to exclude Lidoderm AG revenues. U.S. Branded
underlying revenue growth is calculated as the change in total
revenues period-over-period, prepared in accordance with GAAP,
adjusted to include Auxilium pro forma revenues and to exclude
Lidoderm sales and Actavis royalties. Litha and Somar underlying
revenue growth is calculated as the change in total combined
revenues period-over-period, prepared in accordance with GAAP,
adjusted to exclude the impact of revenues from Lithas
acquisition of Aspen Holdings and Lithas divestiture of its
medical and vaccine business, and calculated using a constant
exchange rate.
Because adjusted financial measures exclude the effect of items
that will increase or decrease the Companys reported results of
operations, the Company strongly encourages investors to review
the Companys consolidated financial statements and publicly filed
reports in their entirety. Investors are also encouraged to
review the reconciliation of the non-GAAP financial measures used
in the Presentation to their most directly comparable GAAP
financial measures as included in the appendix of the
Presentation and in Exhibit 99.1 of Form 8-K filed with the U.S.
Securities and Exchange Commission on November8, 2016. However,
other than with respect to projected adjusted diluted EPS, the
Company only provides guidance on a non-GAAP basis and does not
provide reconciliations of such forward-looking non-GAAP measures
to GAAP due to the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliation, including adjustments that could be made for
asset impairments, contingent consideration adjustments, legal
settlements, loss on extinguishment of debt, adjustments to
inventory and other charges reflected in the reconciliation of
historic numbers, the amount of which could be significant.
The information in this Item7.01 and in Exhibit 99.1 attached
hereto shall not be deemed to be filed for purposes of Section18
of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that section. The information
contained in this Item7.01 and in Exhibit 99.1 attached hereto
shall not be incorporated into any registration statement or
other document filed by the Company with the U.S. Securities and
Exchange Commission under the Securities Act of 1933, whether
made before or after the date hereof, regardless of any general
incorporation language in such filing, except as shall be
expressly set forth by specific reference in such filing.
Item9.01 |
Financial Statements and Exhibits. |
(d) Exhibits.
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| 99.1 |
Investor Presentation of Endo International plc, dated January9, 2017 |