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Name | Symbol | Market | Type |
---|---|---|---|
Teva Pharmaceutical Industries Ltd | NYSE:TEVA | NYSE | Depository Receipt |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.03 | -0.21% | 14.07 | 14.19 | 13.94 | 13.99 | 8,541,680 | 00:58:12 |
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) today reported results for the year and the quarter ended December 31, 2019.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200212005398/en/
Full-Year 2019 and Q4 2019 Highlights:
FY 2019
Q4 2019
Revenues
$16.9 billion
$4.5 billion
Revenues prior to revision (*)
$17.5 billion
$4.6 billion
Cash flow from operating activities
$748 million
$538 million
Free cash flow
$2,053 million
$974 million
GAAP earnings (loss) per share
$(0.91)
$0.10
Non-GAAP EPS
$2.40
$0.62
(*)
Revision of prior period financial statements with respect to the distribution business in our International Markets segment, decreasing sales by $165 million in Q4 2019, and $642 million in 2019, with an offsetting decrease in cost of sales. No impact on gross profit, operating income, earnings per share or cash flows for the related periods.
“In 2019, we made great strides towards positioning Teva for renewed growth by completing our two-year restructuring plan, reducing our cost base by more than $3 billion, and reducing our net debt by more than $9 billion, all while maintaining our global leadership in generics, serving around 200 million patients every day,” said Mr. Kåre Schultz, Teva’s President and CEO.
“Our key growth products met major milestones in 2019, including the launch of AJOVY® in Europe, continued strong growth for AUSTEDO®, and the successful launch of our first biosimilar TRUXIMA® in North America. In 2020, we expect to see continued growth for AJOVY®, AUSTEDO® and our biosimilars.”
Mr. Schultz continued, “Looking ahead, we will further transform our manufacturing network, improve our profitability, and generate cash, which will further reduce our debt. We will enhance our biopharmaceutical offerings, and expand our key assets with additional indications and geographies.”
Revision of Previously Reported Consolidated Financial Statements
In connection with the preparation of Teva's consolidated financial statements for the fiscal year ended December 31, 2019, Teva determined that in the full years and interim periods of fiscal years 2017 and 2018, and the first three quarters of fiscal year 2019, it had an immaterial error in the presentation of distribution revenues from its Israeli distribution business. This business is part of the International Markets reporting segment and facilitates distribution of Teva and third party products to pharmacies, hospitals and other organizations in Israel.
Specifically, the Company concluded that it presented revenue from its Israeli distribution business on a gross basis, although it should have reported such revenue on a net basis. Because Teva has no discretion in establishing prices for any specifies goods or services, limited inventory risk and is not primarily responsible for contract fulfillment, Teva does not meet the criteria for reporting revenues from such business as a principal (on a gross basis), as opposed to as an agent (on a net basis).
The Company evaluated the cumulative impact of this item on its previously issued annual financial statements for 2017 and 2018, and the interim financial statements for 2017, 2018 and the first three quarters of 2019, and concluded that, for the reasons mentioned below, the revisions were not material, individually or in the aggregate, to any of its previously-issued interim or annual financial statements. Teva has revised its presentation of net revenue and cost of sales in the historical consolidated financial statements to reflect the change in this item, as described in more detail below.
The impact of this revision is a decrease in net revenues with an offsetting decrease in cost of sales. There is no impact on gross profit, operating income or earnings per share. In addition, there is no impact on Teva’s balance sheet or statement of cash flows for the related periods.
The following table summarizes the impact of the revision on net revenues and non-GAAP cost of sales in the consolidated statements of income in the relevant periods:
Net revenues
Cost of sales
As reported
Adjustment
As revised
As reported
Adjustment
As revised
(U.S. $ in millions)
2017
22,385
(533)
21,853
10,351
(533)
9,818
2018
18,854
(583)
18,271
9,308
(583)
8,725
Nine months ended
September 30, 2019
12,896
(477)
12,419
6,456
(477)
5,979
The following items presented in this press release have been adjusted to reflect the revision described above:
2019 Annual Consolidated Results
Revenues in 2019 were $16,887 million, a decrease of 8%, or 5% in local currency terms, compared to 2018, mainly due to generic competition to COPAXONE®, a decline in revenues from our U.S. generics business, BENDEKA®/TREANDA® and Japan, partially offset by higher revenues from AUSTEDO, AJOVY and QVAR® in the United States. The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See "Revision of Previously Reported Consolidated Financial Statements" above.
Exchange rate movements between 2019 and 2018 negatively impacted our revenues by $402 million, our GAAP operating income by $135 million and our non-GAAP operating income by $154 million.
GAAP gross profit was $7,537 million in 2019, a decrease of 9% compared to 2018. GAAP gross profit margin was 44.6% in 2019, compared to 45.4% in 2018. Non-GAAP gross profit was $8,702 million in 2019, a decrease of 9% compared to 2018. Non-GAAP gross profit margin was 51.5% in 2019, compared to 52.2% in 2018. The decrease in both GAAP and non-GAAP gross profit was mainly due to lower revenues from COPAXONE in North America.
GAAP Research and Development (R&D) expenses in 2019 were $1,010 million, a decrease of 17% compared to 2018. Non-GAAP R&D expenses in 2019 were $1,004 million, or 5.9% of revenues, compared to $1,102 million, or 6.0% of revenues, in 2018. The decrease in R&D expenses resulted primarily from pipeline optimization and efficiencies realized as part of our restructuring plan.
GAAP Selling and Marketing (S&M) expenses in 2019 were $2,614 million, a decrease of 10% compared to 2018. Non-GAAP S&M expenses were $2,438 million, or 14.4% of revenues, in 2019, compared to $2,718 million, or 14.9% of revenues, in 2018. The decrease was mainly due to cost reductions and efficiency measures as part of the restructuring plan.
GAAP General and Administrative (G&A) expenses in 2019 were $1,192 million, a decrease of 8% compared to 2018. Non-GAAP G&A expenses were $1,145 million in 2019, or 6.8% of revenues, compared to $1,228 million, or 6.7% of revenues, in 2018. The decrease was mainly due to cost reductions and efficiency measures as part of the restructuring plan.
GAAP other income in 2019 was $76 million, compared to $291 million in 2018. The other income in 2019 was mainly related to the sale of activities in our International Markets segment. Non-GAAP other income in 2019 was $27 million, compared to $225 million in 2018. Non-GAAP other income in 2018 was mainly due to Section 8 recoveries from multiple cases in Canada and recovery of lost profits in cases in which U.S. patent infringement litigation had previously prevented the sale of certain products.
GAAP Operating loss was $443 million in 2019, compared to operating loss of $1,637 million in 2018. The decrease was mainly due to higher impairment charges recorded in 2018, partially offset by higher provisions in connection with legal settlements and loss contingencies in 2019, as well as lower profit in our North America segment. Non-GAAP operating income was $4,142 million, a decrease of 12% compared to $4,723 million in 2018.
Adjusted EBITDA (non-GAAP operating income, which excludes amortization and certain other items, and excluding depreciation expenses) in 2019 was $4,685 million, compared to $5,319 million in 2018.
In 2019, GAAP financial expenses were $822 million, compared to $959 million in 2018. Non-GAAP financial expenses were $824 in 2019, compared to $893 in 2018.
In 2019, we recognized a GAAP tax benefit of $278 million, or 22%, on a pre-tax loss of $1,265 million. In 2018, we recognized a tax benefit of $195 million, or 8%, on a pre-tax loss of $2,596 million. Our tax rate for 2018 was lower than in 2019 due to one-time legal settlements and divestments that had a low corresponding tax effect.
Non-GAAP income taxes for 2019 were $597 million on non-GAAP pre-tax income of $3,317 million. Non-GAAP income taxes in 2018 were $519 million on non-GAAP pre-tax income of $3,830 million. The non-GAAP tax rate for 2019 was 18%, compared to 14% in 2018. Our annual non-GAAP effective tax rate for 2019 was higher than our non-GAAP effective tax rate for 2017 and 2018 primarily due to a lower tax shield on finance expenses.
In the future, both our GAAP and non-GAAP effective tax rates are expected to remain similar to the 2019 rate.
GAAP net loss attributable to Teva’s ordinary shareholders and GAAP diluted loss per share in 2019 were $999 million and $0.91, respectively, compared to net loss of $2,399 million and diluted loss per share of $2.35 in 2018. Non-GAAP net income attributable to ordinary shareholders for calculating diluted EPS and non-GAAP diluted EPS in 2019 were $2,627 million and $2.40, respectively, compared to $2,985 million and $2.92 in 2018.
The weighted average diluted shares outstanding used for the fully diluted share calculation on a GAAP basis for 2019 and 2018 were 1,091 million and 1,021 million shares, respectively. The weighted average outstanding shares used for the fully diluted EPS calculation on a non-GAAP basis for 2019 and 2018 were 1,094 million and 1,024 million shares, respectively.
As of December 31, 2019 and 2018, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,108 million and 1,100 million shares, respectively.
Non-GAAP information: Net non-GAAP adjustments in 2019 were $3,625 million. Non-GAAP net income and non-GAAP EPS for the year were adjusted to exclude the following items:
Teva believes that excluding such items facilitates investors’ understanding of its business. For further information see the tables below for a reconciliation of the U.S. GAAP results to the adjusted non-GAAP figures and the information under “Non-GAAP Financial Measures.” Investors should consider non-GAAP financial measures in addition to, and not as replacement for, or superior to, measures of financial performance prepared in accordance with GAAP.
Cash flow generated from operating activities in 2019 was $748 million, a decrease of $1,698 million, or 69%, compared to 2018. This decrease was mainly due to the working capital adjustment with Allergan and the Rimsa settlement in 2018, and lower profit in our North America segment during 2019.
Free cash flow (Cash flow generated from operating activities in 2019, net of cash used for capital investments and beneficial interest collected in exchange for securitized trade receivables) was $2,053 million in 2019, compared to $3,679 million in 2018. The decrease in 2019 resulted mainly from the lower cash flow generated from operating activities.
As of December 31, 2019, our debt was $26,908 million, compared to $28,916 million as of December 31, 2018. The decrease was mainly due to senior notes repaid at maturity or prepaid with cash generated during the year. The portion of total debt classified as short-term as of December 31, 2019 was 9%, compared to 8% as of December 31, 2018, due to a decrease in our total debt. Our average debt maturity was approximately 6.4 years as of December 31, 2019, compared to 6.8 years as of December 31, 2018.
Annual Report on Form 10-K
Teva will file its Annual Report on Form 10-K with the SEC in the coming days. The report will include a complete analysis of the financial results for 2019 and will be available on Teva’s website, http://ir.tevapharm.com, as well as on the SEC’s website: http://www.sec.gov.
Fourth Quarter 2019 Consolidated Results
Revenues in the fourth quarter of 2019 were $4,468 million, an increase of 1%, or 2% in local currency terms, compared to the fourth quarter of 2018, mainly due to an increase in sales of AUSTEDO, AJOVY and certain respiratory products, partially offset by lower revenues from COPAXONE in North America.
Exchange rate differences between the fourth quarter of 2019 and the fourth quarter of 2018 negatively impacted our revenues and GAAP operating income by $47 million and $27 million, respectively. Our non-GAAP operating income was negatively impacted by $29 million.
GAAP gross profit was $1,958 million in the fourth quarter of 2019, a decrease of 1% compared to the fourth quarter of 2018. GAAP gross profit margin was 43.8% in the fourth quarter of 2019, compared to 44.6% in the fourth quarter of 2018. Non-GAAP gross profit was $2,262 million in the fourth quarter of 2019, a decrease of 3% compared to the fourth quarter of 2018. Non-GAAP gross profit margin was 50.6% in the fourth quarter of 2019, compared to 52.7% in the fourth quarter of 2018. The decrease in non-GAAP gross profit margin in the fourth quarter of 2019 resulted primarily from a decline in revenues from COPAXONE.
GAAP Research and Development (R&D) expenses in the fourth quarter of 2019 were $232 million, a decrease of 21% compared to the fourth quarter of 2018. Non-GAAP R&D expenses were $237 million, or 5.3% of quarterly revenues, in the fourth quarter of 2019, compared to $289 million, or 6.5% of quarterly revenues, in the fourth quarter of 2018. The decrease in R&D expenses in the fourth quarter of 2019 resulted primarily from pipeline optimization and efficiencies realized as part of our restructuring plan.
GAAP Selling and Marketing (S&M) expenses in the fourth quarter of 2019 were $706 million, a decrease of 11% compared to the fourth quarter of 2018. Non-GAAP S&M expenses were $665 million, or 14.9% of quarterly revenues in the fourth quarter of 2019, compared to $768 million, or 17.4% of quarterly revenues in the fourth quarter of 2018. The decrease in S&M expenses in 2019 was mainly due to cost reduction and efficiency measures as part of the restructuring plan.
GAAP General and Administrative (G&A) expenses in the fourth quarter of 2019 were $318 million, a decrease of 7% compared to the fourth quarter of 2018. Non-GAAP G&A expenses were $309 million in the fourth quarter of 2019, or 6.9% of quarterly revenues in the fourth quarter of 2019, compared to $330 million, or 7.5% of quarterly revenues in the fourth quarter of 2018. The decrease was mainly due to cost reduction and efficiency measures as part of the restructuring plan.
GAAP other income in the fourth quarter of 2019 was $47 million, compared to other loss of $43 million in the fourth quarter of 2018. Non-GAAP other income in the fourth quarter of 2019 was $9 million, compared to $5 million in fourth quarter of 2018.
GAAP operating income in the fourth quarter of 2019 was $148 million, compared to a loss of $3,164 million in the fourth quarter of 2018. Non-GAAP operating income in the fourth quarter of 2019 was $1,061 million, an increase of 12% compared to the fourth quarter of 2018. Non-GAAP operating margin was 23.8% in the fourth quarter of 2019 compared to 21.4% in the fourth quarter of 2018.
EBITDA (non-GAAP operating income, which excludes amortization and certain other items, as well as depreciation expenses) was $1,204 million in the fourth quarter of 2019, an increase of 10% compared to $1,091 million in the fourth quarter of 2018.
GAAP financial expenses for the fourth quarter of 2019 were $186, compared to $223 million in the fourth quarter of 2018. Non-GAAP financial expenses were $198 million in the fourth quarter of 2019, compared to $216 million in the fourth quarter of 2018.
In the fourth quarter of 2019, we recognized a GAAP tax benefit of $119 million on a pre-tax GAAP loss of $38 million. In the fourth quarter of 2018, we recognized a GAAP tax benefit of $139 million on a pre-tax GAAP loss of $3,387 million. Non-GAAP income taxes for the fourth quarter of 2019 were $155 million, or 18%, on pre-tax non-GAAP income of $863 million. Non-GAAP income taxes in the fourth quarter of 2018 were $96 million, or 13%, on pre-tax non-GAAP income of $730 million.
GAAP net income attributable to ordinary shareholders and GAAP diluted earnings per share in the fourth quarter of 2019 were $110 million and $0.10, respectively, compared to GAAP net loss attributable to ordinary shareholders and GAAP diluted loss per share of $2,940 million and $2.85, respectively, in the fourth quarter of 2018. Non-GAAP net income attributable to ordinary shareholders and non-GAAP diluted EPS in the fourth quarter of 2019 were $683 million and $0.62, respectively, compared to $543 million and $0.53, respectively, in the fourth quarter of 2018.
For the fourth quarter of 2019, the weighted average outstanding shares for the fully diluted EPS calculation on a GAAP basis was 1,094 million shares, compared to 1,031 million shares in the fourth quarter of 2018. The weighted average outstanding shares for the fully diluted EPS calculation on a non-GAAP basis was 1,094 million shares in the fourth quarter of 2019, compared to 1,034 million shares in the fourth quarter of 2018.
Non-GAAP information: Net non-GAAP adjustments in the fourth quarter of 2019 were $573 million. Non-GAAP net income and non-GAAP EPS for the fourth quarter were adjusted to exclude the following items:
Teva believes that excluding such items facilitates investors' understanding of its business. See the attached tables for a reconciliation of the GAAP results to the adjusted non-GAAP figures. Investors should consider non-GAAP financial measures in addition to, and not as replacement for, or superior to, measures of financial performance prepared in accordance with GAAP.
Cash flow generated from operations during the fourth quarter of 2019 was $538 million, compared to $367 million in the fourth quarter of 2018. The increase was mainly due to active management of inventory levels.
Free cash flow (Cash flow generated from operating activities, net of cash used for capital investments and beneficial interest collected in exchange for securitized trade receivables) was $974 million in the fourth quarter of 2019, compared to $522 million in the fourth quarter of 2018. The increase in 2019 resulted mainly from the higher cash flow generated from operating activities and sell of real-estate assets.
Segment Results for the Fourth Quarter of 2019
North America Segment
Our North America segment includes the United States and Canada.
The following table presents revenues, expenses and profit for our North America segment for the three months ended December 31, 2019 and 2018:
Three months ended December 31,
2019
2018
(U.S. $ in millions / % of Segment Revenues)
Revenues
$
2,373
100%
$
2,238
100.0%
Gross profit
1,196
50.4%
1,201
53.7%
R&D expenses
155
6.5%
185
8.3%
S&M expenses
265
11.2%
341
15.2%
G&A expenses
97
4.1%
127
5.7%
Other (income) expense
(7
)
§
(3
)
§
Segment profit*
$
686
28.9%
$
551
24.6%
* Segment profit does not include amortization and certain other items.
§ Represents an amount less than 0.5%.
Revenues from our North America segment in the fourth quarter of 2019 were $2,373 million, an increase of $135 million, or 6%, compared to the fourth quarter of 2018, mainly due to the launch of TRUXIMA (a biosimilar to Rituxan®), higher revenues from respiratory products, AUSTEDO and Anda, partially offset by lower revenues from COPAXONE.
Revenues in the United States, our largest market, were $2,218 million in the fourth quarter of 2019, an increase of $116 million, or 6%, compared to the fourth quarter of 2018.
Revenues by Major Products and Activities
The following table presents revenues for our North America segment by major products and activities for the three months ended December 31, 2019 and 2018:
North America
Three months ended
December 31,
Percentage
Change
2019
2018
2019-2018
(U.S. $ in millions)
Generic products
$
1,137
$
1,099
3%
COPAXONE
264
356
(26%)
BENDEKA/TREANDA
125
140
(11%)
ProAir*
80
45
77%
QVAR
67
9
604%
AJOVY
25
3
NA
AUSTEDO
136
68
98%
Anda
412
363
13%
Other
128
153
(16%)
Total
$
2,373
$
2,238
6%
_________
* Does not include revenues from the ProAir authorized generic, which are included under generic products.
Generic products revenues in our North America segment in the fourth quarter of 2019 increased by 3% to $1,137 million, compared to the fourth quarter of 2018, mainly due to new generic product launches, including the launch of TRUXIMA in November 2019, partially offset by price and volume erosion due to additional competition to our product portfolio.
In the fourth quarter of 2019, we led the U.S. generics market in total prescriptions and new prescriptions, with approximately 388 million total prescriptions (based on trailing twelve months), representing 10.5% of total U.S. generic prescriptions according to IQVIA data.
COPAXONE revenues in our North America segment in the fourth quarter of 2019 decreased by 26% to $264 million, compared to the fourth quarter of 2018, mainly due to generic competition in the United States.
BENDEKA and TREANDA combined revenues in our North America segment in the fourth quarter of 2019 decreased by 11% to $125 million, compared to the fourth quarter of 2018, mainly due to lower volumes resulting from Eagle Pharmaceuticals, Inc.’s launch of a ready-to-dilute bendamustine hydrochloride in June 2018.
ProAir revenues in our North America segment in the fourth quarter of 2019 increased by 77% to $80 million, compared to the fourth quarter of 2018, mainly due to higher sales reserves recorded in the fourth quarter of 2018 in anticipation of generic competition to the short-acting beta-agonist class of drugs. We launched our own ProAir authorized generic in the United States in January 2019.
QVAR revenues in our North America segment in the fourth quarter of 2019 increased to $67 million, compared to the fourth quarter of 2018. The increase in sales was mainly due to a higher net price and an increase in volume.
AJOVY revenues in our North America segment in the fourth quarter of 2019 were $25 million. AJOVY’s exit market share in the United Stated in terms of total number of prescriptions during 2019 was 17%. On January 28, 2020, the FDA approved an auto-injector device for AJOVY in the U.S.
AUSTEDO revenues in our North America segment in the fourth quarter of 2019 were $136 million, compared to $68 million in the fourth quarter of 2018. This increase was mainly due to higher volumes.
Anda revenues in our North America segment in the fourth quarter of 2019 increased by 13% to $412 million, compared to the fourth quarter of 2018, mainly due to higher volumes.
North America Gross Profit
Gross profit from our North America segment in the fourth quarter of 2019 was $1,196 million, flat compared to the fourth quarter of 2018. Gross profit in the fourth quarter of 2019 was mainly impacted by lower revenues from COPAXONE, offset by higher revenues from AUSTEDO, the launch of TRUXIMA and higher revenues from other specialty products.
Gross profit margin for our North America segment in the fourth quarter of 2019 decreased to 50.4%, compared to 53.7% in the fourth quarter of 2018. This decrease was mainly due to lower COPAXONE revenues.
North America Profit
Profit from our North America segment in the fourth quarter of 2019 was $686 million, an increase of 24% compared to $551 million in the fourth quarter of 2018. Profit increased mainly due to higher revenues from AUSTEDO, the launch of TRUXIMA, higher revenues from other specialty products and cost reductions and efficiency measures, partially offset by lower revenues from COPAXONE.
Europe Segment
Our Europe segment includes the European Union and certain other European countries.
The following table presents revenues, expenses and profit for our Europe segment for the three months ended December 31, 2019 and 2018:
Three months ended December 31,
2019
2018
(U.S. $ in millions / % of Segment Revenues)
Revenues
$
1,184
100%
$
1,204
100%
Gross profit
638
53.9%
689
57.2%
R&D expenses
63
5.3%
75
6.2%
S&M expenses
253
21.3%
278
23.1%
G&A expenses
65
5.5%
82
6.8%
Other (income) expense
-
§
1
§
Segment profit*
$
258
21.8%
$
253
21.0%
___________
* Segment profit does not include amortization and certain other items.
§ Represents an amount less than 0.5%.
Revenues from our Europe segment in the fourth quarter of 2019 were $1,184 million, a decrease of $20 million, or 2%, compared to the fourth quarter of 2018. In local currency terms, revenues increased by 2%, mainly due to new generic product launches partially offset by a decline in COPAXONE revenues due to the entry of competing glatiramer acetate products and the loss of exclusivity for certain products in our oncology portfolio.
Revenues by Major Products and Activities
The following table presents revenues for our Europe segment by major products and activities for the three months ended December 31, 2019 and 2018:
Europe
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S. $ in millions)
Generic products
$
871
$
844
3%
COPAXONE
106
118
(10%)
Respiratory products
86
90
(4%)
Other
122
152
(20%)
Total
$
1,184
$
1,204
(2%)
Generic products revenues in our Europe segment in the fourth quarter of 2019, including OTC products, increased by 3% to $871 million, compared to the fourth quarter of 2018. In local currency terms, revenues increased by 7%, mainly due to new generic product launches.
COPAXONE revenues in our Europe segment in the fourth quarter of 2019 decreased by 10% to $106 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 8%, mainly due to price reductions resulting from the entry of competing glatiramer acetate products.
Respiratory products revenues in our Europe segment in the fourth quarter of 2019 decreased by 4% to $86 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 2%, mainly due to lower sales in the United Kingdom.
Europe Gross Profit
Gross profit from our Europe segment in the fourth quarter of 2019 was $638 million, a decrease of 7% compared to $689 million in the fourth quarter of 2018. The decrease was mainly due to lower revenues from COPAXONE, the impact of currency fluctuations and higher cost of goods sold, partially offset by new generic product launches.
Gross profit margin for our Europe segment in the fourth quarter of 2019 decreased to 53.9%, compared to 57.2% in the fourth quarter of 2018. This decrease was mainly due to higher cost of goods sold and product mix.
Europe Profit
Profit from our Europe segment in the fourth quarter of 2019 was $258 million, an increase of 2% compared to $253 million in the fourth quarter of 2018. This increase was mainly due to cost reductions and efficiency measures as part of the restructuring plan.
International Markets Segment
Our International Markets segment includes all countries other than those in our North America and Europe segments. The key markets in this segment are Japan, Russia and Israel.
The following table presents revenues, expenses and profit for our International Markets segment for the three months ended December 31, 2019 and 2018:
Three months ended December 31,
2019
2018
(U.S. $ in millions / % of Segment Revenues)
Revenues
$
578
100%
$
599
100%
Gross profit
290
50.1%
312
52.1%
R&D expenses
21
3.7%
26
4.3%
S&M expenses
133
23.0%
134
22.4%
G&A expenses
36
6.2%
38
6.3%
Other (income) expense
(1)
§
-
§
Segment profit*
$
101
17.5%
$
114
19.0%
__________
* Segment profit does not include amortization and certain other items.
§ Represents an amount less than 0.5%.
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See "Revision of Previously Reported Consolidated Financial Statements" above.
Revenues from our International Markets segment in the fourth quarter of 2019 were $578 million, a decrease of $21 million, or 3%, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 3% compared to the fourth quarter of 2018, mainly due to lower sales in Japan and Israel.
Revenues by Major Products and Activities
The following table presents revenues for our International Markets segment by major products and activities for the three months ended December 31, 2019 and 2018:
International markets
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S. $ in millions)
Generic products
$
489
$
499
(2%)
COPAXONE
17
20
(14%)
Distribution*
6
5
11%
Other
67
76
(12%)
Total
$
578
$
599
(3%)
*The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See "Revision of Previously Reported Consolidated Financial Statements" above.
Generic products revenues in our International Markets segment, which include OTC products, decreased by 2% to $489 million in the fourth quarter of 2019, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 3%, mainly due to lower sales in Japan resulting from regulatory pricing reductions and generic competition to off-patented products.
COPAXONE revenues in our International Markets segment in the fourth quarter of 2019 decreased by 14% to $17 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 8%.
Distribution revenues in our International Markets segment in the fourth quarter of 2019 increased by 11% to $6 million, compared to the fourth quarter of 2018. In local currency terms, revenues increased by 3%.
International Markets Gross Profit
Gross profit from our International Markets segment in the fourth quarter of 2019 was $290 million, a decrease of 7% compared to $312 million in the fourth quarter of 2018. Gross profit margin for our International Markets segment in the fourth quarter of 2019 decreased to 50.1%, compared to 52.1% in the fourth quarter of 2018. The decrease was mainly due to lower gross profit resulting from changes in the product mix in certain countries, mainly Japan.
International Markets Profit
Profit from our International Markets segment in the fourth quarter of 2019 was $101 million, compared to $114 million in the fourth quarter of 2018. The decrease was mainly due to lower revenues in Japan, partially offset by cost reductions and efficiency measures as part of the restructuring plan.
Other Activities
We have other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis. Our other activities are not included in our North America, Europe or International Markets segments.
Our revenues from other activities in the fourth quarter of 2019 decreased by 12% to $332 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 11%.
API sales to third parties in the fourth quarter of 2019 were $187 million, a decrease of 10% compared to the fourth quarter of 2018, in both U.S. dollars and local currency terms.
Outlook for 2020 Non-GAAP Results
2019 Actuals
2020 Outlook
Revenues
$16.9 billion
$16.6 - $17.0 billion
Non-GAAP Operating Income
$4.1 billion
$4.0 - $4.4 billion
EBITDA
$4.7 billion
$4.5 - $4.9 billion
Non-GAAP EPS
$2.40
$2.30 - $2.55
Weighted average number of shares
1,094 million
1,098 million
Free cash flow
$2.1 billion
$1.8 - $2.2 billion
The outlook for 2020 non-GAAP results is based on the following key assumptions:
2019 Actuals
Commentary
Global COPAXONE
$1.5 billion
Continued generic erosion; sales of approximately $1.2 billion
AUSTEDO
$412 million
Continued increase in the U.S. sales to approximately $650 million
Global AJOVY
$96 million
Continued increase in sales to approximately $250 million
Foreign Exchange
Moderate negative impact on revenues and operating income compared to 2019
Tax Rate
18%
17% - 18%
CAPEX
$0.5 billion
$0.6 billion
Conference Call
Teva will host a conference call and live webcast along with a slide presentation on Wednesday, February 12, 2020 at 8:00 a.m. ET to discuss its fourth quarter and annual 2019 results and overall business environment. A question & answer session will follow.
United States
1-866-966-1396
International
+44 (0) 2071 928000
Israel
1-809-203-624
For a list of other international toll-free numbers, click here.
Passcode: 1459117
A live webcast of the call will also be available on Teva's website at: ir.tevapharm.com. Please log in at least 10 minutes prior to the conference call in order to download the applicable software.
Following the conclusion of the call, a replay of the webcast will be available within 24 hours on the Company's website by calling United States 1-866-331-1332; International +44 (0) 3333 009785; passcode: 1459117.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) has been developing and producing medicines to improve people’s lives for more than a century. We are a global leader in generic and specialty medicines with a portfolio consisting of over 3,500 products in nearly every therapeutic area. Around 200 million people around the world take a Teva medicine every day, and are served by one of the largest and most complex supply chains in the pharmaceutical industry. Along with our established presence in generics, we have significant innovative research and operations supporting our growing portfolio of specialty and biopharmaceutical products. Learn more at www.tevapharm.com.
Non-GAAP Financial Measures
This press release contains certain financial information that differs from what is reported under accounting principles generally accepted in the United States ("GAAP"). These non-GAAP financial measures, including, but not limited to, revenues prior to revision, non-GAAP EPS, non-GAAP operating income, non-GAAP gross profit, non-GAAP gross profit margin, EBITDA, non-GAAP financial expenses, non-GAAP income taxes, non-GAAP net income and non-GAAP diluted EPS are presented in order to facilitates investors' understanding of our business. We utilize certain non-GAAP financial measures to evaluate performance, in conjunction with other performance metrics. The following are examples of how we utilize the non-GAAP measures: our management and board of directors use the non-GAAP measures to evaluate our operational performance, to compare against work plans and budgets, and ultimately to evaluate the performance of management; our annual budgets are prepared on a non-GAAP basis; and senior management’s annual compensation is derived, in part, using these non-GAAP measures. Revenues prior to revision are being presented to provide investors with comparable information to that which was provided in prior periods. The revision of gross to net presentation of revenues in the distribution business in our International Markets segment decreased revenues with an offsetting decrease in cost of sales. See the attached tables for a reconciliation of the GAAP results to the adjusted non-GAAP figures. Investors should consider non-GAAP financial measures in addition to, and not as replacements for, or superior to, measures of financial performance prepared in accordance with GAAP. We are not providing forward looking guidance for GAAP reported financial measures or a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measure because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management’s current beliefs and expectations and are subject to substantial risks and uncertainties, both known and unknown, that could cause our future results, performance or achievements to differ significantly from that expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to:
and other factors discussed in our Annual Report on Form 10-K and subsequently filed reports, including the sections captioned "Risk Factors." Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statements or other information contained herein, whether as a result of new information, future events or otherwise. You are cautioned not to put undue reliance on these forward-looking statements.
Consolidated Statements of Income (U.S. dollars in millions, except share and per share data) Three months ended Year ended December 31, December 31,2019
2018
2019
2018
(Unaudited) (Unaudited) (Audited) (Audited) Net revenues4,468
4,418
16,887
18,271
Cost of sales2,510
2,447
9,351
9,975
Gross profit1,958
1,971
7,537
8,296
Research and development expenses232
295
1,010
1,213
Selling and marketing expenses706
797
2,614
2,916
General and administrative expenses318
344
1,192
1,298
Other asset impairments, restructuring and other items161
153
423
987
Intangible assets impairment433
745
1,639
1,991
Goodwill impairment-
2,727
-
3,027
Legal settlements and loss contingencies7
31
1,178
(1,208)
Other expense (income)(47)
43
(76)
(291)
Operating income (loss)148
(3,164)
(443)
(1,637)
Financial expenses – net186
223
822
959
Loss before income taxes(38)
(3,387)
(1,265)
(2,596)
Tax benefits(119)
(139)
(278)
(195)
Share in losses (profit) of associated companies, net5
(5)
13
71
Net income (loss)75
(3,243)
(1,000)
(2,472)
Net income attributable to non-controlling interests(34)
(357)
(2)
(322)
Net income (loss) attributable to Teva110
(2,886)
(999)
(2,150)
Dividends on preferred shares-
54
-
249
Net loss attributable to Teva's ordinary shareholders110
(2,940)
(999)
(2,399)
Earnings per share attributable to ordinary shareholders: Basic ($)0.10
(2.85)
(0.91)
(2.35)
Diluted ($)0.10
(2.85)
(0.91)
(2.35)
Weighted average number of shares (in millions): Basic1,092
1,031
1,091
1,021
Diluted1,094
1,031
1,091
1,021
Non-GAAP net income attributable to ordinary shareholders:*683
543
2,627
2,985
Non-GAAP net income attributable to ordinary shareholders for diluted earnings per share:683
543
2,627
2,985
Non-GAAP earnings per share attributable to ordinary shareholders:* Basic ($)0.63
0.53
2.41
2.92
Diluted ($)0.62
0.53
2.40
2.92
Non-GAAP average number of shares (in millions): Basic1,092
1,031
1,091
1,021
Diluted1,094
1,034
1,094
1,024
* See reconciliation attached. Condensed Consolidated Balance Sheets (U.S. dollars in millions) (Audited) December 31, December 31,2019
2018
ASSETS Current assets: Cash and cash equivalents1,975
1,782
Trade receivables5,676
5,822
Inventories4,422
4,731
Prepaid expenses870
899
Other current assets434
468
Assets held for sale87
92
Total current assets13,464
13,794
Deferred income taxes386
368
Other non-current assets591
731
Property, plant and equipment, net6,436
6,868
Operating lease right-of-use assets514
-
Identifiable intangible assets, net11,232
14,005
Goodwill24,846
24,917
Total assets57,470
60,683
LIABILITIES & EQUITY Current liabilities: Short-term debt2,345
2,216
Sales reserves and allowances6,159
6,711
Trade payables1,718
1,853
Employee-related obligations693
870
Accrued expenses1,869
1,868
Other current liabilities889
804
Total current liabilities13,674
14,322
Long-term liabilities: Deferred income taxes1,096
2,140
Other taxes and long-term liabilities2,640
1,727
Senior notes and loans24,562
26,700
Operating lease liabilities435
-
Total long-term liabilities28,733
30,567
Equity: Teva shareholders’ equity13,972
14,707
Non-controlling interests1,091
1,087
Total equity15,063
15,794
Total liabilities and equity57,470
60,683
TEVA PHARMACEUTICAL INDUSTRIES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in millions) (Unaudited) Year endedThree months ended
December 31, December 31,2019
2018
2019
2018
Operating activities: Net income (loss)(1,000
)
$
(2,472
)
$
76
$
(3,243
)
Adjustments to reconcile net income (loss) to net cash provided by operations: Impairment of long-lived assets1,778
5,621
476
3,717
Depreciation and amortization
1,722
1,842
416
382
Net change in operating assets and liabilities
(896
)
(1,823
)
(112
)
(302
)
Deferred income taxes — net and uncertain tax positions(985
)
(837
)
(333
)
(187
)
Stock-based compensation119
155
20
33
Other items
28
(135
)
23
(127
)
Research and development in process-
114
-
60
Net income (loss) from sale of long-lived assets and investments
(18
)
(19
)
(28
)
34
Net cash provided by operating activities
748
2,446
538
367
Investing activities: Beneficial interest collected in exchange for securitized trade receivables
1,487
1,735
379
363
Proceeds from sales of long-lived assets and investments
343
890
174
10
Purchases of property, plant and equipment
(525
)
(651
)
(119
)
(213
)
Purchases of investments and other assets(8
)
(119
)
(3
)
(63
)
Other investing activities58
11
(1
)
(23
)
Net cash provided by investing activities1,355
1,866
430
74
Financing activities: Repayment of senior notes and loans and other long-term liabilities
(3,944
)
(7,446
)
(2,229
)
(457
)
Proceeds from senior notes and loans, net of issuance costs2,083
4,434
2,083
-
Net change in short-term debt
(2
)
(260
)
(98
)
2
Other financing activities
(11
)
(57
)
3
(44
)
Tax withholding payments made on shares and dividends(52
)
(22
)
-
-
Net cash provided by (used in) financing activities
(1,926
)
(3,351
)
(241
)
(499
)
Translation adjustment on cash and cash equivalents16
(142
)
7
(35
)
Net change in cash and cash equivalents193
819
734
(93
)
Balance of cash and cash equivalents at beginning of period1,782
963
1,241
1,875
Balance of cash and cash equivalents at end of period
$
1,975
$
1,782
$
1,975
$
1,782
Three Months Ended December 31, 2019 U.S. $ and shares in millions (except per share amounts) GAAP Excluded for non GAAP measurement Non GAAP Amortization ofpurchasedintangible assets Legalsettlements andlosscontingencies Impairmentof long-livedassets Other R&Dexpenses Restructuringcosts Costs related toregulatory actionstaken in facilities Equitycompensation Contingentconsideration Gain on saleof business OthernonGAAPitems Otheritems COGS
2,510
256
17
5
26
2,206
R&D232
(8)
4
-
237
S&M706
34
6
1
665
G&A318
5
5
309
Other income(47)
(38)
(9)
Legal settlements and loss contingencies7
7
-
Other asset impairments, restructuring and other items161
44
59
55
2
-
Intangible assets impairment433
433
-
Financial expenses186
(11)
198
Corresponding tax effect(119)
(274)
155
Share in losses of associated companies – net5
-
5
Net income attributable to non-controlling interests(34)
(54)
19
Total reconciled items290
7
477
(8)
59
17
19
55
(38)
34
(339)
EPS - Basic0.10
0.52
0.63
EPS - Diluted0.10
0.52
0.62
The non-GAAP diluted weighted average number of shares was 1,094 million for the three months ended December 31, 2019.
Three Months Ended December 31, 2018 U.S. $ and shares in millions (except per share amounts) GAAP Excluded for non GAAP measurement Non GAAP Amortization ofpurchasedintangibleassets Legalsettlements andlosscontingencies Goodwillimpairment Impairmentof long-livedassets Other R&Dexpenses Acquisition,integrationand relatedexpenses Restructuringcosts Costs related toregulatory actionstaken in facilities Equitycompensation Contingentconsideration Gain on sale ofbusiness Other non GAAPitems Otheritems COGS2,447
233
8
6
110
2,090
R&D295
1
5
-
289
S&M797
24
8
(3)
768
G&A344
11
3
330
Other income43
48
(5)
Legal settlements and loss contingencies31
31
-
Other asset impairments, restructuring and other items153
245
4
46
(27)
(115)
-
Intangible assets impairment745
745
-
Goodwill impairment2,727
2,727
-
Financial expenses223
7
216
Corresponding tax effect(139)
(235)
96
Share in losses of associated companies – net(5)
-
(5)
Net income attributable to non-controlling interests(357)
(399)
42
Total reconciled items257
31
2,727
990
1
4
46
8
30
(27)
48
(5)
(627)
EPS - Basic(2.85)
3.38
0.53
EPS - Diluted(2.85)
3.38
0.53
The non-GAAP diluted weighted average number of shares was 1,034 million for the three months ended December 31, 2018.
Year Ended December 31, 2019 (U.S. $ and shares in millions, except per share amounts) GAAP Excluded for non GAAP measurement Non GAAP Amortizationof purchasedintangibleassets Legalsettlements andloss contingencies Impairment oflong-livedassets Other R&Dexpenses Restructuringcosts Costsrelated toregulatoryactionstaken infacilities Equitycompensation Contingentconsideration Gain onsale ofbusiness OthernonGAAPitems Otheritems COGS*9,351
973
45
26
121
8,185
R&D1,010
(15)
20
1
1,004
S&M2,614
139
35
1
2,438
G&A1,192
42
5
1,145
Other income(76)
(50)
(27)
Legal settlements and loss contingencies1,178
1,178
-
Other asset impairments, restructuring and other items423
139
199
59
26
-
Intangible assets impairment1,639
1,639
-
Financial expenses822
(3)
824
Corresponding tax effect(278)
(875)
597
Share in losses of associated companies – net13
-
13
Net income attributable to non-controlling interests(2)
(82)
80
Total reconciled items1,113
1,178
1,778
(15)
199
45
123
59
(50)
155
(959)
EPS - Basic(0.91)
3.32
2.41
EPS - Diluted(0.91)
3.32
2.40
The non-GAAP diluted weighted average number of shares was 1,094 million for the year ended December 31, 2019.
Year ended December 31, 2018 (U.S. $ and shares in millions, except per share amounts) GAAP Excluded for non GAAP measurement Non GAAP Amortization ofpurchasedintangible assets Goodwillimpairment Legal settlementsand losscontingencies Impairmentof long-livedassets Other R&Dexpenses Acquisitionintegrationand relatedexpenses Restructuringcosts Costs related toregulatoryactions taken infacilities Equitycompensation Contingentconsideration Gain on sale ofbusiness Other nonGAAPitems Otheritems COGS*9,975
1,004
14
28
204
8,725
R&D1,213
83
26
2
1,102
S&M2,916
162
43
(7)
2,718
G&A1,298
55
15
1,228
Other income(291)
(66)
(225)
Legal settlements and loss contingencies(1,208)
(1,208)
-
Other asset impairments, restructuring and other items987
500
13
488
57
(71)
-
Intangible assets impairment1,991
1,991
-
Goodwill impairment3,027
3,027
-
Financial expenses959
66
893
Corresponding tax effect(195)
(714)
519
Share in losses of associated companies – net71
103
(32)
Net income attributable to non-controlling interests(322)
(431)
109
Total reconciled items1,166
3,027
(1,208)
2,491
83
13
488
14
152
57
(66)
143
(976)
EPS - Basic(2.35)
5.27
2.92
EPS - Diluted(2.35)
5.27
2.92
The non-GAAP diluted weighted average number of shares was 1,024 million for the year ended December 31, 2018.The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1b to our consolidated financial statements for additional information.
Segment Information North America Europe International Markets Three months endedDecember 31, Three months endedDecember 31, Three months endedDecember 31,2019
2018
2019
2018
2019
2018
(U.S. $ in millions) (U.S. $ in millions) (U.S. $ in millions) Revenues$
2,373
$
2,238
$
1,184
$
1,204
$
578
$
599
Gross profit1,196
1,201
638
689
290
312
R&D expenses155
185
63
75
21
26
S&M expenses265
341
253
278
133
134
G&A expenses97
127
65
82
36
38
Other income (loss)(7)
(3)
-
1
(1)
-
Segment profit$
686
$
551
$
258
$
253
$
101
$
114
Segment Information North America Europe International Markets Year ended December 31, Year ended December 31, Year ended December 31,2019
2018
2019
2018
2019
2018
(U.S. $ in millions) (U.S. $ in millions) (U.S. $ in millions) Revenues$
8,542
$
9,297
$
4,795
$
5,186
$
2,246
$
2,422
Gross profit4,350
4,979
2,704
2,884
1,167
1,254
R&D expenses652
713
262
283
88
96
S&M expenses1,021
1,154
890
1,003
481
518
G&A expenses439
484
239
325
138
153
Other income(14)
(209)
(5)
-
(3)
(11)
Segment profit$
2,252
$
2,837
$
1,318
$
1,273
$
464
$
498
Reconciliation of our segment profit
to consolidated income before income taxes
Three months ended
December 31,
2019
2018
(U.S.$ in millions)
North America profit$
686
$
551
Europe profit
258
253
International Markets profit
101
114
Total segment profit
1,044
918
Profit (loss) of other activities
17
28
1,061
946
Amounts not allocated to segments: Amortization
290
257
Other asset impairments, restructuring and other items
161
153
Goodwill impairment
-
2,727
Intangible asset impairments
433
745
Loss from divestitures, net of divestitures related costs
(38
)
48
Other R&D expenses (income)
(8
)
1
Costs related to regulatory actions taken in facilities
17
8
Legal settlements and loss contingencies
7
31
Other unallocated amounts
51
140
Consolidated operating income (loss)
148
(3,164
)
Financial expenses - net186
223
Consolidated income (loss) before income taxes
$
(38
)
$
(3,387
)
Reconciliation of our segment profit
to consolidated income before income taxes
Year ended
December 31,
2019
2018
(U.S.$ in millions)
North America profit$
2,252
$
2,837
Europe profit
1,318
1,273
International Markets profit
464
498
Total segment profit
4,034
4,608
Profit of other activities
108
115
4,142
4,723
Amounts not allocated to segments: Amortization
1,113
1,166
Other asset impairments, restructuring and other items
423
987
Goodwill impairment
-
3,027
Intangible asset impairments
1,639
1,991
Gain on divestitures, net of divestitures related costs
(50
)
(66
)
Other R&D expenses (income)(15
)
83
Costs related to regulatory actions taken in facilities
45
14
Legal settlements and loss contingencies
1,178
(1,208
)
Other unallocated amounts252
366
Consolidated operating income (loss)
(443
)
(1,637
)
Financial expenses - net822
959
Consolidated income (loss) before income taxes
$
(1,265
)
$
(2,596
)
Revenues by Activity and Geographical Area (Unaudited)Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
North America segment Generics medicines
$
1,137
$
1,099
3%
COPAXONE264
356
(26%)
Bendeka and Trenda125
140
(11%)
ProAir80
45
77%
QVAR67
9
604%
AJOVY25
3
NA
AUSTEDO136
68
98%
ANDA412
363
13%
Other128
153
(16%)
Total2,373
2,238
6%
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
Europe segment Generic medicines
$
871
$
844
3%
COPAXONE106
118
(10%)
Respiratory products86
90
(4%)
Other122
152
(20%)
Total1,184
1,204
(2%)
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
International Markets segment Generics medicines
$
489
$
499
(2%)
COPAXONE17
20
(14%)
Distribution6
5
11%
Other67
76
(12%)
Total578
599
(3%)
Revenues by Activity and Geographical Area (Unaudited)Year ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
North America segment
Generics medicines
$
3,963
4,056
(2%)
COPAXONE1,017
1,759
(42%)
Bendeka and Trenda496
642
(23%)
ProAir274
397
(31%)
QVAR250
182
38%
AJOVY93
3
N/A
AUSTEDO412
204
102%
ANDA1,492
1,347
11%
Other546
708
(23%)
Total8,542
9,297
(8%)
Year ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
Europe segment
Generic medicines
$
3,470
$
3,593
(3%)
COPAXONE432
535
(19%)
Respiratory products354
402
(12%)
Other539
656
(18%)
Total4,795
5,186
(8%)
Year ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
International Markets segment
Generics medicines
$
1,893
$
2,022
(6%)
COPAXONE63
72
(13%)
Distribution20
19
6%
Other271
309
(12%)
Total2,246
2,422
(7%)
Revision
(Unaudited)
The following table summarizes the impact of the revision on net revenues and non-GAAP cost of sales in the consolidated statements of income in the relevant periods: Net revenues Cost of sales As reported Adjustment As revised As reported Adjustment As revised2018
Q15,065
(149)
4,916
2,447
(149)
2,298
Q24,701
(150)
4,551
2,362
(150)
2,212
Q34,529
(143)
4,386
2,268
(143)
2,125
Q44,559
(141)
4,418
2,231
(141)
2,090
2019
Q14,295
(146)
4,149
2,145
(146)
1,999
Q24,337
(159)
4,178
2,149
(159)
1,990
Q34,264
(171)
4,093
2,162
(171)
1,991
Revision of prior period financial statements with respect to the distribution business in our International Markets segment, decreasing sales by $165 million in Q4 2019, and $642 million in 2019, with an offsetting decrease in cost of sales. No impact on gross profit, operating income, earnings per share or cash flows for the related periods. Free cash flow reconciliation (Unaudited)
Year ended December 31,
2019
2018
(U.S. $ in millions)
Net cash provided by operating activities748
2,446
Beneficial interest collected in exchange for securitized trade receivables, included in investing activities
1,487
1,735
capital expenditures
(525
)
(651
)
Proceeds from sale of property, plant and equipment, intangible assets and companies343
150
Free cash flow
$
2,053
$
3,679
Free cash flow reconciliation (Unaudited)
Three months ended
December 31,
2019
2018
(U.S. $ in millions)
Net cash provided by operating activities538
367
Beneficial interest collected in exchange for securitized trade receivables, included in investing activities
379
363
capital expenditures
(119
)
(213
)
Proceeds from sale of property, plant and equipment, intangible assets and companies176
6
Free cash flow
$
974
$
522
View source version on businesswire.com: https://www.businesswire.com/news/home/20200212005398/en/
IR Contacts United States Kevin C. Mannix (215) 591-8912
Israel Ran Meir 972 (3) 926-7516
PR Contacts United States Kelley Dougherty (973) 832-2810
Israel Yonatan Beker 972 (54) 888 5898
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