01—Abstract
Summary
Summary of the 20-F filed February 9, 2015. Cited figures are marked; the original filing is the authoritative source.
Teva Pharmaceutical Industries Limited reported net revenues of $20.27 billiona for 2014, essentially flat compared with $20.31 billion in 2013, as declines in generic and OTC sales were offset by higher specialty medicines revenues.
Operating income rose to $3.95 billionb from $1.65 billion, driven mainly by a $111 million gain from legal settlements and loss contingencies in 2014 versus a $1.52 billion expense in 2013 (largely the pantoprazole settlement). Net income attributable to Teva was $3.06 billion, or $3.56 diluted earnings per share, compared with $1.27 billion, or $1.49 per share, in 2013. Cash flow from operating activities was $5.13 billion, up from $3.24 billion.
Segment results show generic medicines revenues of $9.81 billionc with segment profit of $2.15 billion, and specialty medicines revenues of $8.56 billion with segment profit of $4.58 billion. Copaxone was $4.24 billion of revenue, or 21% of total revenues, and the filing notes that the company's U.S. Orange Book patents on Copaxone 20 mg/mL expired in May 2014 and, subject to further judicial review, in September 2015. The filing also discloses an ongoing voluntary worldwide FCPA investigation, which the company says could result in material fines, and it describes continuing antitrust and product liability litigation, including metoclopramide and modafinil matters.
Total debt declined to $10.33 billiond from $12.19 billion, and cash and cash equivalents rose to $2.23 billion. Teva's board approved a share repurchase authorization increase to $3 billion in October 2014, with $2.5 billion remaining at year-end, and dividends of $1.34 per share were paid during 2014. The company also announced it will begin declaring and paying dividends in U.S. dollars starting April 2015.
02—Key points
Key Highlights
- Net revenues of $20.27 billion were flat versus $20.31 billion in 2013; specialty medicines revenues of $8.56 billion grew while generic medicines revenues of $9.81 billion declined.
- Operating income more than doubled to $3.95 billion, largely because 2014 included a $111 million legal settlement gain versus a $1.52 billion expense in 2013.
- Diluted EPS rose to $3.56 from $1.49, and net income attributable to Teva was $3.06 billion versus $1.27 billion.
- Copaxone generated $4.24 billion in revenue (21% of total), and the filing notes its U.S. Orange Book patents expired in May 2014 and, subject to judicial review, in September 2015.
- Total debt fell to $10.33 billion from $12.19 billion, and cash flow from operations increased to $5.13 billion from $3.24 billion.
- The company disclosed an ongoing voluntary worldwide FCPA investigation, expected to continue through the end of 2015, that may result in material fines or other penalties.
- Teva increased its share repurchase program to $3 billion in October 2014, with $2.5 billion remaining, and will declare and pay dividends in U.S. dollars beginning April 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Teva Pharmaceutical Industries kept $0.15.
- Revenue$20.27B100.0%
- Cost of revenue−$9.22B45.5%
- Gross profit$11.06B54.5%
- Operating costs−$7.11B35.0%
- Operating income$3.95B19.5%
- Interest, other & tax−$896.0M4.4%
- Net income$3.06B15.1%
Where FY2014 revenue went
$20.27B- Cost of revenue: $9.22B, 45% of revenue
- Operating costs: $7.11B, 35% of revenue
- Net income: $3.06B, 15% of revenue
- Interest, other & tax: $896.0M, 4.4% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 9, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $20.27B$20.31B | −0.2% |
| Cost of Revenue | $9.22B$9.61B | −4.1% |
| Gross Profit | $11.06B$10.71B | +3.3% |
| R&D Expenses | $0$5.00M | −100.0% |
| Operating Income | $3.95B$1.65B | +139.6% |
| Interest Expense | $300.00M$314.00M | −4.5% |
| Net Income | $3.06B$1.27B | +140.7% |
| EPS (Basic) | $3.58$1.49 | +140.3% |
| EPS (Diluted) | $3.56$1.49 | +138.9% |
| Shares Outstanding (Basic) | 853.00M849.00M | +0.5% |
| Shares Outstanding (Diluted) | 858.00M850.00M | +0.9% |
05—Questions
Frequently Asked Questions
Why did operating income increase so sharply in 2014?
Operating income rose to $3.95 billion from $1.65 billion, mainly because legal settlements and loss contingencies produced a $111 million gain in 2014 compared with a $1.52 billion expense in 2013, which was largely related to the pantoprazole settlement. Higher segment profit and lower amortization and G&A expenses also contributed.
How dependent is Teva on Copaxone?
Copaxone revenues were $4.24 billion in 2014, or 21% of total revenues, and the filing states they contributed a significantly higher percentage to profits and cash flow. The filing notes competition from oral MS therapies and the possible introduction of a generic version in the United States as risks to future Copaxone sales.
What regulatory and legal risks does the filing highlight?
The filing discloses an ongoing voluntary worldwide FCPA investigation that has identified likely violations in several countries, and it states that fines, penalties or a compliance monitor could follow. It also describes FTC and EU Commission scrutiny of patent settlement agreements, numerous antitrust and product liability suits, and government investigations into marketing practices.
How did Teva's capital allocation and balance sheet change in 2014?
Total debt decreased to $10.33 billion from $12.19 billion after repayments, and cash and cash equivalents increased to $2.23 billion from $1.04 billion. Teva repurchased $500 million of shares in 2014, paid $1.16 billion in dividends, and its share repurchase authorization stood at $2.5 billion remaining at year-end.
06—Continue