Bronte Capital |
Valeant Part XIII: channeling Jeff Skilling - or trying to reconstruct Valeant's balance sheet Posted: 20 Oct 2014 07:04 AM PDT 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.
Consolidated Balance Sheet and Other Data (In millions) 5.1 Cash
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)
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 |
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