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Report Date : |
19.12.2013 |
IDENTIFICATION DETAILS
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Name : |
UNITED THERAPEUTICS CORPORATION |
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Registered Office : |
1040 Spring Street Silver Spring, MD 20910 |
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Country : |
United States |
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Financials (as on) : |
31.12.2012 |
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Date of Incorporation : |
26.06.1996 |
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Legal Form : |
Public Parent |
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Line of Business : |
Subject is a biotechnology company focused on the development
and commercialization of products to address the unmet medical needs of
patients with chronic and life-threatening conditions |
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No. of Employees : |
623 |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Satisfactory |
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Payment Behaviour : |
No complaints |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31st, 2013
|
Country Name |
Previous Rating (31.12.2012) |
Current Rating (31.03.2013) |
|
United States |
A1 |
A1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
UNITED STATES - ECONOMIC
OVERVIEW
The US has the largest and most technologically powerful
economy in the world, with a per capita GDP of $49,800. In this market-oriented
economy, private individuals and business firms make most of the decisions, and
the federal and state governments buy needed goods and services predominantly
in the private marketplace. US business firms enjoy greater flexibility than
their counterparts in Western Europe and Japan in decisions to expand capital
plant, to lay off surplus workers, and to develop new products. At the same
time, they face higher barriers to enter their rivals' home markets than
foreign firms face entering US markets. US firms are at or near the forefront
in technological advances, especially in computers and in medical, aerospace,
and military equipment; their advantage has narrowed since the end of World War
II. The onrush of technology largely explains the gradual development of a
"two-tier labor market" in which those at the bottom lack the education
and the professional/technical skills of those at the top and, more and more,
fail to get comparable pay raises, health insurance coverage, and other
benefits. Since 1975, practically all the gains in household income have gone
to the top 20% of households. Since 1996, dividends and capital gains have
grown faster than wages or any other category of after-tax income. Imported oil
accounts for nearly 55% of US consumption. Crude oil prices doubled between
2001 and 2006, the year home prices peaked; higher gasoline prices ate into
consumers' budgets and many individuals fell behind in their mortgage payments.
Oil prices climbed another 50% between 2006 and 2008, and bank foreclosures
more than doubled in the same period. Besides dampening the housing market,
soaring oil prices caused a drop in the value of the dollar and a deterioration
in the US merchandise trade deficit, which peaked at $840 billion in 2008. The
sub-prime mortgage crisis, falling home prices, investment bank failures, tight
credit, and the global economic downturn pushed the United States into a
recession by mid-2008. GDP contracted until the third quarter of 2009, making
this the deepest and longest downturn since the Great Depression. To help
stabilize financial markets, in October 2008 the US Congress established a $700
billion Troubled Asset Relief Program (TARP). The government used some of these
funds to purchase equity in US banks and industrial corporations, much of which
had been returned to the government by early 2011. In January 2009 the US
Congress passed and President Barack OBAMA signed a bill providing an
additional $787 billion fiscal stimulus to be used over 10 years - two-thirds
on additional spending and one-third on tax cuts - to create jobs and to help
the economy recover. In 2010 and 2011, the federal budget deficit reached
nearly 9% of GDP. In 2012 the federal government reduced the growth of spending
and the deficit shrank to 7.6% of GDP. Wars in Iraq and Afghanistan required
major shifts in national resources from civilian to military purposes and
contributed to the growth of the budget deficit and public debt. Through 2011,
the direct costs of the wars totaled nearly $900 billion, according to US
government figures. US revenues from taxes and other sources are lower, as a
percentage of GDP, than those of most other countries. In March 2010, President
OBAMA signed into law the Patient Protection and Affordable Care Act, a health
insurance reform that was designed to extend coverage to an additional 32
million American citizens by 2016, through private health insurance for the
general population and Medicaid for the impoverished. Total spending on health
care - public plus private - rose from 9.0% of GDP in 1980 to 17.9% in 2010. In
July 2010, the president signed the DODD-FRANK Wall Street Reform and Consumer
Protection Act, a law designed to promote financial stability by protecting
consumers from financial abuses, ending taxpayer bailouts of financial firms,
dealing with troubled banks that are "too big to fail," and improving
accountability and transparency in the financial system - in particular, by
requiring certain financial derivatives to be traded in markets that are
subject to government regulation and oversight. In December 2012, the Federal
Reserve Board announced plans to purchase $85 billion per month of
mortgage-backed and Treasury securities in an effort to hold down long-term
interest rates, and to keep short term rates near zero until unemployment drops
to 6.5% from the December rate of 7.8%, or until inflation rises above 2.5%.
Long-term problems include stagnation of wages for lower-income families,
inadequate investment in deteriorating infrastructure, rapidly rising medical
and pension costs of an aging population, energy shortages, and sizable current
account and budget deficits - including significant budget shortages for state
governments
Source
: CIA
|
UNITED THERAPEUTICS
CORPORATION |
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United Therapeutics Corporation is a biotechnology company focused on the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening conditions. Its therapeutic products and product candidates include: Prostacyclin Analogues, Phosphodiesterase Type 5 (PDE-5) Inhibitor, Adcirca, Monoclonal Antibodies (MAbs), Glycobiology Antiviral Agents, Cell-Based Therapy, and Engineered Lungs and Lung Tissue for Transplantation. Prostacyclin analogues are stable synthetic forms of prostacyclin. Its product is Remodulin (treprostinil) Injection (Remodulin). PDE-5 inhibitors act to inhibit the degradation of cyclic guanosine monophosphate (cGMP) in cells. Its PDE-5 inhibitor product is Adcirca (tadalafil) tablets (Adcirca), a once-daily oral therapy for the treatment of pulmonary arterial hypertension (PAH). MAbs act by targeting tumor-associated antigens on cancer cells to activate a patient's immune system against the cancer cells. For the nine months ended 30 September 2013, United Therapeutics Corporation revenues increased 23% to $828M. Net income decreased 7% to $204.9M. Revenues reflect License fees increase of 11% to $7.3M. Net income was offset by Share-based compensation increase from $24.5M to $81.9M (expense), Research and development increase of 31% to $177.8M (expense), Other, net decrease of 99% to $323K (income). |
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Industry |
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ANZSIC 2006: |
1841 - Human Pharmaceutical and Medicinal Product Manufacturing |
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ISIC Rev 4: |
2100 - Manufacture of pharmaceuticals, medicinal chemical and botanical products |
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NACE Rev 2: |
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NAICS 2012: |
54171 - Research and Development in the Physical, Engineering, and Life Sciences |
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UK SIC 2007: |
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US SIC 1987: |
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Stock
Snapshot
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ABI Number: 506639319
1 - Profit & Loss Item Exchange Rate: USD 1 = USD 1
2 - Balance Sheet Item Exchange Rate: USD 1 = USD 1
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Sales and Distribution |
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In addition, sales of both Tyvaso and Adcirca continue to
become increasingly prominent sources of our revenues since their commercial
introduction in 2009. We sell Remodulin and Tyvaso in the United States to
our specialty pharmaceutical distributors: Accredo Health Group, Inc.
(Accredo), CuraScript, Inc. (CuraScript) and CVS Caremark (Caremark). To
date, the April 2012 acquisition of Medco Health Solutions (the parent
company of Accredo) by Express Scripts, Inc. (the parent company of
CuraScript) has not affected our business. In addition to marketing in the
United States, we also sell Remodulin to distributors internationally.
Adcirca is sold to pharmaceutical wholesalers that are part of Lilly's
pharmaceutical wholesaler network.
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Overview
United Therapeutics Corporation (UTC) is a biotechnology company that undertakes the development and marketing of therapeutic products in the areas of cardiovascular, cancer and infectious diseases. It offers products that address the unmet medical needs of patients with chronic and life-threatening conditions. The company leverages its strong financial position to gain a competitive advantage over other pharmaceutical companies to attract new customers. However, uncertain R&D outcomes and intense competition poses a threat for its marketing activities.
Strengths
The company leverages on its key technology platforms which has distinct competitive advantages over existing and emerging technologies and approaches for developing innovative products to treat patients with cardiovascular diseases and cancer. UTC develops and markets unique products based on its six key therapeutic platforms to address the unmet medical needs of patients with chronic and life-threatening cardiovascular and infectious diseases and cancer. Its key therapeutic platforms consist of Prostacyclin Analogues, Phosphodiesterase 5 (PDE5) inhibitors, Glycobiology Antiviral Agents, Monoclonal Antibodies, Cell-Based Therapy and Engineered Lungs and Lung Tissue for Transplantation. The company’s lead prostacyclin analogue is Remodulin, is a treprostinil-based compound for the treatment of cardiovascular disease. It developed an inhaled and oral formulation of treprostinil and Beraprost-MR along with prostacyclin analog, for the treatment of cardiovascular disease. Its glycobiology antiviral agents are a class of small sugar-like molecules for treating viruses like hepatitis C. Its monoclonal antibodies consist of Ch14.18 MAb and 8H9 MAb, developed for activating patients' immune systems to treat cancer. UTC’s investigational therapy in the Phosphodiesterase 5 (PDE5) inhibitors platform is Adcirca, a molecule that acts to inhibit the degradation of cyclic guanosine monophosphate (cGMP) in cells. Its cell based therapy platform is carrying studies on cells through PLacental eXpanded (PLX) for the treatment of pulmonary hypertension. Through the xenotransplantation technology acquired in July 2011, the company is developing engineered lungs and lung tissue which can be transplanted into patients suffering from PAH and other lung diseases. The company leverages on its key technology platforms for developing innovative products to treat patients with cardiovascular diseases and cancer.
Performance of Remodulin Injection
Remodulin Injection is the company’s lead product for treating pulmonary arterial hypertension (PAH). It is a prostacyclin analogue with treprostinil sodium as its main ingredient. UTC distributes subcutaneous and intravenous Remodulin in the US and European Union countries, South America, Saudi Arabia and Israel. The company generated approximately $458.0m, $430.1m and $403.6m from Remodulin, representing 50 percent, 58 percent and 68 percent of its net revenues for the years ended 2012, 2011 and 2010, respectively. Outside of the US, Remodulin is approved for treatment of PAH in 37 countries by continuous subcutaneous administration. It is also approved for treatment of PAH by continuous intravenous administration in 31 countries outside the U.S., including 23 countries in Europe. The company could further capitalize on Remodulin for maximum revenue generation and increased profitability.
The constant revenue growth of the company would strengthen its financial position and help in successfully carrying its growth and expansion plans. UTC’s revenues grew consistently in the last five years (2003-2011). The company's total revenues during the period recorded a CAGR of 12.73%, increasing from $ 281.5m in 2008 to $916.0m in 2012. In the fiscal year ended December 2012, its revenues increased by 23% from $743.2m in 2011. The growth in revenues was principally due to the increased number of patients prescribed with its products, as compared to other company’s products.
Weaknesses
The company depends heavily on limited customers for a significant portion of its net sales, which makes it vulnerable to associated market risks of being over dependent on concentrated revenue channels. Its largest customer, Accredo Health Group, Inc. generated total revenue of $514.0m in fiscal year 2012, which accounted for 56% of the company’s total revenue. UTC has also been generating a major part of its revenue from the sale of its products in the US. This makes the company vulnerable to geographically associated market risks and risks of economic downturn in any single market.
The company depends heavily on third parties for the manufacturing and marketing of its products and services. UTC’s high dependence on third parties, suppliers and manufacturers could adversely affect its business due to the delays in drugs and devices on a timely basis. The company depends on Baxter Pharmaceutical Solutions, LLC for the production of Remodulin. In April 2009, the company amended its agreement with Baxter to extend it till 2013. UTC also relies on Catalent Pharma Solutions, Inc. for conducting stability studies on Remodulin such as formulating treprostinil for inhalation use, manufacturing Tyvaso, formulating tablets for its oral clinical trials, and analyzing other products in development. The company has also entered into manufacturing and supply agreement with Lilly. Lilly manufactures and distributes Adcirca through its wholesaler network. A change in supplier or manufacturer could cause a delay in the manufacture, distribution and research efforts associated with its respective products or result in increased costs.
Opportunities
The company’s focus on biologics provides opportunities to develop new drugs and drive its revenue growth in this fast growing sector. Biologics, which are manufactured from proteins sourced from living organisms, are bringing a paradigm change in the way healthcare is administered. Biologics, which offer greater efficacy and innovative therapies, are the fastest growing pharmaceutical market segments globally. Biologics also offer a definite competitive advantage to the company as they require shorter development time and provide greater patent protection as they are difficult to copy. Until recently, there was no generic competition to the biotech industry as there was no regulatory framework in place to approve generic version of biotech drugs. The company may also benefit from better IP protection of its patent. Most regulators felt that biologic drugs, unlike pharmaceutical drugs, are hard to copy as they are manufactured from living cells, which are hard to replicate. However, the situation is changing fast with European regulatory authority approving Omnitrope, a generic version of human growth protein, and issuing guidelines for approving generic versions of select biologic drugs. The biologics industry emerged as a major growth area in the global healthcare industry. Since its emergence in the 1970s, the biologics industry has grown rapidly to reach approximately $128 billion in 2009. In-house research suggests that the biologic drugs market outperformed the pharmaceutical market in the past few years. The biologics industry had a year-on-year average growth rate of approximately 11.5% over 2007–2009. This is significantly higher than the pharmaceutical industry’s growth rate of 6% during the same period. It is expected to grow 9.3% for the period of 2009–2016.
Rising Healthcare Expenditure in the US
Rising healthcare expenditure in the US provides significant opportunities to the company in generating higher revenue. According to the US government’s Center for Medicare and Medicaid Services (CMS), healthcare expenditure in the country rose 6.8% to exceed $2 trillion and represented 16% of the country’s gross domestic product (GDP). According to the Congressional Budget Office, if the healthcare spending continues to increase at its current pace, CMS spending and private health costs will increase from the current 16% of GDP to 25% in 2025.
Research and Development Projects
The company has strong focus on its research and development (R&D) activities for inventing new technologies and products, as well as new product development. UTC’S research and development expenses amounted to $173.4m, which accounted for 18.9% of the company’s total revenue in fiscal year 2012. Its R&D activities are focuses on the development of several pipeline products. Currently, UTC has about nine products in clinical development. These include Oral Treprostinil, Beraprost-MR, IW001 for IPF and PGD, PLX Cells, pulmonary tissue replacement and remodeling, and Remodulin via implantable pump for treating cardiopulmonary diseases; cancer treating products including ch14.18 for treating Neuroblastoma, and 8H9 MAb for metastatic brain cancer; and Glycobiology antiviral agents for treating infectious diseases. Part from this, the company is also developing engineered lungs for transplantation in pre clinical stage. Such product pipeline will further expand the addressable markets and provide enough opportunities for the company to improve its market share.
Threats
Adverse or inconclusive results from preclinical testing or clinical trials may substantially delay or halt the development of UTC's various product candidates, consequently affecting its timeliness for profitability. The outcome of clinical trials is always a subject of uncertainty. After the discovery of a new compound, substantial amount of money and a great deal of time are required to successfully launch a new product. Moreover, it may become necessary to discontinue clinical development if the effectiveness of a drug is not proven as initially expected, or if serious adverse effects arise. In addition, pharmaceuticals are subject to legal restrictions in each country and authorization from local regulatory authorities is a prerequisite for a product launch in every country. It is difficult to accurately foresee when approvals for a new product can be obtained.
The medical device industry is subject to various significant ongoing technological advances and product innovation and development. Hence, in order to meet its customer’s demands, UTC must continuously design new, and update existing products and invest and develop new technologies and products. The launch of new products and technologies by the company involves a significant commitment towards its research and development. Upon investing in these new technologies, the company’s profits may suffer if they are not accepted in the marketplace as anticipated. Additionally, its competitors may develop innovative technologies and products, which might render its technology and products under development obsolete or uncompetitive.
The company operates in a highly competitive environment of biotechnology and pharmaceutical companies which are subject to rapid and substantial technological change. Developments by third parties could render UTC’S products and/or technologies non-competitive, and the company may not be able to keep pace with technological developments. Its competitors could develop products which offer an entirely different approach or means of accomplishing the desired therapeutic effect in comparison to UTC’S products, which could also be more effective and less costly than UTC ‘S product candidates. Its lead product Remodulin Injection faces competition from products such as Flolan, Generic epoprostenol, Ventavis, Revatio, Letairis, and Tracleer, all developed for the treatment of PAH. The company should anticipate industry trends and develop advanced products ahead of its competitors. UTC expects to continue to encounter competition in the future which could limit its ability to grow revenue and maintain acceptable pricing levels. Factors such as changing customer order patterns, changing incentive programs; or competitors’ new products can impact the company’s competitive positioning.
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of infoUSA, has developed a sophisticated computer model to assign credit
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proven model considers information such as the number of employees, years in
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Company Name |
Company Type |
Location |
Country |
Industry |
Sales |
Employees |
|
Parent |
Silver Spring, MD |
United States |
Pharmaceutical Manufacturing |
916.1 |
623 |
|
|
Subsidiary |
Silver Spring, MD |
United States |
Research and Development Services |
|
200 |
|
|
Subsidiary |
Silver Spring, MD |
United States |
Pharmaceutical Manufacturing |
|
200 |
|
|
Subsidiary |
Guildford |
United Kingdom |
Health and Personal Care Wholesale |
16.4 |
37 |
|
|
Subsidiary |
Melbourne, FL |
United States |
Electromedical and Control Instruments Manufacturing |
5.9 |
25 |
|
|
Subsidiary |
Blacksburg, VA |
United States |
Pharmaceutical Manufacturing |
|
25 |
|
|
Branch |
Resrch Trngle Pk, NC |
United States |
Pharmaceutical Manufacturing |
|
16 |
|
|
Subsidiary |
Burlington, VT |
United States |
Pharmaceutical Manufacturing |
|
7 |
|
|
Branch |
Satellite Beach, FL |
United States |
Pharmaceutical Manufacturing |
4.7 |
6 |
|
|
Branch |
Washington, DC |
United States |
Pharmaceutical Manufacturing |
0.9 |
2 |
|
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31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Restated Normal |
Restated Normal |
Restated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate (Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Net Sales |
916.1 |
743.2 |
592.9 |
358.9 |
281.5 |
|
Revenue |
916.1 |
743.2 |
592.9 |
358.9 |
281.5 |
|
Total Revenue |
916.1 |
743.2 |
592.9 |
358.9 |
281.5 |
|
|
|
|
|
|
|
|
Cost of Revenue |
119.3 |
88.9 |
67.7 |
40.9 |
30.1 |
|
Cost of Revenue, Total |
119.3 |
88.9 |
67.7 |
40.9 |
30.1 |
|
Gross Profit |
796.8 |
654.3 |
525.2 |
318.0 |
251.4 |
|
|
|
|
|
|
|
|
Selling/General/Administrative Expense |
184.1 |
164.2 |
121.4 |
107.8 |
74.2 |
|
Labor & Related Expense |
17.6 |
-7.7 |
67.2 |
64.1 |
20.1 |
|
Total Selling/General/Administrative Expenses |
201.7 |
156.5 |
188.6 |
171.9 |
94.3 |
|
Research & Development |
173.4 |
180.0 |
165.3 |
120.4 |
239.2 |
|
Total Operating Expense |
494.4 |
425.4 |
421.6 |
333.1 |
363.6 |
|
|
|
|
|
|
|
|
Operating Income |
421.6 |
317.8 |
171.3 |
25.8 |
-82.1 |
|
|
|
|
|
|
|
|
Interest Expense - Non-Operating |
-17.5 |
-22.2 |
-19.8 |
-18.0 |
-16.2 |
|
Interest Capitalized - Non-Operating |
0.9 |
0.8 |
0.1 |
5.2 |
4.8 |
|
Interest Expense, Net Non-Operating |
-16.6 |
-21.4 |
-19.7 |
-12.9 |
-11.4 |
|
Interest Income - Non-Operating |
3.9 |
3.5 |
2.9 |
5.1 |
11.0 |
|
Investment Income - Non-Operating |
-0.1 |
-0.1 |
-0.2 |
-0.1 |
-0.2 |
|
Interest/Investment Income - Non-Operating |
3.8 |
3.3 |
2.8 |
5.0 |
10.8 |
|
Interest Income (Expense) - Net Non-Operating Total |
-12.8 |
-18.0 |
-16.9 |
-7.9 |
-0.6 |
|
Other Non-Operating Income (Expense) |
31.9 |
-0.6 |
0.8 |
0.7 |
-1.0 |
|
Other, Net |
31.9 |
-0.6 |
0.8 |
0.7 |
-1.0 |
|
Income Before Tax |
440.7 |
299.1 |
155.2 |
18.6 |
-83.7 |
|
|
|
|
|
|
|
|
Total Income Tax |
136.2 |
81.9 |
43.9 |
-0.7 |
-34.4 |
|
Income After Tax |
304.4 |
217.2 |
111.2 |
19.3 |
-49.3 |
|
|
|
|
|
|
|
|
Net Income Before Extraord Items |
304.4 |
217.2 |
111.2 |
19.3 |
-49.3 |
|
Discontinued Operations |
0.0 |
0.6 |
-5.3 |
0.1 |
- |
|
Total Extraord Items |
0.0 |
0.6 |
-5.3 |
0.1 |
- |
|
Net Income |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
|
|
|
|
|
|
|
Income Available to Common Excl Extraord Items |
304.4 |
217.2 |
111.2 |
19.3 |
-49.3 |
|
|
|
|
|
|
|
|
Income Available to Common Incl Extraord Items |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
|
|
|
|
|
|
|
Basic/Primary Weighted Average Shares |
52.1 |
57.2 |
56.1 |
53.3 |
45.8 |
|
Basic EPS Excl Extraord Items |
5.84 |
3.80 |
1.98 |
0.36 |
-1.08 |
|
Basic/Primary EPS Incl Extraord Items |
5.84 |
3.81 |
1.89 |
0.37 |
-1.08 |
|
Dilution Adjustment |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Diluted Net Income |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
Diluted Weighted Average Shares |
53.3 |
59.4 |
59.5 |
56.1 |
45.8 |
|
Diluted EPS Excl Extraord Items |
5.71 |
3.66 |
1.87 |
0.34 |
-1.08 |
|
Diluted EPS Incl Extraord Items |
5.71 |
3.67 |
1.78 |
0.35 |
-1.08 |
|
Dividends per Share - Common Stock Primary Issue |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|
Gross Dividends - Common Stock |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Interest Expense, Supplemental |
17.5 |
21.4 |
19.7 |
12.9 |
11.4 |
|
Interest Capitalized, Supplemental |
-0.9 |
-0.8 |
-0.1 |
-5.2 |
-4.8 |
|
Depreciation, Supplemental |
27.1 |
18.2 |
17.6 |
10.7 |
3.9 |
|
Total Special Items |
- |
37.0 |
7.7 |
5.5 |
151.6 |
|
Normalized Income Before Tax |
440.7 |
336.2 |
162.8 |
24.1 |
67.9 |
|
|
|
|
|
|
|
|
Effect of Special Items on Income Taxes |
- |
10.1 |
2.2 |
1.9 |
53.1 |
|
Inc Tax Ex Impact of Sp Items |
136.2 |
92.0 |
46.1 |
1.2 |
18.7 |
|
Normalized Income After Tax |
304.4 |
244.2 |
116.7 |
22.9 |
49.2 |
|
|
|
|
|
|
|
|
Normalized Inc. Avail to Com. |
304.4 |
244.2 |
116.7 |
22.9 |
49.2 |
|
|
|
|
|
|
|
|
Basic Normalized EPS |
5.84 |
4.27 |
2.08 |
0.43 |
1.07 |
|
Diluted Normalized EPS |
5.71 |
4.11 |
1.96 |
0.41 |
1.07 |
|
Amort of Intangibles, Supplemental |
2.1 |
1.7 |
1.6 |
0.7 |
0.6 |
|
Rental Expenses |
3.6 |
4.6 |
2.7 |
2.7 |
2.5 |
|
Advertising Expense, Supplemental |
- |
- |
- |
- |
1.2 |
|
Research & Development Exp, Supplemental |
173.4 |
180.0 |
165.3 |
120.4 |
239.2 |
|
Normalized EBIT |
421.6 |
354.8 |
179.0 |
31.2 |
69.5 |
|
Normalized EBITDA |
450.9 |
374.7 |
198.2 |
42.6 |
74.1 |
|
Current Tax - Domestic |
83.9 |
54.1 |
25.0 |
14.3 |
0.0 |
|
Current Tax - Foreign |
0.7 |
0.5 |
0.8 |
0.2 |
0.4 |
|
Current Tax - Local |
13.9 |
8.9 |
1.8 |
2.0 |
1.3 |
|
Current Tax - Total |
98.5 |
63.6 |
27.7 |
16.5 |
1.7 |
|
Deferred Tax - Domestic |
37.3 |
11.2 |
-1.6 |
-24.4 |
-68.7 |
|
Deferred Tax - Foreign |
0.2 |
0.6 |
-1.3 |
0.2 |
-0.2 |
|
Deferred Tax - Local |
-0.4 |
-2.4 |
1.9 |
-2.5 |
-5.3 |
|
Deferred Tax - Total |
37.0 |
9.4 |
-1.0 |
-26.7 |
-74.2 |
|
Domestic Tax - Other |
0.6 |
7.6 |
15.7 |
8.0 |
36.4 |
|
Foreign Tax - Other |
0.1 |
-0.4 |
0.5 |
0.0 |
0.0 |
|
Local Tax - Other |
0.0 |
1.6 |
1.1 |
1.6 |
1.7 |
|
Income Tax - Total |
136.2 |
81.9 |
43.9 |
-0.7 |
-34.4 |
|
Interest Cost - Domestic |
1.5 |
1.4 |
0.9 |
0.6 |
0.4 |
|
Service Cost - Domestic |
4.3 |
4.3 |
3.7 |
2.6 |
2.7 |
|
Prior Service Cost - Domestic |
0.8 |
0.8 |
0.4 |
0.1 |
0.1 |
|
Actuarial Gains and Losses - Domestic |
0.0 |
0.1 |
0.1 |
0.0 |
0.0 |
|
Domestic Pension Plan Expense |
6.6 |
6.5 |
5.1 |
3.3 |
3.2 |
|
Defined Contribution Expense - Domestic |
2.1 |
1.7 |
1.4 |
0.8 |
0.4 |
|
Total Pension Expense |
8.7 |
8.2 |
6.5 |
4.2 |
3.6 |
|
Total Plan Interest Cost |
1.5 |
1.4 |
0.9 |
0.6 |
0.4 |
|
Total Plan Service Cost |
4.3 |
4.3 |
3.7 |
2.6 |
2.7 |
|
|
|
Annual Balance Sheet |
|
Financials in: USD (mil) |
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
UpdateType/Date |
Reclassified Normal |
Updated Normal |
Updated Normal |
Updated Normal |
Restated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Cash & Equivalents |
154.0 |
162.7 |
252.2 |
100.4 |
129.5 |
|
Short Term Investments |
325.2 |
240.8 |
374.9 |
129.1 |
106.6 |
|
Cash and Short Term Investments |
479.2 |
403.5 |
627.1 |
229.5 |
236.0 |
|
Provision for Doubtful Accounts |
- |
- |
0.0 |
0.0 |
0.0 |
|
Trade Accounts Receivable - Net |
116.6 |
88.7 |
73.7 |
50.6 |
28.3 |
|
Other Receivables |
- |
- |
- |
2.6 |
2.3 |
|
Total Receivables, Net |
116.6 |
88.7 |
73.7 |
53.3 |
30.6 |
|
Inventories - Finished Goods |
11.9 |
22.6 |
13.1 |
8.9 |
4.1 |
|
Inventories - Work In Progress |
11.7 |
14.2 |
18.6 |
12.1 |
6.6 |
|
Inventories - Raw Materials |
13.6 |
9.2 |
2.8 |
4.8 |
3.4 |
|
Inventories - Other |
- |
0.0 |
1.0 |
0.6 |
0.3 |
|
Total Inventory |
37.3 |
46.0 |
35.5 |
26.4 |
14.4 |
|
Prepaid Expenses |
- |
9.9 |
8.8 |
8.2 |
11.6 |
|
Deferred Income Tax - Current Asset |
- |
8.2 |
12.6 |
7.2 |
4.8 |
|
Other Current Assets |
35.4 |
6.2 |
6.8 |
- |
- |
|
Other Current Assets, Total |
35.4 |
14.4 |
19.4 |
7.2 |
4.8 |
|
Total Current Assets |
668.5 |
562.5 |
764.5 |
324.5 |
297.4 |
|
|
|
|
|
|
|
|
Buildings |
- |
249.3 |
239.5 |
236.2 |
61.5 |
|
Land/Improvements |
- |
21.7 |
20.2 |
20.0 |
12.0 |
|
Machinery/Equipment |
- |
75.8 |
77.3 |
71.0 |
46.3 |
|
Construction in Progress |
- |
72.5 |
7.2 |
0.0 |
116.7 |
|
Property/Plant/Equipment - Gross |
- |
419.3 |
344.2 |
327.2 |
236.5 |
|
Accumulated Depreciation |
- |
-53.3 |
-38.2 |
-23.3 |
-13.7 |
|
Property/Plant/Equipment - Net |
453.7 |
366.0 |
306.0 |
303.9 |
222.7 |
|
Goodwill, Net |
10.5 |
8.1 |
2.5 |
8.8 |
7.5 |
|
Intangibles - Gross |
11.6 |
17.8 |
13.8 |
14.5 |
4.5 |
|
Accumulated Intangible Amortization |
-5.8 |
-3.8 |
-6.4 |
-4.9 |
-4.2 |
|
Intangibles, Net |
5.9 |
14.0 |
7.4 |
9.7 |
0.4 |
|
LT Investments - Other |
305.7 |
343.9 |
132.8 |
148.6 |
100.3 |
|
Long Term Investments |
305.7 |
343.9 |
132.8 |
148.6 |
100.3 |
|
Deferred Income Tax - Long Term Asset |
150.1 |
190.7 |
202.1 |
201.0 |
178.8 |
|
Restricted Cash - Long Term |
5.4 |
5.1 |
5.1 |
40.0 |
45.8 |
|
Other Long Term Assets |
26.8 |
27.7 |
11.1 |
15.2 |
21.7 |
|
Other Long Term Assets, Total |
182.3 |
223.6 |
218.4 |
256.1 |
246.3 |
|
Total Assets |
1,626.6 |
1,518.1 |
1,431.6 |
1,051.5 |
874.5 |
|
|
|
|
|
|
|
|
Accounts Payable |
- |
47.3 |
16.1 |
18.8 |
20.3 |
|
Payable/Accrued |
83.2 |
- |
- |
- |
- |
|
Accrued Expenses |
- |
57.2 |
50.3 |
29.8 |
20.9 |
|
Notes Payable/Short Term Debt |
0.0 |
0.0 |
236.0 |
220.3 |
0.0 |
|
Other Current Liabilities |
93.6 |
108.1 |
126.3 |
61.4 |
16.5 |
|
Other Current liabilities, Total |
93.6 |
108.1 |
126.3 |
61.4 |
16.5 |
|
Total Current Liabilities |
176.8 |
212.6 |
428.7 |
330.2 |
57.7 |
|
|
|
|
|
|
|
|
Long Term Debt |
275.0 |
265.6 |
68.9 |
0.0 |
205.7 |
|
Capital Lease Obligations |
- |
- |
0.0 |
30.3 |
29.3 |
|
Total Long Term Debt |
275.0 |
265.6 |
68.9 |
30.3 |
235.0 |
|
Total Debt |
275.0 |
265.6 |
304.9 |
250.6 |
235.0 |
|
|
|
|
|
|
|
|
Other Long Term Liabilities |
80.0 |
80.5 |
39.3 |
27.1 |
15.7 |
|
Other Liabilities, Total |
80.0 |
80.5 |
39.3 |
27.1 |
15.7 |
|
Total Liabilities |
531.7 |
558.7 |
536.9 |
387.7 |
308.3 |
|
|
|
|
|
|
|
|
Redeemable Preferred Stock |
0.0 |
- |
- |
- |
- |
|
Redeemable Preferred Stock |
0.0 |
- |
- |
- |
- |
|
Common Stock |
11.5 |
11.5 |
11.5 |
11.4 |
11.2 |
|
Common Stock |
11.5 |
11.5 |
11.5 |
11.4 |
11.2 |
|
Additional Paid-In Capital |
1,015.8 |
992.7 |
928.7 |
798.9 |
722.3 |
|
Retained Earnings (Accumulated Deficit) |
553.5 |
249.0 |
31.2 |
-74.7 |
-93.9 |
|
Treasury Stock - Common |
-471.0 |
-283.0 |
-67.4 |
-67.4 |
-67.4 |
|
Other Comprehensive Income |
-15.0 |
-10.9 |
-9.2 |
-4.3 |
-5.9 |
|
Other Equity, Total |
-15.0 |
-10.9 |
-9.2 |
-4.3 |
-5.9 |
|
Total Equity |
1,094.9 |
959.4 |
894.8 |
663.9 |
566.2 |
|
|
|
|
|
|
|
|
Total Liabilities & Shareholders’ Equity |
1,626.6 |
1,518.1 |
1,431.6 |
1,051.5 |
874.5 |
|
|
|
|
|
|
|
|
Shares Outstanding - Common Stock Primary Issue |
50.2 |
53.6 |
57.6 |
54.2 |
52.9 |
|
Total Common Shares Outstanding |
50.2 |
53.6 |
57.6 |
54.2 |
52.9 |
|
Treasury Shares - Common Stock Primary Issue |
11.9 |
7.9 |
2.5 |
2.5 |
2.5 |
|
Employees |
623 |
543 |
520 |
410 |
360 |
|
Number of Common Shareholders |
- |
40 |
42 |
13,046 |
14,150 |
|
Accumulated Intangible Amort, Suppl. |
5.8 |
3.8 |
6.4 |
4.9 |
4.2 |
|
Total Long Term Debt, Supplemental |
- |
322.7 |
320.0 |
250.0 |
- |
|
Long Term Debt Maturing within 1 Year |
- |
1.2 |
251.1 |
0.0 |
- |
|
Long Term Debt Maturing in Year 2 |
- |
34.0 |
1.2 |
125.0 |
- |
|
Long Term Debt Maturing in Year 3 |
- |
34.0 |
1.2 |
125.0 |
- |
|
Long Term Debt Maturing in Year 4 |
- |
126.8 |
33.3 |
0.0 |
- |
|
Long Term Debt Maturing in Year 5 |
- |
126.8 |
33.3 |
0.0 |
- |
|
Long Term Debt Maturing in 2-3 Years |
- |
67.9 |
2.4 |
250.0 |
- |
|
Long Term Debt Maturing in 4-5 Years |
- |
253.5 |
66.5 |
0.0 |
- |
|
Long Term Debt Matur. in Year 6 & Beyond |
- |
0.0 |
0.0 |
0.0 |
- |
|
Total Capital Leases, Supplemental |
- |
- |
- |
32.0 |
- |
|
Capital Lease Payments Due in Year 1 |
- |
- |
- |
0.0 |
- |
|
Capital Lease Payments Due in Year 2 |
- |
- |
- |
16.0 |
- |
|
Capital Lease Payments Due in Year 3 |
- |
- |
- |
16.0 |
- |
|
Capital Lease Payments Due in Year 4 |
- |
- |
- |
0.0 |
- |
|
Capital Lease Payments Due in Year 5 |
- |
- |
- |
0.0 |
- |
|
Capital Lease Payments Due in 2-3 Years |
- |
- |
- |
32.0 |
- |
|
Capital Lease Payments Due in 4-5 Years |
- |
- |
- |
0.0 |
- |
|
Cap. Lease Pymts. Due in Year 6 & Beyond |
- |
- |
- |
0.0 |
- |
|
Total Operating Leases, Supplemental |
- |
19.3 |
17.8 |
5.3 |
6.2 |
|
Operating Lease Payments Due in Year 1 |
- |
3.3 |
4.4 |
2.4 |
2.1 |
|
Operating Lease Payments Due in Year 2 |
- |
3.1 |
2.6 |
1.2 |
1.8 |
|
Operating Lease Payments Due in Year 3 |
- |
3.0 |
2.4 |
1.0 |
0.9 |
|
Operating Lease Payments Due in Year 4 |
- |
3.0 |
1.7 |
0.8 |
0.8 |
|
Operating Lease Payments Due in Year 5 |
- |
2.7 |
1.9 |
0.0 |
0.6 |
|
Operating Lease Pymts. Due in 2-3 Years |
- |
6.1 |
5.0 |
2.1 |
2.8 |
|
Operating Lease Pymts. Due in 4-5 Years |
- |
5.7 |
3.6 |
0.8 |
1.4 |
|
Oper. Lse. Pymts. Due in Year 6 & Beyond |
- |
4.2 |
4.8 |
0.0 |
0.0 |
|
Pension Obligation - Domestic |
- |
33.0 |
26.4 |
14.5 |
9.2 |
|
Funded Status - Domestic |
- |
-33.0 |
-26.4 |
-14.5 |
-9.2 |
|
Total Funded Status |
- |
-33.0 |
-26.4 |
-14.5 |
-9.2 |
|
Discount Rate - Domestic |
- |
4.49% |
4.80% |
5.25% |
6.35% |
|
Compensation Rate - Domestic |
- |
5.00% |
5.00% |
5.00% |
5.00% |
|
Other Assets, Net - Domestic |
- |
10.6 |
10.6 |
3.7 |
1.7 |
|
Net Assets Recognized on Balance Sheet |
- |
10.6 |
10.6 |
3.7 |
1.7 |
|
Total Plan Obligations |
- |
33.0 |
26.4 |
14.5 |
9.2 |
|
|
|
Annual Cash Flows |
|
Financials in: USD (mil) |
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Reclassified Normal |
Updated Normal |
Reclassified Normal |
Reclassified Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate (Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Net Income/Starting Line |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
Depreciation |
27.1 |
20.5 |
17.9 |
11.4 |
4.5 |
|
Depreciation/Depletion |
27.1 |
20.5 |
17.9 |
11.4 |
4.5 |
|
Deferred Taxes |
136.2 |
81.4 |
41.9 |
-1.0 |
-34.4 |
|
Unusual Items |
6.8 |
0.0 |
7.7 |
4.5 |
1.6 |
|
Equity in Net Earnings (Loss) |
1.4 |
2.6 |
1.0 |
-1.8 |
-2.5 |
|
Other Non-Cash Items |
55.8 |
39.0 |
111.9 |
118.5 |
21.9 |
|
Non-Cash Items |
64.0 |
41.6 |
120.6 |
121.2 |
21.0 |
|
Accounts Receivable |
-24.0 |
-16.2 |
-23.5 |
-22.0 |
-2.3 |
|
Inventories |
-5.9 |
-16.1 |
-9.2 |
-9.1 |
-2.6 |
|
Prepaid Expenses |
-7.4 |
-2.1 |
-0.6 |
3.4 |
-5.7 |
|
Other Assets |
-2.4 |
-3.6 |
-4.8 |
-0.2 |
-16.1 |
|
Accounts Payable |
-37.2 |
16.7 |
-2.7 |
-3.6 |
18.5 |
|
Accrued Expenses |
14.4 |
3.6 |
25.6 |
9.2 |
3.6 |
|
Other Liabilities |
-145.8 |
-93.6 |
-59.7 |
-29.1 |
22.4 |
|
Changes in Working Capital |
-208.2 |
-111.3 |
-74.8 |
-51.3 |
17.8 |
|
Cash from Operating Activities |
323.6 |
250.2 |
211.5 |
99.7 |
-40.4 |
|
|
|
|
|
|
|
|
Purchase of Fixed Assets |
-111.9 |
-36.0 |
-18.6 |
-95.4 |
-124.4 |
|
Capital Expenditures |
-111.9 |
-36.0 |
-18.6 |
-95.4 |
-124.4 |
|
Acquisition of Business |
0.0 |
-3.5 |
0.0 |
-3.6 |
0.0 |
|
Sale/Maturity of Investment |
527.9 |
733.9 |
457.7 |
249.1 |
297.9 |
|
Purchase of Investments |
-579.3 |
-815.7 |
-662.2 |
-310.6 |
-346.0 |
|
Other Investing Cash Flow |
0.0 |
0.0 |
13.9 |
-2.1 |
-8.8 |
|
Other Investing Cash Flow Items, Total |
-51.5 |
-85.4 |
-190.6 |
-67.2 |
-56.8 |
|
Cash from Investing Activities |
-163.4 |
-121.3 |
-209.2 |
-162.6 |
-181.2 |
|
|
|
|
|
|
|
|
Other Financing Cash Flow |
2.1 |
-247.2 |
22.8 |
4.4 |
21.1 |
|
Financing Cash Flow Items |
2.1 |
-247.2 |
22.8 |
4.4 |
21.1 |
|
Sale/Issuance of Common |
- |
- |
0.0 |
0.0 |
150.0 |
|
Repurchase/Retirement of Common |
-188.0 |
-212.0 |
0.0 |
0.0 |
- |
|
Common Stock, Net |
-188.0 |
-212.0 |
0.0 |
0.0 |
150.0 |
|
Options Exercised |
16.8 |
24.4 |
85.4 |
32.1 |
41.9 |
|
Issuance (Retirement) of Stock, Net |
-171.2 |
-187.6 |
85.4 |
32.1 |
191.9 |
|
Long Term Debt Issued |
0.0 |
250.0 |
70.0 |
0.0 |
0.0 |
|
Long Term Debt Reduction |
0.0 |
-33.3 |
-31.4 |
0.0 |
- |
|
Long Term Debt, Net |
0.0 |
216.8 |
38.6 |
0.0 |
0.0 |
|
Issuance (Retirement) of Debt, Net |
0.0 |
216.8 |
38.6 |
0.0 |
0.0 |
|
Cash from Financing Activities |
-169.1 |
-218.1 |
146.8 |
36.5 |
213.0 |
|
|
|
|
|
|
|
|
Foreign Exchange Effects |
0.2 |
-0.3 |
2.8 |
-2.7 |
-1.2 |
|
Net Change in Cash |
-8.6 |
-89.5 |
151.8 |
-29.1 |
-9.9 |
|
|
|
|
|
|
|
|
Net Cash - Beginning Balance |
162.7 |
252.2 |
100.4 |
129.5 |
139.3 |
|
Net Cash - Ending Balance |
154.0 |
162.7 |
252.2 |
100.4 |
129.5 |
|
Cash Interest Paid |
5.3 |
4.1 |
1.8 |
1.3 |
1.3 |
|
Cash Taxes Paid |
101.5 |
46.5 |
22.7 |
23.9 |
1.6 |
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Restated Normal |
Restated Normal |
Restated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate (Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Net product sales |
906.1 |
741.1 |
591.7 |
357.6 |
270.0 |
|
Service Sales |
- |
- |
- |
- |
9.3 |
|
Other |
10.0 |
2.1 |
1.2 |
1.2 |
2.2 |
|
Total revenue |
916.1 |
743.2 |
592.9 |
358.9 |
281.5 |
|
|
|
|
|
|
|
|
Cost of Product Sales |
119.3 |
88.9 |
67.7 |
40.9 |
27.0 |
|
Cost of Service Sales |
- |
- |
- |
- |
3.1 |
|
Research and development |
173.4 |
180.0 |
165.3 |
120.4 |
239.2 |
|
Selling, general and administrative |
116.9 |
- |
- |
- |
- |
|
Selling, general and administrative |
- |
97.8 |
75.3 |
67.0 |
41.3 |
|
Share-based compensation |
17.6 |
-7.7 |
67.2 |
64.1 |
20.1 |
|
Sales & Marketing |
67.2 |
66.4 |
46.1 |
40.7 |
32.9 |
|
Total Operating Expense |
494.4 |
425.4 |
421.6 |
333.1 |
363.6 |
|
|
|
|
|
|
|
|
Interest Expense |
-17.5 |
- |
- |
- |
- |
|
Interest expense |
- |
-22.2 |
-19.8 |
-18.0 |
-16.2 |
|
Interest Income |
3.9 |
3.5 |
2.9 |
5.1 |
11.0 |
|
Interest capitalized |
0.9 |
0.8 |
0.1 |
5.2 |
4.8 |
|
Other, net |
31.9 |
-0.6 |
0.8 |
0.7 |
-1.0 |
|
Equity loss in affiliate |
-0.1 |
-0.1 |
-0.2 |
-0.1 |
-0.2 |
|
Net Income Before Taxes |
440.7 |
299.1 |
155.2 |
18.6 |
-83.7 |
|
|
|
|
|
|
|
|
Income tax expense |
136.2 |
81.9 |
43.9 |
-0.7 |
-34.4 |
|
Net Income After Taxes |
304.4 |
217.2 |
111.2 |
19.3 |
-49.3 |
|
|
|
|
|
|
|
|
Net Income Before Extra. Items |
304.4 |
217.2 |
111.2 |
19.3 |
-49.3 |
|
Discontinued Operations |
0.0 |
- |
- |
- |
- |
|
Discontinued Operations |
- |
0.0 |
-5.3 |
0.1 |
- |
|
Discontinued Operations |
0.0 |
0.6 |
0.0 |
0.0 |
- |
|
Net income |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
|
|
|
|
|
|
|
Income Available to Com Excl ExtraOrd |
304.4 |
217.2 |
111.2 |
19.3 |
-49.3 |
|
|
|
|
|
|
|
|
Income Available to Com Incl ExtraOrd |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
|
|
|
|
|
|
|
Basic |
52.1 |
57.2 |
56.1 |
53.3 |
45.8 |
|
Basic EPS Excluding ExtraOrdinary Items |
5.84 |
3.80 |
1.98 |
0.36 |
-1.08 |
|
Basic EPS Including ExtraOrdinary Items |
5.84 |
3.81 |
1.89 |
0.37 |
-1.08 |
|
Dilution Adjustment |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Diluted Net Income |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
Diluted |
53.3 |
59.4 |
59.5 |
56.1 |
45.8 |
|
Diluted EPS Excluding ExtraOrd Items |
5.71 |
3.66 |
1.87 |
0.34 |
-1.08 |
|
Diluted EPS Including ExtraOrd Items |
5.71 |
3.67 |
1.78 |
0.35 |
-1.08 |
|
DPS-Ordinary Shares |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|
Gross Dividends - Common Stock |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Normalized Income Before Taxes |
440.7 |
336.2 |
162.8 |
24.1 |
67.9 |
|
|
|
|
|
|
|
|
Inc Tax Ex Impact of Sp Items |
136.2 |
92.0 |
46.1 |
1.2 |
18.7 |
|
Normalized Income After Taxes |
304.4 |
244.2 |
116.7 |
22.9 |
49.2 |
|
|
|
|
|
|
|
|
Normalized Inc. Avail to Com. |
304.4 |
244.2 |
116.7 |
22.9 |
49.2 |
|
|
|
|
|
|
|
|
Basic Normalized EPS |
5.84 |
4.27 |
2.08 |
0.43 |
1.07 |
|
Diluted Normalized EPS |
5.71 |
4.11 |
1.96 |
0.41 |
1.07 |
|
Research & Development Exp |
173.4 |
180.0 |
165.3 |
120.4 |
239.2 |
|
Interest expense |
17.5 |
21.4 |
19.7 |
12.9 |
11.4 |
|
Interest Capitalised |
-0.9 |
-0.8 |
-0.1 |
-5.2 |
-4.8 |
|
Total Amortization of Intangible Assets |
2.1 |
- |
- |
- |
- |
|
Amort of Intangibles |
- |
1.7 |
1.6 |
0.7 |
0.6 |
|
Rental Expense |
3.6 |
4.6 |
2.7 |
2.7 |
2.5 |
|
Depreciation |
27.1 |
18.2 |
17.6 |
10.7 |
3.9 |
|
Advertising Expenses |
- |
- |
- |
- |
1.2 |
|
Federal |
83.9 |
- |
- |
- |
- |
|
Current Tax Federal |
- |
54.1 |
25.0 |
14.3 |
0.0 |
|
State |
13.9 |
- |
- |
- |
- |
|
Current Tax State |
- |
8.9 |
1.8 |
2.0 |
1.3 |
|
Foreign |
0.7 |
- |
- |
- |
- |
|
Current Tax Foreign |
- |
0.5 |
0.8 |
0.2 |
0.4 |
|
Current Tax - Total |
98.5 |
63.6 |
27.7 |
16.5 |
1.7 |
|
Federal |
37.3 |
- |
- |
- |
- |
|
Deferred Tax- Federal |
- |
11.2 |
-1.6 |
-24.4 |
-68.7 |
|
State |
-0.4 |
- |
- |
- |
- |
|
Deferred Tax- State |
- |
-2.4 |
1.9 |
-2.5 |
-5.3 |
|
Foreign |
0.2 |
- |
- |
- |
- |
|
Deferred Tax- Foreign |
- |
0.6 |
-1.3 |
0.2 |
-0.2 |
|
Deferred Tax - Total |
37.0 |
9.4 |
-1.0 |
-26.7 |
-74.2 |
|
Federal |
0.6 |
- |
- |
- |
- |
|
Federal - Other |
- |
7.6 |
15.7 |
8.0 |
36.4 |
|
State |
0.0 |
- |
- |
- |
- |
|
State - Other |
- |
1.6 |
1.1 |
1.6 |
1.7 |
|
Foreign |
0.1 |
- |
- |
- |
- |
|
Foreign |
- |
-0.4 |
0.5 |
0.0 |
0.0 |
|
Income Tax - Total |
136.2 |
81.9 |
43.9 |
-0.7 |
-34.4 |
|
Service Cost - Domestic |
4.3 |
4.3 |
3.7 |
2.6 |
2.7 |
|
Interest Cost - Domestic |
1.5 |
1.4 |
0.9 |
0.6 |
0.4 |
|
Prior Service Cost - Domestic |
0.8 |
0.8 |
0.4 |
0.1 |
0.1 |
|
Actuarial Gains and Losses - Domestic |
0.0 |
0.1 |
0.1 |
0.0 |
0.0 |
|
Domestic Pension Plan Expense |
6.6 |
6.5 |
5.1 |
3.3 |
3.2 |
|
401(k) Retirement Plan |
2.1 |
1.7 |
1.4 |
0.8 |
0.4 |
|
Total Pension Expense |
8.7 |
8.2 |
6.5 |
4.2 |
3.6 |
|
Annual Balance Sheet |
|
Financials in: USD (mil) |
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
UpdateType/Date |
Reclassified Normal |
Updated Normal |
Updated Normal |
Updated Normal |
Restated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
154.0 |
162.7 |
252.2 |
100.4 |
129.5 |
|
Marketable investments |
325.2 |
240.8 |
374.9 |
129.1 |
106.6 |
|
Accounts receivable, net of allowance of |
116.6 |
88.7 |
73.7 |
50.6 |
28.3 |
|
Doubtful Accnts. |
- |
- |
0.0 |
0.0 |
0.0 |
|
Other Receivable |
- |
- |
- |
1.4 |
0.8 |
|
Interest Rcvbl. |
- |
- |
- |
1.3 |
1.5 |
|
Prepaid Expenses |
- |
9.9 |
8.8 |
8.2 |
11.6 |
|
Raw Materials |
13.6 |
9.2 |
2.8 |
4.8 |
3.4 |
|
Work-in-progress |
11.7 |
14.2 |
18.6 |
12.1 |
6.6 |
|
Finished Goods |
11.9 |
22.6 |
13.1 |
8.9 |
4.1 |
|
Supplies |
- |
0.0 |
1.0 |
0.6 |
0.3 |
|
Deferred tax assets |
- |
8.2 |
12.6 |
7.2 |
4.8 |
|
Other current assets |
35.4 |
6.2 |
6.8 |
- |
- |
|
Total current assets |
668.5 |
562.5 |
764.5 |
324.5 |
297.4 |
|
|
|
|
|
|
|
|
Land |
- |
21.7 |
20.2 |
20.0 |
12.0 |
|
Building/Improv. |
- |
249.3 |
239.5 |
236.2 |
61.5 |
|
Construction |
- |
72.5 |
7.2 |
0.0 |
116.7 |
|
Holter/Monitor |
- |
- |
6.4 |
5.6 |
4.6 |
|
Furniture/Equip. |
- |
75.8 |
70.9 |
65.4 |
41.7 |
|
Depreciation |
- |
-53.3 |
-38.2 |
-23.3 |
-13.7 |
|
Goodwill |
10.5 |
8.1 |
2.5 |
8.8 |
7.5 |
|
Technology, patents and tradenames |
4.9 |
4.8 |
9.0 |
9.4 |
4.5 |
|
Customer Relationships |
4.7 |
4.7 |
4.8 |
5.2 |
0.0 |
|
Contract-based |
2.0 |
8.4 |
0.0 |
- |
- |
|
AccAmort Brand/Patent/Market/Art Intang. |
-2.8 |
- |
- |
- |
- |
|
Acc Amort Customer Relationships |
-2.2 |
- |
- |
- |
- |
|
Acc Amort Contract-based |
-0.7 |
- |
- |
- |
- |
|
Amortization of Intangibles |
- |
-3.8 |
-6.4 |
-4.9 |
-4.2 |
|
Marketable investments |
305.7 |
343.9 |
132.8 |
148.6 |
100.3 |
|
Marketable investments and cash-restrict |
5.4 |
5.1 |
5.1 |
40.0 |
45.8 |
|
Deferred tax assets, net |
150.1 |
190.7 |
202.1 |
201.0 |
178.8 |
|
Other assets |
26.8 |
27.7 |
11.1 |
15.2 |
21.7 |
|
Property, plant and equipment, net |
453.7 |
- |
- |
- |
- |
|
Total Assets |
1,626.6 |
1,518.1 |
1,431.6 |
1,051.5 |
874.5 |
|
|
|
|
|
|
|
|
Accounts Payable |
- |
47.3 |
16.1 |
18.8 |
20.3 |
|
Convertible notes |
0.0 |
0.0 |
236.0 |
220.3 |
0.0 |
|
Accrued expenses |
- |
57.2 |
50.3 |
29.8 |
20.9 |
|
Other current liabilities |
93.6 |
108.1 |
126.3 |
61.4 |
16.5 |
|
Accounts payable and accrued expenses |
83.2 |
- |
- |
- |
- |
|
Total Current Liabilities |
176.8 |
212.6 |
428.7 |
330.2 |
57.7 |
|
|
|
|
|
|
|
|
Mortgages payable-noncurrent |
70.3 |
71.5 |
68.9 |
0.0 |
205.7 |
|
Lease obligation |
- |
- |
0.0 |
30.3 |
29.3 |
|
Convertible notes |
204.7 |
194.2 |
0.0 |
- |
- |
|
Total Long Term Debt |
275.0 |
265.6 |
68.9 |
30.3 |
235.0 |
|
|
|
|
|
|
|
|
Other liabilities |
80.0 |
80.5 |
39.3 |
27.1 |
15.7 |
|
Total Liabilities |
531.7 |
558.7 |
536.9 |
387.7 |
308.3 |
|
|
|
|
|
|
|
|
Series A junior participating preferred |
0.0 |
- |
- |
- |
- |
|
Preferred stock |
0.0 |
- |
- |
- |
- |
|
Temporary equity |
10.9 |
10.9 |
10.9 |
10.9 |
10.9 |
|
Common stock |
0.6 |
0.6 |
0.6 |
0.6 |
0.3 |
|
Additional paid-in capital |
1,015.8 |
992.7 |
928.7 |
798.9 |
722.3 |
|
Retained earnings |
553.5 |
249.0 |
31.2 |
-74.7 |
-93.9 |
|
Accumulated other comprehensive loss |
-15.0 |
-10.9 |
-9.2 |
-4.3 |
-5.9 |
|
Treasury stock at cost |
-471.0 |
-283.0 |
-67.4 |
-67.4 |
-67.4 |
|
Total Equity |
1,094.9 |
959.4 |
894.8 |
663.9 |
566.2 |
|
|
|
|
|
|
|
|
Total Liabilities & Shareholders' Equity |
1,626.6 |
1,518.1 |
1,431.6 |
1,051.5 |
874.5 |
|
|
|
|
|
|
|
|
S/O-Ordinary Shares |
50.2 |
53.6 |
57.6 |
54.2 |
52.9 |
|
Total Common Shares Outstanding |
50.2 |
53.6 |
57.6 |
54.2 |
52.9 |
|
T/S-Ordinary Shares |
11.9 |
7.9 |
2.5 |
2.5 |
2.5 |
|
AccAmort Brand/Patent/Market/Art Intang. |
2.8 |
- |
- |
- |
- |
|
Acc Amort Customer Relationships |
2.2 |
- |
- |
- |
- |
|
Acc Amort Contract-based |
0.7 |
- |
- |
- |
- |
|
Accumulated Amortization of Intangibles |
- |
3.8 |
6.4 |
4.9 |
4.2 |
|
Full-Time Employees |
623 |
543 |
520 |
410 |
360 |
|
Number of Common Shareholders |
- |
40 |
42 |
13,046 |
14,150 |
|
Long Term Debt Maturing Within 1 Year |
- |
1.2 |
251.1 |
0.0 |
- |
|
Long Term Debt Maturing Within 3 Year |
- |
67.9 |
2.4 |
250.0 |
- |
|
Long Term Debt Maturing Within 5 Year |
- |
253.5 |
66.5 |
0.0 |
- |
|
Long Term Debt Maturing After 5 Year |
- |
0.0 |
0.0 |
0.0 |
- |
|
Total Long Term Debt, Supplemental |
- |
322.7 |
320.0 |
250.0 |
- |
|
Capital Leases Due Within 1 Year |
- |
- |
- |
0.0 |
- |
|
Capital Leases Due Within 3 Years |
- |
- |
- |
32.0 |
- |
|
Capital Leases Due Within 5 Years |
- |
- |
- |
0.0 |
- |
|
Capital Leases Due - Thereafter |
- |
- |
- |
0.0 |
- |
|
Total Capital Leases, Supplemental |
- |
- |
- |
32.0 |
- |
|
Operating Leases Due Within 1 Year |
- |
3.3 |
4.4 |
2.4 |
2.1 |
|
Operating Leases Due Within 2 Years |
- |
3.1 |
2.6 |
1.2 |
1.8 |
|
Operating Leases Due Within 3 Years |
- |
3.0 |
2.4 |
1.0 |
0.9 |
|
Operating Leases Due Within 4 Years |
- |
3.0 |
1.7 |
0.8 |
0.8 |
|
Operating Leases Due Within 5 Years |
- |
2.7 |
1.9 |
0.0 |
0.6 |
|
Operating Leases - Remaining Payments |
- |
4.2 |
4.8 |
- |
- |
|
Total Operating Leases, Supplemental |
- |
19.3 |
17.8 |
5.3 |
6.2 |
|
Projected Benefit Obligation - Domestic |
- |
33.0 |
26.4 |
14.5 |
9.2 |
|
Funded Status - Domestic |
- |
-33.0 |
-26.4 |
-14.5 |
-9.2 |
|
Total Funded Status |
- |
-33.0 |
-26.4 |
-14.5 |
-9.2 |
|
Discount Rate - Domestic |
- |
4.49% |
4.80% |
5.25% |
6.35% |
|
Compensation Rate - Domestic |
- |
5.00% |
5.00% |
5.00% |
5.00% |
|
AOCI-Actuarial Loss |
- |
3.3 |
4.1 |
2.3 |
0.2 |
|
AOCI-Prior Service Cost |
- |
7.4 |
6.5 |
1.4 |
1.6 |
|
Net Assets Recognized on Balance Sheet |
- |
10.6 |
10.6 |
3.7 |
1.7 |
|
|
|
Annual Cash Flows |
|
Financials in: USD (mil) |
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Reclassified Normal |
Updated Normal |
Reclassified Normal |
Reclassified Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate (Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
Ernst & Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Net Income |
304.4 |
217.9 |
105.9 |
19.5 |
-49.3 |
|
Depreciation and amortization |
27.1 |
20.5 |
17.9 |
11.4 |
4.5 |
|
Impairment |
6.8 |
0.0 |
- |
- |
- |
|
Share-based compensation expense (benefi |
30.1 |
-15.7 |
- |
- |
- |
|
Amortization of debt discount and issue |
11.1 |
19.4 |
16.8 |
15.7 |
14.7 |
|
Expense associated with outstanding lice |
1.2 |
37.0 |
0.0 |
0.0 |
- |
|
Gains/losses on trading securities |
- |
- |
7.7 |
4.5 |
1.6 |
|
Stock/Option Service |
- |
- |
113.9 |
101.0 |
28.7 |
|
Provisions for inventory obsolescence |
11.8 |
5.2 |
2.4 |
4.7 |
0.6 |
|
Current and deferred tax expense |
136.2 |
81.4 |
41.9 |
-1.0 |
-34.4 |
|
Amortization of discount or premium on i |
4.6 |
4.5 |
2.6 |
1.6 |
-1.0 |
|
Excess tax benefits from share-based com |
-3.1 |
-11.3 |
-23.8 |
-4.4 |
-21.1 |
|
Equity loss in affiliate and other |
1.4 |
2.6 |
1.0 |
-1.8 |
-2.5 |
|
Accounts receivable |
-24.0 |
-16.2 |
-23.5 |
-22.0 |
-2.3 |
|
Inventories |
-5.9 |
-16.1 |
-9.2 |
-9.1 |
-2.6 |
|
Prepaid Expenses |
-7.4 |
-2.1 |
-0.6 |
3.4 |
-5.7 |
|
Other assets |
-2.4 |
-3.6 |
-4.8 |
-0.2 |
-16.1 |
|
Accounts Payable |
-37.2 |
16.7 |
-2.7 |
-3.6 |
18.5 |
|
Accrued Expenses |
14.4 |
3.6 |
25.6 |
9.2 |
3.6 |
|
Other Liabilities |
-145.8 |
-93.6 |
-59.7 |
-29.1 |
22.4 |
|
Cash from Operating Activities |
323.6 |
250.2 |
211.5 |
99.7 |
-40.4 |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipme |
-111.9 |
-36.0 |
-18.6 |
-95.4 |
-124.4 |
|
Purchases of held-to-maturity investment |
-579.3 |
-815.7 |
-662.2 |
-310.6 |
-321.4 |
|
Maturities of held-to-maturity investmen |
527.9 |
733.9 |
421.5 |
249.1 |
266.1 |
|
Purchase of Available for Sale Investm. |
- |
- |
0.0 |
0.0 |
-24.6 |
|
Acquisitions |
0.0 |
-3.5 |
0.0 |
-3.6 |
0.0 |
|
Sales of trading investments |
0.0 |
0.0 |
36.2 |
0.0 |
31.9 |
|
Restrictions on cash |
0.0 |
0.0 |
13.9 |
-2.1 |
-8.8 |
|
Cash from Investing Activities |
-163.4 |
-121.3 |
-209.2 |
-162.6 |
-181.2 |
|
|
|
|
|
|
|
|
Proceeds received from issuance of debt |
0.0 |
250.0 |
70.0 |
0.0 |
0.0 |
|
Payments of transaction costs related to |
0.0 |
-7.5 |
-1.1 |
0.0 |
0.0 |
|
Principal payments of debt |
-1.0 |
-251.0 |
0.0 |
0.0 |
- |
|
Excess tax benefits from share-based com |
3.1 |
11.3 |
23.8 |
4.4 |
21.1 |
|
Payments to repurchase common stock |
-188.0 |
-212.0 |
0.0 |
0.0 |
- |
|
Proceeds from exercise of stock options |
16.8 |
24.4 |
85.4 |
32.1 |
41.9 |
|
Proceeds from the sale of treasury stock |
- |
- |
0.0 |
0.0 |
150.0 |
|
Payment for convertible note hedge and w |
0.0 |
-33.3 |
0.0 |
0.0 |
- |
|
Payment of lease obligation |
0.0 |
0.0 |
-31.4 |
0.0 |
- |
|
Cash from Financing Activities |
-169.1 |
-218.1 |
146.8 |
36.5 |
213.0 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
0.2 |
-0.3 |
2.8 |
-2.7 |
-1.2 |
|
Net (decrease) increase in cash and cash |
-8.6 |
-89.5 |
151.8 |
-29.1 |
-9.9 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of |
162.7 |
252.2 |
100.4 |
129.5 |
139.3 |
|
Cash and cash equivalents, end of year |
154.0 |
162.7 |
252.2 |
100.4 |
129.5 |
|
Cash Interest Paid |
5.3 |
4.1 |
1.8 |
1.3 |
1.3 |
|
Cash Taxes Paid |
101.5 |
46.5 |
22.7 |
23.9 |
1.6 |
|
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Standard & Poor’s
|
United
States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks,
Rising Debt Burden; Outlook Negative |
|
Publication
date: 05-Aug-2011 20:13:14 EST |
·
We have lowered our long-term sovereign
credit rating on the United States of America to 'AA+' from 'AAA' and affirmed
the 'A-1+' short-term rating.
·
We have also removed both the short- and long-term ratings
from CreditWatch negative.
·
The downgrade reflects our opinion that the fiscal consolidation plan that
Congress and the Administration recently agreed to falls short of what, in our
view, would be necessary to stabilize the government's medium-term debt
dynamics.
·
More broadly, the downgrade reflects our view that the effectiveness, stability,
and predictability of American policymaking and political institutions have
weakened at a time of ongoing fiscal and economic challenges to a degree more
than we envisioned when we assigned a negative outlook to the rating on April
18, 2011.
·
Since then, we have changed our view of the difficulties in bridging the
gulf between the political parties over fiscal policy, which makes us
pessimistic about the capacity of Congress and the Administration to be able to
leverage their agreement this week into a broader fiscal consolidation plan
that stabilizes the government's debt dynamics any time soon.
·
The outlook on the long-term rating is negative. We could lower the
long-term rating to 'AA' within the next two years if we see that less
reduction in spending than agreed to, higher interest rates, or new fiscal
pressures during the period result in a higher general government debt
trajectory than we currently assume in our base case.
TORONTO (Standard &
Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services said today that it
lowered its long-term sovereign credit rating on the United States of America
to 'AA+' from 'AAA'. Standard & Poor's also said that the outlook on the
long-term rating is negative. At the same time, Standard & Poor's affirmed
its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's
removed both ratings from CreditWatch, where they were placed on July 14, 2011,
with negative implications.
The transfer and
convertibility (T&C) assessment of the U.S.--our assessment of the
likelihood of official interference in the ability of U.S.-based public- and
private-sector issuers to secure foreign exchange for
debt service--remains
'AAA'.
We lowered our long-term
rating on the U.S. because we believe that the prolonged controversy over
raising the statutory debt ceiling and the related fiscal policy debate
indicate that further near-term progress containing the growth in public
spending, especially on entitlements, or on reaching an agreement on raising
revenues is less likely than we previously assumed and will remain a
contentious and fitful process. We also believe that the fiscal consolidation
plan that Congress and the Administration agreed to this week falls short of
the amount that we believe is necessary to stabilize the general government
debt burden by the middle of the decade.
Our lowering of the
rating was prompted by our view on the rising public debt burden and our
perception of greater policymaking uncertainty, consistent with our criteria
(see "Sovereign Government Rating Methodology and
Assumptions ," June 30, 2011, especially Paragraphs 36-41).
Nevertheless, we view the U.S. federal government's other economic, external,
and monetary credit attributes, which form the basis for the sovereign rating,
as broadly unchanged.
We have taken the ratings
off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment
of 2011 has removed any perceived immediate threat of payment default posed by
delays to raising the government's debt ceiling. In addition, we believe that
the act provides sufficient clarity to allow us to evaluate the likely course
of U.S. fiscal policy for the next few years.
The political
brinksmanship of recent months highlights what we see as America's governance
and policymaking becoming less stable, less effective, and less predictable
than what we previously believed. The statutory debt ceiling and the threat of
default have become political bargaining chips in the debate over fiscal
policy. Despite this year's wide-ranging debate, in our view, the differences
between political parties have proven to be extraordinarily difficult to
bridge, and, as we see it, the resulting agreement fell well short of the
comprehensive fiscal consolidation program that some proponents had envisaged
until quite recently. Republicans and Democrats have only been able to agree to
relatively modest savings on discretionary spending while delegating to the
Select Committee decisions on more comprehensive measures. It appears that for
now, new revenues have dropped down on the menu of policy options. In addition,
the plan envisions only minor policy changes on Medicare and little change in other
entitlements,
the containment of which
we and most other independent observers regard as key to long-term fiscal
sustainability.
Our opinion is that
elected officials remain wary of tackling the structural issues required to
effectively address the rising U.S. public debt burden in a manner consistent
with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions,"
June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in
framing a consensus on fiscal policy weakens the government's ability to manage
public finances and diverts attention from the debate over how to achieve more
balanced and dynamic economic growth in an era of fiscal stringency and
private-sector deleveraging (ibid). A new political consensus might (or might
not) emerge after the 2012 elections, but we believe that by then, the
government debt burden will likely be higher, the needed medium-term fiscal
adjustment potentially greater, and the inflection point on the U.S.
population's demographics and other age-related spending drivers closer at hand
(see "Global Aging 2011: In The U.S., Going Gray Will Likely
Cost Even More Green, Now," June 21, 2011).
Standard & Poor's
takes no position on the mix of spending and revenue measures that Congress and
the Administration might conclude is appropriate for putting the U.S.'s
finances on a sustainable footing.
The act calls for as much
as $2.4 trillion of reductions in expenditure growth over the 10 years through
2021. These cuts will be implemented in two steps: the $917 billion agreed to
initially, followed by an additional $1.5 trillion that the newly formed
Congressional Joint Select Committee on Deficit Reduction is supposed to
recommend by November 2011. The act contains no measures to raise taxes or
otherwise enhance revenues, though the committee could recommend them.
The act further provides
that if Congress does not enact the committee's recommendations, cuts of $1.2
trillion will be implemented over the same time period. The reductions would
mainly affect outlays for civilian discretionary spending, defense, and
Medicare. We understand that this fall-back mechanism is designed to encourage
Congress to embrace a more balanced mix of expenditure savings, as the
committee might recommend.
We note that in a letter
to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated
total budgetary savings under the act to be at least $2.1 trillion over the
next 10 years relative to its baseline assumptions. In updating our own fiscal
projections, with certain modifications outlined below, we have relied on the
CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to
include the CBO assumptions contained in its Aug. 1 letter to Congress. In
general, the CBO's "Alternate Fiscal Scenario" assumes a continuation
of recent Congressional action overriding existing law.
We view the act's
measures as a step toward fiscal consolidation. However, this is within the
framework of a legislative mechanism that leaves open the details of what is
finally agreed to until the end of 2011, and Congress and the Administration
could modify any agreement in the future. Even assuming that at least $2.1
trillion of the spending reductions the act envisages are implemented, we
maintain our view that the U.S. net general government debt burden (all levels
of government combined, excluding liquid financial assets) will likely continue
to grow. Under our revised base case fiscal scenario--which we consider to be
consistent with a 'AA+' long-term rating and a negative outlook--we now project
that net general government debt would rise from an estimated 74% of GDP by the
end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of
sovereign indebtedness is high in relation to those of peer credits and, as
noted, would continue to rise under the act's revised policy settings.
Compared with previous
projections, our revised base case scenario now assumes that the 2001 and 2003
tax cuts, due to expire by the end of 2012, remain in place. We have changed
our assumption on this because the majority of Republicans in Congress continue
to resist any measure that would raise revenues, a position we believe Congress
reinforced by passing the act. Key macroeconomic assumptions in the base case
scenario include trend real GDP growth of 3% and consumer price inflation near
2% annually over the decade.
Our revised upside
scenario--which, other things being equal, we view as consistent with the
outlook on the 'AA+' long-term rating being revised to stable--retains these same
macroeconomic assumptions. In addition, it incorporates $950 billion of new
revenues on the assumption that the 2001 and 2003 tax cuts for high earners
lapse from 2013 onwards, as the Administration is advocating. In this scenario,
we project that the net general government debt would rise from an estimated
74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.
Our revised downside
scenario--which, other things being equal, we view as being consistent with a
possible further downgrade to a 'AA' long-term rating--features less-favorable
macroeconomic assumptions, as outlined below and also assumes that the second
round of spending cuts (at least $1.2 trillion) that the act calls for does not
occur. This scenario also assumes somewhat higher nominal interest rates for
U.S. Treasuries. We still believe that the role of the U.S. dollar as the key
reserve currency confers a government funding advantage, one that could change
only slowly over time, and that Fed policy might lean toward continued loose
monetary policy at a time of fiscal tightening. Nonetheless, it is possible
that interest rates could rise if investors re-price relative risks. As a
result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in
10-year bond yields relative to the base and upside cases from 2013 onwards. In
this scenario, we project the net public debt burden would rise from 74% of GDP
in 2011 to 90% in 2015 and to 101% by 2021.
Our revised scenarios
also take into account the significant negative revisions to historical GDP
data that the Bureau of Economic Analysis announced on July 29. From our
perspective, the effect of these revisions underscores two related points when
evaluating the likely debt trajectory of the U.S. government. First, the
revisions show that the recent recession was deeper than previously assumed, so
the GDP this year is lower than previously thought in both nominal and real
terms. Consequently, the debt burden is slightly higher. Second, the revised
data highlight the sub-par path of the current economic recovery when compared
with rebounds following previous post-war recessions. We believe the sluggish
pace of the current economic recovery could be consistent with the experiences
of countries that have had financial crises in which the slow process of debt
deleveraging in the private sector leads to a persistent drag on demand. As a
result, our downside case scenario assumes relatively modest real trend GDP
growth of 2.5% and inflation of near 1.5% annually going forward.
When comparing the U.S.
to sovereigns with 'AAA' long-term ratings that we view as relevant
peers--Canada, France, Germany, and the U.K.--we also observe, based on our
base case scenarios for each, that the trajectory of the U.S.'s net public debt
is diverging from the others. Including the U.S., we estimate that these five
sovereigns will have net general government debt to GDP ratios this year
ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%.
By 2015, we project that their net public debt to GDP ratios will range between
30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at
79%. However, in contrast with the U.S., we project that the net public debt
burdens of these other sovereigns will begin to decline, either before or by
2015.
Standard & Poor's
transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment
reflects our view of the likelihood of the sovereign restricting other public
and private issuers' access to foreign exchange needed to meet debt service.
Although in our view the credit standing of the U.S. government has
deteriorated modestly, we see little indication that official interference of
this kind is entering onto the policy agenda of either Congress or the
Administration. Consequently, we continue to view this risk as being highly
remote.
The outlook on the
long-term rating is negative. As our downside alternate fiscal scenario
illustrates, a higher public debt trajectory than we currently assume could
lead us to lower the long-term rating again. On the other hand, as our upside
scenario highlights, if the recommendations of the Congressional Joint Select
Committee on Deficit Reduction--independently or coupled with other
initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high
earners--lead to fiscal consolidation measures beyond the minimum mandated, and
we believe they are likely to slow the deterioration of the government's debt
dynamics, the long-term rating could stabilize at 'AA+'.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.61.92 |
|
|
1 |
Rs.100.83 |
|
Euro |
1 |
Rs.85.27 |
INFORMATION DETAILS
|
Report
Prepared by : |
NIS |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall
operation is considered normal. Capable to meet normal commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with full
security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
-- |
NB |
New Business |
-- |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.