Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Allergan Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010
Net earnings	1,528,800)	988,700)	1,102,500)	938,100)	4,900)
Depreciation and amortization	248,100)	254,600)	256,600)	253,400)	257,100)
Amortization of original issue discount and debt issuance costs	2,800)	2,600)	1,900)	9,700)	28,400)
Amortization of net realized gain on interest rate swap	(15,000)	(14,400)	(7,700)	(1,300)	(1,300)
Deferred income tax benefit	(79,800)	(192,200)	(88,300)	(68,900)	(249,100)
Loss on disposal and impairment of assets	29,800)	5,800)	5,700)	—)	17,900)
Unrealized (gain) loss on derivative instruments	(37,200)	(10,400)	15,300)	(11,100)	7,600)
Expense of share-based compensation plans	159,700)	114,400)	109,100)	86,300)	73,900)
Loss on sale of discontinued operations	—)	408,200)	—)	—)	—)
Legal settlement	—)	—)	—)	—)	15,200)
Impairment of intangible assets and related costs	—)	11,400)	22,300)	20,400)	369,100)
(Income) expense from changes in fair value of contingent consideration	(15,100)	70,700)	5,400)	11,900)	7,900)
Provision for losses on trade receivables in Venezuela	37,300)	—)	—)	—)	—)
Restructuring charges	246,400)	5,500)	5,700)	4,600)	300)
Loss on investments, net	3,100)	3,700)	—)	1,300)	—)
Pension and other post-retirement benefit plans settlements and curtailments	12,100)	—)	—)	—)	—)
Non-cash items included in net earnings	592,200)	659,900)	326,000)	306,300)	527,000)
Trade receivables	(115,700)	(139,600)	(34,300)	(105,600)	(71,400)
Inventories	(43,800)	(26,900)	(7,300)	(24,000)	(5,600)
Other current assets	(23,300)	(800)	(16,000)	(33,100)	7,300)
Other non-current assets	(29,700)	(15,500)	44,100)	(13,400)	(18,600)
Accounts payable	1,900)	37,400)	32,700)	(19,300)	8,600)
Accrued expenses	115,900)	110,200)	73,100)	39,100)	34,400)
Income taxes	(124,000)	64,900)	52,400)	(19,800)	(17,600)
Other liabilities	25,500)	17,100)	26,700)	13,600)	(5,100)
Changes in operating assets and liabilities	(193,200)	46,800)	171,400)	(162,500)	(68,000)
Net cash provided by operating activities	1,927,800)	1,695,400)	1,599,900)	1,081,900)	463,900)
Purchases of short-term investments	(1,269,800)	(1,025,600)	(865,200)	(571,100)	(824,100)
Purchases of equity investments	(20,300)	—)	—)	—)	—)
Acquisitions, net of cash acquired	(67,500)	(892,100)	(349,200)	(101,400)	(69,800)
Additions to property, plant and equipment	(243,900)	(171,900)	(143,300)	(118,600)	(102,800)
Additions to capitalized software	(19,000)	(11,800)	(13,900)	(11,200)	(13,300)
Additions to intangible assets	(15,000)	(300)	(4,100)	(300)	(40,900)
Contractual purchase price adjustment to prior acquisition	—)	—)	—)	—)	(1,700)
Proceeds from maturities of short-term investments	1,815,900)	683,200)	784,600)	1,140,300)	75,000)
Proceeds from sale of business	1,800)	42,700)	—)	—)	—)
Proceeds from sale of equity investments	—)	—)	—)	1,900)	—)
Proceeds from sale of property, plant and equipment	500)	500)	1,800)	1,200)	400)
Net cash (used in) provided by investing activities	182,700)	(1,375,300)	(589,300)	340,800)	(977,200)
Repayments of convertible borrowings	—)	—)	—)	(808,900)	—)
Dividends to stockholders	(59,600)	(59,400)	(60,400)	(61,100)	(60,600)
Payments to acquire treasury stock	(839,200)	(650,700)	(909,000)	(461,700)	(286,000)
Purchase of noncontrolling interest in a subsidiary	—)	(18,000)	—)	—)	—)
Payments of contingent consideration	(10,200)	(61,200)	(5,100)	(3,000)	—)
Net borrowings (repayments) of notes payable	16,500)	6,800)	(35,100)	30,700)	6,600)
Debt issuance costs	—)	(4,800)	—)	—)	(6,100)
Proceeds from issuance of senior notes, net of discount	—)	598,500)	—)	—)	648,000)
Sale of stock to employees	521,000)	179,300)	246,400)	264,000)	234,000)
Excess tax benefits from share-based compensation	167,500)	37,700)	45,700)	37,700)	27,100)
Net cash provided by (used in) financing activities	(204,000)	28,200)	(717,500)	(1,002,300)	563,000)
Effect of exchange rate changes on cash and equivalents	(41,200)	(4,000)	2,600)	(5,500)	(5,600)
Net increase (decrease) in cash and equivalents	1,865,300)	344,300)	295,700)	414,900)	44,100)
Cash and equivalents at beginning of period	3,046,100)	2,701,800)	2,406,100)	1,991,200)	1,947,100)
Cash and equivalents at end of period	4,911,400)	3,046,100)	2,701,800)	2,406,100)	1,991,200)

Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).

Net earnings: Net earnings demonstrated a strong upward trend from 2010 to 2014. Beginning at $4.9 million in 2010, earnings surged significantly to $938.1 million in 2011 and continued to increase, peaking at $1.53 billion in 2014. This indicates improved profitability over the period.
Depreciation and amortization: Depreciation and amortization expenses remained relatively stable, averaging around $250 million annually, with a slight decline in 2014 to $248.1 million, suggesting consistent investment in long-lived assets and steady wear and tear.
Amortization of issue discount and debt costs: These charges declined considerably from $28.4 million in 2010 to very low levels in subsequent years, indicating lower debt issuance or cost amortization impacts over time.
Amortization of net realized gain on interest rate swap: The company recorded negative amortization amounts annually, increasing in magnitude to a loss of $15 million by 2014, showing the ongoing impact of derivative instruments reducing earnings.
Deferred income tax benefit: Deferred tax benefits fluctuated, with a significant negative impact in 2010 at $249.1 million, though the negative effect lessened in later years, showing a more moderate tax-related adjustment over time.
Loss on disposal and impairment of assets: Losses in this category were irregular, peaking at $29.8 million in 2014, implying episodic asset impairments, with a notable low or zero impact in 2011.
Unrealized (gain) loss on derivative instruments: Gains and losses on derivatives showed volatility, swinging from gains to losses across the years, and culminating in a large unrealized gain of $37.2 million in 2014, indicating increased effectiveness or changing market conditions.
Expense of share-based compensation plans: Share-based compensation expenses consistently increased each year, rising from $73.9 million in 2010 to $159.7 million in 2014, reflecting an expanding workforce or more generous equity incentive policies.
Loss on sale of discontinued operations: A significant one-time loss of $408.2 million was recorded in 2013, indicating a major divestiture impacting that year's earnings significantly.
Legal settlement: A single legal settlement expense of $15.2 million occurred in 2010, with no further expenses recorded in subsequent years.
Impairment of intangible assets and related costs: This item declined dramatically from $369.1 million in 2010 to negligible amounts by 2013 and absent in 2014, suggesting substantial impairments took place early in the period and then ceased.
Changes in fair value of contingent consideration: This line item fluctuated widely, with moderate expenses early on and a large expense of $70.7 million in 2013, then reversing to a gain of $15.1 million in 2014, indicating volatility in contingent liability valuations.
Provision for losses on trade receivables in Venezuela: A provision of $37.3 million was recognized in 2014, reflecting increased credit risk or collection challenges in that market.
Restructuring charges: Restructuring costs increased substantially over time, escalating from $300,000 in 2010 to a very large $246.4 million in 2014, indicating ongoing organizational restructuring efforts.
Loss on investments, net: Losses were relatively minimal and sporadic, peaking at $3.7 million in 2013, suggesting some minor occasional investment losses.
Pension and other post-retirement benefit plans settlements and curtailments: A discrete charge of $12.1 million was recorded in 2014, possibly connected to changes in benefit plan terms or settlements.
Non-cash items included in net earnings: Non-cash items fluctuated considerably, with a high of $659.9 million in 2013 and a decline to $592.2 million in 2014, indicating significant accounting adjustments impacting reported earnings.
Changes in operating assets and liabilities: These changes were volatile, with negative effects in 2010, 2011, and 2014, but positive impacts in 2012 and 2013, reflecting variable working capital management performance.
Net cash provided by operating activities: Operating cash flows showed a consistent increase from $463.9 million in 2010 to $1.93 billion in 2014, reflecting improved cash generation from core operations.
Purchases of short-term investments: Cash outflows for short-term investments rose steadily each year from $824.1 million in 2010 to $1.27 billion in 2014, indicating increased allocation to liquid investments.
Acquisitions, net of cash acquired: Net acquisitions spending was significant and fluctuated, with a peak outflow of $892.1 million in 2013, highlighting active M&A activity.
Additions to property, plant and equipment: Capital expenditures increased annually, ranging from $102.8 million in 2010 to $243.9 million in 2014, showing ongoing investment to expand or maintain physical assets.
Proceeds from maturities of short-term investments: Proceeds from short-term investment maturities showed large inflows, peaking at $1.82 billion in 2014, partly offsetting investment purchases.
Net cash used in investing activities: Investing activities varied widely, with large outflows in 2010 and 2013, while 2011 and 2014 saw net positive cash flows, evidencing fluctuating investment and divestiture patterns.
Dividends to stockholders: Dividend payments remained consistent at approximately $60 million annually, indicating a stable dividend policy.
Payments to acquire treasury stock: Significant cash was used to repurchase shares, with expenditures generally increasing from $286 million in 2010 to $839.2 million in 2014, suggesting an emphasis on returning capital to shareholders through buybacks.
Sale of stock to employees: Proceeds from employee stock sales grew from $234 million in 2010 to $521 million in 2014, potentially reflecting expanded employee stock ownership programs.
Net cash provided by (used in) financing activities: Financing cash flows were highly variable, with positive cash inflows in 2010 and 2013, but significant outflows in 2011, 2012, and 2014, consistent with debt repayments, share repurchases, and other financing activities.
Net increase (decrease) in cash and equivalents: Cash and cash equivalents increased steadily year-over-year, culminating in a large increase of $1.87 billion in 2014, reflecting strong liquidity growth.
Cash and equivalents at end of period: Ending cash balances rose consistently from $1.99 billion at the end of 2010 to $4.91 billion at the end of 2014, highlighting improved cash reserves and financial flexibility.

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Allergan Inc. (NYSE:AGN.)

Cash Flow Statement