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.
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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
- Aggregate Accruals
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Celgene Corp., consolidated cash flow statement
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Net Income
- The net income exhibited fluctuations over the period, with an initial decrease from $2,000 million in 2014 to $1,602 million in 2015, followed by a rebound to $1,999 million in 2016. Thereafter, it showed significant increases to $2,940 million in 2017 and $4,046 million in 2018, indicating strong profitability growth in the latter years.
- Depreciation and Amortization
- Depreciation expenses steadily increased from $104 million in 2014 to $160 million in 2018. Amortization expenses also grew overall, from $269 million in 2014 to $475 million in 2018, though with some volatility, notably a decline in 2017 compared to 2016.
- Impairment Charges
- Impairment charges showed considerable volatility, with a moderate figure of $133 million in 2014, declining in 2015, then sharply increasing to $489 million in 2016 and peaking at $1,679 million in 2017, before dropping significantly to $31 million in 2018. This suggests irregular recognition of significant impairments predominantly in 2017.
- Deferred Income Taxes
- Deferred income taxes fluctuated notably, displaying negative values primarily from 2014 to 2017, with a substantial negative spike in 2017 (-$1,330 million). In 2018, the figure turned positive to $32 million, reflecting changes in tax timing differences or adjustments.
- Contingent Consideration and Related Payments
- The change in contingent consideration and success payments was mostly negative or low, with a notable large negative adjustment of -$1,350 million in 2017. Payments for contingent consideration occurred irregularly with small negative values over several years, indicating acquisitions or liabilities settlements.
- Investment Gains and Fair Value Adjustments
- Gains on sale of debt securities and equity investments showed variable gains and losses, including a significant loss of -$84 million in 2015. A large negative fair value adjustment on equity investments was recorded in 2018 (-$317 million), indicating a marked decline in valuation that year.
- Share-Based Compensation and Employee Benefits
- Share-based compensation expenses showed a consistent upward trend, increasing substantially from $448 million in 2014 to $921 million in 2018. Conversely, share-based employee benefit plan expenses remained relatively stable, hovering around the $30-$40 million range annually.
- Derivative Instruments and Other Items
- Derivative instrument results fluctuated with a loss in 2014 and 2015, a gain in 2016 and 2017, and a small gain in 2018, indicating variable impact from derivative activities. Other net items remained minor and relatively stable over the years.
- Working Capital Changes
- Accounts receivable changes showed negative cash flow impact until 2017, improving slightly in 2018. Inventory changes were negative or minimal until a positive change of $82 million in 2018. Other operating assets and liabilities exhibited volatility, with accounts payable showing large positive inflows in 2015 and 2016 but declining afterward. Income tax payable had a significant positive increase in 2017 followed by a large negative correction in 2018. Deferred revenue steadily increased but remained minor in scale. The substantial positive change in current assets and liabilities in 2017 (+$2,171 million) contrasts with negative changes in adjacent years.
- Cash Flow from Operating Activities
- Net cash provided by operating activities increased steadily from $2,806 million in 2014 to a peak of $5,246 million in 2017, slightly declining to $5,171 million in 2018. Adjustments to reconcile net income to net cash showed a similar increasing trend until 2017, declining moderately in 2018, reflecting operational cash flow strength.
- Investing Activities
- Investing activities generally consumed cash, with net cash used fluctuating significantly. Payments for acquisitions notably impacted 2015 and 2018 with large outflows (-$7,695 million and -$8,648 million, respectively), contributing to the high cash usage. Purchases and sales of debt and equity securities and capital expenditures also contributed variably, with capital expenditures rising modestly from $150 million in 2014 to $330 million in 2018.
- Financing Activities
- Payments for treasury shares represented significant outflows consistently increasing from $2,975 million in 2014 to $6,096 million in 2018, indicating substantial share repurchase activity. Borrowing activities showed large and fluctuating short-term borrowings and repayments, with notable issuance of long-term debt in 2015 ($7,913 million) and moderate issuance in subsequent years. Overall, net cash flow from financing activities was positive in 2015 but negative in other years, reflecting major outflows related to debt repayment and share repurchases.
- Cash and Equivalents
- Cash and cash equivalents generally increased from 2014 ($4,122 million) to 2017 ($7,013 million), followed by a sharp decline to $4,234 million in 2018. The net increase in cash was positive until 2017, turning negative in 2018 (-$2,779 million), likely influenced by investing and financing outflows.
- Overall Summary
- The financial data reveals a company with increasing profitability and operational cash flow through 2017, coupled with significant investing activity, especially acquisitions and capital expenditures, which led to high cash outflows in investing. The company engaged heavily in share repurchases and managed debt with fluctuating borrowings and repayments. Cash reserves built up until 2017 but decreased substantially in 2018. Volatility in impairment charges, deferred taxes, and contingent considerations highlights episodic financial adjustments. The growing share-based compensation expense indicates increasing employee incentive costs over time.