Allergan PLC (NYSE:AGN)

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Allergan PLC, effective income tax rate (EITR) reconciliation

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Statutory tax rate	12.50%	12.50%	12.50%	12.50%	12.50%
Earnings subject to U.S. taxes	-1.30%	1.80%	17.80%	37.50%	18.50%
Earnings subject to rates different than the statutory rate	5.30%	3.40%	-2.50%	18.30%	2.30%
Tax reserves and audit outcomes	-2.10%	-2.60%	-0.40%	0.70%	-0.30%
Non-deductible expenses	-12.60%	-7.40%	-0.20%	-3.10%	-5.40%
Impact of acquisitions and reorganizations	2.60%	15.30%	9.30%	-3.10%	0.00%
Tax credits and U.S. special deductions	2.00%	0.90%	1.50%	3.10%	0.50%
Rate changes	-0.30%	-2.20%	1.20%	7.40%	0.00%
Valuation allowances	-8.70%	3.70%	-2.20%	-6.50%	6.70%
Other	-0.30%	0.20%	0.00%	0.20%	0.50%
Effective income tax rate, before impact of U.S. tax reform enactment	-2.90%	25.60%	37.00%	67.00%	35.30%
Impact of U.S. tax reform enactment	0.00%	0.20%	27.20%	0.00%	0.00%
Effective income tax rate	-2.90%	25.80%	64.20%	67.00%	35.30%

Based on: 10-K (reporting date: 2019-12-31), 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).

The effective income tax rate (EITR) exhibited extreme volatility between 2015 and 2019, characterized by a sharp escalation in the mid-period followed by a precipitous decline to a negative rate by the end of the analysis period.

Statutory Rate Divergence: While the statutory tax rate remained constant at 12.50% throughout the entire five-year period, the EITR diverged significantly. The rate peaked at 67.00% in 2016 and 64.20% in 2017, before falling to 25.80% in 2018 and ultimately reaching -2.90% in 2019.
U.S. Tax Exposure and Legislative Reform: Earnings subject to U.S. taxes served as a primary driver of the EITR's volatility. This factor peaked in 2016 at 37.50%, contributing heavily to that year's high tax rate. In 2017, the EITR was further inflated by a one-time impact of 27.20% resulting from the enactment of U.S. tax reform. By 2019, however, the impact of earnings subject to U.S. taxes shifted to a negative 1.30%.
Operational and Structural Adjustments: The impact of acquisitions and reorganizations became a significant upward pressure on the tax rate starting in 2016, peaking at 15.30% in 2018. Conversely, non-deductible expenses exerted a growing downward influence on the EITR, expanding from a reduction of 5.40% in 2015 to 12.60% in 2019.
Valuation Allowances and Other Factors: Valuation allowances showed inconsistent effects, oscillating between positive and negative contributions. A notable negative impact of 8.70% in 2019 contributed to the overall negative EITR for that year. Other factors, including tax credits and special deductions, provided a modest and relatively stable reduction to the tax burden, averaging approximately 1% to 3% annually.

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Allergan PLC, components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Benefits from net operating and capital loss carryforwards	2,105,200)	2,145,800)	—)	—)	—)
Benefits from tax credit and other carryforwards	440,400)	377,600)	—)	—)	—)
Benefits from net operating and capital losses and tax credit carryfowards	—)	—)	1,005,300)	702,000)	1,305,800)
Inventories, receivables and accruals	496,800)	231,800)	263,500)	433,600)	1,023,800)
Basis differences in investments	185,500)	56,100)	1,088,700)	—)	—)
Outside basis differences	—)	—)	—)	—)	5,738,800)
Share-based and other compensation	242,800)	295,500)	315,400)	530,100)	596,600)
Other	183,400)	82,400)	20,400)	64,000)	97,900)
Deferred tax asset, gross	3,654,100)	3,189,200)	2,693,300)	1,729,700)	8,762,900)
Valuation allowance	(2,079,100)	(1,637,900)	(403,800)	(183,900)	(196,200)
Deferred tax asset, net	1,575,000)	1,551,300)	2,289,500)	1,545,800)	8,566,700)
Property, equipment and intangible assets	(4,725,200)	(5,487,400)	(7,519,100)	(12,419,600)	(14,080,700)
Basis differences in investments	(525,900)	(499,900)	(731,400)	(1,793,700)	(2,422,200)
Other	(110,700)	(2,100)	(72,300)	(68,300)	—)
Deferred tax liabilities	(5,361,800)	(5,989,400)	(8,322,800)	(14,281,600)	(16,502,900)
Deferred taxes	(3,786,800)	(4,438,100)	(6,033,300)	(12,735,800)	(7,936,200)

Based on: 10-K (reporting date: 2019-12-31), 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).

The net deferred tax position exhibited significant volatility between 2015 and 2019, characterized by an initial increase in net liabilities followed by a steady reduction. The net deferred tax liability peaked at 12.7 billion USD in 2016 before declining consistently to 3.8 billion USD by the end of 2019.

Analysis of Deferred Tax Assets (DTA): Gross deferred tax assets experienced a sharp contraction from 8.76 billion USD in 2015 to 1.73 billion USD in 2016, primarily due to the elimination of 5.74 billion USD in outside basis differences. Following this decline, gross DTAs grew steadily, reaching 3.65 billion USD by 2019. This recovery was supported by the emergence of net operating and capital loss carryforwards, which totaled 2.11 billion USD in 2019.; A notable trend is the substantial increase in the valuation allowance, which grew from 196.2 million USD in 2015 to 2.08 billion USD in 2019. This increase indicates a more conservative assessment of the realizability of the gross deferred tax assets over the period.; Other asset components showed diverging trends; share-based and other compensation assets declined steadily from 596.6 million USD in 2015 to 242.8 million USD in 2019, while assets related to inventories, receivables, and accruals fluctuated, ending at 496.8 million USD in 2019.
Analysis of Deferred Tax Liabilities (DTL): Total deferred tax liabilities decreased consistently throughout the period, falling from 16.50 billion USD in 2015 to 5.36 billion USD in 2019. This reduction represents a significant decrease in the company's long-term tax obligations.; The primary driver of this reduction was the decline in liabilities associated with property, equipment, and intangible assets, which dropped from 14.08 billion USD in 2015 to 4.73 billion USD in 2019. Additionally, basis differences in investments saw a reduction from 2.42 billion USD in 2015 to 525.9 million USD in 2019.
Net Tax Position Synthesis: While both assets and liabilities decreased from 2015 levels, the reduction in deferred tax liabilities outpaced the net change in deferred tax assets after 2016. The narrowing gap between the net deferred tax assets and deferred tax liabilities resulted in a strengthened net tax position, reducing the total net deferred tax liability by approximately 70% from its 2016 peak.

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Allergan PLC, deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Deferred tax assets	576,900)	1,063,700)	319,100)	233,300)	49,500)
	Deferred tax liabilities	4,363,700)	5,501,800)	6,352,400)	12,969,100)	7,985,700)

Based on: 10-K (reporting date: 2019-12-31), 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).

The financial data indicates a dominant net deferred tax liability position throughout the five-year period ending December 31, 2019. There is a noticeable divergence in the trajectories of deferred tax assets and liabilities, characterized by an overall reduction in long-term tax obligations.

Deferred Tax Assets Analysis: A consistent upward trajectory is observed from 2015 to 2018, where assets rose from 49,500 thousand to a peak of 1,063,700 thousand. This represents a substantial increase in future tax benefits over a three-year span. However, a significant contraction occurred in 2019, with values declining to 576,900 thousand, indicating a reversal or utilization of these assets.
Deferred Tax Liabilities Analysis: Liabilities experienced a sharp increase in 2016, reaching a peak of 12,969,100 thousand. Following this peak, a sustained downward trend is evident, with liabilities decreasing every subsequent year to 4,363,700 thousand by the end of 2019. This steady decline suggests a systematic reduction in future taxable obligations.
Net Deferred Tax Position: The net deferred tax liability remained substantial across the entire period, although the absolute magnitude of this liability decreased significantly. The peak net liability occurred in 2016, followed by a consistent narrowing of the gap between deferred tax assets and liabilities, reflecting a reduction in the overall deferred tax burden on the balance sheet.

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Allergan PLC, Financial Data: Reported vs. Adjusted

Allergan PLC, adjustments to financial statements

US$ in thousands

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported)	94,699,100)	101,787,600)	118,341,900)	128,986,300)	135,840,700)
Less: Noncurrent deferred tax assets, net	576,900)	1,063,700)	319,100)	233,300)	49,500)
Total assets (adjusted)	94,122,200)	100,723,900)	118,022,800)	128,753,000)	135,791,200)
Adjustment to Total Liabilities
Total liabilities (as reported)	36,502,700)	36,656,600)	44,504,800)	52,785,800)	59,251,400)
Less: Noncurrent deferred tax liabilities, net	4,363,700)	5,501,800)	6,352,400)	12,969,100)	7,985,700)
Total liabilities (adjusted)	32,139,000)	31,154,800)	38,152,400)	39,816,700)	51,265,700)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	58,173,600)	65,114,100)	73,821,100)	76,192,700)	76,591,400)
Less: Net deferred tax assets (liabilities)	(3,786,800)	(4,438,100)	(6,033,300)	(12,735,800)	(7,936,200)
Shareholders’ equity (adjusted)	61,960,400)	69,552,200)	79,854,400)	88,928,500)	84,527,600)
Adjustment to Net Income (loss) Attributable To Shareholders
Net income (loss) attributable to shareholders (as reported)	(5,271,000)	(5,096,400)	(4,125,500)	14,973,400)	3,915,200)
Add: Deferred income tax expense (benefit)	(660,900)	(1,262,000)	(7,788,700)	(2,045,700)	(1,811,600)
Net income (loss) attributable to shareholders (adjusted)	(5,931,900)	(6,358,400)	(11,914,200)	12,927,700)	2,103,600)

Based on: 10-K (reporting date: 2019-12-31), 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).

A consistent contraction in the balance sheet is observed from 2015 through 2019, characterized by a steady decline in both total assets and total liabilities. While reported total assets decreased from approximately 135.8 billion US$ to 94.7 billion US$, the adjustment for deferred taxes resulted in a slightly lower asset base across all periods, indicating a modest impact on the asset side of the balance sheet.

Liability and Equity Revaluation: A significant divergence is noted between reported and adjusted total liabilities. The removal of deferred taxes substantially reduces the reported liability figures, most notably in 2016, where adjusted liabilities were approximately 13 billion US$ lower than reported figures. This adjustment directly correlates with an increase in shareholders' equity; adjusted equity consistently exceeds reported equity throughout the analyzed period. For instance, in 2016, adjusted shareholders' equity reached 88.9 billion US$ compared to a reported 76.2 billion US$, suggesting that deferred tax liabilities created a more conservative reported equity position than the adjusted figures reflect.
Net Income Trends and Tax Impact: The company transitioned from a period of profitability in 2015 and 2016 to sustained net losses from 2017 to 2019. The removal of deferred tax components reveals a more severe underlying financial performance. In 2017, the reported net loss of 4.1 billion US$ widened significantly to an adjusted net loss of 11.9 billion US$. This pattern indicates that deferred tax accounting provided a substantial cushion that mitigated the reported magnitude of losses during the 2017 to 2019 period.
Solvency and Capital Structure: Despite the decline in absolute asset values, the adjusted capital structure appears more robust than the reported figures suggest. The gap between reported and adjusted liabilities indicates that a considerable portion of the reported debt is comprised of deferred tax obligations rather than immediate operational or financial liabilities. Consequently, the adjusted shareholders' equity provides a higher baseline for solvency analysis, although both reported and adjusted equity figures trended downward from 2017 onward.

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Allergan PLC, Financial Ratios: Reported vs. Adjusted

Allergan PLC, adjusted financial ratios

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net Profit Margin
Reported net profit margin	-32.76%	-32.28%	-25.88%	102.76%	25.98%
Adjusted net profit margin	-36.87%	-40.28%	-74.74%	88.72%	13.96%
Total Asset Turnover
Reported total asset turnover	0.17	0.16	0.13	0.11	0.11
Adjusted total asset turnover	0.17	0.16	0.14	0.11	0.11
Financial Leverage
Reported financial leverage	1.63	1.56	1.60	1.69	1.77
Adjusted financial leverage	1.52	1.45	1.48	1.45	1.61
Return on Equity (ROE)
Reported ROE	-9.06%	-7.83%	-5.59%	19.65%	5.11%
Adjusted ROE	-9.57%	-9.14%	-14.92%	14.54%	2.49%
Return on Assets (ROA)
Reported ROA	-5.57%	-5.01%	-3.49%	11.61%	2.88%
Adjusted ROA	-6.30%	-6.31%	-10.09%	10.04%	1.55%

Based on: 10-K (reporting date: 2019-12-31), 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).

The removal of deferred taxes reveals a significant discrepancy between reported and adjusted financial performance, particularly concerning profitability and return metrics. While asset efficiency remains stable across both reporting methods, the impact of tax adjustments is most pronounced in net profit margins and returns on equity and assets, where adjusted figures frequently highlight a more severe financial contraction than reported values.

Profitability Margins: A period of extreme volatility is observed in net profit margins. Both reported and adjusted margins peaked in 2016 before entering a sharp decline into negative territory starting in 2017. The adjustment for deferred taxes generally lowered the margins in positive years and intensified the losses in negative years; most notably, in 2017, the adjusted net profit margin dropped to -74.74% compared to a reported -25.88%, suggesting that deferred tax assets or liabilities significantly masked the depth of operational losses during that period.
Return on Equity (ROE) and Return on Assets (ROA): Return metrics follow a trajectory similar to profit margins, with a peak in 2016 followed by a sustained downward trend. Adjusted ROE and ROA are consistently lower than their reported counterparts. In 2017, the divergence is particularly acute, with adjusted ROE falling to -14.92% against a reported -5.59%, and adjusted ROA falling to -10.09% against a reported -3.49%. This indicates that the removal of deferred tax effects presents a more conservative and pessimistic view of the company's ability to generate returns from its equity and asset base.
Financial Leverage: Financial leverage shows a gradual downward trend from 2015 to 2018, with a slight increase in 2019. The adjusted financial leverage is consistently lower than the reported leverage throughout the five-year period. This suggests that deferred tax liabilities contribute a meaningful portion to the reported total liabilities, and their removal results in a lower calculated debt-to-asset relationship.
Asset Turnover: Total asset turnover demonstrates a steady and incremental increase, rising from 0.11 in 2015 to 0.17 in 2019. Unlike the profitability and leverage ratios, asset turnover is virtually unaffected by the removal of deferred taxes, with reported and adjusted values remaining nearly identical across the entire timeline. This indicates that tax adjustments have no material impact on the measured efficiency of asset utilization.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to shareholders	(5,271,000)	(5,096,400)	(4,125,500)	14,973,400)	3,915,200)
Net revenues	16,088,900)	15,787,400)	15,940,700)	14,570,600)	15,071,000)
Profitability Ratio
Net profit margin¹	-32.76%	-32.28%	-25.88%	102.76%	25.98%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to shareholders	(5,931,900)	(6,358,400)	(11,914,200)	12,927,700)	2,103,600)
Net revenues	16,088,900)	15,787,400)	15,940,700)	14,570,600)	15,071,000)
Profitability Ratio
Adjusted net profit margin²	-36.87%	-40.28%	-74.74%	88.72%	13.96%

Based on: 10-K (reporting date: 2019-12-31), 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).

2019 Calculations

¹ Net profit margin = 100 × Net income (loss) attributable to shareholders ÷ Net revenues
= 100 × -5,271,000 ÷ 16,088,900 = -32.76%

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to shareholders ÷ Net revenues
= 100 × -5,931,900 ÷ 16,088,900 = -36.87%

The financial trajectory between 2015 and 2019 is characterized by extreme volatility, shifting from a period of exceptional profitability to a sustained period of net losses.

Net Profit Margin Volatility: A significant spike in profitability occurred in 2016, with the reported net profit margin reaching 102.76% and the adjusted net profit margin reaching 88.72%. This peak was followed by a severe reversal in 2017, as the adjusted net profit margin plummeted to -74.74%, marking a drastic transition from high positive returns to substantial losses.
Comparison of Reported and Adjusted Performance: During 2015 and 2016, adjusted net income figures were lower than reported net income. This relationship inverted sharply in 2017, where the adjusted net loss of 11.9 billion US dollars was significantly deeper than the reported loss of 4.1 billion US dollars. This divergence suggests that the adjustments removed items that had otherwise mitigated the reported losses during that period.
Trend Analysis of Sustained Losses: From 2017 to 2019, the company remained in a negative profit position, though a gradual narrowing of losses is observable. The adjusted net profit margin improved from -74.74% in 2017 to -40.28% in 2018 and further to -36.87% in 2019. While the reported net profit margin remained relatively stable in the negative range between 2017 and 2019 (moving from -25.88% to -32.76%), the adjusted figures demonstrate a steady upward trend toward break-even.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net revenues	16,088,900)	15,787,400)	15,940,700)	14,570,600)	15,071,000)
Total assets	94,699,100)	101,787,600)	118,341,900)	128,986,300)	135,840,700)
Activity Ratio
Total asset turnover¹	0.17	0.16	0.13	0.11	0.11
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net revenues	16,088,900)	15,787,400)	15,940,700)	14,570,600)	15,071,000)
Adjusted total assets	94,122,200)	100,723,900)	118,022,800)	128,753,000)	135,791,200)
Activity Ratio
Adjusted total asset turnover²	0.17	0.16	0.14	0.11	0.11

Based on: 10-K (reporting date: 2019-12-31), 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).

2019 Calculations

¹ Total asset turnover = Net revenues ÷ Total assets
= 16,088,900 ÷ 94,699,100 = 0.17

² Adjusted total asset turnover = Net revenues ÷ Adjusted total assets
= 16,088,900 ÷ 94,122,200 = 0.17

A consistent inverse relationship is observed between the total asset base and the asset turnover ratios from 2015 through 2019. While the total assets experienced a steady decline, the efficiency of those assets in generating revenue improved progressively over the same period.

Asset Base Contraction: Reported total assets decreased from 135,840,700 thousand US dollars in 2015 to 94,699,100 thousand US dollars by 2019. Adjusted total assets followed a near-identical trajectory, falling from 135,791,200 thousand US dollars to 94,122,200 thousand US dollars. This indicates a significant and sustained reduction in the company's total asset footprint over the five-year interval.
Asset Turnover Efficiency: Despite the contraction of the asset base, asset turnover ratios exhibited a positive growth trend. The reported turnover ratio remained stable at 0.11 between 2015 and 2016, subsequently increasing to 0.13 in 2017, 0.16 in 2018, and reaching 0.17 by 2019. The adjusted turnover ratio mirrored this progression, moving from 0.11 in 2015 to 0.17 in 2019, demonstrating an improved capacity to generate revenue relative to the assets employed.
Comparative Analysis of Reported and Adjusted Metrics: The variance between reported and adjusted figures is negligible across all periods. The adjusted total asset turnover closely tracks the reported turnover, with only a slight divergence observed in 2017, where the adjusted ratio was 0.14 compared to the reported 0.13. This suggests that the adjustments applied to the asset values did not materially alter the overall assessment of operational efficiency.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Total assets	94,699,100)	101,787,600)	118,341,900)	128,986,300)	135,840,700)
Shareholders’ equity	58,173,600)	65,114,100)	73,821,100)	76,192,700)	76,591,400)
Solvency Ratio
Financial leverage¹	1.63	1.56	1.60	1.69	1.77
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	94,122,200)	100,723,900)	118,022,800)	128,753,000)	135,791,200)
Adjusted shareholders’ equity	61,960,400)	69,552,200)	79,854,400)	88,928,500)	84,527,600)
Solvency Ratio
Adjusted financial leverage²	1.52	1.45	1.48	1.45	1.61

Based on: 10-K (reporting date: 2019-12-31), 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).

2019 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= 94,699,100 ÷ 58,173,600 = 1.63

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 94,122,200 ÷ 61,960,400 = 1.52

A consistent contraction in the company's asset base is evident from 2015 through 2019. Reported total assets decreased from 135.8 billion USD to 94.7 billion USD, a trend closely mirrored by adjusted total assets. Simultaneously, both reported and adjusted shareholders' equity exhibited a downward trajectory over the same five-year period, though adjusted equity remained consistently higher than reported figures.

Adjusted Financial Leverage Trend: The adjusted financial leverage ratio demonstrates a lower risk profile compared to the reported ratio across all periods. Between 2015 and 2018, the adjusted leverage generally trended downward, moving from 1.61 to a low of 1.45. A slight reversal occurred in 2019, where the ratio increased to 1.52.
Comparative Leverage Analysis: A systematic gap exists between reported and adjusted financial leverage. The adjusted leverage ratio is consistently lower than the reported ratio, primarily driven by the fact that adjusted shareholders' equity is higher than reported equity. For example, in 2016, the reported financial leverage stood at 1.69, while the adjusted leverage was significantly lower at 1.45.
Equity and Asset Correlation: While total assets declined steadily throughout the period, shareholders' equity experienced a more accelerated decline between 2017 and 2019. This contraction in equity relative to the reduction in assets contributed to the upward movement in both reported and adjusted leverage ratios observed in 2019.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to shareholders	(5,271,000)	(5,096,400)	(4,125,500)	14,973,400)	3,915,200)
Shareholders’ equity	58,173,600)	65,114,100)	73,821,100)	76,192,700)	76,591,400)
Profitability Ratio
ROE¹	-9.06%	-7.83%	-5.59%	19.65%	5.11%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to shareholders	(5,931,900)	(6,358,400)	(11,914,200)	12,927,700)	2,103,600)
Adjusted shareholders’ equity	61,960,400)	69,552,200)	79,854,400)	88,928,500)	84,527,600)
Profitability Ratio
Adjusted ROE²	-9.57%	-9.14%	-14.92%	14.54%	2.49%

Based on: 10-K (reporting date: 2019-12-31), 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).

2019 Calculations

¹ ROE = 100 × Net income (loss) attributable to shareholders ÷ Shareholders’ equity
= 100 × -5,271,000 ÷ 58,173,600 = -9.06%

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to shareholders ÷ Adjusted shareholders’ equity
= 100 × -5,931,900 ÷ 61,960,400 = -9.57%

A significant volatility in profitability is evident between 2015 and 2019, characterized by a peak in performance in 2016 followed by a sustained period of negative returns. The transition from positive to negative net income coincides with a steady erosion of shareholders' equity, leading to a deteriorating return on equity (ROE) profile.

Net Income Trends: Reported net income experienced a sharp increase in 2016, reaching 14.97 billion US$, before entering a period of continuous loss from 2017 through 2019. Adjusted net income followed a similar trajectory but demonstrated a more severe contraction in 2017, with a loss of 11.91 billion US$, indicating that non-GAAP adjustments significantly amplified the perceived loss in that specific year.
Shareholders' Equity Dynamics: A consistent downward trend in reported shareholders' equity is observed, declining from 76.59 billion US$ in 2015 to 58.17 billion US$ in 2019. Adjusted shareholders' equity peaked in 2016 at 88.93 billion US$ before declining to 61.96 billion US$ by 2019. The variance between reported and adjusted equity remains substantial throughout the period, suggesting significant adjustments to the capital base.
Return on Equity (ROE) Performance: The reported ROE peaked at 19.65% in 2016 but shifted to negative values starting in 2017, reaching -9.06% by 2019. The adjusted ROE exhibited greater volatility, swinging from a high of 14.54% in 2016 to a low of -14.92% in 2017. While the adjusted ROE improved slightly in 2018 and 2019, it remained negative, mirroring the trend of the reported ROE and confirming a persistent inability to generate positive returns on equity during the latter half of the period.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to shareholders	(5,271,000)	(5,096,400)	(4,125,500)	14,973,400)	3,915,200)
Total assets	94,699,100)	101,787,600)	118,341,900)	128,986,300)	135,840,700)
Profitability Ratio
ROA¹	-5.57%	-5.01%	-3.49%	11.61%	2.88%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to shareholders	(5,931,900)	(6,358,400)	(11,914,200)	12,927,700)	2,103,600)
Adjusted total assets	94,122,200)	100,723,900)	118,022,800)	128,753,000)	135,791,200)
Profitability Ratio
Adjusted ROA²	-6.30%	-6.31%	-10.09%	10.04%	1.55%

Based on: 10-K (reporting date: 2019-12-31), 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).

2019 Calculations

¹ ROA = 100 × Net income (loss) attributable to shareholders ÷ Total assets
= 100 × -5,271,000 ÷ 94,699,100 = -5.57%

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to shareholders ÷ Adjusted total assets
= 100 × -5,931,900 ÷ 94,122,200 = -6.30%

The financial trajectory between 2015 and 2019 is characterized by a sharp transition from profitability to sustained net losses. While 2016 represented a peak in both reported and adjusted returns, a substantial decline occurred in 2017, initiating a period of negative returns that persisted through the end of 2019.

Net Income Performance: Reported net income exhibited a significant increase from 3.9 billion in 2015 to 14.9 billion in 2016, followed by a reversal into losses starting in 2017. Adjusted net income followed a similar trend but demonstrated greater volatility; specifically, the adjusted loss in 2017 reached 11.9 billion, which was substantially more severe than the reported loss of 4.1 billion for the same period.
Asset Base Trends: A consistent contraction of the asset base is observed throughout the five-year period. Reported total assets declined steadily from approximately 135.8 billion in 2015 to 94.7 billion in 2019. Adjusted total assets mirrored this downward trend, decreasing from 135.8 billion to 94.1 billion over the same timeframe.
Return on Assets (ROA) Analysis: The Reported ROA peaked at 11.61% in 2016 before falling to -3.49% in 2017 and continuing to deteriorate to -5.57% by 2019. The Adjusted ROA showed more extreme fluctuations, dropping from a high of 10.04% in 2016 to a low of -10.09% in 2017. While the Adjusted ROA slightly improved to -6.30% by 2019, it remained consistently lower than the reported figure during the years of profitability and more negative during the initial year of losses.

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