Analysis of Property, Plant and Equipment
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- Income Statement
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Property, Plant and Equipment Disclosure
Allergan PLC, balance sheet: property, plant and equipment
US$ in thousands
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).
- Machinery and Equipment
- The recorded cost showed a sharp decline from 1,231,700 thousand USD in 2015 to 437,100 thousand USD in 2016, followed by a gradual recovery over the subsequent years reaching 682,000 thousand USD in 2019. This pattern suggests a significant disposal or revaluation event in 2016, after which investment in machinery and equipment resumed incrementally.
- Research and Laboratory Equipment
- This category demonstrated a consistent upward trend throughout the period. Starting at 171,900 thousand USD in 2015, the asset value decreased substantially to 48,800 thousand USD in 2016 but then steadily increased to 97,000 thousand USD by 2019. The initial decline parallels that of machinery and equipment, potentially indicating reclassification or disposals, with subsequent years reflecting renewed investments.
- Transportation/Other
- Values in this category also decreased markedly from 596,000 thousand USD in 2015 to 381,400 thousand USD in 2016, then increased steadily to 643,500 thousand USD by 2019. The pattern aligns with the trends in machinery and research equipment, reinforcing the possibility of a significant structural adjustment or asset reclassification in 2016.
- Land, Buildings, and Leasehold Improvements
- The asset cost showed a steep decline from 1,439,900 thousand USD in 2015 to 705,300 thousand USD in 2016, followed by consistent annual increases reaching 989,500 thousand USD in 2019. This suggests an initial major reduction in recorded value, after which the company progressively invested in or capitalized new assets within this category.
- Construction in Progress
- There was a gradual decreasing trend over the period, starting at 578,400 thousand USD in 2015 and declining to 442,400 thousand USD in 2019. This indicates ongoing project completion without commensurate new construction starts or a strategic shift toward reducing work-in-progress balances.
- Property, Plant, and Equipment, Cost
- The total cost of property, plant, and equipment halved from 4,017,900 thousand USD in 2015 to 2,018,700 thousand USD in 2016, then steadily rose to 2,854,400 thousand USD by 2019. This substantial drop in 2016 corresponds with the declines seen in individual asset categories and likely results from a major asset revaluation, divestiture, or reclassification event. Subsequent years show recovery through investments and capital expenditures.
- Accumulated Depreciation
- Accumulated depreciation demonstrated a reduction in absolute value from -1,088,400 thousand USD in 2015 to -407,400 thousand USD in 2016, which is consistent with the decrease in net assets and cost. After 2016, accumulated depreciation increased annually reaching -927,800 thousand USD by 2019, indicating ongoing depreciation charges consistent with asset base growth.
- Property, Plant, and Equipment, Net
- The net property, plant, and equipment value declined sharply from 2,929,500 thousand USD in 2015 to 1,611,300 thousand USD in 2016. From 2016 onwards, the net book value experienced modest growth, increasing to 1,926,600 thousand USD by 2019. This reflects the partial recovery of the asset base after the substantial reduction in 2016, balanced against depreciation and capital expenditures during the period.
Asset Age Ratios (Summary)
Allergan PLC, asset age ratios
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).
- Average Age Ratio
- The average age ratio displayed variability over the five-year period, beginning at 27.09% in 2015. It decreased notably to 20.18% in 2016, suggesting a younger asset base at that time. However, from 2017 onward, the ratio increased steadily each year, rising to 25.65% in 2017, then 30.34% in 2018, and reaching 32.5% by 2019. This upward trend indicates a gradual aging of the property, plant, and equipment assets in the latter years.
- Estimated Total Useful Life
- The estimated total useful life of assets fluctuated during the period. It started at 18 years in 2015 but dropped sharply to 13 years in 2016. Subsequently, it showed minor variations, increasing slightly to 14 years in 2017, back down to 13 years in 2018, and rising again to 14 years in 2019. These variations may reflect changes in asset composition or revision in estimation methodologies.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of assets exhibited some inconsistency. It started at 5 years in 2015, decreased to 3 years in 2016, then increased to 4 years in both 2017 and 2018, returning to 5 years in 2019. The dip in 2016 suggests acquisition of newer assets or disposal of older assets during that year, while other years indicate a relatively stable aging pattern.
- Estimated Remaining Life
- There was a notable decline in the estimated remaining life from 13 years in 2015 to 10 years in 2016. It remained stable at 10 years through 2017, then decreased to 9 years in 2018 and stayed at this level in 2019. This downward trend reflects a progressive reduction in the expected service duration of the asset base, consistent with the observed increase in the average age ratio.
Average Age
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Accumulated depreciation | ||||||
| Property, plant and equipment, cost | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
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 Average age = 100 × Accumulated depreciation ÷ Property, plant and equipment, cost
= 100 × ÷ =
- Property, Plant, and Equipment Cost
- The cost of property, plant, and equipment shows an overall increasing trend from 2016 to 2019. Starting at US$2,018,700 thousand in 2016, the cost rose steadily to US$2,854,400 thousand by the end of 2019. Although there was an initial decline between 2015 and 2016, the subsequent years reflect consistent investment or acquisition in assets.
- Accumulated Depreciation
- Accumulated depreciation exhibits a fluctuating pattern. Notably, the value drops significantly from US$1,088,400 thousand in 2015 to US$407,400 thousand in 2016, which deviates from typical depreciation trends and may indicate a restatement or reclassification. From 2016 onward, accumulated depreciation steadily increases each year, reaching US$927,800 thousand by the end of 2019. This suggests ongoing wear and usage of assets, aligning with normal depreciation behavior over time.
- Average Age Ratio
- The average age ratio of the property, plant, and equipment demonstrates a gradual upward trend from 2016 to 2019. Beginning at 20.18% in 2016, it rises each year, reaching 32.5% in 2019. This increase implies that the asset base is aging, potentially indicating slower replacement or renewal of fixed assets relative to their useful life.
- Overall Analysis
- Between 2016 and 2019, the company maintained consistent investments in property, plant, and equipment, as reflected in the rising cost values. Despite this, the increasing average age ratio and accumulated depreciation suggest that a portion of the asset base is aging and experiencing wear. The initial anomaly in accumulated depreciation between 2015 and 2016 warrants further investigation to clarify the accounting treatment during that period.
Estimated Total Useful Life
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 Estimated total useful life = Property, plant and equipment, cost ÷ Depreciation expense
= ÷ =
- Property, Plant, and Equipment (Cost)
- The recorded cost of property, plant, and equipment initially shows a significant decrease from 4,017,900 thousand US dollars at the end of 2015 to 2,018,700 thousand US dollars at the end of 2016. Following this sharp decline, the cost steadily increased over the next three years, reaching 2,854,400 thousand US dollars by the end of 2019. This pattern suggests a possible divestiture or impairment in 2016, followed by consistent capital expenditure or acquisitions in subsequent years.
- Depreciation Expense
- Depreciation expense decreased from 218,300 thousand US dollars in 2015 to 155,800 thousand in 2016, which aligns with the reduction in asset cost observed during the same period. After 2016, depreciation expense experienced gradual increases, rising to 204,500 thousand US dollars by 2019. This incremental growth reflects the increased asset base following reinvestment or acquisition of property, plant, and equipment.
- Estimated Total Useful Life
- The estimated total useful life of the assets fluctuated between 13 and 18 years across the years. It started at 18 years in 2015, decreased sharply to 13 years in 2016, then remained relatively stable with minor variations around 13 to 14 years through 2019. This shift may indicate a change in asset composition or a reassessment of asset longevity in 2016, coinciding with the significant adjustment in asset costs and depreciation expense.
Estimated Age, Time Elapsed since Purchase
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 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation shows a fluctuating trend over the five-year period. Starting at 1,088,400 thousand US dollars in 2015, there is a notable decline in 2016 to 407,400 thousand US dollars, followed by a gradual increase in subsequent years, reaching 927,800 thousand US dollars by the end of 2019. This pattern suggests a significant adjustment or asset reevaluation occurred between 2015 and 2016, after which accumulated depreciation steadily grew.
- Depreciation Expense
- The annual depreciation expense generally demonstrates an increasing trend from 2016 to 2019, with a minor dip between 2015 and 2016. Beginning at 218,300 thousand US dollars in 2015, it decreases to 155,800 thousand in 2016 but then climbs consistently each year, peaking at 204,500 thousand US dollars in 2019. This trend indicates an increasing allocation of depreciation costs annually, which could reflect new asset acquisitions or changes in depreciation methods.
- Time Elapsed Since Purchase
- The time elapsed since purchase ranges between three and five years throughout the period, indicating the average age of the property, plant, and equipment. In 2015, the average age was five years, it decreased to three years in 2016, then stabilized at four years for 2017 and 2018 before returning to five years in 2019. This fluctuation suggests variations in asset turnover or replacement cycles during the timeframe.
Estimated Remaining Life
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 Estimated remaining life = Property, plant and equipment, net ÷ Depreciation expense
= ÷ =
- Net Property, Plant, and Equipment
- The net value of property, plant, and equipment exhibited a significant decline from approximately $2.93 billion at the end of 2015 to about $1.61 billion by the end of 2016. Following this considerable drop, the asset base showed a gradual upward trend, rising to approximately $1.79 billion in 2017 and slightly increasing to around $1.79 billion in 2018. By the end of 2019, the net value further increased to approximately $1.93 billion. This pattern suggests a period of substantial asset reduction or disposals in 2016, followed by moderate reinvestment or capital expenditure in the subsequent years.
- Depreciation Expense
- The depreciation expense decreased from $218.3 million in 2015 to $155.8 million in 2016, paralleling the significant reduction in the net property, plant, and equipment. From 2016 onwards, depreciation expense demonstrated a consistent upward trend, increasing to $171.5 million in 2017, $196.3 million in 2018, and reaching $204.5 million in 2019. This rising depreciation aligns with the gradual increase in net property, plant, and equipment, indicating either additions to the asset base or adjustments in depreciation methodologies reflecting asset aging and utilization.
- Estimated Remaining Life of Assets
- The estimated remaining life of the property, plant, and equipment decreased from 13 years in 2015 to 10 years in 2016, maintaining at 10 years in 2017, and then declining further to 9 years during 2018 and 2019. This downward trend in the estimated remaining useful life suggests an aging asset base, with either accelerated asset consumption, changes in asset composition, or strategic reassessment of asset lifecycles, which can impact future depreciation approaches and capital budgeting.