US prescriptions for ADDERALL XR for the three months to September 30, 2005 were up 11%. ADDERALL XR enhanced its leading market position with a 1% increase in US market share, in a market that grew 4% overall compared to the same period in 2004.
ADDERALL XR had a 25% share of the total US ADHD market in September 2005 and strengthened its position as the leading brand in the US ADHD market.
Product sales growth was higher than prescription growth for the quarter due mainly to the impact of price increases in December 2004 and August 2005 and lower sales deductions.
FDA approval of the adolescent indication for ADDERALL XR was received during July 2005.
On August 24, 2005, Shire announced that Health Canada would reinstate the marketing authorization of ADDERALL XR in Canada effective August 26, 2005. This reinstatement follows the acceptance by Health Canada of the recommendations from the New Drug Committee (NDC), which was appointed by Health Canada at Shire’s request to review the suspension in Canada of ADDERALL XR. The NDC, comprised of three highly qualified, independent experts in the fields of pediatric cardiology, pediatric development and behavioral problems, and pharmacoepidemiology, examined the scientific evidence made available to them by both Shire and Health Canada. The NDC recommended that Health Canada reinstate ADDERALL XR.
During October 2005, Shire filed a Citizen Petition with the FDA requesting that the FDA require more rigorous bioequivalence testing or additional clinical testing for generic or follow-on drug products that reference ADDERALL XR, before they can be approved. Shire believes that these requested criteria will ensure that generic formulations of ADDERALL XR or follow-on drug products will be clinically effective and safe. The FDA has six months to respond to Shire’s petition, however it does not preclude the FDA from granting approval or tentative approval to generic or follow-on products referencing ADDERALL XR during that time.
Shire continues to defend its intellectual property. In October 2005, Shire announced that it has filed a lawsuit against Barr and Impax with respect to US patent No. 6,913,768 (‘768). Shire believes that both Barr’s and Impax’s generic ADDERALL XR products infringe the ‘768 patent claims. The case was filed in the Southern District of New York. The earlier filed cases against Barr and Impax involving the ‘819 and ‘300 patents are scheduled to go to trial in January 2006 and on February 23, 2006 respectively. There will be no 30 month stay associated with the filing of the ‘768 patent case. The ‘768 patent is directed to pharmaceutical compositions comprising a once-a-day sustained release formulation of at least one amphetamine salt for the treatment of ADHD. Impax has filed for summary judgment in respect to non-infringement of the ‘819 and ‘300 patents in the district court of Delaware. The Court has not yet ruled on Impax’s motion. The schedule in the Barr case provided that summary judgement motions were to be filed and fully briefed by October 14, 2005. Neither Shire nor Barr filed any summary judgement motions. Trial in the Barr case is scheduled for January 2006.
Further information about the litigation proceedings relating to our ADDERALL XR patents can be found in our filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the year to December 31, 2004 and our most recent quarterly report on Form 10-Q for the period ended June 30, 2005. Any decrease in the sales of ADDERALL XR could significantly reduce revenues and earnings.
US prescriptions for the three months to September 30, 2005 were down 12%, compared to the same period in 2004. This was due primarily to supply constraints and a 6% decrease in the total US carbamazepine prescription market. The supply constraints have now been resolved.
Product sales for the three months to September 30, 2005 were up 44%, compared to the same period in 2004. The difference between sales growth and the lower level of prescriptions is due to a December 2004 price increase and lower sales deductions in comparison to the high levels in the same period in 2004.
CARBATROL had a 43% share of the total US extended release carbamazepine prescription market in September 2005 (September 2004: 45%).
Patent litigation proceedings with Nostrum Pharmaceuticals, Inc. (Nostrum) relating to CARBATROL are in progress. On July 18, 2005, Judge Mary Little Cooper of the United States Federal District Court in Trenton, New Jersey denied Nostrum’s motion for summary judgment. Consequently, the lawsuit between Shire and Nostrum will continue to move toward trial. No trial date has been set by the Court.
Further information can be found in our filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the year to December 31, 2004 and our most recent quarterly report on Form 10-Q for the period ended June 30, 2005.
PENTASA for the treatment of ulcerative colitis
US prescriptions for the three months to September 30, 2005 were up 6%, compared to the same period in 2004. The increase was due to the success of the co-promotional agreement with Solvay Pharmaceuticals Inc. and the impact of the 500mg dosage form launched in the third quarter of 2004, in conjunction with a 2% increase in the total US oral mesalamine prescription market.
Product sales for the three months to September 30, 2005 were up 11%, compared to the same period in 2004. The difference between sales growth and prescription growth is due to the impact of the September 2004 price increase.
PENTASA had an 18% share of the total US oral mesalamine prescription market in September 2005 (September 2004: 17%).
AGRYLIN and XAGRID for the treatment of thrombocythemia
AGRYLIN/XAGRID sales worldwide for the three months to September 30, 2005 were $16.8 million, down 66% compared to the same period in 2004 (Q3 2004: $49.7 million).
As expected, North American sales were down 88% due to the impact of generic versions of AGRYLIN being approved in the US market in April 2005.
Rest of the World sales (all sales outside North America) were up 37%, due to the successful launch of XAGRID in the UK, Germany and France in the first quarter of 2005. In accordance with current orphan drug legislation in the EU, XAGRID will have up to 10 years of marketing exclusivity in the EU.
FOSRENOL for the treatment of hyperphosphatemia
US prescriptions for the three months to September 30, 2005 were up 19%, to 43,000 prescriptions, compared to the previous quarter (Q2 2005: 36,000). FOSRENOL was launched in the US in January 2005.
Product sales for the three months to September 30, 2005 were $9.7 million (Q2 2005: $9.9 million). The difference between sales and prescription growth is due to pipeline inventories declining from a comparatively high level of stocking in the prior quarter after the initial launch of FOSRENOL in the first quarter.
FOSRENOL had an 8% share of the total US phosphate binding market in September 2005.
Shire continues its discussions relating to FOSRENOL with regulatory authorities across Europe and other regions. Launches are anticipated to begin in Europe shortly, subject to obtaining national approvals and concluding pricing and reimbursement negotiations.
REPLAGAL for the treatment of Fabry disease
REPLAGAL was acquired by Shire as part of the TKT acquisition, which completed on July 27, 2005. Product sales for the period since acquisition were $16.0 million. The majority of REPLAGAL sales are in Europe.
8
3.Royalties
Royalty revenue increased 7% to $60.2 million for the three months to September 30, 2005 (2004: $56.2 million) and represented 16% of total revenues (2004: 16%). The following table provides an analysis of Shire’s royalty income:
Third Quarter 2005 Royalty Highlights
|
|
|
|
| Product | Royalties to Shire | Royalty(1) | Worldwide in-market sales by licensee(2)in |
| | | Growth | Q3 2005 |
| | $M | % | $M |
|
|
|
|
| 3TC | 39.6 | +5%* | 301 |
| ZEFFIX | 7.7 | +10%** | 67 |
| Other | 12.9 | +14% | N/A |
|
|
|
|
* The impact of foreign exchange movements has contributed +3% to the reported growth
** The impact of foreign exchange movements has contributed +1% to the reported growth
(1) Compared with Q3 2004
(2)GSK
3TC
Royalties from sales of 3TC for the three months to September 30, 2005 were $39.6 million, an increase of 5% compared to the three months to September 30, 2004 ($37.9 million). This was due to the continued growth in the nucleoside analogue market for HIV and the positive impact of foreign exchange movements.
Shire receives royalties from GSK on worldwide 3TC sales. GSK’s worldwide sales of 3TC for the three months to September 30, 2005 were $301 million (2004: $291 million).
ZEFFIX
Royalties from sales of ZEFFIX for the three months to September 30, 2005 were $7.7 million, an increase of 10% compared to the three months to September 30, 2004 ($7.0 million), due to strong growth in the Japanese market.
Shire receives royalties from GSK on worldwide ZEFFIX sales. GSK’s worldwide sales of ZEFFIX for the three months to September 30, 2005 were $67 million (2004: $61 million).
Other
Other royalties are primarily in respect of REMINYL and REMINYL XL (now marketed as RAZADYNE and RAZADYNE ER in the US), a product marketed worldwide by Janssen, with the exception of the United Kingdom and the Republic of Ireland where Shire acquired the exclusive marketing rights from May 2004.
On April 11, 2005, Ortho-McNeil Neurologics Inc. (Janssen’s US affiliate company) announced that REMINYL would be marketed in the US under the new product name of RAZADYNE. Ortho-McNeil Neurologics Inc. worked closely with the FDA on a name change following dispensing errors in the US, between REMINYL and the Type 2 diabetes mellitus drug known as AMARYL. REMINYL continues to be marketed outside the US under its original name. Shire is only aware of one similar dispensing error outside the US.
Sales of the REMINYL/RAZADYNE range, for the symptomatic treatment of mild to moderately severe dementia of the Alzheimer’s type, are growing well in the Alzheimer’s market.
Shire and Janssen’s affiliate, Johnson & Johnson Pharmaceutical Research & Development, LLC, are in ongoing discussions with the European regulatory authorities in relation to their assessment of the data for REMINYL from investigational studies in mild cognitive impairment. Labeling changes have now been agreed.
9
Shire has submitted its response to the preliminary Appraisal Consultation Document issued by the National Institute for Clinical Excellence in England and Wales (NICE). This preliminary appraisal recommends that all existing approved products for the symptomatic treatment of mild to moderate Alzheimer's disease in England and Wales are no longer reimbursable by the National Health Service when used by new patients. NICE’s final recommendation was expected to be published in June 2005. However, on July 18, 2005 NICE announced that it had delayed its decision and asked the pharmaceutical companies that market drugs to treat Alzheimer's disease to identify sub-groups of patients who may benefit from the treatments.
4.Financial details
Cost of product sales
For the three months to September 30, 2005 the cost of product sales amounted to 19% of product sales (2004: 14%). The decrease in gross margin is primarily driven by the addition of REPLAGAL to Shire’s product portfolio following the acquisition of TKT. REPLAGAL’s cost of product sales relates entirely to acquired inventories and is therefore based on the fair value of that acquired inventory. In accordance with US GAAP acquired finished goods have been valued at 97% of the expected sales price of REPLAGAL and so virtually no margin will be reflected for REPLAGAL sales until acquired finished goods have been sold (anticipated Q3 2006). For the three months to September 30, 2005 the REPLAGAL cost of product sales includes a $17.2 million adjustment in respect of the acquired inventory, of which $15.1 million related to sales of acquired finished goods and $2.1 million was a write off of damaged work in progress. Excluding this fair value adjustment, the cost of product sales would have been 14%.
Research and development (R&D)
R&D expenditure increased from $57.8 million in the three months to September 30, 2004 to $74.3 million in the three months to September 30, 2005. Expressed as a percentage of total revenues, R&D expenditure was 20% for the three months to September 30, 2005 (2004: 17%). The increase in R&D expenditure is primarily the result of adding two significant projects following the acquisition of TKT. Excluding TKT, R&D expenditure expressed as a percentage of revenues was 17%. Shire’s pipeline is now well advanced with seven projects in late stage development or registration.
Selling, general and administrative (SG&A)
SG&A expenses increased from $104.8 million in the three months to September 30, 2004 to $154.9 million in the three months to September 30, 2005 an increase of 48%. As a percentage of product sales, these expenses were 50% (2004: 37%).
This increase was expected with additional costs in the three months to September 30, 2005 attributable to four product launches during 2005, incremental costs in 2005 associated with the FOSRENOL and EQUETRO sales forces, $7.0 million of SG&A costs associated with TKT and $4.5 million relating to the set up of the new listed holding company for the Shire group. SG&A costs, excluding the impact of TKT and the new listed holding company costs, were $143.4 million and have been moderating over the course of the year (Q2 2005: $153.5 million), as per previous guidance.
Depreciation and amortization
The depreciation charge for the three months to September 30, 2005 was $4.6 million (2004: $5.3 million). Amortization charges, including the amortization on acquired products, were $11.8 million for the three months to September 30, 2005 (2004: $9.5 million).
Reorganization costs
During the three months to September 30, 2005 Shire incurred costs of $6.5 million (2004: $10.1 million) following the closure of the Newport, Kentucky site in July 2005. Following this closure, the site consolidation is now complete and no further reorganization costs are expected to be incurred. During the three months to September 30, 2004 the reorganization costs related to employee severance ($2.6 million), relocation ($3.6 million) and other costs associated with the reorganization ($3.9 million).
Integration costs
For the three months to September 30, 2005, the company incurred $3.5 million of costs associated with the integration of the TKT business into the Group. This primarily related to retention payments for key staff.
In-process R&D
During the three months to September 30, 2005, as required under US GAAP (business combination accounting), Shire wrote off the portion of the purchase price allocated to in-process R&D of $673.0 million.
10
This amount represents the value of those intangible assets acquired as part of the TKT acquisition which have not been approved by the FDA or other regulatory authorities, including I2S and GA-GCB.
Interest income and expense
For the three months to September 30, 2005 the Company received interest income of $6.9 million (2004: $5.7 million). This increase in interest income is due to higher interest rates on our US cash deposits partially offset by the interest foregone by Shire on the net payments of $1.1 billion made to date in respect of the acquisition of TKT.
For the three months to September 30, 2005 the Company incurred interest expense of $3.5 million. This expense includes a $2.5 million provision in respect of interest, which may arise as a result of the court appraisal process on amounts due to shareholders who have requested appraisal of the acquisition consideration payable for their shares.
The charge in Q3 2004 of $8.0 million included the write-off of deferred issuance costs capitalized at the time of Shire’s convertible loan notes issue in 2001. These costs were being amortized over the life of the notes but were written off following the redemption of $370.1 million of loan notes in Q3 2004.
Other income/(expense), net
For the three months to September 30, 2005 other income totaled $3.2 million (2004: expense of $4.9 million). During the three months to September 30, 2005 other income was primarily attributable to the income generated from the sale of certain portfolio investments. During the three months to September 30, 2004 other expense was primarily attributable to the write down of certain portfolio investments.
Taxation
The effective rate of tax for the three months to September 30, 2005 excluding the write-off of in-process R&D was 28% (2004: 28%).
At September 30, 2005 net deferred tax assets of $85.4 million were recognized (December 31, 2004: $78.1 million).
Equity in (losses)/earnings of equity method investees
Losses of $0.6 million were recorded for the three months to September 30, 2005 (2004 earnings of: $1.1 million) being the earnings of $1.2 million from the 50% share of the antiviral commercialization partnership with GSK in Canada (2004: $1.1 million), offset by the share of losses in the GeneChem and EGS Healthcare Funds of $1.8 million (2004: $nil).
Discontinued operations
During the three months to September 30, 2005 $1.0 million of the pipeline loan to ID Biomedical Corporation (IDB) was repaid. The pipeline loan had been fully provided for in 2004 at the time of the sale of the vaccines business to IDB. This part repayment of the pipeline loan was in compliance with the terms of the loan agreement requiring IDB to make such payment in the event IDB sold and leased back any property acquired from Shire as part of the sale of the vaccines business.
11
US GAAP Results for the 9 months to September 30, 2005
Unaudited Consolidated Balance Sheets
| | | September 30, | | December 31, |
| | | 2005 | | 2004 |
| | | $’000 | | $’000 |
| |
| |
|
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | 549,820 | | 1,111,477 |
| Restricted cash | | 30,085 | | 21,627 |
| Short-term investments | | 22,380 | | 324,411 |
| Accounts receivable, net | | 282,262 | | 222,546 |
| Inventories | | 145,694 | | 41,230 |
| Deferred tax asset | | 35,607 | | 70,387 |
| Prepaid expenses and other current assets | | 81,159 | | 137,271 |
| |
| |
|
| Total current assets | | 1,147,007 | | 1,928,949 |
| | | | | |
| Investments | | 47,205 | | 63,267 |
| Property, plant and equipment, net | | 218,108 | | 131,351 |
| Goodwill, net | | 381,747 | | 235,396 |
| Other intangible assets, net | | 749,375 | | 309,297 |
| Deferred tax asset | | 49,782 | | 7,724 |
| Other non-current assets | | 42,955 | | 38,895 |
| |
| |
|
| Total assets | | 2,636,179 | | 2,714,879 |
| |
| |
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable and accrued expenses | | 374,941 | | 311,231 |
| Outstanding TKT shareholders | | 434,876 | | - |
| Loan facility | | - | | 43,162 |
| Other current liabilities | | 53,583 | | 77,558 |
| |
| |
|
| Total current liabilities | | 863,400 | | 431,951 |
| | | | | |
| Long-term debt | | 116 | | 116 |
| Other non-current liabilities | | 45,062 | | 32,159 |
| |
| |
|
| Total liabilities | | 908,578 | | 464,226 |
| |
| |
|
12
US GAAP Results for the 9 months to September 30, 2005
Unaudited Consolidated Balance Sheets (continued)
| | | September 30, | | December 31, | |
| | | 2005 | | 2004 | |
| | | $’000 | | $’000 | |
| | |
| |
| |
| Shareholders’ equity: | | | | | |
| | | | | | |
| Ordinary shares of 5p par value; 800,000,000 shares authorized; and | | | | | |
| 494,192,907 (December 31, 2004: 484,916,034) shares issued and | | | | | |
| outstanding | | 40,803 | | 40,064 | |
| | | | | | |
| Exchangeable shares; 2,363,000 (December 31, 2004: 4,226,476) shares | | 109,377 | | 195,830 | |
| issued and outstanding | | | | | |
| Treasury stock | | (144 | ) | (264 | ) |
| Additional paid-in capital | | 1,191,233 | | 1,072,407 | |
| Accumulated other comprehensive income | | 91,653 | | 131,939 | |
| Retained earnings | | 294,679 | | 810,677 | |
| |
| |
| |
| Total shareholders’ equity | | 1,727,601 | | 2,250,653 | |
| |
| |
| |
| Total liabilities and shareholders’ equity | | 2,636,179 | | 2,714,879 | |
| |
| |
| |
13
US GAAP Results for the 3 months and 9 months to September 30, 2005
Unaudited Consolidated Statements of Operations
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | $’000 | | $’000 | | $’000 | | $’000 | |
| |
| |
| |
| |
| |
| Revenues: | | | | | | | | | |
| Product sales | | 309,150 | | 283,723 | | 930,149 | | 803,597 | |
| Royalties | | 60,186 | | 56,199 | | 181,073 | | 170,001 | |
| Licensing and development | | 4,586 | | 2,820 | | 11,169 | | 10,217 | |
| Other revenues | | 2,155 | | 2,167 | | 11,975 | | 5,654 | |
| |
| |
| |
| |
| |
| Total revenues | | 376,077 | | 344,909 | | 1,134,366 | | 989,469 | |
| |
| |
| |
| |
| |
| Costs and expenses: | | | | | | | | | |
| Cost of product sales | | 60,081 | | 38,933 | | 135,359 | | 100,010 | |
| Research and development | | 74,311 | | 57,759 | | 251,300 | | 143,760 | |
| Selling, general and administrative | | 154,912 | | 104,755 | | 465,960 | | 330,230 | |
| Depreciation and amortization | | 16,420 | | 14,891 | | 50,135 | | 40,474 | |
| Intangible asset impairment | | - | | 5,456 | | 3,000 | | 5,456 | |
| Reorganization costs | | 6,457 | | 10,061 | | 9,335 | | 32,041 | |
| Integration costs | | 3,520 | | - | | 3,520 | | - | |
| In-process R&D write-off | | 673,000 | | - | | 673,000 | | - | |
| |
| |
| |
| |
| |
| Total operating expenses | | 988,701 | | 231,855 | | 1,591,609 | | 651,971 | |
| |
| |
| |
| |
| |
| Operating (loss)/income | | (612,624 | ) | 113,054 | | (457,243 | ) | 337,498 | |
| | | | | | | | | | |
| Interest income | | 6,876 | | 5,697 | | 27,868 | | 14,101 | |
| Interest expense | | (3,519 | ) | (8,032 | ) | (4,718 | ) | (12,259 | ) |
| Other income/(expense), net | | 3,202 | | (4,859 | ) | 3,938 | | 4,403 | |
| |
| |
| |
| |
| |
| Total other income/(expense), net | | 6,559 | | (7,194 | ) | 27,088 | | 6,245 | |
| |
| |
| |
| |
| |
| (Loss)/income from continuing | | | | | | | | | |
| operations before income taxes | | | | | | | | | |
| and equity in (losses)/earnings of | | | | | | | | | |
| equity method investees | | (606,065 | ) | 105,860 | | (430,155 | ) | 343,743 | |
| Income taxes | | (18,609 | ) | (29,960 | ) | (61,707 | ) | (97,188 | ) |
| Equity in (losses)/earnings of | | | | | | | | | |
| equity method investees | | (569 | ) | 1,140 | | 150 | | 3,358 | |
| |
| |
| |
| |
| |
| (Loss)/income from continuing | | | | | | | | | |
| operations | | (625,243 | ) | 77,040 | | (491,712 | ) | 249,913 | |
| Loss from discontinued operations | | - | | - | | - | | (20,135 | ) |
| Gain/(loss) on disposition of | | | | | | | | | |
| discontinued operations | | 1,049 | | - | | 4,174 | | (44,157 | ) |
| |
| |
| |
| |
| |
| Net (loss)/income | | (624,194 | ) | 77,040 | | (487,538 | ) | 185,621 | |
| |
| |
| |
| |
| |
14
US GAAP Results for the 3 months and 9 months to September 30, 2005
Unaudited Consolidated Statements of Operations (continued)
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| |
| |
| |
| |
| |
| Earnings per share - basic | | | | | | | | | |
| (Loss)/ income from continuing | | | | | | | | | |
| operations | | (124.9c | ) | 15.5c | | (98.4c | ) | 50.4c | |
| Loss from discontinued | | | | | | | | | |
| operations | | - | | - | | - | | (4.1c | ) |
| Gain/(loss) on disposition of | | | | | | | | | |
| discontinued operations | | 0.2c | | - | | 0.8c | | (8.9c | ) |
| |
| |
| |
| |
| |
| Net (loss)/income | | (124.7c | ) | 15.5c | | (97.6c | ) | 37.4c | |
| |
| |
| |
| |
| |
| Earnings per share - diluted | | | | | | | | | |
| (Loss)/income from continuing | | | | | | | | | |
| operations | | (124.9c | ) | 15.3c | | (98.4c | ) | 49.2c | |
| Loss from discontinued | | | | | | | | | |
| operations | | - | | - | | - | | (3.9c | ) |
| Gain/(loss) on disposition of | | | | | | | | | |
| discontinued operations | | 0.2c | | - | | 0.8c | | (8.6c | ) |
| |
| |
| |
| |
| |
| Earnings per ordinary share | | (124.7c | ) | 15.3c | | (97.6c | ) | 36.7c | |
| |
| |
| |
| |
| |
| Earnings per ADS | | (374.1c | ) | 45.9c | | (292.8c | ) | 110.1c | |
| |
| |
| |
| |
| |
| Weighted average number of | | | | | | | | | |
| shares: | | | | | | | | | |
| Basic | | 500,542,616 | | 496,474,005 | | 499,741,042 | | 496,090,191 | |
| Diluted | | 500,542,616 | | 509,777,052 | | 499,741,042 | | 515,070,302 | |
| |
| |
| |
| |
| |
15
US GAAP Results for the 3 months and 9 months to September 30, 2005
Unaudited Consolidated Statements of Cash Flows
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | $’000 | | $’000 | | $’000 | | $’000 | |
| |
| |
| |
| |
| |
| CASH FLOWS FROM OPERATING | | | | | | | | | |
| ACTIVITIES: | | | | | | | | | |
| Net (loss)/income from continuing | | | | | | | | | |
| operations | | (625,243 | ) | 77,040 | | (491,712 | ) | 249,913 | |
| Adjustments to reconcile net income | | | | | | | | | |
| to net cash provided by operating | | | | | | | | | |
| activities: | | | | | | | | | |
| Depreciation and amortization | | | | | | | | | |
| Cost of product sales | | 962 | | 681 | | 2,682 | | 1,965 | |
| SG&A | | 16,244 | | 14,891 | | 44,085 | | 40,474 | |
| Stock option compensation | | 90 | | 67 | | 187 | | 165 | |
| In-process R&D write-off | | 673,000 | | - | | 673,000 | | - | |
| Write-down of long-term assets | | 544 | | 10,939 | | 11,005 | | 19,392 | |
| (Gain)/loss on sale of long term | | | | | | | | | |
| assets | | (3,850 | ) | 411 | | (3,866 | ) | (14,472 | ) |
| Dissenting shareholders’ interest | | 2,435 | | - | | 2,435 | | - | |
| Movement in deferred taxes | | 43,718 | | (16,378 | ) | 34,307 | | (23,610 | ) |
| Equity in losses/(earnings) of equity | | | | | | | | | |
| method investees | | 569 | | (1,140 | ) | (150 | ) | (3,358 | ) |
| Changes in operating assets and | | | | | | | | | |
| liabilities, net of acquisitions: | | | | | | | | | |
| Increase in accounts receivable | | (6,107 | ) | (72,933 | ) | (33,893 | ) | (49,261 | ) |
| (Decrease)/ increase in provision for | | | | | | | | | |
| sales deductions | | (6,016 | ) | 14,209 | | 14,424 | | 39,551 | |
| Decrease/(increase) in inventory | | 5,227 | | 3,890 | | (1,273 | ) | (2,864 | ) |
| (Increase)/decrease in prepayments | | | | | | | | | |
| and other current assets | | (32,763 | ) | 13,832 | | (24,403 | ) | 2,199 | |
| (Increase)/decrease in other assets | | (107 | ) | (10,132 | ) | (779 | ) | 2,023 | |
| (Decrease)/increase in accounts and | | | | | | | | | |
| notes payable and other liabilities | | (32,648 | ) | 39,811 | | 5,700 | | 47,322 | |
| (Decrease)/increase in deferred | | | | | | | | | |
| revenue | | (2,700 | ) | 263 | | (10,531 | ) | (288 | ) |
| Cash flows from discontinued | | | | | | | | | |
| operations | | - | | (9,423 | ) | (362 | ) | (25,613 | ) |
| |
| |
| |
| |
| |
| Net cash provided by operating | | | | | | | | | |
| activities | | 33,355 | | 66,028 | | 220,856 | | 283,538 | |
| |
| |
| |
| |
| |
16
US GAAP Results for the 3 months and 9 months to September 30, 2005
Unaudited Consolidated Statements of Cash Flows (continued)
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | $’000 | | $’000 | | $’000 | | $’000 | |
| |
| |
| |
| |
| |
| CASH FLOWS FROM INVESTING | | | | | | | | | |
| ACTIVITIES: | | | | | | | | | |
| Movements in short-term | | 108,372 | | (10,933 | ) | 351,246 | | 21,039 | |
| investments | | | | | | | | | |
| Movements in restricted cash | | 31 | | 17,343 | | (285 | ) | 15,573 | |
| Purchase of subsidiary undertaking, | | | | | | | | | |
| net of cash and cash equivalents | | (1,099,650 | ) | - | | (1,099,650 | ) | - | |
| Expenses of acquisition | | (24,112 | ) | - | | (24,112 | ) | - | |
| Purchase of long-term investments | | (140 | ) | (206 | ) | (7,678 | ) | (5,720 | ) |
| Purchase of property, plant and | | (13,481 | ) | (10,879 | ) | (57,638 | ) | (24,840 | ) |
| equipment | | | | | | | | | |
| Purchase of intangible assets | | (102 | ) | (385 | ) | (20,064 | ) | (12,385 | ) |
| Proceeds from sale of long-term | | | | | | | | | |
| investments | | 10,135 | | - | | 10,135 | | 26,733 | |
| Proceeds from sale of property, | | | | | | | | | |
| plant and equipment | | 40 | | 44 | | 108 | | 444 | |
| Proceeds from assets held for sale | | - | | 3,630 | | - | | 11,289 | |
| Dividends received from investments | | 6,063 | | 4,043 | | 8,483 | | 5,245 | |
| Loans made to IDB | | (13,252 | ) | (23,820 | ) | (43,162 | ) | (23,820 | ) |
| Repayment of loan made to IDB | | 1,049 | | - | | 1,049 | | - | |
| Proceeds from IDB subscription | | - | | - | | 60,000 | | - | |
| Deferred proceeds from sale of the | | | | | | | | | |
| vaccines business | | 30,000 | | 30,000 | | 32,236 | | 30,000 | |
| Cash flows from discontinued | | | | | | | | | |
| operations | | - | | - | | - | | (12,715 | ) |
| |
| |
| |
| |
| |
| Net cash (used in)/ provided by | | | | | | | | | |
| investing activities | | (995,047 | ) | 8,837 | | (789,332 | ) | 30,843 | |
| |
| |
| |
| |
| |
The assets acquired with the purchase of TKT included: cash and cash equivalents ($56.8 million), restricted cash ($8.2 million) and short-term investments ($46.8 million), totalling $111.8 million.17
US GAAP Results for the 3 months and 9 months to September 30, 2005
Unaudited Consolidated Statements of Cash Flows (continued)
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | $’000 | | $’000 | | $’000 | | $’000 | |
| |
| |
| |
| |
| |
| CASH FLOWS FROM FINANCING | | | | | | | | | |
| ACTIVITIES: | | | | | | | | | |
| Redemption of 2% convertible loan | | - | | (370,109 | ) | - | | (370,109 | ) |
| Repayment of long-term debt and | | | | | | | | | |
| capital leases | | - | | (36 | ) | - | | (171 | ) |
| Proceeds from exercise of options | | 11,984 | | 2,180 | | 30,447 | | 7,531 | |
| Proceeds from issue of common stock | | - | | 285 | | - | | 611 | |
| Tax benefit of stock option | | | | | | | | | |
| compensation, charged directly to reserves | | 1,051 | | - | | 2,478 | | - | |
| Payment of dividend | | - | | - | | (19,057 | ) | - | |
| |
| |
| |
| |
| |
| Net cash provided by/(used in) | | | | | | | | | |
| financing activities | | 13,035 | | (367,680 | ) | 13,868 | | (362,138 | ) |
| |
| |
| |
| |
| |
| Effect of foreign exchange rate | | | | | | | | | |
| changes on cash and cash | | | | | | | | | |
| equivalents | | (3,702 | ) | 3,575 | | (7,049 | ) | 2,295 | |
| Discontinued operations | | - | | - | | - | | (10 | ) |
| |
| |
| |
| |
| |
| Net decrease in cash and cash | | (952,359 | ) | (289,240 | ) | (561,657 | ) | (45,472 | ) |
| equivalents | | | | | | | | | |
| Cash and cash equivalents at | | | | | | | | | |
| beginning of period | | 1,502,179 | | 1,307,130 | | 1,111,477 | | 1,063,362 | |
| |
| |
| |
| |
| |
| Cash and cash equivalents at end of | | | | | | | | | |
| period | | 549,820 | | 1,017,890 | | 549,820 | | 1,017,890 | |
| |
| |
| |
| |
| |
18
US GAAP Results for the 3 months and 9 months to September 30, 2005
Selected Notes to the Unaudited US GAAP Financial Statements
(1) Earnings per share
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | $’000 | | $’000 | | $’000 | | $’000 | |
| |
| |
| |
| |
| |
| (Loss)/income from continuing | | (625,243 | ) | 77,040 | | (491,712 | ) | 249,913 | |
| operations | | | | | | | | | |
| Loss from discontinued operations, | | | | | | | | | |
| net of tax | | - | | - | | - | | (20,135 | ) |
| Gain/(loss) on disposition of | | | | | | | | | |
| discontinued operations | | 1,049 | | - | | 4,174 | | (44,157 | ) |
| |
| |
| |
| |
| |
| Numerator for basic EPS | | (624,194 | ) | 77,040 | | (487,538 | ) | 185,621 | |
| | | | | | | | | | |
| Interest charged on convertible debt, | | | | | | | | | |
| net of tax | | - | | 766 | | - | | 3,432 | |
| |
| |
| |
| |
| |
| Numerator for diluted EPS | | (624,194 | ) | 77,806 | | (487,538 | ) | 189,053 | |
| |
| |
| |
| |
| |
| Weighted average number of | | | | | | | | | |
| shares: | | No. of shares | | No. of shares | | No. of shares | | No. of shares | |
| |
| |
| |
| |
| |
| Basic | | 500,542,616 | | 496,474,005 | | 499,741,042 | | 496,090,191 | |
| Effect of dilutive shares: | | | | | | | | | |
| Stock options | | - | | 2,474,699 | | - | | 3,086,390 | |
| Warrants | | - | | - | | - | | 55,579 | |
| Convertible debt | | - | | 10,828,348 | | - | | 15,838,142 | |
| |
| |
| |
| |
| |
| Diluted | | 500,542,616 | | 509,777,052 | | 499,741,042 | | 515,070,302 | |
| |
| |
| |
| |
| |
For the three and nine months ended September 30, 2005, the share options, warrants and convertible debt not included in the calculation of the diluted weighted average number of shares, because the Company made a net loss during the calculation period, are shown below:For the three and nine months ended September 30, 2004, the share options, warrants and convertible debt not included in the calculation of the diluted weighted average number of shares, because the exercise prices exceeded the Company’s average share price during the calculation period, are shown below:
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | No. of shares | | No. of shares | | No. of shares | | No. of shares | |
| |
| |
| |
| |
| |
| Stock options | | 23,092,439 | | 18,866,415 | | 20,278,370 | | 17,567,632 | |
| Warrants | | 1,346,407 | | 1,346,407 | | 1,346,407 | | - | |
| Convertible debt | | 5,756 | | - | | 5,756 | | - | |
| |
| |
| |
| |
| |
| | | 24,444,602 | | 20,212,822 | | 21,630,533 | | 17,567,632 | |
| |
| |
| |
| |
| |
19
US GAAP Results for the 3 months and 9 months to September 30, 2005
Selected Notes to the Unaudited US GAAP Financial Statements
(2) Analysis of revenues
| | | 3 months to | | 3 months to | | 3 months to | | 3 months to |
| | | September 30, | | September 30, | | September 30, | | September 30, |
| | | 2005 | | 2004 | | 2005 | | 2005 |
| | | $’000 | | $’000 | | % change | | % of total revenue |
| |
| |
| |
|
| |
|
|
| Net product sales: | | | | | | | | | | |
| CNS | | | | | | | | | | |
| ADDERALL XR | | 165,863 | | 140,051 | | +18 | % | | 44 | % |
| ADDERALL | | 9,571 | | 11,736 | | -18 | % | | 3 | % |
| CARBATROL | | 16,129 | | 11,225 | | +44 | % | | 4 | % |
| |
| |
| |
|
| |
|
|
| | | 191,563 | | 163,012 | | +18 | % | | 51 | % |
| |
| |
| |
|
| |
|
|
| GI | | | | | | | | | | |
| PENTASA | | 36,568 | | 33,025 | | +11 | % | | 10 | % |
| COLAZIDE | | 2,288 | | 2,126 | | +8 | % | | 1 | % |
| |
| |
| |
|
| |
|
|
| | | 38,856 | | 35,151 | | +11 | % | | 11 | % |
| |
| |
| |
|
| |
|
|
| GP | | | | | | | | | | |
| AGRYLIN/XAGRID | | | | | | | | | | |
| NORTH AMERICA | | 4,783 | | 40,993 | | -88 | % | | 1 | % |
| ROW | | 11,978 | | 8,728 | | +37 | % | | 3 | % |
| FOSRENOL | | 9,722 | | - | | N/ | A | | 3 | % |
| CALCICHEW | | 10,124 | | 9,550 | | +6 | % | | 2 | % |
| SOLARAZE | | 3,343 | | 2,444 | | +37 | % | | 1 | % |
| REMINYL/REMINYL XL | | 3,238 | | 2,609 | | +24 | % | | 1 | % |
| |
| |
| |
|
| |
|
|
| | | 43,188 | | 64,324 | | -33 | % | | 11 | % |
| |
| |
| |
|
| |
|
|
| HGT | | | | | | | | | | |
| REPLAGAL | | 15,956 | | - | | N/ | A | | 4 | % |
| |
| |
| |
|
| |
|
|
| | | 15,956 | | - | | N/ | A | | 4 | % |
| |
| |
| |
|
| |
|
|
| Other product sales | | 19,587 | | 21,236 | | -8 | % | | 5 | % |
| |
| |
| |
|
| |
|
|
| Total product sales | | 309,150 | | 283,723 | | +9 | % | | 82 | % |
| |
| |
| |
|
| |
|
|
| Royalty income: | | | | | | | | | | |
| 3TC | | 39,599 | | 37,871 | | +5 | % | | 11 | % |
| ZEFFIX | | 7,731 | | 7,034 | | +10 | % | | 2 | % |
| Others | | 12,856 | | 11,294 | | +14 | % | | 3 | % |
| |
| |
| |
|
| |
|
|
| | | 60,186 | | 56,199 | | +7 | % | | 16 | % |
| |
| |
| |
|
| |
|
|
| Licensing and development | | 4,586 | | 2,820 | | +63 | % | | 1 | % |
| Other | | 2,155 | | 2,167 | | N/ | A | | 1 | % |
| |
| |
| |
|
| |
|
|
| Total revenues | | 376,077 | | 344,909 | | +9 | % | | 100 | % |
| |
| |
| |
|
| |
|
|
20
US GAAP Results for the 3 months and 9 months to September 30, 2005
Selected Notes to the Unaudited US GAAP Financial Statements
(2) Analysis of revenues (continued)
| | | 9 months to | | 9 months to | | 9 months to | | 9 months to |
| | | September 30, | | September 30, | | September 30, | | September 30, |
| | | 2005 | | 2004 | | 2005 | | 2005 |
| | | $’000 | | $’000 | | % change | | % of total |
| | | | | | | | | revenue |
| |
| |
| |
| |
|
| Net product sales: | | | | | | | | | | |
| CNS | | | | | | | | | | |
| ADDERALL XR | | 516,823 | | 422,997 | | +22 | % | | 45 | % |
| ADDERALL | | 31,033 | | 22,411 | | +38 | % | | 3 | % |
| CARBATROL | | 54,823 | | 38,873 | | +41 | % | | 5 | % |
| |
| |
| |
| |
|
| | | 602,679 | | 484,281 | | +24 | % | | 53 | % |
| |
| |
| |
| |
|
| GI | | | | | | | | | | |
| PENTASA | | 93,777 | | 86,705 | | +8 | % | | 8 | % |
| COLAZIDE | | 6,520 | | 5,944 | | +10 | % | | 1 | % |
| |
| |
| |
| |
|
| | | 100,297 | | 92,649 | | +8 | % | | 9 | % |
| |
| |
| |
| |
|
| GP | | | | | | | | | | |
| AGRYLIN/XAGRID | | | | | | | | | | |
| N AMERICA | | 41,950 | | 96,840 | | -57 | % | | 4 | % |
| ROW | | 36,428 | | 25,155 | | +45 | % | | 3 | % |
| FOSRENOL | | 24,484 | | - | | N/ | A | | 2 | % |
| CALCICHEW | | 28,353 | | 27,525 | | +3 | % | | 2 | % |
| SOLARAZE | | 8,776 | | 6,214 | | +41 | % | | 1 | % |
| REMINYL/REMINYL XL | | 9,384 | | 7,983 | | +17 | % | | 1 | % |
| |
| |
| |
| |
|
| | | 149,375 | | 163,717 | | -9 | % | | 13 | % |
| |
| |
| |
| |
|
| HGT | | | | | | | | | | |
| REPLAGAL | | 15,956 | | - | | N/ | A | | 1 | % |
| |
| |
| |
| |
|
| | | 15,956 | | - | | N/ | A | | 1 | % |
| |
| |
| |
| |
|
| Other product sales | | 61,842 | | 62,950 | | N/ | A | | 6 | % |
| |
| |
| |
| |
|
| Total product sales | | 930,149 | | 803,597 | | +16 | % | | 82 | % |
| |
| |
| |
| |
|
| Royalty income: | | | | | | | | | | |
| 3TC | | 119,467 | | 115,673 | | +3 | % | | 11 | % |
| ZEFFIX | | 21,969 | | 20,174 | | +9 | % | | 2 | % |
| Others | | 39,637 | | 34,154 | | +16 | % | | 3 | % |
| |
| |
| |
| |
|
| | | 181,073 | | 170,001 | | +7 | % | | 16 | % |
| |
| |
| |
| |
|
| Licensing and development | | 11,169 | | 10,217 | | +9 | % | | 1 | % |
| Other | | 11,975 | | 5,654 | | +112 | % | | 1 | % |
| |
| |
| |
| |
|
| Total revenues | | 1,134,366 | | 989,469 | | +15 | % | | 100 | % |
| |
| |
| |
| |
|
21
Non GAAP for the 3 months and 9 months to September 30, 2005
(3)(a) Reconciliation of numerator for diluted EPS
| | | (1)3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | $’000 | | $’000 | | $’000 | | $’000 | |
| |
| |
| |
| |
| |
| Net (loss)/income for basic EPS | | (624,194 | ) | 77,040 | | (487,538 | ) | 185,621 | |
| Add back: | | | | | | | | | |
| Loss from discontinued operations, | | | | | | | | | |
| net of tax | | - | | - | | - | | 20,135 | |
| (Gain)/loss on disposition of | | | | | | | | | |
| discontinued operations | | (1,049 | ) | - | | (4,174 | ) | 44,157 | |
| TKT cost of product sales fair | | | | | | | | | |
| value adjustment, net of tax | | 12,385 | | - | | 12,385 | | - | |
| New River upfront payment, net of | | | | | | | | | |
| tax | | - | | - | | 36,000 | | - | |
| New listed holding company costs, | | | | | | | | | |
| net of tax | | 3,259 | | - | | 3,259 | | - | |
| Reorganization costs, net of tax | | 4,649 | | 7,244 | | 6,721 | | 23,069 | |
| TKT integration costs, net of tax | | 2,534 | | - | | 2,534 | | - | |
| TKT in process R&D write-off | | 673,000 | | - | | 673,000 | | - | |
| Gain on sale of investment, net of | | | | | | | | | |
| tax | | - | | - | | - | | (10,660 | ) |
| |
| |
| |
| |
| |
| Net (loss)/income for Non GAAP | | 70,584 | | 84,284 | | 242,187 | | 262,322 | |
| Interest charged on convertible | | | | | | | | | |
| debt, net of tax | | - | | 766 | | - | | 3,432 | |
| |
| |
| |
| |
| |
| Numerator for non GAAP - Diluted | | 70,584 | | 85,050 | | 242,187 | | 265,754 | |
| EPS | | | | | | | | | |
| |
| |
| |
| |
| |
(1) An analysis of the results for the three months to September 30, 2005, between Shire (excluding TKT) and TKT is shown on page 24.
22
Non GAAP diluted EPS for the 3 months and 9 months to September 30, 2005
(b) Reconciliation of reported EPS
| | | 3 months to | | 3 months to | | 9 months to | | 9 months to | |
| | | September 30, | | September 30, | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
| |
| |
| |
| |
| |
| Diluted EPS per ordinary share | | (124.7c | ) | 15.3c | | (97.6c | ) | 36.7c | |
| | | | | | | | | | |
| Add back: | | | | | | | | | |
| Loss from discontinued operations, | | | | | | | | | |
| net of tax | | - | | - | | - | | 3.9c | |
| (Gain)/loss on disposition of | | | | | | | | | |
| discontinued operations | | (0.2c | ) | - | | (0.8c | ) | 8.6c | |
| |
| |
| |
| |
| |
| Diluted EPS from continuing | | | | | | | | | |
| operations | | (124.9c | ) | 15.3c | | (98.4c | ) | 49.2c | |
| Change in denominator due to | | | | | | | | | |
| effect on dilution of non GAAP | | 1.6c | | - | | 1.0c | | - | |
| adjustments(1) | | | | | | | | | |
| |
| |
| |
| |
| |
| | | (123.3c | ) | 15.3c | | (97.4c | ) | 49.2c | |
| Add back: | | | | | | | | | |
| TKT cost of product sales fair | | | | | | | | | |
| value adjustment, net of tax | | 2.4c | | - | | 2.5c | | - | |
| New River upfront payment, net of | | | | | | | | | |
| tax | | - | | - | | 7.1c | | - | |
| New listed holding company costs, | | | | | | | | | |
| net of tax | | 0.7c | | - | | 0.7c | | - | |
| Reorganization costs, net of tax | | 0.9c | | 1.4c | | 1.3c | | 4.5c | |
| TKT integration costs, net of tax | | 0.5c | | - | | 0.5c | | - | |
| TKT in-process R&D write-off | | 132.7c | | - | | 133.3c | | - | |
| Gain on sale of investment, net of | | | | | | | | | |
| tax | | - | | - | | - | | (2.1c | ) |
| |
| |
| |
| |
| |
| Non GAAP – Diluted EPS per | | | | | | | | | |
| ordinary share | | 13.9c | | 16.7c | | 48.0c | | 51.6c | |
| |
| |
| |
| |
| |
| Non GAAP – Diluted EPS per ADS | | 41.8c | | 50.1c | | 144.0c | | 154.8c | |
| |
| |
| |
| |
| |
(1) Because the items added back result in positive non GAAP net income for the periods to September 30, 2005, the options, warrants and convertible debt become dilutive under this measure, and are therefore included in the calculation of the denominator for non GAAP EPS.
23
US GAAP and Non GAAP results for the 3 months to September 30, 2005
Unaudited Consolidated Statements of Operations
| | | Non GAAP | | | | | |
| | |
| | | | | |
| | | (1)Shire | | (2)TKT | | Combined | | Adjustments | | US GAAP | |
| | | $’000 | | $’000 | | $’000 | | $’000 | | $’000 | |
| |
| |
| |
| |
| |
| |
| Revenues: | | | | | | | | | | | |
| Product sales | | 293,194 | | 15,956 | | 309,150 | | - | | 309,150 | |
| Royalties | | 60,186 | | - | | 60,186 | | - | | 60,186 | |
| Licensing and development | | 4,586 | | - | | 4,586 | | - | | 4,586 | |
| Other revenues | | 1,940 | | 215 | | 2,155 | | - | | 2,155 | |
| |
| |
| |
| |
| |
| |
| Total revenues | | 359,906 | | 16,171 | | 376,077 | | - | | 376,077 | |
| |
| |
| |
| |
| |
| |
| Costs and expenses: | | | | | | | | | | | |
| Cost of product sales(3) | | 40,697 | | 2,182 | | 42,879 | | 17,202 | | 60,081 | |
| Research and development | | 60,114 | | 14,197 | | 74,311 | | - | | 74,311 | |
| Selling, general and | | | | | | | | | | | |
| administrative(4) | | 143,422 | | 6,963 | | 150,385 | | 4,527 | | 154,912 | |
| Depreciation and | | | | | | | | | | | |
| amortization | | 9,909 | | 6,511 | | 16,420 | | - | | 16,420 | |
| Reorganization costs | | - | | - | | - | | 6,457 | | 6,457 | |
| Integration costs | | - | | - | | - | | 3,520 | | 3,520 | |
| In-process R&D write-off | | - | | - | | - | | 673,000 | | 673,000 | |
| |
| |
| |
| |
| |
| |
| Total operating expenses | | 254,142 | | 29,853 | | 283,995 | | 704,706 | | 988,701 | |
| |
| |
| |
| |
| |
| |
| Operating income/(loss) | | 105,764 | | (13,682 | ) | 92,082 | | (704,706 | ) | (612,624 | ) |
| | | | | | | | | | | | |
| Interest income* | | 6,447 | | 429 | | 6,876 | | - | | 6,876 | |
| Interest expense | | (1,083 | ) | (2,436 | ) | (3,519 | ) | - | | (3,519 | ) |
| Other income, net | | 3,064 | | 138 | | 3,202 | | - | | 3,202 | |
| |
| |
| |
| |
| |
| |
| Total other | | | | | | | | - | | | |
| income/(expense), net | | 8,428 | | (1,869 | ) | 6,559 | | | | 6,559 | |
| |
| |
| |
| |
| |
| |
| Income/(loss) from continuing | | | | | | | | | | | |
| operations before income | | | | | | | | | | | |
| taxes and equity in losses | | | | | | | | | | | |
| of equity method investees | | 114,192 | | (15,551 | ) | 98,641 | | (704,706 | ) | (606,065 | ) |
| | | | | | | | | | | | |
| Income taxes | | (31,770 | ) | 4,282 | | (27,488 | ) | 8,879 | | (18,609 | ) |
| Equity in losses of equity | | | | | | | | | | | |
| method investees | | (569 | ) | - | | (569 | ) | - | | (569 | ) |
| |
| |
| |
| |
| |
| |
| Income/(loss) from continuing | | | | | | | | | | | |
| operations | | 81,853 | | (11,269 | ) | 70,584 | | (695,827 | ) | (625,243 | ) |
| Gain on disposition of | | | | | | | | | | | |
| discontinued operations | | - | | - | | - | | 1,049 | | 1,049 | |
| |
| |
| |
| |
| |
| |
| Net income/(loss) | | 81,853 | | (11,269 | ) | 70,584 | | (694,778 | ) | (624,194 | ) |
| |
| |
| |
| |
| |
| |
| Diluted EPS | | 48.5c | | (6.7c | ) | 41.8c | | (415.9c | ) | (374.1c | ) |
| |
| |
| |
| |
| |
| |
* In addition, Shire estimates that the interest foregone on the $1.1billion of net cash used to fund the acquisition was $6.5 million (pre tax) or $4.7million (post tax). This is equivalent to 2.7c per ADS. Added to the Non GAAP Shire earnings per ADS (excluding TKT's net income) of 48.5c per ADS, Shire's EPS per ADS would have been approximately 51.2c had the TKT acquisition not been completed. This is an increase24
of 4% over prior year. Management believes that the presentation of this non GAAP financial measure provides useful information to investors of the historic Shire business as it was before the TKT acquisition.
(1) Defined as the ongoing Shire business excluding TKT and other non GAAP adjustments.
(2) Defined as the acquired TKT business excluding fair value adjustments and integration costs.
(3) The GAAP adjustment of $17.2m is the difference between fair value and cost of REPLAGAL inventory acquired with the TKT business and used during the period.
(4) SG&A of $154.9 million includes $4.5 million of costs relating to the set up of the new holding company.
25
