Document And Entity Information
Document And Entity Information (USD $) | |||
In Millions, except Share data | 6 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| Jun. 30, 2008
|
Document Information | |||
Document Type | 10-Q | ||
Document Period End Date | 2009-06-30 | ||
Amendment Flag | true | ||
Entity Information | |||
Entity Registrant Name | Shire plc | ||
Entity Central Index Key | 0000936402 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Common Stock, Shares Outstanding | 560,286,326 | ||
Entity Public Float | $9,173 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | 263.3 | 218.2 |
Restricted cash | 35.8 | 29.2 |
Accounts receivable, net | 424.7 | 395 |
Inventories | 166.6 | 154.5 |
Assets held for sale | 1.7 | 16.6 |
Deferred tax asset | 84.6 | 89.5 |
Prepaid expenses and other current assets | 174.3 | 141.4 |
Total current assets | 1,151 | 1044.4 |
Non-current assets: | ||
Investments | 90.2 | 42.9 |
Property, plant and equipment, net | 598.1 | 534.2 |
Goodwill | 377.6 | 350.8 |
Other intangible assets, net | 1846.2 | 1824.9 |
Deferred tax asset | 145 | 118.1 |
Other non-current assets | 13.2 | 18.4 |
Total assets | 4221.3 | 3933.7 |
Current liabilities: | ||
Accounts payable and accrued expenses | 807.6 | 708.6 |
Deferred tax liability | 10.9 | 10.9 |
Other current liabilities | 62.4 | 104.3 |
Total current liabilities | 880.9 | 823.8 |
Non-current liabilities | ||
Convertible bonds | 1,100 | 1,100 |
Other long-term debt | 49.4 | 43.1 |
Deferred tax liability | 346.9 | 377 |
Other non-current liabilities | 275 | 291.3 |
Total liabilities | 2652.2 | 2635.2 |
Shareholders' equity: | ||
Common stock of 5p par value; 1,000 million shares authorized; and 560.3 million shares issued and outstanding (2008: 1,000 million shares authorized; and 560.2 million shares issued and outstanding) | 55.5 | 55.5 |
Additional paid-in capital | 2,628 | 2594.6 |
Treasury stock: 20.2 million shares (2008 : 20.7 million shares) | -390.6 | -397.2 |
Accumulated other comprehensive income | 119.7 | 97 |
Accumulated deficit | -843.8 | -1051.7 |
Total Shire plc shareholders' equity | 1568.8 | 1298.2 |
Noncontrolling interest in subsidiaries | 0.3 | 0.3 |
Total equity | 1569.1 | 1298.5 |
Total liabilities and equity | 4221.3 | 3933.7 |
1_Unaudited Consolidated Balanc
Unaudited Consolidated Balance Sheets (Parentheticals) (USD $) | ||
Share data in Millions | Jun. 30, 2009
| Dec. 31, 2008
|
CONSOLIDATED BALANCE SHEETS (Paranthetical) | ||
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 560.3 | 560.2 |
Common stock, shares outstanding | 560.3 | 560.2 |
Treasury stock, shares | 20.2 | 20.7 |
2_Unaudited Consolidated Balanc
Unaudited Consolidated Balance Sheets (Parentheticals in GBP) (Common shares par value, GBP £) | ||
Jun. 30, 2009
| Dec. 31, 2008
| |
Common share par value in GBP | ||
Common stock, par value | 0.05 | 0.05 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Income (USD $) | |||||||||||||||||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 | |||||||||||||||
Revenues: | |||||||||||||||||||
Product sales | 558.4 | 705.7 | 1314.3 | 1337.4 | |||||||||||||||
Royalties | 66.9 | 64.8 | 117.5 | 129.9 | |||||||||||||||
Other revenues | 4.4 | 5.1 | 15.6 | 10.5 | |||||||||||||||
Total revenues | 629.7 | 775.6 | 1447.4 | 1477.8 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of product sales | 96.4 | [1] | 142.9 | [1] | 180 | [1] | 233.2 | [1] | |||||||||||
Research and development | 158.7 | 136.4 | [2] | 344.6 | 248.2 | [2] | |||||||||||||
Selling, general and administrative | 334.7 | [1] | 437.7 | [1],[2] | 653.3 | [1] | 782.4 | [1],[2] | |||||||||||
In-process R&D charge | 0 | 135 | 0 | 135 | |||||||||||||||
Gain on sale of product rights | 0 | -9.1 | 0 | -16.7 | |||||||||||||||
Reorganization costs | 2.9 | 0 | 5.1 | 0 | |||||||||||||||
Integration and acquisition costs | 2.3 | 0 | 3.8 | 0 | |||||||||||||||
Total operating expenses | 595 | 842.9 | 1186.8 | 1382.1 | |||||||||||||||
Operating income/(loss) | 34.7 | -67.3 | 260.6 | 95.7 | |||||||||||||||
Interest income | 0.6 | 6.5 | 1.3 | 19.2 | |||||||||||||||
Interest expense | -10.1 | -16.8 | -21.2 | -34.1 | |||||||||||||||
Other income, net | 4.7 | 0.7 | 54.9 | 13.4 | |||||||||||||||
Total other income/(expenses), net | -4.8 | -9.6 | 35 | -1.5 | |||||||||||||||
Income/(loss) from continuing operations before income taxes and equity in earnings /(losses) of equity method investees | 29.9 | -76.9 | 295.6 | 94.2 | |||||||||||||||
Income taxes | 23.4 | -0.2 | -26.1 | -44.3 | |||||||||||||||
Equity in earnings/(losses) of equity method investees, net of taxes | 0.5 | -1.9 | 0.4 | -0.3 | |||||||||||||||
Income/(loss) from continuing operations, net of tax | 53.8 | (79) | 269.9 | 49.6 | |||||||||||||||
Loss from discontinued operations net of income tax | -9.8 | 0 | -12.4 | 0 | |||||||||||||||
Net income/(loss) | 44 | (79) | 257.5 | 49.6 | |||||||||||||||
Add: Net loss attributable to the noncontrolling interest in subsidiaries | 0.1 | 0 | 0.2 | 0 | |||||||||||||||
Net income/(loss) attributable to Shire plc | 44.1 | (79) | 257.7 | 49.6 | |||||||||||||||
Earnings/(loss) per ordinary share - basic | |||||||||||||||||||
Earnings/(loss) from continuing operations attributable to Shire plc shareholders | 0.1 | -0.146 | 0.5 | 0.091 | |||||||||||||||
Loss from discontinued operations attributable to Shire plc shareholders | -0.018 | $0 | -0.023 | $0 | |||||||||||||||
Earnings/(loss) per ordinary share attributable to Shire plc shareholders - basic | 0.082 | -0.146 | 0.477 | 0.091 | |||||||||||||||
Earnings/(loss) per ordinary share - diluted | |||||||||||||||||||
Earnings/(loss) from continuing operations attributable to Shire plc shareholders | 0.099 | -0.146 | 0.496 | 0.082 | |||||||||||||||
Loss from discontinued operations attributable to Shire plc shareholders | -0.018 | $0 | -0.023 | $0 | |||||||||||||||
Earnings/(loss) per ordinary share attributable to Shire plc shareholders - diluted | 0.081 | -0.146 | 0.473 | 0.082 | |||||||||||||||
Weighted average number of shares (millions): | |||||||||||||||||||
Basic | 539.9 | 542.5 | 539.7 | 543.7 | |||||||||||||||
Diluted | 543.4 | 542.5 | 545 | 579.6 | |||||||||||||||
Amounts attributable to Shire plc shareholders | |||||||||||||||||||
Income from continuing operations, net of tax | 53.9 | (79) | 270.1 | 49.6 | |||||||||||||||
Loss from discontinued operations, net of tax | -9.8 | 0 | -12.4 | 0 | |||||||||||||||
Net income/(loss) attributable to Shire plc | 44.1 | ($79) | 257.7 | 49.6 | |||||||||||||||
[1]Cost of product sales includes amortization of intangible assets relating to favorable manufacturing contracts of $0.4 million for the three months to June 30, 2009 (2008: $0.4 million) and $0.9 million for the six months to June 30, 2009 (2008: $0.9 million). Selling, general and administrative costs include amortization and impairment charges of intangible assets relating to intellectual property rights acquired of $34.3 million for the three months to June 30, 2009 (2008: $121.4 million) and $66.8 million for the six months to June 30, 2009 (2008: $152.3 million). | |||||||||||||||||||
[2]Costs of $8.9 million and $19.1 million, predominantly relating to certain Medical Affairs costs related to promotional & marketing activities, have been reclassified from Research and development costs to Selling, general and administrative costs for the three and six months to June 30, 2008 respectively. |
3_Unaudited Consolidated Statem
Unaudited Consolidated Statements of Income (Parentheticals) (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
CONSOLIDATED STATEMENTS OF INCOME (Paranthetical) | ||||
Tax effect of Discontinued Operation | $0 | $0 | $0 | $0 |
4_Unaudited Consolidated Statem
Unaudited Consolidated Statement of Changes in Shareholders' Equity (USD $) | |||||||||||||||||||
In Millions | Common stock
| Common stock units
| Additional paid-in capital
| Treasury stock
| Accumulated other comprehensive income
| Accumulated deficit
| Non-controlling interest in subsidiaries
| Total
| |||||||||||
Common stock number of shares, beginning balance at Dec. 31, 2008 | 560.2 | ||||||||||||||||||
Total equity, Beginning Balance at Dec. 31, 2008 | 55.5 | 2594.6 | -397.2 | $97 | -1051.7 | 0.3 | 1298.5 | ||||||||||||
Net income/(loss) for the period | 0 | 0 | 0 | 0 | 0 | 257.7 | -0.2 | 257.5 | |||||||||||
Foreign currency translation | 0 | 0 | 0 | 0 | 11.4 | 0 | 0 | 11.4 | |||||||||||
Options exercised | 0 | 0 | 0.2 | 0 | 0 | 0 | 0 | 0.2 | |||||||||||
Options exercised, shares | 0 | 0.1 | |||||||||||||||||
Share-based compensation | 0 | 0 | 33.2 | 0 | 0 | 0 | 0 | 33.2 | |||||||||||
Shares purchased by the Employee Share Ownership Trust ("ESOT") | 0 | 0 | 0 | (1) | 0 | 0 | 0 | (1) | |||||||||||
Shares released by Employee Share Ownership Trust ("ESOT") to satisfy exercise of stock options | 0 | 0 | 0 | 7.6 | 0 | -6.8 | 0 | 0.8 | |||||||||||
Unrealized holding gain/(loss) on available-for-sale securities, (net of taxes of $nil, $nil, $nil and $nil) | 0 | 0 | 0 | 0 | 11.3 | 0 | 0 | 11.3 | |||||||||||
Capital contribution attributable to noncontrolling interest in Jerini AG ("Jerini") | 0 | 0 | 0 | 0 | 0 | 0 | 0.2 | 0.2 | |||||||||||
Dividends | 0 | 0 | 0 | 0 | 0 | (43) | [1] | 0 | (43) | ||||||||||
Total equity, Ending Balance at Jun. 30, 2009 | 55.5 | $2,628 | -390.6 | 119.7 | -843.8 | 0.3 | 1569.1 | ||||||||||||
Common stock number of shares, ending balance at Jun. 30, 2009 | 560.3 | ||||||||||||||||||
[1]Dividends per share. During the six months to June 30, 2009 Shire plc declared and paid dividends of 7.76 US cents per ordinary share (equivalent to 23.28 US cents per American Depositary Share) totaling $43.0 million. |
5_Unaudited Consolidated Statem
Unaudited Consolidated Statements of Comprehensive Income (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Comprehensive income/(loss) | ||||
Net income/(loss) for the period | $44 | ($79) | 257.5 | 49.6 |
Other comprehensive income/(loss): | ||||
Foreign currency translation adjustments | -2.4 | -17.9 | 11.4 | -7.4 |
Unrealized holding gain/(loss) on available-for-sale securities, (net of taxes of $nil, $nil, $nil and $nil) | 10.7 | -0.3 | 11.3 | -28.7 |
Realized gain on available-for-sale securities, (net of taxes of $nil, $nil, $nil and $4.0 million) | 0 | 0 | 0 | -5.4 |
Comprehensive income/(loss) | 52.3 | -97.2 | 280.2 | 8.1 |
Add: Comprehensive loss attributable to the noncontrolling interest in subsidiaries | 0.1 | 0 | 0.2 | 0 |
Comprehensive income/(loss) attributable to Shire plc | 52.4 | -97.2 | 280.4 | 8.1 |
Unaudited Components of Accumul
Unaudited Components of Accumulated Other Comprehensive Income (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Components of accumulated other comprehensive income | ||
Foreign currency translation adjustments | 112.9 | 101.5 |
Unrealized holding loss on available-for-sale securities, net of taxes | 6.8 | -4.5 |
Accumulated other comprehensive income | 119.7 | $97 |
6_Unaudited Consolidated Statem
Unaudited Consolidated Statements of Comprehensive Income (Parentheticals) (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (parentheticals) | ||||
Unrealized holding gain/(loss) on available-for-sale securities, taxes | $0 | $0 | $0 | $0 |
Realized gain on available-for-sale securities, taxes | $0 | $0 | $0 | $4 |
7_Unaudited Consolidated Statem
Unaudited Consolidated Statements of Cash Flows (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income attributable to Shire plc | 257.7 | 49.6 |
Adjustments to reconcile net income attributable to Shire plc to net cash provided by operating activities: | ||
Loss from discontinued operations net of income tax | 12.4 | 0 |
Depreciation and amortization | 117.7 | 96.3 |
Amortization of deferred financing charges | 2.5 | 2.5 |
Interest on building financing obligation | 1.3 | 1.9 |
Share-based compensation | 33.2 | 35.7 |
Impairment of intangible assets | 0 | 90.4 |
Impairment of property, plant and equipment | 2.7 | 0 |
Gain on sale of long-lived assets | -0.2 | -0.4 |
Gain on sale of non-current investments | -55.2 | -9.4 |
Gain on sale of product rights | 0 | -16.7 |
Movement in deferred taxes | -45.7 | 17.4 |
Equity in (earnings)/losses of equity method investees | -0.4 | 0.3 |
Noncontrolling interest in subsidiaries | -0.2 | 0 |
Change in operating assets and liabilities | ||
Increase in accounts receivable | -42.9 | -28.4 |
Increase in sales deduction accrual | 117.5 | 35.5 |
(Increase)/decrease in inventory | -12.8 | 10.4 |
(Increase)/decrease in prepayments and other current assets | -33.8 | 24.3 |
Decrease/(increase) in other assets | 4.4 | -2.4 |
Decrease in accounts and notes payable and other liabilities | -98.5 | -66.4 |
(Decrease)/increase in deferred revenue | -2.7 | 5.5 |
Returns on investment from joint venture | 4.9 | 0 |
Cash flows used in discontinued operations | -5.9 | 0 |
Net cash provided by operating activities (A) | 256 | 246.1 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Movement in restricted cash | -6.6 | 5.2 |
Purchases of subsidiary undertakings and businesses, net of cash acquired | -75.5 | 0 |
Purchase of non-current investments | 0 | -1.1 |
Purchase of property, plant and equipment | -101.8 | -89.4 |
Purchase of intangible assets | (6) | 0 |
Proceeds from disposal of non-current investments | 19.2 | 10.3 |
Proceeds from disposal of property, plant and equipment | 0.4 | 0.9 |
Proceeds/deposits received from sale of product rights | 0 | 5 |
Proceeds received from disposal of subsidiary undertaking | 6.7 | 0 |
Returns of equity investments | 0.2 | 0.4 |
Net cash used in investing activities (B) | -163.4 | -68.7 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payment under building financing obligation | (3) | -0.4 |
Proceeds from exercise of options | 1 | 1 |
Costs from issue of common stock | 0 | -2.9 |
Payment of dividends | (43) | -36.4 |
Payments to acquire shares by ESOT | (1) | -104.1 |
Net cash used in financing activities (C) | (46) | -142.8 |
Effect of foreign exchange rate changes on cash and cash equivalents (D) | -1.5 | 4.1 |
Net increase in cash and cash equivalents (A+B+C+D) | 45.1 | 38.7 |
Cash and cash equivalents at beginning of period | 218.2 | 762.5 |
Cash and cash equivalents at end of period | 263.3 | 801.2 |
Supplemental information: | ||
Interest paid | 17.6 | 18.9 |
Income taxes paid | 119.2 | 62.6 |
Non cash activities: | ||
Equity in Vertex Pharmaceuticals, Inc. ("Vertex") received as consideration for disposal of long term investment | 50.8 | 0 |
Building financing obligation | 7.1 | $0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Summary of Significant Accounting Policies | 1.Summary of Significant Accounting Policies(a)Basis of PresentationThese interim financial statements of Shire plc and its subsidiaries (collectively Shire or the Company) and other financial information included in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) and US Securities and Exchange Commission (SEC) regulations for interim reporting. The December 31, 2008 balance sheet was derived from audited financial statements but does not include all disclosures required by US GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading.These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Companys Annual Report on Form 10-K for the year to December 31, 2008.Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period. Interim results are not necessarily indicative of results to be expected for the full year.(b)Use of estimates in interim financial statementsThe preparation of interim financial statements, in conformity with US GAAP and SEC regulations for interim reporting, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are primarily made in relation to the valuation of intangible assets, sales deductions, the valuation of equity investments, income taxes and provisions for litigation.(c)Accounting pronouncements adopted during the period Statement of Financial Accounting Standards (SFAS) No. 165In June 2009 the Company adopted SFAS No. 165, Subsequent Events (SFAS No. 165). SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, SFAS No 165 provides: the period after the balance sheet date during which management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. SFAS No. 165 is effective prospectively for the interim and annual periods ending after June 15, 2009. The adoption of SFAS No. 165 did not have an impact on the Companys consolidated financial position, results of operation |
Business combinations
Business combinations | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Business combinations | 2.Business combinationsEQUASYM IR and XLOn March 31, 2009 the Company acquired the worldwide rights (excluding the US, Canada and Barbados) to EQUASYM IR and XL for the treatment of attention deficit and hyperactivity disorder (ADHD) from UCB for cash consideration of $72.8 million. Included within the recognized purchase price for the acquisition is further consideration of $18.2 million, which may become payable in 2009 and 2010 if certain targets are met. This acquisition will broaden the scope of Shires ADHD portfolio and will facilitate immediate access to the European ADHD market as well as provide Shire the opportunity to enter additional markets around the world.The acquisition of EQUASYM IR and XL has been accounted for as a business combination in accordance with SFAS No. 141(R). The purchase price has been allocated on a preliminary basis to the currently marketed products acquired ($73.0 million), in-process research and development (IPRD) ($5.5 million), other liabilities ($0.7 million) and goodwill ($13.2 million). The goodwill has been assigned to the Specialty Pharmaceuticals segment.Jerini acquisitionDuring the third quarter of 2008, the Company launched a voluntary public takeover offer for all outstanding shares in Jerini, a German corporation, at a price of 6.25 per share. By December 31, 2008 the Company had acquired rights to 98.6% of the voting interests in Jerini for a cash consideration of $556.5 million, by (i) subscribing for new Jerini shares; (ii) acquiring voting interests through the completion of sale and purchase agreements entered into with institutional shareholders and certain members of Jerinis Management and Supervisory Boards; and (iii) acquiring voting interests through market purchases. The acquisition added Jerinis hereditary angioedema (HAE) product FIRAZYR to Shires portfolio. During the six months to June 30, 2009 through on-market purchases the Company acquired additional voting interests totaling 0.2% of Jerinis issued share capital, for a cash consideration including direct acquisition costs of $2.7 million. These additional voting interests have been accounted for as step-acquisitions using the purchase method of accounting. In respect of the step acquisitions made in 2009, the Company has recognized additional goodwill of $1.7 million, intangible assets in respect of the currently marketed product of $0.7 million, and IPRD of $0.3 million. By June 30, 2009 Shire had acquired rights to a 98.8% voting interest in Jerini for a total consideration of $559.2 million. Shire and Jerini continue to follow procedures under German law to effect the acquisition of the remaining shares. On April 24, 2009 Shire (through its wholly owned subsidiary, Shire Deutschland Investments GmbH) informed the Supervisory Board and Management Board of Jerini that it would offer 7.53 per share for the remaining shares.On June 16, 2009 the annual general meeting (AGM) of Jerini resolved upon the transfer of the remaining Jerini shares to Shire Deutschland Investments GmbH against an adequate cash settlement of 7.53 per share.Minority shareholders may challenge this 'squeeze out' resolution by filing legal complaints wi |
Termination costs
Termination costs | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Termination costs | 3.Termination costsIn August 2006, Shire and Duramed Pharmaceuticals, Inc., a subsidiary of Teva, (Duramed) entered into an agreement related to SEASONIQUE, a number of products using Durameds transvaginal ring technology and other oral products (the Collaboration Products). Under this agreement, Shire was required to reimburse Duramed for US development expenses incurred on Collaboration Products up to a maximum of $140 million over eight years from September 2006, and Shire had the right to commercialize these products in a number of markets outside of North America, including the larger European markets.On February 24, 2009 Shire and Duramed amended this agreement so that it will now terminate on December 31, 2009. Pursuant to this amendment, Shire agreed to return to Duramed its rights under the agreement effective February 24, 2009. Shire also agreed to reimburse Duramed for incurred US development expenditures in 2009 up to a maximum of $30.0 million. Shire has no rights with respect to the products on which such development expenditures are incurred. In addition, Shire agreed to a one-time payment to Duramed of $10.0 million, (which was paid during the first quarter of 2009), and to forego royalties receivable from Barr (a subsidiary of Teva) and cost of goods otherwise payable by Barr to Shire in 2009 under the License Agreement between the parties for the supply of authorized generic ADDERALL XR, up to a maximum of $25.0 million. During the six months to June 30, 2009 the Company recorded a charge of $65.0 million to research and development to reflect the cash payment made in Q1 2009 and other termination related costs. At December 31, 2008 Shires maximum future reimbursement for Duramed incurred development expenditure was $95.6 million.A reconciliation of the contract termination liability is presented below: Six months to June 30, 2009 Amount charged to RD Amount paid Utilization of reserve Closing liability $M $M $M $M ______________________ _________________ _____________________ _______________ Contract termination costs 65.0 (16.2) (22.6) 26.2 ______________________ _________________ _____________________ _______________ The charge of $65.0 million has been included within the Specialty Pharmaceuticals segment in the Companys segmental analysis, see Note 20. |
In-process R and D charge
In-process R and D charge | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
In-process R&D charge | 4.In-process RD charge On June 4, 2008 Shire completed the acquisition of the global rights to METAZYM, a clinical candidate arylsulfatase-A, from Zymenex for $135.0 million in cash. Upon completion in 2008, Shire recognized an IPRD charge of $135.0 million in respect of the acquired development project. |
Reorganization costs
Reorganization costs | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Reorganisation costs | 5.Reorganization costsOwings MillsIn March 2009 the Companys management approved and initiated plans to phase out operations and close the Companys Specialty Pharmaceuticals manufacturing facility at Owings Mills, Maryland. Over the next three years, all products currently manufactured by Shire at this site will transition to DSM Pharmaceutical Products, and operations and employee numbers at the site will wind down over this period. During the six months to June 30, 2009 the Company incurred reorganization costs totaling $5.1 million which relates to employee involuntary termination benefits of $1.9 million, impairment charges for property, plant and equipment of $2.6 million and other costs of $0.6 million. At June 30, 2009 a liability for reorganization costs of $1.1 million was included in accounts payable and accrued expenses. As a result of the decision to transfer manufacturing from the Owings Mills site the company has revised the life of property, plant and equipment in the facility, and has incurred accelerated depreciation of $3.0 million, which has been charged to cost of product sales in the six months to June 30, 2009. These reorganization costs and accelerated depreciation have been recorded within the Specialty Pharmaceuticals operating segment. Jerini non-core operationsIn the second quarter of 2009 as outlined in Note 2, the operations of JOI and certain other non-core pre-clinical operations acquired with Jerini were closed down. At June 30, 2009 a liability for costs associated with these closures, totaling $9.1 million, relating to employee involuntary termination benefits and other closure costs, has been included within accounts payable and accrued expenses with a corresponding increase to goodwill arising on the acquisition.The aggregate liability for re-organization costs arising on the Owing Mills and Jerini closures at June 30, 2009 is as follows: Assumed Amount liability through charged to re- business Closing organization combinations Paid Liability at Six months to June 30, 2009 $'M $'M $'M $'M ____________ ___________ ___________ ___________ Involuntary termination benefits 1.9 5.5 (0.8) 6.6 Contract termination costs - 3.6 - 3.6 Other termination costs 0.6 - (0.6) - ____________ ___________ ___________ ___________ 2.5 9.1 (1.4) 10.2 Impairment charges 2.6 ___________ ___________ ___________ ____________ 5.1 ____________ |
Intergration and Acquisition co
Intergration and Acquisition costs | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Intergration and Acquisition costs | 6.Integration and acquisition costsIntegration costs of $2.3 million (2008: $nil), primarily relating to the integration of Jerini into Shire, were incurred in the six months to June 30, 2009.Acquisition costs of $1.5 million (2008: $nil), primarily relating to direct acquisition costs and changes in the fair value of contingent consideration recognized on the acquisition of EQUASYM, were incurred in the six months to June 30, 2009. |
Accounts receivable, net
Accounts receivable, net | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Accounts receivable, net | 7.Accounts receivable, net Accounts receivable at June 30, 2009 of $424.7 million (December 31, 2008: $ 395.0 million), are stated net of a provision for discounts and doubtful accounts of $12.9 million (December 31, 2008: $20.2 million). Provision for discounts and doubtful accounts: 2009 2008 $M $M _____________ _____________ As at January 1 20.2 9.8 Provision charged to operations 54.1 41.6 Provision utilization (61.4) (38.6) _____________ _____________ As at June 30 12.9 12.8 _____________ _____________ |
Inventories
Inventories | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Inventories | 8.InventoriesInventories at June 30, 2009 of $166.6 million (December 31, 2008: $154.5 million) are stated at the lower of cost or market and are analyzed as follows: June 30, December 31, 2009 2008 $M $M ____________ ____________ Finished goods 52.0 41.4 Work-in-process 81.9 78.7 Raw materials 32.7 34.4 ____________ ____________ 166.6 154.5 ____________ ____________ At June 30, 2009 inventories included $18.0million (December 31, 2008: $11.5 million) of costs capitalized prior to the regulatory approval of the relevant product. |
Assets held for sale and discon
Assets held for sale and discontinued operations | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Assets held for sale and discontinued operations | 9.Assets held for sale and discontinued operationsAt June 30, 2009 assets held for sale had a carrying value of $1.7 million (December 31, 2008: $16.6 million). At December 31, 2008 assets held for sale included $14.9 million for the operations of JOI and Jerini Peptide Technologies GmbH, (JPT), which were acquired through the Jerini acquisition but were deemed non-strategic to the combined business. Since the acquisition of Jerini the Company has classified JOI and JPT as disposal groups held for sale and as discontinued operations. In May 2009, JPT was divested for cash consideration of $6.7 million, and a loss on disposal of $0.5 million has been recognized within discontinued operations for the six months to June 30, 2009. During the second quarter of 2009 it was determined that JOI was no longer going to be divested, and its assets were reclassified as held-and-used, resulting in a re-measurement adjustment of $5.9 million being recognized to record these assets at the lower of their fair value and carrying value. However the Company subsequently closed JOI during the second quarter of 2009 and JOI was reclassified as a discontinued operation. The re-measurement adjustment has accordingly been presented within discontinued operations. The Company has presented JOI and JPT as discontinued operations, recording a net loss from these operations of $12.4 million in the six months to June 30, 2009 (2008: $nil). Revenues and the pre-tax loss from discontinued operations for the six months to June 30, 2009 were $2.3 million (2008: $nil) and $12.4 million (2008: $nil) respectively. The remaining held for sale assets are represented by intangible assets and attributed goodwill for certain products divested to Laboratories Almirall S.A. (Almirall) in 2007. The recognition of the gains arising on the disposal of these products and the de-recognition of the related assets have been deferred pending the completion of the transfer of the relevant regulatory and other consents to the acquirer. These assets divested to Almirall form part of the Specialty Pharmaceuticals operating segment. |
Prepaid expenses and other curr
Prepaid expenses and other current assets | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Prepaid expenses and other current assets | 10.Prepaid expenses and other current assets June 30, December 31, 2009 2008 $M $M ______________ ____________ Prepaid expenses 37.9 47.6 Income tax receivable 33.2 33.2 Value added taxes receivable 59.5 19.3 Supplemental Executive Retirement Plan (SERP) investment 7.0 7.2 Other current assets 36.7 34.1 ______________ ____________ 174.3 141.4 ______________ ____________ |
Investments
Investments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Investments | 11.Investments June 30, December 31, 2009 2008 $M $M ____________ ____________ Investments in private companies 3.9 19.3 Available-for-sale securities 72.8 6.1 Equity method investments 13.5 17.5 ____________ ____________ 90.2 42.9 ____________ ____________ On March 12, 2009 the Company completed the disposal of its minority equity investment in Virochem Pharma, Inc. (Virochem) to Vertex in a cash and stock transaction. The disposal was part of a transaction entered into by all the shareholders of Virochem with Vertex. The carrying amount of this minority equity investment on March 12, 2009 was $14.8 million. Shire received total consideration of $19.2 million in cash and two million Vertex shares (valued at $50.8 million) from the disposal, recognizing a gain on disposal of $55.2 million which has been recorded to Other income, net during the six months to June 30, 2009. Additional consideration of $2.0 million in cash and 0.2 million Vertex shares is being held in escrow until March 11, 2010 pending any warranty claims and breaches of representations made by Virochem and by all selling shareholders, including Shire. The escrow conditions are considered substantive and hence a gain has not been recognized relating to these amounts in the six months to June 30, 2009. The Vertex stock received has been accounted for as an available-for-sale investment and included within non-current investments. |
Other intangible assets, net
Other intangible assets, net | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other intangible assets, net | 12.Other intangible assets, net June 30, December 31, 2009 2008 $M $M ________________ ________________ Intellectual property rights acquired Currently marketed products 2,336.6 2,253.2 IPRD 5.5 - Favorable manufacturing contracts 8.7 8.7 ________________ ________________ 2,350.8 2,261.9 Less: Accumulated amortization (504.6) (437.0) ________________ ________________ 1,846.2 1,824.9 ________________ ________________ Intellectual property rights relate to currently marketed products and IPRD for those acquired products which have not yet obtained regulatory approval; following the introduction of SFAS No. 141(R) IPRD acquired in a business combination is capitalized as an indefinite lived intangible asset. At June 30, 2009 the net book value of these intellectual property rights allocated to the Specialty Pharmaceuticals operating segment was $1,282.8 million (December 31, 2008: $1,244.9 million) and in the Human Genetic Therapies operating segment was $562.6 million (December 31, 2008: $579.3 million).The increase in the net book value of other intangible assets for the six months to June 30, 2009 is shown in the table below: Other intangible assets $M As at January 1, 2009 1,824.9 Acquisitions 79.2 Amortization charged (67.4) Foreign currency translation 9.5 ________________ As at June 30, 2009 1,846.2 ________________ During the six months to June 30, 2009 the Company acquired intangible assets totaling $79.2 million being $78.5 million for EQUASYM IR and XL for the treatment of ADHD ($73.0 million for currently marketed products and $5.5 million for IPRD) and $0.7 million for FIRAZYR for the treatment of acute HAE in the European Union (EU) (acquired through the Jerini business combination). The weighted average amortization period for acquired currently marketed products is 13 years. Following the introduction of SFAS No. 141(R) intellectual property rights relating to IPRD acquired in a business combination are considered indefinite lived until the completion or abandonment of the associated research and development (RD) efforts. Once the RD efforts are completed the useful life of the relevant assets will be determined. Management estimates that the annual amortization charge in respect of intangible assets held at June 30, 2009 will be approximately $142 million for each of the five years to June 30, 2014. Estimated amortization expense can be affected by various factors including future acquisitions, disposals of product rights, regulatory approval and subsequent amortization of the acquired IPRD projects, foreign exchange movements and the technological advancement and regulatory approval of competitor products. |
Accounts payable and accrued ex
Accounts payable and accrued expenses | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Accounts payable and accrued expenses | 13.Accounts payable and accrued expenses June 30, December 31, 2009 2008 $M $M ________________ ________________ Trade accounts payable 76.5 102.4 Accrued rebates Medicaid 201.0 162.6 Accrued rebates Managed care 136.3 59.9 Sales return reserve 49.7 47.1 Accrued bonuses 39.5 62.0 Accrued employee compensation and benefits payable 41.8 36.7 Accrued coupons 6.2 4.0 Research and development accruals 37.3 29.3 Marketing accruals 32.6 22.1 Deferred revenue 15.2 9.6 Other accrued expenses 171.5 172.9 ________________ ________________ 807.6 708.6 ________________ ________________ Accrued Medicaid rebates have increased by $38.4 million to $201.0 million at June 30, 2009 (2008: $162.6 million). The higher rebate liability has principally resulted from the impact of price increases for certain products on the unit rebate amount (URA), together with increased accrued rebates on ADDERALL XR as a consequence of the shipment of authorized generic ADDERALL XR to Teva from April 2009 and the impact of including these sales in the Medicaid rebate calculation pursuant to the Deficit Reduction Act of 2005 (the DRA).Accrued Managed Care rebates have increased by $76.4 million to $136.3 million (2008: $59.9 million), principally due to higher rebates on ADDERALL XR offered to Managed Care Organizations (MCOs) from April 1, 2009. The launch by Teva of authorized generic ADDERALL XR in April 2009 has introduced additional uncertainty into managements estimate of Medicaid and MCO rebate liabilities for ADDERALL XR. During the second quarter of 2009 the Company revised certain assumptions previously used to estimate the Medicaid and Managed Care rebate liability for ADDERALL XR in the wholesaler and retail pipeline at March 31, 2009, as a result of: (i) receiving new information on the amount of URA that could be paid under Medicaid if the Center for Medicare and Medicaid Services were to employ an alternative interpretation of the DRA; and (ii) actual experience of Medicaid and MCO utilization following one quarters market share erosion subsequent to authorized generic launch. The combined effect of these revisions decreased ADDERALL XR product sales and operating income from continuing operations during the three months to June 30, 2009 by $21.4 million, and decreased net income and basic earnings per share during the second quarter by $13.7 million and 2.5 cents per ordinary share respectively. |
Other current liabilities
Other current liabilities | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other current liabilities | 14.Other current liabilities June 30, December 31, 2009 2008 $M $M _____________ _____________ Income taxes payable 7.1 25.8 Value added taxes 7.9 4.4 Derivative financial instruments 9.3 46.9 Other accrued liabilities 38.1 27.2 _____________ _____________ 62.4 104.3 _____________ _____________ |
Other non-current liabilities
Other non-current liabilities | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other non-current liabilities | 15.Other non-current liabilities June 30, December 31, 2009 2008 $M $M ____________ ____________ Income taxes payable 202.5 220.4 Deferred revenue 21.2 29.5 Deferred rent 15.3 16.1 Insurance provisions 20.8 18.1 Other accrued liabilities 15.2 7.2 ____________ ____________ 275.0 291.3 ____________ ____________ |
Commitments and contingencies
Commitments and contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Commitments and contingencies | 16.Commitments and contingencies(a)LeasesFuture minimum lease payments presented below include operating lease payments under lease arrangements as at June 30, 2009: Operating leases $M _____________ 2009 16.9 2010 32.0 2011 26.6 2012 18.7 2013 16.9 2014 16.7 Thereafter 59.4 _____________ 187.2 _____________ (i)Operating leasesThe Company leases land, facilities, motor vehicles and certain equipment under operating leases expiring through 2025. Lease and rental expense amounted to $16.4 million for the six months to June 30, 2009, which is predominately included in Selling, general and administrative expenses in the accompanying statements of income (2008: $15.6 million).(b)Letters of credit and guaranteesAt June 30, 2009 the Company had irrevocable standby letters of credit with various banks, in the amount of $8.2 million, providing security on the recoverability of insurance claims. The Company has restricted cash of $8.2 million, as required by these letters of credit.(c)Collaborative arrangementsShire enters into collaborative arrangements to develop and commercialize drug candidates. These collaborative arrangements often require either up-front, milestone, royalty or profit share payments, or a combination of the foregoing, with payments often contingent upon the success of the related development and commercialization efforts. Collaboration agreements entered into by Shire may also include expense reimbursements or other such payments to the collaborative partner.Shire reports costs incurred and revenue generated from transactions with third parties as well as payments between parties to collaborative arrangements pursuant to the guidance in EITF 99-19 Reporting Revenue Gross as a principal versus net as an agent, or, where appropriate, by analogy toother authoritative accounting literature.Further details of significant collaborative arrangements are included below.In-licensing arrangements(i)Alba Therapeutics Corporation (Alba)On December 14, 2007 Shire acquired worldwide rights to SPD550 (also known as AT-1001), in markets outside of the US and Japan, from Alba. SPD550 is Albas lead inhibitor of barrier dysfunction in various gastrointestinal disorders that is currently in Phase 2 development for the treatment of Celiac disease. Shire has remaining obligations to pay development and sales milestones up to a maximum of $300 million. Shire will also pay single or double digit tiered royalties on net sales of the product.Alba and Shire have formed a joint development committee to monitor RD activities of SPD550. Alba will fund all development until SPD550 has completed Proof of Concept, which is expected to be in the second half of 2009, after which Shire and Alba will share equally development costs under a joint development plan.(ii)Amicus On November 7, 2007 Shire licensed from Amicus the rights to three pharmacological chaperone compounds in markets outside of the US: AMIGAL (HGT-3310) for Fabry disease, PLICERA (HGT-3410) for Gaucher Disease and HGT-3510 (formerly referred to as AT2220) for Pompe disease which are currently in Phase 2 development. Under the terms of the collaboration Shire |
Derivative instruments
Derivative instruments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Derivative instruments | 17.Derivative instrumentsTreasury policies and organizationThe Companys principal treasury operations are coordinated by its corporate treasury function. All treasury operations are conducted within a framework of policies and procedures approved annually by the Board of Directors. As a matter of policy, the Company does not undertake speculative transactions that would increase its currency or interest rate exposure.Interest rate riskThe Company is exposed to interest rate risk on restricted cash, cash and cash equivalents and on foreign exchange contracts on which interest is at floating rates. This exposure is primarily to US dollar, Euro and Canadian dollar interest rates. As the Company maintains all of its investments and foreign exchange contracts on a short term basis for liquidity purposes, this risk is not actively managed. In the six months to June 30, 2009 the average interest rate received on cash and liquid investments was approximately 0.5% per annum. The largest proportion of investments was in US dollar money market and liquidity funds.Shires financing arrangements at June 30, 2009 comprise of Shire plcs $1,100 million in principal amount of 2.75% convertible bonds, due 2014 which were issued in May 2007. Shire has also recognized a liability for building financing obligations of $52.3 million in respect of several leases entered into between August 2007 and March 2009, where Shire is in substance the owner of the property during the construction phase and therefore records the asset and corresponding financing obligation. The Company incurs interest at a fixed rate on both the convertible bonds and on the building financing obligations. No derivative instruments were entered into as of June 30, 2009 or by August 5, 2009 to manage interest rate exposure.The Company continues to review its interest rate risk and the policies in place to manage the risk. Market risk of investmentsAs at June 30, 2009 the Company has $90.2 million of investments comprising available-for-sale investments in publicly quoted companies ($72.8 million), equity method investments ($13.5 million) and cost method investments in private companies ($3.9 million). The investments in public quoted companies and equity method investments, for certain investment funds which contain a mixed portfolio of public and private investments, are exposed to market risk. No financial instruments or derivatives have been employed to hedge this risk.Credit risk Cash is invested in short-term money market instruments, including money market and liquidity funds and bank term deposits. The money market and liquidity funds in which Shire invests are all triple A rated by major credit rating agencies.The Company is exposed to the credit risk of the counterparties with which it enters into derivative contracts. The Company aims to limit this exposure through a system of internal credit limits which require counterparties to have a long term credit rating of A+ / A1 or better from the major rating agencies. The internal credit limits are approved by the Board of Directors and exposure against these limits is monitored by the corporate treasury function. The counterparties to |
Fair value measurement
Fair value measurement | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Fair value measurement | 18.Fair value measurement Assets and Liabilities that are Measured at Fair Value on a Recurring BasisThe following financial assets and liabilities are measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3). Carrying Fair Value Value Total Level 1 Level 2 Level 3 $M $M $M $M $M ____________ ____________ ___________ ___________ ___________ Financial assets: Available-for-sale securities (1) 72.8 72.8 72.8 - - Equity method investments (1) 5.5 5.5 - 5.5 - Foreign exchange contracts 0.6 0.6 - 0.6 - Financial liabilities: Foreign exchange contracts 9.3 9.3 - 9.3 - ____________ ____________ ___________ ___________ ___________ (1) Available-for-sale securities and equity method investments are included within Investments in the unaudited consolidated balance sheet.Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Companys intent or ability to dispose of the financial instrument.The following methods and assumptions were used to estimate the fair value of each material class of financial instrument: Available-for-sale securities the fair values of available-for-sale investments are estimated based on quoted market prices for those investments. Equity method investments The Companys equity method investments comprise unquoted investment funds which hold a portfolio of quoted and unquoted investments. The fair values of quoted investments within the funds are estimated based on quoted market prices for those investments. For unquoted investments within the funds, the fair value is estimated using directly observable inputs other than quoted prices. Foreign exchange contracts The fair value of the swap and forward foreign exchange contracts has been determined using an income approach based on current market expectations about the future cash flowsFinancial Assets and Liabilities that are not measured at Fair Value on a Recurring BasisThe carrying amounts and estimated fair values of the Companys financial assets and liabilities which are not measured at fair value on a recurring basis are as follows: June 30, 2009 December 31, 2008 Carrying Carrying amount Fair value amount Fair value $M $M $M $M ____________ ____________ ____________ ___________ Financial assets: Option over Avexa shares - 0.1 - - Financial liabilities: Convertible bonds 1,100.0 956.4 1,100.0 892.9 Building financing obligation 52.3 42.9 45.6 40.7 ____________ ____________ ____________ ___________ Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Companys intent or ability to dispose of the financial instrument.The carrying amounts of cash and cash equivalents, accounts r |
Earnings per share
Earnings per share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Earnings per share | 19.Earnings per shareThe following table reconciles the net income/(loss) from operations and the weighted average ordinary shares outstanding for basic and diluted earnings per share for the periods presented: 3 months to 3 months to 6 months to 6 months to June 30, June 30, June 30, June 30, 2009 2008 2009 2008 Amounts attributable to Shire plc shareholders $M $M $M $M _________________ _________________ _________________ _________________ Income/(loss) from continuing operations 53.8 (79.0) 269.9 49.6 Loss from discontinued operations (9.8) - (12.4) - Noncontrolling interest in subsidiaries 0.1 - 0.2 - _________________ _________________ _________________ _________________ Numerator for basic earnings per share 44.1 (79.0) 257.7 49.6 Interest on convertible bonds, net of tax (1) - - - (2.2) _________________ _________________ _________________ _________________ Numerator for diluted earnings per share 44.1 (79.0) 257.7 47.4 _________________ _________________ _________________ _________________ Weighted average number of shares: Millions Millions Millions Millions _________________ _________________ _________________ _________________ Basic (2) 539.9 542.5 539.7 543.7 Effect of dilutive shares: Stock based awards to employees (3) 3.5 - 5.3 3.2 Convertible bonds 2.75% due 2014 (4) - - - 32.7 _________________ _________________ _________________ _________________ Diluted 543.4 542.5 545.0 579.6 _________________ _________________ _________________ _________________ (1) For the three and six month periods ended June 30, 2009 and the three month period ended June 30, 2008 interest on the convertible bonds has not been added back as the effect would be anti-dilutive.(2) Excludes shares purchased by the ESOT and presented by the Company as treasury stock.(3) Calculated using the treasury stock method. (4) Calculated using the if-converted method.The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below: 3 months to 3 months to 6 months to 6 months to June 30, June 30, June 30, June 30, 2009 (1) (2) 2008 (3) 2009 (1) (2) 2008 (1) No. of shares No. of shares No. of shares No. of shares Millions Millions Millions Millions _________________ _________________ _________________ _________________ Stock options in the money - 1.3 - - Stock options out of the money 31.3 17.9 18.9 17.4 Convertible bonds 2.75% due 2014 32.7 32.7 32.7 - _________________ _________________ _________________ _________________ (1) For the three month period ended June 30, 2009 and the six month periods ended June 30, 2009 and 2008, certain stock options have been excluded from the calculation of diluted EPS because their exercise prices exceeded Shire plcs average share price during the calculation period.(2) For the three and six month period ended June 30, 2009 the ordinary shares underlying the convertible bonds have not been included in the calculation of the diluted weighted average number of shares, because the effect of their inclusion would be anti-dilutive.(3) For |
Segmental reporting
Segmental reporting | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Segmental reporting | 20.Segmental reportingShires internal financial reporting is in line with its business unit and management reporting structure based on two segments: Specialty Pharmaceuticals and Human Genetic Therapies (HGT). The Specialty Pharmaceuticals and HGT operating segments represent the Companys revenues and costs in respect of currently promoted and sold products, together with the costs of developing projects for future commercialization. All Other has been included in the table below in order to reconcile the two operating segments to the total consolidated figures.The Company evaluates performance based on revenue and operating income. The Company does not have inter-segment transactions. Assets that are directly attributable to the segments have been separately disclosed. Specialty Pharmaceuticals HGT All Other Total 3 months to June 30, 2009 $M $M $M $M ___________ ___________ ___________ ___________ Product sales 427.2 131.2 - 558.4 Royalties 16.0 - 50.9 66.9 Other revenues 1.1 0.4 2.9 4.4 ___________ ____________ ___________ ___________ Total revenues 444.3 131.6 53.8 629.7 ___________ ____________ ___________ ___________ Cost of product sales (1) (2) 70.1 21.8 4.5 96.4 Research and development (1) (2) 95.1 60.8 2.8 158.7 Selling, general and administrative (1) (2) 236.0 47.9 50.8 334.7 Reorganization costs 2.9 - - 2.9 Integration and acquisition costs 0.8 1.5 - 2.3 _____________ ____________ ___________ ___________ Total operating expenses 404.9 132.0 58.1 595.0 _____________ ____________ ___________ ___________ Operating income/(loss) 39.4 (0.4) (4.3) 34.7 _____________ ____________ ___________ ___________ Total assets 2,293.7 1,154.1 773.5 4,221.3 Long-lived assets (3) 335.2 206.8 60.1 602.1 Capital expenditure on long-lived assets (3) 14.0 43.2 2.7 59.9 _____________ ___________ ___________ ___________ (1) Stock-based compensation of $17.4 million is included in: Cost of product sales ($1.0 million), Research and development ($5.3 million) and Selling, general and administrative ($11.1 million).(2) Depreciation from manufacturing plants ($7.9 million) and amortization of favorable manufacturing contracts ($0.4 million) is included in Cost of product sales; depreciation of research and development assets ($3.8 million) is included in Research and development; and all other depreciation and amortization ($50.2 million) is included in Selling, general and administrative.(3) Long-lived assets comprise all non-current assets, (excluding goodwill and other intangible assets, deferred tax assets, investments and financial instruments) based on the geographic location within which the economic benefits arise. Specialty Pharmaceuticals HGT All Other Total 3 months to June 30, 2008 $M $M $M $M ___________ ___________ ___________ ___________ Product sales 580.2 125.5 - 705.7 Royalties 0.5 - 64.3 64.8 Other revenues 1.9 0.1 3.1 5.1 ___________ ____________ ___________ ___________ Total revenues 582.6 125.6 67.4 775.6 ___________ ____________ ___________ ___________ Cost of product sales (1) (2) 126.1 14.4 2.4 142.9 Research and development (1) (2) 8 |
Taxation
Taxation | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Taxation | 21.TaxationIn the six months to June 30, 2009 subsequent to Massachusetts State tax law changes which were enacted during the second quarter of 2009, the Company reduced the amount of valuation allowance recorded against its deferred tax assets by $35.4 million. Following interpretation and analysis of the implication of these regulations the Companys management determined that it was now more likely than not that the relevant US State tax credits and loss carry-forwards would be realized. The impact of revisions to Massachusetts State tax law, together with the corresponding change in the effective tax rate on State deferred tax assets and liabilities, resulted in an overall $27 million deferred tax credit recorded within income taxes in the six months to June 30, 2009. |