Document And Entity Information
Document And Entity Information (USD $) | |
In Millions, except Share data | 12 Months Ended
Dec. 31, 2009 |
Document And Entity Information | |
Document Type | 10-K |
Document Period End Date | 2009-12-31 |
Amendment Flag | false |
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 | 561,527,864 |
Entity Public Float | $7,709 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | 498.9 | 218.2 |
Restricted cash | 33.1 | 29.2 |
Accounts receivable, net | 597.5 | 395 |
Inventories | 189.7 | 154.5 |
Assets held for sale | 1.7 | 16.6 |
Deferred tax asset | 135.8 | 89.5 |
Prepaid expenses and other current assets | 113.5 | 141.4 |
Total current assets | 1570.2 | 1044.4 |
Non-current assets: | ||
Investments | 105.7 | 42.9 |
Property, plant and equipment, net | 676.8 | 534.2 |
Goodwill | 384.7 | 350.8 |
Other intangible assets, net | 1790.7 | 1824.9 |
Deferred tax asset | 79 | 118.1 |
Other non-current assets | 10.4 | 18.4 |
Total assets | 4617.5 | 3933.7 |
Current liabilities: | ||
Accounts payable and accrued expenses | 929.1 | 708.6 |
Deferred tax liability | 2.9 | 10.9 |
Other current liabilities | 88 | 104.3 |
Total current liabilities | 1,020 | 823.8 |
Non-current liabilities | ||
Convertible bonds | 1,100 | 1,100 |
Other long-term debt | 43.6 | 43.1 |
Deferred tax liability | 294.3 | 348 |
Other non-current liabilities | 247.1 | 291.3 |
Total liabilities | 2,705 | 2606.2 |
Shareholders' equity: | ||
Common stock of 5p par value; 1,000 million shares authorized; and 561.5 million shares issued and outstanding (2008: 1,000 million shares authorized; and 560.2 million shares issued and outstanding) | 55.6 | 55.5 |
Additional paid-in capital | 2677.6 | 2594.6 |
Treasury stock: 17.8 million shares (2008 : 20.7 million shares) | -347.4 | -397.2 |
Accumulated other comprehensive income | 149.1 | 97 |
Accumulated deficit | -622.4 | -1022.7 |
Total Shire plc shareholders' equity | 1912.5 | 1327.2 |
Noncontrolling interest in subsidiaries | 0 | 0.3 |
Total equity | 1912.5 | 1327.5 |
Total liabilities and equity | 4617.5 | 3933.7 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) (USD $) | ||
Share data in Millions | Dec. 31, 2009
| Dec. 31, 2008
|
CONSOLIDATED BALANCE SHEETS | ||
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 561.5 | 560.2 |
Common stock, shares outstanding | 561.5 | 560.2 |
Treasury stock, shares | 17.8 | 20.7 |
1_Consolidated Balance Sheets (
Consolidated Balance Sheets (Parentheticals in GBP) (Common shares par value, GBP £) | ||
Dec. 31, 2009
| Dec. 31, 2008
| |
Common stock, par value | 0.05 | 0.05 |
Consolidated Statements of Oper
Consolidated Statements of Operations (USD $) | |||||||||||||||||||
In Millions, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
Revenues: | |||||||||||||||||||
Product sales | 2693.7 | 2754.2 | 2170.2 | ||||||||||||||||
Royalties | 292.5 | 245.5 | 247.2 | ||||||||||||||||
Other revenues | 21.5 | 22.5 | 18.9 | ||||||||||||||||
Total revenues | 3007.7 | 3022.2 | 2436.3 | ||||||||||||||||
Costs and expenses: | |||||||||||||||||||
Cost of product sales | 388 | [1] | 408 | [1] | 320.3 | [1] | |||||||||||||
Research and development | 638.3 | 494.3 | 544.6 | ||||||||||||||||
Selling, general and administrative | 1342.6 | [1] | 1455.2 | [1] | 1210.6 | [1] | |||||||||||||
In-process R&D charge | 1.6 | 263.1 | 1866.4 | ||||||||||||||||
Gain on sale of product rights | -6.3 | -20.7 | -127.8 | ||||||||||||||||
Reorganization costs | 12.7 | 0 | 0 | ||||||||||||||||
Integration and acquisition costs | 10.6 | 10.3 | 1.3 | ||||||||||||||||
Total operating expenses | 2387.5 | 2610.2 | 3815.4 | ||||||||||||||||
Operating income/(loss) | 620.2 | 412 | -1379.1 | ||||||||||||||||
Interest income | 1.9 | 25.5 | 50.6 | ||||||||||||||||
Interest expense | -39.8 | (139) | -70.8 | ||||||||||||||||
Other income/(expenses), net | 60.7 | -32.9 | 1.2 | ||||||||||||||||
Total other (expenses)/income, net | 22.8 | -146.4 | (19) | ||||||||||||||||
Income/(loss) from continuing operations before income taxes and equity in (losses)/earnings of equity method investees | 643 | 265.6 | -1398.1 | ||||||||||||||||
Income taxes | -138.5 | (98) | -55.5 | ||||||||||||||||
Equity in (losses)/earnings of equity method investees, net of taxes | -0.7 | 2.4 | 1.8 | ||||||||||||||||
Income/(loss) from continuing operations, net of tax | 503.8 | 170 | -1451.8 | ||||||||||||||||
Loss from discontinued operations | -12.4 | -17.6 | 0 | ||||||||||||||||
Net income/(loss) | 491.4 | 152.4 | -1451.8 | ||||||||||||||||
Add: Net loss attributable to the noncontrolling interest in subsidiaries | 0.2 | 3.6 | 0 | ||||||||||||||||
Net Income/(Loss) Attributable to Shire plc | 491.6 | 156 | -1451.8 | ||||||||||||||||
Earnings/(loss) per ordinary share - basic | |||||||||||||||||||
Earnings/(loss) from continuing operations attributable to Shire plc shareholders | 0.932 | 0.321 | -2.687 | ||||||||||||||||
Loss from discontinued operations attributable to Shire plc shareholders | -0.023 | -0.033 | $0 | ||||||||||||||||
Earnings/(loss) per ordinary share attributable to Shire plc shareholders - basic | 0.909 | 0.288 | -2.687 | ||||||||||||||||
Earnings/(loss) per ordinary share - diluted | |||||||||||||||||||
Earnings/(loss) from continuing operations attributable to Shire plc shareholders | 0.919 | 0.318 | -2.687 | ||||||||||||||||
Loss from discontinued operations attributable to Shire plc shareholders | -0.022 | -0.032 | $0 | ||||||||||||||||
Earnings/(loss) per ordinary share attributable to Shire plc shareholders - diluted | 0.897 | 0.286 | -2.687 | ||||||||||||||||
Weighted average number of shares (millions): | |||||||||||||||||||
Basic | 540.7 | 541.6 | 540.3 | ||||||||||||||||
Diluted | 548 | 545.4 | 540.3 | ||||||||||||||||
Amounts attributable to Shire plc shareholders | |||||||||||||||||||
Income/(loss) from continuing operations, net of taxes | 504 | 173.3 | -1451.8 | ||||||||||||||||
Loss from discontinued operations, net of taxes | -12.4 | -17.3 | 0 | ||||||||||||||||
Net Income/(Loss) Attributable to Shire plc | 491.6 | $156 | -1451.8 | ||||||||||||||||
[1]Cost of product sales includes amortization of intangible assets relating to favorable manufacturing contracts of $1.7 million for year to December 31, 2009 (2008: $1.7 million, 2007: $1.2 million). Selling, general and administrative costs includes amortization and impairment charges of intangible assets relating to intellectual property rights acquired of $136.9 million including impairments of $nil for the year to December 31, 2009 (2008: $223.3 million including impairments of $97.1 million, 2007: $95.0 million including impairments of $0.4 million). |
2_Consolidated Statements of Op
Consolidated Statements of Operations (Parentheticals) (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
CONSOLIDATED STATEMENTS OF INCOME | |||
Tax effect of Discontinued Operation | $0 | $0 | $0 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Shareholders' Equity (USD $) | |||||||||||||||||||
In Millions | Common stock
| Common stock units
| Exchangeable Stock
| Exchangeable Stock Units
| Additional paid-in capital
| Treasury stock
| Accumulated other comprehensive income
| Retained Earnings / (Accumulated Deficit)
| Non-controlling interest in subsidiaries
| Total
| |||||||||
Total equity, Beginning Balance at Dec. 31, 2006 | 50.2 | 59.4 | 1486.7 | -94.8 | 87.8 | $353 | 1942.3 | ||||||||||||
Number of shares, beginning balance at Dec. 31, 2006 | 506.7 | 1.3 | |||||||||||||||||
Prior-year adjustment | 29 | 29 | |||||||||||||||||
Net income/(loss) for the period | -1451.8 | -1451.8 | |||||||||||||||||
Foreign currency translation | -15.5 | -15.5 | |||||||||||||||||
Shares issued, net of issue costs | 4.3 | 873 | 877.3 | ||||||||||||||||
Shares issued, net of issue costs, shares | 42.8 | ||||||||||||||||||
Exchange of exchangeable shares | 0.1 | -25.8 | 25.7 | ||||||||||||||||
Exchange of exchangeable shares, shares | 1.7 | -0.6 | |||||||||||||||||
Warrants exercised | 0.2 | 12.8 | 13 | ||||||||||||||||
Warrants exercised, shares | 1.3 | ||||||||||||||||||
Options exercised | 0.4 | 30 | 30.4 | ||||||||||||||||
Options exercised, shares | 4.3 | ||||||||||||||||||
Share-based compensation | 75.2 | 75.2 | |||||||||||||||||
Shares purchased by the Employee Share Ownership Trust ("ESOT") | (186) | (186) | |||||||||||||||||
Unrealized holding (loss)/gain on available-for-sale securities | -19.5 | -19.5 | |||||||||||||||||
Realized gain on available-for-sale securities, net of taxes | -0.1 | -0.1 | |||||||||||||||||
Other than temporary impairment of available-for-sale securities | 3 | 3 | |||||||||||||||||
Dividends | -41.3 | [1] | -41.3 | ||||||||||||||||
Total equity, Ending Balance at Dec. 31, 2007 | 55.2 | 33.6 | 2503.4 | -280.8 | 55.7 | -1111.1 | 0 | 1,256 | |||||||||||
Number of shares, ending balance at Dec. 31, 2007 | 556.8 | 0.7 | |||||||||||||||||
Net income/(loss) for the period | 156 | -3.6 | 152.4 | ||||||||||||||||
Foreign currency translation | 36.6 | -1.1 | 35.5 | ||||||||||||||||
Exchange of exchangeable shares | 0.2 | -33.6 | 33.4 | ||||||||||||||||
Exchange of exchangeable shares, shares | 2.3 | -0.7 | |||||||||||||||||
Costs associated with shares issued through Scheme of Arrangement | -5.6 | -5.6 | |||||||||||||||||
Options exercised | 0.1 | 2 | 2.1 | ||||||||||||||||
Options exercised, shares | 1.1 | ||||||||||||||||||
Share-based compensation | 65.2 | 65.2 | |||||||||||||||||
Excess tax benefit/(deficit) associated with exercise of stock options | -3.8 | -3.8 | |||||||||||||||||
Shares purchased by the Employee Share Ownership Trust ("ESOT") | -146.6 | -146.6 | |||||||||||||||||
Shares released by Employee Share Ownership Trust ("ESOT") to satisfy exercise of stock options | 30.2 | -20.8 | 9.4 | ||||||||||||||||
Unrealized holding (loss)/gain on available-for-sale securities | -47.9 | -47.9 | |||||||||||||||||
Realized gain on available-for-sale securities, net of taxes | -5.4 | -5.4 | |||||||||||||||||
Other than temporary impairment of available-for-sale securities | 58 | 58 | |||||||||||||||||
Non controlling interest on acquisition of Jerini AG ("Jerini") | 10.4 | 10.4 | |||||||||||||||||
Purchase of shares in Jerini from non controlling interest | -5.4 | -5.4 | |||||||||||||||||
Dividends | -46.8 | [2] | -46.8 | ||||||||||||||||
Total equity, Ending Balance at Dec. 31, 2008 | 55.5 | 2594.6 | -397.2 | 97 | -1022.7 | 0.3 | 1327.5 | ||||||||||||
Number of shares, ending balance at Dec. 31, 2008 | 560.2 | ||||||||||||||||||
Net income/(loss) for the period | 491.6 | -0.2 | 491.4 | ||||||||||||||||
Foreign currency translation | 35.2 | 35.2 | |||||||||||||||||
Options exercised | 0.1 | 0.5 | 0.6 | ||||||||||||||||
Options exercised, shares | 1.3 | ||||||||||||||||||
Share-based compensation | 65.7 | 65.7 | |||||||||||||||||
Excess tax benefit/(deficit) associated with exercise of stock options | 16.8 | 16.8 | |||||||||||||||||
Shares purchased by the Employee Share Ownership Trust ("ESOT") | (1) | (1) | |||||||||||||||||
Shares released by Employee Share Ownership Trust ("ESOT") to satisfy exercise of stock options | 50.8 | -36.9 | 13.9 | ||||||||||||||||
Unrealized holding (loss)/gain on available-for-sale securities | 16.1 | 16.1 | |||||||||||||||||
Other than temporary impairment of available-for-sale securities | 0.8 | 0.8 | |||||||||||||||||
Purchase of shares in Jerini from non controlling interest | -0.4 | -0.4 | |||||||||||||||||
Capital contribution attributable to noncontrolling interest in Jerini AG ("Jerini") | 0.3 | 0.3 | |||||||||||||||||
Dividends | -54.4 | [3] | -54.4 | ||||||||||||||||
Total equity, Ending Balance at Dec. 31, 2009 | 55.6 | 2677.6 | -347.4 | 149.1 | -622.4 | $0 | 1912.5 | ||||||||||||
Number of shares, ending balance at Dec. 31, 2009 | 561.5 | ||||||||||||||||||
[1]During the year to December 31, 2007 the Company paid dividends totaling 7.39 US cents per ordinary share, equivalent to 22.18 US cents per ADS, and 25.32 Canadian cents per exchangeable share. | |||||||||||||||||||
[2]During the year to December 31, 2008 the Company paid dividends of 8.62 US cents per ordinary share (equivalent to 25.85 US cents per ADS), totaling $46.8 million. | |||||||||||||||||||
[3]During the year to December 31, 2009 Shire plc paid a dividend of 9.91 US cents per ordinary share (equivalent to 29.72 US cents per American Depositary Share) totaling $54.4 million. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Comprehensive income/(loss) | |||
Net income/(loss) for the period | 491.4 | 152.4 | -1451.8 |
Other comprehensive income/(loss): | |||
Foreign currency translation adjustments | 35.2 | 35.5 | -15.5 |
Unrealized holding (loss)/gain on available-for-sale securities | 16.1 | -47.9 | -19.5 |
Other than temporary impairment of available-for-sale securities | 0.8 | 58 | 3 |
Realized gain on available-for-sale securities, net of taxes | -5.4 | -0.1 | |
Comprehensive income/(loss) | 543.5 | 192.6 | -1483.9 |
Add: Comprehensive loss attributable to the noncontrolling interest in subsidiaries | 0.2 | 3.6 | |
Add: Foreign currency translation adjustments attributable to the noncontrolling interest | 1.1 | ||
Comprehensive income/(loss) attributable to Shire plc | 543.7 | 197.3 | -1483.9 |
Components of Accumulated Other
Components of Accumulated Other Comprehensive Income (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
Components of accumulated other comprehensive income | ||
Foreign currency translation adjustments | 136.7 | 101.5 |
Unrealized holding gain/(loss) on available-for-sale securities, net of taxes | 12.4 | -4.5 |
Accumulated other comprehensive income | 149.1 | $97 |
3_Consolidated Statements of Co
Consolidated Statements of Comprehensive Income (Parentheticals) (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Unrealized holding (loss)/gain on available-for-sale securities, taxes | 2.6 | 5.2 | |
Realized gain on available-for-sale securities, taxes | $4 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income/(loss) | 491.4 | 152.4 | -1451.8 |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | |||
Loss from discontinued operations | 12.4 | 17.6 | 0 |
Depreciation and amortization | 250.2 | 202.9 | 158.3 |
Share-based compensation | 65.7 | 65.2 | 75.2 |
In process R&D charge | 1.6 | 128.1 | 1866.4 |
Impairment of intangible assets | 97.1 | 0.4 | |
Impairment of available-for-sale securities | 0.8 | 58 | 3 |
(Gain)/loss on sale of non-current investments | -55.2 | -10.1 | 0.3 |
Gain on sale of product rights | -6.3 | -20.7 | -127.8 |
Other | 12.2 | 10.5 | 14.2 |
Movement in deferred taxes | -98.8 | 74 | -25.4 |
Equity in (losses)/earnings of equity method investees | 0.7 | -2.4 | -1.8 |
Change in operating assets and liabilities | |||
(Increase)/decrease in accounts receivable | -212.3 | 9.4 | -120.7 |
Increase in sales deduction accrual | 134.7 | 84.3 | 24.1 |
(Increase)/decrease in inventory | -38.7 | 36.4 | -45.9 |
Decrease/(increase) in prepayments and other current assets | 30.1 | -9.6 | -10.3 |
Decrease in other assets | 0.8 | 3.6 | 1.2 |
Increase/(decrease) in accounts and notes payable and other liabilities | 38.6 | (99) | 108.5 |
Returns on investment | 4.9 | 7.1 | 6.8 |
Cash flows used in discontinued operations | -5.9 | -4.7 | |
Net cash provided by operating activities (A) | 626.9 | 800.1 | 474.7 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Movements in short-term investments | 55.8 | ||
Movement in restricted cash | -3.9 | 10.3 | -9.7 |
Purchases of subsidiary undertakings and businesses, net of cash acquired | -83.3 | -499.4 | -2519.6 |
Payment on settlement of Transkaryotic Therapies Inc. ("TKT") appraisal rights litigation | -419.9 | ||
Purchase of non-current investments | -0.9 | -2.2 | -63.2 |
Purchase of property, plant and equipment | -254.4 | (236) | -110.4 |
Purchase of intangible assets | (7) | (25) | (59) |
Proceeds from disposal of non-current investments | 19.2 | 10.3 | 0.5 |
Proceeds from disposal of property, plant and equipment | 1 | 1.8 | 0.8 |
Proceeds/deposits received from sale of product rights | 5 | 234.4 | |
Proceeds received from disposal of subsidiary undertaking | 6.7 | ||
Returns of equity investments | 0.2 | 0.6 | 2.3 |
Net cash used in investing activities (B) | -322.4 | -1154.5 | -2468.1 |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from drawings under bank facility | 190 | 1,300 | |
Repayment of drawings under bank facility | (190) | (1,300) | |
Proceeds from issue of Shire plc 2.75% convertible bonds due 2014 | 1,100 | ||
Redemption of New River 3.5% convertible note due 2013 | -279.4 | ||
Proceeds from exercise of New River purchased call option | 141.8 | ||
Payment of debt arrangement and issue costs | -32.8 | ||
Proceeds from building finance obligation | 11.3 | ||
Payment under building financing obligation | -4.7 | -1.8 | |
Excess tax benefit from stock option compensation | 16.8 | ||
Proceeds from exercise of options | 14.6 | 11.4 | 30.4 |
Proceeds from exercise of warrants | 13 | ||
(Costs)/proceeds from issue of common stock | -5.6 | 877.3 | |
Payment of dividends | -54.4 | -46.8 | -41.3 |
Payments to acquire shares by ESOT | (1) | -146.6 | (186) |
Net cash (used in)/provided by financing activities (C) | -28.7 | -178.1 | 1,623 |
Effect of foreign exchange rate changes on cash and cash equivalents (D) | 4.9 | -11.8 | 6 |
Net increase/(decrease) in cash and cash equivalents (A+B+C+D) | 280.7 | -544.3 | -364.4 |
Cash and cash equivalents at beginning of period | 218.2 | 762.5 | 1126.9 |
Cash and cash equivalents at end of period | 498.9 | 218.2 | 762.5 |
Supplemental information: | |||
Interest paid | -31.9 | -191.3 | -25.8 |
Income taxes paid | -223.2 | (117) | -33.5 |
Non cash activities: | |||
Equity in Vertex Pharmaceuticals, Inc. ("Vertex") received as consideration for disposal of non-current investment | 50.8 | ||
Building financing obligation | 7.1 | 32.3 | |
Equity in Avexa Ltd received as proceeds from product out licensing | $5 | 2.9 |
Description Of Operations
Description Of Operations | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Description of Operations | 1.Description of operationsShire plc and its subsidiaries (collectively referred to as either Shire or the Company) is a leading specialty biopharmaceutical company that focuses on meeting the needs of the specialist physician. The Company has grown through acquisition, completing a series of major mergers or acquisitions that have brought therapeutic, geographic and pipeline capabilities, which are in line with Shires strategy of specialist biopharmaceuticals. The Company will continue to evaluate companies, products and project opportunities that offer a good strategic fit and enhance shareholder value.Shires strategic goal is to become the leading specialty biopharmaceutical company that focuses on meeting the needs of the specialist physician. Shire focuses its business on attention deficit and hyperactivity disorder (ADHD), human genetic therapies (HGT) and gastrointestinal (GI) diseases as well as opportunities in other therapeutic areas to the extent they arise through acquisitions.Shires in-licensing, merger and acquisition efforts are focused on products in specialist markets with strong intellectual property protection and global rights.Shire believes that a carefully selected and balanced portfolio of products with strategically aligned and relatively small-scale sales forces will deliver strong results. |
Summary Of Significant Accounti
Summary Of Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Summary of Significant Accounting Policies | 2.Summary of Significant Accounting Policies(a)Basis of preparationThe accompanying consolidated financial statements include the accounts of Shire plc, all of its subsidiary undertakings and the Income Access Share trust, after elimination of inter-company accounts and transactions. Noncontrolling interests in the equity and earnings or losses of a consolidated subsidiary are reflected in Noncontrolling interest in subsidiaries in the Companys consolidated balance sheet and consolidated statement of operations. Noncontrolling interest adjusts the Companys consolidated results of operations to present the net income or loss attributable to the Company exclusive of the earnings or losses attributable to the noncontrolling interest.(b)Use of estimates in consolidated financial statementsThe preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States (US GAAP) and Securities and Exchange Commission (SEC) regulations, 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, the valuation of equity investments, sales deductions, income taxes and provisions for litigation.(c)Revenue recognitionThe Company recognizes revenue when:there is persuasive evidence of an agreement or arrangement;delivery of products has occurred or services have been rendered;the sellers price to the buyer is fixed or determinable; andcollectability is reasonably assured.Where applicable, all revenues are stated net of value added and similar taxes, and trade discounts. No revenue is recognized for consideration, the value or receipt of which is dependent on future events or future performance.The Companys principal revenue streams and their respective accounting treatments are discussed below:Product salesRevenue for the sale of products is recognized upon shipment to customers or at the time of delivery to the customer depending on the terms of sale. Provisions for rebates, product returns and discounts to customers are provided for as reductions to revenue in the same period as the related sales are recorded. The Company monitors and tracks the amount of sales deductions based on historical experience to estimate the reduction to revenues.Royalty incomeRoyalty income relating to licensed technology is recognized when the licensee sells the underlying product, with the amount of royalty income recorded based on sales information received from the relevant licensee. The Company estimates sales amounts and related royalty income based on the historical product information for any period that the information is not available from the relevant licensee.Licensing revenuesOther revenue includes revenues derived from product out-licensing agreements. These arrangements typically consist of an initial upfront payment on inception of t |
Business combinations
Business combinations | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Business combinations | 3.Business combinationsBusiness combinations completed subsequent to January 1, 2009EQUASYM 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 ADHD from UCB Pharma Limited (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 2010 and 2011 if certain sales targets are met. This acquisition has broadened the scope of Shires ADHD portfolio and facilitated immediate access to the European ADHD market as well as providing 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. The purchase price has been allocated on a preliminary basis to the currently marketed products acquired ($73.0 million), IPRD ($5.5 million), other liabilities ($0.7 million) and goodwill ($13.2 million).Business combinations completed prior to January 1, 2009 Jerini acquisitionOn July 3, 2008 the Company announced that it was launching a voluntary public takeover offer for all outstanding shares in Jerini, a German corporation, at a price of EUR 6.25 per share. By August 6, 2008 the Company had acquired 80.1% of the voting interests in Jerini for a cash consideration of $456.3 million. By December 31, 2008 the Company had acquired 98.6% of the voting interests in Jerini for a cash consideration of $556.5 million, represented by Jerini shares, ($539.8 million), the cash cost of cancelling Jerini stock options ($9.4 million) and direct costs of acquisition ($7.3 million). By December 31, 2009 the Company had acquired the rights to the remaining 1.4% of the voting interests in Jerini for additional cash consideration of $10.5 million including direct acquisition costs, such that the Company owned 100% of Jerini. The acquisition added Jerinis hereditary angioedema (HAE) product FIRAZYR to Shires portfolio. The acquisition of Jerini has been accounted for as a purchase business combination. The assets acquired and the liabilities assumed from Jerini have been recorded at the date of acquisition at their fair value. Consolidated financial statements and reported results of operations of Shire issued after the acquisition of a majority holding reflect these values, with the results of Jerini included from August 1, 2008, for convenience purposes, in the consolidated statement of operations. Between acquiring the Companys controlling voting interest in early August 2008 and December 31, 2009, the Company acquired the remaining voting interests totaling 19.9% of Jerinis issued share capital. The additional voting interests have been accounted for as step-acquisitions using the purchase method of accounting.The purchase price was allocated on a preliminary basis to the fair value of assets acquired and liabilities assumed. The final fair values of assets acquired and liabilities assumed was determined in July 2009, and the adjustment in the second quarter of 2009 to recognize assumed liabilities is detailed in section (c) below. The following table presents |
Termination costs
Termination costs | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Termination costs | 4.Termination of Duramed Pharmaceuticals, Inc. (Duramed) collaboration agreementIn August 2006, Shire and Duramed, a subsidiary of Teva Pharmaceutical Industries Ltd, (Teva) 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 such that it terminated 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 Laboratories, Inc. (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 year to December 31, 2009 the Company recorded a charge of $62.9 million to research and development to reflect the cash payment made in the first quarter of 2009 and other termination related costs. A reconciliation of the contract termination liability is presented below: Year to December 31, 2009 Amount charged to RD Amount paid Utilization of reserve Closing liability $M $M $M $M ______________________ _________________ _____________________ _______________ Contract termination costs 62.9 (27.9) (25.0) 10.0 ______________________ _________________ _____________________ _______________ The charge of $62.9 million has been included within the Specialty Pharmaceuticals segment in the Companys segmental analysis, see Note 26. |
Gain on sale of product rights
Gain on sale of product rights | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Gain on sale of product rights (Disclosure) | 5.Gain on sale of product rights During 2007 and 2008 the Company streamlined its operations through the divestment of certain non-core products. In 2007 the Company received cash consideration of $234.4 million on the disposal of non core products, which included $209.6 million from Laboratorios Almirall S.A (Almirall) on the transfer of product licenses, including SOLARAZE and VANIQA, and in 2008 Shire received a further $5.0 million in cash for the transfer of other non-core product rights. The Company recognizes gains in respect of these divested product rights when the relevant regulatory or other consents for the transfer of these product rights are obtained. Accordingly Shire recognized gains of $6.3 million, $20.7 million and $127.8 million in the years to December 31, 2009, 2008 and 2007 respectively on disposal of these non-core assets. At December 31, 2009 the Company recorded as a deposit within Other current liabilities $5.8 million (2008: $12.5 million) of proceeds from the disposal of these products where regulatory or other consents have yet to be obtained.All assets disposed of during 2009, 2008 and 2007 formed part of the Specialty Pharmaceuticals segment. |
Reorganization costs
Reorganization costs | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Reorganisation costs | 6.Reorganization costsOwings MillsIn March 2009 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 year to December 31, 2009 the Company incurred reorganization costs of $12.7 million (2008: $nil, 2007: $nil) which relate to employee involuntary termination benefits, impairment charges for property, plant and equipment and other costs. 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 in the year to December 31, 2009 has incurred accelerated depreciation of $12.0 million, which has been charged to Cost of product sales. Consequently, the Company estimates an annual accelerated depreciation charge, over the level which would have been charged absent the wind down of operations, of $22.5 million in 2010. The reorganization costs and accelerated depreciation have been recorded within the Specialty Pharmaceuticals reportable segment.Jerini non-core operationsAs outlined in Note 3, the operations of JOI and certain other non-core pre-clinical operations acquired with Jerini were closed down in the year to December 31, 2009. On closure of these operations the Company recorded a liability for costs associated with these closures of $9.1 million, relating to employee involuntary termination benefits and other closure costs. This liability was recorded within accounts payable and accrued expenses with a corresponding increase to goodwill arising on the acquisition.The aggregate liability for reorganization costs arising on the Owings Mills and Jerini closures at December 31, 2009 is as follows: Assumed Amount liability through charged to re- business Closing organization combinations Paid/Utilized liability at Year to December 31, 2009 $'M $'M $'M $'M ____________ ___________ ___________ ___________ Involuntary termination benefits 5.6 5.5 (7.0) 4.1 Contract termination costs - 3.6 (0.8) 2.8 Other termination costs 2.1 - (2.1) - ____________ ___________ ___________ ___________ 7.7 9.1 (9.9) 6.9 Impairment charges 5.0 ___________ ___________ ___________ ____________ Reorganization costs for the year to December 31, 2009 12.7 ____________ At December 31, 2009 the closing reorganization cost liability was recorded within accounts payable and accrued expenses ($3.9 million) and other non-current liabilities ($3.0 million). |
Intergration and Acquisition co
Intergration and Acquisition costs | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Intergration and Acquisition costs | 7.Integration and acquisition costsIntegration costs of $7.7 million (2008: $10.3 million, 2007: $1.3 million), were incurred in the year to December 31, 2009. Integration costs in 2009 and 2008 relate to the integration of Jerini, and in 2007 relate to the integration of New River into Shire.Acquisition costs of $2.9 million (2008: $nil, 2007: $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 year to December 31, 2009. |
Accounts receivable, net
Accounts receivable, net | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Accounts receivable, net | 8.Accounts receivable, net Accounts receivable at December 31, 2009 of $597.5 million (December 31, 2008: $395.0 million), are stated net of a provision for discounts and doubtful accounts of $20.8 million (December 31, 2008: $20.2 million, 2007: $9.8 million). Provision for discounts and doubtful accounts: 2009 2008 2007 $M $M $M _____________ _____________ _____________ As at January 1, 20.2 9.8 8.8 Provision charged to operations 127.4 95.0 60.1 Provision utilization (118.5) (84.6) (59.1) Reclassification (8.3) - - _____________ _____________ _____________ As at December 31, 20.8 20.2 9.8 _____________ _____________ _____________ During the year to December 31, 2009 the Company reclassified its provision for Tricare Health Care Program rebates of $8.3 million at January 1, 2009 from provisions for discounts and doubtful accounts to accounts payable and accrued expenses.At December 31, 2009 accounts receivable included $92.4million (December 31, 2008: $38.4 million) of receivables related to royalty income. |
Inventories
Inventories | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Inventories | 9.InventoriesInventories are stated at the lower of cost or market and are analyzed as follows: December 31, December 31, 2009 2008 $M $M ____________ ____________ Finished goods 50.9 41.4 Work-in-progress 102.1 78.7 Raw materials 36.7 34.4 ____________ ____________ 189.7 154.5 ____________ ____________ At December 31, 2009 inventories included $18.8million (December 31, 2008: $11.5 million) of costs capitalized prior to the regulatory approval of the relevant product. |
Assets held for sale
Assets held for sale | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Assets held for sale and discontinued operations | 10.Assets held for sale At December 31, 2009 assets held for sale had a carrying value of $1.7 million, represented by intangible assets and attributed goodwill for certain products divested to Almirall in 2007 (December 31, 2008: $16.6 million). 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 (see Note 5). These assets divested to Almirall form part of the Specialty Pharmaceuticals operating segment.At December 31, 2008 assets held for sale also included $14.9 million for the operations of JOI and JPT. 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 year to December 31, 2009. During the second quarter of 2009 the Company closed JOI, and recorded a re-measurement adjustment of $5.9 million to record the JOI assets at the lower of their fair value and carrying value (see note 3). |
Prepaid expenses and other curr
Prepaid expenses and other current assets | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Prepaid expenses and other current assets | 11.Prepaid expenses and other current assets December 31, December 31, 2009 2008 $M $M ______________ ____________ Prepaid expenses 44.9 47.6 Income tax receivable - 33.2 Value added taxes receivable 37.3 19.3 Other current assets 31.3 41.3 ______________ ____________ 113.5 141.4 ______________ ____________ |
Investments
Investments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Investments | 12.Investments December 31, December 31, 2009 2008 $M $M ____________ ____________ Investments in private companies 3.9 19.3 Available-for-sale securities 87.0 6.1 Equity method investments 14.8 17.5 ____________ ____________ 105.7 42.9 ____________ ____________ Disposal of Virochem Pharma Inc (Virochem)On March 12, 2009 the Company completed the disposal of its cost investment in 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 the Companys investment in Virochem 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 recognized in Other income/(expense), net during the year to December 31, 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 year to December 31, 2009. The Vertex stock received has been accounted for as an available-for-sale investment.Disposal of Questcor Pharmaceutical Inc (Questcor) For the year to December 31, 2008 Other (expense)/income net includes a gain of $9.4 million from the sale of Shires available-for-sale investment in Questcor, a specialty pharmaceutical company focused on providing prescription drugs for central nervous system disorders. Shire received cash consideration of $10.3 million on the sale of this investment.Other-than-temporary impairment of available-for-sale securitiesThe Company recorded other-than-temporary impairments of $0.8 million, $58.0 million and $3.0 million against its available-for-sale securities in the years to December 31, 2009, 2008 and 2007 respectively.During the year to December 31, 2008 the Company recognized impairment charges of $44.3 million relating to its investment in Renovo Group plc, representing unrealized holding losses that were reclassified out of other comprehensive income into earnings in 2008, as management concluded that the impairment was other than temporary. The decline in the market value of the Companys investment in Renovo Group plc initially arose from the results of clinical trials for JUVISTA which were announced over 2007 and 2008. During the third quarter of 2008, in considering whether the decline in value was temporary or other than temporary the Company considered the following factors: the severity of the decline from historical cost (87%) and its duration (eleven months); market analysts targets of Renovo Group plcs share price for the next 18-24 months; and the revised expected filing date for JUVISTA due to the adoption of a sequential rather than parallel Phase 3 development plan. These factors, together with the significant decline in global equity markets during the third quarter of 2008 meant th |
Property Plant and Equipment, n
Property Plant and Equipment, net | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Property, Plant & Equipment, net | 13.Property, plant and equipment, net December 31, December 31, 2009 2008 $M $M ____________ ____________ Land and buildings 398.7 267.6 Office furniture, fittings and equipment 280.5 228.2 Warehouse, laboratory and manufacturing equipment 114.5 80.1 Assets under construction 193.2 164.3 ____________ ____________ 986.9 740.2 Less: Accumulated depreciation (310.1) (206.0) ____________ ____________ 676.8 534.2 ____________ ____________ Depreciation expense for the years to December 31, 2009, 2008 and 2007 was $105.0 million, $77.2 million, and $65.3 million respectively. The expense included impairment losses of $6.3 million, $2.2 million and $1.8 million in the years to December 31, 2009, 2008 and 2007 respectively. |
Goodwill
Goodwill | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Goodwill | 14.Goodwill December 31, December 31, 2009 2008 $M $M ____________ ____________ Goodwill arising on businesses acquired 384.7 350.8 ____________ ____________ During the year to December 31, 2009 the Company acquired the worldwide rights (excluding the US, Canada and Barbados) to EQUASYM IR and XL for a total consideration of $91.0 million, which resulted in goodwill of $13.2 million (see note 3). The goodwill has been assigned to the Specialty Pharmaceuticals segment.During the year to December 31, 2008 the Company acquired a 98.6% voting interest in Jerini for cash consideration of $556.5 million which resulted in goodwill of $148.0 million (see Note 3). This goodwill has been attributed to the HGT reporting segment.At December 31, 2009 goodwill of $214.5 million (2008: $202.4 million) is held in the Specialty Pharmaceuticals segment and $170.2 million (2008: $148.4 million) in the HGT segment. 2009 2008 $M $M ____________ ____________ As at January 1, 350.8 219.4 Acquisitions (including finalisation of purchase price allocation) 27.1 148.0 Foreign currency translation 6.8 (16.6) ____________ ____________ As at December 31, 384.7 350.8 ____________ ____________ |
Other intangible assets, net
Other intangible assets, net | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other intangible assets, net | 15.Other intangible assets, net December 31, December 31, 2009 2008 $M $M ________________ ________________ Intellectual property rights acquired Currently marketed products 2,351.6 2,253.2 IPRD 6.1 - Favorable manufacturing contracts 8.7 8.7 ________________ ________________ 2,366.4 2,261.9 Less: Accumulated amortization (575.7) (437.0) ________________ ________________ 1,790.7 1,824.9 ________________ ________________ At December 31, 2009 the net book value of intangible assets allocated to the Specialty Pharmaceuticals segment was $1,238.0 million (December 31, 2008: $1,244.9 million) and in the HGT segment was $552.7 million (December 31, 2008: $580.0 million).The change in the net book value of other intangible assets for the year to December 31, 2009 is shown in the table below: Other intangible assets $M As at January 1, 2009 1,824.9 Acquisitions 84.0 Amortization charged (138.6) Foreign currency translation 20.4 ________________ As at December 31, 2009 1,790.7 ________________ During the year to December 31, 2009 the Company acquired intangible assets totaling $84.0 million, principally relating to $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). The weighted average amortization period for acquired currently marketed products is 13 years. Amortization charged for the years to December 31, 2009, 2008 and 2007 was $138.6 million, $127.9 million and $95.8 million, respectively.The Company recorded impairments of $nil, $97.1 million and $0.4 million in the years to December 31, 2009, 2008 and 2007 respectively, recorded within Selling, general and administrative costs. In 2008 the Company recognized impairment charges of $97.1 million, of which $94.6 million related to the write-down of its DYNEPO intangible asset to its fair value ($nil). Changes in the external environment, including the launch of several competing bio-similars at lower prices made DYNEPO uneconomic for the Company. Accordingly Company has decided to stop commercializing DYNEPO. Product sales were wound down over the second half of 2008 as all patients were transferred off DYNEPO by the end of 2008. The fair value of DYNEPO was determined using an expected present value technique. The impairment charges relate to the Specialty Pharmaceuticals reportable segment.Management estimates that the annual amortization charge in respect of intangible assets held at December 31, 2009 will be approximately $140 million for each of the five years to December 31, 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 | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Accounts payable and accrued expenses | 16.Accounts payable and accrued expenses December 31, December 31, 2009 2008 $M $M ________________ ________________ Trade accounts payable 79.6 102.4 Accrued rebates Medicaid 188.2 162.6 Accrued rebates Managed care 153.4 59.9 Sales return reserve 62.7 47.1 Accrued bonuses 66.8 62.0 Accrued employee compensation and benefits payable 42.6 36.7 Research and development accruals 53.1 29.3 Marketing accruals 31.5 22.1 Deferred revenue 52.2 9.6 Other accrued expenses 199.0 176.9 ________________ ________________ 929.1 708.6 ________________ ________________ Accrued Medicaid rebates have increased by $25.6 million to $188.2 million at December 31, 2009 (2008: $162.6 million). There are potentially different interpretations as to how shipments of authorized generic ADDERALL XR to Teva and Impax should be included in the Medicaid rebate calculation pursuant to Medicaid rebate legislation. As a result more than one unit rebate amount (URA) is calculable for the purpose of determining the Companys Medicaid rebate liability to States as a result of authorized generic launch. During 2009 the Company highlighted the different interpretations to Centre of Medicaid Services (CMS) and submitted data to CMS for the purpose of computing the URA, based on the Companys reasonable interpretation of the Medicaid rebate legislation and related guidance. The State Medicaid agencies have invoiced the Company for Medicaid rebates, and the Company has paid these Medicaid rebate invoices, based on this URA. Despite this CMS has the ability to subsequently challenge the Companys interpretation of the Medicaid rebate legislation, and require an alternative interpretation to be applied (both retrospectively and prospectively), which could result in a significantly higher Medicaid liability. Throughout 2009 the Companys management has recorded its accrual for Medicaid rebates based on its best estimate of the rebate payable. For the first three quarters of 2009, the Companys management based this best estimate on an amount that the Company could pay were CMS to challenge the Companys interpretation and require an alternative interpretation of the Medicaid rebate legislation to be applied. In the fourth quarter of 2009, the Companys management lowered its best estimate of the Medicaid rebate payable down to be consistent with (i) the Companys interpretation of the Medicaid rebate legislation, (ii) the Companys repeated and consistent submission of price reporting to CMS using the Companys interpretation of the Medicaid rebate legislation, (iii) CMS calculating the URA based on that interpretation, (iv) States submitting Medicaid rebate invoices using this URA and (v) Shire paying these invoices . This change of estimate increased ADDERALL XR product sales by $97.7 million in the fourth quarter of 2009 (of which $73.6 million related to ADDERALL XR sales recognized in the first three quarters of 2009).In determining its best estimate of the Medicaid rebate liability at December 31, 2009 the Companys management has considered a number of factors taken in combination (including the receipt of a further quarters invoices from the States w |
Other current liabilities
Other current liabilities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other current liabilities | 17.Other current liabilities December 31, December 31, 2009 2008 $M $M _____________ _____________ Income taxes payable 46.7 25.8 Value added taxes 10.3 4.4 Derivative financial instruments 1.2 46.9 Other accrued liabilities 29.8 27.2 _____________ _____________ 88.0 104.3 _____________ _____________ |
Long-term debt
Long-term debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Long Term Debt | 18.Long-term debt Shire 2.75% Convertible Bonds due 2014 On May 9, 2007 Shire issued $1,100 million in principal amount of 2.75% convertible bonds due 2014 and convertible into fully paid ordinary shares of Shire plc (the Bonds). The net proceeds of issuing the Bonds, after deducting the commissions and other direct costs of issue, totaled $1,081.7 million. In connection with the Scheme of arrangement the Trust Deed was amended and restated in 2008 in order to provide that, following the substitution of Shire plc in place of Old Shire as the principal obligor and issuer of the Convertible Bonds, the Bonds would be convertible into ordinary shares of Shire plc.The Bonds were issued at 100% of their principal amount, and unless previously purchased and cancelled, redeemed or converted, will be redeemed on May 9, 2014 (the Final Maturity Date) at their principal amount. The Bonds bear interest at 2.75% per annum, payable semi-annually in arrears on November 9 and May 9. The Bonds constitute direct, unconditional, unsubordinated and unsecured obligations of the Company, and rank pari passu and ratably, without any preference amongst themselves, and equally with all other existing and future unsecured and unsubordinated obligations of the Company.The Bonds may be redeemed at the option of the Company, (the Call Option), at their principal amount together with accrued and unpaid interest if: (i) at any time after May 23, 2012 if on no less than 20 dealing days in any period of 30 consecutive dealing days the value of Shires Ordinary Shares underlying each Bond in the principal amount of $100,000 would exceed $130,000; or (ii) at any time conversion rights have been exercised, and/or purchases and corresponding cancellations, and/or redemptions effected in respect of 85% or more in principal amount of Bonds originally issued. The Bonds may also be redeemed at the option of the Bond holder at their principal amount including accrued but unpaid interest on May 9, 2012 (the Put Option), or following the occurrence of a change of control. The Bonds are repayable in US dollars, but also contain provisions entitling the Company to settle redemption amounts in Pounds sterling, or in the case of the Final Maturity Date and following exercise of the Put Option, by delivery of the underlying ordinary shares and a cash top-up amount.The Bonds are convertible into ordinary shares during the conversion period, being the period from June 18, 2007 until the earlier of: (i) the close of business on the date falling fourteen days prior to the Final Maturity Date; (ii) if the Bonds have been called for redemption by the Company, the close of business fourteen days before the date fixed for redemption; (iii) the close of business on the day prior to a Bond holder giving notice of redemption in accordance with the conditions; and (iv) the giving of notice by the trustee that the Bonds are accelerated by reason of the occurrence of an event of default.Upon conversion, the Bond holder is entitled to receive ordinary shares at the conversion price of $33.17 per ordinary share, (subject to adjustment as outlined below).The conversion price is subject to adjustment in re |
Other long-term debt
Other long-term debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other long-term debt | 19.Other long-term debtDuring 2007 and 2009 Shire entered into certain multi-year leases for its HGT business unit at North Reading and Lexington, Massachusetts. As Shire is considered, in substance, the owner of these properties over their construction period, Shire recorded an asset (being the fair value of the building element at inception of the relevant lease) of $7.1 million and $32.7 million in the year to December 31, 2009 and 2007 within Property, Plant and Equipment Assets under construction and the corresponding building financing obligation is recorded within other long term debt. The land element of these leases has been accounted for as an operating lease.Concurrent with entering into a new lease at its Lexington campus, Shire extended the term of certain other existing leases at its Lexington site, such that the terms of these existing leases become co-terminus with the expiration of the new Lexington lease. This lease extension has been accounted for as a substantial modification of the existing building finance obligation, whereby the existing liability ($45.1 million) was derecognized and a building financing obligation based on the fair value of the liability under the revised lease terms ($39.4 million) was recorded in its place. This substantial modification resulted in a non-cash gain of $5.7 million in the year to December 31, 2009 which has been recorded within Other income/(expense), net. |
Other non-current liabilities
Other non-current liabilities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other non-current liabilities | 20.Other non-current liabilities December 31, December 31, 2009 2008 $M $M ____________ ____________ Income taxes payable 170.4 220.4 Deferred revenue 20.0 29.5 Deferred rent 14.5 16.1 Insurance provisions 18.3 18.1 Other accrued liabilities 23.9 7.2 ____________ ____________ 247.1 291.3 ____________ ____________ |
Derivative instruments
Derivative instruments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Derivative instruments | 21.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 year to December 31, 2009 the average interest rate received on cash and liquid investments was less than 1% per annum. The largest proportion of investments was in US dollar money market and liquidity funds.The Company incurs interest at a fixed rate of 2.75% on Shire plcs $1,100 million in principal amount convertible bonds due 2014. The building financing obligation of $46.7 million is also subject to a fixed interest rate over the lease term on the amount outstanding. No derivative instruments were entered into during the year to December 31, 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 December 31, 2009 the Company has $105.7 million of investments comprising available-for-sale investments in publicly quoted companies ($87.0 million), equity method investments ($14.8 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 Financial instruments that potentially expose Shire to concentrations of credit risk consist primarily of short-term cash investments, trade accounts receivable (from product sales and from third parties from which the Company receives royalties) and derivative contracts. 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 both Standard Poors and by Moodys 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 / A2 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 the derivative contracts are major international f |
Fair value measurement
Fair value measurement | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Fair value measurement | 22.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) 87.0 87.0 87.0 - - Foreign exchange contracts 5.4 5.4 - 5.4 - Financial liabilities: Foreign exchange contracts 1.2 1.2 - 1.2 - ____________ ____________ ___________ ___________ ___________ (1)Available-for-sale securities are included within Investments in the 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 securities are estimated based on quoted market prices for those investments. 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 flows. Assets and liabilities that have been measured at fair value on a non-recurring basis (after initial recognition)As outlined in Note 19, the building financing obligation for leased property in Lexington, Massachusetts was substantially modified in the year to December 31, 2009, by extension of the term of the relevant underlying lease on July 31, 2009. The existing liability of $45.1 million was derecognized, and a building financing obligation of $39.4 million was recorded, such liability measured using the fair value of the liability under the revised terms. This extension of the term of the building finance obligation was treated as a substantial modification resulting in a gain of $5.7 million, which has been recorded within Other income/(expense), net.The fair value of the building financing obligation was estimated based on the present value of the contractual cash flows under the revised lease and the estimated residual value of the property at the end of the lease term, such payments being discounted at a risk-free interest rate adjusted for Shires credit risk. The fair value measurement falls within Level 3 of the fair value hierarchy because the estimate of Shires credit risk was based on a significant unobservable input. Fair Value at Measurement Date Total Level 1 Level 2 Level 3 $'M $'M $'M $'M ____________ ___________ ___________ ___________ Building financing obligation 39.4 - - 39.4 ____________ ____________ ____________ ____________ Financial assets and liabilities that are not m |
Commitments and contingencies
Commitments and contingencies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Commitments and contingencies | 23.Commitments and contingencies(a)LeasesFuture minimum lease payments under operating leases at December 31, 2009 are presented below: Operating leases $M _____________ 2010 31.1 2011 22.9 2012 20.3 2013 19.0 2014 18.8 Thereafter 101.2 _____________ 213.3 _____________ (i)Operating leasesThe Company leases land, facilities, motor vehicles and certain equipment under operating leases expiring through 2027. Lease and rental expense amounted to $35.5 million, $32.6 million and $28.0 million for the years to December 31, 2009, 2008 and 2007, which is predominately included in Selling, general and administrative expenses in the consolidated statements of operations.(b)Letters of credit and guaranteesAt December 31, 2009 the Company had irrevocable standby letters of credit and guarantees with various banks in the amount of $15.1 million, providing security for the companys performance of various obligations. These obligations are primarily in respect of the recoverability of insurance claims, lease obligations and supply commitments. The Company has restricted cash of $9.2 million, as required by these letters of credit.(c)Collaborative arrangementsIn-licensing arrangements(i)Research Collaboration with Santaris Pharma A/S (Santaris) on Locked Nucleic Acid (LNA) Drug Platform On August 24, 2009 Shire announced that it had entered into a research collaboration with Santaris, to develop its proprietary LNA technology in a range of rare diseases. LNA technology has the benefit of shortened target validation and proof of concept, potentially increasing the speed and lowering the cost of development. As part of the joint research project Santaris will design, develop and deliver pre-clinical LNA oligonucleotides for Shire-selected orphan disease targets, and Shire will have the exclusive right to further develop and commercialize these candidate compounds on a worldwide basis.In the year to December 31, 2009 Shire made an upfront payment of $6.5 million to Santaris, for technology access and RD funding, which has been expensed to RD. Shire has remaining obligations to pay Santaris a further $13.5 million subject to certain success criteria, and development and sales milestones up to a maximum of $72 million for each indication. Shire will also pay single or double digit tiered royalties on net sales of the product.Shire and Santaris have formed a joint research committee to monitor RD activities through preclinical Lead Candidate selection at which point all development and commercialization costs will be the responsibility of Shire.(ii)JUVISTAOn June 19, 2007 Shire signed an agreement with Renovo Limited (Renovo) to develop and commercialize JUVISTA, Renovos novel drug candidate being investigated for the reduction of scarring in connection with surgery. Renovo has commenced its first pivotal Phase 3 clinical trial in Europe. Under the terms of the agreement, Shire has the exclusive right to commercialize JUVISTA worldwide, with the exception of the EU member states. Shire has remaining obligations to pay Renovo $25 million on the filing of JUVISTA with the FDA; up to $150 million on FDA approval; royalties on net sales |
Shareholders Equity
Shareholders Equity | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Shareholders Equity | 24.Shareholders equityAuthorized common stockThe authorized stock of Shire plc as at December 31, 2009 was 1,000,000,000 ordinary shares and 2 subscriber ordinary shares.On February 20, 2007 the Company raised $877.3 million, net of associated issue costs, through the private placement of 42.9 million new ordinary shares to certain institutional investors at a price of 1075 pence per share. The newly issued shares represented approximately 8.4 per cent of Shire plcs issued ordinary share capital prior to the placing.DividendsUnder Jersey law, Shire plc is entitled to make payments of dividends from its accumulated profits and other distributable reserves. At December 31, 2009 Shire plcs distributable reserves were approximately $3.7 billion.Treasury stock The Company records the purchase of its own shares by the ESOT as a reduction of shareholders equity based on the price paid for the shares. At December 31, 2009, the ESOT held 5.8 million ordinary shares (2008: 7.3 million; 2007: 8.5 million) and 4.0 million ADSs (2008: 4.5 million; 2007: 1.8 million). During the year to December 31, 2009 a total of 0.1 million (2008: 0.2 million; 2007: 3.0 million) ordinary shares and 0.02 million (2008: 2.8 million; 2007: 1.8 million) ADSs had been purchased for total consideration of $1.0 million (2008: $146.6 million; 2007: $186.0 million), including stamp duty and broker commission. Income Access Share Arrangements (IAS Trust)Shire has put into place the IAS Trust which enables Shire ordinary shareholders, other than Shire ADS holders, to elect to receive their dividends either from a company resident for tax purposes in the Republic of Ireland from a Shire group company resident for tax purposes in the UK. Old Shire has issued one income access share to the IAS Trust which is held by the income access share trustee. The mechanics of the arrangements are as follows:(i)If a dividend is announced or declared by Shire plc on the Shire ordinary shares, an amount is paid by Old Shire by way of a dividend on the income access share to the income access share trustee, and such amount is paid by the income access share trustee to the Shire ordinary shareholders who have elected (or are deemed to have elected) to receive dividends under these arrangements. The dividend which would otherwise be payable by Shire to such Shire ordinary shareholders will be reduced by an amount equal to the amount paid to such Shire ordinary shareholders by the income access share trustee.(ii)If the dividend paid on the income access share and on-paid by the income access share trustee to the Shire ordinary shareholders is less than the total amount of the dividend announced or declared by Shire on the Shire ordinary shares, Shire will be obliged to pay a dividend on the Shire ordinary shares equivalent to the amount of the shortfall. In such a case, any dividend paid on the Shire ordinary shares will generally be subject to Irish withholding tax at the rate of 20% or such lower rate as may be applicable under exemptions from withholding tax contained in Irish law.(iii)A Shire ordinary shareholder is entitled to make an income access share election such that he will receive his |
Earnings per share
Earnings per share | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Earnings per share | 25.Earnings per shareThe following table reconciles net income/(loss) attributable to Shire plc and the weighted average ordinary shares outstanding for basic and diluted earnings per share for the periods presented: Year to December 31, 2009 2008 2007 Amounts attributable to Shire plc shareholders $M $M $M _________________ _________________ _________________ Income/(loss) from continuing operations, net of taxes 503.8 170.0 (1,451.8) Loss from discontinued operations (12.4) (17.6) - Net loss attributable to noncontrolling interest in subsidiaries 0.2 3.6 - _________________ _________________ _________________ Numerator for basic and diluted earnings per share(1) 491.6 156.0 (1,451.8) _________________ _________________ _________________ Weighted average number of shares: Millions Millions Millions _________________ _________________ _________________ Basic(2) 540.7 541.6 540.3 Effect of dilutive shares: Stock based awards to employees(3) 7.3 3.8 - _________________ _________________ _________________ Diluted 548.0 545.4 540.3 _________________ _________________ _________________ (1) For the years to December 31, 2009, 2008 and 2007 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. Year to December 31, 2009 2008 2007 _______________ _______________ _______________ Earnings/(loss) per ordinary share - basic Earnings/(loss) from continuing operations attributable to Shire plc shareholders 93.2c 32.1c (268.7c) Loss from discontinued operations attributable to Shire plc shareholders (2.3c) (3.3c) - _______________ _______________ _______________ Earnings/(loss) per ordinary share attributable to Shire plc shareholders - basic 90.9c 28.8c (268.7c) _______________ _______________ _______________ Earnings/(loss) per ordinary share - diluted Earnings/(loss) from continuing operations attributable to Shire plc shareholders 91.9c 31.8c (268.7c) Loss from discontinued operations attributable to Shire plc shareholders (2.2c) (3.2c) - _______________ _______________ _______________ Earnings/(loss) per ordinary share attributable to Shire plc shareholders diluted 89.7c 28.6c (268.7c) _______________ _______________ _______________ The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below: 2009(2) (3) 2008(2) (3) 2007(1) No. of shares No. of shares No. of shares Millions Millions Millions _________________ _________________ _________________ Share options in the money - - 8.4 Share options out of the money 16.4 17.3 2.9 Warrants - - 0.3 Convertible bonds 2.75% due 2014 33.1 32.7 21.2 _________________ _________________ _________________ |
Segmental reporting
Segmental reporting | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Segmental reporting | 26.Segmental reportingShires internal financial reporting is in line with its business unit and management reporting structure based on two segments: Specialty Pharmaceuticals (which aggregates ADHD, GI and other Specialty Pharmaceutical products) and HGT. The Specialty Pharmaceuticals and HGT reportable 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 or allocable to the segments have been separately disclosed. Specialty Pharmaceuticals HGT All Other Total 2009 $M $M $M $M ___________ ___________ ___________ ___________ Product sales 2,138.2 555.5 - 2,693.7 Royalties 127.2 - 165.3 292.5 Other revenues 9.9 2.6 9.0 21.5 ___________ ____________ ___________ ___________ Total revenues 2,275.3 558.1 174.3 3,007.7 ___________ ____________ ___________ ___________ Cost of product sales(1) (2) 299.3 88.7 - 388.0 Research and development(1) (2) 375.0 257.2 6.1 638.3 Selling, general and administrative(1) (2) 954.4 208.7 179.5 1,342.6 Gain on sale of product rights (6.3) - - (6.3) IPRD charge - 1.6 - 1.6 Reorganization costs 12.7 - - 12.7 Integration and acquisition costs 2.9 7.7 - 10.6 _____________ ____________ ___________ ___________ Total operating expenses 1,638.0 563.9 185.6 2,387.5 _____________ ____________ ___________ ___________ Operating income/(loss) 637.3 (5.8) (11.3) 620.2 _____________ ____________ ___________ ___________ Total assets 2,067.1 1,576.1 974.3 4,617.5 Long-lived assets(3) 202.6 422.4 55.6 680.6 Capital expenditure on long-lived assets(3) 46.9 194.4 18.0 259.3 _____________ ___________ ___________ ___________ (1) Stock-based compensation of $65.7 million is included in: Cost of product sales ($4.4 million), Research and development ($20.1 million) and Selling, general and administrative ($41.2 million).(2) Depreciation from manufacturing plants ($21.8 million) and amortization of favorable manufacturing contracts ($1.7 million) is included in Cost of product sales; depreciation of research and development assets ($15.5 million) is included in Research and development; and all other depreciation and amortization ($204.7 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, income tax receivable and financial instruments). Specialty Pharmaceuticals HGT All Other Total 2008 $M $M $M $M ___________ ___________ ___________ ___________ Product sales 2,272.5 481.7 - 2,754.2 Royalties 1.5 - 244.0 245.5 Other revenues 8.2 4.0 10.3 22.5 ___________ ____________ ___________ ___________ Total revenues 2,282.2 485.7 254.3 3,022.2 ___________ ____________ ___________ ___________ Cost of produ |
Interest expense
Interest expense | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Interest Expense | 27.Interest expense Interest expense for the years to December 31, 2009, 2008 and 2007 was $39.8 million, $139.0 million and $70.8 million respectively. Interest expense primarily includes interest on Shires convertible bond of $33.3 million (2008: $33.3 million; 2007: $18.3 million).Interest expense for the year to December 31, 2008 included $87.3 million (2009: $nil and 2007: $28.0 million) in respect to the TKT appraisal rights litigation. On November 5, 2008 Shire successfully settled all aspects of this litigation with all parties.Shire paid the same price of $37 per share originally offered to all TKT shareholders at the time of the July 2005 merger, plus interest.The Delaware Chancery Court approved dismissal of the case and Shire made payment to the dissenting shareholders on November 7, 2008. The settlement represented a total payment of $567.5 million, representing consideration at $37 per share of $419.9 million and an interest cost of $147.6 million. Prior to reaching this settlement, the Company accrued interest based on a reasonable estimate of the amount that may be awarded by the Court to those former TKT shareholders who requested appraisal. This estimate of interest was based on Shires cost of borrowing. Between the close of the merger and November 5, 2008 the Company applied this interest rate on a quarterly compounding basis to the $419.9 million of consideration to calculate its provision for interest.Upon reaching agreement in principle with all the dissenting shareholders, the Company determined that settlement had become the probable manner through which the appraisal rights litigation would be resolved. Under current law, (although not applicable in this case because the merger was entered into before the relevant amendment to the law became effective) the court presumptively awarded interest in appraisal rights cases at a statutory rate that is 5 percentage points above the Federal Reserve discount rate (as it varies over the duration of the case). In connection with the settlement, the Company agreed to an interest rate that approximates to this statutory rate. Based on the settlement, the Company amended the method of determining its interest provision to reflect this revised manner of resolution and upon reaching settlement with the dissenting shareholders recorded an additional interest expense of $73.0 million in its consolidated financial statements for the year to December 31, 2008. |
Other income
Other income (expenses), net | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Other income/(expenses) net | 28.Other income/(expense), net Year to December 31, 2009 2008 2007 $M $M $M _______________ _______________ _______________ Impairment of non-current investments (see note 12) (0.8) (58.0) (3.0) GeneChem Funds management fee - 1.9 3.6 Gain on sale of non-current investment (see note 12) 55.2 9.4 0.1 Gain on substantial modification of building finance obligation (see note 19) 5.7 - - Foreign exchange 2.3 14.1 (0.8) Other (1.7) (0.3) 1.3 _______________ _______________ _______________ 60.7 (32.9) 1.2 _______________ _______________ _______________ |
Retirement benefits
Retirement benefits | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Retirement Benefits | 29.Retirement benefitsThe Company makes contributions to defined contribution retirement plans that together cover substantially all employees. The level of the Companys contribution is fixed at a set percentage of employees pay. Company contributions to personal defined contribution pension plans totaled $27.9 million, $26.3 million and $22.3 million for the years to December 31, 2009, 2008 and 2007, respectively, and were charged to operations as they became payable. |
Taxation
Taxation | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Taxation | 30.TaxationThe components of pre tax income/(loss) from continuing operations are as follows: 2009 2008 2007 Year to December 31, $M $M $M ___________ ___________ ___________ Republic of Ireland (232.3) (83.5) (99.5) UK 62.8 39.2 94.7 US 552.2 238.7 27.6 IPRD (1.6) (263.1) (1,866.4) Other jurisdictions 261.9 334.3 445.5 ___________ ____________ ___________ 643.0 265.6 (1,398.1) ___________ ____________ ___________ The provision/(benefit) for income taxes by location of the taxing jurisdiction for the years to December 31, consisted of the following: Year to December 31, 2009 2008 2007 $M $M $M __________ __________ ___________ Current income taxes: Republic of Ireland - - 0.2 US federal tax 154.3 12.0 84.5 US state and local taxes 14.4 6.4 4.9 UK corporation tax - 0.3 20.3 Other 16.8 (10.8) 24.8 __________ __________ __________ Total current taxes 185.5 7.9 134.7 __________ __________ __________ Deferred taxes: Republic of Ireland (1.0) (1.3) 9.1 US federal tax (24.5) 75.2 (91.4) US state and local taxes (32.2) (17.2) (5.2) UK corporation tax 6.1 29.8 14.4 Other 4.6 3.6 (6.1) __________ __________ __________ Total deferred taxes (47.0) 90.1 (79.2) __________ __________ __________ Total income taxes(1) 138.5 98.0 55.5 __________ __________ __________ (1) Total income taxes relate solely to continuing operations as there is no tax provision/(benefit) relating to discontinued operations for the years to December 31, 2009, 2008 or 2007. The reconciliation of income/(loss) from continuing operations before income taxes, noncontrolling interests and equity in earnings of equity method investees at the statutory tax rate to the provision for income taxes is shown in the table below: Year to December 31, 2009 2008 2007 $M $M $M ___________ ___________ ___________ Income/(loss) from continuing operations before income taxes and equity in earnings of equity method investees 643.0 265.6 (1,398.1) ___________ ___________ ___________ Statutory tax rate(1) (2) 25.0% 25.0% 30.0% Adjustments to derive effective rate: Non-deductible items: IPRD - 12.1% (40.0%) Other permanent differences: US Research and development credit (5.2%) (9.1%) 2.0% Effect of the convertible bond 2.0% (5.0%) 0.5% Intangible asset amortization(3) 0.1% (6.5%) 1.5% Disposals not subject to tax - - 2.2% Intra-group items(4) (11.8%) 6.2% 0.6% Other permanent items 2.2% 1.4% (0.2%) Other items: Change in valuation allowance 1.3% 12.4% 0.3% Difference in taxation rates 8.5% 3.1% 1.3% Change in provisions for uncertain tax positions 2.3% 1.9% (2.7%) Prior year adjustment (2.7%) (9.2%) 0.8% Change in tax rates 1.9% (0.2%) (0.5%) Other (2.1%) 4.8% 0.2% ___________ ___________ ___________ Provision for income taxes on continuing operations 21.5% 36.9% (4.0%) ___________ ___________ ___________ (1) In addition to being subject to the Irish Corporation tax rate of 25% (2007: UK Corporation tax rate of 30%), in 2009 the Company is also subject to income tax in other territories in which the Company operates, including: Canada (19 |
Share-based compensation plans
Share-based compensation plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Share Based Compensation Plans | 31.Share-based compensation plansThe Company measures share-based compensation cost at the grant date, based on the fair value of the award, and recognizes the expense over the employee requisite service period.The following table shows the total share-based compensation expense (see below for types of share-based awards) included in the consolidated statements of operations: 2009 2008 2007 $M $M $M ____________ ____________ ____________ Cost of product sales 4.4 3.9 5.5 Research and development 20.1 18.9 17.0 Selling, general and administrative 41.2 42.4 52.7 ____________ ____________ ____________ Total 65.7 65.2 75.2 Less tax (19.4) (15.3) (11.7) ____________ ____________ ____________ 46.3 49.9 63.5 ____________ ____________ ____________ There were no capitalized share-based compensation costs at December 31, 2009 and 2008.At December 31, 2009 $74.3 million (2008: $83.7 million) of total unrecognized compensation cost relating to non-vested awards, is expected to be recognized over a period of 5 years. At December 31, 2009 $52.5 million (2008: $40.7 million) of total unrecognized compensation cost relating to non-vested in the money awards, is expected to be recognized over a weighted average period of 1.9 years (2008: 1.9 years). The total fair value of in the money share and share option awards at December 31, 2009 was $24.9 million (2008: $34.4 million).Share-based compensation plansThe Company grants stock-settled share appreciation rights (SARS) and performance share awards over ordinary shares and ADSs to directors and employees under the Shire Portfolio Share Plan (Parts A and B). Prior to 2005, awards were made under legacy plans. The Company also operates an Employee Share Purchase Plan and a Sharesave Scheme.The following awards were outstanding as at December 31, 2009: Compensation type Number of awards* Expiration period from date of issue Vesting period ____________ ____________ ____________ ____________ Portfolio Share Plan - Part A SARs 29,105,047 5 years 3 years, subject to performance criteria for executive directors only Sharesave Scheme Stock options 345,614 6 months after vesting 3 or 5 years Stock Purchase Plan Stock options 705,469 On vesting date 1 to 5 months Legacy Plans Stock options 4,226,803 7 to 10 years 3-10 years, subject to performance criteria __________________ Stock-settled SARs and stock options 34,382,933 __________________ Portfolio Share Plan - Part B Performance share awards 5,209,621 3 years 3 years, subject to performance criteria for executive directors only __________________ Performance share awards 5,209,621 __________________ * Number of awards are stated in terms of ordinary share equivalents.Stock settled SARs and stock options(a)Portfolio Share Plan Part AStock-settled share appreciation rights granted under the Portfolio Share Plan Part A are exercisable subject to certain market and service criteria.In respect of any award made to executive directors market conditions will be based on relative total shareholder return. Vesting of awards made to executive directors will depend on relative total shareholder return per |
Restatement of previously issue
Restatement of previously issued financial statements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Prior Period Adjustments | 32.Restatement of previously issued financial statements Subsequent to the issuance of the Companys financial statements for the year ended December 31, 2008, the Companys management determined that its non-current deferred tax liabilities were overstated by $29 million, following a misstatement in computing the temporary difference between the tax and book value of its other intangible assets.The Company has corrected this misstatement by restating its previously issued financial statements for the years ended December 31, 2008 and 2007.This prior period adjustment does not affect the Companys net income/(loss) or earnings per share for the years ended December 31, 2008 and 2007. The effect of correcting this misstatement has increased retained earnings at January 1, 2007 by $29 million and has reduced non-current deferred tax liabilities by a corresponding amount. The restatement does not affect the Companys net income/(loss) or cash flows in either of the years to December 31, 2008 or 2007. |
Income Access Share Trust Finan
Income Access Share Trust Financial Statements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Income Access Share Trust Financial Statements Text Block | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo Lloyds TSB Offshore Trust Company Limited, Trustee of the Shire Income Access Share Trust and the Board of Directors and Stockholders of Shire plc We have audited the accompanying balance sheets of the Shire Income Access Share Trust (the Trust) as of December 31, 2009 and 2008 and the related statements of income, statements of changes in equity and statements of cash flows for the year ended December 31, 2009 and the period from August 29, 2008 to December 31, 2008. These financial statements are the responsibility of the Trustee and Shire plcs management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Trust is not required to have an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Trusts internal control over financial reporting. Accordingly, we express no such separate opinion. Our audit of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Shire Income Access Share Trust at December 31, 2009 and 2008, and the results of its operations and cash flows for the year to December 31, 2009 and the period from August 29, 2008 to December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. DELOITTE LLPLondon, United KingdomFebruary 26, 2010 SHIRE INCOME ACCESS SHARE TRUSTBALANCE SHEETS Notes December 31, 2009 December 31, 2008 $M $M ________________ ________________ ASSETS Total assets - - ________________ ________________ LIABILITIES AND EQUITY Total liabilities - - ________________ ________________ Equity: Capital account - - ________________ ________________ Total equity - - ________________ ________________ Total liabilities and equity - - ________________ ________________ SHIRE INCOME ACCESS SHARE TRUSTSTATEMENTS OF INCOME Year to Period to Notes December 31, 2009 December 31, 2008 $M $M ________________ ________________ Dividend income 45.9 7.2 ________________ ________________ Net income 45.9 7.2 ________________ ________________ SHIRE INCOME ACCESS SHARE TRUSTSTATEMENTS OF CHANGES IN EQUITY Capital account Revenue account Total equity $M $M $M ________________ ________ |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts Schedule | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
Valuation and Qualifying Accounts Schedule | Beginning balance Provision charged to income(1) Costs incurred/ utilization(1) Ending balance Provision for sales rebates, returns and coupons $M $M $M $M __________ __________ __________ __________ 2009: Accrued rebates Medicaid and Health Maintenance Organizations (HMOs) 222.5 630.8 (511.7) 341.6 Sales returns reserve 47.1 41.4 (25.8) 62.7 Accrued coupons 4.0 38.6 (38.8) 3.8 __________ __________ __________ __________ 273.6 710.8 (576.3) 408.1 __________ __________ __________ __________ 2008: Accrued rebates Medicaid and HMOs 146.6 396.9 (321.0) 222.5 Sales returns reserve 39.5 38.2 (30.6) 47.1 Accrued coupons 9 32.5 (37.5) 4.0 __________ __________ __________ __________ 195.1 467.6 (389.1) 273.6 __________ __________ __________ __________ 2007: Accrued rebates Medicaid and HMOs 126.4 263.5 (243.3) 146.6 Sales returns reserve 36.5 46 (43.0) 39.5 Accrued coupons 13 50.2 (54.2) 9 __________ __________ __________ __________ 175.9 359.7 (340.5) 195.1 __________ __________ __________ __________ (1) In the analysis above, due to systems limitations, it is not practical and has not been necessary to break out current versus prior year activity. When applicable, Shire has performed general ledger reviews of sales deduction provisions charged to income, and the utilization of these provisions in subsequent years. Shire has determined that adjustments made in each year as a result of changes to estimates that related to prior year sales, and adjustments made as a result of differences between prior period provisions and actual payments, did not have a material impact on the Companys financial performance or position either in each individual year, or in the Companys performance over the reported period. |