Shire (SHPG) 10-Q 6 May 10 2010 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information (USD $)
In Millions, except Share data	3 Months Ended Mar. 31, 2010
Document And Entity Information
Document Type	10-Q
Document Period End Date	2010-03-31
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	562,110,523
Entity Public Float	$7,709
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1

Unaudited Consolidated Balance

Unaudited Consolidated Balance Sheets (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Current assets:
Cash and cash equivalents	657.5	498.9
Restricted cash	26.8	33.1
Accounts receivable, net	620.7	597.5
Inventories	215.6	189.7
Deferred tax asset	114.1	135.8
Prepaid expenses and other current assets	131	115.2
Total current assets	1765.7	1570.2
Non-current assets:
Investments	109.6	105.7
Property, plant and equipment, net	668.5	676.8
Goodwill	373.2	384.7
Other intangible assets, net	1729.6	1790.7
Deferred tax asset	80.9	79
Other non-current assets	11.2	10.4
Total assets	4738.7	4617.5
Current liabilities:
Accounts payable and accrued expenses	929.2	929.1
Deferred tax liability	3.3	2.9
Other current liabilities	36.5	88
Total current liabilities	969	1,020
Non-current liabilities
Convertible bonds	1,100	1,100
Other long-term debt	43.7	43.6
Deferred tax liability	321.3	294.3
Other non-current liabilities	247.7	247.1
Total liabilities	2681.7	2,705
Shareholders' equity:
Common stock of 5p par value; 1,000 million shares authorized; and 562.1 million shares issued and outstanding (2009: 1,000 million shares authorized; and 561.5 million shares issued and outstanding)	55.6	55.6
Additional paid-in capital	2697.9	2677.6
Treasury stock: 15.7 million shares (2009 : 17.8 million shares)	-311.8	-347.4
Accumulated other comprehensive income	107.3	149.1
Accumulated deficit	(492)	-622.4
Total Shire plc shareholders' equity	2,057	1912.5
Total equity	2,057	1912.5
Total liabilities and equity	4738.7	4617.5

1_Unaudited Consolidated Balanc

Unaudited Consolidated Balance Sheets (Parentheticals)
Share data in Millions	Mar. 31, 2010	Dec. 31, 2009
CONSOLIDATED BALANCE SHEETS
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	562.1	561.5
Common stock, shares outstanding	562.1	561.5
Treasury stock, shares	15.7	17.8

2_Unaudited Consolidated Balanc

Unaudited Consolidated Balance Sheets (Parentheticals in GBP) (Common shares par value)
	Mar. 31, 2010 GBP (£)	Dec. 31, 2009 GBP (£)
Common stock, par value	0.05	0.05

Unaudited Consolidated Statemen

Unaudited Consolidated Statements of Income (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010		3 Months Ended Mar. 31, 2009
Revenues:
Product sales	718.2		$756
Royalties	95.3		50.6
Other revenues	2.7		11.2
Total revenues	816.2		817.8
Costs and expenses:
Cost of product sales	101.9	[1]	83.6	[1]
Research and development	131		185.9
Selling, general and administrative	359.9	[1]	318.9	[1]
Reorganization costs	5		2.2
Integration and acquisition costs	0.6		1.4
Total operating expenses	598.4		592
Operating income	217.8		225.8
Interest income	0.4		0.6
Interest expense	(9)		(11)
Other income, net	10.8		50.3
Total other income, net	2.2		39.9
Income from continuing operations before income taxes and equity in losses of equity method investees	220		265.7
Income taxes	-53.6		-49.5
Equity in losses of equity method investees, net of taxes	-0.5		-0.1
Income from continuing operations, (net of tax expense of $nil and $nil respectively)	165.9		216.1
Loss from discontinued operations			-2.6
Net income	165.9		213.5
Add: Net loss attributable to the noncontrolling interest in subsidiaries			0.1
Net Income Attributable to Shire plc	165.9		213.6
Earnings per ordinary share - basic
Earnings from continuing operations attributable to Shire plc shareholders	0.305		0.401
Loss from discontinued operations attributable to Shire plc shareholders			-0.005
Earnings per ordinary share attributable to Shire plc shareholders - basic	0.305		0.396
Earnings per ordinary share - diluted
Earnings from continuing operations attributable to Shire plc shareholders	0.297		0.389
Loss from discontinued operations attributable to Shire plc shareholders			-0.004
Earnings per ordinary share attributable to Shire plc shareholders - diluted	0.297		0.385
Weighted average number of shares (millions):
Basic	543.9		539.2
Diluted	586.1		577.2
Amounts attributable to Shire plc shareholders
Income from continuing operations, net of taxes	165.9		216.2
Loss from discontinued operations, net of taxes			-2.6
Net Income Attributable to Shire plc	165.9		213.6
[1]Cost of product sales includes amortization of intangible assets relating to favorable manufacturing contracts of $0.4 million for three months to March 31, 2010 (2009: $0.4 million). Selling, general and administrative costs includes amortization of intangible assets relating to intellectual property rights acquired of $34.6 million for the three months to March 31, 2010 (2009: $32.5 million).

3_Unaudited Consolidated Statem

Unaudited Consolidated Statements of Income (Parentheticals) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
CONSOLIDATED STATEMENTS OF INCOME
Tax effect of Discontinued Operation	$0	$0

4_Unaudited Consolidated Statem

Unaudited Consolidated Statement of Changes in Shareholders' Equity (USD $)
In Millions	Common stock	Common stock units	Additional paid-in capital	Treasury stock	Accumulated other comprehensive income	Retained Earnings / (Accumulated Deficit)	Total
Number of shares, beginning balance at Dec. 31, 2009		561.5
Total equity, Beginning Balance at Dec. 31, 2009	55.6		2677.6	-347.4	149.1	-622.4	1912.5
Net income for the period						165.9	165.9
Foreign currency translation					-35.1		-35.1
Options exercised			1.4				1.4
Options exercised, shares		0.6
Share-based compensation			14.1				14.1
Excess tax benefit associated with exercise of stock options			4.8				4.8
Shares released by Employee Share Ownership Trust ("ESOT") to satisfy exercise of stock options				35.6		-35.5	0.1
Unrealized holding (loss)/gain on available-for-sale securities					-6.7		-6.7
Total equity, Ending Balance at Mar. 31, 2010	55.6		2697.9	-311.8	107.3	($492)	$2,057
Number of shares, ending balance at Mar. 31, 2010		562.1

5_Unaudited Consolidated Statem

Unaudited Consolidated Statements of Comprehensive Income (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Comprehensive income
Net income for the period	165.9	213.5
Other comprehensive income:
Foreign currency translation adjustments	-35.1	13.8
Unrealized holding (loss)/gain on available-for-sale securities	-6.7	0.6
Comprehensive income (net of taxes of $1.6 million and $nil)	124.1	227.9
Add: Comprehensive loss attributable to the noncontrolling interest in subsidiaries		0.1
Comprehensive income attributable to Shire plc	124.1	$228

Unaudited Components of Accumul

Unaudited Components of Accumulated Other Comprehensive Income (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Components of accumulated other comprehensive income
Foreign currency translation adjustments	101.6	136.7
Unrealized holding gain on available-for-sale securities, net of taxes	5.7	12.4
Accumulated other comprehensive income	107.3	149.1

6_Unaudited Consolidated Statem

Unaudited Consolidated Statements of Comprehensive Income (Parentheticals) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unrealized holding (loss)/gain on available-for-sale securities, taxes	1.6	$0

7_Unaudited Consolidated Statem

Unaudited Consolidated Statements of Cash Flows (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	165.9	213.5
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations		2.6
Depreciation and amortization	64.3	55.3
Share-based compensation	14.1	15.8
Gain on sale of non-current investments	-11.1	-55.2
Other	5.2	3.3
Movement in deferred taxes	52.2	33.7
Equity in losses of equity method investees	0.5	0.1
Change in operating assets and liabilities
Increase in accounts receivable	-10.8	(151)
Increase in sales deduction accrual	64.9	121.9
Increase in inventory	-24.2	-9.5
Increase in prepayments and other current assets	-18.1	-12.3
(Increase)/decrease in other assets	-0.6	3.4
Decrease in accounts and notes payable and other liabilities	-116.1	-39.8
Returns on investment from joint venture		4.9
Cash flows used in discontinued operations		-2.6
Net cash provided by operating activities (A)	186.2	184.1
CASH FLOWS FROM INVESTING ACTIVITIES
Movement in restricted cash	6.3	-6.9
Purchases of subsidiary undertakings and businesses, net of cash acquired		-74.1
Purchase of property, plant and equipment	-43.6	(42)
Purchase of intangible assets		(6)
Proceeds from disposal of non-current investments	2	19.2
Proceeds from disposal of property, plant and equipment	0.1	0.4
Returns of equity investments		0.2
Net cash used in investing activities (B)	-35.2	-109.2
CASH FLOWS FROM FINANCING ACTIVITIES
Payment under building financing obligation	-0.7	-0.7
Excess tax benefit from stock option compensation	4.8
Proceeds from exercise of options	1.5	0.1
Net cash provided by/(used in) financing activities (C)	5.6	-0.6
Effect of foreign exchange rate changes on cash and cash equivalents (D)	2	-1.4
Net increase in cash and cash equivalents (A+B+C+D)	158.6	72.9
Cash and cash equivalents at beginning of period	498.9	218.2
Cash and cash equivalents at end of period	657.5	291.1
Supplemental information:
Interest paid	-0.7	-1.7
Income taxes paid	-89.7	-50.4
Non cash activities:
Equity in Vertex Pharmaceuticals, Inc. ("Vertex") received as part consideration for disposal of non-current investment	9.1	50.8
Building financing obligation		8.5

Summary Of Significant Accounti

Summary Of Significant Accounting Policies
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Summary of Significant Accounting Policies	1.Summary of Significant Accounting Policies (a)Basis of preparation These interim financial statements of Shire plc and its subsidiaries (collectively "Shire" or "the Company") and other financial information included in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP") and US Securities and Exchange Commission ("SEC") regulations for interim reporting. The December 31, 2009 balance sheet was derived from audited financial statements but does not include all disclosures required by US GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year to December 31, 2009. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period. Interim results are not necessarily indicative of results to be expected for the full year. (b)Use of estimates in interim financial statements The preparation of interim financial statements, in conformity with US GAAP and 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 and legal proceedings. (c)New accounting pronouncements Adopted during the period Amendments to the Accounting and Disclosure Requirements for the Consolidation of Variable Interest Entities On January 1, 2010 the Company adopted new guidance issued by the Financial Accounting Standard Board ("FASB") on the consolidation of variable interest entities. This guidance changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity's purpose and design and the reporting entity's ability to direct the activities of the other entity that most significantly impact the other entity's economic performance. The guidance also requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to such involvement. The adoption of the guidance did not impa

Business combinations

Business combinations
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Business combinations	2.Business combinations On March 31, 2009 the Company acquired the worldwide rights (excluding the US, Canada and Barbados) to EQUASYM IR and XL for the treatment of attention deficit and hyperactivity disorder ("ADHD") from UCB 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 broadened the scope of Shire's 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 was accounted for as a business combination. The purchase price was allocated to the currently marketed products acquired ($73.0 million), IPRD ($5.5 million), other liabilities ($0.7 million) and goodwill ($13.2 million).

Termination costs

Termination costs
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Termination costs	3.Termination of Duramed Pharmaceuticals, Inc. ("Duramed") collaboration agreement In 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 Duramed's transvaginal ring technology and other oral products (the "Collaboration Products"). On February 24, 2009 Shire and Duramed amended this agreement such that it terminated on December 31, 2009. Pursuant to this amendment, Shire returned to Duramed its rights under the agreement effective February 24, 2009 and charged contract termination costs totaling $65.0 million to research and development in the three months to March 31, 2009. All contract termination costs have been paid by March 31, 2010. Opening liability at January 1, 2010 Amount paid Closing liability at March 31, 2010 $M $M $M ______________________ _____________________ _______________ Contract termination costs 10.0 (10.0) - ______________________ _____________________ _______________

Reorganization costs

Reorganization costs
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Reorganisation costs	4.Reorganization costs Establishment of Swiss Commercial Hub In the three months to March 31, 2010, the Company initiated plans to relocate certain commercial and RD operations to Switzerland over the next two years,and incurred reorganization costs totaling $1.6 million during the period. Owings Mills In March 2009 the Company initiated plans to phase out operations and close the Company's Specialty Pharmaceuticals manufacturing facility at Owings Mills, Maryland. Between 2009 and 2011, all products 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 three months to March 31, 2010 the Company incurred reorganization costs of $3.4 million which relate to employee involuntary termination benefits and other costs. The total reorganization costs incurred since March 2009 are $16.1 million. As a result of the decision to transfer manufacturing from the Owings Mills site the Company revised the useful life of property, plant and equipment in the facility, and in the three months to March 31, 2010 incurred accelerated depreciation of $6.1 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 $16.9 million in 2010. The reorganization costs and accelerated depreciation have been recorded within the Specialty Pharmaceuticals reportable segment. Jerini non-core operations In the second quarter of 2009 the operations of Jerini Ophthalmic, Inc, ("JOI") and certain other non-core pre-clinical operations acquired through the acquisition of Jerini AG ("Jerini") were closed down, and the Company recorded a closure costs liability of $9.1 million, relating to employee involuntary termination benefits and other closure costs. At March 31, 2010 a liability of $1.6 million remained for these closure costs. The liability for reorganization costs arising on the establishment of the Swiss commercial hub, transfer of manufacturing from Owings Mills and the Jerini closure at March 31, 2010 is as follows: Opening liability Amount Closing at January 1, charged to re- liability at 2010 organization Paid/Utilized March 31, 2010 $'M $'M $'M $'M ___________ ____________ ___________ ___________ Involuntary termination benefits 4.1 2.1 (0.5) 5.7 Contract termination costs 2.8 - (1.2) 1.6 Other termination costs - 2.9 (1.3) 1.6 ___________ ____________ ___________ ___________ 6.9 5.0 (3.0) 8.9 ___________ ___________ ___________ ___________ At March 31, 2010 the closing reorganization cost liability was recorded within accounts payable and accrued expenses ($4.1 million) and other non-current liabilities ($4.8 million).

Accounts receivable, net

Accounts receivable, net
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Accounts receivable, net	5.Accounts receivable, net Accounts receivable at March 31, 2010 of $620.7 million (December 31, 2009: $597.5 million), are stated net of a provision for discounts and doubtful accounts of $20.1 million (December 31, 2009: $20.8 million). Provision for discounts and doubtful accounts: 2010 2009 $M $M _____________ _____________ As at January 1, 20.8 20.2 Provision charged to operations 39.5 32.5 Provision utilization (40.2) (25.8) _____________ _____________ As at March 31, 20.1 26.9 _____________ _____________ At March 31, 2010 accounts receivable included $93.2million (December 31, 2009: $92.4 million) of receivables related to royalty income.

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Inventories	6.Inventories Inventories are stated at the lower of cost or market value and comprise: March 31, December 31, 2010 2009 $M $M ____________ ____________ Finished goods 68.5 50.9 Work-in-progress 102.9 102.1 Raw materials 44.2 36.7 ____________ ____________ 215.6 189.7 ____________ ____________ At March 31, 2010 inventories included $nil (December 31, 2009: $18.8 million) for products which have not yet received regulatory approval. Pre-approval inventories at December 31, 2009 related to VPRIV, which was granted marketing approval by the US Food and Drug Administration ("FDA") on February 26, 2010.

Prepaid expenses and other curr

Prepaid expenses and other current assets
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Prepaid expenses and other current assets	7.Prepaid expenses and other current assets March 31, December 31, 2010 2009 $M $M ______________ ____________ Prepaid expenses 42.6 44.9 Income tax receivable 41.1 - Value added taxes receivable 21.4 37.3 Other current assets 25.9 33.0 ______________ ____________ 131.0 115.2 ______________ ____________

Investments

Investments
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Investments	8.Investments On March 12, 2009 the Company completed the disposal of its investment in Virochem Pharma Inc. ("Virochem") to Vertex in a cash and stock transaction. The disposal was part of a transaction entered into by all the shareholders of Virochem with Vertex. The carrying amount of the Company's investment in Virochem on March 12, 2009 was $14.8 million. In 2009 Shire received consideration of $19.2 million in cash and two million Vertex shares (valued at $50.8 million) from the disposal, recognizing a gain of $55.2 million in the three months to March 31, 2009. In the three months to March 31, 2010 the Company received further consideration of $2.0 million in cash and 0.2 million Vertex shares (valued at $9.1 million) which had been held in escrow until certain conditions expired in March 2010. The Company recognized an additional gain on disposal of $11.1 million in the three months to March 31, 2010. The Vertex stock received has been accounted for as an available-for-sale investment.

Other intangible assets, net

Other intangible assets, net
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Other intangible assets, net	9.Other intangible assets, net March 31, December 31, 2010 2009 $M $M ________________ ________________ Intellectual property rights acquired Currently marketed products 2,330.1 2,351.6 IPRD 6.1 6.1 Favorable manufacturing contracts 8.7 8.7 ________________ ________________ 2,344.9 2,366.4 Less: Accumulated amortization (615.3) (575.7) ________________ ________________ 1,729.6 1,790.7 ________________ ________________ At March 31, 2010 the net book value of intangible assets allocated to the Specialty Pharmaceuticals segment was $1,201.6 million (December 31, 2009: $1,238.0 million) and in the Human Genetics Therapies ("HGT") segment was $528.0 million (December 31, 2009: $552.7 million). The change in the net book value of other intangible assets for the three months to March 31, 2010 is shown in the table below: Other intangible assets $M As at January 1, 2010 1,790.7 Acquisitions 2.7 Amortization charged (35.0) Foreign currency translation (28.8) ________________ As at March 31, 2010 1,729.6 ________________ The weighted average amortization period for acquired currently marketed products is 10 years. The Company reviews its intangible assets for impairment whenever events or circumstances suggest that they may not be recoverable. During the first quarter of 2010, as a result of continuing release liner removal specification concerns, the Company reviewed the recoverability of its DAYTRANA intangible asset, (carrying value $105 million), and based on estimates and intentions at March 31, 2010 the Company determined that its DAYTRANA intangible asset remained recoverable. However, it is reasonably possible that changes to circumstances, estimates or intentions existing at March 31, 2010 could result in impairment of the DAYTRANA intangible asset in future periods. Management estimates that the annual amortization charge in respect of intangible assets held at March 31, 2010 will be approximately $140 million for each of the five years to March 31, 2015. 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
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Accounts payable and accrued expenses	10.Accounts payable and accrued expenses March 31, December 31, 2010 2009 $M $M ________________ ________________ Trade accounts payable and accrued purchases 149.7 170.6 Accrued rebates Medicaid 246.4 188.2 Accrued rebates Managed care 158.9 153.4 Sales return reserve 63.9 62.7 Accrued bonuses 30.8 66.8 Accrued employee compensation and benefits payable 58.2 42.6 Research and development accruals 40.3 53.1 Marketing accruals 34.5 31.5 Deferred revenue 34.3 52.2 Other accrued expenses 112.2 108.0 ________________ ________________ 929.2 929.1 ________________ ________________

Other current liabilities

Other current liabilities
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Other current liabilities	11.Other current liabilities March 31, December 31, 2010 2009 $M $M _____________ _____________ Income taxes payable - 46.7 Value added taxes 8.8 10.3 Other accrued liabilities 27.7 31.0 _____________ _____________ 36.5 88.0 _____________ _____________

Other non-current liabilities

Other non-current liabilities
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Other non-current liabilities	12.Other non-current liabilities March 31, December 31, 2010 2009 $M $M ____________ ____________ Income taxes payable 170.0 170.4 Deferred revenue 17.1 20.0 Deferred rent 14.2 14.5 Insurance provisions 20.8 18.3 Other accrued liabilities 25.6 23.9 ____________ ____________ 247.7 247.1 ____________ ____________

Commitments and contingencies

Commitments and contingencies
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Commitments and contingencies	13.Commitments and contingencies (a)Leases Future minimum lease payments under operating leases at March 31, 2010 are presented below: Operating leases $M _____________ 2010 24.0 2011 30.4 2012 18.3 2013 17.0 2014 16.9 2015 16.1 Thereafter 1 57.6 _____________ 180.3 _____________ The Company leases land, facilities, motor vehicles and certain equipment under operating leases expiring through 2027. Lease and rental expense amounted to $8.6 million and $8.5 million for the three months to March 31, 2010 and 2009 respectively, which is predominately included in Selling, general and administrative expenses in the consolidated statements of income. (b)Letters of credit and guarantees At March 31, 2010 the Company had irrevocable standby letters of credit and guarantees with various banks totaling $16.0 million, providing security for the Company's 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 $9.8 million, as required by these letters of credit. (c)Collaborative arrangements Details of significant collaborative arrangements are included below: In-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. Shire has remaining obligations to pay Santaris $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)JUVISTA On June 19, 2007 Shire signed an agreement with Renovo Limited ("Renovo") to develop and commercialize JUVISTA, Renovo's novel drug candidate being investigated for the reduction of scarring in connection with surgery, outside of the EU. On March 1, 2010, the license agreement was revised. In the revised license agreement, the rights to sell JUVISTA in all territories outside the USA, Mexico and Canada were returned to Renovo. Milestone and royalty obligations remain unchanged from the original agreement except that Shire will pay Renovo an additional $5 million milestone if Shire elects to commence a clinical trial following Shire's review of the clinical trial

Derivative instruments

Derivative instruments
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Derivative instruments	14.Derivative instruments Treasury policies and organization The Company's 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 risk The 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 three months to March 31, 2010 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 plc's $1,100 million in principal amount convertible bonds due 2014. The building financing obligation of $46.8 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 three months to March 31, 2010 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 investments As at March 31, 2010 the Company has $109.6 million of investments comprising available-for-sale investments in publicly quoted companies ($90.9 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 Poor's and by Moody's 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 de

Fair value measurement

Fair value measurement
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Fair value measurement	15.Fair value measurement Assets and liabilities that are measured at fair value on a recurring basis The 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) 90.9 90.9 90.9 - - Foreign exchange contracts 4.7 4.7 - 4.7 - Financial liabilities: Foreign exchange contracts 1.4 1.4 - 1.4 - ____________ ____________ ___________ ___________ ___________ (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 Company's 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 values of the swap and forward foreign exchange contracts have been determined using an income approach based on current market expectations about the future cash flows. Financial assets and liabilities that are not measured at fair value on a recurring basis The carrying amounts and estimated fair values as at March 31, 2010 and December 31, 2009 of the Company's financial assets and liabilities which are not measured at fair value on a recurring basis are as follows: March 31, 2010 December 31, 2009 Carrying Carrying amount Fair value amount Fair value $M $M $M $M ____________ ____________ ____________ ___________ Financial assets: Option over Avexa shares - 0.1 - 0.1 Financial liabilities: Convertible bonds 1,100.0 1,098.0 1,100.0 1,067.0 Building financing obligation 46.8 47.8 46.7 47.3 ____________ ____________ ____________ ___________ 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 Company's intent or ability to dispose of the financial instrument. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate to fair value because of the short-term maturity of these amounts. The following methods and assumptions were used to estimate the fair value of each material class of financial instrument: Option over Avexa shares - the fair values of the Avexa shares are based on quoted market prices for the shares. Convertible bonds the fair value of Shire $1,100 million

Earnings per share

Earnings per share
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Earnings per share	16.Earnings per share The following table reconciles net income attributable to Shire plc and the weighted average ordinary shares outstanding for basic and diluted earnings per share for the periods presented: 3 months to March 31, 2010 2009 Amounts attributable to Shire plc shareholders $M $M _________________ _________________ Numerator for basic earnings per share 165.9 213.6 Interest on convertible bonds, net of tax 8.4 8.4 _________________ _________________ Numerator for diluted earnings per share 174.3 222.0 _________________ _________________ Weighted average number of shares: Millions Millions _________________ _________________ Basic(1) 543.9 539.2 Effect of dilutive shares: Stock based awards to employees(2) 9.0 5.3 Convertible bonds 2.75% due 2014(3) 33.2 32.7 _________________ _________________ Diluted 586.1 577.2 _________________ _________________ (1) Excludes shares purchased by the ESOT and presented by the Company as treasury stock. (2) Calculated using the treasury stock method. (3) Calculated using the "if-converted" method. The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below: 2010(1) 2009(1) No. of shares No. of shares Millions Millions _________________ _________________ Share options out of the money 16.1 16.6 _________________ _________________ (1) In the three months to March 31, 2010 and 2009 certain stock options have been excluded from the calculation of diluted Earnings per share because their exercise prices exceeded Shire plc's average share price during the calculation period.

Segmental reporting

Segmental reporting
	3 Months Ended Mar. 31, 2010
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Segmental reporting	17.Segmental reporting Shire's internal financial reporting is in line with its business unit and management reporting structure and includes two segments: Specialty Pharmaceuticals and HGT. The Specialty Pharmaceuticals and HGT reportable segments represent the Company's revenues and costs for 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 3 months to March 31, 2010 $M $M $M $M ___________ ___________ ___________ ___________ Product sales 541.4 176.8 - 718.2 Royalties 58.6 - 36.7 95.3 Other revenues 0.7 0.7 1.3 2.7 ___________ ____________ ___________ ___________ Total revenues 600.7 177.5 38.0 816.2 ___________ ____________ ___________ ___________ Cost of product sales(1) 80.4 21.5 - 101.9 Research and development(1) 73.9 57.1 - 131.0 Selling, general and administrative(1) 249.5 62.7 47.7 359.9 Reorganization costs 3.4 - 1.6 5.0 Integration and acquisition costs 0.6 - - 0.6 _____________ ____________ ___________ ___________ Total operating expenses 407.8 141.3 49.3 598.4 _____________ ____________ ___________ ___________ Operating income/(loss) 192.9 36.2 (11.3) 217.8 _____________ ____________ ___________ ___________ Total assets 1,997.6 1,613.1 1,128.0 4,738.7 Long-lived assets(2) 184.6 436.2 53.7 674.5 Capital expenditure on long-lived assets(2) 2.3 25.5 1.9 29.7 _____________ ___________ ___________ ___________ (1) Depreciation from manufacturing plants ($8.6 million) and amortization of favorable manufacturing contracts ($0.4 million) is included in Cost of product sales; depreciation of research and development assets ($3.7 million) is included in Research and development; and all other depreciation and amortization ($51.6 million) is included in Selling, general and administrative. (2) 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 3 months to March 31, 2009 $M $M $M $M ___________ ___________ ___________ ___________ Product sales 632.5 123.5 - 756.0 Royalties 0.9 - 49.7 50.6 Other revenues 7.0 1.4 2.8 11.2 ___________ ____________ ___________ ___________ Total revenues 640.4 124.9 52.5 817.8 ___________ ____________ ___________ ___________ Cost of product sales(1) 61.2 19.9 2.5 83.6 Research and development(1) 126.6 56.8 2.5 185.9 Selling, general and administrative(1) 229.8 46.0 43.1 318.9 Reorganization costs 2.2 - - 2.2 Integration and acquisition costs 0.7 0.7 - 1.4 _____________ ____________ ___________ ___________ Total operating expenses 420.5 123.4 48.1 592.0 _____________ __