SHIRE PLC
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By:
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/s/ A C Russell |
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Name: |
Angus Russell
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Title: | Chief Executive Officer |
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EXHIBIT INDEX
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Number
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Description
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99.01
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Press Release dated February 14, 2013
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Press Release
www.shire.com
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![]() |
Financial Highlights
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Full Year 2012(1)
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Product sales
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$4,407 million
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+12%
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Product sales excluding ADDERALL XR
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$3,978 million
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+16%
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Total revenues
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$4,681 million
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+10%
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Non GAAP operating income
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$1,474 million
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+9%
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US GAAP operating income
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$949 million
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-14%
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Non GAAP diluted earnings per ADS
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$6.10
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+14%
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US GAAP diluted earnings per ADS
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$3.93
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-13%
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Non GAAP cash generation
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$1,637 million
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+18%
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Non GAAP free cash flow
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$1,256 million
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+43%
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US GAAP net cash provided by operating activities
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$1,383 million
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+29%
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(1)
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See page 3 for assumptions
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Full Year 2012
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Full Year 2011
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||||||||||
US GAAP
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Adjustments
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Non GAAP
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US GAAP
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Adjustments
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Non GAAP
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|||||||||
$M
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$M
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$M
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$M
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$M
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$M
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||||||
Total revenues
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4,681
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-
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4,681
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4,263
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-
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4,263
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|||||
Operating income
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949
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525
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1,474
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1,109
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248
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1,357
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Diluted earnings per ADS
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$3.93
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$2.17
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$6.10
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$4.53
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$0.81
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$5.34
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·
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Product sales in 2012 were up 12% to $4,407 million (2011: $3,950 million). On a Constant Exchange Rate (“CER”) basis, which is a Non GAAP measure, product sales were up 13%.
Product sales excluding ADDERALL XR® grew strongly and were up 16%, driven particularly by growth from VYVANSE® (up 28% to $1,030 million), VPRIV® (up 20% to $307 million), INTUNIV® (up 29% to $288 million) and FIRAZYR® (up 252% to $116 million).
ADDERALL XR product sales were down 19% to $429 million primarily due to lower prescription volumes following the approval of a new generic version of ADDERALL XR in Q2 2012. Reported product sales were also impacted by the accounting for the settlement of the Impax Laboratories, Inc. (“Impax”) litigation (see page 6 for further details).
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·
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Total revenues increased by 10% (up 12% on a CER basis) as the growth in product sales was partially offset by lower royalties and other revenues (down 12%), primarily ADDERALL XR royalties following the launch of a new generic competitor in Q2 2012. The decline in ADDERALL XR royalties was partially offset by the recognition of one-time royalty income of $38 million following resolution of a disagreement with GlaxoSmithKline (“GSK”) and ViiV Healthcare (“ViiV”) relating to royalty payments for 3TC® and ZEFFIX®.
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·
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On a Non GAAP basis:
Operating income was up 9% to $1,474 million (2011: $1,357 million), as we invested in our promising pipeline leading to total operating expenses increasing at a slightly higher rate than total revenues. Research and Development expenditure was up 16% particularly due to investment in new uses for lisdexamfetamine dimesylate(1) (“LDX”) and SPD602 for Iron Overload. The effect of higher Research and Development expenditure was moderated by a lower rate of increase in Selling, General and Administrative expenditure (up 7%).
On a US GAAP basis:
Operating income in 2012 was down 14% to $949 million (2011: $1,109 million) primarily resulting from charges to impair intangible assets for RESOLOR® in the EU ($198 million) in 2012. The impairments were due to lower actual and projected performance for the product given the increasingly challenging European reimbursement environment. Operating income in 2012 was also impacted by a charge of $58 million in relation to the agreement in principle with the US Government to resolve a previously disclosed civil investigation (see page 6 for further details).
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·
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Non GAAP diluted earnings per American Depository Share (“ADS”) increased 14% to $6.10 (2011: $5.34), due to higher Non GAAP operating income and a lower effective tax rate on Non GAAP income of 18% (2011: 22%).
On a US GAAP basis diluted earnings per ADS decreased 13% to $3.93 (2011: $4.53) primarily due to the lower US GAAP operating income, partially offset by a lower US GAAP effective tax rate of 18% (2011: 21%).
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(1)
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LDX, currently marketed as VYVANSE in the US and ELVANSE in certain territories in the EU for the treatment of ADHD.
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![]() |
2
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·
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Cash generation, a Non GAAP measure, grew strongly by 18% to $1,637 million (2011: $1,391 million) as higher cash receipts from gross product sales and improved cash collections for aged European receivables more than offset higher operating expenses and sales deduction payments in the year.
Free cash flow, also a Non GAAP measure, was up 43% to $1,256 million (2011: $879 million) due to higher cash generation, lower cash tax payments and lower capital expenditure.
On a US GAAP basis, net cash provided by operating activities was up 29% to $1,383 million (2011: $1,074 million).
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·
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Reflecting our strong cash generation, net cash (also a Non GAAP measure) at December 31, 2012 was $373 million (December 31, 2011: Non GAAP net debt of $488 million) including the impact of share purchases totalling $106 million under the share buy-back program.
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(1)
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Based on the most recent consensus estimates compiled by Consensus Forecast Ltd, as of the date of this press release, of $6.72 Non GAAP diluted earnings per ADS for the year ended 31 December 2013, available on Shire’s website (http://www.shire.com/shireplc/en/investors/forecasts).
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3
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Financial Highlights
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Q4 2012(1)
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Product sales
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$1,098 million
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+5%
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Product sales excluding ADDERALL XR
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$1,016 million
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+10%
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Total revenues
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$1,201 million
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+5%
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Non GAAP operating income
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$368 million
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0%
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US GAAP operating income
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$79 million
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-74%
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Non GAAP diluted earnings per ADS
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$1.58
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+4%
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US GAAP diluted earnings per ADS
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$0.22
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-83%
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Non GAAP cash generation
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$452 million
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+1%
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Non GAAP free cash flow
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$314 million
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-11%
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US GAAP net cash provided by operating activities
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$372 million
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-9%
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(1)
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Percentages compare to equivalent 2011 period.
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·
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Product sales in Q4 2012 were up 5% (up 5% on a CER basis) to $1,098 million (Q4 2011: $1,049 million).
Product sales excluding ADDERALL XR were up 10% due to strong growth particularly from VYVANSE (up 18% to $257 million), INTUNIV (up 24% to $81 million) and FIRAZYR (up 132% to $35 million). The growth in product sales excluding ADDERALL XR was moderated by DERMAGRAFT® (down 65% to $19 million) due to the ongoing restructuring of the Regenerative Medicine (“RM”) sales and marketing organization.
ADDERALL XR product sales were down 35% to $82 million primarily due to lower prescription demand following the approval of a new generic version of ADDERALL XR in Q2 2012, the accounting for the settlement of the Impax litigation (see page 6 for further details) and higher sales deductions.
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·
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Total revenues were up 5% due to both higher product sales and royalties. Royalties in Q4 2012 benefited from one-time royalty income of $38 million for 3TC and ZEFFIX following the resolution of the disagreement with GSK and ViiV.
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·
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On a Non GAAP basis:
Operating income remained broadly constant at $368 million (Q4 2011: $369 million), as the increase in total revenues was offset by higher Research and Development expenditure (up 14%) as we continue to invest in a number of early and late stage pipeline programs expected to drive future growth. The effect of higher Research and Development expenditure was moderated by a lower rate of increase in Selling, General and Administrative expenditure (up 5%).
On a US GAAP basis:
Operating income was down 74% to $79 million (Q4 2011: $304 million) primarily due to charges to impair intangible assets relating to RESOLOR in the EU of $171 million and higher legal and litigation costs in Q4 2012, including a charge of $58 million in relation to the agreement in principle with the US Government.
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·
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Non GAAP diluted earnings per ADS increased 4% to $1.58 (Q4 2011: $1.51) as broadly constant Non GAAP operating income benefited from a lower effective tax rate on Non GAAP income of 15% (Q4 2011: 19%).
On a US GAAP basis diluted earnings per ADS decreased 83% to $0.22 (Q4 2011: $1.33), due to lower US GAAP operating income together with a higher US GAAP effective tax rate of 35% (Q4 2011: 14%).
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·
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Cash generation, a Non GAAP measure, increased by 1% to $452 million (Q4 2011: $447 million).
Free cash flow, also a Non GAAP measure, decreased by 11% to $314 million (Q4 2011: $351 million) primarily due to higher cash tax payments in the quarter.
On a US GAAP basis, net cash provided by operating activities was down 9% to $372 million (Q4 2011: $409 million).
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4
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·
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On December 18, 2012 Shire announced a positive outcome from the European Decentralized Procedure for ELVANSE (to be known as TYVENSE® in Ireland). ELVANSE is indicated as part of a comprehensive treatment program for ADHD in children aged 6 years of age and over when response to previous methylphenidate treatment is considered clinically inadequate.
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·
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A Phase 3 clinical program to evaluate the efficacy and safety of LDX in adults with BED was initiated in Q4 2012.
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A Phase 3 clinical program to evaluate the efficacy and safety of LDX as adjunctive treatment to antipsychotic medications on negative symptoms in adults who have persistent predominant NSS was initiated in Q4 2012.
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·
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In December 2012, Shire submitted a supplemental Marketing Authorization Application to the European Medicines Agency (“EMA”) seeking approval for FIRAZYR for the treatment of ACE-I AE in Europe. Depending upon the outcome of discussions with the US Food and Drug Administration (“FDA”) about appropriate development pathways for FIRAZYR as a possible ACE-I AE treatment option, Phase 3 studies for the US market could begin in 2013.
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·
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In December 2012, Shire filed with the EMA in Europe for the VPRIV label to be updated with data regarding the impact of VPRIV on certain parameters of bone disease in Type 1 Gaucher patients.
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·
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HGT2310 is in development as an Enzyme Replacement Therapy (“ERT”) delivered intrathecally for Hunter Syndrome patients with CNS symptoms. Shire initiated a Phase 1/2 clinical trial in Q1 2010 which has now completed. The top line results of this trial indicate that HGT2310 appears to be well tolerated at all three doses studied during the timeframe of the trial. Furthermore, dose-dependent drug activity in vivo was evidenced by a decline in glycosaminoglycan (“GAG”) levels in cerebrospinal fluid following treatment, a biomarker of metabolic activity. Full results from this trial will be presented at the American College of Medical Genetics (“ACMG”) meeting in March 2013. Shire is currently planning a pivotal clinical trial which is expected to initiate in the second half of 2013, subject to customary regulatory interactions with the FDA and EMA.
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·
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HGT1410 is in development as an ERT delivered intrathecally for the treatment of Sanfilippo A Syndrome (Mucopolysaccharidosis IIIA). Shire initiated a Phase 1/2 clinical trial in August 2010 which has now completed. The top line results of this trial indicate that HGT1410 appears to be well tolerated at all three doses studied during the timeframe of the trial. Furthermore, dose-dependent drug activity in vivo was evidenced by a decline in GAG levels in cerebrospinal fluid following treatment. Full results from this trial will be presented at the ACMG meeting in March 2013. Shire is currently planning the next clinical trial for HGT1410, designed to measure a clinical response, which is expected to initiate in the second half of 2013, subject to customary regulatory interactions with the FDA and EMA.
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5
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·
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In February 2013, Shire enrolled the first patient in its Phase 3 clinical program for EB.
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·
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On February 1, 2013 Shire announced that it had reached an agreement in principle to resolve the previously disclosed civil investigation into Shire’s U.S. sales and marketing practices relating to ADDERALL XR, VYVANSE and DAYTRANA®. The agreement also addresses sales and marketing practices relating to LIALDA® and PENTASA® pursuant to a subsequent voluntary disclosure made by Shire. Shire has recorded a $57.5 million charge in Q4 2012, comprised of the agreement in principle amount, interest and costs. The agreement in principle is subject to change until this matter is finally resolved. Discussions between Shire and the US Government are ongoing to establish a final resolution to the investigation.
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·
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On February 7, 2013 Shire and Impax settled all litigation relating to Shire’s contract to supply Impax with authorized generic ADDERALL XR.
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·
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On January 23, 2013 Shire announced that it had decided to proceed with a collective dismissal and business closure at its site in Turnhout, Belgium. This decision follows the conclusion of an information and consultation process.
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·
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On February 12, 2013 Shire completed the acquisition of Lotus Tissue Repair, Inc. of Cambridge, MA, a privately held biotechnology company developing the first and only protein replacement therapy currently being investigated for the treatment of dystrophic epidermolysis bullosa (“DEB”). DEB is a devastating orphan disease for which there is no currently approved treatment option other than palliative care. Shire purchased the company for an upfront cash payment and further contingent cash payments may be payable in future periods, depending on the achievement of certain safety and development milestones.
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·
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We announce today that Sylvie Gregoire, President of our HGT business will leave Shire at the end of March after five years with the Company. Sylvie has contributed to the growth of Shire through leading the building of our rare diseases business; we’re grateful for her significant contributions and we wish her well in the future. Flemming Ørnskov will assume interim leadership of this business from the end of March. Mike Yasick, who for the last five years has led Shire’s largest business unit, Behavioral Health, will assume interim leadership of the SP business from the end of March.
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·
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On November 15, 2012 Shire announced that Dr. Jeff Jonas had been appointed as President of Shire’s RM business and has joined the Shire Leadership Team. Jeff has been closely involved with the RM business since Shire acquired it as Advanced BioHealing Inc. (“ABH”) in June 2011. In addition to his role as head of the SP R&D team, Jeff has been leading the RM R&D team and has been a member of the RM leadership team. As previously announced, Kevin Rakin, who led ABH since 2007 and during its integration into Shire, has stepped down from his position as RM President and from the Shire Leadership Team to pursue new career interests.
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6
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·
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Shire has a strong balance sheet and continued robust cash generation, and considers efficient use of capital on behalf of shareholders an important objective. Therefore in Q4 2012 Shire commenced a share buy-back program, for the purpose of returning funds to shareholders, of up to $500 million, through both direct purchases of ordinary shares and through the purchase of ordinary shares underlying American Depositary Receipts. As of February 13, 2013 Shire had made on-market repurchases totaling 4,776,274 ordinary shares at a cost of $143 million (excluding transaction costs).
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7
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Page
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Overview of Full Year 2012 Financial Results
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9
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Financial Information
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14
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Non GAAP Reconciliation
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23
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Notes to Editors
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27
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Safe Harbor Statement
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28
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Explanation of Non GAAP Measures
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28
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Trademarks
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29
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Investor Relations
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- Eric Rojas
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erojas@shire.com
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+1 781 482 0999
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- Sarah Elton-Farr
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seltonfarr@shire.com
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+44 1256 894 157
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Media
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- Jessica Mann (Corporate)
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jmann@shire.com
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+44 1256 894 280
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- Gwen Fisher (Specialty Pharma)
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gfisher@shire.com
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+1 484 595 9836
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- Jessica Cotrone (Human Genetic Therapies)
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jcotrone@shire.com
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+1 781 482 9538
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- Lindsey Hart (Regenerative Medicine)
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lhart@shire.com
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+1 615 250 3311
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UK dial in:
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0808 237 0030 or 0203 139 4830
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US dial in:
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1 866 928 7517 or 1 718 873 9077
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International Access Numbers:
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Click Here
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Password/Conf ID:
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99054603#
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Live Webcast:
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http://www.shire.com/shireplc/en/investors
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8
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Year on year growth
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US Exit Market Share(1)
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||||||||
Product sales
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Sales $M
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Sales
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CER
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US Rx(1)
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VYVANSE
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1,029.8
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+28%
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+28%
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+17%
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17%
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ELAPRASE®
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497.6
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+7%
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+11%
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n/a(2)
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n/a(2)
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REPLAGAL®
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497.5
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+5%
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+10%
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n/a(3)
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n/a(3)
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LIALDA/MEZAVANT®
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399.9
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+7%
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+8%
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+5%
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22%
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VPRIV
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306.6
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+20%
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+23%
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n/a(2)
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n/a(2)
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INTUNIV
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287.8
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+29%
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+29%
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+34%
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5%
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PENTASA
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|
265.8
|
|
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+6%
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+6%
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-5%
|
14%
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FOSRENOL®
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|
172.0
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|
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+3%
|
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+6%
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-19%
|
4%
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DERMAGRAFT(4)
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|
153.8
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|
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+46%
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+46%
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n/a(2)
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n/a(2)
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FIRAZYR
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116.3
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|
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+252%
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+258%
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n/a(2)
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n/a(2)
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OTHER
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|
250.6
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|
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-5%
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-2%
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n/a
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n/a
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Excluding ADDERALL XR
|
|
3,977.7
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|
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+16%
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+18%
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ADDERALL XR
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429.0
|
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-19%
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-19%
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-11%
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5%
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Total
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4,406.7
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|
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+12%
|
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+13%
|
|
|
|
|
|
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(1)
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Data provided by IMS Health National Prescription Audit (“IMS NPA”). Exit market share represents the average US market share in the month ended December 31, 2012.
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(2)
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IMS NPA Data not available.
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(3)
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Not sold in the US in 2012.
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(4)
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DERMAGRAFT was acquired by Shire on June 28, 2011 (sales growth above reflects full year 2012 sales compared to post acquisition sales for 2011).
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9
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(1)
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Shire acquired DERMAGRAFT through its acquisition of ABH on June 28, 2011 and reported revenues from DERMAGRAFT of $105.3m relating to the post acquisition period in 2011.
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10
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2.
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Royalties
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Product
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Royalties to Shire $M
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Year on year growth
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CER
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|
3TC and ZEFFIX
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91.6
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+11%
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+11%
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ADDERALL XR
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70.3
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-34%
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-34%
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FOSRENOL
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53.3
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+15%
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+15%
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Other
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26.4
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-44%
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-42%
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Total
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241.6
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-15%
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-15%
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3.
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Financial details
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2012 | 2011 | ||||||
$M
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% of product sales
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$M
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% of product sales
|
||||
Cost of product sales (US GAAP)
|
645.4
|
15%
|
588.1
|
15%
|
|||
Transfer of manufacturing from Owings Mills
|
-
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(11.3)
|
|||||
Unwind of inventory fair value adjustment
|
-
|
(11.0)
|
|||||
Depreciation
|
(31.5)
|
(33.2)
|
|||||
Non GAAP Cost of product sales
|
613.9
|
14%
|
532.6
|
13%
|
|||
![]() |
11
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2012
|
2011
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||||||
$M
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% of product sales
|
$M
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% of product sales
|
||||
R&D (US GAAP)
|
965.5
|
22%
|
770.7
|
20%
|
|||
Impairment of intangible assets
|
(71.2)
|
(16.0)
|
|||||
Payment in respect of in-licensed and acquired products
|
(23.0)
|
-
|
|||||
Depreciation
|
(22.5)
|
(25.2)
|
|||||
Non GAAP R&D
|
848.8
|
19%
|
729.5
|
18%
|
|||
2012 | 2011 | ||||||
$M
|
% of product sales
|
$M
|
% of product sales
|
||||
SG&A (US GAAP)
|
2,114.0
|
48%
|
1,751.4
|
44%
|
|||
Intangible asset amortization
|
(194.1)
|
(165.0)
|
|||||
Impairment of intangible assets
|
(126.7)
|
-
|
|||||
Legal and litigation costs(1)
|
(102.6)
|
-
|
|||||
Depreciation
|
(59.8)
|
(63.1)
|
|||||
Non GAAP SG&A
|
1,630.8
|
37%
|
1,523.3
|
39%
|
|||
(1)
|
In Q2 2012 Shire amended its Non GAAP policy to exclude costs related to the settlement of litigation, government investigations and other disputes, together with related external legal costs. Non GAAP SG&A in 2011 has not been restated as the amounts incurred in that period were not significant.
|
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12
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![]() |
13
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Page
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|
Unaudited US GAAP Consolidated Balance Sheets
|
15
|
Unaudited US GAAP Consolidated Statements of Income
|
16
|
Unaudited US GAAP Consolidated Statements of Cash Flows
|
18
|
Selected Notes to the Unaudited US GAAP Financial Statements
|
|
(1) Earnings per share
|
20
|
(2) Analysis of revenues
|
21
|
Non GAAP reconciliation
|
23
|
![]() |
14
|
December 31,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
$M | $M | |||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
1,482.2 | 620.0 | ||||||
Restricted cash
|
17.1 | 20.6 | ||||||
Accounts receivable, net
|
824.2 | 845.0 | ||||||
Inventories
|
436.9 | 340.1 | ||||||
Deferred tax asset
|
229.9 | 207.6 | ||||||
Prepaid expenses and other current assets
|
221.8 | 174.9 | ||||||
Total current assets
|
3,212.1 | 2,208.2 | ||||||
Non-current assets:
|
||||||||
Investments
|
38.7 | 29.9 | ||||||
Property, plant and equipment ("PP&E"), net
|
955.8 | 932.1 | ||||||
Goodwill
|
644.5 | 592.6 | ||||||
Other intangible assets, net
|
2,388.1 | 2,493.0 | ||||||
Deferred tax asset
|
46.5 | 50.7 | ||||||
Other non-current assets
|
31.5 | 73.7 | ||||||
Total assets
|
7,317.2 | 6,380.2 | ||||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
1,501.5 | 1,370.5 | ||||||
Convertible bonds
|
- | 1,100.0 | ||||||
Other current liabilities
|
144.1 | 63.8 | ||||||
Total current liabilities
|
1,645.6 | 2,534.3 | ||||||
Non-current liabilities:
|
||||||||
Convertible bonds
|
1,100.0 | - | ||||||
Deferred tax liability
|
520.8 | 516.6 | ||||||
Other non-current liabilities
|
241.6 | 144.3 | ||||||
Total liabilities
|
3,508.0 | 3,195.2 | ||||||
Equity:
|
||||||||
Common stock of 5p par value; 1,000 million shares authorized; and 562.5 million shares issued and outstanding (2011: 1,000 million shares authorized; and 562.5 million shares issued and outstanding)
|
55.7 | 55.7 | ||||||
Additional paid-in capital
|
2,981.5 | 2,853.3 | ||||||
Treasury stock: 10.7 million shares (2011: 11.8 million)
|
(310.4 | ) | (287.2 | ) | ||||
Accumulated other comprehensive income
|
86.9 | 60.3 | ||||||
Retained earnings
|
995.5 | 502.9 | ||||||
Total equity
|
3,809.2 | 3,185.0 | ||||||
Total liabilities and equity
|
7,317.2 | 6,380.2 |
![]() |
15
|
3 months to
|
3 months to
|
Year to
|
Year to
|
|||||||||||||
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
Revenues:
|
||||||||||||||||
Product sales
|
1,097.6 | 1,049.2 | 4,406.7 | 3,950.2 | ||||||||||||
Royalties
|
87.2 | 83.7 | 241.6 | 283.5 | ||||||||||||
Other revenues
|
16.4 | 9.3 | 32.9 | 29.7 | ||||||||||||
Total revenues
|
1,201.2 | 1,142.2 | 4,681.2 | 4,263.4 | ||||||||||||
Costs and expenses:
|
||||||||||||||||
Cost of product sales(1)
|
166.6 | 153.4 | 645.4 | 588.1 | ||||||||||||
R&D(1)
|
281.9 | 214.4 | 965.5 | 770.7 | ||||||||||||
SG&A(1)
|
665.6 | 456.1 | 2,114.0 | 1,751.4 | ||||||||||||
(Gain)/loss on sale of product rights
|
(1.6 | ) | 2.2 | (18.1 | ) | 6.0 | ||||||||||
Reorganization costs
|
- | 6.3 | - | 24.3 | ||||||||||||
Integration and acquisition costs
|
10.1 | 5.8 | 25.2 | 13.7 | ||||||||||||
Total operating expenses
|
1,122.6 | 838.2 | 3,732.0 | 3,154.2 | ||||||||||||
Operating income
|
78.6 | 304.0 | 949.2 | 1,109.2 | ||||||||||||
Interest income
|
0.8 | 0.4 | 3.1 | 1.9 | ||||||||||||
Interest expense
|
(9.2 | ) | (10.3 | ) | (38.2 | ) | (39.1 | ) | ||||||||
Other (expense)/income, net
|
(6.3 | ) | 2.2 | (2.7 | ) | 18.1 | ||||||||||
Total other expense, net
|
(14.7 | ) | (7.7 | ) | (37.8 | ) | (19.1 | ) | ||||||||
Income before income taxes and equity in earnings/(losses) of equity method investees
|
63.9 | 296.3 | 911.4 | 1,090.1 | ||||||||||||
Income taxes
|
(22.4 | ) | (40.3 | ) | (167.0 | ) | (227.6 | ) | ||||||||
Equity in earnings/(losses) of equity method investees, net of taxes
|
0.5 | (0.7 | ) | 1.0 | 2.5 | |||||||||||
Net income
|
42.0 | 255.3 | 745.4 | 865.0 |
|
(1)
|
Cost of product sales includes amortization of intangible assets relating to favorable manufacturing contracts of $nil for the three months to December 31, 2012 (2011: $0.4 million) and $0.7 million for the year to December 31, 2012 (2011: $1.7 million). R&D includes intangible asset impairment charges of $44.2 million (2011: $nil) for the three months to December 31, 2012 and $71.2 million (2011: $16.0 million) for the year to December 31, 2012. SG&A costs include amortization and impairment charges of intangible assets relating to intellectual property rights acquired of $174.2 million for the three months to December 31, 2012 (2011: $45.9 million) and $320.8 million for the year to December 31, 2012 (2011: $165.0 million).
|
![]() |
16
|
3 months to
|
3 months to
|
Year to
|
Year to
|
|||||||||||||
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Earnings per ordinary share – basic
|
7.5 | c | 46.4 | c | 134.2 | c | 156.9 | c | ||||||||
Earnings per ADS – basic
|
22.5 | c | 139.2 | c | 402.6 | c | 470.7 | c | ||||||||
Earnings per ordinary share – diluted
|
7.4 | c | 44.4 | c | 130.9 | c | 150.9 | c | ||||||||
Earnings per ADS – diluted
|
22.2 | c | 133.2 | c | 392.7 | c | 452.7 | c | ||||||||
Weighted average number of shares:
|
||||||||||||||||
Millions
|
Millions
|
Millions
|
Millions
|
|||||||||||||
Basic
|
555.2 | 550.7 | 555.4 | 551.1 | ||||||||||||
Diluted(1)
|
558.5 | 593.9 | 593.5 | 595.4 |
(1)
|
For the weighted average number of shares used for Non GAAP diluted earnings per ADS, please refer to the Non GAAP reconciliation tables on pages 23 - 26.
|
![]() |
17
|
3 months to December 31,
|
Year to December 31,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
Net income
|
42.0 | 255.3 | 745.4 | 865.0 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Depreciation and amortization
|
77.1 | 82.6 | 308.6 | 294.8 | ||||||||||||
Share based compensation
|
22.1 | 21.0 | 87.1 | 75.7 | ||||||||||||
Impairment of intangible assets
|
170.9 | - | 197.9 | 16.0 | ||||||||||||
Gain on sale of non-current investments
|
(0.2 | ) | - | (0.5 | ) | (23.5 | ) | |||||||||
(Gain)/loss on sale of product rights
|
(1.6 | ) | 2.2 | (18.1 | ) | 6.0 | ||||||||||
Other
|
12.6 | 10.2 | 18.0 | 16.1 | ||||||||||||
Movement in deferred taxes
|
(27.9 | ) | (1.3 | ) | (58.3 | ) | (14.5 | ) | ||||||||
Equity in (earnings)/losses of equity method investees
|
(0.5 | ) | 0.7 | (1.0 | ) | (2.5 | ) | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Decrease/(increase) in accounts receivable
|
45.2 | (11.3 | ) | 22.2 | (134.0 | ) | ||||||||||
Increase in sales deduction accrual
|
6.6 | 34.3 | 42.7 | 80.5 | ||||||||||||
Increase in inventory
|
(6.3 | ) | (21.6 | ) | (88.2 | ) | (64.4 | ) | ||||||||
Increase in prepayments and other assets
|
(32.3 | ) | (54.1 | ) | (14.5 | ) | (36.8 | ) | ||||||||
Increase/(decrease) in accounts payable and other liabilities
|
64.0 | 91.4 | 136.7 | (10.0 | ) | |||||||||||
Returns on investment from joint venture
|
- | - | 4.9 | 5.2 | ||||||||||||
Net cash provided by operating activities(A)
|
371.7 | 409.4 | 1,382.9 | 1,073.6 |
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||
|
||||||||||||||||
Movements in restricted cash
|
1.8 | 0.5 | 3.5 | 6.2 | ||||||||||||
Purchases of subsidiary undertakings and businesses, net of cash acquired
|
- | (1.5 | ) | (97.0 | ) | (725.0 | ) | |||||||||
Purchases of non-current investments
|
(5.9 | ) | (2.4 | ) | (18.0 | ) | (10.7 | ) | ||||||||
Purchases of PP&E
|
(58.0 | ) | (58.4 | ) | (149.6 | ) | (194.3 | ) | ||||||||
Purchases of intangible assets
|
- | - | (43.5 | ) | (5.2 | ) | ||||||||||
Proceeds from disposal of non-current investments and PP&E
|
2.6 | 11.3 | 7.2 | 106.0 | ||||||||||||
Proceeds from capital expenditure grants
|
- | - | 8.4 | - | ||||||||||||
Proceeds received on sale of product rights
|
4.1 | 3.2 | 17.8 | 12.0 | ||||||||||||
Returns of equity investments and proceeds from short term investments
|
- | 0.1 | 0.2 | 1.8 | ||||||||||||
Net cash used in investing activities(B)
|
(55.4 | ) | (47.2 | ) | (271.0 | ) | (809.2 | ) |
![]() |
18
|
3 months to December 31,
|
Year to December 31,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
|
||||||||||||||||
Proceeds from drawing of revolving credit facility
|
- | - | - | 30.0 | ||||||||||||
Repayment of revolving credit facility
|
- | - | - | (30.0 | ) | |||||||||||
Repayment of debt acquired through business combinations
|
- | - | (3.0 | ) | (13.1 | ) | ||||||||||
Excess tax benefit associated with exercise of stock options
|
2.1 | 7.7 | 40.7 | 31.4 | ||||||||||||
Payments to acquire shares under the share buy-back program
|
(106.5 | ) | - | (106.5 | ) | - | ||||||||||
Payments to acquire shares by the Employee Benefit Trust ("EBT")
|
(48.4 | ) | (25.0 | ) | (99.3 | ) | (151.8 | ) | ||||||||
Proceeds from exercise of options
|
15.6 | 12.5 | 16.2 | 13.4 | ||||||||||||
Deferred contingent consideration payments
|
(2.9 | ) | - | (5.8 | ) | - | ||||||||||
Payment of dividend
|
(15.6 | ) | (13.3 | ) | (86.3 | ) | (73.8 | ) | ||||||||
Other
|
- | (0.5 | ) | (0.3 | ) | (1.5 | ) | |||||||||
Net cash used in financing activities(C)
|
(155.7 | ) | (18.6 | ) | (244.3 | ) | (195.4 | ) | ||||||||
Effect of foreign exchange rate changes on cash and cash equivalents (D)
|
(0.3 | ) | - | (5.4 | ) | 0.4 | ||||||||||
Net increase in cash and cash equivalents(A) +(B) +(C) +(D)
|
160.3 | 343.6 | 862.2 | 69.4 | ||||||||||||
Cash and cash equivalents at beginning of period
|
1,321.9 | 276.4 | 620.0 | 550.6 | ||||||||||||
Cash and cash equivalents at end of period
|
1,482.2 | 620.0 | 1,482.2 | 620.0 |
![]() |
19
|
3 months to
|
3 months to
|
Year to
|
Year to
|
|||||||||||||
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
||||||||||||
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
|
||||||||||||||||
Numerator for basic EPS
|
42.0 | 255.3 | 745.4 | 865.0 | ||||||||||||
Interest on convertible bonds, net of tax (1)
|
- | 8.4 | 31.3 | 33.6 | ||||||||||||
|
||||||||||||||||
Numerator for diluted EPS
|
42.0 | 263.7 | 776.7 | 898.6 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Weighted average number of shares:
|
||||||||||||||||
|
Millions
|
Millions
|
Millions
|
Millions
|
||||||||||||
Basic(2)
|
555.2 | 550.7 | 555.4 | 551.1 | ||||||||||||
Effect of dilutive shares:
|
||||||||||||||||
Share based awards to employees(3)
|
3.3 | 9.7 | 4.6 | 10.9 | ||||||||||||
Convertible bonds 2.75% due 2014(4)
|
- | 33.5 | 33.5 | 33.4 | ||||||||||||
|
||||||||||||||||
Diluted(5)
|
558.5 | 593.9 | 593.5 | 595.4 |
|
(1)
|
For the three month period ended December 31, 2012 interest on the convertible bond has not been added back as the effect would be anti-dilutive
|
|
(2)
|
Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock.
|
|
(3)
|
Calculated using the treasury stock method.
|
|
(4)
|
Calculated using the “if converted” method.
|
|
(5)
|
For the weighted average number of shares used for Non GAAP diluted earnings per ADS, please refer to the Non GAAP reconciliation tables on pages 23 - 26.
|
3 months to
|
3 months to
|
Year to
|
Year to
|
|||||||||||||
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Millions
|
Millions
|
Millions
|
Millions
|
|||||||||||||
Share based awards to employees(1)
|
6.7 | 2.7 | 5.2 | 2.9 | ||||||||||||
Convertible bonds 2.75% due 2014(2)
|
33.5 | - | - | - |
|
(1)
|
Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire’s average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date.
|
|
(2)
|
For the three month period ended December 31, 2012 the ordinary shares underlying the convertible bonds have not been included in the calculation of the diluted weighted average number of shares, as the effect of their inclusion would be anti-dilutive.
|
![]() |
20
|
Year to December 31,
|
2012
|
2011
|
2012
|
2012
|
||||||||||||
%
|
% of total
|
|||||||||||||||
$M | $M |
change
|
revenue
|
|||||||||||||
Net product sales:
|
||||||||||||||||
Specialty Pharmaceuticals
|
||||||||||||||||
Behavioral Health
|
||||||||||||||||
VYVANSE
|
1,029.8 | 805.0 | 28 | % | 22 | % | ||||||||||
ADDERALL XR
|
429.0 | 532.8 | -19 | % | 9 | % | ||||||||||
INTUNIV
|
287.8 | 223.0 | 29 | % | 6 | % | ||||||||||
EQUASYM®
|
29.2 | 19.9 | 47 | % | 1 | % | ||||||||||
1,775.8 | 1,580.7 | 12 | % | 38 | % | |||||||||||
Gastro Intestinal
|
||||||||||||||||
LIALDA/MEZAVANT
|
399.9 | 372.1 | 7 | % | 9 | % | ||||||||||
PENTASA
|
265.8 | 251.4 | 6 | % | 6 | % | ||||||||||
RESOLOR
|
11.8 | 6.1 | 93 | % |
<1
|
% | ||||||||||
677.5 | 629.6 | 8 | % | 15 | % | |||||||||||
General products
|
||||||||||||||||
FOSRENOL
|
172.0 | 166.9 | 3 | % | 4 | % | ||||||||||
XAGRID®
|
97.2 | 90.6 | 7 | % | 2 | % | ||||||||||
269.2 | 257.5 | 5 | % | 6 | % | |||||||||||
Other product sales
|
112.4 | 147.8 | -24 | % | 2 | % | ||||||||||
Total SP product sales
|
2,834.9 | 2,615.6 | 8 | % | 61 | % | ||||||||||
Human Genetic Therapies
|
||||||||||||||||
ELAPRASE
|
497.6 | 464.9 | 7 | % | 11 | % | ||||||||||
REPLAGAL
|
497.5 | 475.2 | 5 | % | 11 | % | ||||||||||
VPRIV
|
306.6 | 256.2 | 20 | % | 6 | % | ||||||||||
FIRAZYR
|
116.3 | 33.0 | 252 | % | 2 | % | ||||||||||
Total HGT product sales
|
1,418.0 | 1,229.3 | 15 | % | 30 | % | ||||||||||
Regenerative Medicine
|
||||||||||||||||
DERMAGRAFT
|
153.8 | 105.3 | 46 | % | 3 | % | ||||||||||
Total RM product sales
|
153.8 | 105.3 | 46 | % | 3 | % | ||||||||||
Total product sales
|
4,406.7 | 3,950.2 | 12 | % | 94 | % | ||||||||||
Royalties:
|
||||||||||||||||
3TC and ZEFFIX
|
91.6 | 82.7 | 11 | % | 2 | % | ||||||||||
ADDERALL XR
|
70.3 | 107.1 | -34 | % | 2 | % | ||||||||||
FOSRENOL
|
53.3 | 46.5 | 15 | % | 1 | % | ||||||||||
Other
|
26.4 | 47.2 | -44 | % |
<1
|
% | ||||||||||
Total royalties
|
241.6 | 283.5 | -15 | % | 5 | % | ||||||||||
Other revenues
|
32.9 | 29.7 | 11 | % | 1 | % | ||||||||||
Total revenues
|
4,681.2 | 4,263.4 | 10 | % | 100 | % |
![]() |
21
|
3 months to December 31,
|
2012
|
2011
|
2012
|
2012
|
||||||||||||
%
|
% of total
|
|||||||||||||||
$M | $M |
change
|
revenue
|
|||||||||||||
Net product sales:
|
||||||||||||||||
Specialty Pharmaceuticals
|
||||||||||||||||
Behavioral Health
|
||||||||||||||||
VYVANSE
|
256.5 | 217.1 | 18 | % | 21 | % | ||||||||||
ADDERALL XR
|
81.5 | 124.8 | -35 | % | 7 | % | ||||||||||
INTUNIV
|
81.2 | 65.4 | 24 | % | 7 | % | ||||||||||
EQUASYM
|
7.9 | 4.3 | 84 | % | 1 | % | ||||||||||
427.1 | 411.6 | 4 | % | 36 | % | |||||||||||
Gastro Intestinal
|
||||||||||||||||
LIALDA/MEZAVANT
|
111.4 | 96.1 | 16 | % | 9 | % | ||||||||||
PENTASA
|
69.1 | 65.2 | 6 | % | 6 | % | ||||||||||
RESOLOR
|
3.5 | 2.1 | 67 | % |
<1
|
% | ||||||||||
184.0 | 163.4 | 13 | % | 15 | % | |||||||||||
General products
|
||||||||||||||||
FOSRENOL
|
45.2 | 39.9 | 13 | % | 4 | % | ||||||||||
XAGRID
|
26.5 | 21.4 | 24 | % | 2 | % | ||||||||||
71.7 | 61.3 | 17 | % | 6 | % | |||||||||||
Other product sales
|
26.5 | 30.5 | -13 | % | 2 | % | ||||||||||
Total SP product sales
|
709.3 | 666.8 | 6 | % | 59 | % | ||||||||||
Human Genetic Therapies
|
||||||||||||||||
ELAPRASE
|
139.3 | 124.0 | 12 | % | 12 | % | ||||||||||
REPLAGAL
|
118.2 | 120.9 | -2 | % | 10 | % | ||||||||||
VPRIV
|
77.3 | 69.3 | 12 | % | 6 | % | ||||||||||
FIRAZYR
|
34.6 | 14.9 | 132 | % | 3 | % | ||||||||||
Total HGT product sales
|
369.4 | 329.1 | 12 | % | 31 | % | ||||||||||
Regenerative Medicine
|
||||||||||||||||
DERMAGRAFT
|
18.9 | 53.3 | -65 | % | 1 | % | ||||||||||
Total RM product sales
|
18.9 | 53.3 | -65 | % | 1 | % | ||||||||||
Total product sales
|
1,097.6 | 1,049.2 | 5 | % | 91 | % | ||||||||||
Royalties:
|
||||||||||||||||
3TC and ZEFFIX
|
56.8 | 18.6 | 205 | % | 5 | % | ||||||||||
ADDERALL XR
|
8.1 | 40.5 | -80 | % | 1 | % | ||||||||||
FOSRENOL
|
16.3 | 15.1 | 8 | % | 1 | % | ||||||||||
Other
|
6.0 | 9.5 | -37 | % |
<1
|
% | ||||||||||
Total royalties
|
87.2 | 83.7 | 4 | % | 7 | % | ||||||||||
Other revenues
|
16.4 | 9.3 | 76 | % | 2 | % | ||||||||||
Total revenues
|
1,201.2 | 1,142.2 | 5 | % | 100 | % |
![]() |
22
|
Year to December 31, 2012
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||||||||||||||||
$M | $M | $M | $M | $M | $M | $M | ||||||||||||||||||||||
Total revenues
|
4,681.2 | - | - | - | - | - | 4,681.2 | |||||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||||||
Cost of product sales
|
645.4 | - | - | - | - | (31.5 | ) | 613.9 | ||||||||||||||||||||
R&D
|
965.5 | (71.2 | ) | (23.0 | ) | - | - | (22.5 | ) | 848.8 | ||||||||||||||||||
SG&A
|
2,114.0 | (320.8 | ) | - | - | (102.6 | ) | (59.8 | ) | 1,630.8 | ||||||||||||||||||
Gain on sale of product rights
|
(18.1 | ) | - | - | 18.1 | - | - | - | ||||||||||||||||||||
Integration and acquisition costs
|
25.2 | - | (25.2 | ) | - | - | - | - | ||||||||||||||||||||
Depreciation
|
- | - | - | - | - | 113.8 | 113.8 | |||||||||||||||||||||
Total operating expenses
|
3,732.0 | (392.0 | ) | (48.2 | ) | 18.1 | (102.6 | ) | - | 3,207.3 | ||||||||||||||||||
Operating income
|
949.2 | 392.0 | 48.2 | (18.1 | ) | 102.6 | - | 1,473.9 | ||||||||||||||||||||
Interest income
|
3.1 | - | - | - | - | - | 3.1 | |||||||||||||||||||||
Interest expense
|
(38.2 | ) | - | - | - | - | - | (38.2 | ) | |||||||||||||||||||
Other (expense)/income, net
|
(2.7 | ) | 4.0 | - | - | - | - | 1.3 | ||||||||||||||||||||
Total other expense, net
|
(37.8 | ) | 4.0 | - | - | - | - | (33.8 | ) | |||||||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
911.4 | 396.0 | 48.2 | (18.1 | ) | 102.6 | - | 1,440.1 | ||||||||||||||||||||
Income taxes
|
(167.0 | ) | (59.5 | ) | (9.9 | ) | - | (28.3 | ) | - | (264.7 | ) | ||||||||||||||||
Equity in earnings of equity method investees, net of tax
|
1.0 | - | - | - | - | - | 1.0 | |||||||||||||||||||||
Net income
|
745.4 | 336.5 | 38.3 | (18.1 | ) | 74.3 | - | 1,176.4 | ||||||||||||||||||||
Impact of convertible debt, net of tax
|
31.3 | - | - | - | - | - | 31.3 | |||||||||||||||||||||
Numerator for diluted EPS
|
776.7 | 336.5 | 38.3 | (18.1 | ) | 74.3 | - | 1,207.7 | ||||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
593.5 | - | - | - | - | - | 593.5 | |||||||||||||||||||||
Diluted earnings per ADS
|
392.7 | c | 170.0 | c | 19.4 | c | (9.1c | ) | 37.5 | c | - | 610.5 | c |
|
(a)
|
Amortization and asset impairments: Impairment of IPR&D intangible assets for RESOLOR in the EU ($71.2 million), impairment charges of intellectual property rights acquired for RESOLOR in the EU ($126.7 million), amortization of intangible assets relating to intellectual property rights acquired ($194.1 million), impairment of available for sale securities ($4.0 million), and tax effect of adjustments;
|
|
(b)
|
Acquisitions and integration activities: Up-front payments made to Sangamo Biosciences Inc. and for the acquisition of the US rights to prucalopride (marketed in certain countries in Europe as RESOLOR) ($23.0 million), costs primarily associated with the acquisition of FerroKin and the integration of ABH ($16.0 million), charges related to the change in fair value of deferred contingent consideration ($9.2 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to fair value ($18.1 million) and tax effect of adjustments;
|
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($102.6 million), and tax effect of adjustments; and
|
|
(e)
|
Depreciation reclassification: Depreciation of $113.8 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
23
|
Year to December 31, 2011
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
|||||||||||||||||||||
$M | $M | $M | $M | $M | $M | |||||||||||||||||||
Total revenues
|
4,263.4 | - | - | - | - | 4,263.4 | ||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||
Cost of product sales
|
588.1 | - | (11.0 | ) | (11.3 | ) | (33.2 | ) | 532.6 | |||||||||||||||
R&D
|
770.7 | (16.0 | ) | - | - | (25.2 | ) | 729.5 | ||||||||||||||||
SG&A
|
1,751.4 | (165.0 | ) | - | - | (63.1 | ) | 1,523.3 | ||||||||||||||||
Loss on sale of product rights
|
6.0 | - | - | (6.0 | ) | - | - | |||||||||||||||||
Reorganization costs
|
24.3 | - | - | (24.3 | ) | - | - | |||||||||||||||||
Integration and acquisition costs
|
13.7 | - | (13.7 | ) | - | - | - | |||||||||||||||||
Depreciation
|
- | - | - | - | 121.5 | 121.5 | ||||||||||||||||||
Total operating expenses
|
3,154.2 | (181.0 | ) | (24.7 | ) | (41.6 | ) | - | 2,906.9 | |||||||||||||||
Operating income
|
1,109.2 | 181.0 | 24.7 | 41.6 | - | 1,356.5 | ||||||||||||||||||
Interest income
|
1.9 | - | - | - | - | 1.9 | ||||||||||||||||||
Interest expense
|
(39.1 | ) | - | - | - | - | (39.1 | ) | ||||||||||||||||
Other income/(expense), net
|
18.1 | 2.4 | - | (23.5 | ) | - | (3.0 | ) | ||||||||||||||||
Total other expense, net
|
(19.1 | ) | 2.4 | - | (23.5 | ) | - | (40.2 | ) | |||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
1,090.1 | 183.4 | 24.7 | 18.1 | - | 1,316.3 | ||||||||||||||||||
Income taxes
|
(227.6 | ) | (58.7 | ) | (8.3 | ) | 2.7 | - | (291.9 | ) | ||||||||||||||
Equity in earnings of equity method investees, net of tax
|
2.5 | - | - | - | - | 2.5 | ||||||||||||||||||
Net income
|
865.0 | 124.7 | 16.4 | 20.8 | - | 1,026.9 | ||||||||||||||||||
Impact of convertible debt, net of tax
|
33.6 | - | - | - | - | 33.6 | ||||||||||||||||||
Numerator for diluted EPS
|
898.6 | 124.7 | 16.4 | 20.8 | - | 1,060.5 | ||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
595.4 | - | - | - | - | 595.4 | ||||||||||||||||||
Diluted earnings per ADS
|
452.7 | c | 62.7 | c | 8.4 | c | 10.5 | c | - | 534.3 | c |
|
(a)
|
Amortization and asset impairments: Impairment of intangible assets ($16.0 million), amortization of intangible assets relating to intellectual property rights acquired ($165.0 million), impairment of available for sale securities ($2.4 million), and tax effect of adjustments;
|
|
(b)
|
Acquisitions and integration activities: Unwind of ABH inventory fair value adjustment ($11.0 million), costs associated with acquisition and integration of ABH ($13.6 million) and integration of Movetis ($8.3 million), less adjustment to contingent consideration payable for EQUASYM ($8.2 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Accelerated depreciation ($6.6 million) and dual running costs ($4.7 million) on the transfer of manufacturing from Owings Mills to a third party, re-measurement of DAYTRANA contingent consideration to fair value ($6.0 million), reorganization costs ($24.3 million) on the transfer of manufacturing from Owings Mills to a third party and the establishment of an international commercial hub in Switzerland, gain on disposal of investment in Vertex ($23.5 million), and tax effect of adjustments; and
|
|
(d)
|
Depreciation: Depreciation of $121.5 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
24
|
3 months to December 31, 2012
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||||||||||||||||
$M | $M | $M | $M | $M | $M | $M | ||||||||||||||||||||||
Total revenues
|
1,201.2 | - | - | - | - | - | 1,201.2 | |||||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||||||
Cost of product sales
|
166.6 | - | - | - | - | (7.9 | ) | 158.7 | ||||||||||||||||||||
R&D
|
281.9 | (44.2 | ) | - | - | - | (4.2 | ) | 233.5 | |||||||||||||||||||
SG&A
|
665.6 | (174.2 | ) | - | - | (62.2 | ) | (17.5 | ) | 411.7 | ||||||||||||||||||
Gain on sale of product rights
|
(1.6 | ) | - | - | 1.6 | - | - | - | ||||||||||||||||||||
Integration and acquisition costs
|
10.1 | - | (10.1 | ) | - | - | - | - | ||||||||||||||||||||
Depreciation
|
- | - | - | - | - | 29.6 | 29.6 | |||||||||||||||||||||
Total operating expenses
|
1,122.6 | (218.4 | ) | (10.1 | ) | 1.6 | (62.2 | ) | - | 833.5 | ||||||||||||||||||
Operating income
|
78.6 | 218.4 | 10.1 | (1.6 | ) | 62.2 | - | 367.7 | ||||||||||||||||||||
Interest income
|
0.8 | - | - | - | - | - | 0.8 | |||||||||||||||||||||
Interest expense
|
(9.2 | ) | - | - | - | - | - | (9.2 | ) | |||||||||||||||||||
Other expense, net
|
(6.3 | ) | 4.0 | - | - | - | - | (2.3 | ) | |||||||||||||||||||
Total other expense, net
|
(14.7 | ) | 4.0 | - | - | - | - | (10.7 | ) | |||||||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
63.9 | 222.4 | 10.1 | (1.6 | ) | 62.2 | - | 357.0 | ||||||||||||||||||||
Income taxes
|
(22.4 | ) | (17.5 | ) | 0.2 | - | (13.8 | ) | - | (53.5 | ) | |||||||||||||||||
Equity in earnings of equity method investees, net of tax
|
0.5 | - | - | - | - | - | 0.5 | |||||||||||||||||||||
Net income
|
42.0 | 204.9 | 10.3 | (1.6 | ) | 48.4 | - | 304.0 | ||||||||||||||||||||
Impact of convertible debt, net of tax (1)
|
- | 7.6 | - | - | - | - | 7.6 | |||||||||||||||||||||
Numerator for diluted EPS
|
42.0 | 212.5 | 10.3 | (1.6 | ) | 48.4 | - | 311.6 | ||||||||||||||||||||
Weighted average number of shares (millions) – diluted(1)
|
558.5 | 33.5 | - | - | - | - | 592.0 | |||||||||||||||||||||
Diluted earnings per ADS
|
22.5 | c | 106.5 | c | 5.1 | c | (0.9c | ) | 24.6 | c | - | 157.8 | c |
|
(1)
|
The impact of convertible debt, net of tax has a dilutive effect on Non GAAP basis.
|
|
(a)
|
Amortization and asset impairments: Impairment of IPR&D intangible assets for RESOLOR ($44.2 million), impairment charges of intellectual property rights acquired for RESOLOR in the EU ($126.7 million), amortization of intangible assets relating to intellectual property rights acquired ($47.5 million), impairment of available for sale securities ($4.0 million), and tax effect of adjustments;
|
|
(b)
|
Acquisition and integration activities: Costs primarily associated with the acquisition of FerroKin and the integration of ABH ($4.2 million), charges related to the change in fair value of deferred contingent consideration ($5.9 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to fair value ($1.6 million), and tax effect of adjustments;
|
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($62.2 million), and tax effect of adjustments; and
|
|
(e)
|
Depreciation reclassification: Depreciation of $29.6 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
25
|
3 months to December 31, 2011
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
|||||||||||||||||||||
$M | $M | $M | $M | $M | $M | |||||||||||||||||||
Total revenues
|
1,142.2 | - | - | - | - | 1,142.2 | ||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||
Cost of product sales
|
153.4 | - | (2.0 | ) | (2.3 | ) | (10.8 | ) | 138.3 | |||||||||||||||
R&D
|
214.4 | - | - | - | (8.8 | ) | 205.6 | |||||||||||||||||
SG&A
|
456.1 | (45.9 | ) | - | - | (16.7 | ) | 393.5 | ||||||||||||||||
Loss on sale of product rights
|
2.2 | - | - | (2.2 | ) | - | - | |||||||||||||||||
Reorganization costs
|
6.3 | - | - | (6.3 | ) | - | - | |||||||||||||||||
Integration and acquisition costs
|
5.8 | - | (5.8 | ) | - | - | - | |||||||||||||||||
Depreciation
|
- | - | - | - | 36.3 | 36.3 | ||||||||||||||||||
Total operating expenses
|
838.2 | (45.9 | ) | (7.8 | ) | (10.8 | ) | - | 773.7 | |||||||||||||||
Operating income
|
304.0 | 45.9 | 7.8 | 10.8 | - | 368.5 | ||||||||||||||||||
Interest income
|
0.4 | - | - | - | - | 0.4 | ||||||||||||||||||
Interest expense
|
(10.3 | ) | - | - | - | - | (10.3 | ) | ||||||||||||||||
Other income/(expense), net
|
2.2 | - | - | - | - | 2.2 | ||||||||||||||||||
Total other income/(expense), net
|
(7.7 | ) | - | - | - | - | (7.7 | ) | ||||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
296.3 | 45.9 | 7.8 | 10.8 | - | 360.8 | ||||||||||||||||||
Income taxes
|
(40.3 | ) | (23.1 | ) | (4.1 | ) | (1.8 | ) | - | (69.3 | ) | |||||||||||||
Equity in earnings of equity method investees, net of tax
|
(0.7 | ) | - | - | - | - | (0.7 | ) | ||||||||||||||||
Net income
|
255.3 | 22.8 | 3.7 | 9.0 | - | 290.8 | ||||||||||||||||||
Impact of convertible debt, net of tax
|
8.4 | - | - | - | - | 8.4 | ||||||||||||||||||
Numerator for diluted EPS
|
263.7 | 22.8 | 3.7 | 9.0 | - | 299.2 | ||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
593.9 | - | - | - | - | 593.9 | ||||||||||||||||||
Diluted earnings per ADS
|
133.2 | c | 11.5 | c | 1.9 | c | 4.6 | c | - | 151.2 | c |
|
(a)
|
Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($45.9 million), and tax effect of adjustments;
|
|
(b)
|
Acquisition and integration activities: Unwind of ABH inventory fair value adjustment ($2.0 million), costs associated with the acquisition and integration of ABH ($3.5 million) and integration of Movetis ($2.3 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Dual running costs ($2.3 million) on the transfer of manufacturing from Owings Mills to a third party, re-measurement of DAYTRANA contingent consideration to fair value ($2.2 million), reorganization costs ($6.3 million) on the transfer of manufacturing from Owings Mills to a third party and establishment of an international commercial hub in Switzerland, and tax effect of adjustments; and
|
|
(d)
|
Depreciation: Depreciation of $36.3 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
26
|
3 months to December 31,
|
Year to December 31,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
Net cash provided by operating activities
|
371.7 | 409.4 | 1,382.9 | 1,073.6 | ||||||||||||
Tax and interest payments, net
|
79.9 | 37.4 | 230.8 | 317.4 | ||||||||||||
Up-front payments in respect of in-licensed and acquired products
|
- | - | 23.0 | - | ||||||||||||
Non GAAP cash generation
|
451.6 | 446.8 | 1,636.7 | 1,391.0 |
3 months to December 31,
|
Year to December 31,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
Net cash provided by operating activities
|
371.7 | 409.4 | 1,382.9 | 1,073.6 | ||||||||||||
Up-front payments in respect of in-licensed and acquired products
|
- | - | 23.0 | - | ||||||||||||
Capital expenditure
|
(58.0 | ) | (58.4 | ) | (149.6 | ) | (194.3 | ) | ||||||||
Non GAAP free cash flow
|
313.7 | 351.0 | 1,256.3 | 879.3 |
December 31,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
$M | $M | |||||||
Cash and cash equivalents
|
1,482.2 | 620.0 | ||||||
Convertible bonds
|
(1,100.0 | ) | (1,100.0 | ) | ||||
Other debt
|
(9.3 | ) | (8.2 | ) | ||||
Non GAAP net cash/(debt)
|
372.9 | (488.2 | ) |
·
|
Behavioral Health and Gastro Intestinal conditions
|
·
|
Rare Diseases
|
·
|
Regenerative Medicine
|
![]() |
27
|
|
·
|
Shire’s products may not be a commercial success;
|
|
·
|
revenues from ADDERALL XR are subject to generic erosion;
|
|
·
|
the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third party payors in a timely manner for Shire's products may impact future revenues and earnings;
|
|
·
|
Shire relies on a single source for manufacture of certain of its products and a disruption to the supply chain for those products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis;
|
|
·
|
Shire uses third party manufacturers to manufacture many of its products and is reliant upon third party contractors for certain goods and services, and any inability of these third party manufacturers to manufacture products, or any failure of these third party contractors to provide these goods and services, in each case in accordance with its respective contractual obligations, could adversely affect Shire’s ability to manage its manufacturing processes or to operate its business;
|
|
·
|
the development, approval and manufacturing of Shire’s products is subject to extensive oversight by various regulatory agencies and regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
|
|
·
|
the actions of certain customers could affect Shire's ability to sell or market products profitably and fluctuations in buying or distribution patterns by such customers could adversely impact Shire’s revenues, financial conditions or results of operations;
|
|
·
|
investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire’s activities in the highly regulated markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines;
|
|
·
|
adverse outcomes in legal matters and other disputes, including Shire’s ability to obtain, maintain, enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire’s revenues, financial condition or results of operations;
|
![]() |
28
|
·
|
Intangible asset amortization and impairment charges; and
|
·
|
Other than temporary impairment of investments.
|
·
|
Up-front payments and milestones in respect of in-licensed and acquired products;
|
·
|
Costs associated with acquisitions, including transaction costs, fair value adjustments on contingent consideration and acquired inventory;
|
·
|
Costs associated with the integration of companies; and
|
·
|
Noncontrolling interests in consolidated variable interest entities.
|
·
|
Gains and losses on the sale of non-core assets;
|
·
|
Costs associated with restructuring and re-organization activities;
|
·
|
Termination costs; and
|
·
|
Income/(losses) from discontinued operations.
|
·
|
Net legal costs related to the settlement of litigation, government investigations and other disputes (excluding internal legal team costs).
|
![]() |
29
|