[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
[ ]
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
[ ]
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
[ ]
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.f13e-4(c))
|
99.1
|
Press Release dated July 18, 2014, reporting Shire plc’s financial results for the three month period ended June 30, 2014.
|
SHIRE PLC
|
||
By:
|
/s/ T May
|
|
Name:
|
Tatjana May
|
|
Title:
|
General Counsel
|
EXHIBIT INDEX
|
|
Number
|
Description
|
99.1
|
Press Release dated July 18, 2014
|
Press Release
www.shire.com
|
![]() |
Financial Highlights
|
Q2 2014
|
Growth(1)
|
Product sales
|
$1,470 million
|
+22%(2)
|
Total revenues
|
$1,502 million
|
+20%
|
|
|
|
Non GAAP operating income
|
$630 million
|
+32%
|
US GAAP operating income from continuing operations
|
$338 million
|
-14%
|
|
|
|
Non GAAP EBITDA margin (excluding royalties & other revenues)(3)
|
44%
|
n/a
|
US GAAP net income margin(4)
|
35%
|
n/a
|
|
|
|
Non GAAP diluted earnings per ADS
|
$2.67
|
+42%
|
US GAAP diluted earnings per ADS
|
$2.66
|
+96%
|
|
|
|
Non GAAP cash generation
|
$659 million
|
+76%
|
Non GAAP free cash flow
|
$830 million
|
+245%
|
US GAAP net cash provided by operating activities
|
$834 million
|
+223%
|
|
|
|
|
|
Q2 2014
|
|
|
Q2 2013
|
|
||||||||
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
||||||
|
|
$M
|
|
$M
|
|
$M
|
|
|
$M
|
|
$M
|
|
$M
|
|
Total revenues
|
|
1,502
|
|
-
|
|
1,502
|
|
|
1,252
|
|
-
|
|
1,252
|
|
Operating income
|
|
338
|
|
292
|
|
630
|
|
|
391
|
|
88
|
|
479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per ADS
|
|
$2.66
|
|
$0.01
|
|
$2.67
|
|
|
$1.36
|
|
$0.52
|
|
$1.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
|
Product sales grew strongly in Q2 2014 (up 22% to $1,470 million from $1,208 million in Q2 2013). Product sales in Q2 2014 included $141 million for products acquired with ViroPharma Incorporated (“ViroPharma”), primarily $130 million from CINRYZE®. The inclusion of ViroPharma contributed 12% to reported product sales growth in the quarter.
|
|
·
|
Total revenues were up 20% to $1,502 million (Q2 2013: $1,252 million), with the strong product sales growth being only modestly offset by lower royalties and other revenues (down 27%).
|
|
·
|
On a Non GAAP basis:
|
|
·
|
Non GAAP diluted earnings per American Depository Share (“ADS”) increased 42% to $2.67 (Q2 2013: $1.88) as a result of higher Non GAAP operating income and a lower Non GAAP effective tax rate of 16% in Q2 2014 (Q2 2013: 23%).
|
![]() |
2
|
·
|
Cash generation, a Non GAAP measure, was up 76% to $659 million (Q2 2013: $374 million). The growth in cash generation in 2014 resulted from the strong operating income, and lower cash generation in Q2 2013 due to delayed receipts last year from certain large distributors in the US.
|
|
·
|
Net debt, also a Non GAAP measure, was $920 million at June 30, 2014 (December 31, 2013: net cash of $2,231 million).
|
![]() |
3
|
·
|
Yesterday, July 17, 2014, Shire announced top-line results from two Phase 4 efficacy and safety studies of VYVANSE compared with CONCERTA® (methylphenidate HCl) with a placebo reference arm in adolescents aged 13-17 diagnosed with ADHD. In SPD489-406, the forced-dose titration study, VYVANSE was found to be statistically superior to CONCERTA on the primary efficacy analysis (p = 0.0013) with mean reductions on the ADHD RS-IV total score of 25.4 and 22.1 points, respectively. In SPD489-405, the dose optimization study, neither VYVANSE nor CONCERTA was found to be statistically superior to the other on the primary efficacy analysis (p = 0.0717), with a larger mean improvement found for VYVANSE than CONCERTA (mean reductions on the ADHD-RS-IV total score of 25.6 and 23.5 points, respectively). The primary efficacy endpoint for both studies was defined as the change from baseline in ADHD-RS-IV total score at Week 6 and Week 8, respectively. In both studies, the types of adverse events appear to be generally consistent with the known safety profile for VYVANSE established in studies of adolescents with ADHD. Further evaluation of the data for both studies is under way.
|
·
|
On June 12, 2014 Shire announced that it had agreed to a written request by the US Food and Drug Administration (“FDA”) to conduct pediatric clinical studies to investigate the potential use of VYVANSE for the treatment of ADHD in preschool-age children, ages 4 to 5. Upon FDA confirmation of a timely submission and review of data that adheres to the requirements of the written request, Shire will be entitled to the benefits of the Best Pharmaceuticals for Children Act, including a six-month extension to the exclusivity afforded by Shire's patents for VYVANSE, which expire in 2023.
|
·
|
Following a meeting with the FDA, on May 16, 2014 Shire announced that it intends to submit a New Drug Application (“NDA”) for lifitegrast in Q1 2015 as a treatment for the signs and symptoms of Dry Eye disease in adults. In parallel to preparing for the NDA submission, Shire is assessing the need to collect additional clinical data to further strengthen the filing, marketing claims and rest-of world-opportunity for lifitegrast.
|
·
|
Shire made the decision in Q2 2014 to discontinue further development of VASCUGEL, intended to enhance blood vessel repair in patients undergoing hemodialysis. This decision was made based on portfolio prioritization as well as unexpected challenges and complexities with the development program. No new patients will be enrolled in the two Phase 2 trials, but those currently in the trials will be followed for at least 12 weeks for safety. In addition, the 64 patients enrolled in the Arteriovenous Fistula study will be followed for six months, per the study protocol. Once the studies are closed out Shire will analyze available data then make any further decisions regarding VASCUGEL.
|
·
|
On June 25, 2014 Shire announced that Judge Stanley R. Chesler of the US District Court for the District of New Jersey granted Shire’s summary judgment motion in a patent infringement lawsuit, holding that certain claims of the patents protecting VYVANSE were both infringed and valid.
|
![]() |
4
|
·
|
On June 11, 2014 Shire completed its acquisition of Lumena, a biopharmaceutical company with late stage rare disease pipeline assets. Lumena brings to Shire two new novel, once-daily, orally administered therapeutic compounds: SHP625 (formerly LUM001), in Phase 2 clinical development with four potential orphan indications; and SHP626 (formerly LUM002), ready to enter Phase 2 clinical development later in 2014. SHP625 and SHP626 are both inhibitors of the apical sodium-dependent bile acid transporter (“ASBT”), which is primarily responsible for recycling bile acids from the intestine to the liver. SHP625 works by preventing recycling of bile acids back to the liver and is thought to reduce bile acid accumulation, improve liver function and potentially relieve the extreme itching associated with cholestatic liver disease and is in clinical trials in Alagille Syndrome, Progressive Familial Intrahepatic Cholestasis, Primary Biliary Cirrhosis, and Primary Sclerosing Cholangitis. SHP626 is in development for the treatment of nonalcoholic steatohepatitis, a common and often “silent” liver disease characterized by fat deposits in the liver and inflammation which can progress to significant fibrosis.
|
·
|
On July 4, 2014 Shire completed its acquisition of Fibrotech, an Australian biopharmaceutical company developing a new class of orally available drugs with a novel mechanism of action which has the potential to address both the inflammatory and fibrotic components of disease processes. Shire will undertake the further development of Fibrotech’s lead product candidate SHP627 (formerly FT011), which has completed a Phase 1 study in healthy volunteers and a Phase 1B study in patients with renal impairment. The first Phase 2 study is expected to be initiated to enroll Focal Segmental Glomerulosclerosis (“FSGS”) patients next year. In addition to the lead compound SHP627, Shire has acquired Fibrotech’s library of novel molecules including FT061, which is in pre-clinical development.
|
·
|
On June 30, 2014, Shire announced that it had received assessments from the Canadian revenue authorities which entitle its Canadian subsidiary, Shire Canada Inc. (“Shire Canada”) to total cash refunds equivalent to US$410 million (C$440 million).
|
|
(1)
|
Translated using a CAD:USD exchange rate of 1:0.93, being the exchange rate on the date of receipt.
|
![]() |
5
|
(1)
|
Translated using a GBP:USD exchange rate of 1.7093.
|
![]() |
6
|
|
Page
|
Overview of Second Quarter 2014 Financial Results
|
8
|
Financial Information
|
12
|
Non GAAP Reconciliation
|
21
|
Notes to Editors
|
26
|
Safe Harbor Statement
|
28
|
Explanation of Non GAAP Measures
|
29
|
Trade Marks
|
30
|
Investor Relations
|
|
|
|
|
- Jeff Poulton
|
jpoulton@shire.com
|
+1 781 482 0945
|
|
- Sarah Elton-Farr
|
seltonfarr@shire.com
|
+44 1256 894 157
|
|
|
|
|
Media
|
|
|
|
|
- Stephanie Fagan
|
sfagan@shire.com
|
+1 781 482 0460
|
|
- Gwen Fisher
|
gfisher@shire.com
|
+1 484 595 9836
|
![]() |
7
|
|
|
|
|
|
Year on year growth
|
||
Product sales(1)
|
|
Sales $M
|
|
|
Sales
|
|
Non GAAP CER(2)
|
|
|
|
|
|
|
|
|
VYVANSE(3)
|
|
359.5
|
|
|
+20%
|
|
+20%
|
ELAPRASE®
|
|
152.1
|
|
|
+2%
|
|
+2%
|
LIALDA®/MEZAVANT®
|
|
143.6
|
|
|
+4%
|
|
+5%
|
REPLAGAL
|
|
130.5
|
|
|
+14%
|
|
+14%
|
CINRYZE
|
|
129.9
|
|
|
n/a
|
|
n/a
|
INTUNIV®
|
|
100.0
|
|
|
+11%
|
|
+11%
|
ADDERALL XR®
|
|
99.8
|
|
|
-11%
|
|
-11%
|
VPRIV®
|
|
89.7
|
|
|
+9%
|
|
+8%
|
FIRAZYR
|
|
89.0
|
|
|
+80%
|
|
+79%
|
PENTASA®
|
|
63.2
|
|
|
-14%
|
|
-14%
|
OTHER
|
|
112.3
|
|
|
+14%
|
|
+10%
|
Total
|
|
1,469.6
|
|
|
+22%
|
|
+21%
|
|
|
|
|
|
|
|
|
(1)
|
Product sales from continuing operations, including ViroPharma Inc. acquired January 24, 2014, and excluding DERMAGRAFT which has been treated as discontinued operations following divestment on January 17, 2014.
|
(2)
|
On a Constant Exchange Rate (“CER”) basis, which is a Non GAAP measure.
|
(3)
|
Lisdexamfetamine dimesylate (“LDX”) currently marketed as VYVANSE in the US & Canada, VENVANSE® in Latin America and ELVANSE® in certain territories in the EU for the treatment of ADHD.
|
![]() |
8
|
2.
|
Royalties
|
|
|
|
|
|
|
Year on year growth
|
|||
Product
|
|
Royalties to Shire $M
|
|
|
Royalties
|
|
|
CER
|
|
|
|
|
|
|
|
|
|
|
|
FOSRENOL®
|
1.00
|
9.4
|
|
|
-13%
|
|
|
-13%
|
|
3TC® and ZEFFIX®
|
1.00
|
8.3
|
|
|
-27%
|
|
|
-25%
|
|
ADDERALL XR
|
1.00
|
4.5
|
|
|
-8%
|
|
|
-8%
|
|
Other
|
1.00
|
7.0
|
|
|
-25%
|
|
|
-28%
|
|
Total
|
1.00
|
29.2
|
|
|
-20%
|
|
|
-20%
|
|
|
|
|
|
|
|
|
|
|
|
![]() |
9
|
3.
|
Financial details
|
|
Q2 2014
$M
|
% of product sales
|
Q2 2013
$M
|
% of
product
sales
|
||||||||||||
Cost of product sales (US GAAP)
|
277.0 | 19 | % | 164.3 | 14 | % | ||||||||||
Unwind of ViroPharma inventory fair value step-up
|
(33.7 | ) | - | |||||||||||||
Depreciation
|
(17.8 | ) | (9.2 | ) | ||||||||||||
Cost of product sales (Non GAAP)
|
225.5 | 15 | % | 155.1 | 13 | % | ||||||||||
|
|
Q2 2014
$M
|
% of product sales
|
Q2 2013
$M
|
% of
product
sales
|
||||||||||||
R&D (US GAAP)
|
236.9 | 16 | % | 256.5 | 21 | % | ||||||||||
Impairment of intangible assets
|
(22.0 | ) | (19.9 | ) | ||||||||||||
Depreciation
|
(5.8 | ) | (4.3 | ) | ||||||||||||
R&D (Non GAAP)
|
209.1 | 14 | % | 232.3 | 19 | % | ||||||||||
|
|
Q2 2014
$M
|
% of product sales
|
Q2 2013
$M
|
% of
product
sales
|
||||||||||||
SG&A (US GAAP)
|
496.2 | 34 | % | 410.0 | 34 | % | ||||||||||
Intangible asset amortization
|
(61.2 | ) | (35.9 | ) | ||||||||||||
Legal and litigation costs
|
(2.2 | ) | (1.8 | ) | ||||||||||||
Costs incurred in connection with the recommended combination of Shire and AbbVie
|
(19.1 | ) | - | |||||||||||||
Depreciation
|
(21.1 | ) | (15.6 | ) | ||||||||||||
SG&A (Non GAAP)
|
392.6 | 27 | % | 356.7 | 30 | % | ||||||||||
|
![]() |
10
|
![]() |
11
|
|
Page
|
|
|
Unaudited US GAAP Consolidated Balance Sheets
|
13
|
|
|
Unaudited US GAAP Consolidated Statements of Income
|
14
|
|
|
Unaudited US GAAP Consolidated Statements of Cash Flows
|
16
|
|
|
Selected Notes to the Unaudited US GAAP Financial Statements
|
|
(1) Earnings per share
|
18
|
(2) Analysis of revenues
|
19
|
|
|
Non GAAP reconciliation
|
21
|
![]() |
12
|
|
June 30,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
|
$M | $M | ||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
153.6 | 2,239.4 | ||||||
Restricted cash
|
34.1 | 22.2 | ||||||
Accounts receivable, net
|
1,051.5 | 961.2 | ||||||
Inventories
|
585.0 | 455.3 | ||||||
Assets held for sale
|
- | 31.6 | ||||||
Deferred tax asset
|
370.2 | 315.6 | ||||||
Prepaid expenses and other current assets
|
418.6 | 263.0 | ||||||
|
||||||||
Total current assets
|
2,613.0 | 4,288.3 | ||||||
|
||||||||
Non-current assets:
|
||||||||
Investments
|
40.1 | 31.8 | ||||||
Property, plant and equipment ("PP&E"), net
|
852.5 | 891.8 | ||||||
Goodwill
|
2,283.4 | 624.6 | ||||||
Other intangible assets, net
|
5,325.5 | 2,312.6 | ||||||
Deferred tax asset
|
145.7 | 141.1 | ||||||
Other non-current assets
|
84.2 | 32.8 | ||||||
|
||||||||
Total assets
|
11,344.4 | 8,323.0 | ||||||
|
||||||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
1,783.0 | 1,688.4 | ||||||
Short term borrowings
|
210.8 | - | ||||||
Other current liabilities
|
222.8 | 119.5 | ||||||
|
||||||||
Total current liabilities
|
2,216.6 | 1,807.9 | ||||||
|
||||||||
Non-current liabilities:
|
||||||||
Long term borrowings
|
850.0 | - | ||||||
Deferred tax liability
|
1,403.6 | 560.6 | ||||||
Other non-current liabilities
|
755.1 | 588.5 | ||||||
|
||||||||
Total liabilities
|
5,225.3 | 2,957.0 | ||||||
|
||||||||
Equity:
|
||||||||
Common stock of 5p par value; 1,000 million shares authorized; and 598.3 million shares issued and outstanding (2013: 1,000 million shares authorized; and 597.5 million shares issued and outstanding)
|
58.6 | 58.6 | ||||||
Additional paid-in capital
|
4,271.1 | 4,186.3 | ||||||
Treasury stock: 11.4 million shares (2013: 13.4 million)
|
(368.1 | ) | (450.6 | ) | ||||
Accumulated other comprehensive income
|
124.1 | 110.2 | ||||||
Retained earnings
|
2,033.4 | 1,461.5 | ||||||
|
||||||||
Total equity
|
6,119.1 | 5,366.0 | ||||||
|
||||||||
Total liabilities and equity
|
11,344.4 | 8,323.0 |
![]() |
13
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
Revenues:
|
||||||||||||||||
Product sales
|
1,469.6 | 1,207.9 | 2,777.7 | 2,306.1 | ||||||||||||
Royalties
|
29.2 | 36.3 | 61.5 | 74.8 | ||||||||||||
Other revenues
|
3.3 | 8.0 | 9.7 | 14.7 | ||||||||||||
Total revenues
|
1,502.1 | 1,252.2 | 2,848.9 | 2,395.6 | ||||||||||||
|
||||||||||||||||
Costs and expenses:
|
||||||||||||||||
Cost of product sales
|
277.0 | 164.3 | 506.5 | 311.7 | ||||||||||||
R&D(1)
|
236.9 | 256.5 | 597.4 | 477.1 | ||||||||||||
SG&A(1)
|
496.2 | 410.0 | 926.5 | 801.7 | ||||||||||||
Goodwill impairment charge
|
- | - | - | 7.1 | ||||||||||||
Gain on sale of product rights
|
(3.8 | ) | (4.5 | ) | (40.2 | ) | (11.0 | ) | ||||||||
Reorganization costs
|
45.8 | 17.7 | 95.2 | 35.2 | ||||||||||||
Integration and acquisition costs
|
112.1 | 17.4 | 118.7 | 21.5 | ||||||||||||
Total operating expenses
|
1,164.2 | 861.4 | 2,204.1 | 1,643.3 | ||||||||||||
|
||||||||||||||||
Operating income from continuing operations
|
337.9 | 390.8 | 644.8 | 752.3 | ||||||||||||
|
||||||||||||||||
Interest income
|
18.7 | 0.5 | 19.2 | 1.2 | ||||||||||||
Interest expense
|
(11.1 | ) | (9.1 | ) | (18.9 | ) | (18.3 | ) | ||||||||
Other income/(expense), net
|
3.3 | (1.3 | ) | 8.0 | (2.3 | ) | ||||||||||
Total other income/(expense), net
|
10.9 | (9.9 | ) | 8.3 | (19.4 | ) | ||||||||||
|
||||||||||||||||
Income from continuing operations before income taxes and equity in earnings of equity method investees
|
348.8 | 380.9 | 653.1 | 732.9 | ||||||||||||
Income taxes
|
176.5 | (90.5 | ) | 125.9 | (161.9 | ) | ||||||||||
Equity in earnings of equity method investees, net of taxes
|
3.0 | 0.5 | 2.4 | 0.9 | ||||||||||||
Income from continuing operations, net of tax
|
528.3 | 290.9 | 781.4 | 571.9 | ||||||||||||
Loss from discontinued operations, net of taxes
|
(5.2 | ) | (32.8 | ) | (27.9 | ) | (249.0 | ) | ||||||||
Net income
|
523.1 | 258.1 | 753.5 | 322.9 | ||||||||||||
|
|
(1)
|
R&D includes intangible asset impairment charges of $22.0 million for the three months to June 30, 2014 (2013: $19.9 million) and $188.0 million for the six months to June 30, 2014 (2013: $19.9 million). SG&A costs include amortization charges of intangible assets relating to intellectual property rights acquired of $61.2 million for the three months to June 30, 2014 (2013: $35.9 million) and $119.0 million for the six months to June 30, 2014 (2013: $72.0 million).
|
![]() |
14
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Earnings per Ordinary Share – basic
|
|
|
|
|
||||||||||||
Earnings from continuing operations
|
90.1 | c | 52.9 | c | 133.6 | c | 103.9 | c | ||||||||
Loss from discontinued operations
|
(0.9c | ) | (6.0c | ) | (4.8c | ) | (45.3c | ) | ||||||||
|
||||||||||||||||
Earnings per Ordinary Share – basic
|
89.2 | c | 46.9 | c | 128.8 | c | 58.6 | c | ||||||||
|
||||||||||||||||
Earnings per ADS – basic
|
267.6 | c | 140.7 | c | 386.4 | c | 175.8 | c | ||||||||
|
||||||||||||||||
Earnings per Ordinary Share – diluted
|
||||||||||||||||
Earnings from continuing operations
|
89.5 | c | 50.9 | c | 132.3 | c | 99.9 | c | ||||||||
Loss from discontinued operations
|
(0.9c | ) | (5.6c | ) | (4.7c | ) | (42.4c | ) | ||||||||
|
||||||||||||||||
Earnings per Ordinary Share – diluted
|
88.6 | c | 45.3 | c | 127.6 | c | 57.5 | c | ||||||||
|
||||||||||||||||
Earnings per ADS – diluted
|
265.8 | c | 135.9 | c | 382.8 | c | 172.5 | c | ||||||||
|
||||||||||||||||
|
||||||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Weighted average number of shares:
|
||||||||||||||||
|
Millions
|
Millions
|
Millions
|
Millions
|
||||||||||||
|
||||||||||||||||
Basic
|
586.4 | 549.6 | 585.3 | 550.5 | ||||||||||||
Diluted
|
590.3 | 586.0 | 590.3 | 587.5 |
![]() |
15
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
|
||||||||||||||||
Net income
|
523.1 | 258.1 | 753.5 | 322.9 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Depreciation and amortization
|
108.3 | 76.2 | 204.8 | 151.2 | ||||||||||||
Share based compensation
|
29.5 | 19.8 | 55.7 | 36.4 | ||||||||||||
Change in fair value of contingent consideration
|
80.6 | 11.9 | 21.4 | 13.7 | ||||||||||||
Impairment of intangible assets
|
22.0 | 19.9 | 188.0 | 19.9 | ||||||||||||
Goodwill impairment charge
|
- | - | - | 198.9 | ||||||||||||
Write down of assets
|
0.9 | 8.2 | 13.0 | 8.3 | ||||||||||||
Gain on sale of product rights
|
(3.8 | ) | (4.5 | ) | (40.2 | ) | (11.0 | ) | ||||||||
Unwind of ViroPharma inventory fair value step-up
|
33.8 | - | 72.5 | - | ||||||||||||
Other, net
|
16.2 | (1.1 | ) | 14.1 | (1.1 | ) | ||||||||||
Movement in deferred taxes
|
6.8 | 19.8 | 25.3 | 21.2 | ||||||||||||
Equity in earnings of equity method investees
|
(3.0 | ) | (0.5 | ) | (2.4 | ) | (0.9 | ) | ||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Decrease/(increase) in accounts receivable
|
40.0 | (51.3 | ) | (37.3 | ) | (102.6 | ) | |||||||||
Increase/(decrease) in sales deduction accrual
|
35.2 | (4.4 | ) | 106.0 | 40.0 | |||||||||||
Decrease/(increase) in inventory
|
6.9 | (24.8 | ) | (11.7 | ) | (53.9 | ) | |||||||||
Increase in prepayments and other assets
|
(62.9 | ) | (4.7 | ) | (137.5 | ) | (66.5 | ) | ||||||||
Increase/(decrease) in accounts payable and other liabilities
|
0.4 | (67.2 | ) | (145.1 | ) | (160.7 | ) | |||||||||
Returns on investment from joint venture
|
- | 3.2 | - | 3.2 | ||||||||||||
Net cash provided by operating activities(A)
|
834.0 | 258.6 | 1,080.1 | 419.0 |
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||||||||||
|
|
|
|
|
||||||||||||
Movements in restricted cash
|
(1.8 | ) | 1.7 | (11.9 | ) | (0.5 | ) | |||||||||
Purchases of subsidiary undertakings and businesses, net of cash acquired
|
(253.9 | ) | (150.6 | ) | (4,018.3 | ) | (227.8 | ) | ||||||||
Purchases of non-current investments
|
(2.8 | ) | (3.9 | ) | (3.1 | ) | (6.7 | ) | ||||||||
Purchases of PP&E
|
(3.8 | ) | (17.7 | ) | (19.1 | ) | (65.0 | ) | ||||||||
Proceeds from short-term investments
|
9.5 | - | 56.3 | - | ||||||||||||
Proceeds from disposal of non-current investments
|
- | 7.0 | 8.0 | 7.7 | ||||||||||||
Proceeds received on sale of product rights
|
4.8 | 5.5 | 52.8 | 10.3 | ||||||||||||
Other, net
|
0.1 | - | (2.8 | ) | 2.7 | |||||||||||
Net cash used in investing activities(B)
|
(247.9 | ) | (158.0 | ) | (3,938.1 | ) | (279.3 | ) |
![]() |
16
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
|
||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
|
||||||||||||||||
Proceeds from revolving line of credit, long term and short term borrowings
|
140.8 | - | 2,310.8 | - | ||||||||||||
Repayment of revolving line of credit
|
(601.4 | ) | - | (1,251.6 | ) | - | ||||||||||
Repayment of debt acquired through business combinations
|
(17.6 | ) | - | (551.5 | ) | - | ||||||||||
Proceeds from ViroPharma call options
|
- | - | 346.7 | - | ||||||||||||
Payment of dividend
|
(99.6 | ) | (79.2 | ) | (99.6 | ) | (79.2 | ) | ||||||||
Payments to acquire shares by the Employee Benefit Trust ("EBT") |
-
|
(50.0 | ) | (50.0 | ) | |||||||||||
Payments to acquire shares under the share buy-back program
|
- | (107.1 | ) | - | (177.7 | ) | ||||||||||
Excess tax benefit associated with exercise of stock options
|
8.6 | 1.7 | 29.1 | 6.1 | ||||||||||||
Contingent consideration payments
|
(2.5 | ) | (2.8 | ) | (10.3 | ) | (8.8 | ) | ||||||||
Other, net
|
(0.5 | ) | (6.8 | ) | (0.3 | ) | (7.5 | ) | ||||||||
Net cash (used in)/provided by financing activities(C)
|
(572.2 | ) | (244.2 | ) | 773.3 | (317.1 | ) | |||||||||
Effect of foreign exchange rate changes on cash and cash equivalents (D)
|
0.6 | (5.2 | ) | (1.1 | ) | (2.9 | ) | |||||||||
Net increase/(decrease) in cash and cash equivalents(A) +(B) +(C) +(D)
|
14.5 | (148.8 | ) | (2,085.8 | ) | (180.3 | ) | |||||||||
Cash and cash equivalents at beginning of period
|
139.1 | 1,450.7 | 2,239.4 | 1,482.2 | ||||||||||||
Cash and cash equivalents at end of period
|
153.6 | 1,301.9 | 153.6 | 1,301.9 |
![]() |
17
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
|
||||||||||||||||
Income from continuing operations
|
528.3 | 290.9 | 781.4 | 571.9 | ||||||||||||
Loss from discontinued operation
|
(5.2 | ) | (32.8 | ) | (27.9 | ) | (249.0 | ) | ||||||||
|
||||||||||||||||
Numerator for basic EPS
|
523.1 | 258.1 | 753.5 | 322.9 | ||||||||||||
Interest on convertible bonds, net of tax
|
- | 7.5 | - | 15.1 | ||||||||||||
|
||||||||||||||||
Numerator for diluted EPS
|
523.1 | 265.6 | 753.5 | 338.0 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Weighted average number of shares:
|
||||||||||||||||
|
Millions
|
Millions
|
Millions
|
Millions
|
||||||||||||
Basic(1)
|
586.4 | 549.6 | 585.3 | 550.5 | ||||||||||||
Effect of dilutive shares:
|
||||||||||||||||
Share based awards to employees(2)
|
3.9 | 2.6 | 5.0 | 3.3 | ||||||||||||
Convertible bonds(3)
|
- | 33.8 | - | 33.7 | ||||||||||||
|
||||||||||||||||
Diluted
|
590.3 | 586.0 | 590.3 | 587.5 |
|
(1)
|
Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock.
|
|
(2)
|
Calculated using the treasury stock method.
|
|
(3)
|
Calculated using the “if converted” method.
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
Millions
|
Millions
|
Millions
|
Millions
|
||||||||||||
Share based awards to employees(1)
|
0.3 | 11.0 | 1.2 | 9.1 |
|
(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.
|
![]() |
18
|
3 months to June 30,
|
2014
|
2013
|
2014
|
2014
|
||||||||||||
|
|
|
%
|
% of total
|
||||||||||||
|
$M | $M |
change
|
revenue
|
||||||||||||
Net product sales:
|
|
|
||||||||||||||
VYVANSE
|
359.5 | 300.3 | 20 | % | 24 | % | ||||||||||
ELAPRASE
|
152.1 | 149.2 | 2 | % | 10 | % | ||||||||||
LIALDA/MEZAVANT
|
143.6 | 137.5 | 4 | % | 10 | % | ||||||||||
REPLAGAL
|
130.5 | 114.1 | 14 | % | 9 | % | ||||||||||
CINRYZE
|
129.9 | - | n/a | 9 | % | |||||||||||
INTUNIV
|
100.0 | 90.4 | 11 | % | 7 | % | ||||||||||
ADDERALL XR
|
99.8 | 112.3 | -11 | % | 7 | % | ||||||||||
VPRIV
|
89.7 | 82.5 | 9 | % | 6 | % | ||||||||||
FIRAZYR
|
89.0 | 49.5 | 80 | % | 6 | % | ||||||||||
PENTASA
|
63.2 | 73.6 | -14 | % | 4 | % | ||||||||||
FOSRENOL
|
46.7 | 42.1 | 11 | % | 3 | % | ||||||||||
XAGRID
|
27.9 | 26.5 | 5 | % | 2 | % | ||||||||||
Other product sales
|
37.7 | 29.9 | 26 | % | 3 | % | ||||||||||
Total product sales
|
1,469.6 | 1,207.9 | 22 | % | 98 | % | ||||||||||
|
||||||||||||||||
Royalties:
|
||||||||||||||||
FOSRENOL
|
9.4 | 10.8 | -13 | % |
<1
|
% | ||||||||||
3TC and ZEFFIX
|
8.3 | 11.3 | -27 | % |
<1
|
% | ||||||||||
ADDERALL XR
|
4.5 | 4.9 | -8 | % |
<1
|
% | ||||||||||
Other
|
7.0 | 9.3 | -25 | % |
<1
|
% | ||||||||||
Total royalties
|
29.2 | 36.3 | -20 | % | 2 | % | ||||||||||
|
||||||||||||||||
Other revenues
|
3.3 | 8.0 | -59 | % |
<1
|
% | ||||||||||
|
||||||||||||||||
Total revenues
|
1,502.1 | 1,252.2 | 20 | % | 100 | % |
![]() |
19
|
6 months to June 30,
|
2014
|
2013
|
2014
|
2014
|
||||||||||||
|
|
|
%
|
% of total
|
||||||||||||
|
$M | $M |
change
|
revenue
|
||||||||||||
Net product sales:
|
|
|
||||||||||||||
VYVANSE
|
710.7 | 598.7 | 19 | % | 25 | % | ||||||||||
ELAPRASE
|
280.7 | 263.5 | 7 | % | 10 | % | ||||||||||
LIALDA/MEZAVANT
|
272.5 | 238.0 | 14 | % | 10 | % | ||||||||||
REPLAGAL
|
244.8 | 228.1 | 7 | % | 9 | % | ||||||||||
CINRYZE
|
215.5 | - | n/a | 8 | % | |||||||||||
INTUNIV
|
182.3 | 168.1 | 8 | % | 6 | % | ||||||||||
ADDERALL XR
|
184.9 | 212.1 | -13 | % | 6 | % | ||||||||||
VPRIV
|
176.6 | 164.1 | 8 | % | 6 | % | ||||||||||
FIRAZYR
|
163.9 | 91.2 | 80 | % | 6 | % | ||||||||||
PENTASA
|
135.5 | 144.6 |
-6
|
% | 5 | % | ||||||||||
FOSRENOL
|
88.1 | 84.4 | 4 | % | 3 | % | ||||||||||
XAGRID
|
55.0 | 49.9 | 10 | % | 2 | % | ||||||||||
Other product sales
|
67.2 | 63.4 | 6 | % | 2 | % | ||||||||||
Total product sales
|
2,777.7 | 2,306.1 | 20 | % | 98 | % | ||||||||||
|
||||||||||||||||
Royalties:
|
||||||||||||||||
FOSRENOL
|
22.2 | 19.8 | 12 | % | 1 | % | ||||||||||
3TC and ZEFFIX
|
15.8 | 23.8 | -34 | % | 1 | % | ||||||||||
ADDERALL XR
|
13.5 | 13.0 | 4 | % |
<1
|
% | ||||||||||
Other
|
10.0 | 18.2 | -45 | % |
<1
|
% | ||||||||||
Total royalties
|
61.5 | 74.8 | -18 | % | 2 | % | ||||||||||
|
||||||||||||||||
Other revenues
|
9.7 | 14.7 | -34 | % |
<1
|
% | ||||||||||
|
||||||||||||||||
Total revenues
|
2,848.9 | 2,395.6 | 19 | % | 100 | % |
![]() |
20
|
3 months to June 30, 2014
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
||||||||||||||||||||||||
|
$M | $M | $M | $M | $M | $M | $M | $M | ||||||||||||||||||||||||
Total revenues
|
1,502.1 | - | - | - | - | - | - | 1,502.1 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||||||||||
Cost of product sales
|
277.0 | - | (33.7 | ) | - | - | - | (17.8 | ) | 225.5 | ||||||||||||||||||||||
R&D
|
236.9 | (22.0 | ) | - | - | - | - | (5.8 | ) | 209.1 | ||||||||||||||||||||||
SG&A
|
496.2 | (61.2 | ) | - | - | (2.2 | ) | (19.1 | ) | (21.1 | ) | 392.6 | ||||||||||||||||||||
Gain on sale of product rights
|
(3.8 | ) | - | - | 3.8 | - | - | - | - | |||||||||||||||||||||||
Reorganization costs
|
45.8 | - | - | (45.8 | ) | - | - | - | - | |||||||||||||||||||||||
Integration and acquisition costs
|
112.1 | - | (112.1 | ) | - | - | - | - | - | |||||||||||||||||||||||
Depreciation
|
- | - | - | - | - | - | 44.7 | 44.7 | ||||||||||||||||||||||||
Total operating expenses
|
1,164.2 | (83.2 | ) | (145.8 | ) | (42.0 | ) | (2.2 | ) | (19.1 | ) | - | 871.9 | |||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating income
|
337.9 | 83.2 | 145.8 | 42.0 | 2.2 | 19.1 | - | 630.2 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Interest income
|
18.7 | - | - | - | - | (18.6 | ) | - | 0.1 | |||||||||||||||||||||||
Interest expense
|
(11.1 | ) | - | - | - | - | - | - | (11.1 | ) | ||||||||||||||||||||||
Other expense, net
|
3.3 | - | - | - | - | - | - | 3.3 | ||||||||||||||||||||||||
Total other income/(expense), net
|
10.9 | - | - | - | - | (18.6 | ) | - | (7.7 | ) | ||||||||||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
348.8 | 83.2 | 145.8 | 42.0 | 2.2 | 0.5 | - | 622.5 | ||||||||||||||||||||||||
Income taxes
|
176.5 | (31.5 | ) | (15.3 | ) | (12.7 | ) | (0.8 | ) | (216.0 | ) | - | (99.8 | ) | ||||||||||||||||||
Equity in earnings of equity method investees, net of tax
|
3.0 | - | - | - | - | - | - | 3.0 | ||||||||||||||||||||||||
Net income from continuing operations
|
528.3 | 51.7 | 130.5 | 29.3 | 1.4 | (215.5 | ) | - | 525.7 | |||||||||||||||||||||||
Loss from discontinued operations, net of tax
|
(5.2 | ) | - | - | 5.2 | - | - | - | - | |||||||||||||||||||||||
Net income
|
523.1 | 51.7 | 130.5 | 34.5 | 1.4 | (215.5 | ) | - | 525.7 | |||||||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
590.3 | - | - | - | - | - | - | 590.3 | ||||||||||||||||||||||||
Diluted earnings per ADS
|
265.8 | c | 26.5 | c | 66.4 | c | 17.5 | c | 0.6 | c | (109.5 | ) | - | 267.3 | c |
|
(a)
|
Amortization and asset impairments: Impairment of IPR&D intangible asset ($22.0 million), amortization of intangible assets relating to intellectual property rights acquired ($61.2 million), and tax effect of adjustments;
|
|
(b)
|
Acquisition and integration activities: Unwind of ViroPharma inventory fair value adjustments ($33.7 million), costs primarily associated with the acquisition and integration of ViroPharma ($31.5 million), net charge related to the change in fair value of contingent consideration liabilities ($80.6 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Gain on re-measurement of DAYTRANA contingent consideration to fair value ($3.8 million), costs relating to the One Shire reorganization ($45.8 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($5.2 million);
|
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($2.2 million), and tax effect of adjustments;
|
|
(e)
|
Other: Net income tax credit related to the settlement of certain tax positions with the Canadian revenue authorities ($216.0 million), related interest income received in respect of cash deposited with the Canadian revenue authorities ($18.6 million), costs associated with the recommended combination of Shire and AbbVie ($19.1 million), and tax effect of adjustments; and
|
|
(f)
|
Depreciation reclassification: Depreciation of $44.7 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
21
|
3 months to June 30, 2013
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
|||||||||||||||||||||
|
$M | $M | $M | $M | $M | $M | $M | |||||||||||||||||||||
Total revenues
|
1,252.2 | - | - | - | - | - | 1,252.2 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||||||
Cost of product sales
|
164.3 | - | - | - | - | (9.2 | ) | 155.1 | ||||||||||||||||||||
R&D
|
256.5 | (19.9 | ) | - | - | - | (4.3 | ) | 232.3 | |||||||||||||||||||
SG&A
|
410.0 | (35.9 | ) | - | - | (1.8 | ) | (15.6 | ) | 356.7 | ||||||||||||||||||
Gain on sale of product rights
|
(4.5 | ) | - | - | 4.5 | - | - | - | ||||||||||||||||||||
Reorganization costs
|
17.7 | - | - | (17.7 | ) | - | - | - | ||||||||||||||||||||
Integration and acquisition costs
|
17.4 | - | (17.4 | ) | - | - | - | - | ||||||||||||||||||||
Depreciation
|
- | - | - | - | - | 29.1 | 29.1 | |||||||||||||||||||||
Total operating expenses
|
861.4 | (55.8 | ) | (17.4 | ) | (13.2 | ) | (1.8 | ) | - | 773.2 | |||||||||||||||||
|
||||||||||||||||||||||||||||
Operating income
|
390.8 | 55.8 | 17.4 | 13.2 | 1.8 | - | 479.0 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Interest income
|
0.5 | - | - | - | - | - | 0.5 | |||||||||||||||||||||
Interest expense
|
(9.1 | ) | - | - | - | - | - | (9.1 | ) | |||||||||||||||||||
Other expense, net
|
(1.3 | ) | - | - | - | - | - | (1.3 | ) | |||||||||||||||||||
Total other expense, net
|
(9.9 | ) | - | - | - | - | - | (9.9 | ) | |||||||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
380.9 | 55.8 | 17.4 | 13.2 | 1.8 | - | 469.1 | |||||||||||||||||||||
Income taxes
|
(90.5 | ) | (10.9 | ) | (1.6 | ) | (5.8 | ) | (0.7 | ) | - | (109.5 | ) | |||||||||||||||
Equity in earnings of equity method investees, net of tax
|
0.5 | - | - | - | - | - | 0.5 | |||||||||||||||||||||
Income from continuing operations
|
290.9 | 44.9 | 15.8 | 7.4 | 1.1 | - | 360.1 | |||||||||||||||||||||
Loss from discontinued operations, net of tax
|
(32.8 | ) | - | - | 32.8 | - | - | - | ||||||||||||||||||||
Net income
|
258.1 | 44.9 | 15.8 | 40.2 | 1.1 | - | 360.1 | |||||||||||||||||||||
Impact of convertible debt, net of tax
|
7.5 | - | - | - | - | - | 7.5 | |||||||||||||||||||||
Numerator for diluted EPS
|
265.6 | 44.9 | 15.8 | 40.2 | 1.1 | - | 367.6 | |||||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
586.0 | - | - | - | - | - | 586.0 | |||||||||||||||||||||
Diluted earnings per ADS
|
135.9 | c | 23.0 | c | 8.1 | c | 20.6 | c | 0.5 | c | - | 188.1 | c |
|
a)
|
Amortization and asset impairments: Impairment of IPR&D intangible assets acquired with Movetis ($19.9 million), amortization of intangible assets relating to intellectual property rights acquired ($35.9 million), and tax effect of adjustments;
|
|
b)
|
Acquisition and integration activities: Costs primarily associated with the acquisition of SARcode and Lotus ($5.5 million), charges related to the change in fair values of contingent consideration liabilities ($11.9 million), and tax effect of adjustments;
|
|
c)
|
Divestments, reorganizations and discontinued operations: Gain on re-measurement of DAYTRANA contingent consideration to fair value ($4.5 million), costs relating to the collective dismissal and closure of Shire’s facility at Turnhout, Belgium and the One Shire reorganization costs ($17.7 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($32.8 million);
|
|
d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($1.8 million), and tax effect of adjustments; and
|
|
e)
|
Depreciation reclassification: Depreciation of $29.1 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
22
|
6 months to June 30, 2014
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
||||||||||||||||||||||||
|
$M | $M | $M | $M | $M | $M | $M | $M | ||||||||||||||||||||||||
Total revenues
|
2,848.9 | - | - | - | - | - | - | 2,848.9 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||||||||||
Cost of product sales
|
506.5 | - | (72.5 | ) | - | - | - | (28.0 | ) | 406.0 | ||||||||||||||||||||||
R&D
|
597.4 | (188.0 | ) | - | - | - | - | (11.6 | ) | 397.8 | ||||||||||||||||||||||
SG&A
|
926.5 | (119.0 | ) | - | - | (3.9 | ) | (19.1 | ) | (41.9 | ) | 742.6 | ||||||||||||||||||||
Gain on sale of product rights
|
(40.2 | ) | - | - | 40.2 | - | - | - | - | |||||||||||||||||||||||
Reorganization costs
|
95.2 | - | - | (95.2 | ) | - | - | - | - | |||||||||||||||||||||||
Integration and acquisition costs
|
118.7 | - | (118.7 | ) | - | - | - | - | - | |||||||||||||||||||||||
Depreciation
|
- | - | - | - | - | - | 81.5 | 81.5 | ||||||||||||||||||||||||
Total operating expenses
|
2,204.1 | (307.0 | ) | (191.2 | ) | (55.0 | ) | (3.9 | ) | (19.1 | ) | - | 1,627.9 | |||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating income
|
644.8 | 307.0 | 191.2 | 55.0 | 3.9 | 19.1 | - | 1,221.0 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Interest income
|
19.2 | - | - | - | - | (18.6 | ) | - | 0.6 | |||||||||||||||||||||||
Interest expense
|
(18.9 | ) | - | - | - | - | - | - | (18.9 | ) | ||||||||||||||||||||||
Other income/(expense), net
|
8.0 | - | - | (5.0 | ) | - | - | - | 3.0 | |||||||||||||||||||||||
Total other income/(expense), net
|
8.3 | - | - | (5.0 | ) | - | (18.6 | ) | - | (15.3 | ) | |||||||||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
653.1 | 307.0 | 191.2 | 50.0 | 3.9 | 0.5 | - | 1,205.7 | ||||||||||||||||||||||||
Income taxes
|
125.9 | (76.0 | ) | (25.5 | ) | (25.4 | ) | (1.4 | ) | (216.0 | ) | - | (218.4 | ) | ||||||||||||||||||
Equity in earnings of equity method investees, net of tax
|
2.4 | - | - | - | - | - | - | 2.4 | ||||||||||||||||||||||||
Income from continuing operations
|
781.4 | 231.0 | 165.7 | 24.6 | 2.5 | (215.5 | ) | - | 989.7 | |||||||||||||||||||||||
Loss from discontinued operations, net of tax
|
(27.9 | ) | - | - | 27.9 | - | - | - | - | |||||||||||||||||||||||
Net income
|
753.5 | 231.0 | 165.7 | 52.5 | 2.5 | (215.5 | ) | - | 989.7 | |||||||||||||||||||||||
Numerator for diluted EPS
|
753.5 | 231.0 | 165.7 | 52.5 | 2.5 | (215.5 | ) | - | 989.7 | |||||||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
590.3 | - | - | - | - | - | - | 590.3 | ||||||||||||||||||||||||
Diluted earnings per ADS
|
382.8 | c | 117.4 | c | 84.4 | c | 26.8 | c | 1.2 | c | (109.5 | ) | - | 503.1 | c |
|
The following items are included in Adjustments:
|
|
(a)
|
Amortization and asset impairments: Impairment of IPR&D intangible assets ($188.0 million), amortization of intangible assets relating to intellectual property rights acquired ($119.0 million), and tax effect of adjustments;
|
|
(b)
|
Acquisitions and integration activities: Unwind of ViroPharma inventory fair value adjustments ($72.5 million), costs primarily associated with acquisition of ViroPharma ($97.3 million), net charge related to the change in fair values of contingent consideration liabilities ($21.4 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Gain on sale of CALCICHEW product rights and on re-measurement of DAYTRANA contingent consideration to fair value ($40.2 million), costs relating to the One Shire reorganization ($95.2 million), gain on sale of long term investments ($5.0 million), tax effect of adjustments and loss from discontinued operations, net of tax ($27.9 million);
|
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($3.9 million), and tax effect of adjustments;
|
|
(e)
|
Other: Net income tax credit related to the settlement of certain tax positions with the Canadian revenue authorities ($216.0 million), related interest income received in respect of cash deposited with the Canadian revenue authorities ($18.6 million), costs associated with the recommended combination of Shire and AbbVie ($19.1 million), and tax effect of adjustment; and
|
|
(f)
|
Depreciation reclassification: Depreciation of $81.5 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
23
|
6 months to June 30, 2013
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
|||||||||||||||||||||
|
$M | $M | $M | $M | $M | $M | $M | |||||||||||||||||||||
Total revenues
|
2,395.6 | - | - | - | - | - | 2,395.6 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||||||
Cost of product sales
|
311.7 | - | - | - | - | (16.3 | ) | 295.4 | ||||||||||||||||||||
R&D
|
477.1 | (19.9 | ) | - | - | - | (8.9 | ) | 448.3 | |||||||||||||||||||
SG&A
|
801.7 | (72.0 | ) | - | - | (3.4 | ) | (31.7 | ) | 694.6 | ||||||||||||||||||
Goodwill impairment charge
|
7.1 | (7.1 | ) | - | - | - | - | - | ||||||||||||||||||||
Gain on sale of product rights
|
(11.0 | ) | - | - | 11.0 | - | - | - | ||||||||||||||||||||
Reorganization costs
|
35.2 | - | - | (35.2 | ) | - | - | - | ||||||||||||||||||||
Integration and acquisition costs
|
21.5 | - | (21.5 | ) | - | - | - | - | ||||||||||||||||||||
Depreciation
|
- | - | - | - | - | 56.9 | 56.9 | |||||||||||||||||||||
Total operating expenses
|
1,643.3 | (99.0 | ) | (21.5 | ) | (24.2 | ) | (3.4 | ) | - | 1,495.2 | |||||||||||||||||
|
||||||||||||||||||||||||||||
Operating income
|
752.3 | 99.0 | 21.5 | 24.2 | 3.4 | - | 900.4 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Interest income
|
1.2 | - | - | - | - | - | 1.2 | |||||||||||||||||||||
Interest expense
|
(18.3 | ) | - | - | - | - | - | (18.3 | ) | |||||||||||||||||||
Other expense, net
|
(2.3 | ) | - | - | - | - | - | (2.3 | ) | |||||||||||||||||||
Total other expense, net
|
(19.4 | ) | - | - | - | - | - | (19.4 | ) | |||||||||||||||||||
Income before income taxes and equity in earnings of equity method investees
|
732.9 | 99.0 | 21.5 | 24.2 | 3.4 | - | 881.0 | |||||||||||||||||||||
Income taxes
|
(161.9 | ) | (21.9 | ) | (2.1 | ) | (5.8 | ) | (1.3 | ) | - | (193.0 | ) | |||||||||||||||
Equity in earnings of equity method investees, net of tax
|
0.9 | - | - | - | - | - | 0.9 | |||||||||||||||||||||
Income from continuing operations
|
571.9 | 77.1 | 19.4 | 18.4 | 2.1 | - | 688.9 | |||||||||||||||||||||
Loss from discontinued operations, net of tax
|
(249.0 | ) | - | - | 249.0 | - | - | - | ||||||||||||||||||||
Net income
|
322.9 | 77.1 | 19.4 | 267.4 | 2.1 | - | 688.9 | |||||||||||||||||||||
Impact of convertible debt, net of tax
|
15.1 | - | - | - | - | - | 15.1 | |||||||||||||||||||||
Numerator for diluted EPS
|
338.0 | 77.1 | 19.4 | 267.4 | 2.1 | - | 704.0 | |||||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
587.5 | - | - | - | - | - | 587.5 | |||||||||||||||||||||
Diluted earnings per ADS
|
172.5 | c | 39.4 | c | 9.9 | c | 136.5 | c | 1.1 | c | - | 359.4 | c |
The following items are included in Adjustments:
|
|
(a)
|
Amortization and asset impairments: Impairment of IPR&D intangible assets acquired with Movetis ($19.9 million), impairment of goodwill relating to Shire’s Regenerative Medicine Business relating to continuing operations ($7.1 million), amortization of intangible assets relating to intellectual property rights acquired ($72.0 million), and tax effect of adjustments;
|
|
(b)
|
Acquisitions and integration activities: Costs primarily associated with the acquisition of SARcode and Lotus ($7.8 million), charges related to the change in fair values of contingent consideration liabilities ($13.7 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to higher fair value ($11.0 million), costs relating to the collective dismissal and closure of Shire’s facility at Turnhout, Belgium and the One Shire reorganization costs ($35.2 million), tax effect of adjustments and loss from discontinued operations, net of tax ($249.0 million);
|
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($3.4 million), and tax effect of adjustments; and
|
|
(e)
|
Depreciation reclassification: Depreciation of $56.9 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
![]() |
24
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
US GAAP Net Income
|
523.1 | 258.1 | 753.5 | 322.9 | ||||||||||||
(Deduct) / add back:
|
||||||||||||||||
Loss from discontinued operations, net of tax
|
5.2 | 32.8 | 27.9 | 249.0 | ||||||||||||
Equity in earnings of equity method investees, net of taxes
|
(3.0 | ) | (0.5 | ) | (2.4 | ) | (0.9 | ) | ||||||||
Income taxes
|
(176.5 | ) | 90.5 | (125.9 | ) | 161.9 | ||||||||||
Other expense/ (income), net
|
(3.3 | ) | 1.3 | (8.0 | ) | 2.3 | ||||||||||
Interest expense
|
11.1 | 9.1 | 18.9 | 18.3 | ||||||||||||
Interest income
|
(18.7 | ) | (0.5 | ) | (19.2 | ) | (1.2 | ) | ||||||||
|
||||||||||||||||
US GAAP Operating income from continuing operations
|
337.9 | 390.8 | 644.8 | 752.3 | ||||||||||||
|
||||||||||||||||
Amortization
|
61.2 | 35.9 | 119.0 | 72.0 | ||||||||||||
Depreciation
|
44.7 | 29.1 | 81.5 | 56.9 | ||||||||||||
Asset impairments
|
22.0 | 19.9 | 188.0 | 27.0 | ||||||||||||
Acquisition and integration activities
|
145.8 | 17.4 | 191.2 | 21.5 | ||||||||||||
Divestments, reorganizations and discontinued operations
|
42.0 | 13.2 | 55.0 | 24.2 | ||||||||||||
Legal and litigation costs
|
2.2 | 1.8 | 3.9 | 3.4 | ||||||||||||
Other
|
19.1 | - | 19.1 | - | ||||||||||||
|
||||||||||||||||
Non GAAP EBITDA
|
674.9 | 508.1 | 1,302.5 | 957.3 | ||||||||||||
|
||||||||||||||||
Depreciation
|
(44.7 | ) | (29.1 | ) | (81.5 | ) | (56.9 | ) | ||||||||
|
||||||||||||||||
Non GAAP Operating income from continuing operations
|
630.2 | 479.0 | 1,221.0 | 900.4 | ||||||||||||
|
||||||||||||||||
Net income margin(1)
|
35 | % | 21 | % | 26 | % | 13 | % | ||||||||
|
||||||||||||||||
Non GAAP EBITDA margin(2)
|
44 | % | 38 | % | 44 | % | 38 | % | ||||||||
|
(1) Net income margin as a percentage of total revenues
|
|
|||||||
|
|
|
|
|
|
|
|
|
(2) Non GAAP EBITDA margin as a percentage of product sales, excluding royalties and other revenues
|
|
![]() |
25
|
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
Net cash provided by operating activities
|
834.0 | 258.6 | 1,080.1 | 419.0 | ||||||||||||
Tax and interest payments, net
|
72.6 | 115.4 | 157.8 | 212.5 | ||||||||||||
Receipt from the Canadian revenue authorities
|
(248.0 | ) | - | (248.0 | ) | - | ||||||||||
Non GAAP cash generation
|
658.6 | 374.0 | 989.9 | 631.5 |
|
3 months to June 30,
|
6 months to June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
Net cash provided by operating activities
|
834.0 | 258.6 | 1,080.1 | 419.0 | ||||||||||||
Capital expenditure
|
(3.8 | ) | (17.7 | ) | (19.1 | ) | (65.0 | ) | ||||||||
Non GAAP free cash flow
|
830.2 | 240.9 | 1,061.0 | 354.0 |
|
June 30,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
|
$M | $M | ||||||
Cash and cash equivalents
|
153.6 | 2,239.4 | ||||||
|
||||||||
Long term borrowings
|
(850.0 | ) | - | |||||
Short term borrowings
|
(210.8 | ) | - | |||||
Other debt
|
(13.1 | ) | (8.9 | ) | ||||
Non GAAP net (debt)/cash
|
(920.3 | ) | 2,230.5 |
![]() |
26
|
![]() |
27
|
|
·
|
Shire’s products may not be a commercial success;
|
|
·
|
revenues from ADDERALL XR are subject to generic erosion and revenues from INTUNIV will become subject to generic competition starting in December 2014;
|
|
·
|
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, financial condition and results of operations;
|
|
·
|
Shire conducts its own manufacturing operations for certain of its Rare Diseases products and is reliant on third party contractors to manufacture other products and to provide goods and services. Some of Shire’s products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire’s 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 for some period of time.
|
|
·
|
the development, approval and manufacturing of Shire’s products is subject to extensive oversight by various regulatory agencies. Submission of an application for regulatory approval of any of our product candidates, such as our planned submission of a New Drug Application to the FDA for Lifitegrast as a treatment for the signs and symptoms of dry eye disease in adults, may be delayed for any number of reasons and, once submitted, may be subjected to lengthy review and ultimately rejected. Moreover, 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. Fluctuations in buying or distribution patterns by such customers can 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 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;
|
|
·
|
Shire faces intense competition for highly qualified personnel from other companies, academic institutions, government entities and other organizations. Shire is undergoing a corporate reorganization and the consequent uncertainty could adversely impact Shire’s ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives;
|
|
·
|
failure to achieve Shire’s strategic objectives with respect to the acquisition of ViroPharma Incorporated may adversely affect Shire’s financial condition and 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 reorganization 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).
|
·
|
Net income tax credit (being income tax, interest and estimated penalties) related to the settlement of certain tax positions with the Canadian revenue authorities.
|
·
|
Costs associated with the recommended combination of Shire and AbbVie.
|
![]() |
29
|
Profit forecast
|
Basis of preparation
|
![]() |
30
|
Principal assumptions
|
Factors outside the influence or control of the directors of Shire (or other members of Shire’s management)
|
|
·
|
There will be no material change to existing prevailing global macroeconomic and political conditions during the year ending December 31, 2014;
|
|
·
|
There will be no material changes in market conditions within the pharmaceutical industry over the forecast period to December 31, 2014, in relation to either customer demand or competitive environment which could impact Shire’s commercialised products;
|
|
·
|
The announcement of the recommended combination of Shire and AbbVie will not result in any material changes to Shire’s obligations to customers, its ability to negotiate new business, resolve contract disputes or to the retention of key management;
|
|
·
|
The Euro, British pound and Swiss franc and other exchange rates, together with inflation, tax and interest rates in Shire’s principal markets, will remain materially unchanged from prevailing rates;
|
|
·
|
There will be no material adverse events that will have a significant impact on Shire’s financial performance; and
|
|
·
|
There will be no material change in legislation or regulatory requirements impacting on Shire’s operations or its accounting policies.
|
Factors within the influence or control of the directors of Shire
|
|
·
|
The Profit Forecast excludes any material acquisitions or disposals made by Shire prior to December 31, 2014, other than those already reported;
|
|
·
|
The Company’s policy on Non GAAP financial measures, as outlined on pages 29-30 of this document, will be consistently applied in the financial year to December 31, 2014;
|
|
·
|
There will be no material change to Shire’s existing operational strategy;
|
|
·
|
There will be no material changes to the number of diluted shares in issue; and
|
|
·
|
There will be no material changes in the debt structure of the Shire Group, other than partial repayment of existing borrowings under Shire’s bank facilities.
|
![]() |
31
|