Morningstar® Document Research℠
`FORM 10-Q
`Shire plc - N/A
`Filed: May 05, 2015 (period: March 31, 2015)
`
`
`
`Quarterly report with a continuing view of a company's financial position
`
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user
`assumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot be
`limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 1
`
`

`

`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`FORM 10-Q
`
`
`QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the Quarterly Period ended March 31, 2015
`
`Commission File Number: 0-29630
`
`
`SHIRE PLC
`
`(Exact name of registrant as specified in its charter)
`
`
`
`
`
`
`
`Jersey (Channel Islands)
`(State or other jurisdiction of incorporation or organization)
`
`5 Riverwalk, Citywest Business Campus, Dublin 24, Republic of
`Ireland
` (Address of principal executive offices and zip code)
`
`
`
`98-0601486
`(I.R.S. Employer Identification No.)
`
`+353 1 429 7700
`(Registrant’s telephone number, including area code)
`
`
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
`1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.
`
`Yes [X]
`
`Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File
`required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232,405 of this chapter) during the preceding 12 months (or for such
`shorter period that the registrant was required to submit and post such files).
`
`Yes [X]
`
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
`
`Large accelerated filer [X]
`
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
`
`Yes [ ]
`
`As at April 24, 2015 the number of outstanding ordinary shares of the Registrant was 600,292,756.
`
`
`No [ ]
`
` No [ ]
`
`Accelerated filer [ ]
`
`Non-accelerated filer [ ]
`
`Smaller reporting company [ ]
`
`No [X]
`
`
`
`1
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 2
`
`

`

`
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`THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
`
`Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks
`and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire’s results could be materially
`adversely affected. The risks and uncertainties include, but are not limited to, that:
`
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`·
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`·
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`Shire’s products may not be a commercial success;
`
`product sales from ADDERALL XR and INTUNIV are subject to generic competition;
`
`·
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`the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payers in a timely manner for
`Shire’s products may affect future revenues, financial condition and results of operations;
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`·
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`·
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`·
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`·
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`·
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`·
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`·
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`·
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`Shire conducts its own manufacturing operations for certain of its products and is reliant on third party contract manufacturers 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 manufacture of Shire’s products is subject to extensive oversight by various regulatory agencies. Regulatory approvals or
`interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, an
`increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
`
`Shire has a portfolio of products in various stages of research and development. The successful development of these products is highly
`uncertain and requires significant expenditures and time, and there is no guarantee that these products will receive regulatory approval;
`
`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 affect Shire’s revenues, financial condition 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 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 and organizations. Shire is undergoing a corporate
`reorganization and was the subject of an unsuccessful acquisition proposal and the consequent uncertainty could adversely affect 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 NPS Pharmaceuticals Inc. (“NPS Pharma”) may adversely
`affect Shire’s financial condition and results of operations; and
`
`
`other risks and uncertainties detailed from time to time in Shire’s filings with the Securities and Exchange Commission, including those risks
`outlined in “Item 1A: Risk Factors” in Shire’s Annual Report on Form 10-K for the year ended December 31, 2014.
`
`
`
`
`2
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 3
`
`

`

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`The following are trademarks either owned or licensed by Shire plc or its subsidiaries, which are the subject of trademark registrations
`in certain territories, or which are owned by third parties as indicated and referred to in this Form 10-Q:
`
`ADDERALL XR® (mixed salts of a single entity amphetamine)
`AGRYLIN® (anagrelide hydrochloride)
`BUCCOLAM® (midazolam hydrochloride oromucosal solution)
`CALCICHEW® (trademark of Takeda Nycomed AS
`CARBATROL® (carbamazepine extended-release capsules)
`CEREZYME® (trademark of Genzyme)
`CINRYZE® (C1 esterase inhibitor [human])
`DAYTRANA® (trademark of Noven Pharmaceutical Inc. (“Noven”))
`DERMAGRAFT® (trademark of Organogenesis Inc. (“Organogenesis”))
`ELAPRASE® (idursulfase)
`ELVANSE® (lisdexamfetamine dimesylate)
`ELVANSE ADULT® (lisdexamfetamine dimesylate)
`ELVANSE VUXEN® (lisdexamfetamine dimesylate)
`ESTRACE® (trademark of Trimel Pharmaceuticals Inc.)
`EQUASYM® (methylphenidate hydrochloride)
`EQUASYM XL® (methylphenidate hydrochloride)
`FIRAZYR® (icatibant)
`FOSRENOL® (lanthanum carbonate)
`GATTEX® (teduglutide [rDNA origin])
`INTUNIV® (guanfacine extended release)
`LIALDA® (trademark of Nogra International Limited)
`MEZAVANT® (trademark of Giuliani International Limited)
`MIMPARA® (cinacalcet HCl)
`NATPAR® (parathyroid hormone)
`NATPARA® (parathyroid hormone (rDNA))
`PENTASA® (trademark of Ferring B.V. Corp (“Ferring”))
`PLENADREN® (hydrocortisone, modified release tablet)
`PREMIPLEX® (IGF-I/IGFBP-3)
`REGPARA® (cinacalcet HCl)
`REPLAGAL® (agalsidase alfa)
`RESOLOR® (prucalopride)
`REVESTIVE® (teduglutide)
`SENSIPAR® (cinacalcet HCl)
`TYVENSE® (lisdexamfetamine dimesylate)
`VASCUGEL® (allogeneic aortic endothelial cells cultured in a porcine gelatin matrix [Gelfoam®] with cytokines, implanted)
`VANCOCIN® (trademark of ANI Pharmaceuticals Inc.)
`VENVANSE® (lisdexamfetamine dimesylate)
`VPRIV® (velaglucerase alfa)
`VYVANSE® (lisdexamfetamine dimesylate)
`XAGRID® (anagrelide hydrochloride)
`ZEFFIX® (trademark of GSK)
`3TC® (trademark of GSK)
`
`
`
`
`3
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 4
`
`

`

`SHIRE PLC
`Form 10-Q for the three months to March 31, 2015
`
`Table of contents
`
`Unaudited Consolidated Balance Sheets at March 31, 2015 and December 31, 2014
`
`Unaudited Consolidated Statements of Income for the three months to March 31, 2015 and March 31, 2014
`
`Unaudited Consolidated Statements of Comprehensive Income for the three months to March 31, 2015 and March 31, 2014
`
`Unaudited Consolidated Statement of Changes in Equity for the three months to March 31, 2015
`
`Unaudited Consolidated Statements of Cash Flows for the three months to March 31, 2015 and March 31, 2014
`
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`PART I FINANCIAL INFORMATION
`
`ITEM 1. FINANCIAL STATEMENTS
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`Notes to the Unaudited Consolidated Financial Statements
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`ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
`
`ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
`
`ITEM 4. CONTROLS AND PROCEDURES
`
`PART II OTHER INFORMATION
`
`ITEM 1. LEGAL PROCEEDINGS
`
`ITEM 1A. RISK FACTORS
`
`ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
`
`ITEM 3. DEFAULTS UPON SENIOR SECURITIES
`
`ITEM 4. MINE SAFETY DISCLOSURES
`
`ITEM 5. OTHER INFORMATION
`
`ITEM 6. EXHIBITS
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`4
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` Page
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`5
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`5
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`7
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`9
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`10
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`11
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`13
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`39
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`53
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`53
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`53
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`53
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`53
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`53
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`53
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`53
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`54
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`54
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`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 5
`
`

`

`PART I: FINANCIAL INFORMATION
`ITEM1: FINANCIAL STATEMENTS
`
`
`
`
`
`
`
`ASSETS
`Current assets:
`Cash and cash equivalents
`Restricted cash
`Accounts receivable, net
`Inventories
`Deferred tax asset
`Prepaid expenses and other current assets
`
`Total current assets
`
`Non-current assets:
`Investments
`Property, plant and equipment, net (“PP&E”)
`Goodwill
`Other intangible assets, net
`Deferred tax asset
`Other non-current assets
`
`Total assets
`
`LIABILITIES AND EQUITY
`Current liabilities:
`Accounts payable and accrued expenses
`Short-term borrowings
`Other current liabilities
`
`Total current liabilities
`
`Non-current liabilities:
`Long-term borrowings
`Deferred tax liability
`Other non-current liabilities
`
`Total liabilities
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`Commitments and contingencies
`
`
`
`SHIRE PLC
`
`UNAUDITED CONSOLIDATED BALANCE SHEETS
`
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`Notes
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`
`5
`6
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`8
`
`9
`10
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`11
`13
`12
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`13
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`14
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`15
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` March 31,
`2015
`
`
`$’M
`
`
`
`
`
`74.3
`
`68.9
`
`1,116.3
`
`588.7
`
`461.8
`
`216.6
`
`
`
`2,526.6
`
`
`
`
`
`45.7
`
`821.9
`
`4,178.7
`
`9,980.0
`
`102.7
`
`22.7
`
`
`
`17,678.3
`
`
`
`
`
`
`
`1,991.6
`
`2,570.2
`
`303.2
`
`
`
`4,865.0
`
`
`
`
`
`78.7
`
`2,909.9
`
`844.0
`
`
`
`8,697.6
`
`
`
`-
`
` December 31,
`2014
`
`
`$’M
`
`
`
`
`
`2,982.4
`
`54.6
`
`1,035.1
`
`544.8
`
`344.7
`
`221.5
`
`
`
`5,183.1
`
`
`
`
`
`43.7
`
`837.5
`
`2,474.9
`
`4,934.4
`
`112.1
`
`46.4
`
`
`
`13,632.1
`
`
`
`
`
`
`
`1,909.4
`
`850.0
`
`262.5
`
`
`
`3,021.9
`
`
`
`
`
`-
`
`1,210.6
`
`736.7
`
`
`
`4,969.2
`
`
`
`-
`
`5
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 6
`
`

`

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`SHIRE PLC
`UNAUDITED CONSOLIDATED BALANCE SHEETS (continued)
`
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`Equity:
`
`Common stock of 5p par value; 1,000 million shares authorized; and 600.2 million shares issued
`and outstanding (2014: 1,000 million shares authorized; and 599.1 million shares issued and
`outstanding)
`Additional paid-in capital
`Treasury stock: 10.0 million shares (2014: 10.6 million shares)
`Accumulated other comprehensive loss
`Retained earnings
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`Total equity
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`Total liabilities and equity
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`Notes
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`16
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` December 31,
` March 31,
`
`2014
`2015
`
`
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`$’M
`
`$’M
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`58.9
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`4,373.2
`(330.1)
`(160.3)
`5,039.0
`
`
`
`8,980.7
`
`
`
`17,678.3
`
`
`58.7
`4,338.0
`(345.9)
`(31.5)
`4,643.6
`
`8,662.9
`
`13,632.1
`
`The accompanying notes are an integral part of these unaudited consolidated financial statements.
`
`
`
`6
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 7
`
`

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`SHIRE PLC
`UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
`
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`Revenues:
` Product sales
` Royalties
` Other revenues
`
`Total revenues
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`Costs and expenses:
` Cost of product sales
` Research and development(1)
` Selling, general and administrative(1)
` Gain on sale of product rights
` Reorganization costs
` Integration and acquisition costs
`
`Total operating expenses
`
`Operating income from continuing operations
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`Interest income
`Interest expense
`Other income, net
`
`Total other expense, net
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`Income from continuing operations before income taxes and equity in losses of equity method
`investees
`Income taxes
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`Equity in losses of equity method investees, net of taxes
`
`Income from continuing operations, net of taxes
`Loss from discontinued operations, net of taxes1
`
`Net income
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` 3 months to
` 3 months to
` March 31,
` March 31,
`2014
`2015
`
`
`
`$’M
`
`$’M
`
`
`
`
`
`1,308.1
`
`1,423.2
`
`32.3
`
`62.8
`
`6.4
`
`2.4
`
`
`
`
`
`1,346.8
`
`1,488.4
`
`
`
`
`
`
`
`
`
`229.5
`
`227.8
`
`360.5
`
`193.7
`
`430.3
`
`506.6
`
`(5.2)
`(36.4)
`
`15.2
`
`49.4
`
`75.7
`
`6.6
`
`
`
`
`
`1,013.8
`
`1,039.9
`
`
`
`
`
`474.6
`
`306.9
`
`
`
`
`
`2.0
`
`0.5
`
`(9.6)
`(7.8)
`
`4.3
`
`4.7
`
`
`
`
`
`(3.3)
`(2.6)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`471.3
`(57.4)
`
`
`(1.0)
`
`
`412.9
`
`(2.5)
`
`
`410.4
`
`
`304.3
`(50.6)
`
`(0.6)
`
`253.1
`(22.7)
`
`230.4
`
`Notes
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`3
`4
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`7
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`(1) Research and development (“R&D”) includes intangible asset impairment charges of $nil for the three months to March 31, 2015 (2014: $166.0 million). Selling,
`general and administrative (“SG&A”) costs include amortization of intangible assets relating to intellectual property rights acquired of $88.3 million for the three months
`to March 31, 2015 (2014: $57.8 million).
`
`7
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 8
`
`

`

`
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`SHIRE PLC
`UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (continued)
`
`
`
`
`Earnings per ordinary share - basic
`
`Earnings from continuing operations
`Loss from discontinued operations
`
`Earnings per ordinary share - basic
`
`Earnings per ordinary share - diluted
`
`Earnings from continuing operations
`Loss from discontinued operations
`
`Earnings per ordinary share - diluted
`
`Weighted average number of shares (millions):
`Basic
`Diluted
`
`The accompanying notes are an integral part of these unaudited consolidated financial statements.
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`1
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`1
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`Notes
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`19
`19
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`8
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` 3 months to
` March 31,
`2014
`
`
`
`
`
`
`43.3c
`
`(3.9c)
`
`
`
`39.4c
`
`
`
`
`
`
`
`43.0c
`
`(3.9c)
`
`
`
`39.1c
`
`
`
`
`
`584.3
`
`588.8
`
`
`
`
` 3 months to
` March 31,
`2015
`
`
`
`70.1c
`(0.4c)
`
`69.7c
`
`
`
`69.7c
`(0.4c)
`
`69.3c
`
`
`589.1
`592.7
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 9
`
`

`

`SHIRE PLC
` UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
`
`
`
`
`
`
`Net income
`Other comprehensive income:
`Foreign currency translation adjustments
`Unrealized holding gain on available-for-sale securities (net of taxes of $nil and $2.5 million)
`
`Comprehensive income
`
`
`
` 3 months to
` 3 months to
` March 31,
` March 31,
`2014
`2015
`
`
`$’M
`$’M
`
`
`
`230.4
`
`410.4
`
`
`
`
`
`(129.5)
`(1.7)
`
`0.7
`
`4.3
`
`
`
`
`
`281.6
`
`233.0
`
`The components of accumulated other comprehensive income as at March 31, 2015 and December 31, 2014 are as follows:
`
`
`
`
`
`Foreign currency translation adjustments
`Unrealized holding loss on available-for-sale securities, net of taxes
`
`Accumulated other comprehensive loss
`
`The accompanying notes are an integral part of these unaudited consolidated financial statements.
`
`
`
`
`9
`
` December 31,
` March 31,
`2014
`2015
`
`
`
`$’M
`
`$’M
`
`(155.2)
`(25.7)
`
`(5.1)
`(5.8)
`
`
`
`
`
`(160.3)
`(31.5)
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 10
`
`

`

`SHIRE PLC
`UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
`(In millions of US dollars except share data)
`
`Shire plc shareholders’ equity
`Accumulated
`other
`comprehensive
`loss
`$’M
`(31.5)
`-
`(128.8)
`-
`
`-
`
`
`Additional
`paid-in
`capital
`$’M
`4,338.0
`-
`-
`-
`
`15.3
`
`
`
`
`
`
`
`
`
`
`
`Treasury
`stock
`$’M
`(345.9)
`-
`-
`-
`
`-
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`As at January 1, 2015
`Net income
`Other comprehensive loss, net of tax
`Options exercised
`
`Share-based compensation
`
`Tax benefit associated with exercise of
`stock options
`
`Shares released by employee benefit
`trust to satisfy exercise of stock
`options
`
`As at March 31, 2015
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Common
`stock
`Number of
`shares
`M’s
`599.1
`-
`-
`1.1
`
`-
`
`
`-
`
`
`-
`
`600.2
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Common
`stock
`$’M
`58.7
`-
`-
`0.2
`
`-
`
`
`-
`
`
`-
`
`58.9
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`19.9
`
`
`-
`
`4,373.2
`
`
`
`
`
`
`
`
`-
`
`
`15.8
`
`(330.1)
`
`
`
`
`
`
`
`
`-
`
`
`-
`
`(160.3)
`
`The accompanying notes are an integral part of these unaudited consolidated financial statements.
`
`
`
`
`10
`
`
`
`
`
`Retained
`earnings
`$’M
`4,643.6
`410.4
`-
`-
`
`-
`
`
`-
`
`
`(15.0)
`
`5,039.0
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Total equity
`$’M
`8,662.9
`410.4
`(128.8)
`0.2
`
`15.3
`
`
`19.9
`
`
`0.8
`
`8,980.7
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 11
`
`

`

`
`
`2014
`$’M
`
`230.4
`
`
`94.6
`26.2
`(59.2)
`38.8
`166.0
`12.1
`(36.4)
`(0.3)
`18.5
`0.6
`
`
`(77.3)
`70.8
`(18.6)
`(74.6)
`(145.5)
`
`246.1
`
`
`(10.1)
`(3,764.4)
`(15.6)
`46.8
`48.0
`8.0
`(2.9)
`
`(3,690.2)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`2015
`
`
`$’M
`
`
`
`410.4
`
`
`
`
`
`120.6
`
`15.3
`
`2.4
`
`11.2
`
`-
`
`-
`(5.2)
`1.1
`
`16.6
`
`1.0
`
`
`
`
`
`(85.1)
`(24.6)
`(22.0)
`42.4
`
`77.5
`
`
`
`561.6
`
`
`
`
`
`(14.5)
`(5,199.7)
`(22.3)
`54.5
`
`3.9
`
`0.9
`
`-
`
`
`
`(5,177.2)
`
`SHIRE PLC
`UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
`
` 3
`
` months to March 31,
`
`
`CASH FLOWS FROM OPERATING ACTIVITIES:
`Net income
`
`Adjustments to reconcile net income to net cash provided by operating activities:
`Depreciation and amortization
`Share-based compensation
`Change in fair value of contingent consideration
`Unwind of inventory fair value step-ups
`Impairment of IPR&D intangible assets
`Impairment of PP&E1
`Gain on sale of product rights
`Other, net
`Movement in deferred taxes
`Equity in losses of equity method investees
`
`Changes in operating assets and liabilities:
`Increase in accounts receivable
`(Decrease)/increase in sales deduction accruals
`Increase in inventory
`Decrease/(increase) in prepayments and other assets
`Increase/(decrease) in accounts and notes payable and other liabilities
`
`Net cash provided by operating activities (A)
`
`CASH FLOWS FROM INVESTING ACTIVITIES:
`Movements in restricted cash
`Purchases of subsidiary undertakings and businesses, net of cash acquired
`Purchases of non-current investments and PP&E
`Proceeds from short-term investments
`Proceeds received on sale of product rights
`Proceeds from disposal of non-current investments and PP&E
`Other, net
`
`Net cash used in investing activities (B)
`
`
`
`11
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 12
`
`

`

`
`
`2014
`$’M
`
`2,170.0
`(650.2)
`(533.9)
`346.7
`20.5
`(7.8)
`0.2
`
`1,345.5
`
`(1.7)
`
`(2,100.3)
`2,239.4
`
`139.1
`
`
`
`
`2014
`$’M
`
`(2.6)
`(82.6)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`2015
`
`
`$’M
`
`
`
`2,230.0
`(535.2)
`-
`
`-
`
`19.9
`
`(2.4)
`(3.2)
`
`
`1,709.1
`
`
`
`(1.6)
`
`
`(2,908.1)
`2,982.4
`
`
`
`74.3
`
`
`
`
`
`
`
`
`2015
`
`
`$’M
`
`(5.0)
`48.8
`
`
`SHIRE PLC
`UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
`
` 3
`
` months to March 31,
`
`
`CASH FLOWS FROM FINANCING ACTIVITIES:
`Proceeds from revolving line of credit, long-term and short-term borrowings
`Repayment of revolving line of credit
`Repayment of debt acquired with ViroPharma Inc. (“ViroPharma”)
`Proceeds from ViroPharma call options
`Excess tax benefit associated with exercise of stock options
`Contingent consideration payments
`Other, net
`
`Net cash provided by financing activities(C)
`
`Effect of foreign exchange rate changes on cash and cash equivalents (D)
`
`Net decrease in cash and cash equivalents(A+B+C+D)
`Cash and cash equivalents at beginning of period
`
`Cash and cash equivalents at end of period
`
`Supplemental information associated with continuing
`operations:
`
`3 months to March 31,
`
`
`Interest paid
`Income taxes repaid/(paid), net
`
`The accompanying notes are an integral part of these unaudited consolidated financial statements.
`
`
`
`12
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 13
`
`

`

`
`
`
`1. Summary of Significant Accounting Policies
`
`SHIRE PLC
`NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
`
`(a) Basis of preparation
`
`These interim financial statements of Shire plc and its subsidiaries (collectively “Shire” or the “Company”) and other financial information included
`in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of
`America (“US GAAP”) and US Securities and Exchange Commission (“SEC”) regulations for interim reporting.
`
`The balance sheet as at December 31, 2014 was derived from audited financial statements but does not include all disclosures required by US
`GAAP.
`
`These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in
`the Company’s Annual Report on Form 10-K for the year to December 31, 2014.
`
`Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been
`condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, which are, in
`the opinion of management, necessary to fairly state the results of the interim period and the Company believes that the disclosures are adequate
`to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected for the full year.
`
`(b) Use of estimates in interim financial statements
`
`The preparation of interim financial statements, in conformity with US GAAP and SEC regulations, requires management to make estimates and
`assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated
`financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made
`in relation to the valuation of intangible assets, sales deductions, income taxes (including provisions for uncertain tax positions and the realization
`of deferred tax assets), provisions for litigation and legal proceedings, contingent consideration receivable from product divestments and
`contingent consideration payable in respect of business combinations and asset purchases. If actual results differ from the Company’s estimates,
`or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely
`affected by, any such change in estimate.
`
`(c) New accounting pronouncements
`
`Adopted during the period
`
`Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
`
`In April 2014 the Financial Accounting Standard Board (“FASB”) issued guidance on the reporting of discontinued operations and disclosures of
`disposals of components of an entity. The amendments in this update revise the definition of discontinued operations by limiting discontinued
`operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity’s
`operations and financial results. The guidance requires expanded disclosures for discontinued operations which provide users of financial
`statements with more information about the assets, liabilities, revenues, and expenses of discontinued operations. The guidance also requires an
`entity to disclose the pre-tax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations
`reporting.
`
`Shire adopted this guidance in the period, which will be effective for discontinued operations occurring after January 1, 2015. The adoption of this
`guidance did not impact the Company’s consolidated financial position, results of operations or cash flows.
`
`To be adopted in future periods
`
`Revenue from Contracts with Customers
`
`In May 2014 the FASB and the International Accounting Standards Board (together the “Accounting Standards Boards”) issued a new accounting
`standard that is intended to clarify and converge the financial reporting requirements for revenue
`
`
`
`
`13
`
`Powered by Morningstar® Document Research℠
`Source: Shire plc, 10-Q, May 05, 2015
`The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
`except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
`
`Page 14
`
`

`

`
`from contracts with customers. The core principle of the standard is that an “entity recognizes revenue to depict the transfer of promised goods or
`services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
`services”. To achieve that core principle the Accounting Standard Boards developed a five-step model (as presented below) and related application
`guidance, which will replace most existing revenue recognition guidance in US GAAP.
`
`Five-step model:
`
`
`
`Step 1: Identify the contract(s) with a customer.
`Step 2: Identify the performance obligations in the contract.
`Step 3: Determine the transaction price.
`Step 4: Allocate the transaction price to the performance obligations in the contract.
`Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
`
`The Accounting Standards Boards also issued new qualitative and quantitative disclosure requirements as part of the new accounting standard
`which aims to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from
`contracts with customers.
`
`In April 2015 the FASB proposed to defer the effective date of the guidance by one year.