Mortgage debt and other secured loans *)
`
`Unsecured loans and other long-term loans **)
`
`Total long-term debt
`
`The debt is payable within the following periods as from the balance sheet date:
`Between one and two years
`Between two and three years
`Between three and four years
`Between four and five years
`After five years
`
`Total long-term debt
`
`The debt is denominated in the following currencies:
`DKK
`EUR
`USO
`
`Total long-term debt
`
`504
`
`476
`
`980
`
`0
`476
`0
`42
`462
`
`980
`
`2
`502
`476
`
`980
`
`504
`
`457
`
`961
`
`0
`0
`457
`0
`504
`
`961
`
`2
`502
`457
`
`961
`
`Adjustment of the above loans to market value at year-end 2008 would result in a loss of DKK 2 million (a loss of DKK 2 million in
`2007).
`
`*) Terms to maturity between 2016 - 2022 and a weighted average interest rate of 4.09%.
`**) Terms to maturity in 2011 and a weighted average interest rate of 1.63%.
`
`Novo Nordisk Annual Report 2008
`
`71
`
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`IPR2018-01676
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`
`D Consolidated financial statements Notes - Consolidated financial statements
`
`23 Deferred income tax assets and liabilities
`
`DKK million
`
`At the beginning of the year
`Deferred tax on profit for the year
`Adjustment relating to previous years
`Deferred tax on items recognised on equity
`Addition regarding acquisition
`Exchange rate adjustments
`
`Total deferred tax (assets)/liabilities (net)
`
`DKK million
`
`Specification
`The deferred tax assets and liabilities are allocable
`to the various balance sheet items as follows:
`Property, plant and equipment
`Intangible assets
`Indirect production costs
`Unrealised profit on intercompany sales
`Allowances for doubtful trade receivables
`Tax-loss carry-forward
`Other
`
`2008
`
`2007
`
`(176)
`851
`184
`(108)
`
`(43)
`
`708
`
`Assets
`
`Liabilities
`
`2008
`Total
`
`Assets
`
`Liabilities
`
`87
`(347)
`(28)
`50
`7
`55
`
`(176)
`
`2007
`Total
`
`(129)
`(628)
`
`(1,997)
`(72)
`(52)
`(453)
`
`1,502
`7
`1,158
`
`2
`
`1,370
`
`1,373
`(621)
`1,158
`(1,997)
`(70)
`(52)
`917
`
`(451)
`(677)
`
`(1,643)
`(61)
`(22)
`(1,188)
`
`1,321
`
`1,103
`
`1,440
`
`870
`(676)
`1,103
`(1,643)
`(60)
`(22)
`252
`
`(3,331)
`
`4,039
`
`708
`
`(4,042)
`
`3,866
`
`(176)
`
`Netting of deferred tax assets and deferred tax
`liabilities related to income taxes for which there is a
`legally enforceable right to offset
`
`1,635
`
`(1,635)
`
`1,520
`
`(1,520)
`
`Total deferred tax (assets)/liabilities (net)
`
`(1,696)
`
`2,404
`
`708
`
`(2,522)
`
`2,346
`
`(176)
`
`Tax-loss carry-forward
`Deferred tax assets are recognised on tax-loss carry-forwards that represent income likely to be realised in the future. The deferred tax
`assets of a tax loss of DKK 276 million (DKK 224 million in 2007) have not been recognised in the Balance sheet. Hereof DKK 15
`million expire within three years.
`
`72 Novo Nordisk Annual Report 2008
`
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`IPR2018-01676
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`
`24 Retirement benefit obligations
`
`Consolidated financial statements Notes - Consolidated financial statements D
`
`Most employees in the Group are covered by post-employment retirement plans in the form of primarily defined contribution plans or
`alternatively defined benefit plans. Group companies sponsor these plans either directly or by contributing to independently
`administered funds. The nature of such plans varies according to the legal regulations, fiscal requirements and economic conditions of
`the countries in which the employees are employed, and the benefits are generally based on the employees' remuneration and years of
`service. The obligations relate both to existing retirees' pensions and to pension entitlements of future retirees.
`
`Other post-employment benefits consist mostly of post-retirement healthcare plans, principally in the United States.
`
`Post-employment benefit plans are usually funded by payments from Group companies and by employees to funds independent of the
`Group. Where a plan is unfunded, a liability for the retirement obligation is recognised in the Group's Balance sheet. In accordance with
`the Accounting Policies the costs recognised for post-employment benefits are included in Cost of goods sold, Sales and distribution
`costs, Research and development costs or Administrative expenses.
`
`The following shows a five-year summary reflecting the funding of retirement obligations and the impact of historical deviations between
`expected and actual return on plan assets and actuarial adjustments on plan liabilities:
`
`DKK million
`
`Retirement obligations
`Plan assets
`
`Deficit/(surplus)
`Unrecognised gains/(loss)
`
`Retirement obligations recognised in the balance sheet
`
`Actuarial (gains)/losses on plan assets
`Actuarial (gains)/losses on plan liabilities
`
`2008
`
`2007
`
`2006
`
`2005
`
`2004
`
`1,103
`(649)
`
`454
`(35)
`
`419
`
`56
`24
`
`885
`(566)
`
`319
`43
`
`362
`
`(3)
`(151)
`
`938
`(495)
`
`443
`(113)
`
`330
`
`(3)
`7
`
`875
`(435)
`
`440
`(124)
`
`316
`
`6
`77
`
`609
`(313)
`
`296
`(46)
`
`250
`
`(2)
`16
`
`DKK million
`
`2008
`
`2007
`
`DKK million
`
`2008
`
`2007
`
`Balance sheet obligations for
`Defined benefit pension plans
`Post-employment medical benefits
`
`Total retirement obligations
`
`907
`196
`
`1,103
`
`738
`147
`
`885
`
`Weighted average asset allocation
`of funded retirement obligations
`Equities
`Bonds
`Cash at bank
`Property
`
`22%
`58%
`15%
`5%
`
`27%
`56%
`12%
`5%
`
`Change/development in the
`retirement
`obligations of the year
`At the beginning of the year
`
`885
`
`938
`
`The amounts recognised in the
`Balance sheet are determined as
`Present value of funded obligations
`
`870
`
`695
`
`Sanofi Exhibit 2136.153
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Current service cost
`Interest cost on pension obligation
`Actuarial (gains)/losses
`Past service costs
`Benefits paid to employees
`Addition regarding acquisition
`Changed classification of pensions
`plans
`Plan amendments
`Other
`Exchange rate adjustments
`
`112
`41
`24
`1
`(52)
`
`17
`
`3
`72
`
`At the end of the year
`
`1,103
`
`Change/development in the fair
`value
`of plan assets of the year
`At the beginning of the year
`Expected return on plan assets
`Actuarial gains/(losses)
`Employer contributions
`Benefits paid to employees
`Addition regarding acquisition
`Changed classification of pensions
`plans
`Other
`Exchange rate adjustments
`
`566
`24
`(56)
`81
`(24)
`
`11
`
`3
`44
`
`91
`32
`(151)
`
`(23)
`31
`
`3
`
`(36)
`
`885
`
`495
`18
`3
`68
`(10)
`1
`
`(9)
`
`At the end of the year
`
`649
`
`566
`
`Fair value of plan assets
`
`(649)
`
`(566)
`
`Present value of unfunded obligations
`Unrecognised actuarial gains/(losses)
`(net) on pension benefit plans
`Unrecognised actuarial gains/(losses)
`(net) on post-employment medical
`plans
`Unrecognised past service costs
`
`221
`
`233
`
`(68)
`
`36
`(3)
`
`129
`
`190
`
`2
`
`44
`(3)
`
`Net liability in the Balance sheet
`
`419
`
`362
`
`Amounts recognised in the Balance sheet for post-employment
`defined benefit pension plans and medical plans are
`predominantly non-current and are reported as either long-term
`assets or long-term liabilities.
`
`Change/development in the
`retirement
`obligations recognised in the
`balance sheet
`Net liability at the beginning of the
`year
`Recognised in the income statement
`for the year
`Employer contributions
`Benefit paid to employees, net
`Exchange rate adjustment
`Plan amendments
`Addition regarding acquisition
`Changed classification of pensions
`plans
`Other
`
`362
`
`128
`
`(81)
`(28)
`28
`
`6
`
`4
`
`330
`
`109
`
`(68)
`(13)
`(27)
`3
`30
`
`(2)
`
`At the end of the year
`
`419
`
`362
`
`Novo Nordisk Annual Report 2008
`
`73
`
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`IPR2018-01676
`
`

`

`Back to Contents
`
`D Consolidated financial statements Notes - Consolidated financial statements
`
`24 Retirement benefit obligations (continued)
`
`DKK million
`
`2008
`
`2007
`
`DKK million
`
`2008
`
`2007
`
`Income statement charge for
`Defined benefit pension plans
`Post-employment medical benefits
`
`92
`36
`
`79
`30
`
`Total income statement charge
`
`128
`
`109
`
`The Group expects to contribute DKK 68 million to its defined
`benefit pension plans in 2009.
`
`The weighted average
`assumptions used for computation
`and valuation of defined benefit
`plans and post-employment
`medical benefits are as follows
`Discount rate
`Projected return on plan assets
`Projected future remuneration
`increases
`Healthcare cost trend rate
`Inflation rate
`
`5%
`4%
`
`4%
`
`6%
`2%
`
`4%
`4%
`
`3%
`
`7%
`2%
`
`For all major defined benefit plans actuarial computations and
`valuations are performed annually.
`
`Amounts recognised in the income statement for
`the year
`Current service cost
`Interest cost on pension obligation
`Expected return on plan assets
`Actuarial (gains)/losses recognised in the year
`Past service cost
`
`Total income statement charge
`
`Actual return on plan assets
`
`25 Other provisions
`
`112 91
`41 32
`(24)(18)
`(2) 1
`1
`3
`
`128 109
`
`(33) 21
`
`DKK million
`
`At the beginning of the year
`Additional provisions *)
`Adjustments to previous year's provisions
`Used during the year
`Exchange rate adjustments
`
`Provisions
`for
`returned
`products
`
`593
`236
`(95)
`(151)
`11
`
`Provisions
`
`Other
`
`for sales
`
`provisions
`
`2008
`
`Total
`
`2007
`
`Total
`
`rebates
`
`1,744
`3,693
`(209)
`(3,019)
`72
`
`1,303
`46
`(25)
`(385)
`(28)
`
`3,640
`3,975
`(329)
`(3,555)
`55
`
`3,367
`3,510
`(316)
`(2,731)
`(190)
`
`At the end of the year
`
`594
`
`2,281
`
`911
`
`3,786
`
`3,640
`
`Specification of other provisions:
`Long-term *)
`Current
`
`Total other provisions
`
`594
`
`594
`
`2,281
`
`2,281
`
`863
`48
`
`911
`
`863
`2,923
`
`1,239
`2,401
`
`3,786
`
`3,640
`
`Sanofi Exhibit 2136.155
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`*) DKK 339 million in 2007 relates to discontinuation of AERx®.
`
`Provisions for returned products:
`Novo Nordisk issues credit notes for expired goods as a part of normal business. Consequently, a provision for future returns is made
`based on historical statistical product returns, which represents management's best estimate. The provision is expected to be used
`within the normal operating cycle.
`
`Provisions for sales rebates:
`In some countries the actual rebates depend on which customers purchase the products. Factors that complicate the rebate
`calculations are the identification of which products have been sold subject to a rebate, which customer or government price terms
`apply, and the estimated lag time between sale and payment of the rebate. Please refer to notes 3 and 5 for further information on
`rebates deducted from sales.
`
`Other provisions:
`Other provisions consist of various types of provisions including provisions for legal disputes, which represents management's best
`estimate. Please refer to note 36 for further information on commitments and contingencies.
`
`74 Novo Nordisk Annual Report 2008
`
`Sanofi Exhibit 2136.156
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`DKK million
`
`Bank loans and overdrafts
`Long-term debt, amounts falling due
`within one year
`Derivative financial instruments (refer
`to note 35)
`
`Total short-term debt
`
`The debt is denominated in the
`following currencies:
`DKK
`EUR
`USO
`JPY
`Other currencies
`
`2008
`
`55
`
`1,279
`
`1,334
`
`21
`40
`601
`672
`
`Total short-term debt
`
`1,334
`
`206
`
`154
`
`45
`
`405
`
`13
`179
`108
`11
`94
`
`405
`
`At year-end, the Group had undrawn committed credit facilities
`amounting to DKK 7,451 million (DKK 7,457 million in 2007). The
`undrawn committed credit facilities consist of a EUR 400 million
`and a EUR 600 million facility committed by a number of Danish
`and international banks. The facilities mature in 2009 and 2012
`respectively.
`
`27 Other liabilities
`
`DKK million
`
`2008
`
`2007
`
`Employee costs payable
`Taxes and duties payable
`Accruals and deferred income
`Amounts owed to affiliated companies
`Other payables
`
`2,272
`135
`78
`79
`3,289
`
`2,025
`346
`122
`93
`2,373
`
`Total other liabilities
`
`5,853
`
`4,959
`
`Back to Contents
`
`Consolidated financial statements Notes - Consolidated financial statements D
`
`26 Short-term debt and financial derivatives
`
`28 Other adjustments for non-cash items
`
`2007
`
`DKK million
`
`2008
`
`2007
`
`2006
`
`Share-based payment
`costs
`Increase/( decrease) in
`provisions
`(Gain)/loss from sale of
`property,
`plant and equipment
`Change in allowances for
`doubtful
`trade receivables
`Unrealised (gain)/loss on
`shares
`and bonds etc
`Unrealised foreign
`exchange (gain)/loss
`Share of (profit)/loss in
`associated companies
`Recognised income of
`divestment of
`business activities in the
`associated
`company Harno Invest
`A/S
`Unrealised capital gain on
`investments in
`associated companies
`Other, including
`difference between
`average
`exchange rate and year-
`end exchange rate
`
`Other adjustments for
`non-cash items
`
`331
`
`221
`
`95
`
`69
`
`30
`
`24
`
`195
`
`130
`
`490
`
`113
`
`889
`
`140
`
`134
`
`119
`
`65
`
`54
`
`37
`
`300
`
`(7)
`
`(143)
`
`244
`
`(71)
`
`(1,518)
`
`(15)
`
`16
`
`542
`
`(46)
`
`(352)
`
`1,436
`
`(309)
`
`959
`
`29 Cash flows from acquisition of subsidiaries
`and business units
`
`DKK million
`
`2008
`
`2007
`
`2006
`
`Intangible assets
`Property, plant and
`equipment
`Other long-term assets
`Current assets
`Long-term liabilities
`Current liabilities
`
`44
`
`9
`
`18
`149
`(37)
`(176)
`
`Sanofi Exhibit 2136.157
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Net assets acquired
`
`Goodwill on acquisition
`
`Consideration paid
`
`Acquired cash and cash
`equivalents
`
`Net cash flow
`
`7
`
`52
`
`(59)
`
`(59)
`
`Please refer to note 2 for further information.
`
`30 Cash and cash equivalents
`
`DKK million
`
`2008
`
`2007
`
`2006
`
`Cash at the end of the
`year
`Short-term bank loans
`and overdrafts
`at the end of the year
`(refer to note 26)
`
`Cash and cash
`equivalents
`at the end of the year
`
`8,781
`
`4,823
`
`3,270
`
`(55)
`
`(206)
`
`(285)
`
`8,726
`
`4,617
`
`2,985
`
`At the end of 2008, 2007 and 2006 there were no marketable
`securities with original maturity of less than three months.
`
`Novo Nordisk Annual Report 2008
`
`75
`
`Sanofi Exhibit 2136.158
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Back to Contents
`
`D Consolidated financial statements Notes - Consolidated financial statements
`
`31 Financial risk
`
`Novo Nordisk has centralised the management of the Group's
`financial risks. The overall objective and policies for the
`company's financial risk management are outlined in the
`Treasury Policy, which is approved by the Board of Directors.
`The Treasury Policy consists of the Foreign Exchange Policy,
`the Investment Policy, the Financing Policy and the Policy
`regarding Credit Risk on Financial Counterparts, and includes a
`description of allowed financial instruments and risk limits.
`
`Novo Nordisk only hedges commercial exposures and
`consequently does not enter into derivative transactions for
`trading or speculative purposes. Novo Nordisk uses a fully
`integrated Treasury Management System to manage all financial
`positions. All positions are marked-to-market based on real-time
`quotes and risk is assessed using generally accepted
`standards.
`
`Foreign exchange risk
`Foreign exchange risk is the principal financial risk within Novo
`Nordisk and as such has a significant impact on the Income
`statement and the Balance sheet.
`
`The major part of Novo Nordisk's sales is in EUR, USO, JPY,
`and GBP, while a predominant part of production, research, and
`development costs is carried in DKK. As a consequence, Novo
`Nordisk's foreign exchange risk is most significant in USO, JPY
`and GBP, leaving out EUR for which the exchange rate risk is
`regarded as low due to the Danish fixed-rate policy vis-a-vis the
`EUR. In addition, International Operations' share of sales is
`continuously increasing and the implied foreign exchange risk is
`becoming more important.
`
`The overall objective of foreign exchange risk management is to
`limit the short-term negative impact on earnings and cash flow
`from exchange rate fluctuations, thereby increasing the
`predictability of the financial results.
`
`Novo Nordisk hedges existing assets and liabilities in major
`currencies as well as future expected cash flows up to 24
`months forward. Currency hedging is based upon expectations of
`future exchange rates and takes place using mainly foreign
`exchange forwards and foreign exchange options matching the
`due dates of the hedged items. Expected cash flows are
`continuously assessed using historical inflows, budgets and
`monthly sales forecasts. Hedge effectiveness is assessed on a
`regular basis.
`
`In 2008, financial markets have been characterised by elevated
`uncertainty. As a result, volatility has been higher in all financial
`markets including the foreign exchange market. USO fluctuated
`significantly but ended 2008 with an appreciation of 4.1 % versus
`DKK. In 2007 the USO depreciated by 10.4% versus DKK.
`
`At the end of 2008 a 5% increase in all other currencies versus
`EUR and DKK would result in a decrease of the value of the net
`financial instruments of the Group of approximately DKK 661
`million (DKK 714 million in 2007). A 5% decrease in all other
`currencies versus EUR and DKK would result in an increase of
`the value of the net financial instruments of the Group of
`approximately DKK 669 million (DKK 772 million in 2007).
`
`The financial instruments included in the foreign exchange
`sensitivity analysis are the Group's cash, accounts receivable
`and payable, short- and long-term loans, short- and long-term
`financial investments, foreign exchange forwards, and foreign
`exchange options hedging transaction exposure. Furthermore,
`interest rate swaps and cross-currency swaps are included. Not
`included are anticipated currency transactions, investments, and
`fixed assets. Cross-currency swaps hedging translation
`exposure are excluded from the sensitivity analysis, as the
`effects of changing exchange rates hereon are recognised
`directly under shareholders' funds.
`
`Novo Nordisk only hedges invested equity in major foreign
`affiliates to a very limited extent. Equity hedging takes place
`using long-term cross-currency swaps. At the end of 2008,
`hedged equity made up 12% of the Group's JPY equity. At the
`end of 2007, 12% of the Group's JPY equity was hedged.
`
`Interest rate risk
`The volatility of the financial markets also impacted interest
`rates. During 2008, DKK and EUR interest rates experienced
`high volatility and ended the year with a significant decline. The
`Danish two-year interest rate swap was 3.57% at the end of
`2008, down from 4.23% at the end of 2007.
`
`Changes in the interest rates have an effect on Novo Nordisk's
`financial instruments. At the end of 2008, an increase in the
`interest rate level of one percentage point would, everything else
`being equal, increase the fair value of Novo Nordisk's financial
`instruments by DKK 19 million (DKK 15 million in 2007).
`
`The financial instruments included in the sensitivity analysis
`consist of marketable securities, deposits, short- and long-term
`loans, interest rate swaps and cross-currency swaps. Not
`included are foreign exchange forwards and foreign exchange
`options due to the limited effect that a parallel shift in interest
`rates in all currencies have on these instruments.
`
`Liquidity risk
`Novo Nordisk ensures availability of required liquidity through a
`combination of cash management, highly liquid investment
`portfolios and uncommitted as well as committed facilities.
`
`Counterparty risk
`
`Sanofi Exhibit 2136.159
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Movements in the JPY and the GBP were likewise abnormally
`high. The JPY appreciated by 30.3%, whereas the GBP
`depreciated by 24.6%, both versus DKK. In 2007, the JPY
`depreciated by 5.5% whereas the GBP appreciated by 8.6%.
`Emerging market currencies impacting sales of International
`Operations overall weakened quite significantly because of the
`financial crisis and increased risk aversion.
`
`At year-end 2008 Novo Nordisk has covered the foreign
`exchange exposures on the Balance sheet together with 15
`months of expected future cash flow in USO. For both JPY and
`GBP the equivalent cover was 13 months of expected future
`cash flow. At the end of 2007, the USO cover was 16 months,
`and for JPY and GBP the cover was 15 months and 10 months,
`respectively.
`
`A 5% change in the following currencies will have a full-year
`impact on operating profit of approximately:
`
`DKK million
`
`USO
`JPY
`GBP
`CNY
`CAD
`
`Estimated Estimated
`for
`for
`2009
`2008
`
`530
`150
`80
`80
`40
`
`470
`140
`85
`65
`35
`
`76 Novo Nordisk Annual Report 2008
`
`The use of derivative financial instruments and money market
`deposits gives rise to counterparty exposure. To manage the
`credit risk on financial counter-parties, Novo Nordisk only enters
`into derivative financial contracts with financial counterparties
`having a satisfactory long-term credit rating assigned by
`international credit rating agencies. Money market deposits are
`only entered into with financial counterparties having a
`satisfactory credit rating. The majority of all deposits are secured
`by Danish State guarantee until 2010. Furthermore, maximum
`credit lines defined for each counterpart limit the overall
`counterpart risk.
`
`The credit risk on bonds is limited as investments are made in
`highly liquid bonds with solid credit ratings.
`
`Credit risk on Trade and Other receivables is limited as Novo
`Nordisk has no significant concentration of credit risk, with
`exposure being spread over a large number of counterparties and
`customers.
`
`Capital structure
`Novo Nordisk's capital structure is characterised by a
`substantial equity ratio. This is in line with the general capital
`structure of the pharmaceutical industry and reflects the inherent
`long-term investment horizons in an industry with typically more
`than 1 O years' development time for pharmaceutical products.
`Novo Nordisk's equity ratio, calculated as equity to total
`liabilities, was 65.2% by the end of the year (67.4% at the end of
`2007).
`
`Sanofi Exhibit 2136.160
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Back to Contents
`
`Consolidated financial statements Notes - Consolidated financial statements D
`
`32 Related party transactions
`
`Novo Nordisk A/S is controlled by Novo A/S (incorporated in
`Denmark), which owns 25.5% of the shares in Novo Nordisk
`A/S. The remaining shares are widely held. The ultimate parent
`of the Group is the Novo Nordisk Foundation (incorporated in
`Denmark). Both entities are considered related parties.
`
`Other related parties are considered to be the Novozymes Group
`due to joint ownership, associated companies, the directors and
`officers of these entities and management of Novo Nordisk A/S.
`Following the demerger of Novozymes in November 2000, Novo
`Nordisk A/S has access to certain assets of and may purchase
`certain services from Novo A/Sand the Novozymes Group and
`vice versa. All agreements relating to such assets and services
`are based on the list prices used for sales to third parties where
`such list prices exist, or the price has been set at what is
`regarded as market price. The main part of these agree ments
`covers one year.
`
`The Group has had the following material transactions with
`related parties:
`
`DKK million
`
`Novo Nordisk Foundation
`Donations to the Group
`
`Novo A/S
`Services provided by the Group
`Facilitation provided by Novo A/S
`Purchase of Novo Nordisk B shares
`Sale of treasury shares (related to
`share options)
`Net balance
`
`The Novozymes Group
`Services provided by the Group
`Services provided by the Novozymes
`Group
`Net balance
`
`Associated companies
`Purchased intangible assets, fees
`and royalties etc paid to associated
`companies by Novo Nordisk
`Received intangible assets, fees and
`royalties etc from associated
`companies to Novo Nordisk
`
`2008
`2007
`Purchase/ Purchase/
`(sale)
`(sale)
`
`(29)
`
`(30)
`
`(6)
`
`1,016
`
`(9)
`
`1
`
`(284)
`
`147
`
`33
`
`(7)
`1
`2,090
`
`(8)
`
`3
`
`(253)
`
`159
`
`14
`
`40
`
`63
`
`(12)
`
`Sanofi Exhibit 2136.161
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`There have not been any material transactions with any director
`or officer of Novo Nordisk, the Novozymes Group, Novo A/S, the
`Novo Nordisk Foundation or associated companies. For
`information on remuneration to the management of Novo Nordisk
`A/S, please refer to note 34.
`
`Apart from the balances included in the Balance sheet under
`Other financial assets, Other receivables and Other liabilities,
`there are no material unsettled transactions with related parties
`at the end of the year.
`
`Novo Nordisk Annual Report 2008
`
`77
`
`Sanofi Exhibit 2136.162
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Back to Contents
`
`D Consolidated financial statements Notes - Consolidated financial statements
`
`33 Share-based payment schemes
`
`DKK million
`
`2008
`
`2007
`
`2006
`
`Share options
`Novo Nordisk had established share option schemes in 1998-
`2006 with the purpose of motivating and retaining a qualified
`management group and to ensure common goals for
`management and the shareholders. Each option gives the right
`to purchase one Novo Nordisk B share. All share options are
`hedged by treasury shares. No options were granted in 2007 and
`2008 as the future long-term incentive programme from 2007
`onwards will be share based.
`
`The options are exercisable three years after the issue date and
`will expire after eight years. The exercise price for options
`granted based on performance targets for the financial years
`2000 -2006 was equal to the market price of the Novo Nordisk B
`share at the time when the plan was established. The options
`can only be settled in shares.
`
`156
`
`15
`
`9
`
`9
`
`55
`
`43
`
`46
`
`Total share-based
`payment costs
`recognised in income
`statement
`Employee shares (DK
`based employees)
`Employee shares
`(Outside DK)
`Long-term share-based
`incentive programme
`(Senior management
`board)
`Long-term share-based
`incentive programme
`(Management group
`below Senior
`management board) *)
`
`Share-based payment
`expensed in the Income
`statement
`
`105
`
`78
`
`58
`
`Assumptions
`The market value of the Novo Nordisk B share options has been
`calculated using the Black-Scholes option pricing model.
`
`331
`
`130
`
`113
`
`The assumptions used are shown in the table below:
`
`*) Includes long-term share-based incentive programme for 2007 and 2008
`and share option programme for 2003 to 2006.
`
`Employee shares
`In 2008 a general employee share program was implemented in
`Denmark. Approximately 12,000 employees have purchased 1.2
`million shares at a price of DKK 150 per share.
`
`Outside of Denmark the program is structured as share options
`with the same initial benefit per employee as in Denmark.
`Approximately 14,000 employees have been granted 694,500
`shares.
`
`Long-term share-based incentive programme
`For a description of the programme please refer to pages 44- 45.
`
`In 2008, the allocation to the joint pool for the Senior
`Management Board amounts to DKK 55 million, corresponding
`to 8 months' salary. This amount was expensed in 2008. The
`cash amount was converted into 171,492 Novo Nordisk B shares
`of DKK 1 using a share price of DKK 318, equal to the average
`trading price for Novo Nordisk B shares on the NASDAQ OMX
`Copenhagen from 31 January to 14 February 2008. Based on the
`split of participants at the establishment of the joint pool,
`approximately 35% of the pool will be allocated to the members
`of Executive Management and 65% to the members of the
`Senior Management Board.
`
`Expected life of the
`option in years (average)
`Expected volatility
`Expected dividend per
`share (in DKK)
`Risk-free interest rate
`(based on Danish
`government bonds)
`Novo Nordisk B share
`price at the date of grant
`Novo Nordisk B share
`price at the end of the
`year
`
`2008
`
`2007
`
`2006
`
`6
`29%
`
`6.00
`
`6
`21%
`
`4.50
`
`6
`17%
`
`3.50
`
`3.00%
`
`4.25%
`
`3.60%
`
`N/A
`
`N/A
`
`195
`
`271.0
`
`335.0
`
`235.5
`
`Share options on Novozymes shares
`Options granted prior to the demerger of Novozymes A/S in 2000
`have been split into one Novo Nordisk option and one
`Novozymes option. At the end of the year, the Group's
`outstanding Novozymes options amount to 20,117 with an
`average exercise price of DKK 101 per share of DKK 1 0 and a
`market value of DKK 6 million. These options are hedged by the
`Group's holding of Novozymes A/S B shares.
`
`Sanofi Exhibit 2136.163
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`The shares allocated to the joint pool for 2005 (232,026 shares)
`were released to the individual participants on 29 January 2009
`following the approval of the Annual Report 2008 by the Board of
`Directors.
`
`The total number of shares in the joint pool relating to the years
`2006, 2007 and 2008 now amounts to 599,284 shares split in the
`following way:
`
`Year allocated to pool
`
`Number of shares
`
`Vesting
`
`2006
`2007
`2008
`
`261,500
`166,292
`171,492
`
`599,284
`
`2010
`2011
`2012
`
`For the management group below the Senior Management
`Board, a similar share-based incentive programme was
`introduced in 2007. The allocation to the joint pool for this group
`consisting of approximately 500 employees was DKK 135 million
`in 2007, corresponding to 527,665 shares. The cost of this
`allocation will be amortised equally over the period 2007-2010.
`
`For 2008, this group consisted of about 550 employees. The
`allocation to the joint pool was DKK 181 million corresponding to
`570,390 shares. The cost of this allocation will be amortised
`equally over the period 2008 -2011. Including cancelled
`allocations of 7,690 shares from 2007 this pool now consists of
`1,090,365 shares.
`
`78 Novo Nordisk Annual Report 2008
`
`Sanofi Exhibit 2136.164
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Back to Contents
`
`Consolidated financial statements Notes - Consolidated financial statements D
`
`33 Share-based payment schemes (continued)
`
`Outstanding share options in Novo Nordisk
`
`Outstanding at the end of 2005
`
`Granted in respect of 2006 (issued on 31 January 2007)
`Exercised in 2006:
`of 1997 Ordinary share option plan
`of 1998 Ordinary share option plan
`of 1999 Ordinary share option plan
`of 2000 Ordinary share option plan
`of Launch share option plan
`of 2001 Ordinary share option plan
`of 2002 Launch share option plan
`of 2005 Employee share options *)
`Cancelled in 2006
`Value adjustment ***)
`
`Average
`exercise
`price per
`option
`DKK
`
`Market
`value per
`option
`DKK
`
`Market
`value
`DKK
`million
`
`119
`
`175
`
`95
`63
`99
`99
`99
`166
`161
`0
`119
`
`64
`
`45
`
`64
`64
`64
`64
`64
`64
`64
`64
`64
`
`634
`
`99
`
`(2)
`(10)
`(17)
`(18)
`(54)
`(18)
`(2)
`0
`(11)
`519
`
`Share
`options
`
`9,951,772
`
`2,229,084
`
`(27,000)
`(161,500)
`(270,400)
`(280,416)
`(845,880)
`(283,600)
`(36,000)
`(350)
`(179,306)
`
`Outstanding at the end of 2006
`
`10,096,404
`
`134
`
`111
`
`1,120
`
`Exercised in 2007:
`of 1998 Ordinary share option plan
`of 1999 Ordinary share option plan
`of 2000 Ordinary share option plan
`of 2001 Ordinary share option plan
`of Launch share option plan
`of 2001 Launch share option plan
`of 2002 Launch share option plan
`of 2003 Ordinary share option plan
`of 2005 Employee share options*)
`Expired in 2007
`Cancelled in 2007
`Value adjustment ***)
`
`(73,000)
`(287,434)
`(306,800)
`(356,280)
`(138,680)
`(21,528)
`(16,048)
`(979,010)
`(840)
`(17,000)
`(261,036)
`
`63
`99
`99
`166
`99
`166
`161
`98
`0
`134
`134
`
`111
`111
`111
`111
`111
`111
`111
`111
`111
`111
`111
`
`(8)
`(32)
`(34)
`(40)
`(15)
`(2)
`(2)
`(109)
`0
`(2)
`(29)
`688
`
`Outstanding at the end of 2007
`
`7,638,748
`
`140
`
`201
`
`1,535
`
`Employee share options granted 2008 **)
`Exercised in 2008:
`of 1999 Ordinary share option plan
`of 2000 Ordinary share option plan
`of 2001 Ordinary share option plan
`
`694,500
`
`(140,500)
`(159,525)
`(92,700)
`
`0
`
`99
`99
`166
`
`289
`
`201
`201
`201
`
`201
`
`(28)
`(32)
`(18)
`
`Sanofi Exhibit 2136.165
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`of 2003 Ordinary share option plan
`of 2004 Launch share option plan
`of 2005 Employee share options *)
`Expired in 2008
`Cancelled in 2008
`Value adjustment ***)
`
`(225,225)
`(566,516)
`(156,380)
`(58,070)
`(16,000)
`
`97.5
`133.5
`0
`140
`140
`
`201
`201
`201
`201
`201
`
`(45)
`(114)
`(31)
`(12)
`(3)
`(505)
`
`Outstanding at the end of 2008
`
`6,918,332
`
`133
`
`137
`
`948
`
`*) Granted to employees in some countries outside of Denmark with a benefit equal to the employee share benefit obtained by employees under the employee
`share programme in the rest of the world.
`**) Granted to employees outside of DK under the employee share programme, with a benefit equal to the benefit obtained by the Danish based employees under
`the employee share programme.
`
`***) The market value has been calculated using the Black-Scholes model with the parameters existing at year-end of the respective year.
`
`Novo Nordisk Annual Report 2008
`
`79
`
`Sanofi Exhibit 2136.166
`Mylan v. Sanofi
`IPR2018-01676
`
`

`

`Back to Contents
`
`D Consolidated financial statements Notes - Consolidated financial statements
`
`