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Shire plc – ‘10-K’ for 12/31/09 – ‘XML.R14’

On:  Friday, 2/26/10, at 12:40pm ET   ·   For:  12/31/09   ·   Accession #:  950103-10-520   ·   File #:  0-29630

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/26/10  Shire plc                         10-K       12/31/09   62:8.1M                                   Davis Polk & … LLP 01/FA

Annual Report   —   Form 10-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML   2.87M 
 2: EX-10.26    Material Contract                                   HTML     37K 
 3: EX-21       Subsidiaries List                                   HTML     47K 
 4: EX-23.1     Consent of Experts or Counsel                       HTML     19K 
 5: EX-23.2     Consent of Experts or Counsel                       HTML     19K 
 6: EX-31.1     Certification -- §302 - SOA'02                      HTML     26K 
 7: EX-31.2     Certification -- §302 - SOA'02                      HTML     26K 
 8: EX-32.1     Certification -- §906 - SOA'02                      HTML     20K 
47: XML         IDEA XML File -- Definitions and References          XML    131K 
55: XML         IDEA XML File -- Filing Summary                      XML     94K 
52: XML.R1      Document And Entity Information                      XML     89K 
53: XML.R2      Consolidated Balance Sheets                          XML    268K 
32: XML.R3      Consolidated Balance Sheets (Parentheticals)         XML     57K 
37: XML.R4      Consolidated Balance Sheets (Parentheticals in       XML     33K 
                GBP)                                                             
45: XML.R5      Consolidated Statements of Operations                XML    365K 
44: XML.R6      Consolidated Statements of Operations                XML     51K 
                (Parentheticals)                                                 
59: XML.R7      Consolidated Statement of Changes in Shareholders'   XML   1.03M 
                Equity                                                           
22: XML.R8      Consolidated Statements of Comprehensive Income      XML    122K 
43: XML.R9      Components of Accumulated Other Comprehensive        XML     51K 
                Income                                                           
20: XML.R10     Consolidated Statements of Comprehensive Income      XML     59K 
                (Parentheticals)                                                 
19: XML.R11     Consolidated Statements of Cash Flows                XML    545K 
31: XML.R12     Description Of Operations                            XML     35K 
49: XML.R13     Summary Of Significant Accounting Policies           XML     80K 
33: XML.R14     Business combinations                                XML     79K 
34: XML.R15     Termination costs                                    XML     38K 
41: XML.R16     Gain on sale of product rights                       XML     35K 
62: XML.R17     Reorganization costs                                 XML     43K 
29: XML.R18     Intergration and Acquisition costs                   XML     35K 
15: XML.R19     Accounts receivable, net                             XML     38K 
36: XML.R20     Inventories                                          XML     37K 
48: XML.R21     Assets held for sale                                 XML     35K 
25: XML.R22     Prepaid expenses and other current assets            XML     37K 
46: XML.R23     Investments                                          XML     40K 
35: XML.R24     Property Plant and Equipment, net                    XML     38K 
58: XML.R25     Goodwill                                             XML     39K 
51: XML.R26     Other intangible assets, net                         XML     43K 
38: XML.R27     Accounts payable and accrued expenses                XML     43K 
42: XML.R28     Other current liabilities                            XML     37K 
18: XML.R29     Long-term debt                                       XML     40K 
21: XML.R30     Other long-term debt                                 XML     36K 
26: XML.R31     Other non-current liabilities                        XML     37K 
30: XML.R32     Derivative instruments                               XML     45K 
40: XML.R33     Fair value measurement                               XML     53K 
50: XML.R34     Commitments and contingencies                        XML     56K 
17: XML.R35     Shareholders Equity                                  XML     41K 
23: XML.R36     Earnings per share                                   XML     52K 
54: XML.R37     Segmental reporting                                  XML     97K 
57: XML.R38     Interest expense                                     XML     36K 
39: XML.R39     Other income (expenses), net                         XML     39K 
60: XML.R40     Retirement benefits                                  XML     34K 
24: XML.R41     Taxation                                             XML     86K 
61: XML.R42     Share-based compensation plans                       XML     71K 
28: XML.R43     Restatement of previously issued financial           XML     35K 
                statements                                                       
16: XML.R44     Income Access Share Trust Financial Statements       XML     62K 
27: XML.R45     Valuation and Qualifying Accounts Schedule           XML     45K 
56: EXCEL       IDEA Workbook of Financial Reports (.xls)            XLS    206K 
 9: EX-101.INS  XBRL Instance -- shpgf-20091231                      XML    826K 
11: EX-101.CAL  XBRL Calculations -- shpgf-20091231_cal              XML    203K 
12: EX-101.DEF  XBRL Definitions -- shpgf-20091231_def               XML     86K 
13: EX-101.LAB  XBRL Labels -- shpgf-20091231_lab                    XML    822K 
14: EX-101.PRE  XBRL Presentations -- shpgf-20091231_pre             XML    468K 
10: EX-101.SCH  XBRL Schema -- shpgf-20091231                        XSD     99K 


‘XML.R14’   —   Business combinations


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<div style="font-size:12pt"><p>3.        Business combinations<br /><br />Business combinations completed subsequent to January 1, 2009<br /><br />EQUASYM IR and XL<br /><br />On March 31, 2009 the Company acquired the worldwide rights (excluding the US, Canada and Barbados) to EQUASYM IR and XL for the treatment of ADHD from UCB Pharma Limited (“UCB”) for cash consideration of $72.8 million. Included within the recognized purchase price for the acquisition is further consideration of $18.2 million, which may become payable in 2010 and 2011 if certain sales targets are met. This acquisition has broadened the scope of Shire’s ADHD portfolio and facilitated immediate access to the European ADHD market as well as providing Shire the opportunity to enter additional markets around the world.<br /><br />The acquisition of EQUASYM IR and XL has been accounted for as a business combination. The purchase price has been allocated on a preliminary basis to the currently marketed products acquired ($73.0 million), IPR&D ($5.5 million), other liabilities ($0.7 million) and goodwill ($13.2 million).<br /><br />Business combinations completed prior to January 1, 2009 <br /><br />Jerini acquisition<br /><br />On July 3, 2008 the Company announced that it was launching a voluntary public takeover offer for all outstanding shares in Jerini, a German corporation, at a price of EUR 6.25 per share. By August 6, 2008 the Company had acquired 80.1% of the voting interests in Jerini for a cash consideration of $456.3 million. By December 31, 2008 the Company had acquired 98.6% of the voting interests in Jerini for a cash consideration of $556.5 million, represented by Jerini shares, ($539.8 million), the cash cost of cancelling Jerini stock options ($9.4 million) and direct costs of acquisition ($7.3 million). By December 31, 2009 the Company had acquired the rights to the remaining 1.4% of the voting interests in Jerini for additional cash consideration of $10.5 million including direct acquisition costs, such that the Company owned 100% of Jerini. The acquisition added Jerini’s hereditary angioedema (“HAE”) product FIRAZYR to Shire’s portfolio. <br /><br />The acquisition of Jerini has been accounted for as a purchase business combination. The assets acquired and the liabilities assumed from Jerini have been recorded at the date of acquisition at their fair value. Consolidated financial statements and reported results of operations of Shire issued after the acquisition of a majority holding reflect these values, with the results of Jerini included from August 1, 2008, for convenience purposes, in the consolidated statement of operations. Between acquiring the Company’s controlling voting interest in early August 2008 and December 31, 2009, the Company acquired the remaining voting interests totaling 19.9% of Jerini’s issued share capital. The additional voting interests have been accounted for as step-acquisitions using the purchase method of accounting.<br /><br />The purchase price was allocated on a preliminary basis to the fair value of assets acquired and liabilities assumed. The final fair values of assets acquired and liabilities assumed was determined in July 2009, and the adjustment in the second quarter of 2009 to recognize assumed liabilities is detailed in section (c) below. <br /><br />The following table presents the Company’s preliminary allocation of the purchase price to the assets acquired and liabilities assumed at their fair values based on the Company’s 80.1% voting interest acquired by August 6, 2008: </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="left"> </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">Fair value</td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">$’M</td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="left"> </td></tr><tr><td height="17" width="614" align="left">ASSETS</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Current assets:</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Cash and cash equivalents</td><td height="17" width="89" align="right">56.7 </td></tr><tr><td height="17" width="614" align="left">Restricted cash</td><td height="17" width="89" align="right">0.4 </td></tr><tr><td height="17" width="614" align="left">Inventories</td><td height="17" width="89" align="right">1.9 </td></tr><tr><td height="17" width="614" align="left">Assets held-for-sale</td><td height="17" width="89" align="right">24.4 </td></tr><tr><td height="17" width="614" align="left">Other current assets</td><td height="17" width="89" align="right">4.9 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="17" width="614" align="left">Total current assets</td><td height="17" width="89" align="right">88.3 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Property, plant and equipment </td><td height="17" width="89" align="right">3.6 </td></tr><tr><td height="17" width="614" align="left">Goodwill</td><td height="17" width="89" align="right">121.0 </td></tr><tr><td height="17" width="614" align="left">Other intangible assets</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left"> - currently marketed product</td><td height="17" width="89" align="right">257.6 </td></tr><tr><td height="17" width="614" align="left"> - in-process R&D</td><td height="17" width="89" align="right">104.1 </td></tr><tr><td height="17" width="614" align="left">Deferred tax asset</td><td height="17" width="89" align="right">0.5 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="17" width="614" align="left">Total assets</td><td height="17" width="89" align="right">575.1 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="17" width="614" align="left">LIABILITIES</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Current liabilities:</td><td height="17" width="89" align="right">31.3 </td></tr><tr><td height="17" width="614" align="left">Deferred tax liability</td><td height="17" width="89" align="right">76.3 </td></tr><tr><td height="17" width="614" align="left">Other long-term liabilities</td><td height="17" width="89" align="right">0.8 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="17" width="614" align="left"> Total liabilities</td><td height="17" width="89" align="right">108.4 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Estimated fair value of identifiable assets acquired and liabilities assumed</td><td height="17" width="89" align="right">466.7 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Noncontrolling interest</td><td height="17" width="89" align="right">(10.4)</td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="17" width="614" align="left">Cost of 80.1% voting interest acquired</td><td height="17" width="89" align="right">456.3 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_______________</td></tr></table><p>(a) Other intangible assets, currently marketed product<br /><br />Other intangible assets includes $320.2 million (being $257.6 million acquired as of August 6, 2008 and $62.6 million in the subsequent step acquisitions) relating to intellectual property rights in respect of Jerini’s currently marketed product, FIRAZYR, which received marketing authorization from the European Commission in July 2008 for the treatment of acute HAE in the EU. These intellectual property rights include the right to develop, use, market, sell and/or offer for sale the technical processes, intellectual property and institutional understanding (including the way in which FIRAZYR reacts in body, an understanding of the mechanisms of action which allow FIRAZYR to work and the knowledge related to the associated clinical and marketing studies performed to obtain approval of FIRAZYR). The fair value of FIRAZYR in the EU has been determined using an income approach applying the multi-period excess earnings method, based on the present value of incremental after tax cash flows attributable to the asset after the deduction of contributory asset charges for the assets employed (including working capital, the assembled workforce and other fixed assets). <br /><br />This intangible asset has an estimated useful life of 17 years, will be amortized on a straight line basis, and has been allocated to the HGT reporting segment.<br /><br />(b) Other intangible assets, IPR&D<br /><br />IPR&D is defined as being a development project that has been initiated and has achieved material progress but (i) has not yet reached technological feasibility or has not yet received the appropriate regulatory approval, (ii) has no alternative future use, and (iii) the fair value is estimable with reasonable certainty. A project-by-project valuation using business combination and intangible assets guidance in the Codification and the American Institute of Certified Public Accountants Practice Aid “Assets Acquired in a Business Combination to Be Used In Research and Development Activities: A Focus on Software, Electronic Devices and Pharmaceutical Industries” has been performed to determine the fair value of research and development projects of Jerini which were in-process, but not yet completed as of the acquisition date. <br /><br />The IPR&D assets of $129.7 million (being $104.1 million acquired as of August 6, 2008 and $25.6 million in the subsequent step acquisitions) relate to FIRAZYR for the treatment of acute HAE in the US ($64.9 million), and the rest of the world excluding the US and EU (“RoW”), ($64.8 million). These IPR&D assets have not yet received approval from the relevant regulatory authorities at the acquisition date. In the US FIRAZYR received a not approvable letter from the FDA in April 2008. The Company considers that these IPR&D assets have no alternative future use outside of their current development projects and the fair value of these IPR&D assets has therefore been charged to the consolidated statement of operations (in accordance with the US GAAP for business combinations which completed prior to January 1, 2009).<br /><br />The fair value of the FIRAZYR IPR&D assets was determined using the income approach applying the multi-period excess earnings method. The fair value of the IPR&D assets has been based on the incremental cash flows expected to be generated by the development projects after the deduction of contributory asset charges in respect of other assets employed in these research projects (including working capital, the assembled workforce and other fixed assets). These estimated future cash flows were then probability adjusted to take into account the stage of completion and the remaining risks and uncertainties surrounding the future development and commercialization of FIRAZYR. These estimated probability adjusted, after tax cash flows were then discounted at 17-18% to determine a present, or fair, value.<br /><br />The major risks and uncertainties associated with the timely completion of the acquired IPR&D projects consist of the ability to confirm the efficacy of the technology based on data from the clinical trials, and obtaining the relevant regulatory approvals. The valuations have been based on information at the time of the acquisition and expectations and assumptions that (i) have been deemed reasonable by the Company’s management, and (ii) are based on information, expectations and assumptions that would be available to and be made by a market participant. However, no assurance can be given that the underlying assumptions or events associated with such assets will occur as projected. For these reasons, among others, the actual cash flows may vary from forecast future cash flows.<br /><br />(c) Goodwill<br /><br />Goodwill of $152.8 million (being $121.0 million acquired as of August 6, 2008 and $31.8 million in the subsequent step acquisitions) has been wholly allocated to the HGT reporting segment and is not deductible for tax purposes.<br /><br />(d) Assets held-for-sale<br /><br />On acquisition of Jerini the Company and Jerini commenced a strategic review of the acquired assets to identify which of the assets were non core to the newly combined business. In October 2008 Jerini announced that its Supervisory and Management Boards had concluded that it was in the best interests of Jerini to divest Jerini Ophthalmic, Inc, (“JOI”), Jerini Peptide Technologies Gmbh (“JPT”) and Jerini’s pre clinical projects. The Company presented the fair value less costs to sell of JOI and JPT as assets held-for-sale at the acquisition date. These held-for-sale assets were recorded at their aggregate fair value less costs to sell of $27.8 million within the purchase price allocation, the carrying value being primarily represented by the fair value of IPR&D.<br /><br />In May 2009 JPT was divested for cash consideration of $6.7 million, resulting in a loss on disposal of $0.5 million.<br /><br />For the years to December 31, 2009 and 2008 the Company has presented JOI and JPT as discontinued operations, recording revenues and the pre-tax loss from these businesses within discontinued operations for the year to December 31, 2009 of $2.3 million and $12.4 million (2008: $3.6 million and $17.6 million, 2007: $nil and $nil) respectively. The loss from discontinued operations for the year to December 31, 2009 includes the $0.5 million loss on disposal of JPT and charges of $5.9 million relating to re-measurement of JOI assets to fair value, as a result of the closure, rather than divestment, of JOI. The loss from discontinued operations in the year to December 31, 2008 also includes a charge of $12.9 million arising on the re-measurement of assets held for sale to their fair value less costs to sell at December 31, 2008.<br /><br />Further, in 2009, the Company adjusted the preliminary purchase price allocation to recognize assumed liabilities for onerous contract costs and employee involuntary termination costs incurred on closure of JOI and the pre-clinical projects totaling $9.1 million. These adjustments were recognized as an increase in acquired goodwill.<br /><br />METAZYM acquisition<br /><br />On June 4, 2008 Shire completed the acquisition of the global rights to METAZYM from Zymenex A/S (“Zymenex”) for $135.0 million in cash, and recognized an IPR&D charge of $135.0 million during 2008 for the acquired development project.<br /><br />New River acquisition <br /><br />On April 19, 2007 Shire completed its acquisition of New River by way of a short-form merger, in an all-cash transaction. The acquisition was effected by merging Shuttle Corporation, an indirect wholly owned subsidiary of Shire, with and into New River, with New River continuing as the surviving corporation. As consideration, Shire paid to New River’s shareholders $64 in cash for each share of New River common stock outstanding at the time of the acquisition.<br /><br />The acquisition of New River allowed Shire to capture the full economic value of VYVANSE, and gain control of the future development and commercialization of this product. VYVANSE for ADHD in pediatric populations was approved by the FDA on February 23, 2007 and the Company received notification from the Drug Enforcement Administration (“DEA”) of the final Schedule II classification for VYVANSE on May 3, 2007. <br /><br />The acquisition of New River was accounted for using the purchase method. Under the purchase method of accounting, the assets and liabilities of New River were recorded at their fair values at the acquisition date. The consolidated financial statements and reported results of operations of Shire issued after the completion of the acquisition reflect these fair values, with the results of New River being included within the consolidated statement of operations from April 19, 2007. <br /><br />Total consideration, was $2,594.5 million at the price of $64 per share of New River’s common stock, including direct cash consideration of $2,276.0 million, the cost of settling stock options and SARs of $124.5 million, the cost of settling warrants over shares of New River common stock of $133.0 million and direct acquisition costs of $61.0 million.<br /><br />Accounting for the Effective Settlement of the New River Collaboration Agreement<br /><br />Prior to the acquisition of New River, on January 31, 2005 Shire entered into a collaboration agreement with New River which governed the development, manufacture and commercialization of VYVANSE for the treatment of ADHD in the US and RoW territories. In March 2005, this collaboration agreement was split into two separate agreements, the US Collaboration Agreement and the RoW Territory Licence Agreement (together the “New River Collaboration Agreements”).<br /><br />Under the terms of the New River Collaboration Agreements, the parties were required to collaborate on the development, manufacturing, marketing and sales of VYVANSE in the US. Profits from the collaboration arising in the US were to be divided according to a predetermined formula, based on the scheduling of VYVANSE by the DEA. Post-approval milestones were due under the New River Collaboration Agreements if the product received favorable scheduling (schedule III, IV or V or unscheduled) and on the achievement of certain sales milestones.<br /><br />Through the New River Collaboration Agreements Shire also acquired the license in the RoW territory to develop and commercialize VYVANSE, in consideration of a low double-digit royalty.<br /><br />Shire paid an initial sum of $50 million to New River in January 2005 on signing the original collaboration agreement and a further $50 million was paid by Shire to New River following acceptance of the filing of a New Drug Application (“NDA”) by the FDA in January 2006.<br /><br />As Shire had a pre-existing relationship with New River, Shire accounted for the effective settlement of this relationship as of the completion date of the New River acquisition.<br /><br />Shire measured the effective settlement of the New River Collaboration Agreements resulting from its pre-existing relationship with New River and determined that, in respect of the US Collaboration Agreement, it was less favorable to the Company when compared with pricing for current market transactions for similar items. The RoW Territory License Agreement was determined to be at current market rates. The valuation of the New River Collaboration Agreements and their current market comparators was based upon information available at the time of the acquisition and using the expectations and assumptions that were deemed reasonable by the Company’s management.<br /><br />Although the US Collaboration Agreement was deemed less favorable to the Company at the time of the acquisition when compared with pricing for current market transactions for similar items, the Company did not record a loss on the effective settlement of the pre-existing relationship in the consolidated statement of operations, nor did the Company adjust its purchase price for New River to reflect any such loss resulting from this effective settlement, as settlement provisions in the US Collaboration Agreement available to the Company enabled effective settlement of the New River Collaboration Agreements at no cost to the Company.<br /><br />(a) Purchase price allocation<br /><br />Shire's cost of acquiring New River of approximately $2.6 billion has been allocated to the assets acquired and liabilities assumed according to their estimated fair values at the date of acquisition. Based on this allocation, and at the end of the allocation period, an excess of the fair value of assets acquired and liabilities assumed over the cost of acquisition totaling $122.2 million had arisen which was allocated as a pro rata reduction of amounts that would otherwise have been ascribed to identifiable intangible assets and IPR&D, (such IPR&D being immediately charged to expense, having no alternative future use). The value of other intangible assets and IPR&D below are presented after this pro-rata allocation. <br /><br />During the second half of 2008, after the end of the allocation period, the Company reduced the values ascribed to other intangible assets by $24.1 million from amounts previously assigned to these assets in the purchase price allocation. The change to the values ascribed arose from changes to estimates of deferred taxes: accordingly the excess of the fair value of net assets acquired and liabilities assumed over the cost of the acquisition increased by $24.1 million. This excess was allocated to intangible assets.<br /><br />The following table presents the Company’s allocation of the purchase price to the assets acquired and liabilities assumed, including the post-allocation period adjustment as outlined above, based on their fair values.</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right"><b>$’M</b></td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left">ASSETS</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Current assets:</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Cash and cash equivalents</td><td height="17" width="89" align="right">74.9 </td></tr><tr><td height="17" width="614" align="left">Short-term investments</td><td height="17" width="89" align="right">55.8 </td></tr><tr><td height="17" width="614" align="left">Accounts receivable, net</td><td height="17" width="89" align="right">0.3 </td></tr><tr><td height="17" width="614" align="left">Inventories</td><td height="17" width="89" align="right">11.4 </td></tr><tr><td height="17" width="614" align="left">Purchased call option</td><td height="17" width="89" align="right">141.8 </td></tr><tr><td height="17" width="614" align="left">Deferred tax asset</td><td height="17" width="89" align="right">68.1 </td></tr><tr><td height="17" width="614" align="left">Prepaid expenses and other current assets</td><td height="17" width="89" align="right">0.2 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left">Total current assets</td><td height="17" width="89" align="right">352.5 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Property, plant and equipment, net</td><td height="17" width="89" align="right">0.8 </td></tr><tr><td height="17" width="614" align="left">Other intangible assets, net</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">-      Intellectual property - developed technology</td><td height="17" width="89" align="right">1,064.5 </td></tr><tr><td height="17" width="614" align="left">-      Favorable manufacturing contracts</td><td height="17" width="89" align="right">8.7 </td></tr><tr><td height="17" width="614" align="left">-      In process research and development</td><td height="17" width="89" align="right">1,866.4 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left">Total assets</td><td height="17" width="89" align="right">3,292.9 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left">LIABILITIES </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Current liabilities:</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Accounts payable and accrued expenses</td><td height="17" width="89" align="right">33.3 </td></tr><tr><td height="17" width="614" align="left">Convertible loan notes</td><td height="17" width="89" align="right">279.4 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">312.7 </td></tr><tr><td height="17" width="614" align="left">Non-current liabilities:</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="614" align="left">Deferred tax liability</td><td height="17" width="89" align="right">385.7 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left">Total liabilities</td><td height="17" width="89" align="right">698.4 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr><tr><td height="17" width="614" align="left">Net assets acquired</td><td height="17" width="89" align="right">2,594.5 </td></tr><tr><td height="17" width="614" align="left"> </td><td height="17" width="89" align="right">_____________</td></tr></table><p>(b) IPR&D<br /><br />A project-by-project valuation was performed to determine the fair values of research and development projects of New River which were in-process, but not completed as of the completion of the acquisition.<br /><br />IPR&D assets totaling $1,866.4 million were identified relating to VYVANSE indicated for ADHD in non-pediatric patients in the US ($1,786.8 million) and VYVANSE indicated for ADHD in RoW, ($79.6 million). Both of these IPR&D assets had not received approval, (either from the FDA or from the relevant regulators in the RoW) at the acquisition date. The Company considered that these IPR&D assets have no alternative future use outside of their current development projects, and these assets were therefore charged to expense in the consolidated statement of operations as of the acquisition date.<br /><br />The fair value of the VYVANSE IPR&D assets was determined through the income approach using the multi-period excess earnings method. The fair value of the acquired IPR&D assets was based on the present value of the probability adjusted incremental cash flows expected to be generated by the research and development projects, after the deduction of contributory asset charges for other assets employed in these projects (such other assets include working capital, the assembled workforce, and the favorable manufacturing contract identified below). The valuation assumed that the effective settlement of the pre-existing New River Collaboration Agreements had occurred and Shire had purchased 100% of the forecast future cash flows. Estimated future cash flows were probability adjusted to take into account the stage of completion and the risks surrounding the successful development and commercialization of the acquired projects. The estimated after tax cash flows were discounted to present value using risk adjusted discount rates between 10% and 12%.<br /><br />The major risks and uncertainties associated with the timely completion of the acquired IPR&D projects consist of the ability to confirm the safety and efficacy of the technology based on the data from ongoing clinical trials and obtaining the necessary regulatory approvals. The valuations were based on information at the time of the acquisition and expectations and assumptions that (i) were deemed reasonable by Shire’s management, and (ii) were based on information, expectations and assumptions that would have been available to and made by a market participant. However, no assurance can be given that the underlying assumptions or events associated with such assets will occur as projected. For these reasons, among others, the actual cash flows may vary from forecast future cash flows.<br /><br />(c) Identifiable intangible assets<br /><br />The acquired identifiable intangible assets were attributable to the following categories: </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">Fair value</td><td height="17" width="89" align="right">Asset life</td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">$’M</td><td height="17" width="89" align="right">Years</td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">_______________</td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="19" width="530" align="left">Intellectual property - developed technology(1)</td><td height="19" width="89" align="right">1,064.5 </td><td height="19" width="89" align="right">20 </td></tr><tr><td height="19" width="530" align="left">Favorable manufacturing contract(2)</td><td height="19" width="89" align="right">8.7 </td><td height="19" width="89" align="right">5 </td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">_______________</td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">1,073.2 </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">_______________</td><td height="17" width="89" align="right"> </td></tr></table><p>(1) Relates to VYVANSE approved for the treatment of ADHD in pediatric patients in the US.<br />(2) The asset life of 20 years represents the period over which management believe the asset will contribute to the future cash flows of Shire, being the expected commercial lifespan of VYVANSE (VYVANSE has patent protection in the US until September 2023).<br /><br />Acquired identifiable intangible assets primarily represent the value ascribed to developed technology, represented by VYVANSE for the treatment of ADHD in pediatric populations in the US. These rights include the rights to develop, use, market, sell and/or offer for sale the technical processes, intellectual property and institutional understanding (including the way in which VYVANSE reacts in body, an understanding of the mechanisms of action which allow VYVANSE to work and the knowledge related to the associated clinical and marketing studies performed for VYVANSE).<br /><br />The fair value of this intellectual property in respect of VYVANSE for the treatment of ADHD in pediatric populations was determined through the income approach using the multi-period excess earnings method. The valuation assumes that the effective settlement of the pre-existing New River Collaboration Agreements has occurred and Shire has purchased 100% of the cash flows of VYVANSE for the treatment of ADHD in pediatric populations in the US. Using the multi-period excess earnings method, the fair value of intellectual property in respect of VYVANSE for the treatment of ADHD in pediatric populations in the US was based on the present value of the incremental after-tax cash flows attributable to the asset, after the deduction of contributory asset charges for other assets employed (including working capital, the assembled workforce, and the favorable manufacturing contract).<br /><br />The valuations were based on information available at the time of the acquisition and the expectations and assumptions that (i) were deemed reasonable by Shire’s management, and (ii) were based on information, expectations and assumptions that would have been available to and made by a market participant. However, no assurance can be given that the underlying assumptions or events associated with such assets will occur as projected. For these reasons, among others, the actual cash flows may vary from forecast future cash flows.<br /><br />(d) Convertible Notes<br /><br />In July 2006, New River issued $137.8 million of 3.5% Convertible Subordinated Notes due 2013 (the “Notes”). On conversion of the Notes New River was obligated to pay the principal amount of the Notes to the Note holders in cash, with any excess of the fair value over their principal amount (the “Excess Conversion Value”) being payable either in cash, shares of New River common stock or a combination of shares of New River common stock and cash at the election of New River.<br /><br />On April 3, 2007 New River announced that it had elected to settle any Excess Conversion Value in cash. Following the change of control of New River as a result of the business combination, Note holders were entitled to a make-whole premium in the form of an increase in the conversion rate if they tendered their Notes for conversion prior to May 17, 2007.<br /><br />The Notes were included in the purchase price allocation at their fair value, being the present value of the estimated future cash flows in respect of the Notes as of the date of acquisition. All the outstanding Notes were tendered for conversion in the period between the acquisition and May 17, 2007 and were therefore settled in cash during the second quarter of 2007 at a value of $279.4 million, which equates to the fair value of the Notes at the acquisition date including the make-whole premium.<br /><br />(e) Purchased Call Option<br /><br />Concurrent with the issue of the Notes, New River also entered into a purchased call option with Merrill Lynch at a cost to New River of $43.5 million, being a convertible note hedge transaction for the Excess Conversion Value of the Notes. The purchased call options covered, subject to customary anti-dilution adjustments, 4,005,811 shares of New River common stock at strike prices which corresponded to the conversion price of the Notes. New River had recorded the cost of acquiring the purchased call option to additional paid in capital.<br /><br />As a result of New River’s election on April 3, 2007 to settle the Excess Conversion Value in cash, Merrill Lynch was obligated to settle the purchased call option in cash. The fair value of the purchased call option represents the Excess Conversion Value of the Notes, including the make-whole premium. This fair value of $141.8 million was recorded by the Company as an asset within the purchase price allocation.<br /><br />Supplemental disclosure of pro-forma information<br /><br />The following unaudited pro forma financial information presents the combined results of the operations of Shire, Jerini and New River as if the acquisitions of New River had occurred on at January 1, 2006 and the acquisition of Jerini at January 1, 2007 based upon Shire’s ownership interest of 100% and 98.6% of New River and Jerini respectively. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations actually would have been had the acquisition been completed at the dates indicated. In addition, the unaudited pro forma financial information does not purport to project the future results of operations of the combined Company.</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">2008 </td><td height="17" width="89" align="right">2007 </td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">$’M</td><td height="17" width="89" align="right">$’M</td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">_______________</td><td height="17" width="89" align="right">_______________</td></tr><tr><td height="17" width="530" align="left">Revenues</td><td height="17" width="89" align="right">3,031.6 </td><td height="17" width="89" align="right">2,461.7 </td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="530" align="left">Net income from continuing operations</td><td height="17" width="89" align="right">114.7 </td><td height="17" width="89" align="right">204.6 </td></tr><tr><td height="17" width="530" align="left">Net income attributable to Shire plc</td><td height="17" width="89" align="right">97.1 </td><td height="17" width="89" align="right">204.6 </td></tr><tr><td height="12" width="530" align="left"> </td><td height="12" width="89" align="right">_______________</td><td height="12" width="89" align="right">_______________</td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="530" align="left">Per share amounts:</td><td height="17" width="89" align="right"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="530" align="left">Net income from continuing operations per share - basic</td><td height="17" width="89" align="right">21.2c</td><td height="17" width="89" align="right">37.0c</td></tr><tr><td height="17" width="530" align="left">Net income per ordinary share attributable to Shire plc – basic</td><td height="17" width="89" align="right">18.0c</td><td height="17" width="89" align="right">37.0c</td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right"> </td><td height="17" width="89" align="right"> </td></tr><tr><td height="17" width="530" align="left">Net income from continuing operations per share - diluted</td><td height="17" width="89" align="right">21.0c</td><td height="17" width="89" align="right">36.4c</td></tr><tr><td height="17" width="530" align="left">Net income per ordinary share attributable to Shire plc – diluted</td><td height="17" width="89" align="right">17.8c</td><td height="17" width="89" align="right">36.4c</td></tr><tr><td height="17" width="530" align="left"> </td><td height="17" width="89" align="right">_______________</td><td height="17" width="89" align="right">_______________</td></tr></table></div>
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2 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 5/25/10  SEC                               UPLOAD9/11/17    1:21K  Shire plc
 4/14/10  SEC                               UPLOAD9/11/17    1:31K  Shire plc
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