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| <NonNumbericText> <div style="font-size:12pt"><p>6. Reorganization costs<br /><br />Owings Mills<br /><br />In March 2009 Company’s management approved and initiated plans to phase out operations and close the Company’s Specialty Pharmaceuticals manufacturing facility at Owings Mills, Maryland. Over the next three years, all products currently manufactured by Shire at this site will transition to DSM Pharmaceutical Products, and operations and employee numbers at the site will wind down over this period. During the year to December 31, 2009 the Company incurred reorganization costs of $12.7 million (2008: $nil, 2007: $nil) which relate to employee involuntary termination benefits, impairment charges for property, plant and equipment and other costs. <br /><br />As a result of the decision to transfer manufacturing from the Owings Mills site the Company has revised the life of property, plant and equipment in the facility, and in the year to December 31, 2009 has incurred accelerated depreciation of $12.0 million, which has been charged to Cost of product sales. Consequently, the Company estimates an annual accelerated depreciation charge, over the level which would have been charged absent the wind down of operations, of $22.5 million in 2010. The reorganization costs and accelerated depreciation have been recorded within the Specialty Pharmaceuticals reportable segment.<br /><br />Jerini non-core operations<br /><br />As outlined in Note 3, the operations of JOI and certain other non-core pre-clinical operations acquired with Jerini were closed down in the year to December 31, 2009. On closure of these operations the Company recorded a liability for costs associated with these closures of $9.1 million, relating to employee involuntary termination benefits and other closure costs. This liability was recorded within accounts payable and accrued expenses with a corresponding increase to goodwill arising on the acquisition.<br /><br />The aggregate liability for reorganization costs arising on the Owings Mills and Jerini closures at December 31, 2009 is as follows:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" width="218" align="left"> </td><td height="17" width="56" align="left"> </td><td height="17" width="100" align="right"> </td><td height="17" width="107" align="right">Assumed</td><td height="17" width="99" align="right"> </td><td height="17" width="101" align="right"> </td></tr><tr><td height="17" width="218" align="left"> </td><td height="17" width="56" align="left"> </td><td height="17" width="100" align="right">Amount</td><td height="17" width="107" align="right">liability through</td><td height="17" width="99" align="right"> </td><td height="17" width="101" align="right"> </td></tr><tr><td height="17" width="218" align="left"> </td><td height="17" width="56" align="left"> </td><td height="17" width="100" align="right">charged to re-</td><td height="17" width="107" align="right">business</td><td height="17" width="99" align="right"> </td><td height="17" width="101" align="right">Closing</td></tr><tr><td height="17" width="218" align="left"> </td><td height="17" width="56" align="left"> </td><td height="17" width="100" align="right">organization</td><td height="17" width="107" align="right">combinations</td><td height="17" width="99" align="right">Paid/Utilized</td><td height="17" width="101" align="right">liability at</td></tr><tr><td height="17" width="218" align="left">Year to December 31, 2009</td><td height="17" width="56" align="left"> </td><td height="17" width="100" align="right">$'M</td><td height="17" width="107" align="right">$'M</td><td height="17" width="99" align="right">$'M</td><td height="17" width="101" align="right">$'M</td></tr><tr><td height="11" width="218" align="right"> </td><td height="11" width="56" align="right"> </td><td height="11" width="100" align="right">____________</td><td height="11" width="107" align="right">___________</td><td height="11" width="99" align="right">___________</td><td height="11" width="101" align="right">___________</td></tr><tr><td height="17" width="218" align="left"> </td><td height="17" width="56" align="right"> </td><td height="17" width="100" align="right"> </td><td height="17" width="107" align="right"> </td><td height="17" width="99" align="right"> </td><td height="17" width="101" align="right"> </td></tr><tr><td height="19" width="218" align="left">Involuntary termination benefits </td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">5.6 </td><td height="19" width="107" align="right">5.5 </td><td height="19" width="99" align="right">(7.0)</td><td height="19" width="101" align="right">4.1 </td></tr><tr><td height="19" width="218" align="left">Contract termination costs</td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">- </td><td height="19" width="107" align="right">3.6 </td><td height="19" width="99" align="right">(0.8)</td><td height="19" width="101" align="right">2.8 </td></tr><tr><td height="19" width="218" align="left">Other termination costs </td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">2.1 </td><td height="19" width="107" align="right">- </td><td height="19" width="99" align="right">(2.1)</td><td height="19" width="101" align="right">- </td></tr><tr><td height="19" width="218" align="left"> </td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">____________</td><td height="19" width="107" align="right">___________</td><td height="19" width="99" align="right">___________</td><td height="19" width="101" align="right">___________</td></tr><tr><td height="19" width="218" align="left"> </td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">7.7 </td><td height="19" width="107" align="right">9.1 </td><td height="19" width="99" align="right">(9.9)</td><td height="19" width="101" align="right">6.9 </td></tr><tr><td height="19" width="218" align="left">Impairment charges </td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">5.0 </td><td height="19" width="107" align="right">___________</td><td height="19" width="99" align="right">___________</td><td height="19" width="101" align="right">___________</td></tr><tr><td height="19" width="218" align="left"> </td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">____________</td><td height="19" width="107" align="right"> </td><td height="19" width="99" align="right"> </td><td height="19" width="101" align="right"> </td></tr><tr><td height="37" width="218" align="left">Reorganization costs for the year to December 31, 2009</td><td height="37" width="56" align="right"> </td><td height="37" width="100" align="right">12.7 </td><td height="37" width="107" align="right"> </td><td height="37" width="99" align="right"> </td><td height="37" width="101" align="right"> </td></tr><tr><td height="19" width="218" align="left"> </td><td height="19" width="56" align="right"> </td><td height="19" width="100" align="right">____________</td><td height="19" width="107" align="right"> </td><td height="19" width="99" align="right"> </td><td height="19" width="101" align="right"> </td></tr></table><p>At December 31, 2009 the closing reorganization cost liability was recorded within accounts payable and accrued expenses ($3.9 million) and other non-current liabilities ($3.0 million).</p></div> </NonNumbericText> |
| <NonNumericTextHeader> 6. Reorganization costsOwings MillsIn March 2009 Company’s management approved and initiated plans to </NonNumericTextHeader> |
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