Notes to the summary financial information
1 BASIS OF PREPARATION
This summary financial information has not been audited. It has been extracted from the Company's full consolidated financial statements for the year ended December 31, 2008, which were presented in accordance with accounting principles generally accepted in the United States of America and which were audited in accordance with standards of the Public Company Accounting Oversight Board (United States), filed with the SEC on Form 10-K on February 27, 2009.
This summary financial information does not contain sufficient information to allow a full understanding of the results and state of affairs of the Company and are not statutory accounts within the meaning of Section 240 of the Companies Act 1985 or Article 104 of the Companies (Jersey) Law 1991 or summary financial statements within the meaning of Section 251 of the UK Companies Act 1985.
For further information the full consolidated financial statements and the report of the independent registered public accounting firm that expressed an unqualified opinion on those consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 should be consulted. A copy of the Company's Annual Report on Form 10-K is available on its website and is also available on the SEC's website at www.sec.gov.
2 SHAREHOLDERS' EQUITY
| Total shareholders' equity $'M |
|
|---|---|
| As at December 31, 2007 | 1,227.0 |
| Net income for the period | 156.0 |
| Foreign currency translation | 36.6 |
| Costs associated with shares issued through Scheme of Arrangement | (5.6) |
| Options exercised | 2.1 |
| Tax deficit associated with the exercise of stock options | (3.8) |
| Stock-based compensation | 65.2 |
| Shares purchased by Employee Share Ownership Trust ('ESOT') | (146.6) |
| Shares released by ESOT to satisfy option exercises | 9.4 |
| Unrealized holding loss on available-for-sale securities, net of taxes | (47.9) |
| Realized gain on sale of available-for-sale securities, net of taxes | (5.4) |
| Other than temporary impairment of available for sale securities, net of taxes | 58.0 |
| Dividends | (46.8) |
| As at December 31, 2008 | 1,298.2 |
3 DIVIDENDS
During the year to December 31, 2008 the Company paid dividends totaling 8.62 US¢ per Ordinary share, equivalent to 25.85 US¢ per ADS, totalling $46.8 million.
4 BUSINESS COMBINATIONS
On July 3, 2008 the Company announced that it was launching a voluntary public takeover offer for all outstanding shares in Jerini AG ('Jerini'), a German corporation, at a price of 6.25 Euros per share. By December 31, 2008 Shire had acquired a 98.6% voting interest in Jerini for a total consideration of $556.5 million, represented by Jerini shares, ($539.8 million), the cash cost of canceling Jerini stock options ($9.4 million) and direct costs of acquisition ($7.3 million).
The acquisition of Jerini has been accounted for as a purchase business combination in accordance with SFAS No. 141. Under the purchase method of accounting, the assets acquired and the liabilities assumed from Jerini are recorded at the date of acquisition at their fair value.
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 (the date a controlling voting interest was obtained):
| Fair value $'M |
|
|---|---|
| ASSETS | |
| Current assets: | 88.3 |
| Property, plant and equipment, net | 3.6 |
| Goodwill | 121.0 |
| Other intangible assets | |
| - currently marketed product | 257.6 |
| in-process R&D | 104.1 |
| Deferred tax asset | 0.5 |
| Total assets | 575.1 |
| LIABILITIES | |
| Current liabilities: | 31.3 |
| Deferred tax liability | 76.3 |
| Other long-term liabilities | 0.8 |
| Total liabilities | 108.4 |
| Estimated fair value of identifiable assets acquired and liabilities assumed | 466.7 |
| Minority interests | (10.4) |
| Cost of 80.1% voting interest acquired | 456.3 |
In respect of the step acquisitions made subsequent to the acquisition of the 80.1% majority voting interest the Company has recognized additional goodwill of $27.0 million, intangible assets in respect of the currently marketed product of $58.1 million and IPR&D of $24.0 million.
5 CHANGE IN REPORTING ENTITY
On May 23, 2008 Scheme of Arrangement, (the 'Scheme') approved by the High Court of England and Wales and the shareholders of Shire plc, a company incorporated in England and Wales ('Old Shire') became effective. Under the terms of the Scheme, Shire Limited, (now known as Shire plc, a public incorporated in Jersey (Channel Islands) and tax resident in the Republic of Ireland became the holding company of old Shire, the former holding company of the Shire group.