Shire plc: Strong Third Quarter and Increased Non GAAP Earnings Expectations
DUBLIN, October 24, 2013 /PRNewswire/ --
Shire (LSE: SHP, NASDAQ: SHPG) announces results for the three months to September 30, 2013.
Financial Highlights Q3 2013 Growth(1)
$1,195
Product sales million +13%
$1,237
Total revenues million +12%
Non GAAP operating income $422 million +30%
US GAAP operating income $341 million +25%
Non GAAP diluted earnings per ADS $1.77 +30%
US GAAP diluted earnings per ADS $1.46 +23%
Non GAAP cash generation $482 million +36%
Non GAAP free cash flow $388 million +49%
US GAAP net cash provided by operating
activities $434 million +50%
(1) Percentages compare to equivalent 2012 period.
The Non GAAP financial measures included within this release are explained on page 24, and are reconciled to the most directly comparable financial measures prepared in accordance with US GAAP on pages 19 - 23.
STRONG RESULTS DEMONSTRATING GOOD PROGRESS
- Product sales +13% - with eight of our products delivering double digit growth in the quarter - including VYVANSE® (+21%), LIALDA®/MEZAVANT® (+36%) and FIRAZYR®(+107%)
- Non GAAP operating income +30% reflecting strong operating leverage
- Non GAAP earnings per ADS +30%
- Non GAAP cash generation +36%
- Guidance increased to mid-to-high teens Non GAAP earnings growth for the full year in 2013
STRATEGY EXECUTION
- Focused on growth: excellence in commercial execution and investment in newly prioritized pipeline
- 'One Shire' reorganization well underway driving greater efficiencies and resetting cost base to deliver sustainable improved operating leverage
- Revenue growth and effective cost management underpins increased guidance for 2013
Flemming Ornskov, M.D., Chief Executive Officer, commented:
"This has been a strong quarter with good growth in revenues, earnings and cash generation.
We're demonstrating execution of our strategy, which is putting Shire on a path of sustainable growth. Our focus on commercial excellence is improving product sales and we're excited about the opportunities in our pipeline.
We're confident in our prospects for the longer term as we continue to execute on commercial delivery, progress our prioritized pipeline and focus on targeted M&A. The benefits of our 'One Shire' reorganization are already evident in our year to date performance, we have a simpler, more efficient business and now expect Non GAAP R&D and SG&A spend to be lower than current consensus expectations for this year and in 2014 and 2015[1].
I am delighted to be increasing our 2013 full year earnings guidance to delivering mid-to-high teens Non GAAP earnings growth and guiding to continuing operating leverage for 2014 and 2015[1]. This strong performance has been overseen by a management team with long term tenure at Shire, supplemented by some recent new senior appointments."
[1] For full guidance, refer to Outlook statement on page 3.
FINANCIAL SUMMARY
Third Quarter 2013 Unaudited Results
Q3 2013 Q3 2012
Non Non
US GAAP Adjustments GAAP US GAAP Adjustments GAAP
$M $M $M $M $M $M
Total
revenues 1,237 - 1,237 1,100 - 1,100
Operating
income 341 81 422 273 52 325
Diluted
earnings
per ADS $1.46 $0.31 $1.77 $1.19 $0.17 $1.36
- Product sales in Q3 2013 grew strongly (up 13% to $1,195 million). On a Constant Exchange Rate ("CER") basis, which is a Non GAAP measure, product sales were up 13%.
Eight of our products delivered double digit growth including VYVANSE(up 21% to $299 million), LIALDA/MEZAVANT (up 36% to $142 million), ELAPRASE® (up 17% to $129 million), VPRIV® (up 17% to $88 million), INTUNIV® (up 17% to $81 million) and FIRAZYR(up 107% to $63 million). LIALDA/MEZAVANTsales in Q3 2013 were particularly strong, primarily due to growth in US market share.
Growth in total product sales was moderated by DERMAGRAFT® (down 29% to $24 million), ADDERALL XR® (down 20% to $81 million) and REPLAGAL® (down 11% to $109 million). REPLAGAL product sales continue to be impacted by the return of competition to the Fabry market.
- Total revenues were up 12% to $1,237 million (Q3 2012: $1,100 million) as the growth in product sales was partially offset by lower royalties.
- On a Non GAAP basis:
Operating income was up 30% to $422 million (Q3 2012: $325 million), as total operating costs in Q3 2013 increased at a lower rate (up 5%) than total revenues (up 12%) demonstrating our focus on delivering efficient growth. Research and Development expenditure was up 2% and Selling, General and Administrative expenditure was up 1%.
On a US GAAP basis:
Operating income was up 25% to $341 million (Q3 2012: $273 million), a lower rate of increase than on a Non GAAP basis as Q3 2013 included higher acquisition and integration costs as compared to Q3 2012 and reorganization costs of $14 million not incurred in Q3 2012. Research and Development expenditure was up 2% and Selling, General and Administrative expenditure was up 1%.
- Non GAAP diluted earnings per American Depository Share ("ADS") increased 30% to $1.77 (Q3 2012: $1.36) primarily due to higher Non GAAP operating income.
On a US GAAP basis, diluted earnings per ADS increased 23% to $1.46 (Q3 2012: $1.19), primarily due to higher US GAAP operating income.
- Cash generation, a Non GAAP measure, increased by 36% to $482 million (Q3 2012: $355 million) due to both higher cash receipts from product sales and lower operating expense payments in Q3 2013 as compared to Q3 2012. Cash generation partially benefited from the timing of some receipts from large distributors in the US.
Free cash flow, also a Non GAAP measure, increased by 49% to $388 million (Q3 2012: $261 million) primarily due to higher cash generation and lower tax payments, partially offset by higher capital expenditure payments in Q3 2013 as compared to Q3 2012.
On a US GAAP basis, net cash provided by operating activities was up 50% to $434 million (Q3 2012: $288 million).
- Net cash, which is a Non GAAP measure, was $577 million at September 30, 2013 (December 31, 2012: $373 million).
On a US GAAP basis, cash and cash equivalents were $1,686 million at September 30, 2013 (December 31, 2012: $1,482 million).
STRATEGIC EXECUTION
Shire continues to focus on its strategic priorities of growing sales of the existing portfolio, bringing new innovative treatments to market through both R&D and business development, while driving greater efficiency and increased operating leverage.
The business has been simplified. Prior to May 2013 Shire had three autonomous divisions, each with their own R&D, supply chain, technical operations and commercial infrastructures. These three divisions have been reorganized so they are now one business, with much reduced overlap.
Shire now has greater collaboration and focus in its commercial operations and this is showing positive results, as evident in the increased product sales. With a single R&D organization now in place, Shire has a more effective process to evaluate holistically all pipeline opportunities as well as business development prospects. Our pipeline has been prioritized to focus on development programs that have the best chance of clinical and commercial success together with early stage research in rare diseases. We believe that these measures will ensure Shire is optimally positioned to enable the continued development of products that serve unmet patient need and to sustain the track record of high growth.
OUTLOOK
We are increasing our guidance to mid-to-high teens Non GAAP earnings growth for the full year in 2013 (previous guidance: double digit Non GAAP earnings growth) as we continue to see operating costs benefit from our reorganization efforts.
We anticipate a similar level of product sales growth in the fourth quarter as we delivered in the third quarter, and continue to expect full year product sales growth in the mid-to-high single digits.
We continue to expect royalties and other revenues to be 35-40% lower than 2012.
Our Non GAAP gross margin for the full year is expected to remain at a similar level to 2012.
With investment prioritized behind our promising pipeline and our late stage clinical trials, we now expect Non GAAP R&D to be 5-7% higher for the full year than in 2012 (previous guidance: growth in the low double digits).
Non GAAP SG&A for the full year is now anticipated to be 5-7% lower than 2012 (previous guidance: 2-4% lower). Non GAAP SG&A in the fourth quarter is expected to be slightly higher than in the third quarter as we provide targeted support to our commercial team to invest behind our key products.
As a result, we now expect combined Non GAAP R&D and SG&A to be 1-3% lower than 2012 (previous guidance: only marginally higher). This translates to a reduced spend of $250 million compared with our guidance forecasts in February 2013[1].
Our core effective tax rate on Non GAAP income is anticipated to remain in the range of 18-20%.
Taken together, we are increasing our guidance to reflect our expectation of delivering mid-to-high teens Non GAAP earnings growth for the full year in 2013 (previous guidance: double digit Non GAAP earnings growth).
Looking forward, we anticipate continuing operating leverage in 2014 and 2015, from reduced combined Non GAAP R&D and SG&A. We expect this to be around $250 million lower than current consensus in 2014 and $300 million lower than current consensus in 2015[2].
[1] Improvements of approximately $250 million for full year 2013, based on the difference between initial guidance for full year 2013 of high single digit growth in combined Non GAAP R&D and SG&A (guidance provided February 14, 2013) and current guidance expectations of combined Non GAAP R&D and SG&A to be 1-3% lower than 2012.
[2] Based on the most recent consensus estimates compiled by Consensus Forecast Ltd, as of the date of this release, of combined Non GAAP R&D and SG&A of $2,662 million and $2,683 million for the years ending December 31, 2014 and 2015 respectively, available on Shire's website (http://www.shire.com/shireplc/en/investors/forecasts).
THIRD QUARTER 2013 AND RECENT PIPELINE DEVELOPMENTS
Pipeline
ABH001 - for the treatment of Epidermolysis Bullosa
- This program has been discontinued as part of the prioritization of Shire's pipeline.
OTHER DEVELOPMENTS
Decision to discontinue the construction of the new manufacturing facility in San Diego
- On October 22, 2013 Shire announced that it had decided to discontinue the construction of its new manufacturing facility in San Diego. Shire will continue to manufacture DERMAGRAFT in its existing facility in La Jolla, and Shire's ability to meet expected future demand for DERMAGRAFT is not impacted by this decision. Shire is currently assessing possible disposal opportunities in relation to this facility.
Share Buy-Back Program
- In Q4 2012 Shire commenced a share buy-back program, for the purpose of returning funds to shareholders, of up to $500 million, through both direct purchases of Ordinary Shares and through the purchase of Ordinary Shares underlying American Depositary Receipts. As of October 22, 2013 Shire had made on-market repurchases totaling 9,807,835 Ordinary Shares at a cost of $299 million (excluding transaction costs).
BOARD AND COMMITTEE CHANGES
- On October 23, 2013 Shire announced that Dominic Blakemore will join the Shire Board of Directors effective January 1, 2014. On joining the Board, Dominic will become a member of the Shire Audit, Compliance & Risk Committee. Dominic's career experience includes finance and strategy roles with global corporations. He is currently Group Finance Director of Compass Group plc.
ADDITIONAL INFORMATION
The following additional information is included in this press release:
Page
Overview of Third Quarter 2013 Financial Results 6
Financial Information 10
Non GAAP Reconciliation 19
Notes to Editors 23
Safe Harbor Statement 24
Explanation of Non GAAP Measures 24
Trade Marks 25
Dial in details for the live conference call for investors at 14:00 BST / 09:00 EDT on October 24, 2013:
UK dial in: 0808-237-0030 or 0203-139-4830
US dial in: 1-866-928-7517 or 1-718-873-9077
International
Access
Numbers: http://wpc.1726.planetstream.net/001726/FEL_Events_International_Access_List.p
Password/Conf ID: 71566006#
Live Webcast: http://www.shire.com/shireplc/en/investors
The quarterly earnings presentation will be available today at 13:00 BST / 08:00 EDT on:
- Shire's IR Briefcase in the iTunes Store
- Shire.com Investors section
OVERVIEW OF THIRD QUARTER 2013 FINANCIAL RESULTS
1. Product sales
For the three months to September 30, 2013 product sales increased by 13% to $1,195 million (Q3 2012: $1,055 million) and represented 97% of total revenues (Q3 2012: 96%).
US Exit
Market
Year on year growth Share(1)
Non GAAP
Product sales Sales $M Sales CER US Rx(1)
VYVANSE(2) 299.2 +21% +21% +7% 17%
LIALDA/MEZAVANT 141.9 +36% +36% +23% 27%
ELAPRASE 129.1 +17% +17% n/a(3) n/a(3)
REPLAGAL 108.5 -11% -10% n/a(4) n/a(4)
VPRIV 87.8 +17% +17% n/a(3) n/a(3)
ADDERALL XR 81.4 -20% -20% -2% 5%
INTUNIV 80.8 +17% +17% +8% 4%
PENTASA(R) 70.6 +5% +5% +1% 14%
FIRAZYR 62.6 +107% +106% n/a(3) n/a(3)
DERMAGRAFT 23.9 -29% -29% n/a(3) n/a(3)
OTHER 109.1 +16% +15% n/a n/a
Total 1,194.9 +13% +13%
- Data provided by IMS Health National Prescription Audit ("IMS NPA") relates solely to US-based prescriptions. Exit market share represents the average monthly US market share in the month ended September 30, 2013.
- Lisdexamfetamine ("LDX") currently marketed as VYVANSE in the US & Canada, VENVANSE® in Latin America and ELVANSE® in certain territories in the EU.
- IMS NPA Data not available.
- Not sold in the US in Q3 2013.
VYVANSE - ADHD
VYVANSE product sales showed strong growth (up 21%) in Q3 2013 compared to Q3 2012 due to higher prescription demand, which was up 7% in the quarter in addition to the benefit of price increases taken since Q3 2012.
LIALDA/MEZAVANT - Ulcerative Colitis
Product sales for LIALDA/MEZAVANT in Q3 2013 were up 36% primarily due to higher prescription demand (up 23%) and stocking in Q3 2013 compared to a slight destocking in Q3 2012, the benefit of which was partially offset by higher sales deductions in Q3 2013 as compared to Q3 2012.
ELAPRASE- Hunter syndrome
ELAPRASE product sales in Q3 2013 were up 17% compared to Q3 2012 driven primarily by continued growth in the number of patients and higher utilization. Quarterly sales of ELAPRASE can be volatile due to the timings of large orders to certain markets which order less frequently. This accounts for the decline in sales from Q2 2013 to Q3 2013. The underlying number of patients being treated with ELAPRASE continues to grow.
REPLAGAL - Fabry disease
REPLAGAL sales were down 11% as compared to Q3 2012 primarily due to lower volume in Europe due to the return of competition to the Fabry market and the timing of large orders in Q3 2012 from markets that order less frequently.
VPRIV - Gaucher disease
VPRIV product sales were up 17% in Q3 2013 compared to Q3 2012 as the number of patients on therapy continues to grow.
ADDERALL XR - ADHD
ADDERALL XR product sales decreased (down 20%) in Q3 2013 primarily due to higher sales deductions as a percentage of sales in Q3 2013 as compared to Q3 2012.
INTUNIV - ADHD
The strong growth in INTUNIV product sales (up 17%) in Q3 2013 was driven by a combination of increased US prescription demand (up 8%) and the effect of price increases taken since Q3 2012. The benefit of these increases was partially offset by higher sales deductions in Q3 2013 as compared to Q3 2012.
PENTASA - Ulcerative Colitis
PENTASA product sales (up 5%) benefited from price increases taken since Q3 2012 partially offset by higher sales deductions in Q3 2013 as compared to Q3 2012.
FIRAZYR - Hereditary Angioedema
FIRAZYR product sales growth (up 107%) was primarily driven by the US market, where the number of new patients on therapy continues to grow strongly.
DERMAGRAFT - Diabetic Foot Ulcers
DERMAGRAFT product sales were down 29% compared to Q3 2012.
2. Royalties
Year on year growth
Royalties to
Product Shire $M Royalties CER
FOSRENOL(R) 1.00 13.8 -1% -2%
3TC(R) and ZEFFIX(R) 1.00 10.1 -5% -5%
ADDERALL XR 1.00 6.2 -45% -45%
Other 1.00 7.5 +25% +23%
Total 1.00 37.6 -10% -10%
3. Financial details
Cost of product sales
% of % of
product product
Q3 2013 sales Q3 2012 sales
$M $M
Cost of product sales (US
GAAP) 197.1 16% 167.9 16%
Depreciation (11.0) (9.4)
Cost of product sales (Non
GAAP) 186.1 16% 158.5 15%
Cost of product sales as a percentage of product sales remained broadly constant in Q3 2013 as compared to Q3 2012.
Research and Development ("R&D")
% of % of
product product
Q3 2013 sales Q3 2012 sales
$M $M
R&D (US GAAP) 229.1 19% 224.7 21%
Depreciation (6.3) (5.5)
R&D (Non GAAP) 222.8 19% 219.2 21%
Non GAAP R&D increased by $3.6 million, or 2%[1], due to the continued investment in our R&D pipeline, primarily on non-ADHD programs for LDX, on SHP602 (formerly known as SPD602) for iron overload and on development programs acquired through business development in 2013, including Lifitegrast. This growth was offset by reduced costs in relation to programs which have been discontinued following our pipeline prioritization review.
US GAAP R&D increased by $4.4 million, or 2%, as compared to Q3 2012.
Selling, General and Administrative ("SG&A")
% of % of
product product
2013 sales 2012 sales
$M $M
SG&A (US GAAP) 441.1 37% 437.4 41%
Intangible asset
amortization (44.4) (50.0)
Legal and litigation costs (8.5) (4.5)
Depreciation (16.5) (14.2)
SG&A (Non GAAP) 371.7 31% 368.7 35%
Non GAAP SG&A increased by $3.0 million, or 1%, a slower rate than the increase in product sales as we continue to focus on simplifying our business and delivering efficient growth.
US GAAP SG&A increased by $3.7 million, or 1%, as compared to Q3 2013.
For the nine months to September 30, 2013 Non GAAP SG&A decreased by $85.1 million, or 7%[1]; US GAAP SG&A decreased by $111.0 million, or 8%.
[1] For the full year guidance, refer to Outlook statement on page 3.
Gain on sale of product rights
For the three months to September 30, 2013 Shire recorded a gain on sale of product rights of $3.6 million (2012: $5.7 million) following re-measurement of the contingent consideration receivable from the divestment of DAYTRANA®.
Reorganization costs
For the three months to September 30, 2013 Shire recorded reorganization costs of $13.7 million (Q3 2012: $nil) primarily relating to the "One Shire" reorganization as we transition to a new operating structure.
Integration and acquisition costs
For the three months to September 30, 2013 Shire recorded integration and acquisition costs of $18.4 million primarily related to the change in fair value of contingent consideration and the costs of integrating SARcode Biosciences Inc. ("SARcode") and Premacure AB ("Premacure"). In Q3 2012 integration and acquisition costs ($2.7 million) primarily related to the acquisition of FerroKin Biosciences, Inc. ("FerroKin") and the integration of Advanced BioHealing Inc. ("ABH").
Interest expense
For the three months to September 30, 2013 Shire incurred interest expense of $9.0 million (Q3 2012: $9.2 million), which principally relates to the coupon on Shire's $1,100 million 2.75% convertible bonds due May 2014.
Taxation
The effective rate of tax on Non GAAP income in Q3 2013 was 19% (Q3 2012: 18%), and on a US GAAP basis the effective rate of tax was 16% (Q3 2012: 15%).
The effective rate of tax in Q3 2013 on both a Non GAAP and a US GAAP basis is higher than the same period in 2012 due primarily to adverse changes in profit mix and changes in provisions for uncertain tax positions, partially offset by changes in estimates of the amount of certain tax liabilities following the finalisation of various tax returns.
FINANCIAL INFORMATION
TABLE OF CONTENTS
Page
Unaudited US GAAP Consolidated Balance Sheets 11
Unaudited US GAAP Consolidated Statements of Income 12
Unaudited US GAAP Consolidated Statements of Cash
Flows 14
Selected Notes to the Unaudited US GAAP Financial
Statements
(1) Earnings per share 16
(2) Analysis of revenues 17
Non GAAP reconciliation 19
Unaudited US GAAP financial position as of September 30, 2013
Consolidated Balance Sheets
September 30, December 31,
2013 2012
$M $M
ASSETS
Current assets:
Cash and cash equivalents 1,686.1 1,482.2
Restricted cash 16.6 17.1
Accounts receivable, net 1,037.8 824.2
Inventories 480.5 436.9
Deferred tax asset 210.6 229.9
Prepaid expenses and other current assets 282.3 221.8
Total current assets 3,713.9 3,212.1
Non-current assets:
Investments 36.7 38.7
Property, plant and equipment ("PP&E"), net 965.1 955.8
Goodwill 621.3 644.5
Other intangible assets, net 2,976.0 2,388.1
Deferred tax asset 40.4 46.5
Other non-current assets 34.5 31.5
Total assets 8,387.9 7,317.2
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses 1,581.6 1,501.5
Convertible bonds 1,100.0 -
Other current liabilities 163.2 144.1
Total current liabilities 2,844.8 1,645.6
Non-current liabilities:
Convertible bonds - 1,100.0
Deferred tax liability 722.0 520.8
Other non-current liabilities 652.3 241.6
Total liabilities 4,219.1 3,508.0
Equity:
Common stock of 5p par value; 1,000 million
shares authorized; and 562.9 million shares
issued and outstanding (2012: 1,000 million
shares authorized; and 562.5 million shares
issued and outstanding) 55.8 55.7
Additional paid-in capital 3,045.6 2,981.5
Treasury stock: 14.5 million shares (2012:
10.7 million) (466.6) (310.4)
Accumulated other comprehensive income 101.3 86.9
Retained earnings 1,432.7 995.5
Total equity 4,168.8 3,809.2
Total liabilities and equity 8,387.9 7,317.2
Unaudited US GAAP results for the three months and nine months to September 30, 2013
Consolidated Statements of Income
9 months 9 months
3 months to 3 months to to to
September September
September 30, September 30, 30, 30,
2013 2012 2013 2012
$M $M $M $M
Revenues:
Product sales 1,194.9 1,054.5 3,541.8 3,309.1
Royalties 37.6 41.8 112.4 154.4
Other revenues 4.1 4.1 18.8 16.5
Total revenues 1,236.6 1,100.4 3,673.0 3,480.0
Costs and expenses:
Cost of product sales 197.1 167.9 528.7 478.8
R&D(1) 229.1 224.7 713.4 683.6
SG&A(1) 441.1 437.4 1,337.4 1,448.4
Goodwill impairment
charge - - 198.9 -
Gain on sale of product
rights (3.6) (5.7) (14.6) (16.5)
Reorganization costs 13.7 - 57.6 -
Integration and
acquisition costs 18.4 2.7 39.9 15.1
Total operating
expenses 895.8 827.0 2,861.3 2,609.4
Operating income 340.8 273.4 811.7 870.6
Interest income 0.4 0.9 1.6 2.3
Interest expense (9.0) (9.2) (27.0) (29.0)
Other income/(expense),
net 0.6 3.5 (1.9) 3.6
Total other expense,
net (8.0) (4.8) (27.3) (23.1)
Income before income
taxes and equity in
(losses)/earnings of
equity method investees 332.8 268.6 784.4 847.5
Income taxes (54.3) (41.6) (183.9) (144.6)
Equity in
(losses)/earnings of
equity method
investees, net of taxes (0.3) 0.2 0.6 0.5
Net income 278.2 227.2 601.1 703.4
- R&D includes intangible asset impairment charges of $19.9 million for the nine months to September 30, 2013 (2012: $27.0 million). SG&A costs include amortization and impairment charges of intangible assets relating to intellectual property rights acquired of $44.4 million for the three months to September 30, 2013 (2012: $50.0 million) and $136.1 million for the nine months to September 30, 2013 (2012: $146.6 million).
Unaudited US GAAP results for the three months and nine months to September 30, 2013
Consolidated Statements of Income (continued)
9 months 9 months
3 months to 3 months to to to
September September
September 30, September 30, 30, 30,
2013 2012 2013 2012
Earnings per ordinary
share - basic
Earnings per Ordinary
Share - basic 50.7c 40.9c 109.3c 126.6c
Earnings per ADS -
basic 152.1c 122.7c 327.9c 379.8c
Earnings per Ordinary
Share - diluted 48.8c 39.6c 106.2c 122.4c
Earnings per ADS -
diluted 146.4c 118.8c 318.6c 367.2c
Weighted average number
of shares:
Millions Millions Millions Millions
Basic 548.4 555.9 549.8 555.5
Diluted 585.7 593.1 587.5 594.0
Unaudited US GAAP results for the three months and nine months to September 30, 2013
Consolidated Statements of Cash Flows
3 months to 9 months to
September 30, September 30,
2013 2012 2013 2012
$M $M $M $M
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income 278.2 227.2 601.1 703.4
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization 78.2 79.1 229.4 231.5
Share based compensation 18.8 21.6 55.2 65.0
Change in fair value of
contingent consideration 14.7 1.2 28.4 3.3
Impairment of intangible
assets - - 19.9 27.0
Goodwill impairment
charge - - 198.9 -
Gain on sale of product
rights (3.6) (5.7) (14.6) (16.5)
Other, net (2.8) (0.7) 4.4 1.8
Movement in deferred taxes (5.1) (6.3) 16.1 (30.4)
Equity in losses/(earnings) of
equity method investees 0.3 (0.2) (0.6) (0.5)
Changes in operating assets and
liabilities:
Increase in accounts
receivable (112.6) (45.4) (215.2) (23.0)
Increase in sales
deduction accrual 68.7 8.5 108.7 36.1
Decrease/(increase) in
inventory 14.0 (14.9) (39.9) (81.9)
(Increase)/decrease in
prepayments and other
assets (4.4) (14.3) (70.9) 17.8
Increase/(decrease) in
accounts payable and
other liabilities 89.3 38.3 (71.4) 72.7
Returns on investment from joint
venture - - 3.2 4.9
Net cash provided by operating
activities(A) 433.7 288.4 852.7 1,011.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Movements in restricted cash 1.0 (4.5) 0.5 1.7
Purchases of subsidiary undertakings
and businesses, net of cash acquired - - (227.8) (97.0)
Purchases of non-current investments (3.1) (7.4) (9.9) (12.1)
Purchases of PP&E (45.3) (27.2) (110.3) (91.6)
Purchases of intangible assets - - - (43.5)
Proceeds received on sale of product
rights 4.7 3.3 15.0 13.7
Other, net 1.0 0.1 11.5 13.2
Net cash used in investing
activities(B) (41.7) (35.7) (321.0) (215.6)
Unaudited US GAAP results for the three months and nine months to September 30, 2013
Consolidated Statements of Cash Flows (continued)
3 months to 9 months to
September 30, September 30,
2013 2012 2013 2012
$M $M $M $M
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments to acquire shares under
the share buy-back program (12.8) - (190.5) -
Payment of dividend - - (79.2) (70.7)
Payments to acquire shares by the
Employee Benefit Trust ("EBT") - (40.2) (50.3) (50.9)
Excess tax benefit associated
with exercise of stock options 3.4 3.5 9.5 38.6
Contingent consideration payments (2.5) (3.0) (11.3) (3.0)
Other, net 1.7 (0.3) (5.5) (2.6)
Net cash used in financing
activities(C) (10.2) (40.0) (327.3) (88.6)
Effect of foreign exchange rate
changes on cash and cash
equivalents (D) 2.4 (3.5) (0.5) (5.1)
Net increase in cash and cash
equivalents(A) +(B) +(C) +(D) 384.2 209.2 203.9 701.9
Cash and cash equivalents at
beginning of period 1,301.9 1,112.7 1,482.2 620.0
Cash and cash equivalents at end
of period 1,686.1 1,321.9 1,686.1 1,321.9
Unaudited US GAAP results for the three months and nine months to September 30, 2013
Selected Notes to the Financial Statements
(1) Earnings Per Share ("EPS")
9 months 9 months
3 months to 3 months to to to
September September
September 30, September 30, 30, 30,
2013 2012 2013 2012
$M $M $M $M
Numerator for basic EPS 278.2 227.2 601.1 703.4
Interest on convertible
bonds, net of tax 7.6 7.5 22.7 23.7
Numerator for diluted
EPS 285.8 234.7 623.8 727.1
Weighted average number
of shares:
Millions Millions Millions Millions
Basic(1) 548.4 555.9 549.8 555.5
Effect of dilutive
shares:
Share based awards to
employees(2) 3.5 3.7 3.9 5.0
Convertible bonds 2.75%
due 2014(3) 33.8 33.5 33.8 33.5
Diluted 585.7 593.1 587.5 594.0
- Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock.
- Calculated using the treasury stock method.
- Calculated using the "if converted" method.
The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below:
9 months 9 months
3 months to 3 months to to to
September September
September 30, September 30, 30, 30,
2013 2012 2013 2012
Millions Millions Millions Millions
Share based awards to
employees(1) 0.5 6.6 4.5 4.9
- Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire's average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date.
Unaudited US GAAP results for the three months to September 30, 2013
Selected Notes to the Financial Statements
(2) Analysis of revenues
3 months to September 30, 2013 2012 2013 2013
% % of total
$M $M change revenue
Net product sales:
VYVANSE 299.2 247.1 21% 24%
LIALDA/MEZAVANT 141.9 104.4 36% 11%
ELAPRASE 129.1 110.5 17% 10%
REPLAGAL 108.5 121.7 -11% 9%
VPRIV 87.8 74.9 17% 7%
ADDERALL XR 81.4 102.2 -20% 7%
INTUNIV 80.8 69.0 17% 7%
PENTASA 70.6 67.0 5% 6%
FIRAZYR 62.6 30.3 107% 5%
FOSRENOL 51.9 38.1 36% 4%
XAGRID(R) 24.2 22.0 10% 2%
DERMAGRAFT 23.9 33.7 -29% 2%
Other product sales 33.0 33.6 -2% 3%
Total product sales 1,194.9 1,054.5 13% 97%
Royalties:
FOSRENOL 13.8 14.0 -1% 1%
3TC and ZEFFIX 10.1 10.6 -5% 1%
ADDERALL XR 6.2 11.2 -45% <1%
Other 7.5 6.0 25% 1%
Total royalties 37.6 41.8 -10% 3%
Other revenues 4.1 4.1 0% <1%
Total revenues 1,236.6 1,100.4 12% 100%
Unaudited US GAAP results for the nine months to September 30, 2013
Selected Notes to the Financial Statements
(2) Analysis of revenues
9 months to September 30, 2013 2012 2013 2013
% % of total
$M $M change revenue
Net product sales:
VYVANSE 897.9 773.3 16% 24%
LIALDA/MEZAVANT 379.9 288.5 32% 10%
ELAPRASE 392.6 358.3 10% 11%
REPLAGAL 336.6 379.3 -11% 9%
VPRIV 251.9 229.3 10% 7%
ADDERALL XR 293.5 347.5 -16% 8%
INTUNIV 248.9 206.6 20% 7%
PENTASA 215.2 196.7 9% 6%
FIRAZYR 153.8 81.7 88% 4%
FOSRENOL 136.3 126.8 7% 4%
XAGRID 74.1 70.7 5% 2%
DERMAGRAFT 64.7 134.9 -52% 2%
Other product sales 96.4 115.5 -17% 2%
Total product sales 3,541.8 3,309.1 7% 96%
Royalties:
FOSRENOL 33.6 37.0 -9% 1%
3TC and ZEFFIX 33.9 34.8 -3% 1%
ADDERALL XR 19.2 62.2 -69% <1%
Other 25.7 20.4 26% 1%
Total royalties 112.4 154.4 -27% 3%
Other revenues 18.8 16.5 14% 1%
Total revenues 3,673.0 3,480.0 6% 100%
Unaudited results for the three months to September 30, 2013
Non GAAP reconciliation
3 months to September Non
30, 2013 US GAAP Adjustments GAAP
(a) (b) (c) (d) (e)
$M $M $M $M $M $M $M
Total revenues 1,236.6 - - - - - 1,236.6
Costs and expenses:
Cost of product sales 197.1 - - - - (11.0) 186.1
R&D 229.1 - - - - (6.3) 222.8
SG&A 441.1 (44.4) - - (8.5) (16.5) 371.7
Gain on sale of
product rights (3.6) - - 3.6 - - -
Reorganization costs 13.7 - - (13.7) - - -
Integration and
acquisition costs 18.4 - (18.4) - - - -
Depreciation - - - - - 33.8 33.8
Total operating
expenses 895.8 (44.4) (18.4) (10.1) (8.5) - 814.4
Operating income 340.8 44.4 18.4 10.1 8.5 - 422.2
Interest income 0.4 - - - - - 0.4
Interest expense (9.0) - - - - - (9.0)
Other income, net 0.6 - - - - - 0.6
Total other expense,
net (8.0) - - - - - (8.0)
Income before income
taxes and equity in
losses of equity
method investees 332.8 44.4 18.4 10.1 8.5 - 414.2
Income taxes (54.3) (14.1) (1.0) (4.2) (3.1) - (76.7)
Equity in losses of
equity method
investees, net of tax (0.3) - - - - - (0.3)
Net income 278.2 30.3 17.4 5.9 5.4 - 337.2
Impact of convertible
debt, net of tax 7.6 - - - - - 7.6
Numerator for diluted
EPS 285.8 30.3 17.4 5.9 5.4 - 344.8
Weighted average
number of shares
(millions) - diluted 585.7 - - - - - 585.7
Diluted earnings per
ADS 146.4c 15.6c 9.0c 3.0c 2.7c - 176.7c
The following items are included in Adjustments:
- Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($44.4 million), and tax effect of adjustments;
- Acquisition and integration activities: Costs primarily associated with the integration of SARcode and Premacure ($3.7 million), charges related to the change in fair value of contingent consideration ($14.7 million), and tax effect of adjustments;
- Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to higher fair value ($3.6 million), costs relating to the "One Shire" reorganization announced at Q1 2013 and the collective dismissal and closure of Shire's facility at Turnhout, Belgium ($13.7 million), and tax effect of adjustments;
- Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($8.5 million), and tax effect of adjustments; and
- Depreciation reclassification: Depreciation of $33.8 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
Unaudited results for the three months to September 30, 2012
Non GAAP reconciliation
3 months to September Non
30, 2012 US GAAP Adjustments GAAP
(a) (b) (c) (d) (e)
$M $M $M $M $M $M $M
Total revenues 1,100.4 - - - - - 1,100.4
Costs and expenses:
Cost of product sales 167.9 - - - - (9.4) 158.5
R&D 224.7 - - - - (5.5) 219.2
SG&A 437.4 (50.0) - - (4.5) (14.2) 368.7
Gain on sale of product
rights (5.7) - - 5.7 - - -
Integration and
acquisition costs 2.7 - (2.7) - - - -
Depreciation - - - - - 29.1 29.1
Total operating
expenses 827.0 (50.0) (2.7) 5.7 (4.5) - 775.5
Operating income 273.4 50.0 2.7 (5.7) 4.5 - 324.9
Interest income 0.9 - - - - - 0.9
Interest expense (9.2) - - - - - (9.2)
Other income, net 3.5 - - - - - 3.5
Total other expense,
net (4.8) - - - - - (4.8)
Income before income
taxes and equity in
earnings of equity
method investees 268.6 50.0 2.7 (5.7) 4.5 - 320.1
Income taxes (41.6) (14.3) (1.1) - (1.5) - (58.5)
Equity in earnings of
equity method
investees, net of tax 0.2 - - - - - 0.2
Net income 227.2 35.7 1.6 (5.7) 3.0 - 261.8
Impact of convertible
debt, net of tax 7.5 - - - - - 7.5
Numerator for diluted
EPS 234.7 35.7 1.6 (5.7) 3.0 - 269.3
Weighted average number
of shares (millions) -
diluted 593.1 - - - - - 593.1
Diluted earnings per
ADS 118.8c 18.0c 0.9c (3.0c) 1.5c - 136.2c
The following items are included in Adjustments:
- Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($50.0 million), and tax effect of adjustments;
- Acquisition and integration activities: Costs associated with the acquisition of FerroKin and the integration of ABH ($1.5 million), charges related to the change in fair value of contingent consideration ($1.2 million), and tax effect of adjustments;
- Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to higher fair value ($5.7 million);
- Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($4.5 million), and tax effect of adjustments; and
- Depreciation reclassification: Depreciation of $29.1 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
Unaudited results for the nine months to September 30, 2013
Non GAAP reconciliation
9 months to Non
September 30, 2013 US GAAP Adjustments GAAP
(a) (b) (c) (d) (e)
$M $M $M $M $M $M $M
Total revenues 3,673.0 - - - - - 3,673.0
Costs and expenses:
Cost of product
sales 528.7 - - - - (28.8) 499.9
R&D 713.4 (19.9) - - - (15.2) 678.3
SG&A 1,337.4 (136.1) - - (18.0) (49.3) 1,134.0
Goodwill impairment
charge 198.9 (198.9) - - - - -
Gain on sale of
product rights (14.6) - - 14.6 - - -
Reorganization costs 57.6 - - (57.6) - - -
Integration and
acquisition costs 39.9 - (39.9) - - - -
Depreciation - - - - - 93.3 93.3
Total operating
expenses 2,861.3 (354.9) (39.9) (43.0) (18.0) - 2,405.5
Operating income 811.7 354.9 39.9 43.0 18.0 - 1,267.5
Interest income 1.6 - - - - - 1.6
Interest expense (27.0) - - - - - (27.0)
Other expense, net (1.9) - - - - - (1.9)
Total other expense,
net (27.3) - - - - - (27.3)
Income before income
taxes and equity in
earnings of equity
method investees 784.4 354.9 39.9 43.0 18.0 - 1,240.2
Income taxes (183.9) (43.2) (3.1) (13.1) (6.5) - (249.8)
Equity in earnings
of equity method
investees, net of
tax 0.6 - - - - - 0.6
Net income 601.1 311.7 36.8 29.9 11.5 - 991.0
Impact of
convertible debt,
net of tax 22.7 - - - - - 22.7
Numerator for
diluted EPS 623.8 311.7 36.8 29.9 11.5 - 1,013.7
Weighted average
number of shares
(millions) - diluted 587.5 - - - - - 587.5
Diluted earnings per
ADS 318.6c 159.1c 18.7c 15.1c 6.0c - 517.5c
The following items are included in Adjustments:
- Amortization and asset impairments: Impairment of IPR&D intangible assets acquired with Movetis ($19.9 million), impairment of goodwill relating to Shire's Regenerative Medicine Business ($198.9 million), amortization of intangible assets relating to intellectual property rights acquired ($136.1 million), and tax effect of adjustments;
- Acquisitions and integration activities: Costs primarily associated with acquisition of SARcode, Lotus and Premacure ($11.5 million), charges related to the change in fair value of contingent consideration ($28.4 million), and tax effect of adjustments;
- Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to higher fair value ($14.6 million), costs relating to the "One Shire" reorganization announced at Q1 2013 and the collective dismissal and closure of Shire's facility at Turnhout, Belgium ($57.6 million), and tax effect of adjustments;
- Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($18.0 million), and tax effect of adjustments; and
- Depreciation reclassification: Depreciation of $93.3 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
Unaudited results for the nine months to September 30, 2012
Non GAAP reconciliation
9 months to Non
September 30, 2012 US GAAP Adjustments GAAP
(a) (b) (c) (d) (e)
$M $M $M $M $M $M $M
Total revenues 3,480.0 - - - - - 3,480.0
Costs and expenses:
Cost of product
sales 478.8 - - - - (23.6) 455.2
R&D 683.6 (27.0) (23.0) - - (18.3) 615.3
SG&A 1,448.4 (146.6) - - (40.4) (42.3) 1,219.1
Gain on sale of
product rights (16.5) - - 16.5 - - -
Integration and
acquisition costs 15.1 - (15.1) - - - -
Depreciation - - - - - 84.2 84.2
Total operating
expenses 2,609.4 (173.6) (38.1) 16.5 (40.4) - 2,373.8
Operating income 870.6 173.6 38.1 (16.5) 40.4 - 1,106.2
Interest income 2.3 - - - - - 2.3
Interest expense (29.0) - - - - - (29.0)
Other income, net 3.6 - - - - - 3.6
Total other expense,
net (23.1) - - - - - (23.1)
Income before income
taxes and equity in
earnings of equity
method investees 847.5 173.6 38.1 (16.5) 40.4 - 1,083.1
Income taxes (144.6) (42.0) (10.1) - (14.5) - (211.2)
Equity in earnings
of equity method
investees, net of
tax 0.5 - - - - - 0.5
Net income 703.4 131.6 28.0 (16.5) 25.9 - 872.4
Impact of
convertible debt,
net of tax 23.7 - - - - - 23.7
Numerator for
diluted EPS 727.1 131.6 28.0 (16.5) 25.9 - 896.1
Weighted average
number of shares
(millions) - diluted 594.0 - - - - - 594.0
Diluted earnings per
ADS 367.2c 66.6c 14.1c (8.4c) 13.2c - 452.7c
The following items are included in Adjustments:
- Amortization and asset impairments: Impairment of IPR&D intangible assets for RESOLOR ($27.0 million), amortization of intangible assets relating to intellectual property rights acquired ($146.6 million), and tax effect of adjustments;
- Acquisitions and integration activities: Up-front payments made to Sangamo Biosciences Inc. and for the acquisition of the US rights to prucalopride (marketed in certain countries in Europe as RESOLOR) ($23.0 million), costs associated with acquisition of FerroKin and the integration of ABH ($11.8 million), charges related to the change in fair value of contingent consideration ($3.3 million), and tax effect of adjustments;
- Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to fair value ($16.5 million);
- Legal and litigation costs: Costs related to the litigation, government investigations, other disputes and external legal costs ($40.4 million), and tax effect of adjustments; and
- Depreciation reclassification: Depreciation of $84.2 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
Unaudited results for the three months and nine months to September 30, 2013
Non GAAP reconciliation
The following table reconciles US GAAP net cash provided by operating activities to Non GAAP cash generation:
3 months to September 9 months to September
30, 30,
2013 2012 2013 2012
$M $M $M $M
Net cash provided by
operating activities 433.7 288.4 852.7 1,011.2
Tax and interest
payments, net 48.1 66.8 260.6 150.9
Up-front payments in
respect of in-licensed
and acquired products - - - 23.0
Non GAAP cash
generation 481.8 355.2 1,113.3 1,185.1
The following table reconciles US GAAP net cash provided by operating activities to Non GAAP free cash flow:
3 months to September 9 months to September
30, 30,
2013 2012 2013 2012
$M $M $M $M
Net cash provided by
operating activities 433.7 288.4 852.7 1,011.2
Up-front payments in
respect of in-licensed
and acquired products - - - 23.0
Capital expenditure (45.3) (27.2) (110.3) (91.6)
Non GAAP free cash
flow 388.4 261.2 742.4 942.6
Non GAAP net cash comprises:
September 30, December 31,
2013 2012
$M $M
Cash and cash equivalents 1,686.1 1,482.2
Convertible bonds (1,100.0) (1,100.0)
Other debt (8.9) (9.3)
Non GAAP net cash 577.2 372.9
NOTES TO EDITORS
Shire enables people with life-altering conditions to lead better lives.
Our strategy is to focus on developing and marketing innovative specialty medicines to meet significant unmet patient needs.
We provide treatments in Neuroscience, Rare Diseases, Gastrointestinal, Internal Medicine and Regenerative Medicine and we are developing treatments for symptomatic conditions treated by specialist physicians in other targeted therapeutic areas.
FORWARD - LOOKING STATEMENTS - "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements included in this announcement that are not historical facts are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire's results could be materially adversely affected. The risks and uncertainties include, but are not limited to, that:
- Shire's products may not be a commercial success;
- revenues from ADDERALL XR are subject to generic erosion;
- the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payors in a timely manner for Shire's products may impact future revenues and earnings;
- Shire relies on a single source for manufacture of certain of its products and a disruption to the supply chain for those products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis;
- Shire uses third party manufacturers to manufacture many of its products and is reliant upon third party contractors for certain goods and services, and any inability of these third party manufacturers to manufacture products, or any failure of these third party contractors to provide these goods and services, in each case in accordance with its respective contractual obligations, could adversely affect Shire's ability to manage its manufacturing processes or to operate its business;
- the development, approval and manufacturing of Shire's products is subject to extensive oversight by various regulatory agencies and regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
- the actions of certain customers could affect Shire's ability to sell or market products profitably and fluctuations in buying or distribution patterns by such customers could adversely impact Shire's revenues, financial conditions or results of operations;
- investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire's activities in the highly regulated markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines;
- adverse outcomes in legal matters and other disputes, including Shire's ability to obtain, maintain, enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire's revenues, financial condition or results of operations;
and other risks and uncertainties detailed from time to time in Shire's filings with the U.S. Securities and Exchange Commission, including its most recent Annual Report on Form 10-K.
NON GAAP MEASURES
This press release contains financial measures not prepared in accordance with US GAAP. These measures are referred to as "Non GAAP" measures and include: Non GAAP operating income; Non GAAP net income; Non GAAP diluted earnings per ADS; effectivetax rate on Non GAAP income before income taxes and earnings/(losses) of equity method investees ("effective tax rate on Non GAAP income"); Non GAAP cost of product sales; Non GAAP research and development; Non GAAP selling, general and administrative; Non GAAP other income/expense; Non GAAP cash generation; Non GAAP free cash flow and Non GAAP net cash/(debt). These Non GAAP measures exclude the effect of certain cash and non-cash items, that Shire's management believes are not related to the core performance of Shire's business.
These Non GAAP financial measures are used by Shire's management to make operating decisions because they facilitate internal comparisons of Shire's performance to historical results and to competitors' results. Shire's Remuneration Committee uses certain key Non GAAP measures when assessing the performance and compensation of employees, including Shire's executive directors.
The Non GAAP measures are presented in this press release as Shire's management believe that they will provide investors with a means of evaluating, and an understanding of how Shire's management evaluates, Shire's performance and results on a comparable basis that is not otherwise apparent on a US GAAP basis, since many non-recurring, infrequent or non-cash items that Shire's management believe are not indicative of the core performance of the business may not be excluded when preparing financial measures under US GAAP.
These Non GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP.
Where applicable the following items, including their tax effect, have been excluded when calculating Non GAAP earnings for both 2013 and 2012, and from our Outlook:
Amortization and asset impairments:
- Intangible asset amortization and impairment charges; and
- Other than temporary impairment of investments.
Acquisitions and integration activities:
- Up-front payments and milestones in respect of in-licensed and acquired products;
- Costs associated with acquisitions, including transaction costs, fair value adjustments on contingent consideration and acquired inventory;
- Costs associated with the integration of companies; and
- Noncontrolling interests in consolidated variable interest entities.
Divestments, reorganizations and discontinued operations:
- Gains and losses on the sale of non-core assets;
- Costs associated with restructuring and reorganization activities;
- Termination costs; and
- Income/(losses) from discontinued operations.
Legal and litigation costs:
- Net legal costs related to the settlement of litigation, government investigations and other disputes (excluding internal legal team costs).
Depreciation, which is included in Cost of product sales, R&D and SG&A costs in our US GAAP results, has been separately disclosed for the presentation of 2013 and 2012 Non GAAP earnings.
Cash generation represents net cash provided by operating activities, excluding up-front and milestone payments for in-licensed and acquired products, tax and interest payments.
Free cash flow represents net cash provided by operating activities, excluding up-front and milestone payments for in-licensed and acquired products, but including capital expenditure in the ordinary course of business.
A reconciliation of Non GAAP financial measures to the most directly comparable measure under US GAAP is presented on pages 19 to 23.
Growth at CER, which is a Non GAAP measure, is computed by restating 2013 results using average 2012 foreign exchange rates for the relevant period.
Average exchange rates for the nine months to September 30, 2013 were $1.55:£1.00 and $1.31:€1.00 (2012: $1.58:£1.00 and $1.29:€1.00). Average exchange rates for Q3 2013 were $1.53:£1.00 and $1.32:€1.00 (2012: $1.58:£1.00 and $1.25:€1.00).
TRADE MARKS
All trade marks designated ® and ™ used in this press release are trade marks of Shire plc or companies within the Shire group except for 3TC® and ZEFFIX® which are trade marks of GlaxoSmithKline, PENTASA® which is a registered trade mark of FERRING B.V., LIALDA® and MEZAVANT® which are trade marks of Nogra Pharma Limited, and DAYTRANA® which is a trade mark of Noven Therapeutics, LLC. Certain trade marks of Shire plc or companies within the Shire group are set out in Shire's Annual Report on Form 10-K for the year ended December 31, 2012 and the Quarterly Report on Form 10-Q for the three months and six months ended June 30, 2013.
For further information please contact:
Investor Relations
Eric Rojas
[email protected]
+1-781-482-0999
Sarah Elton-Farr
[email protected]
+44-1256-894-157
Media
Jessica Mann
[email protected]
+44-1256-894-280
Gwen Fisher
[email protected]
+1-484-595-9836
Jessica Cotrone
[email protected]
+1-781-482-9538
SOURCE Shire plc
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