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Shire: Unaudited Pro Forma Condensed Combined Financial Information

The following excerpt is from the company's SEC filing.

On January 22, 2016, Shire acquired Dyax, a U.S. biopharmaceutical company based in Burlington, Massachusetts, pursuant to a merger agreement dated as of November 2, 2015.

The unaudited pro forma condensed combined financial statements are presented to illustrate the effects of the acquisition on the historical financial position and operating results of Shire and Dyax. The unaudited pro forma condensed combined balance sheet as of December 31, 2015, combines the historical consolidated balance sheets of Shire and Dyax, giving effect to the acquisition as if it had occurred on December 31, 2015. The unaudite d pro forma condensed combined statement of income for the year ended December 31, 2015, combines the historical consolidated statements of income of Shire and Dyax, giving effect to the acquisition as if it had occurred on January 1, 2015.

Shire has adjusted the historical consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) with respect to the statement of income expected to have a continuing impact on the combined results. This information should be read in conjunction with:

The accompanying notes to the unaudited pro forma condensed combined financial statements;

The separate historical consolidated financial statements of Shire for the year ended December 31, 2015 included in Shire’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (“SEC”) on February 23, 2016; and

The separate historical financial statements of Dyax as of and for the year ended December 31, 2015 included in Exhibit 99.3 within this Form 8-K/A.

Shire funded the up-front cash component of the purchase consideration of approximately $5,934.0 million through (i) borrowing from a $5,600.0 million term loan facility dated November 2, 2015 (the “November 2015 Facilities Agreement”); (ii) borrowing from a $2,100.0 million revolving credit facilities agreement dated December 12, 2014 (the “RCF”); and (iii) existing cash and cash equivalents.

The unaudited pro forma condensed combined financial information has been prepared by management in accordance with SEC Regulation S-X Article 11 for illustrative purposes only. The unaudited pro forma condensed combined financial statements are not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the merger been completed as of the dates indicated. The unaudited pro forma condensed combined financial statements do not purport to project the future financial position or results of operations of the combined entity. In addition, the unaudited pro forma condensed combined financial statements reflect preliminary estimates and assumptions based on information available at the time of preparation, including preliminary fair value estimates of Dyax’s assets and liabilities acquired by Shire. Differences between the preliminary estimates reflected in these unaudited pro forma condensed combined financial statements and the final acquisition accounting may occur.

SHIRE PLC

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

Pro forma adjustments (Note 4)

Pro forma combined

ASSETS

Current assets:

Cash and cash equivalents

(135.5

Restricted cash

Short-term investments

Accounts receivable, net

1,201.2

1,213.1

Inventories

Prepaid expenses and other current assets

Total current assets

2,255.5

(117.3

2,457.8

Non-current assets:

Investments

Property, plant and equipment, net

Goodwill

4,147.8

2,740.2

6,888.0

Other intangible assets, net

9,173.3

4,660.0

13,833.3

Deferred tax asset

Other non-current assets

(a), (c)

Total assets

16,609.8

7,308.8

24,255.0

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable and accrued expenses

2,050.6

2,178.9

Short term borrowings

1,511.5

1,209.1

2,720.6

Other current liabilities

Total current liabilities

3,706.1

1,295.3

5,045.0

Non-current liabilities:

Long term borrowings

4,600.0

4,669.9

Deferred tax liability

2,205.9

1,339.5

3,545.4

Other non-current liabilities

(b), (f)

1,196.2

Total liabilities

6,780.7

7,626.6

14,456.5

Equity:

Common stock

Additional paid-in capital

4,486.3

(892.7

Treasury stock

(320.6

Accumulated other comprehensive (loss)/income

(183.8

Retained earnings/(accumulated deficit)

5,788.3

(606.5

(e),(i)

5,757.7

Total equity

9,829.1

(317.8

9,798.5

Total liabilities and equity

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2015

Revenues:

Product sales

6,099.9

6,166.6

Royalties

Other revenues

Total revenues

6,416.7

6,503.8

Costs and expenses:

Cost of product sales

Research and development

1,564.0

1,622.6

Selling, general and administrative

2,341.2

(j), (k)

2,431.1

Gain on sale of product rights

Reorganization costs

Integration and acquisition costs

Total operating expenses

4,997.2

5,159.8

Operating income/(loss) from continuing operations

1,419.5

1,344.0

Interest income

Interest expense

(l), (m)

(130.7

Other income, net

Income/(loss) from continuing operations before income taxes and equity in losses of equity method investees

1,385.8

(103.1

1,222.0

Income taxes

Equity in losses of equity method investees, net of taxes

Income/(loss) from continuing operations, net of taxes

1,337.5

1,186.2

Earnings per ordinary share from continuing operations - basic

Earnings per ordinary share from continuing operations - diluted

Weighted average number of shares (millions)

Diluted

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2015

Description of transaction and basis of presentation

On January 22, 2016, Shire acquired all of the outstanding share capital of Dyax for $37.30 per share in cash. Under the terms of the merger agreement, Dyax shareholders may receive additional value through a...


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