Celgene Corporation
CELGENE CORP /DE/ (Form: 10-Q, Received: 08/01/2012 16:06:59)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

(Mark one)

 

[x]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2012

 

OR

 

[ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________to _____________

 

Commission File Number 001-34912

 

CELGENE CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

 

22-2711928

(State or other jurisdiction of incorporation

 

(I.R.S. Employer Identification

or organization)

 

Number)

 

 

 

86 Morris Avenue, Summit, NJ

 

07901

(Address of principal executive offices)

 

(Zip Code)

 

 

 

(908) 673-9000

 

 

 

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

 

Yes

X

 

No

 

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

 

Yes

X

 

No

 

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

X

 

Accelerated filer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accelerated filer (Do not check if a
smaller reporting company)

 

 

Smaller reporting company

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 

Yes

 

 

No

X

 

At July 23, 2012, 431,423,976 shares of Common Stock, par value $.01 per share, were outstanding.

 



 

CELGENE CORPORATION

 

FORM 10-Q TABLE OF CONTENTS

 

 

 

Page No.

PART I

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1

Financial Statements

 

 

 

 

 

Consolidated Statements of Income -
Three-Month and Six-Month Periods Ended June 30, 2012 and 2011

2

 

 

 

 

Consolidated Statements of Comprehensive Income –
Three-Month and Six-Month Periods Ended June 30, 2012 and 2011

3

 

 

 

 

Consolidated Balance Sheets -
As of June 30, 2012 and December 31, 2011

4

 

 

 

 

Consolidated Statements of Cash Flows -
Six-Month Periods Ended June 30, 2012 and 2011

5

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

7

 

 

 

Item 2

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

28

 

 

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

50

 

 

 

Item 4

Controls and Procedures

53

 

 

 

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

Item 1

Legal Proceedings

54

 

 

 

Item 1A

Risk Factors

54

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

70

 

 

 

Item 6

Exhibits

71

 

 

 

Signatures

 

72

 

1



 

PART I – FINANCIAL INFORMATION

 

Item 1.  Financial Statements.

 

CELGENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three-Month Periods Ended

 

Six-Month Periods Ended

 

 

June 30,

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net product sales

 

 

$

1,336,590

 

 

$

1,154,328

 

 

$

2,582,089

 

 

$

2,237,937

 

Collaborative agreements and other revenue

 

 

3,230

 

 

3,399

 

 

5,861

 

 

12,702

 

Royalty revenue

 

 

26,944

 

 

25,428

 

 

52,102

 

 

57,797

 

Total revenue

 

 

1,366,764

 

 

1,183,155

 

 

2,640,052

 

 

2,308,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold (excluding amortization of acquired intangible assets)

 

 

71,852

 

 

126,443

 

 

144,372

 

 

253,711

 

Research and development

 

 

447,098

 

 

371,520

 

 

809,142

 

 

806,998

 

Selling, general and administrative

 

 

323,027

 

 

305,643

 

 

648,805

 

 

607,904

 

Amortization of acquired intangible assets

 

 

44,148

 

 

70,087

 

 

85,908

 

 

139,137

 

Acquisition related (gains) charges and restructuring, net

 

 

39,285

 

 

(9,477

)

 

28,215

 

 

(106,221

)

Total costs and expenses

 

 

925,410

 

 

864,216

 

 

1,716,442

 

 

1,701,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

441,354

 

 

318,939

 

 

923,610

 

 

606,907

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income and expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and investment income, net

 

 

3,108

 

 

5,945

 

 

6,816

 

 

10,467

 

Interest (expense)

 

 

(11,474

)

 

(9,418

)

 

(22,859

)

 

(21,168

)

Other income (expense), net

 

 

7,696

 

 

2,945

 

 

7,119

 

 

9,013

 

Income before income taxes

 

 

440,684

 

 

318,411

 

 

914,686

 

 

605,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

 

73,311

 

 

39,203

 

 

145,776

 

 

70,925

 

Net income

 

 

367,373

 

 

279,208

 

 

768,910

 

 

534,294

 

Net loss attributable to non-controlling interest

 

 

-    

 

 

190

 

 

-    

 

 

694

 

Net income attributable to Celgene

 

 

$

367,373

 

 

$

279,398

 

 

$

768,910

 

 

$

534,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Celgene:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.84

 

 

$

0.60

 

 

$

1.76

 

 

$

1.15

 

Diluted

 

 

$

0.82

 

 

$

0.59

 

 

$

1.72

 

 

$

1.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

436,703

 

 

462,625

 

 

437,526

 

 

464,300

 

Diluted

 

 

445,379

 

 

469,962

 

 

447,092

 

 

470,958

 

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

 

2



 

CELGENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

 

 

 

 

 

Three-Month Periods Ended

 

 

Six-Month Periods Ended

 

 

 

June 30,

 

 

June 30,

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

367,373

 

 

279,208

 

 

$

768,910

 

 

534,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(16,274

)

 

4,985

 

 

2,082

 

 

18,821

 

Change in functional currency of a foreign subsidiary

 

 

-    

 

 

-    

 

 

13,144

 

 

-    

 

Net unrealized gains (losses) related to cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses), net of tax expense (benefit) of ($12,130) and ($44) for the three-months ended June 30, 2012 and 2011, respectively, and ($11,881) and ($5) for the six-months ended June 30, 2012 and 2011, respectively.

 

 

24,590

 

 

(31,178

)

 

47,876

 

 

(57,171

)

Reclassification adjustment for (gains) losses included in net income, net of tax (expense) benefit of ($404) and ($611) for the three-months ended June 30, 2012 and 2011, respectively, and ($3,022) and ($1,117) for the six-months ended June 30, 2012 and 2011, respectively.

 

 

(18,575

)

 

8,211

 

 

(35,013

)

 

4,148

 

Net unrealized gains (losses) on marketable securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses), net of tax expense (benefit) of ($70) and ($425) for the three-months ended June 30, 2012 and 2011, respectively, and ($94) and $1,510 for the six-months ended June 30, 2012 and 2011, respectively.

 

 

(827

)

 

2,049

 

 

1,634

 

 

3,938

 

Reclassification adjustment for (gains) losses included in net income, net of tax (expense) benefit of $45 and ($70) for the three-months ended June 30, 2012 and 2011, respectively, and $45 and $256 for the six-months ended June 30, 2012 and 2011, respectively.

 

 

48

 

 

4

 

 

(304

)

 

1,033

 

Total other comprehensive income (loss)

 

 

(11,038

)

 

(15,929

)

 

29,419

 

 

(29,231

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

356,335

 

 

263,279

 

 

798,329

 

 

505,063

 

Comprehensive loss attributable to non-controlling interest

 

 

-     

 

 

190

 

 

-    

 

 

694

 

Comprehensive income attributable to Celgene

 

 

$

356,335

 

 

263,469

 

 

$

798,329

 

 

505,757

 

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

 

3



 

CELGENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

 

 

June 30,

 

 

 

December 31,

 

 

 

 

 

2012

 

 

 

2011

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

1,862,479

 

 

 

$

1,859,464

 

 

Marketable securities available for sale

 

 

699,065

 

 

 

788,690

 

 

Accounts receivable, net of allowances of $25,979 and $18,855 at June 30, 2012 and December 31, 2011, respectively

 

 

884,908

 

 

 

945,531

 

 

 

Inventory

 

 

223,194

 

 

 

189,573

 

 

Deferred income taxes

 

 

134,049

 

 

 

116,751

 

 

Other current assets

 

 

275,119

 

 

 

395,094

 

 

Assets held for sale

 

 

-    

 

 

 

58,122

 

 

Total current assets

 

 

4,078,814

 

 

 

4,353,225

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

526,827

 

 

 

506,042

 

 

Intangible assets, net

 

 

3,265,950

 

 

 

2,844,698

 

 

Goodwill

 

 

2,040,780

 

 

 

1,887,220

 

 

Other assets

 

 

468,836

 

 

 

414,725

 

 

Total assets

 

 

$

10,381,207

 

 

 

$

10,005,910

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

$

390,434

 

 

 

$

526,684

 

 

Accounts payable

 

 

109,044

 

 

 

121,525

 

 

Accrued expenses

 

 

623,833

 

 

 

701,707

 

 

Income taxes payable

 

 

89,165

 

 

 

30,042

 

 

Current portion of deferred revenue

 

 

14,786

 

 

 

14,346

 

 

Other current liabilities

 

 

165,666

 

 

 

138,424

 

 

Liabilities of disposal group

 

 

-    

 

 

 

7,244

 

 

Total current liabilities

 

 

1,392,928

 

 

 

1,539,972

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue, net of current portion

 

 

14,752

 

 

 

12,623

 

 

Income taxes payable

 

 

173,937

 

 

 

616,465

 

 

Deferred income taxes

 

 

1,130,222

 

 

 

775,022

 

 

Other non-current liabilities

 

 

439,228

 

 

 

273,516

 

 

Long-term debt, net of discount

 

 

1,272,112

 

 

 

1,275,585

 

 

Total liabilities

 

 

4,423,179

 

 

 

4,493,183

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $.01 par value per share, 5,000,000 shares authorized; none outstanding at June 30, 2012 and December 31, 2011

 

 

-    

 

 

 

-    

 

 

 

Common stock, $.01 par value per share, 575,000,000 shares authorized; issued 493,483,403 and 487,381,255 shares at June 30, 2012 and December 31, 2011, respectively

 

 

4,935

 

 

 

4,874

 

 

Common stock in treasury, at cost; 60,435,257 and 49,889,078 shares at June 30, 2012 and December 31, 2011, respectively

 

 

(3,497,569

)

 

 

(2,760,705

)

 

Additional paid-in capital

 

 

7,148,255

 

 

 

6,764,479

 

 

Retained earnings

 

 

2,335,325

 

 

 

1,566,416

 

 

Accumulated other comprehensive income (loss)

 

 

(32,918

)

 

 

(62,337

)

 

Total stockholders’ equity

 

 

5,958,028

 

 

 

5,512,727

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

 

$

10,381,207

 

 

 

$

10,005,910

 

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

 

4



 

CELGENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

 

 

 

 

Six-Month Periods Ended

 

 

 

 

 

June 30,

 

 

 

 

 

2012

 

 

 

2011

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

 

$

768,910

 

 

 

$

534,294

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation

 

 

38,489

 

 

 

35,019

 

 

Amortization

 

 

86,568

 

 

 

140,249

 

 

Allocation of prepaid royalties

 

 

897

 

 

 

15,744

 

 

Provision for accounts receivable allowances

 

 

5,545

 

 

 

1,405

 

 

Deferred income taxes

 

 

174,695

 

 

 

(85,282

)

 

Impairment of acquired in-process research and development

 

 

22,152

 

 

 

118,000

 

 

Change in value of contingent consideration

 

 

25,638

 

 

 

(111,169

)

 

Share-based compensation expense

 

 

114,211

 

 

 

112,097

 

 

Share-based employee benefit plan expense

 

 

7,882

 

 

 

8,071

 

 

Unrealized and realized change in value of derivative instruments

 

 

(37,071

)

 

 

8,874

 

 

Realized (gains) losses on marketable securities available for sale

 

 

(259

)

 

 

1,455

 

 

Other, net

 

 

(7,989

)

 

 

1,321

 

 

 

 

 

 

 

 

 

 

 

 

Change in current assets and liabilities, excluding the effect of acquisitions and dispositions:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

37,431

 

 

 

(126,187

)

 

Inventory

 

 

(34,043

)

 

 

65,428

 

 

Other operating assets

 

 

194,076

 

 

 

12,952

 

 

Assets held for sale, net

 

 

(1,176

)

 

 

1,290

 

 

Accounts payable and other operating liabilities

 

 

(71,005

)

 

 

(35,551

)

 

Income tax payable

 

 

(379,833

)

 

 

43,526

 

 

Deferred revenue

 

 

2,291

 

 

 

(5,137

)

 

Net cash provided by operating activities

 

 

947,409

 

 

 

736,399

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Proceeds from sales of marketable securities available for sale

 

 

850,478

 

 

 

1,095,497

 

 

Purchases of marketable securities available for sale

 

 

(760,995

)

 

 

(963,293

)

 

Payments for acquisition of business, net of cash acquired

 

 

(352,246

)

 

 

-    

 

 

Proceeds from the sale of non-core assets, net

 

 

1,782

 

 

 

93,185

 

 

Capital expenditures

 

 

(59,249

)

 

 

(53,048

)

 

Purchases of investment securities

 

 

(29,225

)

 

 

(533

)

 

Other investing activities

 

 

(516

)

 

 

(2,329

)

 

Net cash provided by (used in) investing activities

 

 

(349,971

)

 

 

169,479

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Payment for treasury shares

 

 

(726,513

)

 

 

(689,126

)

 

Proceeds from short-term borrowing

 

 

2,624,316

 

 

 

-    

 

 

Principal repayments on short-term borrowing

 

 

(2,759,762

)

 

 

-    

 

 

Net proceeds from exercise of common stock options and warrants

 

 

240,876

 

 

 

54,357

 

 

Excess tax benefit from share-based compensation arrangements

 

 

28,640

 

 

 

10,462

 

 

Net cash (used in) financing activities

 

 

(592,443

)

 

 

(624,307

)

 

 

 

 

 

 

 

 

 

 

 

Effect of currency rate changes on cash and cash equivalents

 

 

(1,980

)

 

 

15,345

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

3,015

 

 

 

296,916

 

 

Cash and cash equivalents at beginning of period

 

 

1,859,464

 

 

 

1,351,128

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

 

$

1,862,479

 

 

 

$

1,648,044

 

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

 

5



 

CELGENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

(Unaudited)

(Dollars in thousands)

 

 

 

 

Six-Month Periods Ended

 

 

 

 

 

June 30,

 

 

 

 

 

2012

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental schedule of non-cash investing and financing activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in net unrealized (gain) loss on marketable securities available for sale

 

 

$

(1,539

)

 

 

$

(4,804

)

 

 

 

 

 

 

 

 

 

 

 

Matured shares tendered in connection with stock option exercises

 

 

$

(155

)

 

 

$

-    

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid

 

 

$

24,482

 

 

 

$

26,169

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes paid

 

 

$

172,387

 

 

 

$

66,689

 

 

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

 

6



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(In all accompanying tables, amounts of dollars expressed in thousands,

except per share amounts, unless otherwise indicated)

 

1.  Nature of Business and Basis of Presentation

 

Celgene Corporation and its subsidiaries (collectively “we,” “our,”  “us” or the “Company”) is a global biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory diseases.  We are dedicated to innovative research and development which is designed to bring new therapies to market and are involved in research in several scientific areas that may deliver proprietary next-generation therapies, targeting areas such as intracellular signaling pathways in cancer and immune cells, immunomodulation in cancer and autoimmune diseases, and therapeutic application of cell therapies.

 

Our primary commercial stage products include REVLIMID ® , VIDAZA ® , ABRAXANE ® ,  THALOMID ®  and ISTODAX ® .  Additional sources of revenue include a licensing agreement with Novartis, which entitles us to royalties on FOCALIN XR ®  and the entire RITALIN ®  family of drugs, the sale of services through our Cellular Therapeutics subsidiary and other miscellaneous licensing and collaboration agreements.

 

The consolidated financial statements include the accounts of Celgene Corporation and its subsidiaries. Investments in limited partnerships and interests where we have an equity interest of 50% or less and do not otherwise have a controlling financial interest are accounted for by either the equity or cost method.  We record net income (loss) attributable to non-controlling interest, if any, in our Consolidated Statements of Income equal to the percentage of ownership interest retained in the respective operations by the non-controlling parties.

 

The preparation of these unaudited consolidated financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures.  Actual results could differ from those estimates.  We are subject to certain risks and uncertainties related to product development, regulatory approval, market acceptance, scope of patent and proprietary rights, competition, European credit risk, technological change and product liability.

 

Interim results may not be indicative of the results that may be expected for the full year.  In the opinion of management, these unaudited consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of these interim unaudited consolidated financial statements.

 

2.      Summary of Significant Accounting Policies

 

Our significant accounting policies are described in Note 1 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2011, or the 2011 Annual Report on Form 10-K.

 

New Accounting Pronouncements:   In July 2012, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2012-02, “Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment,” or ASU 2012-02.  ASU 2012-02 allows a company the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test.  Under that option, a company would no longer be required to calculate the fair value of an indefinite-lived intangible asset unless the company determines, based on that qualitative assessment, that it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount.  ASU 2012-02 is effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

 

3.      Acquisitions and Divestitures

 

Avila Acquisition

 

On March 7, 2012, or the Acquisition Date, we acquired all of the outstanding common stock of Avila Therapeutics, Inc., subsequently renamed Celgene Avilomics Research, or Avila.  The acquisition resulted in Avila becoming our wholly owned subsidiary.  The results of operations for Avila are included in our consolidated financial statements from the date of acquisition and the assets and liabilities of Avila have been recorded at their respective fair values on the acquisition date and consolidated with our other assets and liabilities.   Avila’s results of operations prior to the acquisition were determined to be immaterial to us; therefore, pro forma financial statements are not required to be presented.

 

7



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

We paid $352.2 million in cash, net of cash acquired, and may make additional payments of up to an estimated maximum of $595.0 million in contingent developmental and regulatory milestone payments.

 

Prior to the acquisition, Avila was a clinical-stage biotechnology company focused on the design and development of targeted covalent drugs to achieve best-in class outcomes.  Avila’s product pipeline has been created using its proprietary Avilomics™ platform for developing targeted covalent drugs that treat diseases through protein silencing. Avila’s most advanced product candidate, CC-292, formerly AVL-292, a potential treatment for cancer and autoimmune diseases, is currently in phase I clinical testing.  We acquired Avila to enhance our portfolio of potential therapies for patients with life-threatening illnesses worldwide.

 

Our potential contingent consideration payments are classified as liabilities, which were measured at fair value as of the acquisition date.  The range of potential milestone payments is from no payment if none of the milestones are achieved to an estimated maximum of $595.0 million if all milestones are achieved.  The potential milestones consist of developmental and regulatory achievements, including milestones for the initiation of phase II and phase III studies, investigational new drug, or IND, filings, and other regulatory events.

 

We estimated the fair value of potential contingent consideration using a probability-weighted income approach, which reflects the probability and timing of future potential payments.  This fair value measurement is based on significant input not observable in the market and thus represents a Level 3 liability within the fair value hierarchy. The resulting probability weighted cash flows were discounted using a discount rate based on a market participant assumption.

 

Subsequent to the acquisition date, we measure the contingent consideration arrangements at fair value each period with changes in fair value recognized in operating earnings unless changes pertain to facts and circumstances that existed as of the acquisition date, in which case changes are recognized as adjustments to goodwill.  Changes in fair value reflect new information about the in-process research and development, or IPR&D, assets and the passage of time.  In the absence of new information, changes in fair value only reflect the passage of time as development work towards the achievement of the milestones progresses and are accrued based on an accretion schedule.

 

Fair value amounts allocated to contingent consideration and certain assets have been adjusted during the three-month period ended June 30, 2012 based on analysis of facts and circumstances that existed as of the acquisition date .  These measurement period adjustments were not significant and did not have a significant impact on our financial condition, results of operations or cash flows in any interim period in 2012 and, therefore, we did not retrospectively adjust our interim financial statements for the three-month period ended March 31, 2012.

 

The acquisition has been accounted for using the acquisition method of accounting which requires that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and requires the fair value of acquired IPR&D to be classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts.  A provisional purchase price allocation has been made and recorded amounts for the following items are subject to change:

 

·                   The amount recorded for the fair value of contingent consideration.

·                   Amounts for intangible assets, goodwill and associated deferred tax liabilities pending finalization of valuation efforts.

·                   Amounts for income tax assets, receivables and liabilities, pending the filing of Avila pre-acquisition tax returns.

 

The amounts recognized will be finalized as the information necessary to complete the analyses is obtained, but no later than one year from the acquisition date.  Material adjustments, if any, could require retrospective application if they impact amortization amounts.

 

8



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

The fair value of consideration transferred in the acquisition of Avila is shown in the table below:

 

 

 

 

Fair Value at the
Acquisition Date

 

 

 

 

 

(Provisional)

 

 

 

 

 

 

 

 

 

Cash

 

 

$

363,405

 

 

Contingent consideration

 

 

169,337

 

 

Total fair value of consideration transferred

 

 

$

532,742

 

 

 

The provisional purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the acquisition date based upon their respective preliminary fair values summarized below:

 

 

 

 

Amounts
Recognized as of
Acquisition Date
(Provisional)

 

 

 

 

 

 

 

 

Working capital (1)

 

 

$

11,987

 

 

Property, plant and equipment

 

 

2,559

 

 

Platform technology intangible asset (2)

 

 

330,800

 

 

In-process research and development product rights

 

 

198,400

 

 

Net deferred tax liability (3)

 

 

(164,993)

 

 

Total identifiable net assets

 

 

378,753

 

 

Goodwill

 

 

153,989

 

 

Net assets acquired

 

 

$

532,742

 

 

 

(1)        Includes cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities.

(2)        Platform technology related to the Avilomics™ discovery platform which is being amortized over a useful life of seven years based on the estimated useful life of the underlying process.

(3)        Includes current deferred income tax asset of $14.7 million and non-current deferred tax liability of $179.7 million.

 

The fair values of current assets, current liabilities and property, plant and equipment were determined to approximate their book values.

 

The fair value of the platform technology intangible asset was based primarily on expected cash flows from future product candidates to be developed from the Avilomics™ platform and the fair value assigned to acquired IPR&D was primarily based on expected cash flows from the CC-292 product candidate which is in phase I testing .  The values assigned to the platform technology intangible asset and the IPR&D asset were determined by estimating the costs to develop CC-292 and future product candidates into commercially viable products, estimating the resulting revenue from the potential products, and discounting the net cash flows to present value.  The revenue and costs projections used were reduced based on the probability of developing new drugs. Additionally, the projections considered the relevant market sizes and growth factors and the nature and expected timing of new product introductions. The resulting net cash flows from such potential products are based on our estimates of cost of sales, operating expenses, and income taxes.  The rates utilized to discount the net cash flows to their present value were commensurate with the stage of development of the projects and uncertainties in the economic estimates used in the projections described

 

9



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

above.  Acquired IPR&D will be accounted for as an indefinite-lived intangible asset until regulatory approval in specified markets or discontinuation.

 

The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition.  The goodwill recorded as part of the acquisition is largely attributable to full ownership rights to the Avilomics™ platform .  We do not expect any portion of this goodwill to be deductible for tax purposes.  The goodwill attributable to the acquisition has been recorded as a non-current asset in our Consolidated Balance Sheets and is not amortized, but is subject to review for impairment annually.

 

As a result of the acquisition of Avila, we have become party to a number of collaboration agreements that Avila had entered into prior to the acquisition.  These agreements entitle us to receive potential milestone payments and reimbursement of expenses for research and development expenses incurred under the collaborations and our collaboration partners may receive intellectual property rights or options to purchase such rights related to products developed under the collaborations.   We do not consider these collaboration arrangements to be significant.

 

Sale of Facilities

 

Two manufacturing and research facilities located in Melrose Park, Illinois, and the equipment associated with operations at those facilities, were sold during the three-month period ended June 30, 2012 to APP Pharmaceuticals, Inc., or APP, a subsidiary of Fresenius Kabi AG.  APP manufactures ABRAXANE ®  at one of the facilities.  In exchange for the facilities, we received rights to free and reduced cost manufacturing of specified quantities of ABRAXANE ® , which we recorded as current or non-current assets based on anticipated timing of delivery, a five-year rent-free lease of a portion of one of the facilities, and a net cash payment of $1.8 million.  The transaction did not result in any gain or loss.

 

4.    Earnings Per Share

 

 

 

 

Three-Month Periods Ended

 

 

 

Six-Month Periods Ended

 

 

 

 

 

June 30,

 

 

 

June 30,

 

 

(Amounts in thousands, except per share)

 

 

2012

 

 

 

2011

 

 

 

2012

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Celgene

 

 

$

367,373

 

 

 

$

279,398

 

 

 

$

768,910

 

 

 

$

534,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

436,703

 

 

 

462,625

 

 

 

437,526

 

 

 

464,300

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options, restricted stock units, warrants and other

 

 

8,676

 

 

 

7,337

 

 

 

9,566

 

 

 

6,658

 

 

Diluted

 

 

445,379

 

 

 

469,962

 

 

 

447,092

 

 

 

470,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.84

 

 

 

$

0.60

 

 

 

$

1.76

 

 

 

$

1.15

 

 

Diluted

 

 

$

0.82

 

 

 

$

0.59

 

 

 

$

1.72

 

 

 

$

1.14

 

 

 

The total number of potential shares of common stock excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive was 10,355,082 and 21,840,944 shares for the three-month periods ended June 30, 2012 and 2011, respectively.  The total number of potential common shares excluded for the six-month periods ended June 30, 2012 and 2011 was 8,477,044 and 25,951,468, respectively.

 

Our Board of Directors has approved common share repurchases  of up to an aggregate of $6.5 billion of our common stock.  As of June 30, 2012, an aggregate of 56,241,949 shares of common stock were repurchased

 

10



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

under the program, including 8,062,564 shares of common stock repurchased during the three-month period ended June 30, 2012.  As of June 30, 2012 we had a remaining open-ended authorization of $3.161 billion.

 

5.    Accumulated Other Comprehensive Income (Loss)

 

The components of other comprehensive income (loss) consist of changes in pension liability, changes in net unrealized gains (losses) on marketable securities classified as available-for-sale, net unrealized gains (losses) related to cash flow hedges and changes in foreign currency translation adjustments, which includes changes in a subsidiary’s functional currency and net asset transfers of common control subsidiaries.

 

The accumulated balances related to each component of other comprehensive income (loss), net of tax, is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Net Unrealized

 

 

 

Net Unrealized

 

 

 

Currency

 

 

 

Other

 

 

 

 

Pension

 

 

 

Gains (Losses) From

 

 

 

Gains (Losses)

 

 

 

Translation

 

 

 

Comprehensive

 

 

 

 

Liability

 

 

 

Marketable Securities

 

 

 

From Hedges

 

 

 

Adjustment

 

 

 

Income (Loss)

 

Balance December 31, 2011

 

 

$

(5,382

)

 

 

$

4,707

 

 

 

$

5,713

 

 

 

$

(67,375

)

 

 

$

(62,337

)

Other comprehensive income (loss)

 

 

-  

 

 

 

1,330

 

 

 

12,863

 

 

 

15,226

 

 

 

29,419

 

Balance June 30, 2012

 

 

$

(5,382

)

 

 

$

6,037

 

 

 

$

18,576

 

 

 

$

(52,149

)

 

 

$

(32,918

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2010

 

 

$

(3,836

)

 

 

$

3,102

 

 

 

$

(15,556

)

 

 

$

(57,477

)

 

 

$

(73,767

)

Other comprehensive income (loss)

 

 

-  

 

 

 

4,971

 

 

 

(53,023

)

 

 

18,821

 

 

 

(29,231

)

Balance June 30, 2011

 

 

$

(3,836

)

 

 

$

8,073

 

 

 

$

(68,579

)

 

 

$

(38,656

)

 

 

$

(102,998

)

 

6.    Financial Instruments and Fair Value Measurement

 

The table below presents information about assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2012 and the valuation techniques we utilized to determine such fair value.  Fair values determined based on Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities.  Our Level 1 assets consist of marketable equity securities.  Fair values determined based on Level 2 inputs utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active.  Our Level 2 assets consist primarily of U.S. Treasury securities, U.S. government-sponsored agency securities, U.S. government-sponsored agency mortgage-backed securities, non-U.S. government, agency and Supranational securities, global corporate debt securities, foreign currency forward contracts and interest rate lock agreements.  Fair values determined based on Level 3 inputs utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity.  We do not have any Level 3 assets.  Our Level 1 liability relates to our publicly traded contingent value rights, or CVRs.  The Level 3 liability consists of contingent consideration related to undeveloped product rights resulting from the acquisition of Gloucester Pharmaceuticals, Inc., or Gloucester, and contingent consideration related to the undeveloped product rights and the technology platform acquired from the Avila acquisition.  The estimated maximum potential payments related to the contingent consideration from the acquisitions of Gloucester and Avila is $120.0 million and $595.0 million, respectively.

 

11



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

 

 

 

 

 

 

 

Quoted Price in

 

 

 

Significant

 

 

 

Significant

 

 

 

 

 

 

 

 

Active Markets for

 

 

 

Other Observable

 

 

 

Unobservable

 

 

 

 

Balance at

 

 

 

Identical Assets

 

 

 

Inputs

 

 

 

Inputs

 

 

 

 

June 30, 2012

 

 

 

(Level 1)

 

 

 

(Level 2)

 

 

 

(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

 

$

699,065

 

 

 

$

432

 

 

 

$

698,633

 

 

 

$

-  

 

Forward currency contracts

 

 

81,765

 

 

 

-  

 

 

 

81,765

 

 

 

-  

 

Treasury rate lock agreements

 

 

1,816

 

 

 

-  

 

 

 

1,816

 

 

 

-  

 

Total assets

 

 

$

782,646

 

 

 

$

432

 

 

 

$

782,214

 

 

 

$

-  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent value rights

 

 

$

(77,893

)

 

 

$

(77,893

)

 

 

$

-  

 

 

 

$

-  

 

Other acquisition related contingent consideration

 

 

(254,555

)

 

 

-  

 

 

 

-  

 

 

 

(254,555

)

Total liabilities

 

 

$

(332,448

)

 

 

$

(77,893

)

 

 

$

-  

 

 

 

$

(254,555

)

 

 

 

 

 

 

 

 

Quoted Price in

 

 

 

Significant

 

 

 

Significant

 

 

 

 

 

 

 

 

Active Markets for

 

 

 

Other Observable

 

 

 

Unobservable

 

 

 

 

Balance at

 

 

 

Identical Assets

 

 

 

Inputs

 

 

 

Inputs

 

 

 

 

December 31, 2011

 

 

 

(Level 1)

 

 

 

(Level 2)

 

 

 

(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

 

$

788,690

 

 

 

$

560

 

 

 

$

788,130

 

 

 

$

-  

 

Forward currency contracts

 

 

48,561

 

 

 

-  

 

 

 

48,561

 

 

 

-  

 

Total assets

 

 

$

837,251

 

 

 

$

560

 

 

 

$

836,691

 

 

 

$

-  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent value rights

 

 

$

(60,583

)

 

 

$

(60,583

)

 

 

$

-  

 

 

 

$

-  

 

Other acquisition related contingent consideration

 

 

(76,890

)

 

 

-  

 

 

 

-  

 

 

 

(76,890

)

Total liabilities

 

 

$

(137,473

)

 

 

$

(60,583

)

 

 

$

-  

 

 

 

$

(76,890

)

 

There were no security transfers between Levels 1 and 2 in the six-month period ended June 30, 2012.  Level 3 liabilities issued during the six-month period ended June 30, 2012 consist of contingent consideration related to the acquisition of Avila.  The following tables represent a roll-forward of the fair value of Level 3 instruments (significant unobservable inputs):

 

 

 

 

Six-Month Periods Ended June 30,

 

 

 

 

2012

 

 

 

2011

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

$

-  

 

 

 

$

23,372

 

Amounts acquired or issued

 

 

-  

 

 

 

-  

 

Net realized and unrealized gains

 

 

-  

 

 

 

1,187

 

Settlements

 

 

-  

 

 

 

(22,477

)

Transfers in and/or out of Level 3

 

 

-  

 

 

 

-  

 

Balance at end of period

 

 

$

-  

 

 

 

$

2,082

 

 

12



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

Settlements of $22.5 million during the six-month period ended June 30, 2011 consisted of Level 3 instruments that were considered non-core assets acquired in the acquisition of Abraxis BioScience Inc., or Abraxis, and were included in the sale of the non-core assets in April 2011.

 

 

 

Six-Month Periods Ended June 30,

 

 

 

2012

 

 

2011

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Balance at beginning of period

 

  $

(76,890)

 

 

  $

(252,895)

 

Amounts acquired or issued

 

(169,337)

 

 

-   

 

Net change in fair value

 

(8,328)

 

 

(12,161)

 

Settlements

 

-   

 

 

-   

 

Transfers in and/or out of Level 3

 

-   

 

 

180,000

 

Balance at end of period

 

  $

(254,555)

 

 

  $

(85,056)

 

 

Transfers out of Level 3 during the six-month period ended June 30, 2011 consisted of $180.0 million related to a milestone that was part of the contingent consideration in the Gloucester acquisition. At June 30, 2011 the milestone was achieved and was valued based on the contractually defined amount of the milestone, which was paid in July.

 

7.    Derivative Instruments and Hedging Activities

 

Foreign Currency Forward Contracts:   We use foreign currency forward contracts to hedge specific forecasted transactions denominated in foreign currencies and to reduce exposures to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies.

 

We enter into foreign currency forward contracts to protect against changes in anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates, primarily associated with non-functional currency denominated revenues and expenses of foreign subsidiaries.  The foreign currency forward hedging contracts outstanding at June 30, 2012 and December 31, 2011 had settlement dates within 36 months.  These foreign currency forward contracts are designated as cash flow hedges and, to the extent effective, any unrealized gains or losses on them are reported in other comprehensive income (loss), or OCI, and reclassified to operations in the same periods during which the underlying hedged transactions affect operations.  Any ineffectiveness on these foreign currency forward contracts is reported in other income (expense), net.  Foreign currency forward contracts entered into to hedge forecasted revenue and expenses were as follows at June 30, 2012 and December 31, 2011:

 

 

 

Notional Amount

Foreign Currency

 

June 30, 2012

 

 

December 31, 2011

 

 

 

 

 

 

 

Australian Dollar

$

23,061

 

$

17,169

 

British Pound

 

95,514

 

 

53,764

 

Canadian Dollar

 

56,749

 

 

67,281

 

Euro

 

574,659

 

 

714,446

 

Japanese Yen

 

514,960

 

 

606,538

 

Swiss Franc

 

38,007

 

 

49,182

 

Total

$

1,302,950

 

$

1,508,380

 

 

We consider the impact of our own and the counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its obligations under the contract on an ongoing basis.  As of June 30, 2012, credit risk did not materially change the fair value of our foreign currency forward contracts.

 

13



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

We also enter into foreign currency forward contracts to reduce exposures to foreign currency fluctuations of certain recognized assets and liabilities denominated in foreign currencies.  These foreign currency forward contracts have not been designated as hedges and, accordingly, any changes in their fair value are recognized on the Consolidated Statements of Income in other income (expense), net in the current period.  The aggregate notional amount of the foreign currency forward non-designated hedging contracts outstanding at June 30, 2012 and December 31, 2011 were $923.2 million and $916.9 million, respectively.

 

Treasury Rate Lock Agreements:   During the three-month period ended June 30, 2012, we entered into treasury rate lock agreements, or treasury rate locks, in anticipation of issuing fixed-rate notes during 2012.  With the exception of a short period in June when certain outstanding treasury rate locks were not designated as hedges, our treasury rate locks are designated as cash flow hedges and, to the extent effective, any realized or unrealized gains or losses on them are reported in OCI and will be recognized in income over the life of the anticipated fixed-rate notes.  Treasury rate locks were settled in May and June 2012 which required us to pay $29.9 million that is included in OCI.  During the short period in June when we had outstanding treasury rate locks that were not considered hedging instruments, we recorded the change in fair value of $3.7 million in other income (expense), net.  No material amounts were recorded in income during the three- or six-month periods ended June 30, 2012 or 2011 as a result of hedge ineffectiveness or hedge components excluded from the assessment of effectiveness. At June 30, 2012 we had outstanding treasury rate locks with a notional amount of $500.0 million which mature in August 2012.

 

Interest Rate Swap Contracts:   From time to time we hedge the fair value of certain debt obligations through the use of interest rate swap contracts.  The interest rate swap contracts are designated hedges of the fair value changes in the notes attributable to changes in interest rates.  Since the specific terms and notional amount of the swap are intended to match those of the debt being hedged, it is assumed to be a highly effective hedge and all changes in fair value of the swaps are recorded on the Consolidated Balance Sheets with no net impact recorded in income.  Any net interest payments made or received on interest rate swap contracts are recognized as interest expense.  In August 2011, we settled interest rate swap contracts we entered into in February and March 2011 resulting in the receipt of $34.3 million.  The proceeds from the settlements are being accounted for as a reduction of current and future interest expense associated with our $500.0 million, 2.45% fixed-rate notes due in 2015.  There were no interest rate swap contracts outstanding at June 30, 2012.

 

14



 

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

The following table summarizes the fair value and presentation in the consolidated balance sheets for derivative instruments as of June 30, 2012 and December 31, 2011:

 

 

 

June 30, 2012

 

 

Asset Derivatives

 

Liability Derivatives

 

 

Balance Sheet

 

 

 

Balance Sheet

 

 

Instrument

 

Location

 

Fair Value

 

Location

 

Fair Value

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts designated as hedging instruments*

 

Other current assets

Other non-current assets

Other non-current liabilities

$

62,613

9,375

13

 

Other current assets

Other non-current assets

Other non-current liabilities

$

 

19,759

788

2,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury rate lock agreements designated as hedging instruments

 

Other current assets

 

1,816

 

Other current assets

 

 

-  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts not designated as hedging instruments*

 

Other current assets

Other current liabilities

Other non-current assets

 

67,607

1,093

25,804

 

Other current assets

Other current liabilities

Other non-current assets

 

27,358

10,711

23,651

 

 

 

 

 

 

 

 

 

Total

 

 

$

168,321

 

 

$

 

84,740

 

 

 

 

 

 

December 31, 2011

 

 

 

Asset Derivatives

 

Liability Derivatives

 

 

 

Balance Sheet

 

 

 

Balance Sheet

 

 

Instrument

 

Location

 

Fair Value