|
|
July 14
|
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Property, plant and equipment
|
|
$
|
687
|
|
Goodwill*
|
|
|
48,073
|
|
Intangible asset – technology asset
|
|
|
11,169
|
|
Intangible asset – customer relationships
|
|
|
5,243
|
|
Intangible asset – order backlog
|
|
|
1,172
|
|
Intangible asset - trade name
|
|
|
1,357
|
|
Cash and cash equivalents
|
|
|
1,965
|
|
Other current assets
|
|
|
3,713
|
|
Deferred tax liability
|
|
|
(2,367
|
)
|
Other liabilities
|
|
|
(2,521
|
)
|
Liability arising from contingent consideration arrangement
|
|
|
(44,028
|
)
|
Net assets acquired
|
|
$
|
24,463
|
|
Cash consideration
|
|
$
|
24,463
|
|
Contingent consideration
|
|
|
44,028
|
|
Amount of total consideration
|
|
|
68,491
|
|
Liabilities included in preliminary purchase price allocation re contingent consideration
|
|
|
(44,028
|
)
|
Net assets acquired
|
|
$
|
24,463
|
|
* Goodwill represents the cost of an established workforce with experience in the development of site performance and study management systems and process related efficiencies expected to be generated from the use of the Firecrest site performance management system and is not tax deductible.
The proforma effect of the Firecrest acquisition if completed on January 1, 2010 would have resulted in net revenue, net income and earnings per share for the fiscal years ended December 31, 2010 and December 31, 2011 as follows:
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(in thousands)
|
|
Net revenue
|
|
$
|
952,729
|
|
|
$
|
906,311
|
|
Net income
|
|
$
|
25,851
|
|
|
$
|
86,127
|
|
Basic earnings per share
|
|
$
|
0.43
|
|
|
$
|
1.44
|
|
Diluted earnings per share
|
|
$
|
0.42
|
|
|
$
|
1.42
|
|
5. Intangible Assets
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Cost
|
|
(in thousands)
|
|
Customer relationships acquired
|
|
$
|
36,900
|
|
|
$
|
33,951
|
|
Technology asset acquired
|
|
|
11,169
|
|
|
|
11,169
|
|
Order backlog
|
|
|
3,171
|
|
|
|
2,571
|
|
Tradenames acquired
|
|
|
1,357
|
|
|
|
1,357
|
|
Volunteer list acquired
|
|
|
1,325
|
|
|
|
1,325
|
|
Non-compete arrangements
|
|
|
489
|
|
|
|
489
|
|
Foreign exchange movement
|
|
|
(62
|
)
|
|
|
(1,001
|
)
|
Total cost
|
|
|
54,349
|
|
|
|
49,861
|
|
Accumulated amortization
|
|
|
(22,550
|
)
|
|
|
(15,363
|
)
|
Foreign exchange movement
|
|
|
(445
|
)
|
|
|
(51
|
)
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
$
|
31,354
|
|
|
$
|
34,447
|
|
On February 15, 2013 the Company acquired the Clinical Trial Services division of Cross Country Healthcare, Inc. Cross Country Healthcare’s Clinical Trial Services division includes US resourcing providers, ClinForce and Assent Consulting, whose services include contract staffing, permanent placement and functional service provision (“FSP”). The value of certain customer relationships and order backlog identified of $3.3 million and $0.6 million respectively are being amortized over approximately 3 years and 1 year, the estimated period of benefit. $1,488,000 has been amortized in the period since the date of acquisition.
On February 28, 2012 the Company acquired PriceSpective a strategy consulting company. The value of certain customer relationships identified of $10.2 million is being amortized over approximately 10 years, the estimated period of benefit. The value of order backlog and certain non-compete arrangements identified of $0.4 million and $0.4 million respectively are being amortized over approximately 0.8 and 3 years, the estimated period of benefit. $2,521,000 has been amortized in the period since the date of acquisition.
On February 15, 2012 the Company acquired BeijingWits Medical, a Chinese CRO. The value of certain customer relationships and order backlog identified of $1.8 million and $0.4 million respectively are being amortized over approximately 10 and 4 years, the estimated period of benefit. The value of certain non-compete arrangements identified of $0.01 million are being amortized over approximately 5 years, the estimated period of benefit. $549,000 has been amortized in the period since the date of acquisition.
On July 14, 2011 the Company acquired Firecrest Clinical Limited, a provider of technology solutions that boost investigator site performance and study management. The value of certain technology assets and customer relationships identified of $11.2 million and $5.2 million respectively are being amortized over approximately 7.5 years, the estimated period of benefit. The value of the Firecrest tradename and order backlog identified of $1.4 million and $1.2 million respectively are being amortized over approximately 4.5 and 1.2 years, the estimated period of benefit. $6,807,000 has been amortized in the period since the date of acquisition.
On January 14, 2011 the Company acquired Oxford Outcomes Limited, an international health outcomes consultancy business. The value of certain customer relationships and order backlog identified of $6.6 million and $0.6 million respectively are being amortized over approximately 6.5 and 2 years, the estimated period of benefit. $3,706,000 has been amortized in the period since the date of acquisition. A put and call option was also agreed between the Company and the selling shareholders for the acquisition of the remaining common stock of Oxford Outcomes Limited. This option was exercised in October 2011.
On May 17, 2010 the Company acquired Timaq Medical Imaging, a European provider of advanced imaging services. The value of certain client relationships identified of $0.8 million is being amortized over approximately 3 years, the estimated period of benefit. $770,000 has been amortized in the period since the date of acquisition.
On November 14, 2008 the Company acquired Prevalere Life Sciences, a US provider
of bioanalytical and immunoassay laboratory services.
The value of certain customer relationships identified of $7.4 million is being amortized over periods ranging from approximately 7 to 11 years, the estimated period of the benefit. $4,162,000 has been amortized in the period since the date of acquisition.
On February 11, 2008 the Company acquired Healthcare Discoveries, a US provider of Phase I clinical trial services. The value of certain client relationships identified of $1.6 million is being amortized over periods ranging from approximately 2 to 9 years, the estimated periods of benefit. The value of certain volunteer lists identified of $1.3 million is being amortized over approximately 6 years, the estimated period of benefit. $2,547,000 has been amortized in the period since the date of acquisition.
Future intangible asset amortization expense for the years ended December 31, 2014 to December 31, 2018 is as follows:
|
|
Year ended
December 31
(in thousands)
|
|
2014
|
|
$
|
7,099
|
|
2015
|
|
|
6,867
|
|
2016
|
|
|
5,297
|
|
2017
|
|
|
4,283
|
|
2018
|
|
|
3,693
|
|
|
|
|
|
|
|
|
$
|
27,239
|
|
6. Property, Plant and Equipment, net
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Cost
|
|
|
|
|
|
|
Land
|
|
$
|
3,464
|
|
|
$
|
3,325
|
|
Building
|
|
|
96,450
|
|
|
|
94,395
|
|
Computer equipment and software
|
|
|
212,019
|
|
|
|
189,455
|
|
Office furniture and fixtures
|
|
|
68,268
|
|
|
|
66,351
|
|
Laboratory equipment
|
|
|
29,678
|
|
|
|
32,724
|
|
Leasehold improvements
|
|
|
15,304
|
|
|
|
10,482
|
|
Motor vehicles
|
|
|
56
|
|
|
|
69
|
|
|
|
|
425,239
|
|
|
|
396,801
|
|
Less accumulated depreciation and asset write off
|
|
|
(264,409
|
)
|
|
|
(228,428
|
)
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment (net)
|
|
$
|
160,830
|
|
|
$
|
168,373
|
|
7. Other Liabilities
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
Personnel related liabilities
|
|
$
|
138,639
|
|
|
$
|
90,902
|
|
Facility related liabilities
|
|
|
16,205
|
|
|
|
15,393
|
|
General overhead liabilities
|
|
|
31,034
|
|
|
|
22,776
|
|
Other liabilities
|
|
|
3,019
|
|
|
|
5,010
|
|
Short term government grants (note 11)
|
|
|
240
|
|
|
|
235
|
|
Restructuring and other items (note 14)
|
|
|
2,430
|
|
|
|
926
|
|
Acquisition consideration payable
|
|
|
3,245
|
|
|
|
45,850
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
194,812
|
|
|
$
|
181,092
|
|
8. Other Non-Current Liabilities
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
Personnel related liabilities
|
|
$
|
4,278
|
|
|
$
|
6,920
|
|
Defined benefit pension obligations, net (note 9)
|
|
|
3,536
|
|
|
|
4,720
|
|
Other non-current liabilities
|
|
|
3,384
|
|
|
|
2,672
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,198
|
|
|
$
|
14,312
|
|
9. Employee Benefits
Certain Company employees are eligible to participate in a defined contribution plan (the "Plan"). Participants in the Plan may elect to defer a portion of their pre-tax earnings into a pension plan, which is run by an independent party. The Company matches participant's contributions typically at 6% of the participant's annual compensation. Contributions to this plan are recorded, as an expense in the Consolidated Statement of Operations. Contributions for the years ended December 31, 2011, December 31, 2012 and December 31, 2013 were $16,644,000, $18,187,000 and $20,293,000 respectively.
The Company's United States operations maintain a retirement plan (the "U.S. Plan") that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Participants in the U.S. Plan may elect to defer a portion of their pre-tax earnings, up to the Internal Revenue Service annual contribution limit. The Company matches 50% of each participant's contributions; each participant can contribute up to 6% of their annual compensation. Contributions to this U.S. Plan are recorded, in the year contributed, as an expense in the Consolidated Statement of Operations. Contributions for the years ended December 31, 2011, December 31, 2012 and December 31, 2013 were $7,064,000, $8,442,000 and $9,816,000 respectively.
One of the Company’s subsidiaries which was acquired during the 2003 fiscal year, ICON Development Solutions Limited, operates a defined benefit pension plan in the United Kingdom for its employees. The plan is managed externally and the related pension costs and liabilities are assessed in accordance with the advice of a professionally qualified actuary. Plan assets at December 31, 2013, December 31, 2012 and December 31, 2011, consist of units held in independently administered funds. The pension costs of this plan are presented in the following tables in accordance with the requirements of ASC 715-60,
Defined Benefit Plans – Other Postretirement
. The plan has been closed to new entrants with effect from July 1, 2003.
Change in benefit obligation
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
(in thousands)
|
|
Benefit obligation at beginning of year
|
|
$
|
22,527
|
|
|
$
|
19,924
|
|
Service cost
|
|
|
251
|
|
|
|
242
|
|
Interest cost
|
|
|
1,005
|
|
|
|
964
|
|
Plan participants’ contributions
|
|
|
75
|
|
|
|
101
|
|
Benefits paid
|
|
|
(105
|
)
|
|
|
(237
|
)
|
Actuarial loss
|
|
|
680
|
|
|
|
405
|
|
Foreign currency exchange rate changes
|
|
|
525
|
|
|
|
1,128
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
24,958
|
|
|
$
|
22,527
|
|
Change in plan assets
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
(in thousands)
|
|
Fair value of plan assets at beginning of year
|
|
$
|
17,807
|
|
|
$
|
15,021
|
|
Actual return on plan assets
|
|
|
2,916
|
|
|
|
1,810
|
|
Employer contributions
|
|
|
224
|
|
|
|
239
|
|
Plan participants’ contributions
|
|
|
75
|
|
|
|
101
|
|
Benefits paid
|
|
|
(105
|
)
|
|
|
(237
|
)
|
Foreign currency exchange rate changes
|
|
|
505
|
|
|
|
873
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
21,422
|
|
|
$
|
17,807
|
|
The fair values of the assets above do not include any of the Company’s own financial instruments, property occupied by, or other assets used by, the Company.
Funded status
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
(in thousands)
|
|
Projected benefit obligation
|
|
$
|
(24,958
|
)
|
|
$
|
(22,527
|
)
|
Fair value of plan assets
|
|
|
21,422
|
|
|
|
17,807
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(3,536
|
)
|
|
$
|
(4,720
|
)
|
|
|
|
|
|
|
|
|
|
Non-current other liabilities
|
|
$
|
(3,536
|
)
|
|
$
|
(4,720
|
)
|
The following amounts were recorded in the consolidated statement of operations as components of the net periodic benefit cost:
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
|
(in thousands)
|
|
Service cost
|
|
$
|
251
|
|
|
$
|
242
|
|
|
$
|
212
|
|
Interest cost
|
|
|
1,005
|
|
|
|
964
|
|
|
|
931
|
|
Expected return on plan assets
|
|
|
(983
|
)
|
|
|
(895
|
)
|
|
|
(1,141
|
)
|
Amortization of net loss
|
|
|
130
|
|
|
|
179
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
403
|
|
|
$
|
490
|
|
|
$
|
2
|
|
The following assumptions were used at the commencement of the year in determining the net periodic pension benefit cost for the years ended December 31, 2011, December 31, 2012 and December 31, 2013:
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Discount rate
|
|
|
4.6
|
%
|
|
|
4.7
|
%
|
|
|
5.4
|
%
|
Rate of compensation increase
|
|
|
3.4
|
%
|
|
|
3.5
|
%
|
|
|
4.0
|
%
|
Expected rate of return on plan assets
|
|
|
5.7
|
%
|
|
|
5.8
|
%
|
|
|
7.1
|
%
|
Accumulated other comprehensive income
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
|
(in thousands)
|
|
Actuarial loss - benefit obligation
|
|
$
|
680
|
|
|
$
|
405
|
|
|
$
|
2,621
|
|
Actuarial (gain)/loss – plan assets
|
|
|
(1,933
|
)
|
|
|
(915
|
)
|
|
|
1,744
|
|
Actuarial gain recognized in net periodic benefit cost
|
|
|
(130
|
)
|
|
|
(179
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(1,383
|
)
|
|
$
|
(689
|
)
|
|
$
|
4,365
|
|
The estimated net gain and prior service cost for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are $20,000 and $nil respectively.
Amounts recognized in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost are as follows:
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
(in thousands)
|
Net actuarial loss
|
|
$
|
1,988
|
|
|
$
|
3,371
|
|
|
$
|
4,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,988
|
|
|
$
|
3,371
|
|
|
$
|
4,060
|
|
Benefit Obligation
The following assumptions were used in determining the benefit obligation at December 31, 2013:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Discount rate
|
|
|
4.7
|
%
|
|
|
4.6
|
%
|
Rate of compensation increase
|
|
|
4.0
|
%
|
|
|
3.4
|
%
|
The discount rate is determined by reference to UK long dated government and corporate bond yields at the balance sheet date. This is represented by the iboxx corporate bond over 15 year index plus 30 basis points.
Plan Assets
The assets of the scheme are invested in the Legal and General Fixed Income Fund, the Baillie Gifford Diversified Growth Fund and the Standard Life Global Absolute Return Strategies Fund. The aim of the Legal and General Fixed Income Fund is to capture the returns on UK and overseas equity markets with a more even investment in UK and overseas equities than would be provided by reference to market capitalization or consensus weights. The Diversified Growth and Absolute Return funds are actively managed with a wide investment remit which results in dynamic asset allocation. The funds utilize a combination of traditional assets (such as equities and bonds), alternative asset classes and investment strategies based on advanced derivative techniques resulting in a highly diversified portfolio. The expected long-term rate of return on assets at December 31, 2013 of 6.1% was calculated as the value of the fund after application of a market value reduction factor. The expected long term rates of return on different asset classes are as follows:
Asset Category
|
|
Expected long-term
return per annum
|
|
Equity
|
|
|
6.6
|
%
|
Bonds
|
|
|
4.7
|
%
|
At December 31, 2013 UK gilts were yielding around 3.6% per annum. This is often referred to as the risk free rate of return as UK gilts have a negligible risk of default and the income payments and capital on redemption are guaranteed by the UK Government. The long-term expected return on equities has been determined by setting appropriate risk premiums above the yield on UK gilts. A long term equity “risk-premium” of 3.0% per annum has been assumed, this being the expected long-term out-performance of equities over UK gilts. The long-term expected return on bonds is determined by reference to UK long dated government and corporate bond yields at the balance sheet date. This is represented by the iboxx AA 15 index plus 30 basis points.
The underlying asset split of the fund is shown below.
Asset Category
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
Equity
|
|
|
70
|
%
|
|
|
90
|
%
|
Bonds
|
|
|
30
|
%
|
|
|
10
|
%
|
|
|
|
100
|
%
|
|
|
100
|
%
|
Applying the above expected long term rates of return to the asset distribution at December 31, 2013, gives rise to an expected overall rate of return of scheme assets of approximately 6.1% per annum.
Plan Asset Fair Value Measurements
|
|
Quoted Prices in Active
Markets for Identical
Assets
|
|
|
|
Level 1
|
|
|
|
(in thousands)
|
|
|
|
|
|
Cash
|
|
$
|
58
|
|
|
|
|
|
|
Fixed Income Securities
|
|
|
|
|
Legal and General Active Corporate Bond – Over 10 Year
|
|
|
5,788
|
|
|
|
|
|
|
Other Types of Investments
|
|
|
|
|
Baillie Gifford Diversified Growth Fund
|
|
|
8,452
|
|
Standard Life Global Absolute Return Strategies
|
|
|
7,124
|
|
|
|
|
|
|
|
|
$
|
21,422
|
|
Cash Flows
The Company expects to contribute $0.2 million to its pension fund in the year ending December 31, 2014.
The following annual benefit payments, which reflect expected future service as appropriate, are expected to be paid.
|
|
(in thousands)
|
|
|
|
|
|
2013
|
|
$
|
108
|
|
2014
|
|
|
108
|
|
2015
|
|
|
108
|
|
2016
|
|
|
108
|
|
2017
|
|
|
108
|
|
Years 2018 - 2022
|
|
$
|
538
|
|
The expected cash flows are estimated figures based on the members expected to retire over the next 10 years assuming no early retirements plus an additional amount in respect of recent average withdrawal experience. At the present time it is not clear whether annuities will be purchased when members reach retirement or whether pensions will be paid each month out of scheme assets. The cash flows above have been estimated on the assumption that pensions will be paid monthly out of scheme assets. If annuities are purchased, then the expected benefit payments will be significantly different from those shown above.
10. Equity Incentive Schemes and Stock Compensation Charges
Share Options
On July 21, 2008 the Company adopted the Employee Share Option Plan 2008 (the “2008 Employee Plan”) pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may grant options to any employee, or any director holding a salaried office or employment with the Company or a Subsidiary for the purchase of ordinary shares. On the same date, the Company also adopted the Consultants Share Option Plan 2008 (the “2008 Consultants Plan”), pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may grant options to any consultant, adviser or non-executive director retained by the Company or any Subsidiary for the purchase of ordinary shares.
Each option granted under the 2008 Employee Plan or the 2008 Consultants Plan (together the “2008 Option Plans”) will be an employee stock option, or NSO, as described in Section 422 or 423 of the Internal Revenue Code. Each grant of an option under the 2008 Options Plans will be evidenced by a Stock Option Agreement between the optionee and the Company. The exercise price will be specified in each Stock Option Agreement, however option prices will not be less than 100% of the fair market value of an ordinary share on the date the option is granted.
An aggregate of 6.0 million ordinary shares have been reserved under the 2008 Employee Plan, as reduced by any shares issued or to be issued pursuant to options granted under the 2008 Consultants Plan, under which a limit of 400,000 shares applies. Further, the maximum number of ordinary shares with respect to which options may be granted under the 2008 Employee Option Plan, during any calendar year to any employee shall be 400,000 ordinary shares. There is no individual limit under the 2008 Consultants Plan. No options may be granted under the 2008 Option Plans after July 21, 2018.
On January 17, 2003 the Company adopted the Share Option Plan 2003 (the “2003 Share Option Plan”) pursuant to which the Compensation and Organization Committee of the Board could grant options to officers and other employees of the Company or its subsidiaries for the purchase of ordinary shares. An aggregate of 6.0 million ordinary shares were reserved under the 2003 Share Option Plan; and, in no event could the number of ordinary shares issued pursuant to options awarded under this plan exceed 10% of the outstanding shares, as defined in the 2003 Share Option Plan, at the time of the grant, unless the Board expressly determined otherwise. Further, the maximum number of ordinary shares with respect to which options could be granted under the 2003 Share Option Plan during any calendar year to any employee was 400,000 ordinary shares. The 2003 Share Option Plan expired on January 17, 2013. No new options may be granted under this plan.
Share option awards are granted with an exercise price equal to the market price of the Company’s shares at date of grant. Share options typically vest over a period of five years from date of grant and expire eight years from date of grant. The maximum contractual term of options outstanding at December 31, 2013 is eight years.
The following table summarizes the transactions for the Company’s share option plans for the years ended December 31, 2013, December 31, 2012 and December 31, 2011:
|
|
Options Granted
Under Plans
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted Average Grant
Date Fair
Value
|
|
Outstanding at December 31, 2010
|
|
|
4,798,677
|
|
|
|
4,798,677
|
|
|
$
|
21.71
|
|
|
$
|
8.47
|
|
Granted
|
|
|
989,449
|
|
|
|
989,449
|
|
|
$
|
19.66
|
|
|
$
|
8.20
|
|
Exercised
|
|
|
(430,340
|
)
|
|
|
(430,340
|
)
|
|
$
|
10.84
|
|
|
$
|
4.80
|
|
Cancelled
|
|
|
(454,968
|
)
|
|
|
(454,968
|
)
|
|
$
|
25.77
|
|
|
$
|
9.87
|
|
Outstanding at December 31, 2011
|
|
|
4,902,818
|
|
|
|
4,902,818
|
|
|
$
|
21.87
|
|
|
$
|
8.61
|
|
Granted
|
|
|
842,273
|
|
|
|
842,273
|
|
|
$
|
22.01
|
|
|
$
|
9.59
|
|
Exercised
|
|
|
(890,236
|
)
|
|
|
(890,236
|
)
|
|
$
|
14.62
|
|
|
$
|
6.16
|
|
Cancelled
|
|
|
(504,224
|
)
|
|
|
(504,224
|
)
|
|
$
|
25.14
|
|
|
$
|
9.76
|
|
Outstanding at December 31, 2012
|
|
|
4,350,631
|
|
|
|
4,350,631
|
|
|
$
|
23.01
|
|
|
$
|
9.17
|
|
Granted
|
|
|
264,950
|
|
|
|
264,950
|
|
|
$
|
33.09
|
|
|
$
|
12.05
|
|
Exercised
|
|
|
(1,249,759
|
)
|
|
|
(1,249,759
|
)
|
|
$
|
21.60
|
|
|
$
|
8.58
|
|
Cancelled
|
|
|
(392,034
|
)
|
|
|
(392,034
|
)
|
|
$
|
25.27
|
|
|
$
|
10.02
|
|
Outstanding at December 31, 2013
|
|
|
2,973,788
|
|
|
|
2,973,788
|
|
|
$
|
24.20
|
|
|
$
|
9.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and exercisable at December 31, 2013
|
|
|
1,505,707
|
|
|
|
1,505,707
|
|
|
$
|
24.92
|
|
|
$
|
8.64
|
|
The weighted average remaining contractual life of options outstanding and options exercisable at December 31, 2013, was 4.52 years and 3.29 years respectively. 655,224 options are expected to vest during the year ended December 31, 2014.
The intrinsic value of options exercised during the year ended December 31, 2013 amounted to $18.3 million. The intrinsic value of options outstanding and options exercisable at December 31, 2013 amounted to $48.2 million and $23.3 million respectively. Intrinsic value is calculated based on the market value of the Company’s shares at the date of exercise.
Non vested shares outstanding as at December 31, 2013 are as follows:
|
|
Options
Outstanding
Number of Shares
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
Non vested outstanding at December 31, 2012
|
|
|
2,094,533
|
|
|
$
|
22.43
|
|
|
$
|
9.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
264,950
|
|
|
|
33.09
|
|
|
|
12.05
|
|
Vested
|
|
|
(641,773
|
)
|
|
|
24.29
|
|
|
|
9.60
|
|
Forfeited
|
|
|
(249,629
|
)
|
|
|
22.97
|
|
|
|
9.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non vested outstanding at December 31, 2013
|
|
|
1,468,081
|
|
|
$
|
23.45
|
|
|
$
|
9.45
|
|
Outstanding and exercisable share options:
The following table summarizes information concerning outstanding and exercisable share options as of December 31, 2013:
|
Options Outstanding
|
|
|
|
|
|
Options Exercisable
|
|
|
Range
Exercise
Price
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Remaining
Contractual Life
|
|
|
Weighted
Average
Exercise Price
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise Price
|
|
|
$
|
11.00
|
|
|
24,140
|
|
|
0.09
|
|
|
$
|
11.00
|
|
|
24,140
|
|
|
$
|
11.00
|
|
|
$
|
15.47
|
|
|
180
|
|
|
3.33
|
|
|
$
|
15.47
|
|
|
-
|
|
|
$
|
15.47
|
|
|
$
|
15.84
|
|
|
50,000
|
|
|
3.33
|
|
|
$
|
15.84
|
|
|
40,000
|
|
|
$
|
15.84
|
|
|
$
|
16.80
|
|
|
150,000
|
|
|
5.83
|
|
|
$
|
16.80
|
|
|
60,000
|
|
|
$
|
16.80
|
|
|
$
|
17.17
|
|
|
30,000
|
|
|
5.85
|
|
|
$
|
17.17
|
|
|
12,000
|
|
|
$
|
17.17
|
|
|
$
|
18.00
|
|
|
24,000
|
|
|
0.83
|
|
|
$
|
18.00
|
|
|
24,000
|
|
|
$
|
18.00
|
|
|
$
|
18.98
|
|
|
6,600
|
|
|
2.87
|
|
|
$
|
18.98
|
|
|
6,600
|
|
|
$
|
18.98
|
|
|
$
|
19.45
|
|
|
15,000
|
|
|
4.82
|
|
|
$
|
19.45
|
|
|
1,800
|
|
|
$
|
19.45
|
|
|
$
|
20.16
|
|
|
2,000
|
|
|
4.87
|
|
|
$
|
20.16
|
|
|
1,200
|
|
|
$
|
20.16
|
|
|
$
|
20.28
|
|
|
457,871
|
|
|
5.17
|
|
|
$
|
20.28
|
|
|
177,987
|
|
|
$
|
20.28
|
|
|
$
|
20.59
|
|
|
162,000
|
|
|
6.14
|
|
|
$
|
20.59
|
|
|
20,400
|
|
|
$
|
20.59
|
|
|
$
|
21.25
|
|
|
231,751
|
|
|
1.12
|
|
|
$
|
21.25
|
|
|
231,751
|
|
|
$
|
21.25
|
|
|
$
|
22.10
|
|
|
400
|
|
|
3.56
|
|
|
$
|
22.10
|
|
|
-
|
|
|
$
|
22.10
|
|
|
$
|
22.26
|
|
|
233,927
|
|
|
3.15
|
|
|
$
|
22.26
|
|
|
155,161
|
|
|
$
|
22.26
|
|
|
$
|
22.30
|
|
|
475,333
|
|
|
6.32
|
|
|
$
|
22.30
|
|
|
82,326
|
|
|
$
|
22.30
|
|
|
$
|
23.66
|
|
|
8,900
|
|
|
6.57
|
|
|
$
|
23.66
|
|
|
1,780
|
|
|
$
|
23.66
|
|
|
$
|
24.25
|
|
|
100,000
|
|
|
4.18
|
|
|
$
|
24.25
|
|
|
100,000
|
|
|
$
|
24.25
|
|
|
$
|
24.46
|
|
|
343,677
|
|
|
4.17
|
|
|
$
|
24.46
|
|
|
172,209
|
|
|
$
|
24.46
|
|
|
$
|
26.20
|
|
|
2,400
|
|
|
4.38
|
|
|
$
|
26.20
|
|
|
1,440
|
|
|
$
|
26.20
|
|
|
$
|
26.71
|
|
|
7,650
|
|
|
6.70
|
|
|
$
|
26.71
|
|
|
4,090
|
|
|
$
|
26.71
|
|
|
$
|
29.45
|
|
|
3,000
|
|
|
4.32
|
|
|
$
|
29.45
|
|
|
1,800
|
|
|
$
|
29.45
|
|
|
$
|
31.49
|
|
|
12,450
|
|
|
7.16
|
|
|
$
|
31.49
|
|
|
-
|
|
|
$
|
31.49
|
|
|
$
|
32.37
|
|
|
200,203
|
|
|
7.33
|
|
|
$
|
32.37
|
|
|
2,500
|
|
|
$
|
32.37
|
|
|
$
|
35.33
|
|
|
377,523
|
|
|
2.15
|
|
|
$
|
35.33
|
|
|
377,523
|
|
|
$
|
35.33
|
|
|
$
|
36.05
|
|
|
6,000
|
|
|
2.40
|
|
|
$
|
36.05
|
|
|
6,000
|
|
|
$
|
36.05
|
|
|
$
|
36.22
|
|
|
37,483
|
|
|
7.46
|
|
|
$
|
36.22
|
|
|
-
|
|
|
$
|
36.22
|
|
|
$
|
37.90
|
|
|
10,300
|
|
|
7.93
|
|
|
$
|
37.90
|
|
|
-
|
|
|
$
|
37.90
|
|
|
$
|
41.25
|
|
|
1,000
|
|
|
2.67
|
|
|
$
|
41.25
|
|
|
1,000
|
|
|
$
|
41.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11.00 - $41.25
|
|
|
2,973,788
|
|
|
4.52
|
|
|
$
|
24.20
|
|
|
1,505,707
|
|
|
$
|
24.92
|
|
Options outstanding include both vested and unvested options as at December 31, 2013. Options excercisable represent options which have vested at December 31, 2013. From the date of grant, substantially all options vest over a five year period at 20% per annum.
Fair value of Stock Options Assumptions
The weighted average fair value of options granted during the years ended December 31, 2013, December 31, 2012 and December 31, 2011 was calculated using the Black-Scholes option pricing model. The weighted average fair values and assumptions were as follows:
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average fair value
|
|
$
|
12.05
|
|
|
$
|
9.59
|
|
|
$
|
8.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected volatility
|
|
|
40
|
%
|
|
|
50
|
%
|
|
|
45
|
%
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Risk-free interest rate
|
|
|
0.76
|
%
|
|
|
0.83
|
%
|
|
|
1.4
|
%
|
Expected life
|
|
5.0 years
|
|
|
5.0 years
|
|
|
5.0 years
|
|
Expected volatility is based on the historical volatility of our common stock over a period equal to the expected term of the options; the expected life represents the weighted average period of time that options granted are expected to be outstanding given consideration to vesting schedules, and our historical experience of past vesting and termination patterns. The risk-free rate is based on the U.S. government zero-coupon bonds yield curve in effect at time of the grant for periods corresponding with the expected life of the option.
Restricted Share Units and Performance Share Units
On July 21, 2008 the Company adopted the 2008 Employees Restricted Share Unit Plan (the “2008 RSU Plan”) pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may select any employee, or any director holding a salaried office or employment with the Company, or a Subsidiary to receive an award under the plan. An aggregate of 1.0 million ordinary shares have been reserved for issuance under the 2008 RSU Plan.
On April 23, 2013 the Company adopted the 2013 Employees Restricted Share Unit and Performance Share Unit Plan (the “2013 RSU Plan”) pursuant to which the Compensation and Organization Committee of the Company’s Board of Directors may select any employee, or any director holding a salaried office or employment with the Company, or a Subsidiary to receive an award under the plan. An aggregate of 1.6 million ordinary shares have been reserved for issuance under the 2013 RSU Plan. The shares are awarded at zero cost and vest over a service period. Awards under the 2013 RSU Plan may be settled in cash or shares at the option of the Company.
The Company has awarded RSU’s and PSU’s to certain key individuals of the Group. The following table summarizes RSU and PSU activity for the year ended December 31, 2013:
|
|
PSU
Outstanding
Number of
Shares
|
|
|
PSU
Weighted
Average
Fair
Value
|
|
PSU
Weighted
Average
Remaining
Contractual
Life
|
|
RSU
Outstanding
Number of
Shares
|
|
|
RSU
Weighted
Average
Fair
Value
|
|
RSU
Weighted
Average
Remaining
Contractual
Life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2012
|
|
|
-
|
|
|
|
-
|
|
|
|
|
496,000
|
|
|
$
|
20.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
359,570
|
|
|
$
|
33.09
|
|
|
|
|
409,492
|
|
|
$
|
34.62
|
|
|
Shares vested
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(50,000
|
)
|
|
$
|
22.30
|
|
|
Forfeited
|
|
|
(6,326
|
)
|
|
$
|
36.22
|
|
|
|
|
(9,033
|
)
|
|
$
|
25.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2013
|
|
|
353,244
|
|
|
$
|
33.04
|
|
2.35
|
|
|
846,459
|
|
|
$
|
27.05
|
|
1.77
|
The fair value of RSU’s vested for the year ended December 31, 2013 totaled $1.1 million. (No RSU’s vested during 2012).
No PSU’s vested during 2013 or during 2012.
The PSU’s vest based on service and specified EPS targets. The maximum number of PSU’s that could vest based on PSU’s outstanding is 353,244, based on attaining cumulative EPS targets over the period 2013 – 2015.
Non-cash stock compensation expense
Income from operations for the year ended December 31, 2013 is stated after charging $14.2 million in respect of non-cash stock compensation expense. Non-cash stock compensation expense for the year ended December 31, 2013 has been allocated as follows:
|
|
Year ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Direct costs
|
|
$
|
7,835
|
|
|
$
|
6,007
|
|
|
$
|
5,155
|
|
Selling, general and administrative
|
|
$
|
6,385
|
|
|
$
|
4,894
|
|
|
$
|
4,200
|
|
Restructuring and other non-recurring items (note 14)
|
|
|
-
|
|
|
$
|
620
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total compensation costs
|
|
$
|
14,220
|
|
|
$
|
11,521
|
|
|
$
|
9,355
|
|
Total non-cash stock compensation expense not yet recognized at December 31, 2013 amounted to $34.3 million. The weighted average period over which this is expected to be recognized is 2.51 years. Total tax benefit recognized in additional paid in capital related to the non-cash compensation expense amounted to $1.7 million for the year ended December 31, 2013 (2012: $1.3 million, 2011: $0.7 million).
11. Government Grants
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Received
|
|
$
|
3,698
|
|
|
$
|
3,473
|
|
Less accumulated amortization
|
|
|
(2,497
|
)
|
|
|
(2,148
|
)
|
Foreign exchange translation adjustment
|
|
|
398
|
|
|
|
337
|
|
|
|
|
1,599
|
|
|
|
1,662
|
|
Less current portion
|
|
|
(240
|
)
|
|
|
(235
|
)
|
|
|
$
|
1,359
|
|
|
$
|
1,427
|
|
Capital grants received may be refundable in full if certain events occur. Such events, as set out in the related grant agreements, include sale of the related asset, liquidation of the Company or failure to comply with other conditions of the grant agreements. No loss contingency has been recognized as the likelihood of such events arising has been assessed as remote. Government grants amortized to the profit and loss account amounted to $349,000 and $154,000 for the years ended December 31, 2013 and December 31, 2012 respectively. As at December 31, 2013 the Company had $2.0 million in restricted retained earnings, pursuant to the terms of grant agreements.
12. Share Capital
Holders of ordinary shares will be entitled to receive such dividends as may be recommended by the board of directors of the Company and approved by the shareholders and/or such interim dividends as the board of directors of the Company may decide. On liquidation or a winding up of the Company, the par value of the ordinary shares will be repaid out of the assets available for distribution among the holders of the ordinary shares of the Company. Holders of ordinary shares have no conversion or redemption rights. On a show of hands, every holder of an ordinary share present in person or proxy at a general meeting of shareholders shall have one vote, for each ordinary share held with no individual having more than one vote.
During the year ended December 31, 2013, 1,249,759 options were exercised by employees at an average exercise price of $21.60 per share for total proceeds of $27.0 million. During the year ended December 31, 2013, 50,000 ordinary shares were issued in respect of certain RSU’s previously awarded by the Company.
During the year ended December 31, 2012, 890,236 options were exercised by employees at an average exercise price of $14.62 per share for total proceeds of $13.0 million.
During the year ended December 31, 2011, 430,340 options were exercised by employees at an average exercise price of $10.84 per share for total proceeds of $4.7 million. During the year ended December 31, 2011 3,768 ordinary shares were issued in respect of certain RSU’s previously awarded by the Company.
(a) Share Repurchase Program
On October 27, 2011 the Company announced its intention to commence a share repurchase program of up to $50 million. On November 22, 2011 the Company entered into two separate share repurchase plans of up to $10 million each, covering the periods November 23, 2011 to December 31, 2011 and January 1, 2012 to February 20, 2012 respectively. On February 21, 2012 the Company entered into a further share repurchase plan of up to $20 million, covering the period February 22, 2012 to April 22, 2012. On April 27, 2012 the Company entered into a fourth share repurchase plan of up to $20 million, covering the period April 27, 2012 to July 18, 2012
.
On July 30, 2012 the Company entered into a fifth share repurchase plan of up to $10 million, covering the period July 30, 2012 to October 26, 2012
.
Under the repurchase program, a broker purchased the Company’s shares from time to time on the open market or in privately negotiated transactions in accordance with agreed terms and limitations. The program was designed to allow share repurchases during periods when the Company would ordinarily not be permitted to do so because it may be in possession of material non-public or price-sensitive information, applicable insider trading laws or self-imposed trading blackout periods. The Company’s instructions to the broker were irrevocable and the trading decisions in respect of the repurchase program were made independently of and uninfluenced by the Company. The Company confirms that on entering the share repurchase plans it had no material non-public, price-sensitive or inside information regarding the Company or its securities. Furthermore, the Company will not enter into additional plans whilst in possession of such information.
During the year ended December 31, 2012 738,341 ordinary shares were repurchased by the Company for a total consideration of $15.6 million. During the year ended December 31, 2011 545,597 ordinary shares were repurchased by the Company for a total consideration of $9.0 million. As at December 31, 2012 1,283,938 ordinary shares have been repurchased by the Company for a total consideration of $24.6 million. There were no share repurchases completed during 2013. All ordinary shares repurchased by the Company were cancelled, and the nominal value of these shares transferred to a capital redemption reserve fund as required under Irish Company Law.
13. Income Taxes
The Company’s United States and Irish based subsidiaries file tax returns in the United States and Ireland respectively. Other foreign subsidiaries are taxed separately under the laws of their respective countries.
The components of income before provision for income tax expense are as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
80,914
|
|
|
$
|
12,157
|
|
|
$
|
(33,732
|
)
|
United States
|
|
|
16,218
|
|
|
|
11,371
|
|
|
|
13,317
|
|
Other
|
|
|
23,733
|
|
|
|
43,693
|
|
|
|
49,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
|
$
|
120,865
|
|
|
$
|
67,221
|
|
|
$
|
28,995
|
|
The components of total income tax expense are as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Provision for income taxes:
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
Ireland
|
|
$
|
9,158
|
|
|
$
|
1,684
|
|
|
$
|
351
|
|
United States
|
|
|
14,492
|
|
|
|
12,290
|
|
|
|
6,367
|
|
Other
|
|
|
4,876
|
|
|
|
8,257
|
|
|
|
5,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current tax
|
|
|
28,526
|
|
|
|
22,231
|
|
|
|
12,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred expense/(benefit):
|
|
|
|
|
|
|
|
|
|
|
|
|
Ireland
|
|
|
1,914
|
|
|
|
(287
|
)
|
|
|
(3,825
|
)
|
United States
|
|
|
(9,420
|
)
|
|
|
(9,715
|
)
|
|
|
(1,711
|
)
|
Other
|
|
|
(2,967
|
)
|
|
|
(428
|
)
|
|
|
(585
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax expense/(benefit)
|
|
|
(10,473
|
)
|
|
|
(10,430
|
)
|
|
|
(6,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
18,053
|
|
|
|
11,801
|
|
|
|
6,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact on shareholders equity and other comprehensive income of the tax consequence of :
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess tax benefit on stock compensation
|
|
|
(1,651
|
)
|
|
|
(1,274
|
)
|
|
|
(681
|
)
|
Currency impact on long term funding
|
|
|
87
|
|
|
|
356
|
|
|
|
(294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
16,489
|
|
|
$
|
10,883
|
|
|
$
|
5,140
|
|
Ireland’s statutory income tax rate is 12.5%. The Company’s consolidated effective tax rate differed from the statutory rate as set forth below;
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Taxes at Irish statutory rate of 12.5% (2011:12.5%; 2012: 12.5%)
|
|
$
|
15,108
|
|
|
$
|
8,401
|
|
|
$
|
3,625
|
|
Foreign and other income taxed at higher/(reduced) rates
|
|
|
4,229
|
|
|
|
7,873
|
|
|
|
5,373
|
|
Research & development tax incentives
|
|
|
(2,598
|
)
|
|
|
(4,954
|
)
|
|
|
(6,341
|
)
|
Movement in valuation allowance
|
|
|
2,389
|
|
|
|
1,557
|
|
|
|
4,362
|
|
Prior year over provision in respect of foreign taxes
|
|
|
(47
|
)
|
|
|
(678
|
)
|
|
|
(83
|
)
|
Effects of permanent items
|
|
|
(1,002
|
)
|
|
|
(26
|
)
|
|
|
(615
|
)
|
Other
|
|
|
(26
|
)
|
|
|
(372
|
)
|
|
|
(206
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18,053
|
|
|
$
|
11,801
|
|
|
$
|
6,115
|
|
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are presented below:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
6,501
|
|
|
$
|
6,631
|
|
|
$
|
7,331
|
|
Goodwill
|
|
|
14,013
|
|
|
|
11,467
|
|
|
|
9,443
|
|
Other intangible assets
|
|
|
970
|
|
|
|
2,707
|
|
|
|
3,525
|
|
Accruals
|
|
|
51
|
|
|
|
77
|
|
|
|
1,185
|
|
Other
|
|
|
4
|
|
|
|
88
|
|
|
|
97
|
|
Unrealised FX
|
|
|
1,056
|
|
|
|
1,160
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities recognized
|
|
|
22,595
|
|
|
|
22,130
|
|
|
|
21,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss carry forwards
|
|
|
27,646
|
|
|
|
25,116
|
|
|
|
21,981
|
|
Property, plant and equipment
|
|
|
2,739
|
|
|
|
2,345
|
|
|
|
1,324
|
|
Accrued expenses and payments on account
|
|
|
29,429
|
|
|
|
19,382
|
|
|
|
11,652
|
|
Stock compensation
|
|
|
6,291
|
|
|
|
5,586
|
|
|
|
4,818
|
|
Deferred compensation expense
|
|
|
1,187
|
|
|
|
1,136
|
|
|
|
1,197
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
214
|
|
Unrealised FX
|
|
|
92
|
|
|
|
98
|
|
|
|
-
|
|
Total deferred tax assets
|
|
|
67,384
|
|
|
|
53,663
|
|
|
|
41,186
|
|
Valuation allowance for deferred tax assets
|
|
|
(21,591
|
)
|
|
|
(18,817
|
)
|
|
|
(16,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets recognized
|
|
$
|
45,793
|
|
|
$
|
34,846
|
|
|
$
|
24,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
23,198
|
|
|
$
|
12,716
|
|
|
$
|
3,160
|
|
At December 31, 2013 non-U.S subsidiaries had operating loss carry forwards for income tax purposes that may be carried forward indefinitely, available to offset against future taxable income, if any, of approximately $96.2 million (2012: $94.4 million). At December 31, 2013 non-U.S. subsidiaries also had additional operating loss carry forwards of $5.9 million which are due to expire between 2014 and 2016.
At December 31, 2013 U.S. subsidiaries, had U.S. federal and state net operating loss (“NOL”) carry forwards of approximately $8.3 million and $15.9 million, respectively. These net operating losses are available for offset against future taxable income and expire between 2014 and 2032. Of the $8.3 million U.S. federal and $15.9 million state net operating losses, approximately $7.6 million and $15.2 million are currently available for offset against future U.S. federal and state taxable income respectively. Annual utilization of these state net operating losses may be limited by specific state rules. The subsidiary’s ability to use the remaining U.S. federal and state net operating loss carry forwards of $0.7 million and $0.7 million, respectively is further limited to $113,000 per year due to a change of ownership in 2000, as defined by Section 382 of the Internal Revenue Code of 1986, as amended.
The expected expiry dates of these losses are as follows:
|
Federal
|
|
|
State
|
|
|
NOL’s
|
|
|
NOL’s
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
2014- 2020
|
$
|
678
|
|
|
$
|
678
|
|
2021- 2025
|
|
-
|
|
|
|
8,572
|
|
2026- 2032
|
|
7,644
|
|
|
|
6,648
|
|
|
|
|
|
|
|
|
|
|
$
|
8,322
|
|
|
$
|
15,898
|
|
In addition US subsidiaries have alternative minimum tax credit carry forwards of approximately $0.3 million that are available to reduce future U.S. federal regular income taxes, over an indefinite period. They also have general business credit carry forwards of approximately $0.3 million that are available to offset future U.S. federal income taxes.
The valuation allowance at December 31, 2013 was approximately $21.6 million. The valuation allowance for deferred tax assets as of December 31, 2012 and December 31, 2011 was $18.8 million and $16.4 million respectively. The net change in the total valuation allowance was an increase of $2.8 million during 2013 and an increase of $2.4 million during 2012.
The valuation allowances at December 31, 2013 and December 31, 2012 were primarily related to tax losses and tax credits carried forward that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
The Company has not recognized a deferred tax liability for the undistributed earnings of foreign subsidiaries that arose in 2013 and prior years as the Company considers these earnings to be indefinitely reinvested. It is not practical to calculate the unrecognized deferred tax liability.
A reconciliation of the beginning and ending amount of total unrecognized tax benefits is as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Gross amount of unrecognized tax benefits at start of year
|
|
$
|
7,189
|
|
|
$
|
6,543
|
|
|
$
|
8,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase related to prior year tax positions
|
|
|
-
|
|
|
|
1,167
|
|
|
|
304
|
|
Decrease related to prior year tax positions
|
|
|
(494
|
)
|
|
|
-
|
|
|
|
(36
|
)
|
Increase related to current year tax positions
|
|
|
2,269
|
|
|
|
1,473
|
|
|
|
482
|
|
Settlements
|
|
|
(899
|
)
|
|
|
(98
|
)
|
|
|
-
|
|
Lapse of statute of limitations
|
|
|
(2,285
|
)
|
|
|
(1,896
|
)
|
|
|
(2,773
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of unrecognized tax benefits at end of year
|
|
$
|
5,780
|
|
|
$
|
7,189
|
|
|
$
|
6,543
|
|
The relevant statute of limitations for gross unrealized tax benefits totaling $1.2 million could potentially expire during 2014.
Included in the balance of total unrecognized tax benefits at December 31, 2013 there were net potential benefits of $5.8 million, which if recognized, would affect the effective rate on income tax from continuing operations. The balance of total unrecognized tax benefits at December 31, 2012 and December 31, 2011 included net potential benefits which, if recognized, would affect the effective rate of income tax from continuing operations of $7.2 million and $6.5 million respectively.
Interest and penalties recognized as a net benefit during the year ended December 31, 2013 amounted to $0.2 million (2012: $0.1 million) and are included within the provision for income taxes. Total accrued interest and penalties as of December 31, 2013 and December 31, 2012 were $0.9 million and $1.1 million respectively and are included in the closing income tax liabilities at those dates.
Our major tax jurisdictions are the United States and Ireland. We may potentially be subjected to tax audits in both our major jurisdictions. In the United States tax periods open to audit include the years December 31, 2010, December 31, 2011, December 31, 2012 and December 31, 2013. In Ireland tax periods open to audit include the years ended December 31, 2008, December 31, 2009, December 31, 2010, December 31, 2011, December 31, 2012 and December 31, 2013. During such audits, local tax authorities may challenge the positions taken by us in tax returns.
14. Restructuring and other items
Restructuring and other items recognized during the year ended December 31, 2013 comprise:
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Restructuring charges
|
|
$
|
9,033
|
|
|
$
|
4,525
|
|
|
|
9,817
|
|
Other items
|
|
|
-
|
|
|
|
1,111
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge
|
|
$
|
9,033
|
|
|
$
|
5,636
|
|
|
$
|
9,817
|
|
Restructuring Charges
Restructuring and other items of $9.0 million were recorded during the year ended December 31, 2013. During 2013 the Company conducted a review of its operations. This review resulted in the adoption of an initial restructuring plan, which included the closure of its Phase I facility in Omaha, Nebraska. This followed the expansion of the Company’s Phase I facility in San Antonio, Texas and the consolidation of the Company’s US Phase I capabilities in this location. The restructuring plan also included resource rationalizations in certain areas of the business to improve resource utilization. A further restructuring plan was also adopted during 2013 which resulted in resource rationalizations in order to improve operating efficiencies and reduce expenses. Details of the movement in this restructuring plan recognized are as follows:
|
|
Workforce
|
|
|
Office
|
|
|
|
|
|
|
Reductions
|
|
|
Consolidations
|
|
|
Total
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Q1 Plan - Initial provision recognized
|
|
$
|
3,903
|
|
|
$
|
509
|
|
|
$
|
4,412
|
|
Q2 Plan - Initial provision recognized
|
|
|
4,228
|
|
|
|
393
|
|
|
|
4,621
|
|
Total provision recognised
|
|
|
8,131
|
|
|
|
902
|
|
|
|
9,033
|
|
Cash payments
|
|
|
(6,544
|
)
|
|
|
(199
|
)
|
|
|
(6,743
|
)
|
Amounts released
|
|
|
(93
|
)
|
|
|
-
|
|
|
|
(93
|
)
|
Foreign exchange movement
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
(3
|
)
|
Provision at December 31, 2013
|
|
$
|
1,491
|
|
|
$
|
703
|
|
|
$
|
2,194
|
|
We expect to pay these amounts in 2014.
Prior Period Restructuring Charges
Restructuring charges of $4.5 million were recorded during year ended December 31, 2012 (inclusive of the release of $0.1 million relating to the 2011 Restructuring Plans) under a restructuring plan (“the 2012 restructuring plan”) adopted following a review by the Company of its operations. The 2012 restructuring plan included resource rationalizations in certain areas of the business and a re-organization of available office space at the Company’s Philadelphia facility. The restructuring plan recognized included $3.4 million in respect of resource rationalizations and $1.2 million in respect of lease termination and exit costs associated with the re-organization of available space at the Company’s Philadelphia facility.
Details of the movement in the 2012 restructuring plan are as follows:
|
|
Workforce
|
|
|
Office
|
|
|
|
|
|
|
Reductions
|
|
|
Consolidations
|
|
|
Total
|
|
|
|
(in thousands)
|
|
Initial provision recognized
|
|
$
|
3,394
|
|
|
$
|
1,250
|
|
|
$
|
4,644
|
|
Residual balance from prior period
|
|
|
-
|
|
|
|
130
|
|
|
|
130
|
|
Cash payments
|
|
|
(3,030
|
)
|
|
|
(824
|
)
|
|
|
(3,854
|
)
|
Foreign exchange movement
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
Provision at December 31, 2012
|
|
$
|
360
|
|
|
$
|
556
|
|
|
$
|
916
|
|
Cash payments
|
|
|
(197
|
)
|
|
|
(426
|
)
|
|
|
(623
|
)
|
Amounts released
|
|
|
(57
|
)
|
|
|
-
|
|
|
|
(57
|
)
|
Provision at December 31, 2013
|
|
$
|
106
|
|
|
$
|
130
|
|
|
$
|
236
|
|
Other Items
On September 30, 2011 Mr. Peter Gray, retired as Chief Executive Officer (“CEO”) of the Company, in accordance with the provisions of his service agreement, which was terminable on twelve months notice by either party. On October 1, 2011 Mr. Gray was appointed Vice Chairman of the Board. On June 11, 2012 the Company entered into an agreement with Mr. Gray whereby Mr. Gray’s employment and directorship of ICON plc and other ICON group companies would terminate on July 19, 2012. Under the terms of this agreement Mr. Gray would be entitled to be paid €160,000 ($200,000) in lieu of the balance of his notice period and to receive a discretionary bonus of €194,000 ($243,000) in respect of 2012. In addition, under the agreement Mr. Gray’s unvested share options would vest on the date of termination of his employment. The Company has recognized a share-based compensation charge of $738,000 in respect of these options during the year ended December 31, 2012, $620,000 of which was recognized within restructuring and other non-recurring items during the three months ended June 30, 2012.
15. Provision for Doubtful Debts
The Company does business with most major international pharmaceutical companies. Provision for doubtful debts at December 31, 2013 comprises:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Opening provision
|
|
$
|
5,047
|
|
|
$
|
5,526
|
|
Amounts used during the year
|
|
|
(3,132
|
)
|
|
|
(756
|
)
|
Amounts provided during the year
|
|
|
1,368
|
|
|
|
382
|
|
Amounts released during the year
|
|
|
(135
|
)
|
|
|
(105
|
)
|
Closing provision
|
|
$
|
3,148
|
|
|
$
|
5,047
|
|
16. Commitments and Contingencies
Litigation
The Company is not party to any litigation or other legal proceedings that the Company believes could reasonably be expected to have a material adverse effect on the Company's business, results of operations and financial condition.
Operating Leases
The Company has several non-cancelable operating leases, primarily for facilities, that expire over the next 10 years. These leases generally contain renewal options and require the Company to pay all executory costs such as maintenance and insurance. The Company recognized $54.9 million, $52.5 million and $52.2 million in rental expense, including rates, for the years ended December 31, 2013, December 31, 2012 and December 31, 2011 respectively. Future minimum rental commitments for operating leases with non-cancelable terms in excess of one year are as follows:
|
|
Minimum rental payments
|
|
|
|
(in thousands)
|
|
2014
|
|
$
|
36,070
|
|
2015
|
|
|
31,815
|
|
2016
|
|
|
25,993
|
|
2017
|
|
|
17,013
|
|
2018
|
|
|
12,704
|
|
Thereafter
|
|
|
40,224
|
|
Total
|
|
$
|
163,819
|
|
17. Business Segment Information
The Company is a contract research organization (“CRO”), providing outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries. It specializes in the strategic development, management and analysis of programs that support all stages of the clinical development process - from compound selection to Phase I-IV clinical studies. The Company has the expertise and capability to conduct clinical trials in most major therapeutic areas on a global basis and has the operational flexibility to provide development services on a stand-alone basis or as part of an integrated “full service” solution. The Company has expanded predominately through internal growth, together with a number of strategic acquisitions to enhance its expertise and capabilities in certain areas of the clinical development process. The Company also provides laboratory services through its central laboratory business, which includes the Company’s central laboratories located in Dublin, New York, India, Singapore and China.
The Company determines and presents operating segments based on the information that is internally provided to the Chief Executive Officer and Chief Financial Officer, who together are considered the Company’s chief operating decision maker, in accordance with FASB ASC 280-10
Disclosures about Segments of an Enterprises and Related Information
. Historically, the Group organized, operated and assessed its business in two segments, the clinical research segment and the central laboratory segment. In Q1 2013 the Group consolidated and reclassified the results of the former central laboratory segment into the clinical research segment as the central laboratory segment does not reach the thresholds of net revenue, income from operations and total assets as a requirement for being reported as a separate segment. Management determined that its clinical research and central laboratory businesses operate in the same clinical research market, have a similar customer profile, are subject to the same regulatory environment, support the development of new clinical therapies and are so economically similar, reporting their results on an aggregated basis would be more useful to users of the Company’s financial statements.
The Company's areas of operation outside of Ireland include the United States, United Kingdom, France, Germany, Italy, Spain, The Netherlands, Sweden, Belgium, Turkey, Poland, Czech Republic, Lithuania, Latvia, Russia, Ukraine, Hungary, Israel, Romania, Canada, Mexico, Brazil, Colombia, Argentina, Chile, Peru, India, China, South Korea, Japan, Thailand, Taiwan, Singapore, The Philippines, Australia, New Zealand, and South Africa.
Segment information as at December 31, 2013 and December 31, 2012 and for the years ended December 31, 2013, December 31, 2012 and December 31, 2011 is as follows:
a) The distribution of net revenue by geographical area was as follows:
|
|
|
Year ended
|
|
|
|
|
December
|
|
|
|
December
|
|
|
|
December
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
272,683
|
|
|
$
|
171,977
|
|
|
$
|
88,869
|
|
Rest of Europe
|
|
|
333,543
|
|
|
|
338,537
|
|
|
|
348,492
|
|
U.S.
|
|
|
582,250
|
|
|
|
471,700
|
|
|
|
393,957
|
|
Other
|
|
|
147,582
|
|
|
|
132,792
|
|
|
|
114,411
|
|
Total
|
|
$
|
1,336,058
|
|
|
$
|
1,115,006
|
|
|
$
|
945,729
|
|
b) The distribution of income from operations, including restructuring and other items, by geographical area was as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
81,811
|
|
|
$
|
9,659
|
|
|
$
|
(34,703
|
)
|
Rest of Europe
|
|
|
2,831
|
|
|
|
29,240
|
|
|
|
32,175
|
|
U.S.
|
|
|
29,472
|
|
|
|
21,036
|
|
|
|
24,874
|
|
Other
|
|
|
7,053
|
|
|
|
8,082
|
|
|
|
7,097
|
|
Total
|
|
$
|
121,167
|
|
|
$
|
68,017
|
|
|
$
|
29,443
|
|
c) The distribution of income from operations, excluding restructuring and other items, by geographical area was as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
82,867
|
|
|
$
|
11,733
|
|
|
$
|
(33,139
|
)
|
Rest of Europe
|
|
|
6,269
|
|
|
|
29,786
|
|
|
|
35,175
|
|
U.S.
|
|
|
33,564
|
|
|
|
23,687
|
|
|
|
30,127
|
|
Other
|
|
|
7,500
|
|
|
|
8,447
|
|
|
|
7,097
|
|
Total
|
|
$
|
130,200
|
|
|
$
|
73,653
|
|
|
$
|
39,260
|
|
d) The distribution of property, plant and equipment, net, by geographical area was as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
103,868
|
|
|
$
|
110,369
|
|
Rest of Europe
|
|
|
14,630
|
|
|
|
16,115
|
|
U.S.
|
|
|
33,947
|
|
|
|
32,400
|
|
Other
|
|
|
8,385
|
|
|
|
9,489
|
|
Total
|
|
$
|
160,830
|
|
|
$
|
168,373
|
|
e) The distribution of depreciation and amortization by geographical area was as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
19,826
|
|
|
$
|
17,885
|
|
|
$
|
15,192
|
|
Rest of Europe
|
|
|
6,595
|
|
|
|
7,211
|
|
|
|
7,057
|
|
U.S.
|
|
|
16,233
|
|
|
|
13,865
|
|
|
|
12,427
|
|
Other
|
|
|
3,860
|
|
|
|
3,862
|
|
|
|
4,006
|
|
Total
|
|
$
|
46,514
|
|
|
$
|
42,823
|
|
|
$
|
38,682
|
|
f) The distribution of total assets by geographical area was as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
581,568
|
|
|
$
|
476,159
|
|
Rest of Europe
|
|
|
321,661
|
|
|
|
236,305
|
|
U.S.
|
|
|
486,232
|
|
|
|
437,756
|
|
Other
|
|
|
52,999
|
|
|
|
51,888
|
|
Total
|
|
$
|
1,442,460
|
|
|
$
|
1,202,108
|
|
g) The distribution of capital expenditures by geographical area was as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
3,976
|
|
|
$
|
12,406
|
|
|
$
|
16,987
|
|
Rest of Europe
|
|
|
1,887
|
|
|
|
2,506
|
|
|
|
4,795
|
|
U.S.
|
|
|
20,842
|
|
|
|
13,389
|
|
|
|
10,222
|
|
Other
|
|
|
2,783
|
|
|
|
4,725
|
|
|
|
4,001
|
|
Total
|
|
$
|
29,488
|
|
|
$
|
33,026
|
|
|
$
|
36,005
|
|
h) The following table sets forth the clients which represented 10% or more of the Company's net revenue in each of the periods set out below.
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Client A
|
|
|
26
|
%
|
|
|
18
|
%
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client B
|
|
|
10
|
%
|
|
|
12
|
%
|
|
|
13
|
%
|
* Net revenue did not exceed 10%.
i) The distribution of interest income by geographical area was as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
355
|
|
|
$
|
464
|
|
|
$
|
762
|
|
Rest of Europe
|
|
|
501
|
|
|
|
661
|
|
|
|
364
|
|
U.S.
|
|
|
-
|
|
|
|
3
|
|
|
|
18
|
|
Other
|
|
|
130
|
|
|
|
23
|
|
|
|
50
|
|
Total
|
|
$
|
986
|
|
|
$
|
1,151
|
|
|
$
|
1,194
|
|
j) The distribution of the tax charge by geographical area was as follows:
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Ireland
|
|
$
|
11,073
|
|
|
$
|
1,216
|
|
|
$
|
(3,475
|
)
|
Rest of Europe
|
|
|
(7
|
)
|
|
|
3,298
|
|
|
|
657
|
|
U.S.
|
|
|
5,072
|
|
|
|
3,669
|
|
|
|
4,656
|
|
Other
|
|
|
1,915
|
|
|
|
3,618
|
|
|
|
4,277
|
|
Total
|
|
$
|
18,053
|
|
|
$
|
11,801
|
|
|
$
|
6,115
|
|
18. Supplemental Disclosure of Cash Flow Information
|
|
Year ended
|
|
|
|
December
|
|
|
December
|
|
|
December
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash interest on acquisition consideration payable*
|
|
$
|
240
|
|
|
$
|
940
|
|
|
$
|
743
|
|
Cash paid for interest
|
|
$
|
548
|
|
|
$
|
602
|
|
|
$
|
388
|
|
Cash paid for income taxes
|
|
$
|
14,103
|
|
|
$
|
18,475
|
|
|
$
|
22,723
|
|
* recorded within interest expense
19. Accumulated Other Comprehensive Income
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Currency translation adjustments
|
|
$
|
22,828
|
|
|
$
|
12,103
|
|
Currency impact on long term funding
|
|
|
(19,977
|
)
|
|
|
(18,931
|
)
|
Tax on currency impact on long term funding
|
|
|
1,097
|
|
|
|
1,184
|
|
Actuarial loss on defined benefit pension plan (note 9)
|
|
|
(1,988
|
)
|
|
|
(3,371
|
)
|
Unrealised capital gain(loss) – investments (note 3)
|
|
|
-
|
|
|
|
239
|
|
Total
|
|
$
|
1,960
|
|
|
$
|
(8,776
|
)
|
20. Impact of New Accounting Pronouncements
In July 2013, the
FASB issued ASU No. 2013-11, Income Taxes (Topic 740):
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
.
ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of ASU 2013-11 to have a material impact on the financial statements.
In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830):
Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity
. When a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. The amendments in ASU 2013-05 are effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of ASU 2013-05 to have a material impact on the financial statements.
In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220):
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
. ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. ASU 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a material impact on the financial statements.
In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210):
Disclosures about Offsetting Assets and Liabilities.
ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). ASU 2011-11 is effective retrospectively for fiscal years beginning after January 1, 2013. The adoption of ASU 2011-11 did not have a material impact on the financial statements.
21. Related Parties
On July 19, 2012, Mr. Peter Gray retired as a Director and employee of the Company. The Company subsequently entered into an agreement with Integritum Limited, a company controlled by Mr. Gray, for the provision of consultancy services for a period of two years from August 1, 2012, at an agreed fee of €265,000 ($350,000) per annum.
On December 31, 2009, Dr. John Climax retired as Chairman of the Board of the Company. From January 2010 he has held the position as an outside director of the Company. The Company entered into an agreement with Rotrua Limited, a company controlled by Dr. Climax for the provision of consultancy services for a period of three years from January 1, 2010, at an agreed fee of €262,500 ($346,000) per annum. The consultancy agreement expired in December 2012.
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
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ICON plc
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/s/ Brendan Brennan
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Date March 12, 2014
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Brendan Brennan
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Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit
Number
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Title
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3.1
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Description of the Memorandum and Articles of Association of the Company (incorporated by reference to exhibit 3.1 to the Form 20F (File No. 333-08704) filed on March 6, 2013).
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10.1*
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Office Space Lease, dated September 1, 2013, between ICON Central Laboratories Inc., and MSM Reality Co., LLC, Davrick, LLC and Sholom Blau Co., LLC.
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10.2*
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Office Space Lease, dated July 10, 2013, between ICON Clinical Research Inc. and Highwood Reality Limited Partnership.
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10.3*
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Office Space Lease, dated September 30, 2012, between ICON Clinical Research Inc. and Pennbrook Development Partners 2100, L.P.
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12.1*
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Section 302 certifications.
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12.2*
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Section 906 certifications.
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21.1
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List of Subsidiaries (incorporated by reference to Item 4 of Form 20-F filed herewith).
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23.1*
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Consent of KPMG, Independent Registered Public Accounting Firm
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101.1*
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Interactive Data Files (XBRL – Related Documents)
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* Filed herewith
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