SEC Comment Letter for GSK (GSK) — May 18, 2016
GSK plc
Date: May 18, 2016 · CIK: 0001131399 · Accession: 0000000000-16-076935
AI Filing Summary & Sentiment
File numbers found in text: 001-15170
Letter
Mail Stop 4720 May 18 , 2016 Via E -mail Mr. Simon Dingemans Chief Financial Officer GlaxoSmithKline plc 980 Great West Road Brentford, TW8 9GS England
Re: GlaxoSmithKline plc Form 20 -F for the Fiscal Year December 31 , 2015 Filed March 18, 2016 File No. 001-15170
Dear Mr. Dingemans :
We have reviewed your filing and have the following comments . In our comment s, we ask you to provide us with information so we may better understand your disclosure.
Please respond to these comment s within 10 business days by providing the requested information or advise us as soon as possible when you will respon d. If you do not believe a comment applies to your facts and circumstances, please tell us why in your response.
After reviewing your response to the se comment s, we may have additional comments .
Exhibit 15.2: Annual Report 2015 Group Financial Review Critical Accounting Policies Turnover, pa ge 70
1. Please tell us the reas on for year over year fluctuations for your market driven segments and government mandated and state programs reductions from gross revenue, including the effect that changes in your estimates of these items had on your revenues and operations. It appears from your auditors’ report on page 133 that you have changed your estimates in 2015 to update Medicaid rebates for a new pricing methodology as well as to respond to the impact of competitive pricing pressures and greater discounting in the US market but you do not describe these changes. Please tell us what changes were made and how your estimates were affected.
Mr. Simon Dingemans Chief Financial Officer May 18 , 2016 Page 2
Notes to the financial statements Note 38: Acquisitions and disposals 2015 Acquisitions Novartis Consumer Healthcare and Vaccines businesses, page 185
2. Please address the following comments regarding your accounting for the acquisition of the Novartis consumer healthcare business and your formation of the Consumer Healthcare Joint Venture, or the Joint Venture. Reference for use the authoritative literature you rely upon to support your accounting. As you control and consolidate the Joint Ventu re, explain to us why it is appropriate to step -up to fair value your bases of the net assets you contributed to the Joint Venture and record a £2,891 million gain directly to retained earnings as indicated in your equity statement on page 140. In your re sponse tell us whether you contributed entities or assets and liabilities or a combination of both to the Joint Venture. In conjunction with your response to the preceding bullet and your acquisition of the Novartis consumer healthcare business, tell us yo ur consideration of the guidance in paragraph 38 of IFRS 3 for recording the net asset s you contributed to the Joint Venture at book value and recording a gain through the income statement for the difference between the fair value of 36.5% of the consumer healthcare business you contributed to the Joint Venture that was conveyed to Novartis in the form of equity consideration for the acquisition of its consumer healthcare business. Tell us why you recorded a £6,204 million charge directly to retained earnin gs as indicated on page 140 for the option you issued to Novartis that permits it to put its 36.5% interest in the Joint Venture to you . Clarify for us why it is not part of the consideration paid to Novartis to acquire their consumer healthcare business contributed to the Joint Venture and thus result in an increase to goodwill.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts rel ating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In responding t o our comment s, please provide a written statement from the company acknowledging that: the company is responsible fo r the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Mr. Simon Dingemans Chief Financial Officer May 18 , 2016 Page 3
You may contact Senior Staff Accountants Sasha Parikh at (202) 551 -3627 or Mark Brunho fer at (202) 551-3638 if you have questions regarding the comment s. In this regard, do not hesitate to contact me at (202) 551 -3679.
Sincerely,
/s/ Jim B. Rosenberg
Show Raw Text
Mail Stop 4720 May 18 , 2016 Via E -mail Mr. Simon Dingemans Chief Financial Officer GlaxoSmithKline plc 980 Great West Road Brentford, TW8 9GS England Re: GlaxoSmithKline plc Form 20 -F for the Fiscal Year December 31 , 2015 Filed March 18, 2016 File No. 001-15170 Dear Mr. Dingemans : We have reviewed your filing and have the following comments . In our comment s, we ask you to provide us with information so we may better understand your disclosure. Please respond to these comment s within 10 business days by providing the requested information or advise us as soon as possible when you will respon d. If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. After reviewing your response to the se comment s, we may have additional comments . Exhibit 15.2: Annual Report 2015 Group Financial Review Critical Accounting Policies Turnover, pa ge 70 1. Please tell us the reas on for year over year fluctuations for your market driven segments and government mandated and state programs reductions from gross revenue, including the effect that changes in your estimates of these items had on your revenues and operations. It appears from your auditors’ report on page 133 that you have changed your estimates in 2015 to update Medicaid rebates for a new pricing methodology as well as to respond to the impact of competitive pricing pressures and greater discounting in the US market but you do not describe these changes. Please tell us what changes were made and how your estimates were affected. Mr. Simon Dingemans Chief Financial Officer May 18 , 2016 Page 2 Notes to the financial statements Note 38: Acquisitions and disposals 2015 Acquisitions Novartis Consumer Healthcare and Vaccines businesses, page 185 2. Please address the following comments regarding your accounting for the acquisition of the Novartis consumer healthcare business and your formation of the Consumer Healthcare Joint Venture, or the Joint Venture. Reference for use the authoritative literature you rely upon to support your accounting. As you control and consolidate the Joint Ventu re, explain to us why it is appropriate to step -up to fair value your bases of the net assets you contributed to the Joint Venture and record a £2,891 million gain directly to retained earnings as indicated in your equity statement on page 140. In your re sponse tell us whether you contributed entities or assets and liabilities or a combination of both to the Joint Venture. In conjunction with your response to the preceding bullet and your acquisition of the Novartis consumer healthcare business, tell us yo ur consideration of the guidance in paragraph 38 of IFRS 3 for recording the net asset s you contributed to the Joint Venture at book value and recording a gain through the income statement for the difference between the fair value of 36.5% of the consumer healthcare business you contributed to the Joint Venture that was conveyed to Novartis in the form of equity consideration for the acquisition of its consumer healthcare business. Tell us why you recorded a £6,204 million charge directly to retained earnin gs as indicated on page 140 for the option you issued to Novartis that permits it to put its 36.5% interest in the Joint Venture to you . Clarify for us why it is not part of the consideration paid to Novartis to acquire their consumer healthcare business contributed to the Joint Venture and thus result in an increase to goodwill. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts rel ating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In responding t o our comment s, please provide a written statement from the company acknowledging that: the company is responsible fo r the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Mr. Simon Dingemans Chief Financial Officer May 18 , 2016 Page 3 You may contact Senior Staff Accountants Sasha Parikh at (202) 551 -3627 or Mark Brunho fer at (202) 551-3638 if you have questions regarding the comment s. In this regard, do not hesitate to contact me at (202) 551 -3679. Sincerely, /s/ Jim B. Rosenberg Jim B. Rosenberg Senior Assistant Chief Accountant Office of Healthcare and Insurance