Elan Reports Second Quarter and First Half 2013 Financial Results

Elan Reports Second Quarter and First Half 2013 Financial Results

DUBLIN--(BUSINESS WIRE)-- Elan Corporation, plc (NYS: ELN) today reported its second quarter and first half 2013 financial results.

"We are focused squarely on the process of exploring a sale of the company as announced by our Board of Directors on June 14, 2013," commented Mr. Kelly Martin, CEO, adding, "the Board of Directors and executive management are in complete alignment with regard to exploring all opportunities to maximize shareholder value."


Mr. Martin further added that, "the collective work and effort over the previous years has produced a business platform that is highly unique across a number of tactical as well as strategic dimensions. We will continue to advance the process and communicate the outcome to the marketplace at the appropriate time."

Mr. Nigel Clerkin, chief financial officer, said, "our second quarter results have been substantially impacted by the completion of the Tysabri transaction, the subsequent $1.0 billion share buyback, debt retirements and other transactions. Our net income for the quarter, of $2,288.7 million, reflects the gain recorded on the Tysabri transaction of $2,540.2 million, while our sharecount was reduced by approximately 15%. We remain in a very strong financial position, and ended the quarter with over $1.9 billion in cash and cash equivalents, and no debt."

Unaudited Consolidated U.S. GAAP Income Statement Data

Three Months Ended

Six Months Ended

June 30

June 30

2012

2013

2012

2013

US$m

US$m

US$m

US$m

Continuing Operations

(0.2)

56.3

Revenue (see page 7)

56.5

0.1

Cost of goods sold

0.2

(0.3)

56.3

Gross margin

(0.2)

56.5

Operating Expenses (see page 7)

32.8

26.2

Selling, general and administrative

62.8

55.2

25.6

22.2

Research and development

50.5

41.6

(0.1)

97.5

Other net charges/(gain) (see page 9)

1.9

116.2

58.3

145.9

Total operating expenses

115.2

213.0

(58.6)

(89.6)

Operating loss

(115.4)

(156.5)

Net Interest and Investment Gains and Losses (see page 10)

12.4

4.5

Net interest expense

29.2

13.6

140.2

Net charge on debt retirements

140.2

34.3

14.3

Net loss on equity method investments

50.2

29.2

46.7

159.0

Net interest and investment gains and losses

79.4

183.0

(105.3)

(248.6)

Net loss from continuing operations before tax

(194.8)

(339.5)

(15.3)

3.2

Provision for/(benefit from) income taxes

(30.1)

(14.9)

(90.0)

(251.8)

Net loss from continuing operations

(164.7)

(324.6)

Discontinued Operations

61.5

2,540.5

Net income from discontinued operations, net of tax (see page 12)

104.4

2,676.6

(28.5)

2,288.7

Net income/(loss)

(60.3)

2,352.0

(0.15)

(0.47)

Basic and diluted net loss per ordinary share - continuing operations

(0.28)

(0.57)

0.10

4.75

Basic and diluted net income per ordinary share - discontinued operations

0.18

4.73

(0.05)

4.28

Basic and diluted net income/(loss) per ordinary share - total operations

(0.10)

4.16

591.8

535.3

Basic and diluted weighted average number of ordinary shares outstanding (in millions) - continuing and discontinued operations

591.3

565.8

Unaudited Non-GAAP Financial Information - Adjusted EBITDA

Three Months Ended

Non-GAAP Financial Information

Six Months Ended

June 30

Reconciliation Schedule

June 30

2012

2013

2012

2013

US$m

US$m

US$m

US$m

(28.5)

2,288.7

Net income/(loss)

(60.3)

2,352.0

Net income/(loss) from discontinued operations:

(67.9)

(2,540.5)

Net income from Tysabri

(138.8)

(2,633.9)

6.6

Net loss from Prothena

14.1

0.5

(0.2)

Net (income)/loss from EDT/Alkermes

20.3

(43.2)

(90.0)

(251.8)

Net loss from continuing operations

(164.7)

(324.6)

12.4

4.5

Net interest expense

29.2

13.6

(15.3)

3.2

Provision for/(benefit from) income taxes

(30.1)

(14.9)

3.2

1.1

Depreciation and amortization

6.5

2.2

Amortized fees

(0.1)

(0.1)

(89.7)

(243.0)

EBITDA from continuing operations

(159.2)

(323.8)

8.2

4.4

Share-based compensation

19.1

12.3

(0.1)

97.5

Other net charges/(gain)

1.9

116.2

34.3

14.3

Net loss on equity method investments

50.2

29.2

140.2

Net charge on debt retirements

140.2

(47.3)

13.4

Adjusted EBITDA from continuing operations(1)

(88.0)

(25.9)

(1)A reconciliation of Adjusted EBITDA from discontinued operations to net income/(loss) from discontinued operations for the three and six months ended June 30, 2012 and 2013is set out in Appendix I and II.

To supplement its consolidated financial statements presented on a U.S. GAAP basis, Elan provides readers with Adjusted EBITDA, a non-GAAP measure of operating results. Adjusted EBITDA is defined as net loss from continuing operations plus or minus net income or loss from discontinued operations, net interest expense, provision for or benefit from income taxes, depreciation and amortization of costs and revenue, share-based compensation, other net charges or gains, net loss on equity method investments and net charges on debt retirements. Adjusted EBITDA is not presented as, and should not be considered an alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. GAAP. Elan's management uses Adjusted EBITDA to evaluate the operating performance of Elan and its business and this measure is among the factors considered as a basis for Elan's planning and forecasting for future periods. Elan believes Adjusted EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. Adjusted EBITDA is used as an analytical indicator of income generated to service debt and to fund capital expenditures. Adjusted EBITDA does not give effect to cash used for interest payments related to debt service requirements and does not reflect funds available for investment in the business of Elan or for other discretionary purposes. Adjusted EBITDA, as defined by Elan and presented in this press release, may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to net income/(loss) is set out in the table above titled, "Non-GAAP Financial Information Reconciliation Schedule".

Unaudited Consolidated U.S. GAAP Balance Sheet Data

December 31

June 30

2012

2013

US$m

US$m

Assets

Current Assets

Cash and cash equivalents

431.3

1,918.3

Restricted cash and cash equivalents — current

2.6

3.4

Investment securities — current

167.9

42.0

Held for sale assets

220.1

Deferred tax assets — current

380.9

Other current assets

206.7

83.7

Total current assets

1,409.5

2,047.4

Non-Current Assets

Intangible assets, net

99.0

97.8

Property, plant and equipment, net

12.7

8.2

Equity method investments

14.0

69.5

Investment securities — non-current

8.6

9.0

Deferred tax assets — non-current

64.6

Restricted cash and cash equivalents — non-current

13.7

0.9

Other assets

18.1

17.2

Total Assets

1,640.2

2,250.0

Liabilities and Shareholders' Equity

Accounts payable, accrued and other liabilities

422.0

199.9

Long-term debt

600.0

Shareholders' equity

618.2

2,050.1

Total Liabilities and Shareholders' Equity

1,640.2

2,250.0

Movement in Shareholders' Equity

Three Months

Six Months

ended June 30,

ended June 30,

2013

2013

US$m

US$m

682.2

Opening shareholders' equity

618.2

2,288.7

Net income for the period

2,352.0

4.4

Share-based compensation

13.2

16.7

Issuance of share capital

29.3

24.8

Unrealized movement on defined benefit pension plan

24.8

19.8

Increase in net unrealized gain on investment securities

0.7

(1,013.9)

Share repurchase and associated costs

(1,016.4)

27.4(1)

Excess tax benefits from share based compensation

28.3

2,050.1

Closing shareholders' equity

2,050.1

(1)$27.4 million of excess tax benefits from share based compensation have been recognised in the three months ended June 30, 2013 as a result of the utilization of U.S. federal stock compensation net operating loss carryovers against a portion of the upfront profit on the sale of Tysabri which is attributed to the U.S.

Unaudited Consolidated U.S. GAAP Cash Flow Data

Three Months Ended

Six Months Ended

June 30

June 30

2012

2013

2012

2013

US$m

US$m

US$m

US$m

(47.3)

13.4

Adjusted EBITDA from continuing operations

(88.0)

(25.9)

82.6

Adjusted EBITDA from discontinued operations(1)

169.6

116.9

(13.8)

(40.2)

Net interest and tax(2)

(28.5)

(52.0)

(0.1)

(133.4)

Other net charges(3)

(1.5)

(155.4)

(2.3)

22.1

Working capital decrease/(increase)

(38.5)

(49.3)

19.1

(138.1)

Cash flows provided by/(used in) operating activities

13.1

(165.7)

(1.5)

0.2

Net purchases of tangible and intangible assets

(6.0)

(0.7)

(0.2)

(0.2)

Purchase of investments

(0.4)

(0.3)

(48.7)

(25.8)

Funding provided to equity method investment (Janssen AI)

(48.7)

(55.7)

Net proceeds from sale of Alkermes shares

169.7

3,249.5

Proceeds from sale of Tysabri business

3,249.5

(40.0)

Purchase of equity method investment (Newbridge)