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 30June 30
2012 20132012 2013
US$m US$m     US$m US$m
Continuing Operations
(0.2)56.3Revenue (see page 7)56.5

Cost of goods sold

(0.3)56.3Gross margin(0.2)56.5
Operating Expenses (see page 7)
32.826.2Selling, general and administrative62.855.2
25.622.2Research and development50.541.6
(0.1)97.5Other net charges/(gain) (see page 9)1.9116.2
58.3145.9Total operating expenses115.2213.0
(58.6)(89.6)Operating loss(115.4)(156.5)
Net Interest and Investment Gains and Losses (see page 10)
12.44.5Net interest expense29.213.6
140.2Net charge on debt retirements140.2
34.314.3Net loss on equity method investments50.229.2
46.7159.0Net interest and investment gains and losses79.4183.0
(105.3)(248.6)Net loss from continuing operations before tax(194.8)(339.5)
(15.3)3.2Provision for/(benefit from) income taxes(30.1)(14.9)
(90.0)(251.8)Net loss from continuing operations(164.7)(324.6)
Discontinued Operations
61.52,540.5Net income from discontinued operations, net of tax (see page 12)104.42,676.6
(28.5)2,288.7Net 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)
0.104.75Basic and diluted net income per ordinary share - discontinued operations0.184.73
(0.05)4.28Basic and diluted net income/(loss) per ordinary share - total operations(0.10)4.16
591.8535.3Basic and diluted weighted average number of ordinary shares outstanding (in millions) - continuing and discontinued operations591.3565.8
Unaudited Non-GAAP Financial Information - Adjusted EBITDA
Three Months Ended  Non-GAAP Financial Information  Six Months Ended
June 30Reconciliation ScheduleJune 30
2012 20132012 2013
US$m US$m     US$m US$m
(28.5)2,288.7Net 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)
6.6Net loss from Prothena14.10.5
(0.2)Net (income)/loss from EDT/Alkermes20.3(43.2)
(90.0)(251.8)Net loss from continuing operations(164.7)(324.6)
12.44.5Net interest expense29.213.6
(15.3)3.2Provision for/(benefit from) income taxes(30.1)(14.9)
3.21.1Depreciation and amortization6.52.2
Amortized fees(0.1)(0.1)
(89.7)(243.0)EBITDA from continuing operations(159.2)(323.8)
8.24.4Share-based compensation19.112.3
(0.1)97.5Other net charges/(gain)1.9116.2
34.314.3Net loss on equity method investments50.229.2
140.2Net charge on debt retirements140.2
(47.3)13.4Adjusted 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 31June 30
   US$m  US$m
Current Assets
Cash and cash equivalents431.31,918.3
Restricted cash and cash equivalents — current2.63.4
Investment securities — current167.942.0
Held for sale assets220.1
Deferred tax assets — current380.9
Other current assets206.783.7
Total current assets1,409.52,047.4
Non-Current Assets
Intangible assets, net99.097.8
Property, plant and equipment, net12.78.2
Equity method investments14.069.5
Investment securities — non-current8.69.0
Deferred tax assets — non-current64.6
Restricted cash and cash equivalents — non-current13.70.9
Other assets18.117.2
Total Assets1,640.22,250.0
Liabilities and Shareholders' Equity
Accounts payable, accrued and other liabilities422.0199.9
Long-term debt600.0
Shareholders' equity618.22,050.1
Total Liabilities and Shareholders' Equity1,640.22,250.0

Movement in Shareholders' Equity

Three MonthsSix Months
ended June 30,ended June 30,
US$m     US$m
682.2Opening shareholders' equity618.2
2,288.7Net income for the period2,352.0
4.4Share-based compensation13.2
16.7Issuance of share capital29.3
24.8Unrealized movement on defined benefit pension plan24.8
19.8Increase in net unrealized gain on investment securities0.7
(1,013.9)Share repurchase and associated costs(1,016.4)
27.4(1)Excess tax benefits from share based compensation28.3
2,050.1Closing shareholders' equity2,050.1

(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 30June 30
2012 20132012 2013
US$m US$m     US$m US$m
(47.3)13.4Adjusted EBITDA from continuing operations(88.0)(25.9)
82.6Adjusted EBITDA from discontinued operations(1)169.6116.9
(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)22.1Working capital decrease/(increase)(38.5)(49.3)
19.1(138.1)Cash flows provided by/(used in) operating activities13.1(165.7)
(1.5)0.2Net 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 shares169.7
3,249.5Proceeds from sale of Tysabri business3,249.5
(40.0)Purchase of equity method investment (Newbridge) Read Full Story
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