Elan Reports Second Quarter 2009 Financial Results

DUBLIN--(BUSINESS WIRE)--Jul 21, 2009 - Elan Corporation, plc today reported its second quarter 2009 financial results.

Elan CEO Kelly Martin said, “During the first six months of 2009, we grew revenues, added an additional approach to Alzheimer's disease and successfully completed our strategic review with the announcement of a transformative transaction with Johnson & Johnson. Our focus will remain squarely on a disciplined and continuous investment in science and advancing our diversified clinical portfolio to patients.”

Commenting on the second quarter results, Elan executive vice president and chief financial officer, Shane Cooke said that the company results reflected the strong performance of both the Biopharmaceuticals business and Elan Drug Technologies (EDT). Revenues were up by 14%, led by a 30% increase in revenues from Tysabri and a 10% increase in revenues from EDT. The increase in revenues combined with lower SG&A costs led to the company reporting a 54% reduction in operating losses and almost $20 million in positive Adjusted EBITDA for the quarter. “We are particularly pleased to see that the initiatives implemented earlier in the year resulted in an acceleration of the growth in Tysabri, with a 55% increase in the number of net patients added compared to the first quarter 2009.”

Mr. Cooke added, “We were also delighted to announce earlier this month that we had entered a definitive agreement with Johnson & Johnson which marks the end of the strategic review that had started in January. The completion of this transaction will give us financial resources and access to commercial infrastructure which will enable the acceleration of the development and commercialization of our pipeline and product portfolio, while allowing our existing shareholders to continue to participate in the resulting potential long term value creation. Consistent with our stated objectives, it will also de-risk our balance sheet, reduce our future costs and accelerate our return to profitability. For the full year 2009, we remain on target to record double-digit revenue growth and to be profitable on an Adjusted EBITDA basis.”

Unaudited Consolidated U.S. GAAP Income Statement Data

 


 
 
Three Months Ended

 


 
      Six Months Ended

 


 
June 30

 


 
      June 30

 


 
2008 US$m

 


 
  2009 US$m

 


 
      2008 US$m

 


 
  2009 US$m

 


 
        Revenue (see page 8)        
241.7   270.6   Product revenue   449.0   513.5
3.9   10.3   Contract revenue   11.3   12.5
245.6   280.9   Total revenue   460.3   526.0
122.0   139.4   Cost of goods sold   232.8   268.2
123.6   141.5   Gross margin   227.5   257.8
                 
        Operating Expenses (see page 12)        
76.9   69.1   Selling, general and administrative   150.9   140.1
80.1   80.9   Research and development   152.6   161.4
2.6   8.0   Other net charges (see page 13)   5.6   27.6
159.6   158.0   Total operating expenses   309.1   329.1
(36.0)   (16.5)   Operating loss   (81.6)   (71.3)
                 
        Net Interest and Investment Gains and Losses        
33.5   35.8   Net interest expense   68.0   69.6
(0.5)     Net investment (gains)/losses   2.8  
33.0   35.8   Net interest and investment gains and losses   70.8   69.6
                 
(69.0)   (52.3)   Net loss before tax   (152.4)   (140.9)
2.5   15.9   Provision for income taxes   4.6   29.9
(71.5)   (68.2)   Net loss   (157.0)   (170.8)
                 
(0.15)   (0.14)   Basic and diluted net loss per ordinary share   (0.33)   (0.36)
473.1   475.9   Basic and diluted weighted average number of

 ordinary shares outstanding (in millions)

 


 
  472.4   475.7


 

 
Unaudited Non-GAAP Financial Information – EBITDA
 
Three Months Ended June 30

 


 
  Non-GAAP Financial Information Reconciliation Schedule

 


 
  Six Months Ended June 30

 


 
2008 US$m

 


 
  2009 US$m

 


 
      2008 US$m

 


 
  2009 US$m

 


 
                 
(71.5)   (68.2)   Net loss   (157.0)   (170.8)
33.5   35.8   Net interest expense   68.0   69.6
2.5   15.9   Provision for income taxes   4.6   29.9
17.1   19.1   Depreciation and amortization   34.1   38.2
(1.1)   (0.3)   Amortized fees   (2.3)   (0.4)
(19.5)   2.3   EBITDA   (52.6)   (33.5)


 

         
Three Months Ended June 30

 


 
  Non-GAAP Financial Information Reconciliation Schedule

 


 
  Six Months Ended June 30

 


 
2008 US$m

 


 
  2009 US$m

 


 
      2008 US$m

 


 
  2009 US$m

 


 
(19.5)   2.3   EBITDA   (52.6)   (33.5)
11.2   8.8   Share-based compensation   23.4   19.0
2.6   8.0   Other net charges   5.6   27.6
(0.5)     Net investment (gains)/losses   2.8  
(6.2)   19.1   Adjusted EBITDA   (20.8)   13.1


 

To supplement its consolidated financial statements presented on a U.S. GAAP basis, Elan provides readers with EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA, non-GAAP measures of operating results. EBITDA is defined as net income or loss plus or minus depreciation and amortization of costs and revenues, provisions for income tax and net interest expense. Adjusted EBITDA is defined as EBITDA plus or minus share-based compensation, other net charges, and net investment gains or losses. EBITDA and Adjusted EBITDA are not presented as, and should not be considered alternative measures of, operating results or cash flows from operations, as determined in accordance with U.S. GAAP. Elan's management uses EBITDA and Adjusted EBITDA to evaluate the operating performance of Elan and its business and these measures are among the factors considered as a basis for Elan's planning and forecasting for future periods. Elan believes EBITDA and Adjusted EBITDA are measures of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA and Adjusted EBITDA are used as analytical indicators of income generated to service debt and to fund capital expenditures. EBITDA and Adjusted EBITDA do not give effect to cash used for interest payments related to debt service requirements and do not reflect funds available for investment in the business of Elan or for other discretionary purposes. EBITDA and Adjusted EBITDA, as defined by Elan and presented in this press release, may not be comparable to similarly titled measures reported by other companies. Reconciliations of EBITDA and Adjusted EBITDA to net loss from continuing operations are set out in the tables above titled, “Non-GAAP Financial Information Reconciliation Schedule.”


 

 


 

Unaudited Consolidated U.S. GAAP Balance Sheet Data

 


 
           
    December 31

2008

US$m


 


 
    June 30

2009

US$m


 


 
Assets          
Current Assets          
Cash and cash equivalents   375.3     218.4
Restricted cash and cash equivalents — current   20.2     16.8
Investment securities — current   30.5     22.7
Deferred tax assets — current   95.9     72.3
Prepaid and other current assets   240.1     288.5
Total current assets   762.0     618.7
           
Non-Current Assets          
Intangible assets, net   553.9     535.1
Property, plant and equipment, net   351.8     342.6
Investment securities — non-current   8.1     8.4
Deferred tax assets — non-current   145.3     144.7
Restricted cash and cash equivalents — non-current   15.0     14.9
Other assets   31.5     28.9
Total Assets   1,867.6     1,693.3
           
Liabilities and Shareholders' Deficit          
Accounts payable, accrued and other liabilities   334.8     303.8
Long-term debt   1,765.0     1,765.0
Shareholders' deficit(1) (see page 14)   (232.2)     (375.5)
Total Liabilities and Shareholders' Deficit   1,867.6     1,693.3


 

1) Elan's debt covenants do not require it to maintain or adhere to any specific financial ratios. Consequently, the shareholders' deficit has no impact on Elan's ability to comply with its debt covenants.


 

 


 

Unaudited Consolidated U.S. GAAP Cash Flow Data
 
Three Months Ended June 30

 


 
      Six Months Ended June 30

 


 
2008 US$m

 


 
  2009 US$m

 


 
      2008 US$m

 


 
  2009 US$m

 


 
                 
(31.6)   (39.0)   Net interest and tax   (68.0)   (75.6)
(2.6)   (8.0)   Other net charges   (5.6)   (9.7)
(6.2)   19.1   Other operating activities   (20.8)   13.1
(15.1)   (45.1)   Working capital increase   (27.6)   (27.1)
(55.5)   (73.0)   Cash flows from operating activities   (122.0)   (99.3)
                 
(14.8)              

Posted: July 2009


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