Yes o
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No x
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Exhibit | Description |
99.1
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Elan Corporation, plc and Subsidiaries Unaudited Pro Forma Condensed Consolidated Financial Information.
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99.2
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Elan Corporation, plc and Subsidiaries Unaudited Pro Forma Capitalization and Indebtedness.
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ELAN CORPORATION, PLC
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By:
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/s/ William Daniel | |
Name: William F. Daniel
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Title: Executive Vice President and Company Secretary
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Actual
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Pro Forma
Adjustments for
Tysabri Transaction
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Pro Forma
Adjustments for
Debt Redemption
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Pro Forma
Consolidated
Income Statement
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(in millions, except per share data) | |||||||||||||||||||
Continuing Operations(1):
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Revenue
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$ | 0.2 | $ | 195.7 | (2)(A)(i) | — | $ | 195.9 | |||||||||||
Cost of sales
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0.2 | — | — | 0.2 | |||||||||||||||
Gross margin
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— | 195.7 | — | 195.7 | |||||||||||||||
Selling, general and administrative expenses
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113.6 | — | — | 113.6 | |||||||||||||||
Research and development expenses
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95.0 | — | — | 95.0 | |||||||||||||||
Other net charges
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168.9 | — | — | 168.9 | |||||||||||||||
Total operating expenses
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$ | 377.5 | $ | — | $ | — | $ | 377.5 | |||||||||||
Operating (loss)/income
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(377.5 | ) | 195.7 | — | (181.8 | ) | |||||||||||||
Net interest expense
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56.6 | — | (55.0 | ) | (2)(D)(i) | 1.6 | |||||||||||||
Net loss on equity method investments
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221.8 | — | — | 221.8 | |||||||||||||||
Net charge on debt retirement
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76.1 | — | — | 76.1 | |||||||||||||||
Net investment losses
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1.2 | — | — | 1.2 | |||||||||||||||
Net interest and investment losses
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355.7 | — | (55.0 | ) | 300.7 | ||||||||||||||
Net (loss)/income before income taxes
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(733.2 | ) | 195.7 | 55.0 | (482.5 | ) | |||||||||||||
(Benefit from)/provision for income taxes
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(360.5 | ) | 328.7 |
(2)(A)(ii)
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6.9 | (2)(D)(ii) | (24.9 | ) | |||||||||||
Net loss for the year – continuing operations
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$ | (372.7 | ) | $ | (133.0 | ) | $ | 48.1 | $ | (457.6 | ) | ||||||||
Basic and diluted net loss per share –
continuing operations
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$ | (0.63 | ) | $ | (0.89 | )(3) |
Actual
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Pro Forma
Adjustments for
Tysabri
Transaction
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Pro Forma
Adjustments
for Alkermes
Shares
Transaction
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Pro Forma
Adjustments
for Debt
Redemption
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Pro Forma
Adjustments for
Share
Repurchase
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Pro Forma
Consolidated
Balance Sheet
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(in millions)
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Current Assets:
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Cash and cash equivalents
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431.3 | 3,234.9 |
(2)(A)(iii)
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169.7 | (2)(B)(i) | (729.7 | ) |
(2)(D)(iii)
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(1,005.0 | ) | (2)(C)(i) | 2,101.2 | |||||||||||||||||
Restricted cash - current
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2.6 | — | — | — | — | 2.6 | |||||||||||||||||||||||
Assets held for sale(1)
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220.1 | (220.1 | ) |
(2)(A)(iii)
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— | — | — | — | |||||||||||||||||||||
Accounts receivable
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193.5 | — | — | — | — | 193.5 | |||||||||||||||||||||||
Investment securities - current
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167.9 | — | (143.5 | ) |
(2)(B)(ii)
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— | — | 24.4 | |||||||||||||||||||||
Inventory
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— | — | — | — | — | — | |||||||||||||||||||||||
Deferred tax assets - current
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380.9 | (370.9 | ) |
(2)(A)(iv)
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— | — | — | 10.0 | |||||||||||||||||||||
Prepaid and other current assets
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13.2 | — | — | — | — | 13.2 | |||||||||||||||||||||||
Total Current Assets
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$ | 1,409.5 | $ | 2,643.9 | $ | 26.2 | $ | (729.7 | ) | $ | (1,005.0 | ) | $ | 2,344.9 | |||||||||||||||
Non-Current Assets:
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Goodwill and other intangible assets, net
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$ | 12.7 | — | $ | — | $ | — | $ | — | $ | 12.7 | ||||||||||||||||||
Property, plant and equipment, net
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99.0 | — | — | — | — | 99.0 | |||||||||||||||||||||||
Equity method investments
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14.0 | — | — | — | — | 14.0 | |||||||||||||||||||||||
Investment securities – non-current
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8.6 | — | — | — | — | 8.6 | |||||||||||||||||||||||
Restricted cash – non-current
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13.7 | — | — | — | — | 13.7 | |||||||||||||||||||||||
Deferred tax assets – non-current
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64.6 | (57.1 | ) |
(2)(A)(iv)
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— | — | — | 7.5 | |||||||||||||||||||||
Other non-current assets
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18.1 | — | — | (11.8 | ) |
(2)(D)(iii)
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— | 6.3 | |||||||||||||||||||||
Total Non-Current Assets
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$ | 230.7 | $ | (57.1 | ) | $ | — | $ | (11.8 | ) | $ | — | $ | 161.8 | |||||||||||||||
Total Assets
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$ | 1,640.2 | $ | 2,586.8 | $ | 26.2 | $ | (741.5 | ) | $ | (1,005.0 | ) | $ | 2,506.7 | |||||||||||||||
Current Liabilities:
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Accounts payable
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45.6 | — | — | — | — | 45.6 | |||||||||||||||||||||||
Accrued and other current liabilities
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314.1 | 30.0 |
(2)(A)(iv)
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— | (9.3 | ) |
(2)(D)(iii)
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— | 334.8 | ||||||||||||||||||||
Total Current Liabilities
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$ | 359.7 | $ | 30.0 | $ | — | $ | (9.3 | ) | $ | — | $ | 380.4 | ||||||||||||||||
Non-Current Liabilities:
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Long-term debt
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600.0 | — | — | (600.0 | ) |
(2)(D)(iii)
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— | — | |||||||||||||||||||||
Other liabilities
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62.3 | — | — | — | — | 62.3 | |||||||||||||||||||||||
Total Non-Current Liabilities
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$ | 662.3 | $ | — | $ | — | $ | (600.0 | ) | $ | — | $ | 62.3 | ||||||||||||||||
Total Liabilities
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$ | 1,022.0 | $ | 30.0 | $ | — | $ | (609.3 | ) | $ | — | $ | 442.7 | ||||||||||||||||
Shareholders’ Equity:
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Ordinary shares
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36.5 | — | — | — | (5.0 | ) | (2)(C)(i) | 31.5 | |||||||||||||||||||||
Additional paid-in capital
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352.4 | 42.0 |
(2)(A)(iv)
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— | — | — | 394.4 | ||||||||||||||||||||||
Accumulated surplus/(deficit)
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273.9 | 2,514.8 |
(2)(A)(v)
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43.2 |
(2)(B)(ii)
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(132.2 | ) |
(2)(D)(iii)
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(1,000.0 | ) | (2)(C)(i) | 1,699.7 | |||||||||||||||||
Accumulated other comprehensive loss
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(44.6 | ) | — | (17.0 | ) |
(2)(B)(ii)
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— | — | (61.6 | ) | |||||||||||||||||||
Total shareholders’ equity
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$ | 618.2 | $ | 2,556.8 | $ | 26.2 | $ | (132.2 | ) | $ | (1,005.0 | ) | $ | 2,064.0 | |||||||||||||||
Total liabilities and shareholders’ equity
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$ | 1,640.2 | $ | 2,586.8 | $ | 26.2 | $ | (741.5 | ) | $ | (1,005.0 | ) | $ | 2.506.7 | |||||||||||||||
(1)
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As a result of our decision to dispose of the Tysabri intellectual property and related assets, the results of Tysabri for the year ended December 31, 2012 are presented as a discontinued operation in our audited Consolidated Statement of Operations for the year ended December 31, 2012, and the comparative amounts for prior periods were restated to reflect this classification. The assets of the Tysabri business are presented as held for sale in our audited Consolidated Balance Sheet as of December 31, 2012.
Following the separation of a substantial portion of our drug discovery business platform (the “Prothena Business”) into a new, publicly traded company incorporated in Ireland named Prothena Corporation, plc (“Prothena”), the financial results of the Prothena Business for the period from January 1, 2012 to December 20, 2012, the effective date of the separation, are presented as a discontinued operation in our audited Consolidated Statement of Operations for the year ended December 31, 2012, and the comparative amounts for prior periods were restated to reflect this classification.
The results of our former Elan Drug Technologies business, which was divested in September 2011, were presented as a discontinued operation in our audited Consolidated Statement of Operations for the year ended December 31, 2012, and the comparative amounts for prior periods were restated to reflect this classification.
The unaudited pro forma condensed consolidated income statement for the year ended December 31, 2012, does not include the results of discontinued operations.
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(2)
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The pro forma adjustments are as follows: | |
(A) |
Tysabri Transaction:
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(i)
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The adjustment of $195.7 million to revenue reflects the royalties that would have been payable to us by Biogen International for the year ended December 31, 2012, on the assumption that the Tysabri Transaction had closed on January 1, 2012. Under the terms of the Tysabri Transaction, we will earn a royalty of 12% on global net sales of Tysabri during the first 12 months following the closing of the Tysabri Transaction. The global net in-market sales of Tysabri for the year ended December 31, 2012, were $1,631.1 million.
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(ii)
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The adjustment to (benefit from)/provision for income taxes of $328.7 million is comprised of the allocation of a $304.2 million non-recurring tax credit (which was included in the Consolidated Statement of Operations for the year ended December 31, 2012) primarily related to the recognition of a deferred tax asset expected to be utilized in relation to the expected gain from the disposal of the Tysabri business upon the closing of the Tysabri Transaction, and a $24.5 million income tax expense, reflecting the tax effect of the pro forma income statement adjustment for Tysabri royalty revenue ($195.7 million), calculated at the Irish statutory tax rate of 12.5%.
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(iii)
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The adjustment to cash and cash equivalents reflects the receipt of the $3.25 billion payment to be made by Biogen International upon the closing of the Tysabri Transaction, plus $24.9 million relating to inventory that is expected to be transferred to Biogen International upon closing of the Tysabri Transaction (estimated based on the carrying amount of Tysabri inventory included in held for sale assets as of December 31, 2012), less estimated transaction costs of $40.0 million. The adjustment to assets held for sale of $220.1 million reflects the disposal of the Tysabri assets, including inventory with a carrying value of $24.9 million as of December 31, 2012, upon the closing of the Tysabri Transaction.
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(iv)
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The adjustments to deferred tax assets ($370.9 million current; $57.1 million non-current) reflect the expected utilization of deferred tax assets in relation to the expected gain from the disposal of the Tysabri business upon the closing of the Tysabri Transaction. The adjustment to accrued and other current liabilities of $30.0 million reflects the estimated income tax payable in respect of the expected gain on disposal of the Tysabri business. The adjustment of $42.0 million to additional paid-in capital reflects the recognition of a credit, in connection with the Tysabri Transaction, relating to tax windfalls associated with equity awards for which we had recorded no income statement expense.
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(v)
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The adjustment to accumulated surplus reflects the estimated gain of $2,514.8 million (comprised of the $3.25 billion payment to be made by Biogen International upon the closing of the Tysabri Transaction, plus $24.9 million relating to inventory that is expected to be transferred to Biogen International upon closing of the Tysabri Transaction (estimated based on the carrying amount of Tysabri inventory included in held for sale assets as of December 31, 2012), less the write-off of held for sale assets of $220.1 million and estimated costs of the Tysabri Transaction of $40.0 million), net of estimated tax of $500 million (primarily non-cash). The net gain on the disposal of the Tysabri business will be presented in discontinued operations upon the closing of the Tysabri Transaction.
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(B)
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Alkermes Shares Transaction:
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(i)
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The adjustment of $169.7 million to cash and cash equivalents reflects the net cash proceeds from the Alkermes Shares Transaction.
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(ii)
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The adjustment to investment securities-current reflects the disposal of the Alkermes shares sold in the Alkermes Shares Transaction, which had a carrying value of $143.5 million as of December 31, 2012. The adjustment to accumulated surplus of $43.2 million reflects the net proceeds from the Alkermes Shares Transaction of $169.7 million, less the carrying value of $143.5 million, plus $17.0 million of previously unrealized gains related to the Alkermes shares that were sold in the Alkermes Shares Transaction. The $17.0 million adjustment is also reflected as an increase in accumulated other comprehensive loss as of December 31, 2012. The net gain on the sale of the 7.75 million Alkermes shares of $43.4 million (and any related income tax expense) is non-recurring; therefore, the net gain has not been included in the unaudited pro forma condensed consolidated income statement for the year ended December 31, 2012.
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(C)
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Share Repurchase:
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(i)
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The adjustment to cash and cash equivalents reflects the repurchase of Elan Corporation, plc Ordinary Shares for a total of $1.0 billion, and estimated associated transaction costs of $5.0 million. The adjustments to ordinary shares of $5.0 million and accumulated surplus of $1.0 billion reflect the cancellation of the Elan Corporation, plc Ordinary Shares after the repurchase, and are based on an assumed tender offer purchase price of $13.00 per share for all of the repurchased Ordinary Shares, and estimated transaction costs of $5.0 million.
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(D)
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Debt Redemption:
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(i)
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The adjustments to net interest expense reflect the interest cost savings, and amortization of debt financing costs and original issue discount savings, assuming all of the 8.75% Senior Fixed Rate Notes due 2016 (the “8.75% Notes”) were redeemed on January 1, 2012 and the 6.25% Notes were subsequently not issued. The total interest cost savings relating to the redemption of the 8.75% Notes and the 6.25% Notes are $51.9 million. The remaining savings of $3.1 million relate to the amortization of deferred financing costs and original issue discount related to these notes.
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(ii)
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The adjustment to the income tax benefit consists of a $6.9 million decrease, reflecting the tax effect of the pro forma income statement adjustments, calculated at the Irish statutory tax rate of 12.5%.
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(iii)
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The pro forma adjustments reflect the repayment of the $600.0 million of aggregate principal amount of the 6.25% Notes, the payment of a make-whole redemption premium of $115.4 million, accrued interest of $9.3 million and estimated transaction costs of $5.0 million, and the write-off of deferred transaction costs related to the 6.25% Notes of $11.8 million. The pro forma consolidated income statement does not reflect the make-whole redemption premium, the transaction costs and the write-off of deferred transaction costs as these are non-recurring items.
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(3)
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Pro forma basic and diluted net loss per share-continuing operations for the year ended December 31, 2012 was $0.89, which assumes pro forma weighted-average shares outstanding of 515.5 million. The pro forma weighted average shares outstanding of 515.5 million was calculated as 592.4 million shares (the denominator used in the computation of basic and diluted net loss per share-continuing operations for the year ended December 31, 2012, as extracted from the audited Consolidated Statement of Operations for the year ended December 31, 2012), less 76.9 million shares, which is the assumed number of Ordinary Shares that would be cancelled in connection with the Share Repurchase based on the aggregate repurchase amount of $1.0 billion and an assumed tender offer purchase price of $13.00 per share. |
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on an actual basis; and
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on a pro forma basis to give effect to (i) the Tysabri Transaction; (ii) the Alkermes Shares Transaction; (iii) the Debt Redemption; and (iv) the Share Repurchase.
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Actual
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Pro Forma
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Cash and cash equivalents
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$ | 431.3 | $ | 2,101.2 | (1) | |||
Debt, including current maturities:
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6.25% Notes
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600.0 | — | ||||||
Total debt
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$ | 600.0 | $ | — | ||||
Shareholders’ equity
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618.2 | 2,064.0 | (2) | |||||
Total capitalization
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$ | 1,218.2 | $ | 2,064.0 |
(1)
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Cash and cash equivalents, on a pro forma basis to give effect to the Tysabri Transaction, the Alkermes Shares Transaction, the Debt Redemption and the Share Repurchase, reflect (i) an increase of $3,234.9 million, representing the upfront payment of $3.25 billion that will be paid by Biogen International to us upon consummation of the Tysabri Transaction in accordance with the terms of the Tysabri Transaction, plus $24.9 million relating to inventory that is expected to be transferred to Biogen International upon closing of the Tysabri Transaction (estimated based on the carrying amount of Tysabri inventory included in held for sale assets as of December 31, 2012), less estimated transaction costs of $40.0 million; (ii) an increase of $169.7 million, representing the net cash proceeds from the sale of our remaining 7.75 million ordinary shares of Alkermes plc; (iii) the repayment of the $600.0 million of aggregate principal amount of the 6.25% Notes due 2019, the payment of a make-whole redemption premium of $115.4 million, accrued interest of $9.3 million and estimated transaction costs of $5.0 million; and (iv) the aggregate repurchase amount of $1.0 billion in connection with the Share Repurchase, and estimated associated transaction costs of $5.0 million.
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(2)
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Shareholders’ equity, on a pro forma basis to give effect to the Tysabri Transaction, the Alkermes Shares Transaction, the Debt Redemption and the Share Repurchase, includes the following non-recurring items: (i) the estimated net gain after tax on divestment of the Tysabri business as a result of the Tysabri Transaction of $2,514.8 million (comprised of the upfront payment of $3.25 billion, plus $24.9 million relating to inventory that is expected to be transferred to Biogen International upon closing of the Tysabri Transaction (estimated based on the carrying amount of Tysabri inventory included in held for sale assets as of December 31, 2012), less estimated transaction costs of $40.0 million, less the write-off of the Tysabri assets classified as assets held for sale of $220.1 million as of December 31, 2012, and less estimated tax of approximately $500 million); (ii) a credit to additional paid-in capital, in connection with the Tysabri Transaction, of approximately $42.0 million relating to the recognition of tax windfalls associated with equity awards for which we had recorded no income statement expense; and (iii) a gain on disposal of the 7.75 million ordinary shares of Alkermes plc of approximately $26.2 million (comprised of net cash proceeds of $169.7 million, less the carrying amount of $143.5 million as of December 31, 2012, of the 7.75 million ordinary shares). The total realized gain on disposal of the 7.75 million of Alkermes plc of ordinary shares is expected to be $43.2 million, which includes a previously unrealized gain of $17.0 million related to the 7.75 million ordinary shares that was included in actual shareholders’ equity as of December 31, 2012; (iv) a debt retirement charge of $135.2 million comprised of a make-whole redemption premium of $115.4 million, estimated transaction costs of $5.0 million, and the write-off of deferred transaction costs related to the 6.25% Notes of $11.8 million; and (v) a reduction in shareholders’ equity of $1,000.5 million (comprised of the aggregate repurchase amount of $1.0 billion and estimated transaction costs of $5.0 million) as a result of the the repurchase and cancellation of Elan Corporation, plc Ordinary Shares as part of the Share Repurchase.
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