IRSH: Elan Corporation PLC: Elan Reports Fourth Quarter and Full-Year 2012 Financial Results

  IRSH: Elan Corporation PLC: Elan Reports Fourth Quarter and Full-Year 2012
  Financial Results

UK Regulatory Announcement

  *Full Year 2012 guidance met; Pro-forma Revenues up 13%; Adjusted EBITDA up
    31%
  *Capital structure strengthened through debt refinancing and Alkermes
    shares sale
  *Tysabri transaction creates greater financial flexibility to grow
    shareholder value - $3.25 billion upfront plus double-digit future
    royalties

DUBLIN

Elan Corporation, plc today reported its fourth quarter and full-year 2012
financial results.

Mr Kelly Martin, CEO said “2012 was a year in which we continued to make
significant progress and adjustments in our business. We achieved top line
revenue growth of 13%; advanced ELND005 into two Phase 2 programs for
neuropsychiatry; strengthened our balance sheet through refinancing and sale
of our Alkermes shares; we remained disciplinedwith our cost structure and
investment decisions. In addition, we demerged our pathology-based drug
discovery platform into a new listed company, Prothena Corporation plc,
enabling shareholders investment choice.”

Mr Martin added “The Tysabri business restructuring announced earlier today
with our collaborator Biogen Idec provides for a meaningful de-risking of the
business. With $3.25 billion in upfront cash and double digit tiered
royalties, we have created the opportunity to diversify our business across
all areas of the industry value chain with tax efficient capital and cash
flow. As we move through 2013 and beyond, the close of the Tysabri transaction
gives us strategic flexibility to add to the shareholder value proposition and
investment thesis by enabling continued prudent and risk justified investment
in our pipeline, selectively adding commercial and clinical assets, and
exploring the return of capital to shareholders at the appropriate time and in
the right manner.”

Mr. Nigel Clerkin, chief financial officer, said, “We were pleased to have
delivered on all of our financial guidance for 2012. The number of patients
taking Tysabri grew by 12% in 2012, and this strong growth drove our recorded
Tysabri revenues to $1.2 billion for the year. Including Tysabri, our Adjusted
EBITDA increased by over 30% in 2012 to $220 million, well ahead of our goal
of $200 million. We successfully refinanced our debt, extending the maturity
and lowering the annual interest expense by one-third. We also recently sold
our remaining shareholding in Alkermes, bringing the total EDT sale proceeds
to $1.05 billion.”

Mr. Clerkin added, “The Tysabri transaction will provide us with greatly
increased strategic flexibility, while maintaining a substantial participation
in the future growth potential of this tremendous product. We expect Tysabri
in-market sales to show further strong growth in 2013, and to increase by
approximately 15% over the $1.6 billion achieved in 2012. Additionally, we
expect our operating expenses, excluding Tysabri, to be substantially lower
than in 2012, and to be in the range of $170-190 million for the year.”

Unaudited Consolidated U.S. GAAP Income Statement Data
Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011      2012                                         2011       2012
US$m       US$m                                            US$m        US$m
                    Continuing Operations                          
0.4        0.2       Revenue (see page 8)                  4.0         0.2
—          —         Cost of goods sold                    0.8         0.2
0.4        0.2       Gross margin                          3.2         —
                                                                       
                     Operating Expenses (see page 12)
30.9       26.8      Selling, general and administrative   107.2       113.6
25.5       21.5      Research and development              106.8       95.0
21.4       59.3      Other net charges (see page 13)       24.3        168.9
77.8       107.6     Total operating expenses              238.3       377.5
(77.4)     (107.4)   Operating loss                        (235.1)     (377.5)
                                                                       
                     Net Interest and Investment Gains
                     and Losses
16.7       12.4      Net interest expense                  104.9       56.6
17.2       25.8      Net loss on equity method             81.1        221.8
                     investments
—          1.2       Impairment of investments             —           1.2
47.0       76.1      Net charge on debt retirement         47.0        76.1
(0.1)      —         Net investment gains                  (2.6)       —
80.8       115.5     Net interest and investment gains     230.4       355.7
                     and losses
                                                                       
(158.2)    (222.9)   Net loss from continuing operations   (465.5)     (733.2)
                     before tax
31.7       (314.2)   Provision for/(benefit from) income   (12.0)      (360.5)
                     taxes
(189.9)    91.3      Net income/(loss) from continuing     (453.5)     (372.7)
                     operations
                                                                       
                     Discontinued Operations
                     Net income from discontinued
55.2       61.5      operations, net of tax (see page      1,014.0     235.3
                     17)
(134.7)    152.8     Net income/(loss)                     560.5       (137.4)
                                                                       
                     Basic net income/(loss) per
(0.32)     0.15      ordinary share - continuing           (0.77)      (0.63)
                     operations
                     Basic net income/(loss) per
0.09       0.10      ordinary share – discontinued         1.73        0.40
                     operations
                     Basic weighted average number of
589.2      594.3     ordinary shares outstanding (in       587.6       592.4
                     millions) – continuing and
                     discontinued operations
                     Diluted net income/(loss) per
(0.32)     0.15      ordinary share - continuing           (0.77)      (0.63)
                     operations
                     Diluted net income/(loss) per
0.09       0.10      ordinary share – discontinued         1.73        0.40
                     operations
                     Diluted weighted average number of
589.2      599.8     ordinary shares outstanding (in       587.6       592.4
                     millions) – continuing and
                     discontinued operations
                                                                       

Unaudited Non-GAAP Financial Information – Adjusted EBITDA
                                                                 
Three Months Ended   Non-GAAP Financial Information        Twelve Months Ended
December 31          Reconciliation Schedule               December 31
2011      2012                                         2011       2012
US$m       US$m                                            US$m        US$m
                                                                       
(134.7)    152.8     Net income/(loss)                     560.5       (137.4)
                     Net income/(loss) from discontinued
                     operations:
(67.7)     (81.2)    Net income from Tysabri               (270.4)     (302.0)
7.6        19.5      Net loss from Prothena                22.8        46.2
4.9        0.2       Net (income)/loss from EDT            (766.4)     20.5
(189.9)    91.3      Net income/(loss) from continuing     (453.5)     (372.7)
                     operations
16.7       12.4      Net interest expense                  104.9       56.6
31.7       (314.2)   Provision for/(benefit from) income   (12.0)      (360.5)
                     taxes
3.3        2.1       Depreciation and amortization         14.8        11.5
(0.1)      —         Amortized fees                        (0.5)       (0.3)
(138.3)    (208.4)   EBITDA from continuing operations     (346.3)     (665.4)
5.4        4.5       Share-based compensation              21.6        29.3
21.4       59.3      Other net charges                     24.3        168.9
17.2       25.8      Net loss on equity method             81.1        221.8
                     investments
—          1.2       Impairment of investments             —           1.2
47.0       76.1      Net charge on debt retirement         47.0        76.1
(0.1)      —         Net investment gains                  (2.6)       —
(47.4)     (41.5)    Adjusted EBITDA from continuing       (174.9)     (168.1)
                     operations^(1)
                                                                       

^(1) A reconciliation of Adjusted EBITDA to net income/(loss) on a pro forma
basis, including the results of the Tysabri business for the three and twelve
months ended December 31, 2011 and 2012, is set out in Appendix I and Appendix
II. A reconciliation of Adjusted EBITDA from discontinued operations to net
income/(loss) from discontinued operations for the three and twelve months
ended December 31, 2011 and 2012 is set out in Appendix III and IV.

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 income/(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, net loss on equity method investment, impairment of
investments, net charge on debt retirement and net investment gains. 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     December 31
                                                 2011          2012
                                                   US$m            US$m
Assets
Current Assets
Cash and cash equivalents                          271.7           431.3
Restricted cash and cash equivalents — current     2.6             2.6
Investment securities — current                    0.3             167.9
Held for sale assets                               —               220.1
Deferred tax assets — current                      26.2            380.9
Other current assets                               217.2           206.7
Total current assets                               518.0           1,409.5
                                                                   
Non-Current Assets
Intangible assets, net                             309.9           99.0
Property, plant and equipment, net                 83.2            12.7
Equity method investments                          675.8           14.0
Investment securities — non-current                9.8             8.6
Deferred tax assets — non-current                  118.9           64.6
Restricted cash and cash equivalents —             13.7            13.7
non-current
Other assets                                       24.5            18.1
Total Assets                                       1,753.8         1,640.2
                                                                   
Liabilities and Shareholders’ Equity
Accounts payable, accrued and other liabilities    337.0           422.0
Long-term debt                                     615.0           600.0
Shareholders’ equity                               801.8           618.2
Total Liabilities and Shareholders’ Equity         1,753.8         1,640.2
                                                                   

Movement in Shareholders’ Equity
                                                              
Three Months                                                     Twelve Months
ended                                                            ended
December 31,                                                  December 31,
2012                                                             2012
US$m                                                             US$m
601.6          Opening shareholders’ equity                      801.8
152.8          Net income/(loss) for the period                  (137.4)
(105.7)        Prothena distribution                             (105.7)
6.3            Share-based compensation                          45.9
(24.7)         Unrealized movements on defined benefit pension   (24.7)
4.0            Issuance of share capital                         20.8
(16.1)         Increase/(decrease) in net unrealized gain on     17.5
               investment securities
618.2          Closing shareholders’ equity                      618.2
                                                                 

Unaudited Consolidated U.S. GAAP Cash Flow Data
Three Months Ended                                    Twelve Months Ended
December 31                                             December 31
2011      2012                                      2011         2012
US$m       US$m                                         US$m           US$m
                                                               
(47.4)     (41.5)    Adjusted EBITDA from continuing    (174.9)        (168.1)
                     operations
77.1       92.3      Adjusted EBITDA from               387.9          361.7
                     discontinued operations^(1)
(9.1)      (8.6)     Net interest and tax               (98.1)         (52.6)
(17.8)     (62.7)    Other net charges                  (153.0)   ^(2) (105.8)
(27.1)     —         EDT divestment transaction costs   (34.1)         —
(11.8)     46.8      Working capital                    (48.0)         20.1
                     decrease/(increase)
(36.1)     26.3      Cash flows provided by/(used in)   (120.2)        55.3
                     operating activities
(7.4)      (2.7)     Net purchases of tangible and      (28.5)         (12.3)
                     intangible assets
0.2        (0.2)     Net proceeds from                  2.2            (0.7)
                     sale/(purchase) of investments
—          (28.1)    Funding provided to equity         —              (76.9)
                     method investment (Janssen AI)
—          —         Purchase of equity method          (20.0)         —
                     investment (Proteostasis)
—          —         Net proceeds from sale of equity   —              381.1
                     method investment (Alkermes plc)
—          —         Net proceeds from sale of EDT      500.0          —
                     business
—          5.0       Receipt of deferred                —              12.0
                     consideration (Prialt)
—          (125.0)   Prothena distribution              —              (125.0)
(695.5)    (90.6)    Cash used in financing             (691.1)        (73.9)
                     activities
1.3        —         Restricted cash and cash           206.8     ^(2) —
                     equivalents movement
(737.5)    (215.3)   Net cash movement                  (150.8)        159.6
1,009.2    646.6     Beginning cash balance             422.5          271.7
271.7      431.3     Cash and cash equivalents at end   271.7          431.3
                     of period
                                                                       

^(1) A reconciliation of Adjusted EBITDA to net income/(loss) on a pro forma
basis, including the results of the Tysabri business for the three and twelve
months ended December 31, 2011 and 2012, is set out in Appendix I and Appendix
II. In addition, a reconciliation of Adjusted EBITDA from discontinued
operations to net income/(loss) from discontinued operations for the three and
twelve months ended December 31, 2011 and 2012 is set out in Appendix III and
IV.

^(2) Other charges for the twelve months ended December 31, 2011 includes the
settlement reserve charge outflow of $206.3 million related to the Zonegran
settlement that was paid in March 2011. The restricted cash and cash
equivalents movement includes the $203.7 million that was held in escrow in
relation to this settlement.

Overview

Tysabri^® Transaction

On February 6, 2013, Elan announced that it had entered into an asset purchase
agreement with Biogen Idec Inc. (Biogen) to transfer to Biogen all Tysabri
Intellectual Property (IP) and other assets related to Tysabri. In accordance
with the terms of the transaction, upon close, the existing collaboration
arrangements with Biogen will be terminated and Biogen will pay an upfront
payment of $3.25 billion to Elan and continuing royalties on Tysabri in-market
sales. The transaction is expected to close in the first half of 2013, subject
to the satisfaction of certain conditions, including customary regulatory
approvals.

As a result of the decision to divest of the Tysabri IP and other assets, the
results of Tysabri that are included in the Consolidated Income Statement for
the three and twelve months ended December 31, 2012, are presented as a
discontinued operation and the comparative amounts have been restated to
reflect this classification. The Tysabri disposal group assets are classified
as held for sale.

To aid the review of the operating performance of Elan, the analysis below of
the financial results for the fourth quarter and full-year 2012 focuses
primarily on the pro forma results for Elan including Tysabri, as if it were
still a continuing operation, as set out in Appendix I and Appendix II on
pages 22 and 23.

Quarter 4, 2012 Pro Forma Operating Results (including Tysabri)

Total revenue for the fourth quarter of 2012 increased by 18% to $319.8
million from $271.0 million for the same period of 2011, driven by a 14%
increase in Tysabri global in-market net sales to $432.8 million in the fourth
quarter of 2012, from $379.6 million in the fourth quarter of 2011. Worldwide,
the number of patients on Tysabri increased by 12% to approximately 72,700
patients at the end of December 2012, from approximately 64,700 patients
(revised) at the end of December 2011.

While revenues grew by 18%, cash operating expenses remained flat over the
fourth quarter of 2011. Consequently, Adjusted EBITDA increased by 61% to
$60.2 million for the fourth quarter of 2012, from $37.5 million for the same
period of 2011.

A reconciliation of pro forma Adjusted EBITDA to net income/(loss) is
presented in Appendix I on page 22.

Full-Year 2012 Pro Forma Operating Performance (including Tysabri)

Total revenue for the full-year 2012 increased by 13% to $1,202.8 million from
$1,068.1 million for the full-year 2011, as a result of an 8% growth in global
in-market net sales of Tysabri to $1,631.1 million for the full-year 2012,
from $1,510.6 million for the full-year 2011.

Adjusted EBITDA increased by 31% to $220.2 million for the full-year 2012 from
$168.6 million for the full-year 2011, principally reflecting the continued
growth of Tysabri, with cash operating expenses held flat year over year.

A reconciliation of pro forma Adjusted EBITDA to net income/(loss) is
presented in Appendix II on page 23.

Quarter 4, 2012 Operating Performance (excluding Tysabri)

Adjusted EBITDA losses from continuing operations were $41.5 million for the
fourth quarter of 2012, compared to $47.4 million for the fourth quarter of
2011. Operating loss excluding other net charges for the fourth quarter of
2012 decreased to $48.1 million, compared to $56.0 million for the fourth
quarter of 2011. These improvements principally reflect the impact of the
operations restructuring in the fourth quarter of 2012.

The net income from continuing operations for the fourth quarter of 2012 of
$91.3 million includes other charges of $59.3 million (see page 13), a net
charge on debt retirement of $76.1 million (see page 14) and a $304.2 million
tax credit primarily related to the recognition of a deferred tax asset
expected to be utilized in relation to the expected gain on sale of Tysabri in
2013 (see page 16). The net loss from continuing operations for the fourth
quarter of 2011 of $189.9 million includes other charges of $21.4 million and
a net charge on debt retirement of $47.0 million.

The net income of $152.8 million (2011: $134.7 million net loss) includes net
income from discontinued operations of $61.5 million (2011: $55.2 million),
related to the Tysabri, Prothena and EDT businesses. For further information
please refer to page 17 and Appendix III on page 24.

Full-Year 2012 Operating Performance (excluding Tysabri)

Adjusted EBITDA losses from continuing operations decreased to $168.1 million
for the full year 2012, from $174.9 million for the full-year 2011. Operating
loss excluding other net charges for the full-year 2012 decreased to $208.6
million, from $210.8 million for the full-year 2011. These improvements
reflect lower operating expenses, following the operations restructuring in
the fourth quarter of 2012.

The net loss from continuing operations for the full-year 2012 of $372.7
million includes other net charges of $168.9 million (see page 13), a net
charge on debt retirement of $76.1 million (see page 14), an impairment charge
of $117.3 million related to the Janssen AI equity method investment (see page
15) and a $304.2 million tax credit related primarily to the recognition of a
deferred tax asset expected to be utilized in relation to the expected gain on
sale of Tysabri in 2013 (see page 16). The net loss from continuing operations
for the full-year 2011 of $453.5 million includes other net charges of $24.3
million and a net charge on debt retirement of $47.0 million.

The net loss of $137.4 million (2011: $560.5 million net income) includes net
income from discontinued operations of $235.3 million (2011: $1,014.0
million), related to the Tysabri, Prothena and EDT businesses. For further
information please refer to page 17 and Appendix IV on page 25.

Pro Forma Revenue (including Tysabri)

For the fourth quarter of 2012, revenue increased by 18% to $319.8 million
from $271.0 million for the fourth quarter of 2011. For the full-year 2012,
revenue increased by 13% to $1,202.8 million from $1,068.1 million for the
full-year 2011.

Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011       2012                                        2011       2012
US$m        US$m                                           US$m        US$m
                    Product revenue                                
(0.4)       —        Maxipime                              0.4         —
0.4         —        Azactam                               0.9         (0.5)
0.4         0.2      Royalties                             2.7         0.7
0.4         0.2      Total revenue from continuing         4.0         0.2
                     operations
196.4       243.0    Tysabri – U.S.                        746.5       886.0
74.2        76.6     Tysabri – ROW                         317.6       316.6
270.6       319.6    Total Tysabri                         1,064.1     1,202.6
271.0       319.8    Total pro forma revenue               1,068.1     1,202.8
                                                                       

Elan ceased distributing Azactam and Maxipime in 2010. The revenue and
adjustments for these products in 2011 and 2012 relates to adjustments to
discounts and allowances associated with sales prior to the cessation of
distribution.

Tysabri

Global in-market net sales of Tysabri can be analyzed as follows:

Three Months Ended                                     Twelve Months Ended
December 31                                              December 31
2011       2012                                      2011       2012
US$m        US$m                                         US$m        US$m
196.4      243.0    United States                       746.5      886.0
183.2       189.8    ROW                                 764.1       745.1
379.6       432.8    Total Tysabri in-market net sales   1,510.6     1,631.1
                                                                     

At the end of December 2012, approximately 72,700 patients were on therapy
worldwide, including approximately 33,400 commercial patients in the United
States and approximately 38,400 commercial patients in the ROW, representing a
2% increase over the approximately 71,100 patients who were on therapy at the
end of September 2012, and 12% over the approximately 64,700 patients
(revised) who were on therapy at the end of December 2011.

For the fourth quarter of 2012, Tysabri global in-market net sales increased
by 14% to $432.8 million from $379.6 million for the same period of 2011 and
units sold increased by 15%. For the full-year 2012, Tysabri global in-market
net sales increased by 8% to $1,631.1 million from $1,510.6 million for the
full-year 2011, while units sold increased by 13%.

Tysabri was developed in collaboration with Biogen Idec, Inc. (Biogen Idec).
Until the Tysabri Transaction closes, Tysabri continues to be marketed in
collaboration with Biogen Idec and, subject to certain limitations imposed by
the parties, Elan shares with Biogen Idec most of the development and
commercialization costs for Tysabri. Biogen Idec is responsible for
manufacturing the product. In the United States, Elan purchases Tysabri from
Biogen Idec and is responsible for distribution. Consequently, Elan records as
revenue the net sales of Tysabri in the U.S. market. Elan purchases product
from Biogen Idec at a price that includes the cost of manufacturing, plus
Biogen Idec’s gross margin on Tysabri, and this cost, together with royalties
payable to other third parties, is included in cost of sales.

Outside of the United States, Biogen Idec is responsible for distribution and
Elan records as revenue its share of the profit or loss on these sales of
Tysabri, plus Elan’s directly-incurred expenses on these sales, which are
primarily comprised of royalties that Elan incurs and are payable by Elan to
third parties and are reimbursed by the collaboration.

Tysabri – U.S.

At the end of December 2012, approximately 33,400 patients were on commercial
therapy, which represents an increase of 2% over the approximately 32,900
patients who were on therapy at the end of September 2012 and 11% over the
approximately 30,000 patients who were on therapy at the end of December 2011.

In the U.S. market, Elan recorded net sales of $243.0 million for the fourth
quarter of 2012, an increase of 24% over net sales of $196.4 million in the
same period of 2011, principally reflecting a 17% increase in units sold,
along with the impact of price increases. For the full year, Elan recorded net
sales of $886.0 million, an increase of 19% over full year 2011, reflecting a
13% increase in units sold, along with price increases. Almost all of these
sales are for the multiple sclerosis (MS) indication.

Tysabri – ROW

At the end of December 2012, approximately 38,400 patients, principally in the
European Union, were on commercial therapy, an increase of 3% over the
approximately 37,400 patients who were on therapy at the end of September 2012
and 13% over the approximately 34,100 patients (revised) who were on therapy
at the end of December 2011.

ROW in-market net sales increased 4% in the fourth quarter of 2012 to $189.8
million, from $183.2 million for the same period of 2011 principally
reflecting a 13% increase in units sold, offset by unfavorable price and
foreign currency movements, including the 4% decrease in the average
dollar-euro exchange rate from the fourth quarter of 2011 to the fourth
quarter of 2012.

For the full-year 2012, ROW in-market net sales decreased by 2% to $745.1
million, from $764.1 million in 2011. This principally reflects a 13% increase
in units sold, offset by a $50.2 million increase in the Italian revenue
reserve, along with unfavorable price and foreign currency movements,
including the 8% decrease in the average dollar-euro exchange rate from the
full-year 2011 to the full-year 2012.

The revenue reserve for Italy relates to a notification received by Biogen
Idec from the Italian National Medicines Agency during the fourth quarter of
2011, stating that sales of Tysabri had exceeded a limit established by the
agency in 2007. Biogen Idec filed an appeal in December 2011 seeking a ruling
that Biogen Idec’s interpretation is valid and that the position of the agency
is unenforceable. As a result of this dispute, Biogen Idec deferred $17.0
million of revenue recognized on in-market net sales of Tysabri in Italy
during the fourth quarter of 2012, having previously deferred $47.0 million of
revenue in Italy during the first nine months of 2012 and $13.8 million during
the fourth quarter of 2011. Elan expects that Biogen Idec will continue to
defer a portion of in-market revenues on future sales of Tysabri for Italy
until the matter is resolved. As a consequence of this deferral of in-market
net sales by Biogen Idec, Elan has deferred $8.1 million of revenue in the
fourth quarter of 2012 related to these sales, $30.6 million in the full-year
2012 and $37.5 million to date, reflecting the operating and accounting
arrangements between the companies. This matter has resulted in the deferral
of approximately $22 million of Adjusted EBITDA for the full year 2012.

Until the Tysabri Transaction closes, in the ROW market, Biogen Idec is
responsible for distribution, and Elan records as revenue its share of the
profit or loss on ROW sales of Tysabri, plus Elan’s directly-incurred expenses
on these sales. As a result, in the ROW market, Elan recorded net revenue of
$76.6 million for the fourth quarter of 2012 compared to $74.2 million for the
fourth quarter of 2011.

Elan’s net Tysabri ROW revenue is calculated as follows:

Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011      2012                                         2011       2012
US$m       US$m                                            US$m        US$m
183.2     189.8     ROW in-market sales by Biogen Idec    764.1      745.1
(85.0)     (83.2)    ROW operating expenses incurred by    (349.3)     (316.3)
                     the collaboration
98.2       106.6     ROW operating profit incurred by      414.8       428.8
                     the collaboration
49.1       53.3      Elan’s 50% share of Tysabri ROW       207.4       214.4
                     collaboration operating profit
25.1       23.3      Elan’s directly incurred costs        110.2       102.2
74.2       76.6      Net Tysabri ROW revenue               317.6       316.6
                                                                       

Pro Forma Operating Expenses (including Tysabri)

Selling, general and administrative

Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011       2012                                        2011       2012
US$m        US$m                                           US$m        US$m
26.1       21.1     Cash expenses                         85.0       84.5
2.1         1.9      Depreciation and amortization         9.5         7.9
2.7         3.8      Share-based compensation              12.7        21.2
30.9        26.8     SG&A expenses – continuing            107.2       113.6
                     operations
26.2        32.1     Tysabri SG&A expenses                 96.1        113.2
57.1        58.9     Pro forma SG&A expenses               203.3       226.8
                                                                       

SG&A expenses increased slightly to $58.9 million for the fourth quarter of
2012, from $57.1 million for the same period of 2011, primarily as a result of
increased investment in Tysabri commercial activities in the US, offset by
reduced non-Tysabri cash expenses.

For the full-year, SG&A expenses increased to $226.8 million, from $203.3
million in 2011, reflecting increased Tysabri commercial expenses and higher
non-cash share-based compensation expense. Excluding Tysabri, cash SG&A
expenses were flat over 2011.

Research and development

Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011       2012                                        2011       2012
US$m        US$m                                           US$m        US$m
21.6       20.7     Cash expenses                         92.9       83.4
1.2         0.1      Depreciation and amortization         5.0         3.5
2.7         0.7      Share-based compensation              8.9         8.1
25.5        21.5     R&D expenses – continuing             106.8       95.0
                     operations
16.0        16.0     Tysabri R&D expenses                  67.7        62.0
41.5        37.5     Pro forma R&D expenses                174.5       157.0
                                                                       

R&D expenses decreased by 10% for the fourth quarter and full-year 2012, to
$37.5 million and $157.0 million respectively, from $41.5 million and $174.5
million in the fourth quarter and full year 2011, respectively. These
decreases reflect the impact of the operations restructuring during the fourth
quarter of 2012 and a reduction in research activities in 2012 compared to
2011.

Clinical update

In November 2012, Elan and Biogen Idec submitted applications to the U.S. Food
and Drug Administration and European Medicines Agency requesting updates to
the Tysabri labels. The applications request an expanded indication that would
include first-line use for people living with certain relapsing forms of
multiple sclerosis who have tested negative for antibodies to the John
Cunningham Virus (JC virus). A formal assessment of both applications is
ongoing.

In November 2012, Elan enrolled the first patient in a Phase 2 clinical trial
of ELND005 for the treatment of agitation / aggression in patients with
moderate to severe Alzheimer’s disease (AD). This follows the commencement in
August 2012 of a Phase 2 clinical trial of ELND005 as an adjunctive
maintenance treatment in patients with Bipolar I Disorder to delay the time to
occurrence of mood episodes.

In October 2012, ELND005 was featured during one oral presentation and on two
poster presentations at the 5th International Conference on Clinical Trials
for Alzheimer's Disease. The presentations focused on neuropsychiatric
symptoms at different stages of AD and correlations of ELND005 exposures to
neuropsychiatric outcomes in a 78 week Phase 2 study in mild moderate AD. In
addition, data on the effect of ELND005 on agitation / aggression in AD
dementia were highlighted.

Other net charges

Other net charges for the three and twelve months ended December 31, 2012 and
2011 were as follows:

Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011       2012                                        2011       2012
US$m        US$m                                           US$m        US$m
9.2        41.0     Facilities and onerous lease costs    11.9       41.0
8.5         9.4      Severance, restructuring and other    8.7         42.4
                     costs
3.7         0.9      Asset impairment charges              3.7         66.5
—           8.0      Cambridge Collaboration charge        —           8.0
—           —        In-process research and development   —           11.0
21.4        59.3     Other charges – continuing            24.3        168.9
                     operations
0.6         0.6      Tysabri other charges                 1.6         4.2
22.0        59.9     Pro forma other charges               25.9        173.1
                                                                       

In the fourth quarter and full-year 2012, other net charges primarily includes
severance, facilities, asset impairment and other restructuring charges
associated with the closure of the South San Francisco facility and related
reduction in headcount, following the announcement during the third quarter of
2012 of the separation of the Prothena business and cessation of the remaining
early stage research activities.

Other net charges for the fourth quarter and full-year 2012 also include an
$8.0 million charge related to the termination of our Collaboration Agreement
with the University of Cambridge.

Other net charges for the full-year 2012 include an $11.0 million in-process
and development expense, related to a milestone paid to Transition
Therapeutics upon the commencement of the Phase 2 bipolar study with ELND005
during the third quarter.

Net Interest and Investment Gains and Losses

Net interest expense

For the fourth quarter of 2012, net interest expense decreased by 26% to $12.4
million, from $16.7 million for the fourth quarter of 2011. This decrease is
primarily due to the debt refinancing transactions in the fourth quarter of
2012, as described further below.

Debt offering and debt redemption

During the fourth quarter of 2012, Elan completed the offering at par of
$600.0 million in aggregate principal amount of 2019 Fixed Rate Notes. These
new notes carry a coupon of 6.25% per year, payable semi-annually in arrears
beginning April 15, 2013. Using the proceeds of this debt offering, along with
available cash balances, Elan redeemed the outstanding $624.5 million in
aggregate principal amount of 8.75% Senior Notes due 2016. Elan recorded a net
charge on debt retirement of $76.1 million in the fourth quarter of 2012,
comprised of early redemption premiums of $58.0 million and non-cash write off
of unamortized deferred financing costs of $18.1 million.

Following the completion of these debt refinancing transactions, the principal
amount of Elan’s debt has been reduced from $624.5 million at September 30,
2012, to $600.0 million at December 31, 2012, the coupon has decreased from
8.75% to 6.25% and the maturity of the debt has been extended by approximately
three years from October 2016 to October 2019. `

Net loss on equity method investments

The losses on equity method investments for the three and twelve months ended
December 31, 2012 and 2011 can be analyzed as follows:

Three Months Ended                            Twelve Months Ended
December 31                                     December 31
2011       2012                             2011       2012
US$m        US$m                                US$m        US$m
16.0       25.2     Janssen AI                 78.4       101.2
—           —        Impairment of Janssen AI   —           117.3
1.2         0.6      Proteostasis               2.7         3.3
17.2        25.8     Total                      81.1        221.8
                                                            

Janssen AI

As part of Elan’s 2009 transaction with Johnson & Johnson, Janssen AI, a
subsidiary of Johnson & Johnson, acquired substantially all of Elan’s assets
and rights related to its Alzheimer’s Immunotherapy Program (AIP)
collaboration with Wyeth (which has been acquired by Pfizer). Under the terms
of this transaction, Johnson & Johnson provided an initial $500.0 million
funding to Janssen AI and Elan has a 49.9% shareholding in Janssen AI. Any
additional funding in excess of the initial $500.0 million funding commitment
is required to be funded equally by Elan and Johnson & Johnson up to a maximum
additional commitment of $400.0 million in total.

During the first quarter of 2012, the remaining $57.6 million of the initial
$500.0 million funding commitment provided by Johnson & Johnson to Janssen AI
was utilized and as a result, Elan provided funding of $48.7 million to
Janssen AI during the second quarter of 2012 and a further $28.2 million
during the fourth quarter of 2012. In addition, Elan provided funding of $29.9
million to Janssen AI in January 2013. Following the provision of this funding
in January 2013, Elan’s remaining funding commitment to Janssen AI is $93.2
million. Elan recorded a net loss of $25.2 million on the equity method
investment in the fourth quarter of 2012, relating to its share of the fourth
quarter losses of Janssen AI.

On August 6, 2012, Johnson & Johnson issued a press release announcing the
discontinuation of the development of bapineuzumab intravenous in mild to
moderate Alzheimer’s disease based on the co-primary clinical endpoints not
being met in the Janssen AI-led Phase 3 clinical studies (Study 301 and 302).
As a result of the discontinuation, Elan recorded a non-cash impairment charge
of $117.3 million against the carrying value of the equity method investment
in Janssen AI during the third quarter of 2012, representing the full carrying
value of Elan’s 49.9% share of the Janssen AI AIP assets.

Proteostasis

Elan made a $20.0 million equity investment in Proteostasis Therapeutics, Inc
(Proteostasis) in May 2011, which represents approximately 24% of the equity
of Proteostasis. The net loss recorded on the equity method investment in the
fourth quarter of 2012 was $0.6 million.

Provision for Income Taxes

Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011     2012                                          2011      2012
US$m      US$m                                             US$m       US$m
31.7     (314.2)    Provision for / (benefit from)        (12.0)    (360.5)
                     income taxes– continuing operations
12.7      16.0       Tysabri provision for income taxes    56.4       65.7
44.4      (298.2)    Pro forma provision for/(benefit      44.4       (294.8)
                     from) income taxes
                                                                      

The benefit from income taxes for the fourth quarter and full-year 2012
includes a $304.2 million tax credit related primarily to the recognition of a
deferred tax asset expected to be utilized in relation to the expected gain on
sale of Tysabri in 2013.

The provision for income taxes for the fourth quarter and full-year 2011
includes a non-cash U.S. state tax charge of $40.0 million related to the
write-down of U.S. state deferred tax assets, following a beneficial change in
certain state tax legislation which resulted in Elan no longer expecting to
utilize certain state tax credits and loss carry forwards prior to their
expiry, due to a lower expected tax burden in future years.

Discontinued Operations

Net income from discontinued operations for the three and twelve months ended
December 31, 2012 and December 31, 2011 includes the following:

Three Months Ended                                       Twelve Months Ended
December 31                                                December 31
2011      2012                                         2011       2012
US$m       US$m                                            US$m        US$m
67.7      81.2      Tysabri                               270.4      302.0
(7.6)      (19.5)    Prothena                              (22.8)      (46.2)
(4.9)      (0.2)     EDT                                   766.4       (20.5)
55.2       61.5      Net income from discontinued          1,014.0     235.3
                     operations, after tax
                                                                       

The net income and Adjusted EBITDA from discontinued operations for the three
and twelve months ended December 31, 2011 and 2012 are set out in detail in
Appendix III and IV.

Tysabri

On February 6, 2013, Elan announced that it has entered into an asset purchase
agreement with Biogen to transfer to Biogen all Tysabri IP and other assets
related to Tysabri. In accordance with the terms of the transaction, upon
close, the existing collaboration arrangements with Biogen will be terminated
and Biogen will pay an upfront payment of $3.25 billion to Elan and continuing
royalties on Tysabri in-market sales. The continuing royalties include a
royalty of 12% of global net sales of Tysabri during the first 12 months
following the closing of the transaction. Thereafter, we will earn a royalty
of 18% of global net sales up to $2.0 billion each year, and a 25% royalty on
annual global net sales above $2.0 billion. The transaction is expected to
close in the first half of 2013, subject to the satisfaction of certain
conditions, including customary regulatory approvals.

As a result of the decision to divest of the Tysabri IP and other assets, the
results of Tysabri that are included in the Consolidated Income Statement for
the three and twelve months ended December 31, 2012, are presented as a
discontinued operation and the comparative amounts have been restated to
reflect this classification.

The assets of the Tysabri business have been presented as held for sale as of
December 31, 2012. The major classes of assets presented as held for sale are
as follows:

                          December 31,
                        2012
                          US$m
Held for sale assets    
Goodwill                  110.8
Other intangible assets   84.4
Inventory                 24.9
Total                     220.1
                          

Prothena

On December 21, 2012, Elan announced the completion of the spin-off to
shareholders of a substantial portion of its drug discovery business platform,
which is referred to as the “Prothena business”, into a new, publicly traded
company incorporated in Ireland named Prothena Corporation, plc (“Prothena”).
Elan retains an 18% equity holding in Prothena which has been recognized as an
available for sale investment. The issued share capital of Prothena was
admitted to trading on the NASDAQ Global Market on December 21, 2012. Prothena
focuses on the discovery and development of novel antibodies for the potential
treatment of a broad range of diseases that involve protein misfolding or cell
adhesion. The results of the Prothena business up to the date of separation on
December 20, 2012 are presented as part of the net income on discontinued
operations.

Under the terms of the demerger, Elan shareholders received one Prothena
ordinary share for every 41 Elan ordinary shares or ADSs held. In addition, a
wholly owned subsidiary of Elan subscribed for 3.2 million Prothena shares
representing 18% of the total outstanding ordinary shares of Prothena.
Accordingly, on completion of the transaction, Elan shareholders directly and
indirectly own 100% of Prothena by virtue of their direct ownership of 82% of
Prothena’s outstanding shares and indirect ownership of 18% of Prothena’s
outstanding shares.

The results of the Prothena business that are included in the Consolidated
Income Statement for the three and twelve months ended December 31, 2012 are
presented as a discontinued operation and the comparative amounts have been
restated to reflect this classification. Transaction and other costs
associated with the Prothena separation of $17.9 million were incurred during
2012 and have been reported in the net income from discontinued operations
reporting line.

Elan Drug Technologies

In September 2011, Alkermes plc and Elan completed the merger between
Alkermes, Inc. and EDT. Alkermes, Inc. and EDT were combined under a new
holding company incorporated in Ireland named Alkermes plc. In connection with
the transaction, Elan received $500.0 million in cash and 31.9million
ordinary shares of Alkermes plc. Elan sold 76% (24.15 million ordinary shares)
of its shareholding in Alkermes plc in March 2012 and received net proceeds of
$381.1 million. Elan continued to hold 7.75 million ordinary shares of
Alkermes plc, representing an approximate 6% equity interest, which had a fair
value of $143.5 million at December 31, 2012.

On January 31, 2013, we announced that we had agreed to sell, on customary
terms, all of our remaining 7.75 million ordinary shares of Alkermes plc. The
sale closed on February 6, 2013 and we received proceeds of approximately
$169.7 million.

The results of EDT are presented as a discontinued operation following the
sale of the Alkermes plc ordinary shares in March 2012, and the comparative
amounts for the fourth quarter and full-year 2011 have been restated to
reflect this classification.

The net loss from discontinued operations for the twelve months ended December
31, 2012 includes a net loss on the Alkermes equity method investment of $7.2
million, and a net loss on the disposal of the Alkermes plc ordinary shares in
March 2012 of $13.3 million.

Guidance

Elan expects to complete the Tysabri transaction in the first half of 2013.
Under GAAP, the current Tysabri business qualifies as a discontinued
operation, and Elan’s 2013 revenues from Tysabri will comprise the 12% royalty
due on in-market net sales of the product from the date of completion.

Elan expects Tysabri in-market sales to increase by approximately 15% in 2013
over the $1.6 billion recorded in 2012.

Excluding Tysabri, aggregate SG&A and R&D expenses are expected to be in the
range of $170 million to $190 million.

Elan expects to contribute approximately $60- $80 million to JAI during 2013.

About Elan

Elan Corporation, plc (NYSE: ELN) is a neuroscience-based biotechnology
company committed to making a difference in the lives of patients and their
families by dedicating itself to bringing innovations in science to fill
significant unmet medical needs that continue to exist around the world. Elan
shares trade on the New York and Irish Stock Exchanges. For additional
information about the Company, please visit www.elan.com.

Forward-Looking Statements

This document contains forward-looking statements about Elan’s financial
condition, results of operations, business prospects, Tysabri and products in
development that involve substantial risks and uncertainties. You can identify
these statements by the fact that they use words such as “anticipate”,
“estimate”, “project”, “target”, “intend”, “plan”, “will”, “believe”, “expect”
and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance or events. Among the factors that
could cause actual results to differ materially from those described or
projected herein are the following: the risk that the Tysabri transaction does
not complete, the potential of Tysabri, which may be severely constrained by
increases in the incidence of serious adverse events (including death)
associated with Tysabri (in particular, by increases in the incidence rate for
cases of PML), or by competition from existing or new therapies (in
particular, oral therapies), and the potential for the successful development
and commercialization of additional products, whether internally or by
acquisition, especially given the separation of the Prothena business which
left us with no material pre-clinical research programs or capabilities;
Elan’s ability to maintain sufficient cash, liquid resources, and investments
and other assets capable of being monetized to meet its liquidity
requirements; the success of our development activities, and research and
development activities in which we retain an interest, including, in
particular, the impact of the announced discontinuation of the development of
bapineuzumab intravenous in mild to moderate Alzheimer’s disease; failure to
comply with anti-kickback, bribery and false claims laws in the United States,
Europe and elsewhere; difficulties or delays in manufacturing and supply of
Tysabri; trade buying patterns; the impact of potential biosimilar
competition, whether restrictive covenants in Elan’s debt obligations will
adversely affect Elan; the trend towards managed care and health care cost
containment, including Medicare and Medicaid; legislation and other
developments affecting pharmaceutical pricing and reimbursement (including, in
particular, the dispute in Italy with respect to Tysabri sales), both
domestically and internationally; failure to comply with Elan’s payment
obligations under Medicaid and other governmental programs; exposure to
product liability (including, in particular, with respect to Tysabri) and
other types of lawsuits and legal defense costs and the risks of adverse
decisions or settlements related to product liability, patent protection,
securities class actions, governmental investigations and other legal
proceedings; Elan’s ability to protect its patents and other intellectual
property; claims and concerns that may arise regarding the safety or efficacy
of Elan’s products or product candidates; interest rate and foreign currency
exchange rate fluctuations and the risk of a partial or total collapse of the
euro; governmental laws and regulations affecting domestic and foreign
operations, including tax obligations; if the Tysabri transaction completes,
whether we are deemed to be an Investment Company or a Passive Foreign
Investment Company; general changes in United States and International
generally accepted accounting principles; growth in costs and expenses; and
the impact of acquisitions, divestitures, restructurings, product withdrawals
and other unusual items. A further list and description of these risks,
uncertainties and other matters can be found in Elan’s Annual Report on Form
20-F for the fiscal year ended December 31, 2011, and in its Reports of
Foreign Issuer on Form 6-K filed with the SEC. Elan assumes no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise.

Appendix I

Unaudited Pro Forma Financial Information

Three Months Ended                              Three Months Ended
December 31, 2011                                 December 31, 2012
Continuing             Pro                        Continuing             Pro
Operations  Tysabri  Forma                      Operations  Tysabri  Forma
                       Elan                                              Elan
US$m        US$m     US$m                    US$m        US$m     US$m
                                                                         
0.4          270.6     271.0     Revenue          0.2          319.6     319.8
—            147.4     147.4     Cost of goods    —            173.7     173.7
                                 sold
0.4          123.2     123.6     Gross margin     0.2          145.9     146.1
                                                                         
                                 Operating
                                 Expenses
                                 Selling,
30.9         26.2      57.1      general and      26.8         32.1      58.9
                                 administrative
25.5         16.0      41.5      Research and     21.5         16.0      37.5
                                 development
21.4         0.6       22.0      Other net        59.3         0.6       59.9
                                 charges
                                 Total
77.8         42.8      120.6     operating        107.6        48.7      156.3
                                 expenses
(77.4)       80.4      3.0       Operating        (107.4)      97.2      (10.2)
                                 income/(loss)
                                 Net interest
80.8         —         80.8      and investment   115.5        —         115.5
                                 gains and
                                 losses
                                 Net
(158.2)      80.4      (77.8)    income/(loss)    (222.9)      97.2      (125.7)
                                 before tax
                                 Provision
31.7         12.7      44.4      for/(benefit     (314.2)      16.0      (298.2)
                                 from) income
                                 taxes
(189.9)      67.7      (122.2)   Net              91.3         81.2      172.5
                                 income/(loss)
                                 Other
                       (12.5)    discontinued                            (19.7)
                                 operations
                       (134.7)   Total net                               152.8
                                 income/(loss)
                                                                         
Adjusted EBITDA Reconciliation Schedule
                                                                         
(189.9)      67.7      (122.2)   Net              91.3         81.2      172.5
                                 income/(loss)
                                 Net interest
80.8         —         80.8      and investment   115.5        —         115.5
                                 gains and
                                 losses
                                 Provision
31.7         12.7      44.4      for/(benefit     (314.2)      16.0      (298.2)
                                 from) income
                                 taxes
                                 Depreciation
3.3          3.2       6.5       and              2.1          3.2       5.3
                                 amortization
(0.1)        —         (0.1)     Amortized fees   —            —         —
5.4          0.7       6.1       Share-based      4.5          0.7       5.2
                                 compensation
21.4         0.6       22.0      Other net        59.3         0.6       59.9
                                 charges
(47.4)       84.9      37.5      Adjusted         (41.5)       101.7     60.2
                                 EBITDA
                                                                         

Appendix II

Unaudited Pro Forma Financial Information

Twelve Months Ended                             Twelve Months Ended
December 31, 2011                                 December 31, 2012
Continuing             Pro                        Continuing             Pro
Operations  Tysabri  Forma                      Operations  Tysabri  Forma
                       Elan                                              Elan
US$m        US$m     US$m                    US$m        US$m     US$m
                                                                         
4.0          1,064.1   1,068.1   Revenue          0.2          1,202.6   1,202.8
0.8          571.9     572.7     Cost of goods    0.2          655.5     655.7
                                 sold
3.2          492.2     495.4     Gross margin     —            547.1     547.1
                                                                         
                                 Operating
                                 Expenses
                                 Selling,
107.2        96.1      203.3     general and      113.6        113.2     226.8
                                 administrative
106.8        67.7      174.5     Research and     95.0         62.0      157.0
                                 development
24.3         1.6       25.9      Other net        168.9        4.2       173.1
                                 charges
                                 Total
238.3        165.4     403.7     operating        377.5        179.4     556.9
                                 expenses
(235.1)      326.8     91.7      Operating        (377.5)      367.7     (9.8)
                                 income /(loss)
                                 Net interest
230.4        —         230.4     and investment   355.7        —         355.7
                                 gains and
                                 losses
                                 Net
(465.5)      326.8     (138.7)   income/(loss)    (733.2)      367.7     (365.5)
                                 before tax
                                 Provision
(12.0)       56.4      44.4      for/(benefit     (360.5)      65.7      (294.8)
                                 from) income
                                 taxes
(453.5)      270.4     (183.1)   Net              (372.7)      302.0     (70.7)
                                 income/(loss)
                                 Other
                       743.6     discontinued                            (66.7)
                                 operations
                       560.5     Total net                               (137.4)
                                 income/(loss)
                                                                         
Adjusted EBITDA Reconciliation Schedule
                                                                         
(453.5)      270.4     (183.1)   Net              (372.7)      302.0     (70.7)
                                 income/(loss)
                                 Net interest
230.4        —         230.4     and investment   355.7        —         355.7
                                 gains and
                                 losses
                                 Provision
(12.0)       56.4      44.4      for/(benefit     (360.5)      65.7      (294.8)
                                 from) income
                                 taxes
                                 Depreciation
14.8         12.8      27.6      and              11.5         12.8      24.3
                                 amortization
(0.5)        —         (0.5)     Amortized fees   (0.3)        —         (0.3)
21.6         2.3       23.9      Share-based      29.3         3.6       32.9
                                 compensation
24.3         1.6       25.9      Other net        168.9        4.2       173.1
                                 charges
(174.9)      343.5     168.6     Adjusted         (168.1)      388.3     220.2
                                 EBITDA
                                                                         

Appendix III

Unaudited Financial Information – Net Income/(Loss) and Adjusted EBITDA from
Discontinued Operations for the three months ended December 31, 2012 and 2011

Three Months Ended                                    Three Months Ended
December 31, 2011                                       December 31, 2012
Tysabri  Prothena  EDT^(1)  Total                    Tysabri  Prothena^(2)  EDT    Total
US$m     US$m      US$m     US$m                  US$m     US$m          US$m   US$m
                                       Revenue
270.6     —          —         270.6   Product          319.6     —              —       319.6
                                       revenue
—        —         —        —       Contract         —        —             —      —
                                       revenue
270.6     —          —         270.6   Total revenue    319.6     —              —       319.6
147.4    —         —        147.4   Cost of goods    173.7    —             —      173.7
                                       sold
123.2     —          —         123.2   Gross margin     145.9     —              —       145.9
                                                                                         
                                       Operating
                                       Expenses
                                       Selling,
26.2      0.4        —         26.6    general and      32.1      0.9            —       33.0
                                       administrative
16.0      8.1        —         24.1    Research and     16.0      8.9            —       24.9
                                       development
                                       Net loss on
—         —          4.2       4.2     divestment of    —         11.2           —       11.2
                                       business
0.6      —         —        0.6     Other net        0.6      —             —      0.6
                                       charges
                                       Total
42.8     8.5       4.2      55.5    operating        48.7     21.0          —      69.7
                                       expenses
80.4      (8.5)      (4.2)     67.7    Operating        97.2      (21.0)         —       76.2
                                       income/(loss)
                                                                                         
                                       Net interest
—        —         0.7      0.7     and investment   —        —             0.2    0.2
                                       gains and
                                       losses
                                       Net
80.4      (8.5)      (4.9)     67.0    income/(loss)    97.2      (21.0)         (0.2)   76.0
                                       before tax
                                       Provision
12.7     (0.9)     —        11.8    for/(benefit     16.0     (1.5)         —      14.5
                                       from) income
                                       taxes
67.7      (7.6)      (4.9)     55.2    Net              81.2      (19.5)         (0.2)   61.5
                                       income/(loss)

Adjusted EBITDA Reconciliation Schedule
                                                                                         
67.7      (7.6)      (4.9)     55.2    Net              81.2      (19.5)         (0.2)   61.5
                                       income/(loss)
                                       Net interest
—         —          0.7       0.7     and investment   —         —              0.2     0.2
                                       gains and
                                       losses
                                       Net loss on
—         —          4.2       4.2     divestment of    —         11.2           —       11.2
                                       business
                                       Provision
12.7      (0.9)      —         11.8    for/(benefit     16.0      (1.5)          —       14.5
                                       from) income
                                       taxes
                                      Depreciation                                    
3.2                  —         3.3     and              3.2
          0.1                          amortization               —              —       3.2
0.7       0.6        —         1.3     Share-based      0.7       0.4            —       1.1
                                       compensation
0.6      —         —        0.6     Other net        0.6      —             —      0.6
                                       charges
84.9     (7.8)     —        77.1    Adjusted         101.7    (9.4)         —      92.3
                                       EBITDA
                                                                                         

^(1) The fourth quarter 2011 results include amounts relating to the EDT
business for working capital adjustments and additional transaction costs
arising after the date of divestment of the EDT business.

^(2) The fourth quarter 2012 results include the results of the Prothena
business for the fourth quarter up to December 20, 2012, the date of the
separation of the Prothena business.

Appendix IV

Unaudited Financial Information – Net Income/(Loss) and Adjusted EBITDA from
Discontinued Operations for the year ended December 31, 2012 and 2011

Twelve Months Ended                                        Twelve Months Ended
                                                        
December 31, 2011                                          December 31, 2012
Tysabri  Prothena  EDT^(1)  Total                       Tysabri  Prothena^(2)  EDT     Total
US$m     US$m      US$m     US$m                     US$m     US$m          US$m    US$m
                                         Revenue
1,064.1   —          168.0     1,232.1   Product revenue   1,202.6   —              —        1,202.6
—        —         9.9      9.9       Contract          —        —             —       —
                                         revenue
1,064.1   —          177.9     1,242.0   Total revenue     1,202.6   —              —        1,202.6
571.9    —         67.0     638.9     Cost of goods     655.5    —             —       655.5
                                         sold
492.2     —          110.9     603.1     Gross margin      547.1     —              —        547.1
                                                                                             
                                         Operating
                                         Expenses
                                         Selling,
96.1      1.6        23.8      121.5     general and       113.2     2.0            —        115.2
                                         administrative
67.7      23.7       34.3      125.7     Research and      62.0      31.3           —        93.3
                                         development
                                         Net (gain)/loss
—         —          (652.9)   (652.9)   on divestment     —         17.9           —        17.9
                                         of business
1.6      —         (68.1)   (66.5)    Other net         4.2      —             —       4.2
                                         charges/(gains)
165.4    25.3      (662.9)  (472.2)   Total operating   179.4    51.2          —       230.6
                                         expenses
326.8     (25.3)     773.8     1,075.3   Operating         367.7     (51.2)         —        316.5
                                         income/(loss)
                                                                                             
                                         Net interest
—        —         1.7      1.7       and investment    —        —             20.5    20.5
                                         gains and
                                         losses
326.8     (25.3)     772.1     1,073.6   Net income        367.7     (51.2)         (20.5)   296.0
                                         before tax
                                         Provision
56.4     (2.5)     5.7      59.6      for/(benefit      65.7     (5.0)         —       60.7
                                         from) income
                                         taxes
270.4     (22.8)     766.4     1,014.0   Net               302.0     (46.2)         (20.5)   235.3
                                         income/(loss)

Adjusted EBITDA Reconciliation Schedule
                                                                                             
270.4     (22.8)     766.4     1,014.0   Net               302.0     (46.2)         (20.5)   235.3
                                         income/(loss)
                                         Net interest
—         —          1.7       1.7       and investment    —         —              20.5     20.5
                                         gains and
                                         losses
                                         Net (gain)/loss
—         —          (652.9)   (652.9)   on divestment     —         17.9           —        17.9
                                         of business
                                         Provision
56.4      (2.5)      5.7       59.6      for/(benefit      65.7      (5.0)          —        60.7
                                         from) income
                                         taxes
                                         Depreciation
12.8      0.4        7.8       21.0      and               12.8      0.5            —        13.3
                                         amortization
2.3       3.0        5.7       11.0      Share-based       3.6       6.2            —        9.8
                                         compensation
1.6      —         (68.1)   (66.5)    Other net         4.2      —             —       4.2
                                         charges/(gains)
343.5    (21.9)    66.3     387.9     Adjusted EBITDA   388.3    (26.6)        —       361.7
                                                                                             

^(1) The twelve months ended December 31, 2011 results include the results of
the EDT business for the period up to September 16, 2011, the date of
divestment of the EDT business and amounts relating to the EDT business for
working capital adjustments and additional transaction costs arising after the
date of divestment of the EDT business.

^(2) The twelve months ended December 31, 2012 results include the results of
the Prothena business for the period up to December 20, 2012, the date of the
separation of the Prothena business.

Elan Corporation, plc
Investor Relations:
Chris Burns, 800-252-3526
David Marshall, 353-1-709-4444
or
Media Relations:
Emer Reynolds, 353-1-709-4022
Jonathan Birt, 44-751-559-7858

Contact:

Elan Corporation PLC
 
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