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ELN » Topics » Contractual Obligations

This excerpt taken from the ELN 6-K filed Mar 31, 2006.
Contractual Obligations
The following table sets out, at 31 December 2005, our main contractual obligations due by period for debt principal and interest repayments and finance and operating leases. These represent the major contractual future payments that may be made by us. The table does not include items such as expected capital expenditures on plant and equipment or future investments in available-for-sale investments. At 31 December 2005, the directors had authorised capital commitments for the purchase of property, plant and equipment of $7.1 million (2004: $15.9 million).
                     
        Less than   1-3   3-5   After 5
    Total   1 Year   Years   Years   Years
    $m   $m   $m   $m   $m
 
Athena Notes due 2008
  613.2   —   613.2   —   —
6.5% Convertible Notes due 2008(1)
  254.0   —   254.0   —   —
7.75% Notes due 2011
  850.0   —   —   —   850.0
Floating Rate Notes due 2011
  300.0   —   —   —   300.0
 
Total debt principal obligations
  2,017.2   —   867.2   —   1,150.0
 
Debt interest payments(2)
  682.4   153.4   265.7   183.0   80.3
Finance lease obligations(3)
  8.0   5.3   2.7   —   —
Operating lease obligations
  138.9   18.0   30.3   40.9   49.7
 
Total contractual obligations
  2,846.5   176.7   1,165.9   223.9   1,280.0
 
(1) We may, at any time after 1 December 2006, redeem all or part of the 6.5% Convertible Notes then outstanding at par, with interest accrued to the redemption date provided that, within a period of 30 consecutive trading days ending five trading days prior to the date on which the relevant notice of redemption is published, the official closing price per share of the ADSs on the NYSE for 20 trading days shall have been at least 150% of the conversion price deemed to be in effect on each of such trading days.
Elan Corporation, plc 2005 Annual Report  51

Table of Contents

(2) The Floating Rate Notes bear interest at a rate, adjusted quarterly, equal to three-month London Interbank Offer Rate (LIBOR) plus 4.0%. To calculate our interest payment obligation, we used LIBOR at 31 December 2005.
 
(3) In prior years we disposed of plant and equipment and subsequently leased them back and also entered into an arrangement with a third-party bank, the substance of which allows us to require a legal net settlement of our obligations under the leases. The related assets and liabilities of these previous sale and leaseback transactions have been offset in the Consolidated Financial Statements in the amount of $51.8 million at 31 December 2005 (2004: $64.3 million).
At 31 December 2005, we had commitments to invest $2.4 million (2004: $3.2 million) in healthcare managed funds.
In disposing of assets or businesses, we often provide customary representations, warranties, and indemnities (if any) to cover various risks. We do not have the ability to estimate the potential liability from such indemnities because they relate to unknown conditions. However, we have no reason to believe that these uncertainties would have a material adverse effect on our financial condition or results of operations.
The two major rating agencies covering our debt rate it as sub-investment grade debt. None of our debt has a trigger rating that would accelerate the repayment upon a change in rating.
Our debt ratings at 31 December 2005 and 2004 were as follows:
         
    Standard & Poor’s   Moody’s Investors
    Rating Services   Service
 
Athena Notes
  B   B3
6.5% Convertible Notes
  CCC+   Not rated
7.75% Notes
  B   B3
Floating Rate Notes
  B   B3
 
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