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This excerpt taken from the ELN 6-K filed Aug 28, 2009. Liquid
Resources and Shareholders’ Deficit
Our liquid resources and shareholders’ deficit were as
follows:
We have historically financed our operating and capital resource
requirements through cash flows from operations, sales of
investment securities and borrowings. We consider all highly
liquid deposits with an original maturity of three months or
less to be cash equivalents. Our primary source of funds at
30 June 2009 consisted of cash and cash equivalents of
$218.4 million, which excludes current restricted cash and
cash equivalents of $16.8 million and current
available-for-sale
investments of $22.7 million. Cash and cash equivalents
primarily consist of bank deposits and holdings in
U.S. Treasuries funds.
At 30 June 2009, our shareholders’ deficit was
$370.5 million, compared to $223.4 million at
31 December 2008. The increase in the deficit is due
primarily to the net loss incurred during the first half of 2009
and the recognition of deferred tax benefits in
shareholders’ equity that exceed cumulative share-based
compensation expense, partially offset by the share-based
compensation cost recorded in the first half of 2009 and the
issuance of ordinary shares for employee share option exercises.
Our debt covenants do not require us to maintain or adhere to
any specific financial ratios. Consequently, the
shareholders’ deficit has no impact on our ability to
comply with our debt covenants. Our recorded shareholders’
deficit is substantially lower than our market capitalisation,
in particular because the carrying values of our intangible
assets do not fully reflect the value created through our
R&D activities.
On 2 July 2009, following an in depth strategic review, we
announced a definitive agreement whereby Johnson &
Johnson will acquire substantially all of the assets and rights
of our AIP, through a newly formed Johnson & Johnson
company in which we will receive a 49.9% equity interest. In
addition, Johnson & Johnson will invest
$1 billion in Elan in exchange for newly issued American
Depositary Shares of Elan which will represent 18.4% of our
outstanding ordinary shares.
The closing of the transaction, which is subject to customary
closing conditions, is expected in the second half of 2009.
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