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This excerpt taken from the ELN 20-F filed Feb 26, 2009. (m) Revenue
We recognize revenue from the sale of our products, royalties
earned and contract arrangements. Our revenues are classified
into two categories: product revenue and contract revenue.
Product Revenue — Product revenue
includes: (i) the sale of our products,
(ii) royalties and (iii) manufacturing fees. We
recognize revenue from product sales when there is persuasive
evidence that an arrangement exists, title passes, the price is
fixed or determinable, and collectability is reasonably assured.
Revenue is recorded net of applicable sales tax and sales
discounts and allowances, which are described below.
i. The sale of our products consists of the sale of
pharmaceutical drugs, primarily to wholesalers and physicians.
ii. We earn royalties on licensees’ sales of our
products or third-party products that incorporate our
technologies. Royalties are recognized as earned in accordance
with the contract terms when royalties can be reliably measured
and collectability is reasonably assured.
iii. We receive manufacturing fees for products that we
manufacture on behalf of other third-party customers.
Tysabri®
(natalizumab) was developed and is now being marketed in
collaboration with Biogen Idec Inc. In general, subject to
certain limitations imposed by the parties, we share with Biogen
Idec most development and commercialization costs. Biogen Idec
is responsible for manufacturing the product. In the United
States, we purchase Tysabri from Biogen Idec and are
responsible for distribution. Consequently, we record as revenue
the net sales of Tysabri in the U.S. market. We
purchase product from Biogen Idec as required at a price, which
includes the cost of manufacturing, plus Biogen Idec’s
gross profit 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 we record as revenue our share of the
profit or loss on rest of world (ROW) sales of Tysabri,
plus our directly incurred expenses on these sales.
Contract Revenue — Contract revenue arises from
contracts to perform R&D services on behalf of clients or
technology licensing. Contract revenue is recognized when earned
and non-refundable, and when we have no future obligation with
respect to the revenue, in accordance with the terms prescribed
in the applicable contract. Contract research revenue consists
of payments or milestones arising from R&D activities we
perform on behalf of third parties. Our revenue arrangements
with multiple elements are divided into separate units of
accounting if certain criteria are met, including whether the
delivered element has stand-alone value to the customer and
whether there is objective and reliable evidence of the fair
value of the undelivered items. The consideration we receive is
allocated among the separate units based on their respective
fair values, and the applicable revenue recognition criteria are
applied to each of the separate units. Advance payments received
in excess of amounts earned are classified as deferred revenue
until earned.
The U.S. Securities and Exchange Commission’s (SEC)
Staff Accounting Bulletin No. 104, “Revenue
Recognition,” (SAB 104), provides guidance on
revenue recognition. SAB 104 requires the deferral and
amortization of up-front fees when there is a significant
continuing involvement (such as an ongoing product
Table of Contents
Elan
Corporation, plc
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
manufacturing contract or joint development activities) by the
seller after an asset disposal. We defer and amortize up-front
license fees to income over the “performance period”
as applicable. The performance period is the period over which
we expect to provide services to the licensee as determined by
the contract provisions.
Accounting for milestone payments depends on the facts and
circumstances of each contract. We apply the substantive
milestone method in accounting for milestone payments. This
method requires that substantive effort must have been applied
to achieve the milestone prior to revenue recognition. If
substantive effort has been applied, the milestone is recognized
as revenue, subject to it being earned, non-refundable and not
subject to future legal obligation. This requires an examination
of the facts and circumstances of each contract. Substantive
effort may be demonstrated by various factors, including the
risks associated with achieving the milestone, the period of
time over which effort was expended to achieve the milestone,
the economic basis for the milestone payment and licensing
arrangement and the costs and staffing necessary to achieve the
milestone. It is expected that the substantive milestone method
will be appropriate for most contracts. If we determine the
substantive milestone method is not appropriate, then we apply
the proportional performance method to the relevant contracts.
This method recognizes as revenue the percentage of cumulative
non-refundable cash payments earned under the contract, based on
the percentage of costs incurred to date compared to the total
costs expected under the contract.
This excerpt taken from the ELN 6-K filed Mar 31, 2008. a Revenue
In 2006, product revenue related to manufacturing revenue and
royalties and contract revenue related to research activities.
On 31 December 2006, the parent company transferred all of
its intangible assets to a subsidiary company, therefore it did
not earn any product revenue related to these assets in 2007.
The parent company did not earn any contract revenue in 2007 as
it did not perform research activities during the year. For
additional information relating to the transfer of intangible
assets, refer to Note 34(j).
This excerpt taken from the ELN 20-F filed Feb 28, 2008. (l) Revenue
We recognize revenue from the sale of our products, royalties
earned and contract arrangements. Our revenues are classified
into two categories: product revenue and contract revenue.
Product Revenue — Product revenue
includes: (i) the sale of our products,
(ii) royalties and (iii) manufacturing fees. We
recognize revenue from product sales when there is persuasive
evidence that an arrangement exists, title passes, the price is
fixed or determinable, and collectability is reasonably assured.
Revenue is recorded net of applicable sales tax and sales
discounts and allowances, which are described below.
i. The sale of our products consists of the sale of
pharmaceutical drugs, primarily to wholesalers and physicians.
ii. We earn royalties on licensees’ sales of our
products or third-party products that incorporate our
technologies. Royalties are recognized as earned in accordance
with the contract terms when royalties can be reliably measured
and collectability is reasonably assured.
iii. We receive manufacturing fees for products that we
manufacture on behalf of other third-party customers.
Tysabri®
(natalizumab) was developed and is now being marketed in
collaboration with Biogen Idec Inc. (Biogen Idec). In general,
subject to certain limitations imposed by the parties, we share
with Biogen Idec most development and commercialization costs.
Biogen Idec is responsible for manufacturing the product. In the
United States, we purchase Tysabri from Biogen Idec and
are responsible for distribution. Consequently, we record as
revenue the net sales of Tysabri in the U.S. market.
We purchase product from Biogen Idec as required at a price,
which includes the cost of manufacturing, plus Biogen
Idec’s gross profit on Tysabri and this cost,
together with
Table of Contents
Elan
Corporation, plc
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
royalties payable to other third parties, is included in cost of
sales. In the European Union (EU) market, Biogen Idec is
responsible for distribution and we record as revenue our share
of the profit or loss on EU sales of Tysabri, plus our
directly-incurred expenses on these sales.
Contract Revenue — Contract revenue arises from
contracts to perform R&D services on behalf of clients or
technology licensing. Contract revenue is recognized when earned
and non-refundable, and when we have no future obligation with
respect to the revenue, in accordance with the terms prescribed
in the applicable contract. Contract research revenue consists
of payments or milestones arising from R&D activities we
perform on behalf of third parties. Our revenue arrangements
with multiple elements are divided into separate units of
accounting if certain criteria are met, including whether the
delivered element has stand-alone value to the customer and
whether there is objective and reliable evidence of the fair
value of the undelivered items. The consideration we receive is
allocated among the separate units based on their respective
fair values, and the applicable revenue recognition criteria are
applied to each of the separate units. Advance payments received
in excess of amounts earned are classified as deferred revenue
until earned.
The U.S. Securities and Exchange Commission’s (SEC)
Staff Accounting Bulletin No. 104, “Revenue
Recognition,” (SAB 104), provides guidance on revenue
recognition. SAB 104 requires the deferral and amortization
of up-front fees when there is a significant continuing
involvement (such as an ongoing product manufacturing contract
or joint development activities) by the seller after an asset
disposal. We defer and amortize up-front license fees to income
over the “performance period” as applicable. The
performance period is the period over which we expect to provide
services to the licensee as determined by the contract
provisions.
Accounting for milestone payments depends on the facts and
circumstances of each contract. We apply the substantive
milestone method in accounting for milestone payments. This
method requires that substantive effort must have been applied
to achieve the milestone prior to revenue recognition. If
substantive effort has been applied, the milestone is recognized
as revenue, subject to it being earned, non-refundable and not
subject to future legal obligation. This requires an examination
of the facts and circumstances of each contract. Substantive
effort may be demonstrated by various factors, including the
risks associated with achieving the milestone, the period of
time over which effort was expended to achieve the milestone,
the economic basis for the milestone payment and licensing
arrangement and the costs and staffing necessary to achieve the
milestone. It is expected that the substantive milestone method
will be appropriate for most contracts. If we determine the
substantive milestone method is not appropriate, then we apply
the proportional performance method to the relevant contracts.
This method recognizes as revenue the percentage of cumulative
non-refundable cash payments earned under the contract, based on
the percentage of costs incurred to date compared to the total
costs expected under the contract.
This excerpt taken from the ELN 6-K filed Mar 30, 2007. a Revenue
During 2006 and 2005, product revenue related to manufacturing
revenue and royalties, and contract revenue related to research
activities.
This excerpt taken from the ELN 20-F filed Mar 30, 2006. (l) Revenue
We recognize revenue from the sale of our products, royalties
earned, and contract arrangements. Our revenues are classified
into two categories: product revenue and contract revenue.
Product Revenue — Product revenue
includes: (i) the sale of our products;
(ii) royalties; (iii) manufacturing fees; and
(iv) the sales of product rights and related inventory
(referred to as product disposals). We recognize revenue from
product sales when there is persuasive evidence that an
arrangement exists, title passes, the price is fixed or
determinable, and collectibility is reasonably assured. Revenue
is recorded net of applicable sales tax and sales discounts and
allowances, which are described below.
i. The sale of our products consists of the sale of
pharmaceutical drugs, primarily to wholesalers and physicians.
Table of Contents
Elan
Corporation, plc
NOTES TO
THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
ii. We earn royalties on licensees’ sales of our
products or third-party products that incorporate our
technologies. Royalties are recognized as earned in accordance
with the contract terms when royalties can be reliably measured
and collectibility is reasonably assured.
iii. We receive manufacturing fees for products that we
manufacture on behalf of other third party customers.
iv. Revenue from the sale of product rights and related
inventory consists of the proceeds from the disposal of
products, inventory and intellectual property less the
unamortized cost of the related intangible assets.
Contract Revenue — Contract revenue arises
from contracts to perform R&D services on behalf of clients
or technology licensing and business ventures. Contract revenue
is recognized when earned and non-refundable, and when we have
no future obligation with respect to the revenue, in accordance
with the terms prescribed in the applicable contract. Contract
research revenue consists of payments or milestones arising from
R&D activities we perform on behalf of third parties. Our
revenue arrangements with multiple elements are divided into
separate units of accounting if certain criteria are met,
including whether the delivered element has stand-alone value to
the customer and whether there is objective and reliable
evidence of the fair value of the undelivered items. The
consideration we receive is allocated among the separate units
based on their respective fair values, and the applicable
revenue recognition criteria are applied to each of the separate
units. Advance payments received in excess of amounts earned are
classified as deferred revenue until earned.
U.S. Securities and Exchange Commission’s (SEC) Staff
Accounting Bulletin No. 104, “Revenue
Recognition,” (SAB 104), provides guidance on revenue
recognition. SAB 104 requires the deferral and amortization
of up-front fees when there is a significant continuing
involvement (such as an ongoing product manufacturing contract
or joint development activities) by the seller after an asset
disposal. We defer and amortize up-front license fees to income
over the “performance period” as applicable. The
performance period is the period over which we expect to provide
services to the licensee as determined by the contract
provisions.
Accounting for milestone payments depends on the facts and
circumstances of each contract. We apply the substantive
milestone method in accounting for milestone payments. This
method requires that substantive effort must have been applied
to achieve the milestone prior to revenue recognition. If
substantive effort has been applied, the milestone is recognized
as revenue, subject to it being earned, non-refundable and not
subject to future legal obligation. This requires an examination
of the facts and circumstances of each contract. Substantive
effort may be demonstrated by various factors, including the
risks associated with achieving the milestone, the period of
time over which effort was expended to achieve the milestone,
the economic basis for the milestone payment and licensing
arrangement and the costs and staffing necessary to achieve the
milestone. It is expected that the substantive milestone method
will be appropriate for most contracts. If we determine the
substantive milestone method is not appropriate, then we apply
the
percentage-of-completion
method to the relevant contract.
This method recognizes as revenue the percentage of cumulative
non-refundable cash payments earned under the contract, based on
the percentage of costs incurred to date compared to the total
costs expected under the contract.
This excerpt taken from the ELN 6-K filed Apr 11, 2005. 2 Revenue The composition of our revenue for the years ended 31 December was as follows:
Product revenue can be further analysed as follows:
Contract revenue for the year ended 31 December 2004 of $74.1 million (2003: $49.5 million) is comprised of research revenue and milestone payments. | EXCERPTS ON THIS PAGE:
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