This excerpt taken from the ELN 20-F filed Mar 30, 2006.
Sale of Businesses Continuing Operations
During the course of the recovery plan and subsequent realignment of our operation as a biotech company, we sold a number of businesses (principally Zonegran, the primary care franchise and the European sales and marketing business), which are not included in discontinued operations because we have a significant continuing involvement in the operations of these businesses, for example, through ongoing supply arrangements or formulation activities.
For the years ended December 31, 2005, 2004 and 2003, the net gain/(loss) from the disposal of businesses is presented below (in millions):
We did not dispose of any businesses in 2005. The net gain in 2005 resulted from receipts of deferred contingent consideration related to prior year disposals, as described below.
Elan Corporation, plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In April 2004, we completed the sale of our interests in Zonegran in North America and Europe to Eisai for a net total consideration of $113.5 million at closing. We were also entitled to receive additional consideration of up to $110.0 million from Eisai through January 1, 2006, primarily contingent on the date of generic Zonegran approval. We received $85.0 million of this contingent consideration prior to the genericization of Zonegran in December 2005. Consequently, the total net proceeds received from the sale of Zonegran amounted to $198.5 million and resulted in a cumulative net gain of $128.5 million, of which $85.6 million was recognized in 2005 and $42.9 million in 2004.
In February 2004, we sold our European sales and marketing business to Zeneus for net cash proceeds of $93.2 million, resulting in a loss of $2.9 million. We received an additional $6.0 million in February 2005, which was accrued at December 31, 2004, and $15.0 million in December 2005 of contingent consideration, which resulted in a net gain of $17.1 million in 2005 after the release of contingent liabilities of $2.1 million, which were not required ultimately. We will not receive any further consideration in respect of this disposal.
In 2003, a net gain of $264.4 million was recognized on the divestment of the primary care franchise to King Pharmaceuticals, Inc. (King) (principally our rights to Sonatatm (zaleplon) and Skelaxintm (metaxalone)). In June 2003, King paid gross consideration on closing of $749.8 million, which included the transfer to King of Sonata and Skelaxin inventory with a value of approximately $40.0 million and obligations related to Sonata of $218.8 million that were assumed by King. In addition, in January 2004, we received an additional $25.0 million payment, which was contingent on the ongoing patent exclusivity of Skelaxin through December 31, 2003. The amount was included in the gain recorded in 2003 as the contingency was resolved by December 31, 2003.