Elan Corporation (ELN)

IFRS requires that the fair value of share-based payments is expensed to the income statement over the period the related services are received, together with a corresponding increase in equity. There is no corresponding charge for share-based payments under U.S. GAAP for the periods presented. We will implement U.S. GAAP’s Statement of Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payment—An Amendment of FASB Statements No. 123 and 95,” effective 1 January 2006. This standard will require us to expense the fair value of share-based payments, rather than using the intrinsic value method as previously allowed. Therefore, from 1 January 2006, we will record a similar share-based compensation expense under both IFRS and U.S. GAAP.

g    Discontinued operations

Under IFRS, a discontinued operation is a component of a company that either has been disposed of or is classified as held for sale and (i) represents a separate major line of business or geographical area of operations, (ii) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or (iii) is a subsidiary acquired exclusively with a view to resale. Under U.S. GAAP, a discontinued operation is a component of an entity whose operations and cashflows have been or will be eliminated from the ongoing operations of the entity and the entity will not have any significant continuing involvement in the operations of the component after its disposal. As the criteria for the determination of discontinued operations are different under IFRS and U.S. GAAP, the products and businesses treated as discontinued operations differ under each. There are no reconciling differences to total net income/(loss) or shareholders’ equity between IFRS and U.S. GAAP related to discontinued operations. However, the split of net income/(loss) between continuing operations and discontinued operations differs under both GAAPs.