Via Facsimile and U.S. Mail
Mail Stop 6010
July 2, 2005
Mr. G. Kelly Martin
President & Chief Executive Officer
Elan Corporation, PLC
875 Third Avenue, Floor 3
New York, NY 10022
Re: Elan Corporation, PLC
Form 20-F for Fiscal Year Ended December 31, 2004
Filed April 11, 2005
File No. 1-13896
Dear Mr. Martin:
We have limited our review of your filing to those issues we
have addressed in our comments. In our comments, we ask you to
provide us with information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 20-F for the year ended December 31, 2004
Critical Accounting Policies, page 31
Revenue- Discounts, Sales Returns, Rebates and Chargebacks
1. We believe that your disclosure related to estimates of items
that
reduce gross revenue such as product returns, chargebacks,
customer
rebates and other discounts and allowances could be improved.
Please
provide us the following information, in disclosure-type format,
to
help us evaluate the adequacy of your disclosure:
a) The nature and amount of each accrual at the balance sheet date
and the effect that could result from using other reasonably
likely
assumptions than what you used to arrive at each accrual such as a
range of reasonably likely amounts or other type of sensitivity
analysis.
b) The factors that you consider in estimating each accrual such
as
historical return of products, levels of inventory in the
distribution channel, estimated remaining shelf life, price
changes
from competitors and introductions of generics and/or new
products.
c) To the extent that information you consider in b) is
quantifiable,
disclose both quantitative and qualitative information and discuss
to
what extent information is from external sources (e.g., end-
customer
prescription demand, third-party market research data comparing
wholesaler inventory levels to end-customer demand). For example,
in
discussing your estimate of product that may be returned, consider
disclosing and discussing, preferably by product and in tabular
format, the total amount of product (in sales dollars) that could
be
potentially be returned as of the balance sheet date and
disaggregated by expiration period.
d) If applicable, discuss any shipments made as a result of
incentives and/or in excess of your customer`s ordinary course of
business inventory level. Discuss your revenue recognition policy
for such shipments.
e) A roll forward of the accrual for each estimate for each period
presented showing the following:
* Beginning balance,
* Current provision related to sales made in current period,
* Current provision related to sales made in prior periods,
* Actual returns or credits in current period related to sales
made
in current period,
* Actual returns or credits in current period related to sales
made
in prior periods, and
* Ending balance.
f) Regarding your discussion of results of operations for the
period
to period revenue comparisons, discuss the amount of and reason
for
fluctuations for each type of reduction of gross revenue (i.e.
product returns, chargebacks, customer rebates and other discounts
and allowances) including the effect that changes in your
estimates
of these items had on your revenues and operations.
Note 21. Discontinued Operations, Sales of Businesses, and Held
for
Sale Assets and Liabilities, page 105
2. It appears that individual drugs are included in discontinued
operations. Demonstrate to us how each product, product group or
business included in discontinued operations meets the definition
of
an asset group in paragraph 4 of FAS 144. Fully explain how cash
flows of each asset group are identifiable and independent of the
cash flows of other groups of assets. Also explain how you were
able
to determine cost of sales, selling, general and administrative
expenses and research and development expenses directly
attributable
to each drug or product group presented as discontinued
operations.
Note 31. Segment Information
3. We noted your disclosure on page 36 with regards to product
revenues. Please tell us why you have not provided the disclosures
required by paragraph 37 of FAS 131 here in the audited financial
statements.
* * * *
Please provide us the supplemental information requested
within
10 business days of the date of this letter or tell us when you
will
provide a response prior to the expiration of the 10-day period.
Please furnish a letter with your supplemental responses that keys
your response to our comments. Please file your letter on EDGAR
under the form type label CORRESP.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Sasha Parikh, Staff Accountant, at (202)
551-
3627 or Lisa Vanjoske, Assistant Chief Accountant, at (202) 551-
3614
if you have questions regarding the comments. In this regard, do
not
hesitate to contact me at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief
Accountant
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G. Kelly Martin
Elan Corporation, PLC
June 22, 2005
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