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To: Kelvin Taylor who wrote (38332)	2/8/2002 9:12:05 AM
From: Kelvin Taylor	Read Replies (2) \| Respond to of 53068

Elan Corp. shares fell as much as 6.9 percent after Ireland's largest drugmaker said the U.S. Securities and Exchange Commission started to investigate the company, which has lost 71 percent of its market value this year. Elan didn't detail the issues being looked into, although analysts have questioned the Dublin-based company's use of off- balance sheet investments to lower its debt and boost earnings. It's the second time the U.S. agency's looked at Elan's earnings in the last three years. Elan has used 55 joint ventures as it attempts to move away from delivering other companies' drugs into the body and start making its own treatments. ``Elan's long-standing history of accounting aggressiveness has finally caught up with it,'' Prudential analyst Tim Anderson said in a note. `We're curious as to what the company's profit and loss statement will really look like once the SEC is finished dissecting the entanglement.'' The investigation may lead to an earnings restatement, Anderson said. At least seven attorneys have filed lawsuits in hopes of getting class-action status on behalf of the company shareholders. When the company reported fourth-quarter earnings Monday, it said profit would have been 40 percent lower if it included two off-balance-sheet investments in other companies. Elan said it would have earnings per share of 59 cents if the investments were included, not the 97 cents reported. Debt would be $3 billion rather than $2 billion. Analysts have questioned Elan's use of joint ventures to book revenue. The SEC looked at Elan's accounting in 1999, and the company reduced its 1997 earnings by 2 cents a share. Since then, Elan has used generally accepted accounting principles, company spokeswoman Emer Reynolds said last week. Max Gershenoff, an Elan spokesman, said the company ``welcomes the investigation, and intends to cooperate fully.'' Elan's accounting is also getting more attention since U.S. energy trader Enron Corp. filed for bankruptcy after overstating profit.