8-KEarnings & Results

ELI LILLY & Co 8-K Report, Financial Results (Jan 26, 2006)

Filed January 26, 2006For Securities:LLY

Summary

Eli Lilly & Co. (LLY) filed an 8-K report on January 26, 2006, to announce its financial results for the fourth quarter and full year ended December 31, 2005. The report highlights the company's use of non-GAAP financial measures, such as adjusted net income and diluted earnings per share, to provide a clearer picture of ongoing operations by excluding certain significant charges and accounting changes. These adjustments allow for more meaningful period-over-period comparisons and trend analysis, which management utilizes for internal evaluation and resource allocation. The filing also includes financial expectations for the full year 2006, presented on both a GAAP and an adjusted basis.

Key Highlights

  • 1Announcement of Q4 and Full Year 2005 financial results for Eli Lilly & Co.
  • 2Company utilizes non-GAAP financial measures (adjusted net income, adjusted EPS) for enhanced operational clarity.
  • 3Exclusions from non-GAAP measures include asset impairment, restructuring charges, and accounting changes (FIN 47).
  • 4Specific charges from prior periods (Q2 2005 product liability, Q4 2004 charges, Q2 2004 impairments, Q1 2004 R&D acquisition) are also excluded for comparative purposes.
  • 5Adoption of new accounting standard for share-based payments (SFAS 123R) starting January 1, 2005, with pro-forma adjustments for 2004 for comparable analysis.
  • 6Provided financial expectations for Full Year 2006, including both GAAP and adjusted EPS guidance.
  • 7Management emphasizes that non-GAAP measures are supplementary and should be considered alongside GAAP financial statements.

Frequently Asked Questions

This 8-K report announces the results of operations for Eli Lilly & Company for the quarter and full year ended December 31, 2005. It includes an income statement for these periods and a consolidated balance sheet as of December 31, 2005. The details of these results are provided in an attached press release.

Eli Lilly uses non-GAAP measures like adjusted net income and adjusted diluted earnings per share to provide investors with a clearer view of its ongoing operations. These measures exclude significant, often unpredictable charges and accounting changes, which can distort period-over-period comparisons and mask underlying business trends.

The exclusions typically include asset impairment, restructuring and other special charges recognized in Q4 2005, the cumulative effect of adopting new accounting rule FIN 47, a product liability charge from Q2 2005, various charges from Q4 2004 (including those related to the American Jobs Creation Act and R&D in-licensing), and asset impairment charges from Q2 2004 and R&D acquisition costs from Q1 2004.

Eli Lilly adopted the new accounting standard for share-based payments starting January 1, 2005. To facilitate a comparable year-over-year analysis, the company has provided adjusted pro-forma earnings per share for 2004, assuming this new accounting standard had been applied retroactively to the beginning of 2004.