What are the main reasons Eli Lilly is using adjusted pro forma non-GAAP measures?

Eli Lilly is using adjusted pro forma non-GAAP measures to provide investors with a clearer view of its ongoing operational performance. These measures exclude certain charges that are typically highly variable, difficult to predict, and can significantly impact reported results. The company believes these adjustments help investors evaluate ongoing operations, make meaningful period-over-period comparisons, and identify underlying operating trends that might otherwise be masked.

What specific types of charges are being excluded in the adjusted pro forma results?

The excluded charges include acquired in-process research and development (IPR&D) related to various acquisitions and in-licensing transactions (such as those from Macrogenics, Glenmark, Hypnion, Ivy Animal Health, ICOS Corporation, OSI Pharmaceuticals, and an anticipated charge for a BioMS Medical transaction). Additionally, asset impairments, restructuring charges, and costs associated with Zyprexa product liability are also excluded. For comparative purposes, the ICOS acquisition's impact is assumed to have occurred from January 1, 2006, for certain pro forma presentations.

How should investors interpret these non-GAAP financial measures in relation to GAAP measures?

Eli Lilly states that investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to, measures prepared in accordance with GAAP. While the company believes these adjusted figures offer useful insights into ongoing operations and trends, they are not a replacement for the standard financial reporting mandated by GAAP. Investors should use both sets of information for a comprehensive understanding of the company's financial health.

What does the filing indicate about Eli Lilly's financial outlook for 2008?

The filing confirms that Eli Lilly provided financial expectations for 2008. Alongside GAAP earnings per share expectations, the company also offered adjusted pro forma earnings per share expectations. These 2008 expectations are also subject to similar adjustments for anticipated charges, such as an IPR&D charge for an in-licensing transaction with BioMS Medical, to allow for a more consistent comparison with the adjusted 2007 results.

LLY 8-K: Earnings & Results

Summary

Eli Lilly & Co. (LLY) filed an 8-K on January 29, 2008, to report its fourth quarter and full-year 2007 financial results and provide 2008 financial expectations. The filing primarily highlights the company's use of adjusted pro forma non-GAAP financial measures to present a clearer view of ongoing operational performance. These adjustments exclude significant charges such as acquired in-process research and development (IPR&D) for various acquisitions (Macrogenics, Glenmark, Hypnion, Ivy Animal Health, ICOS, OSI Pharmaceuticals), asset impairments, restructuring charges, and costs related to Zyprexa product liability. The company emphasizes that these non-GAAP measures are intended to help investors evaluate ongoing operations and make meaningful period-over-period comparisons, assisting in identifying operating trends that might otherwise be masked.

Key Highlights

1Eli Lilly announced Q4 and full-year 2007 financial results via an 8-K filing on January 29, 2008.
2The company utilized adjusted pro forma non-GAAP financial measures to report results, excluding specific charges for clarity.
3Key excluded charges include acquired in-process R&D for multiple acquisitions and licensing deals (Macrogenics, Glenmark, Hypnion, Ivy Animal Health, ICOS, OSI Pharmaceuticals, BioMS Medical).
4Other excluded items consist of asset impairments, restructuring charges, and Zyprexa product liability costs.
5The adjusted pro forma presentation for 2007 also includes retrospective adjustments for the ICOS acquisition as if it occurred on January 1, 2006, for comparative purposes.
6Eli Lilly provided financial expectations for 2008, including both GAAP and adjusted pro forma earnings per share.
7The company believes these non-GAAP measures offer useful insights into ongoing operations and aid in trend identification, but advises investors to consider them alongside GAAP measures.

ELI LILLY & Co 8-K Report, Financial Results (Jan 29, 2008)

Summary

Key Highlights

Frequently Asked Questions