Why is Eli Lilly using non-GAAP financial measures in this report?

Eli Lilly uses non-GAAP financial measures, specifically adjusted pro forma net income and earnings per share, to offer investors a clearer view of the company's ongoing operational performance. These measures exclude highly variable and unpredictable items, such as acquisition-related charges, restructuring costs, and litigation settlements, which could otherwise mask underlying business trends and make period-over-period comparisons difficult.

What significant events from 2007 and 2008 are being excluded in the pro forma adjustments?

The pro forma adjustments exclude a range of significant items from 2007 and 2008. These include charges related to the acquisition of ImClone Systems, ICOS Corporation, and other smaller entities; various litigation settlements and investigations (notably related to Zyprexa); asset impairments; restructuring and exit costs; and certain tax benefits or charges. The exact nature and timing of these excluded items are detailed in the press release attached as Exhibit 99.1.

How does the ImClone acquisition affect the 2008 and 2009 financial presentations?

The filing notes that the pro forma 2008 results are presented as if the ImClone acquisition were completed on January 1, 2008, to facilitate a more comparable view with 2007. Additionally, the pro forma presentation for 2009 guidance is intended to show the anticipated dilutive impact of the ImClone acquisition on earnings per share.

LLY 8-K: Earnings & Results

Q: What is the primary purpose of this 8-K filing?

The primary purpose of this 8-K filing is to announce Eli Lilly's financial results for the fourth quarter and full fiscal year ended December 31, 2008. It also serves to provide forward-looking financial expectations for 2009.

Summary

Eli Lilly and Company (LLY) filed an 8-K on January 29, 2009, to announce its financial results for the fourth quarter and full fiscal year ended December 31, 2008. A key aspect of this filing is the company's use of non-GAAP financial measures, specifically "adjusted pro forma" presentations, to provide a clearer view of ongoing operations. These adjustments exclude significant one-time items, such as charges related to acquisitions (ImClone, ICOS, SGX, Macrogenics, Glenmark, Hypnion, Ivy Animal Health, TransPharma, BioMS Medical), litigation settlements (Zyprexa), asset impairments, restructuring costs, and tax benefits/charges from various periods in 2007 and 2008. Investors are provided with adjusted pro forma net income and earnings per share, alongside GAAP figures, to facilitate more meaningful comparisons between periods and to identify underlying operational trends. The company also confirmed its financial expectations for 2009, including both GAAP and pro forma non-GAAP EPS guidance. The pro forma presentation for 2008 results is further adjusted to reflect the ImClone acquisition as if it were completed on January 1, 2008, and to show the anticipated dilutive impact of ImClone in 2009. Management uses these non-GAAP measures internally for performance evaluation and resource allocation.

Key Highlights

1Eli Lilly announced its Q4 and Full Year 2008 financial results via an 8-K filing on January 29, 2009.
2The company utilizes non-GAAP financial measures (adjusted pro forma) to present results, excluding significant one-time items from 2007 and 2008.
3Adjustments include charges related to major acquisitions (ImClone, ICOS), litigation, asset impairments, and restructuring costs.
4The filing emphasizes the rationale behind using non-GAAP measures: providing insight into ongoing operations and facilitating period-over-period comparisons.
5Pro forma 2008 results are presented as if the ImClone acquisition occurred on January 1, 2008, to better compare with 2007 and assess 2009 impact.
6Financial expectations for 2009, including both GAAP and pro forma non-GAAP EPS, were confirmed.
7The information in Item 2.02 is furnished and not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.

ELI LILLY & Co 8-K Report, Financial Results (Jan 29, 2009)

Summary

Key Highlights

Frequently Asked Questions