8-KEarnings & ResultsExhibits & Filings

ELI LILLY & Co 8-K Report, Financial Results (Jan 27, 2011)

Filed January 27, 2011For Securities:LLY

Summary

Eli Lilly & Company (LLY) filed an 8-K on January 27, 2011, to report its fourth quarter and full-year 2010 financial results, along with providing initial financial guidance for 2011. The report highlights the company's use of non-GAAP financial measures to present a clearer view of ongoing operational performance, excluding items like restructuring charges, in-process R&D, asset impairments, and legal settlements. Key investor takeaways from the accompanying press release (Exhibit 99.1) include the company's financial performance for 2010 and the forward-looking outlook for 2011. The non-GAAP presentation aims to provide investors with a better understanding of core business trends and operational efficiency by removing the impact of significant, often one-time, charges and adjustments. Investors should carefully review both the GAAP and non-GAAP figures to gain a comprehensive understanding of Lilly's financial health and future prospects.

Key Highlights

  • 1Eli Lilly reported fourth quarter and full fiscal year 2010 results via a press release filed with this 8-K.
  • 2The company utilized non-GAAP financial measures (e.g., non-GAAP net income and EPS) to present results and provide 2011 guidance, excluding specific charges.
  • 3Adjustments to GAAP results included restructuring charges, in-process R&D, asset impairments, and legal settlements.
  • 4Specific adjustments detailed for 2010 and 2009 included severance costs, an Acrux Ltd. in-licensing deal, an Incyte Corporation licensing agreement, and Zyprexa state attorney general settlements.
  • 5The company provided financial expectations for 2011, including non-GAAP EPS growth and revenue growth.
  • 6Revenue growth guidance for 2011 excluded the anticipated decline in Zyprexa and Gemzar sales outside of Japan and the impact of U.S. healthcare reform.
  • 7Lilly stated that non-GAAP measures help investors evaluate ongoing operations and identify trends, as management uses them internally for performance evaluation and resource allocation.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report Eli Lilly's financial results for the fourth quarter and full fiscal year ended December 31, 2010, and to provide initial financial expectations for 2011. It also serves to disclose the company's use of non-GAAP financial measures in its reporting.

Eli Lilly uses non-GAAP measures to provide investors with a clearer view of its ongoing operational performance. By excluding items such as restructuring charges, in-process R&D, asset impairments, and legal settlements, the company aims to help investors evaluate core business trends, make meaningful period-over-period comparisons, and identify operating trends that might otherwise be masked by these significant, often variable, items.

The excluded items in 2010 included restructuring charges primarily related to severance costs, and in-process R&D charges from an Acrux Ltd. in-licensing. In the fourth quarter of 2009, excluded items were asset impairments and restructuring charges, and in-process R&D from an Incyte Corporation agreement. For the first three quarters of 2009, asset impairments and restructuring charges, and charges related to Zyprexa settlements were excluded.

For 2011, Eli Lilly provided financial expectations on a non-GAAP basis. This includes projected non-GAAP earnings per share growth and revenue growth. Notably, the revenue growth forecast specifically excludes the anticipated decline in sales for Zyprexa and Gemzar outside of Japan, as well as the incremental impact of U.S. healthcare reform.