Lilly Reports Third-Quarter Results
Sales increase 14%; Gross margin improves
Company reports net loss of $.43 per share as a result of Zyprexa charges
On a pro forma non-GAAP basis, earnings per share rose 14% to $1.04
INDIANAPOLIS, Oct. 23 /PRNewswire-FirstCall/ -- Eli Lilly and Company
(NYSE: LLY) today announced financial results for the third quarter of
2008.
Due to significant strategic actions taken by the company in 2008,
financial results are presented on both a reported basis and a pro forma
non-GAAP basis. Reported results were prepared in accordance with generally
accepted accounting principles (GAAP) and include all sales and expenses
recognized by the company during the period. Pro forma non-GAAP results
exclude significant items described in the reconciliation tables and also
assume the ICOS acquisition was completed January 1, 2007. The pro forma
non-GAAP results are presented in order to provide additional insights into
the underlying trends in the company's business. Financial guidance is also
provided on both a reported and a pro forma non-GAAP basis.
Third-Quarter Highlights
-- Sales increased 14 percent, to $5.210 billion.
-- Products launched this decade -- Alimta(R), Byetta(R), Cialis(R),
Cymbalta(R), Forteo(R), Strattera(R), Symbyax(R), Xigris(R) and
Yentreve(R) -- collectively grew 28 percent, to $1.923 billion, and
accounted for 37 percent of total sales, compared with 33 percent of
total sales in the third quarter of 2007.
-- The company recorded charges totaling $1.477 billion related to the
pending Zyprexa(R) investigations by the U.S. Attorney for the Eastern
District of Pennsylvania, as well as the resolution of a multi-state
investigation regarding Zyprexa involving 32 states and the District of
Columbia.
-- As a result of the Zyprexa charges, the company reported a net loss of
$465.6 million and a loss per share of $.43, compared with third-
quarter 2007 net income of $926.3 million and earnings per share of
$.85. On a pro forma non-GAAP basis, excluding significant items
totaling $1.47 per share, earnings rose 14 percent to $1.04 per share.
"Over the past few quarters, Lilly has taken significant actions to
advance our pipeline, increase productivity and transform our business
model," commented John Lechleiter, Ph.D., Lilly president and chief
executive officer. "These actions include the targeted acquisitions of
companies and the in-licensing of promising molecules; the restructuring
and impairment of assets resulting from continued productivity initiatives;
and the move toward resolution of a significant aspect of pending Zyprexa
investigations and litigation. In addition, the proposed acquisition of
ImClone would create a leading oncology franchise and strengthen our
biotechnology capabilities. Going forward, we will continue to look for
other opportunities that align with our business strategy."
"Importantly, as we execute on our strategy, we continue to deliver on
our financial commitments. In the third quarter, the underlying
fundamentals of our business remained strong, highlighted by volume-driven
sales growth and an expansion in gross margin. Our revised full-year EPS
guidance reflects these strong fundamentals."
Significant Events Over the Last Three Months
-- The board of directors approved a definitive merger agreement under
which Lilly will acquire ImClone Systems, Inc. through an all cash tender
offer of $70.00 per share, or approximately $6.5 billion. The company
expects the transaction to close in either the fourth quarter of 2008 or
the first quarter of 2009.
-- The company acquired the worldwide rights to the dairy cow
supplement, Posilac(R), as well as the product's supporting operations,
from Monsanto Company for a $300.0 million upfront payment, as well as
contingent consideration based on future Posilac sales. The transaction
closed in October, and will be reflected in the company's fourth quarter
financial results.
-- The company completed the $64.0 million acquisition of SGX
Pharmaceuticals, Inc., a San Diego-based biotechnology company focused on
applying state-of-the art structural biology capabilities to drug
discovery.
-- The company sold its Greenfield Laboratories site in Greenfield,
Indiana, to Covance Inc. The two companies also signed a 10-year service
agreement. Under this agreement, the company and Covance will broaden their
existing strategic collaboration, with Covance assuming responsibility for
Lilly's toxicology testing and other R&D support activities at the site.
-- The company initiated a strategic review of its Tippecanoe Labs
facility in Lafayette, Indiana. The three options being considered for the
site include continuing operations with a revised site mission, exploring
opportunities to sell the facility and ceasing operations altogether. The
review is expected to last six to twelve months. No decisions have yet been
reached.
-- The company's board of directors elected John C. Lechleiter, Ph.D.,
chairman of the board effective January 1, 2009. Lechleiter will succeed
outgoing chairman Sidney Taurel, who had previously announced his
retirement from the company and the board effective December 31, 2008.
-- The company announced that it is set to become the first
pharmaceutical research company to disclose its payments to physicians in
the United States. As part of its broader transparency efforts, the company
plans to launch an online registry of physician payments in 2009.
-- The company, along with its partner Daiichi Sankyo Company, Limited,
confirmed that the U.S. Food and Drug Administration (FDA) did not complete
its review for the prasugrel new drug application (NDA) by the Prescription
Drug User Fee Act goal date of September 26, 2008. The two companies also
reiterated that they continue to have discussions with the FDA regarding
the review of this application. The companies have not been notified of any
regulatory action for the NDA or of any decision to have an advisory
committee to review prasugrel.
-- The FDA approved the use of Alimta, in combination with cisplatin,
in the first-line treatment of locally-advanced and metastatic non-small
cell lung cancer (NSCLC), for patients with nonsquamous histology.
-- The European Commission approved the use of Cymbalta for the
treatment of Generalized Anxiety Disorder (GAD).
-- The company submitted tadalafil as a treatment for pulmonary
arterial hypertension (PAH) to regulatory authorities in both the United
States and Japan.
-- The Committee for Medicinal Products for Human Use (CHMP) issued a
positive opinion recommending approval of Zypadhera(TM) (also known as
olanzapine long-acting injection) for maintenance treatment of adult
patients with schizophrenia sufficiently stabilized during acute treatment
with oral olanzapine. The opinion issued by the CHMP will need to be
ratified by the European Commission before the new indication is considered
approved.
-- The company received a favorable ruling upholding the validity of
its Zyprexa patent in the United Kingdom.
Third-Quarter Significant Items Affecting Reported Net Income (Loss)
The reported net loss for the third quarter of 2008 and the reported
net income for the third quarter of 2007 were affected by significant items
totaling $1.47 and $.06 per share, respectively, which are reflected in the
company's financial results and are summarized below and in the table that
follows:
2008
-- The company recognized charges totaling $1.477 billion, or $1.33 per
share, related to the pending Zyprexa investigations with the U.S. Attorney
for the Eastern District of Pennsylvania, as well as the resolution of a
multi-state investigation regarding Zyprexa involving 32 states and the
District of Columbia.
-- The company recognized a charge of $182.4 million, or $.11 per
share, for asset impairments and restructuring primarily driven by the sale
of its Greenfield, Indiana site.
-- The company recognized a charge of $28.0 million, or $.03 per share,
for acquired in-process research and development associated with the SGX
acquisition.
2007
-- The company recorded a charge of $81.3 million, or $.06 per share,
related to the reduction in expected insurance recoveries.
Third Quarter % Growth
------------- --------
2008 2007
---- ----
Earnings (loss) per share (reported) $(.43) $.85 NM
Charges related to Zyprexa investigations 1.33 -
Asset impairments and restructuring charges .11 -
Charge for a reduction in expected insurance
recoveries - .06
In-process research and development charge
associated with the SGX acquisition .03 -
----- -----
Earnings per share (pro forma non-GAAP) $1.04 $.91 14%
----- -----
Third-Quarter Results
Worldwide sales for the quarter were $5.210 billion, an increase of 14
percent compared with the third quarter of 2007. Sales volume increased 6
percent, while exchange rates contributed 4 percent of worldwide sales
growth and selling prices contributed 3 percent (numbers do not add due to
rounding).
Gross margin as a percent of sales increased by 0.8 percentage points,
to 77.8 percent. This increase was primarily due to higher product prices
and manufacturing expenses growing at a slower rate than sales.
Marketing, selling and administrative expenses rose 12 percent, to
$1.649 billion. This increase was due to increased marketing and sales
force expenses, including prelaunch expenses for prasugrel and marketing
costs associated with Cymbalta and Evista(R), the impact of foreign
exchange rates and increased litigation-related expenses. Research and
development expenses were $953.0 million, or 18 percent of sales. Compared
with the third quarter of 2007, research and development expenses grew 13
percent. This increase was primarily due to increased late-stage clinical
trial and discovery research costs.
The company recognized a charge of $28.0 million in the third quarter
of 2008 for acquired in-process research and development associated with
the acquisition of SGX.
The company recognized asset impairments, restructuring, and other
special charges of $1.659 billion in the third quarter of 2008, primarily
associated with charges totaling $1.477 billion related to Zyprexa
investigations with the U.S. Attorney for the Eastern District of
Pennsylvania and multiple states. In addition, the company also recognized
asset impairments and restructuring charges of $182.4 million primarily
related to the sale of its Greenfield, Indiana site to Covance. In the
third quarter of 2007, the company recognized a charge of $81.3 million for
the reduction in expected product liability insurance recoveries.
Other income decreased by $47.3 million, to $2.5 million, primarily due
to lower out-licensing income and the $10.9 million write-down of certain
investment securities, offset by lower interest expense.
In the third quarter of 2008, due to the uncertainty of the tax
treatment of the Zyprexa charges, the company recorded tax expense of
$232.8 million despite a net loss before income taxes. The effective tax
rate for the third quarter of 2007 was 21.4 percent.
As a result of the Zyprexa charges, on a reported basis the company
recorded a net loss of $465.6 million, or $.43 per share in the third
quarter of 2008, compared with third-quarter 2007 net income of $926.3
million and earnings per share of $.85.
On a pro forma non-GAAP basis, the company recorded net income of
$1.135 billion, or $1.04 per share in the third quarter of 2008, compared
with third-quarter 2007 net income of $996.4 million, or $.91 per share.
Product Sales Highlights
------------------------
(Dollars in millions) % Change % Change
Over/ Over/
Third Quarter (Under) Year-to-Date (Under)
2008 2007 2007 2008 2007 2007
-------- -------- ------ -------- -------- ------
Zyprexa $1,189.5 $1,166.1 2% $3,549.5 $3,487.1 2%
Cymbalta 716.4 513.2 40% 1,975.9 1,474.6 34%
Gemzar(R) 440.2 394.4 12% 1,306.5 1,166.9 12%
Humalog(R) 432.6 362.5 19% 1,277.8 1,060.4 21%
Cialis(1) 376.6 311.4 21% 1,075.7 797.6 35%
Alimta 313.9 215.0 46% 836.0 610.0 37%
Evista 265.7 263.2 1% 806.6 805.0 0%
Humulin(R) 271.6 243.3 12% 800.8 711.9 12%
Forteo 192.7 180.5 7% 584.3 511.1 14%
Strattera 149.5 130.5 15% 432.7 412.6 5%
Total Sales -
Reported $5,209.5 $4,586.8 14% $15,167.5 $13,443.9 13%
Total Sales -
Pro forma $5,209.5 $4,586.8 14% $15,167.5 $13,516.6 12%
(1) The 2007 year-to-date amount for Cialis represents the reported
Cialis sales in Lilly's financial statements and does not include
Cialis sales from the joint-venture countries prior to the ICOS
acquisition on January 29, 2007. Total worldwide Cialis sales for the
first nine months of 2007 were $870.3 million, resulting in 2008
year-to-date growth of 24 percent.
Zyprexa
In the third quarter of 2008, Zyprexa sales totaled $1.190 billion, a 2
percent increase compared with the third quarter of 2007. U.S. sales of
Zyprexa increased 3 percent to $555.6 million, driven by increased net
effective selling prices, partially offset by lower demand. Zyprexa sales
in international markets increased 1 percent, to $633.9 million, driven by
the favorable impact of foreign exchange rates, partially offset by
decreased demand and lower prices. Demand outside the U.S. was unfavorably
impacted by generic competition in Canada and Germany, offset by growth in
Japan and several European markets.
Cymbalta
For the third quarter of 2008, Cymbalta generated $716.4 million in
sales, an increase of 40 percent compared with the third quarter of 2007.
U.S. sales of Cymbalta increased 34 percent, to $597.1 million, driven
primarily by higher demand and, to a lesser extent, increased prices. Sales
outside the U.S. were $119.3 million, an increase of 73 percent, driven
primarily by higher demand and, to a lesser extent, the favorable impact of
foreign exchange rates. Higher demand outside the U.S. reflects both
increased demand in established markets, as well as recent launches in new
markets.
Gemzar
Gemzar sales totaled $440.2 million in the third quarter of 2008, an
increase of 12 percent from the third quarter of 2007. Sales in the U.S.
increased 14 percent, to $189.2 million, due to increased demand and higher
prices, while sales outside the U.S. increased 10 percent, to $250.9
million, as a result of the favorable impact of foreign exchange rates.
Humalog
For the third quarter of 2008, worldwide Humalog sales increased 19
percent, to $432.6 million. Sales in the U.S. increased 13 percent to
$245.1 million, driven by higher demand and, to a lesser extent, increased
net effective selling prices. Sales outside the U.S. increased 28 percent
to $187.5 million, driven by increased demand and the favorable impact of
foreign exchange rates.
Cialis
Cialis sales for the third quarter of 2008 were $376.6 million,
representing growth of 21 percent compared with third-quarter 2007. U.S.
sales of Cialis were $139.8 million in the third quarter, a 20 percent
increase compared with the third quarter of 2007, driven by higher prices
and, to a lesser extent, increased demand. Sales of Cialis outside the U.S.
increased 22 percent, to $236.8 million, driven primarily by the favorable
impact of foreign exchange rates and higher demand.
Alimta
For the third quarter of 2008, Alimta generated sales of $313.9
million, an increase of 46 percent compared with the third quarter of 2007.
U.S. sales of Alimta increased 35 percent, to $149.3 million, due primarily
to increased demand. Sales outside the U.S. increased 58 percent, to $164.6
million, due primarily to increased demand and, to a lesser extent, the
favorable impact of foreign exchange rates.
Evista
Evista sales were $265.7 million in the third quarter of 2008, a 1
percent increase compared with the third quarter of 2007. U.S. sales of
Evista increased 1 percent at $170.8 million, as a result of higher prices,
offset by lower demand. Sales outside the U.S. increased 1 percent to $94.9
million, driven by favorable exchange rates and higher prices offset by
lower demand.
Humulin
Worldwide Humulin sales increased 12 percent in the third quarter of
2008, to $271.6 million. U.S. sales increased 5 percent, to $95.1 million,
due to higher net effective selling prices. Sales outside the U.S.
increased 16 percent, to $176.6 million, driven by the favorable impact of
foreign exchange rates and increased demand.
Forteo
Third-quarter sales of Forteo were $192.7 million, a 7 percent increase
compared with the third quarter of 2007. U.S. sales of Forteo decreased 6
percent, to $117.0 million, driven by changes in wholesaler buying
patterns, partially offset by higher net effective selling prices. Sales
outside the U.S. grew 36 percent, to $75.7 million, due to higher demand
and the favorable impact of foreign exchange rates.
Strattera
During the third quarter of 2008, Strattera generated $149.5 million of
sales, an increase of 15 percent compared with the third quarter of 2007.
U.S. sales increased 6 percent, to $109.5 million, due primarily to higher
prices. Sales outside the U.S. increased 49 percent, to $40.0 million, due
primarily to higher net effective selling prices, increased demand, and, to
a lesser extent, the favorable impact of foreign exchange rates.
Byetta
Worldwide sales of Byetta were $201.2 million in the third quarter of
2008, a 22 percent increase compared with the third quarter of 2007. U.S.
Byetta sales grew 12 percent, to $179.9 million. Byetta sales outside the
U.S. were $21.3 million. Lilly reports as revenue its 50 percent share of
Byetta's gross margin in the U.S., 100 percent of Byetta sales outside the
U.S., and its sales of Byetta pen delivery devices to its partner, Amylin
Pharmaceuticals. For the third quarter, Lilly recognized revenue totaling
$109.2 million, representing a 25 percent increase compared with the third
quarter of 2007.
Animal Health
Worldwide sales of animal health products in the third quarter of 2008
were $277.1 million, an increase of 17 percent compared with the third
quarter of 2007. U.S. sales grew 14 percent, to $127.9 million, driven by
increased demand and the launch of Comfortis(TM). Sales outside the U.S.
grew 20 percent, to $149.2 million, driven primarily by increased demand
and the favorable impact of exchange rates.
Year-to-Date Results
For the first nine months of 2008, worldwide reported sales increased
13 percent and pro forma non-GAAP sales increased 12 percent, to $15.168
billion, compared with sales for the same period in 2007. Reported net
income and earnings per share were $1.558 billion and $1.42, respectively.
On a pro forma non-GAAP basis, net income and earnings per share were
$3.222 billion and $2.95, respectively.
Year-to-Date Significant Items Affecting Reported Net Income
In addition to the third-quarter 2008 and 2007 significant items
previously mentioned, reported net income for the first nine months of 2008
and the first nine months of 2007 were also affected by significant items
occurring in the first and second quarters of the respective years that are
reflected in the company's financial results and are summarized below and
included in the table that follows:
2008
-- The company recognized asset impairments, restructuring and other
special charges of $145.7 million, primarily associated with certain
impairment, termination, and wind-down costs resulting from the termination
of the AIR(R) Insulin program, and a charge of $88.9 million, primarily
associated with previously-announced strategic exit activities related to
manufacturing operations. These two charges decreased earnings per share by
$.14 in total.
-- The company recognized asset impairments associated with certain
manufacturing operations (included in cost of sales) of $57.1 million,
which decreased earnings per share by $.04.
-- The company incurred in-process research and development (IPR&D)
charges associated with the licensing arrangement with BioMS Medical Corp.
of $87.0 million and the licensing arrangement with TransPharma Medical
Ltd. of $35.0 million, which decreased earnings per share by $.07 in total.
-- The company recognized a discrete income tax benefit of $210.3
million as a result of the resolution of a substantial portion of the IRS
audit of its federal income tax returns for years 2001 through 2004, which
increased earnings per share by $.19.
2007
-- The company recognized asset impairments, restructuring, and other
special charges associated with previously announced decisions affecting
manufacturing and research facilities of $123.0 million, which decreased
earnings per share by $.08.
-- The company incurred IPR&D charges associated with the acquisitions
of ICOS ($303.5 million), Hypnion ($291.1 million) and Ivy Animal Health
($37.0 million), as well as the licensing arrangement with OSI
Pharmaceuticals ($25.0 million), which decreased earnings per share by $.58
in total.
Year-to-date % Growth
------------ --------
2008 2007
----- -----
Earnings per share (reported) $1.42 $1.93 (26)%
Charges related to Zyprexa investigations 1.33 -
Asset impairments and restructuring charges
(included in asset impairments, restructuring
and other special charges) .25 .08
Asset impairments (included in cost of sales) .04 -
In-process research and development charges
associated with SGX acquisition (2008),
ICOS, Hypnion, and Ivy acquisitions (2007)
and in-licensing transactions with BioMS and
TransPharma (2008) and OSI (2007) .10 .58
Benefit from resolution of IRS audit (.19) -
Charge for a reduction in expected insurance
recoveries - .06
Include pro forma as if the ICOS acquisition
was completed on January 1, 2007 - (.01)
----- -----
Earnings per share (pro forma non-GAAP) $2.95 $2.64 12%
----- -----
2008 Financial Guidance
The company's full-year 2008 reported earnings guidance is now $2.44 to
$2.49 per share. The change from earlier guidance of $3.79 to $3.94 per
share results from the previously mentioned third-quarter 2008 significant
items totaling $1.47 per share as well as from an expected increase in
underlying EPS. Excluding significant items, the company has raised its pro
forma non- GAAP EPS guidance to $3.97 to $4.02 per share, an increase from
its previous guidance of $3.85 to $4.00 per share. The company's full-year
2008 earnings per share guidance on both a reported basis and a pro forma
non-GAAP basis do not reflect any impact related to the proposed
acquisition of ImClone Systems, including any potential charges.
2008 Earnings Per Share Expectations:
-------------------------------------
2008 2007
Expectations Results % Growth
-------------- ------- -------------
Earnings per share (reported) $2.44 to $2.49 $2.71 (10%) to (8%)
Charges related to Zyprexa
investigations 1.33 -
Asset impairments and restructuring
charges (included in asset
impairments, restructuring and
other special charges) .25 .15
Asset impairments (included in cost
of sales) .04 -
In-process research and development
charges associated with SGX
acquisition (2008), ICOS, Hypnion,
and Ivy acquisitions (2007) and
in-licensing transactions with BioMS
and TransPharma (2008) and OSI,
MacroGenics and Glenmark (2007) .10 .63
Benefit from resolution of IRS audit (.19) -
Charge for a reduction in expected
insurance recoveries - .06
Pro forma as if the ICOS acquisition
was completed on January 1, 2007 - (.01)
-------------- ------
Earnings per share (pro forma
non-GAAP) $3.97 to $4.02 $3.54 12% to 14%
-------------- ------
The company has also revised other aspects of its previously-issued
2008 full-year financial guidance. Specifically, guidance for gross margin
as a percent of sales, other income and deductions, and the effective tax
rate has been revised. All other line-item guidance remains unchanged.
Pro forma sales are still expected to grow in the high-single to
low-double digits. As a result of the weakening of foreign currencies, the
company now expects significant improvement in gross margin as a percent of
sales. The sum of marketing, selling and administrative expenses and
research and development expenses is still expected to grow in the
high-single digits. Marketing, selling and administrative expenses are
still expected to grow in the high-single digits and the company still
expects research and development expenses to grow in the high-single to
low-double digits. Other income and deductions are now expected to
contribute approximately $50 million, a change from the previous guidance
of less than $100 million. As a result of the Zyprexa charge, the effective
tax rate is now expected to be approximately 23 percent on a reported
basis, while on a pro forma non-GAAP basis, the effective tax rate is still
expected to be approximately 22 percent.
Webcast of Conference Call
As previously announced, investors and the general public can access a
live webcast of the third-quarter 2008 financial results conference call
through a link on Lilly's website at http://www.lilly.com. The conference call
will be held today from 9:00 a.m. to 10:00 a.m. Eastern Daylight Time (EDT)
and will be available for replay via the website through November 21, 2008.
Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of first-in-class and best-in-class pharmaceutical products by
applying the latest research from its own worldwide laboratories and from
collaborations with eminent scientific organizations. Headquartered in
Indianapolis, Ind., Lilly provides answers -- through medicines and
information -- for some of the world's most urgent medical needs.
Additional information about Lilly is available at http://www.lilly.com; Lilly's
clinical trial registry is available at http://www.lillytrials.com.
F-LLY
This press release contains forward-looking statements that are based
on management's current expectations, but actual results may differ
materially due to various factors. The company cannot guarantee that the
ImClone merger will close or that the company will realize anticipated
operational efficiencies following any such merger with ImClone. The
current credit market may increase the cost of financing the ImClone
transaction. There are significant risks and uncertainties in
pharmaceutical research and development. There can be no guarantees with
respect to pipeline products that the products will receive the necessary
clinical and manufacturing regulatory approvals or that they will prove to
be commercially successful. The company's results may also be affected by
such factors as competitive developments affecting current products; rate
of sales growth of recently launched products; the timing of anticipated
regulatory approvals and launches of new products; regulatory actions
regarding currently marketed products; other regulatory developments and
government investigations; patent disputes and other litigation involving
current and future products; the impact of governmental actions regarding
pricing, importation, and reimbursement for pharmaceuticals; changes in tax
law; asset impairments and restructuring charges; acquisitions and business
development transactions; and the impact of exchange rates. For additional
information about the factors that affect the company's business, please
see the company's latest Form 10-Q filed August 2008. The company
undertakes no duty to update forward-looking statements.
----------------------------------------------------------------------
Alimta(R) (pemetrexed, Lilly)
Byetta(R) (exenatide injection, Amylin Pharmaceuticals)
Cialis(R) (tadalafil, Lilly)
Comfortis(TM) (Lilly)
Cymbalta(R) (duloxetine hydrochloride, Lilly)
Evista(R) (raloxifene hydrochloride, Lilly)
Forteo(R) (teriparatide of recombinant DNA origin injection, Lilly)
Gemzar(R) (gemcitabine hydrochloride, Lilly)
Humalog(R) (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin(R) (human insulin of recombinant DNA origin, Lilly)
Posilac(R) (recombinant bovine somatotropin, Lilly)
Strattera(R) (atomoxetine hydrochloride, Lilly)
Symbyax(R) (olanzapine fluoxetine combination, or OFC, Lilly)
Xigris(R) (drotrecogin alfa (activated), Lilly)
Yentreve(R) (duloxetine hydrochloride, Lilly)
Zypadhera(TM) (Lilly)
Zyprexa(R) (olanzapine, Lilly)
AIR(R) is a trademark of Alkermes, Inc.
----------------------------------------------------------------------
Eli Lilly and Company Employment Information
September 30, 2008 December 31, 2007
------------------ -----------------
Worldwide Employees 39,600 40,600
Eli Lilly and Company
Operating Results (Unaudited) - REPORTED
(Dollars in millions, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
2008 2007 % Chg. 2008 2007 % Chg.
------------------------- -------------------------
Net sales $5,209.5 $4,586.8 14% $15,167.5 $13,443.9 13%
Cost of sales 1,155.2 1,054.6 10% 3,467.4 2,976.0 17%
Research and
development 953.0 844.5 13% 2,781.6 2,533.1 10%
Marketing, selling
and administrative 1,649.2 1,477.8 12% 4,899.8 4,339.3 13%
Acquired in-process
research and
development 28.0 - NM 150.0 656.6 (77)%
Asset impairments,
restructuring and
other special charges 1,659.4 81.3 NM 1,894.0 204.3 NM
--------- --------- --------- ---------
Operating income (loss) (235.3) 1,128.6 NM 1,974.7 2,734.6 (28)%
Net interest income
(expense) 9.2 (6.2) 10.4 (10.9)
Joint-venture income - - - 11.0
Net other income
(loss) (6.7) 56.0 44.7 89.8
--------- --------- --------- ---------
Other income 2.5 49.8 55.1 89.9
Income (loss) before
income taxes (232.8) 1,178.4 NM 2,029.8 2,824.5 (28)%
Income taxes (benefit) 232.8 252.1 (8%) 472.3 725.9 (35)%
--------- --------- --------- ---------
Net income (loss) $(465.6) $926.3 NM $1,557.5 $2,098.6 (26)%
========= ========= ========= =========
Earnings (loss) per
share - basic $(0.43) $0.85 NM $1.42 $1.93 (26)%
========= ========= ========= =========
Earnings (loss) per
share - diluted $(0.43) $0.85 NM $1.42 $1.93 (26)%
========= ========= ========= =========
Dividends paid per
share $.47 $.425 11% $1.41 $1.275 11%
Weighted-average
shares outstanding
(thousands) - basic 1,093,977 1,090,067 1,093,872 1,089,809
Weighted-average
shares outstanding
(thousands)
- diluted 1,093,977 1,090,228 1,093,927 1,090,095
N/M - not meaningful
Eli Lilly and Company
Operating Results(Unaudited) - Pro forma Non-GAAP
(Dollars in millions, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
% %
2008(a) 2007(c) Chg. 2008(a)(b) 2007(c)(d) Chg.
-------------------------- --------------------------
Net sales $5,209.5 $4,586.8 14% $15,167.5 $13,516.6 12%
Cost of sales 1,155.2 1,054.6 10% 3,410.3 2,991.9 14%
Research and
development 953.0 844.5 13% 2,781.6 2,545.1 9%
Marketing, selling
and administrative 1,649.2 1,477.8 12% 4,899.8 4,375.2 12%
Acquired in-process
research and
development - - NM - - NM
Asset impairments,
restructuring and
other special charges - - NM - - NM
--------- --------- --------- ---------
Operating income
(loss) 1,452.1 1,209.9 20% 4,075.8 3,604.4 13%
Net interest income
(expense) 9.2 (6.2) 10.4 (23.4)
Joint-venture income - - - -
Net other income
(loss) (6.7) 56.0 44.7 91.8
--------- --------- --------- ---------
Other income 2.5 49.8 55.1 68.4
Income (loss) before
income taxes 1,454.6 1,259.7 15% 4,130.9 3,672.8 12%
Income taxes (benefit) 320.0 263.3 21% 908.8 795.8 14%
========= ========= ========= =========
Net income (loss) $1,134.6 $996.4 14% $3,222.1 $2,877.0 12%
========= ========= ========= =========
Earnings (loss) per
share - basic $1.04 $0.91 14% $2.95 $2.64 12%
========= ========= ========= =========
Earnings (loss) per
share - diluted $1.04 $0.91 14% $2.95 $2.64 12%
========= ========= ========= =========
Dividends paid per
share $.47 $.425 11% $1.41 $1.275 11%
Weighted-average
shares outstanding
(thousands) - basic 1,093,977 1,090,067 1,093,872 1,089,809
Weighted-average
shares outstanding
(thousands)
- diluted 1,094,024 1,090,228 1,093,927 1,090,095
N/M - not meaningful
(a) The 2008 third-quarter and year-to-date amounts are adjusted to
eliminate a charge of $28.0 million (no tax benefit), or $0.03 per
share, for acquired in-process research and development related to
the SGX acquisition; a charge of $182.4 million (pre-tax), or
$0.11 per share (after-tax), for asset impairments and restructuring
primarily associated with the sale of the Greenfield site; and
charges totaling $1.477 billion (pre-tax), or $1.33 per share
(after-tax), related to pending and resolved Zyprexa investigations.
(b) In addition to items in (a), the 2008 year-to-date amounts are also
adjusted to eliminate charges totaling $122.0 million (pre-tax), or
$0.07 per share (after-tax), for acquired in-process research and
development associated with the in-licensing of compounds from BioMS,
and TransPharma; a charge of $291.7 million (pre-tax), or $0.18 per
share (after-tax), for asset impairments, restructuring, and other
special charges; and a discrete income tax benefit of $210.3 million,
or $(0.19) per share related to the resolution of a substantial
portion of an IRS audit.
(c) The 2007 third-quarter and year-to-date amounts are adjusted to
eliminate a $81.3 million (pretax) charge, or $0.06 per share
(after-tax), for special charges related to an adjustment to
insurance recoverables on product liability litigation; the 2007
year-to-date amounts are also adjusted to eliminate a second-quarter
charge of $328.1 million (pretax), or $0.29 per share (after-tax),
for acquired in-process research and development related to the
Hypnion and Ivy acquisitions; a $328.5 million (pretax) first-quarter
charge, or $0.29 per share (after-tax), for acquired in-process
research and development for compounds acquired from ICOS and OSI;
and a $123.0 million (pretax) charge, or $0.08 per share (after-tax),
for asset impairments, restructuring, and other special charges.
(d) In accordance with generally accepted accounting principles (GAAP),
the year-to-date 2007 financial statement has been restated assuming
the acquisition of ICOS was completed by Lilly effective January 1,
2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20031219/LLYLOGO )
SOURCE Eli Lilly and Company
