ELI LILLY & Co — Earnings Release 2018

Dec 19, 2018

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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Date of Report (Date of earliest event reported): December 19, 2018

ELI LILLY AND COMPANY

(Exact name of registrant as specified in its charter)

Indiana (State or Other Jurisdiction of Incorporation) 35-0470950 (I.R.S. Employer Lilly Corporate Center 001-06351 Identification No.) Indianapolis, Indiana (Commission (Address of Principal File Number) Executive Offices) 46285 (Zip Code) Registrant's telephone number, including area code: (317) 276-2000

No Change

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

• Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

• Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02. Results of Operations and Financial Condition

On December 19, 2018, the Company issued a press release updating financial guidance for 2018, reaffirming financial expectations through the remainder of the decade, and announcing financial guidance for 2019. In addition, on the same day, the Company held a teleconference for analysts and media to discuss this guidance. The teleconference was web cast on the Company's web site. The press release is attached to this Form 8-K as Exhibit 99.1.

The Company uses non-GAAP financial measures that differ from financial statements reported in conformity with U.S. generally accepted accounting principles (GAAP), and the attached press release includes a description of certain non-GAAP items that may affect our financial expectations for 2018 and 2019. The Company’s non-GAAP financial measures adjust reported results to exclude amortization of intangibles and items that are typically highly variable, difficult to predict, and/or of a size that could have a substantial impact on the Company’s reported operations for a period. The Company believes that these non-GAAP financial measures provide useful information to investors. Among other things, they may help investors evaluate the Company’s ongoing operations. They can assist in making meaningful period-over-period comparisons and in identifying operating trends that would otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP financial measures internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. Investors should consider these non-GAAP financial measures in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.

The information in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.

Item 9.01. Financial Statements and Exhibits

Exhibit Number 99.1	Description Press release dated December 19, 2018

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ELI LILLY AND COMPANY

(Registrant)

By: /s/ Donald A. Zakrowski Title: Vice President, Finance and Chief Accounting Officer

Dated: December 19, 2018

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2 0 1 8 F in a n c ia l G u id a n c e T h e c o m p a n y h a s re v is e d c e rta in e le m e n ts o f its 2 0 1 8 fin a n c ia l g u id a n c e o n a re p o rte d b a s is . E a rn in g s p e r s h a re o n a re p o rte d b a s is a re n o w e x p e c te d to b e in th e ra n g e o f $ 2 .8 0 to $ 2 .8 5 , w h ile n o n -G A A P e a rn in g s p e r s h a re fo r 2 0 1 8 a re s l ti e x p e c te d to b e in th e ra n g e o f $ 5 .5 5 to $ 5 .6 0 . 2 0 1 8 % C h a n g e E x p e c ta tio n s * fro m 2 0 1 7 E a rn in g s p e r s h a re (re p o rte d ) $ 2 .8 0 to $ 2 .8 5 N M A c q u ire d in -p ro c e s s re s e a rc h a n d d e v e lo p m e n t 1 .8 2 A m o rtiz a tio n o f in ta n g ib le a s s e ts .4 3 A s s e t im p a irm e n t, re s tru c tu rin g a n d o th e r s p e c ia l c h a rg e s .4 1 (a ) In c o m e ta x e s .0 5 O th e r, n e t .0 3 E a rn in g s p e r s h a re (n o n -G A A P ) $ 5 .5 5 to $ 5 .6 0 3 0 % to 3 1 % N u m b e rs m a y n o t a d d d u e to ro u n d in g 2 0 1 8 E x p e c ta tio n s a re p e n d in g fin a liz a tio n o f e s tim a te s , a c c o u n tin g p o lic y e le c tio n s , a n d g u id a n c e is s u e d fo r ta x re fo rm . (a ) R e la te s to a d ju s tm e n ts to th e 2 0 1 7 T o l* T a x fo r U .S . ta x re fo rm p ro p o s e d re g u la tio n s a n d ta x e x p e n s e s a s s o c ia te d w ith th e s e p a ra tio n o f th e E la n c o a n im a l h e a lth b u s in e s s . 4

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T h e fo l o w in g ta b le s u m m a riz e s th e c o m p a n y ’s 2 0 1 8 fin a n c ia l g u id a n c e . 2 0 1 8 G u id a n c e * P rio r R e v is e d R e v e n u e $ 2 4 .3 to $ 2 4 .5 b il o n U n c h a n g e d G ro s s M a rg in % o f R e v e n u e (re p o rte d ) A p p ro x . 7 3 .5 % U n c h a n g e d G ro s s M a rg in % o f R e v e n u e (n o n -G A A P ) A p p ro x . 7 6 % U n c h a n g e d M a rk e tin g , S e l in g & A d m in is tra tiv e $ 6 .3 to $ 6 .5 b il o n U n c h a n g e d R e s e a rc h & D e v e lo p m e n t $ 5 .2 to $ 5 .4 b il o n U n c h a n g e d O th e r In c o m e /(E x p e n s e ) $ 7 5 to $ 2 0 0 m il o n U n c h a n g e d T a x R a te (re p o rte d ) A p p ro x . 2 2 .5 % A p p ro x . 2 3 % T a x R a te (n o n -G A A P ) A p p ro x . 1 6 % U n c h a n g e d E a rn in g s p e r s h a re (re p o rte d ) $ 3 .0 4 to $ 3 .0 9 $ 2 .8 0 to $ 2 .8 5 E a rn in g s p e r s h a re (n o n -G A A P ) $ 5 .5 5 to $ 5 .6 0 U n c h a n g e d *C e rta in e le m e n ts o f 2 0 1 8 g u id a n c e a re p e n d in g fin a liz a tio n o f e s tim a te s , a c c o u n tin g p o lic y e le c tio n s , a n d g u id a n c e is s u e d fo r ta x re fo rm . N o n -G A A P a d ju s tm e n ts a re c o n s is te n t w ith th e e a rn in g s p e r s h a re ta b le a b o v e . 5

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M a rk e tin g , s e l in g a n d a d m in is tra tiv e e x p e n s e s a re e x p e c te d to b e in th e ra n g e o f $ 6 .4 b il o n to $ 6 .7 b il o n . R e s e a rc h a n d d e v e lo p m e n t e x p e n s e s a re e x p e c te d to b e in th e ra n g e o f $ 5 .6 b il o n to $ 5 .8 b il o n . O th e r in c o m e (e x p e n s e ) is e x p e c te d to b e e x p e n s e b e tw e e n $ 7 5 m il o n a n d $ 2 2 5 m il o n . T h e 2 0 1 9 e f e c tiv e ta x ra te is e x p e c te d to b e a p p ro x im a te ly 1 6 p e rc e n t o n b o th a re p o rte d b a s is a n d o n a n o n -G A A P b a s is , p e n d in g fin a liz a tio n o f e s tim a te s , a c c o u n tin g p o lic y e le c tio n s , a n d g u id a n c e is s u e d fo r ta x re fo rm . T h e fo l o w in g ta b le s u m m a riz e s th e c o m p a n y ’s 2 0 1 9 fin a n c ia l g u id a n c e . 2 0 1 9 G u id a n c e * R e v e n u e $ 2 5 .3 to $ 2 5 .8 b il o n G ro s s M a rg in % o f R e v e n u e (re p o rte d ) A p p ro x . 7 5 .0 % G ro s s M a rg in % o f R e v e n u e (n o n -G A A P ) A p p ro x . 7 6 .5 % M a rk e tin g , S e l in g & A d m in is tra tiv e $ 6 .4 to $ 6 .7 b il o n R e s e a rc h & D e v e lo p m e n t $ 5 .6 to $ 5 .8 b il o n O th e r In c o m e /(E x p e n s e ) $ (2 2 5 ) to $ (7 5 ) m il o n T a x R a te (re p o rte d ) A p p ro x . 1 6 % T a x R a te (n o n -G A A P ) A p p ro x . 1 6 % E a rn in g s p e r s h a re (re p o rte d ) $ 5 .5 2 to $ 5 .6 2 E a rn in g s p e r s h a re (n o n -G A A P ) $ 5 .9 0 to $ 6 .0 0 C e rta in e le m e n ts o f 2 0 1 9 g u id a n c e a re p e n d in g fin a liz a tio n o f e s tim a te s , a c c o u n tin g p o lic y e le c tio n s , a n d g u id a n c e is s u e d fo r ta x re fo rm . N o n -G A A P a d ju s tm e n ts a re c o n s is te n t w ith th e e a rn in g s p e r s h a re ta b le a b o v e . 7
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290:0200 a M in.m . Eim ua sm Fte rnin tim ea n (EcTia) al Enxdp w ie l bceta atiovnasila Tbhlee fo c r eopm pla ya vniay th hea w es rebvsisitee. Adb itso 2u0t E2li L0i l y m in a nim ud C om finm pa nacniayl e Lxi l yp ise ac gtalotiobnasl h aenadlth ncoaw ere lexapdeecr thtsa at ut lenaitesst 6 c paerinrcge w ithn t c doism pc oovuenryd to a cnrenautea m el re vdeicninuees g throaw tht m a frokm 2e life0 b1e5 t e tor fo 2r p0e2o0p foler th aero fuu l cnodm p th ea w on yrld, a. Wen d w e a t lerea fosut 7n pdeercde m on t creo thm pa no au cnedn atunryn augaol re bvye an m au en g croow thm m i fo t er thde to h curem aa tinng p hhigahrm a-q ucaelityu m etic adl bicuinseinse thsast m e. C eertat reina finl naenecdiasl g, aunidda tondcaey in w efo rm a re m atio nin fo trur 2e0 to1 th9a at m isn ds 2io0n1 in8 a is l o purer w os erkn. Atecdro osns b thoeth g alo rebpeo, Lrtei l yd e am pn dlo ay neoens-G A w oArkP to b daissciso. Svoem er a n ndu bm brin ge lifers-c inh thaisn pgreinsgs m e re ledaicsinee m as toy th noost aed w hd dou nee toe rodu thnedm , im pin g . R ero vpeo thrteed u rensdueltsrs ataren pdreinpga arendd in m a a cncaogrdeam en cnet o w ithf d is U .Se a. gseen, aenrad l y g aivcec beapctekd to a ccocm m uo u nntin i tegs p thrinrocuipglehs p (G Ah ilaAnPth) aronbpdey in n aconlu gddu veao aralu l rennvteteeeensrisu thm . Tea at ponip ledea elinrnxe m op p erorend asubecostsu re w it Lc l si l you, pgclencaizeseeedd v d inisu cit urinlinsgic a that w w w .el te ps etin l iyriog.cd, w ios l rem a. N oc ennivd-G Ae h th t pAe:n / P ne m eew sc aerossousm .rea l iysry.c e 8oxm /sc luodceia thl-ceh iteam sn n deelss. Fc-LribLeYd T inh thise p rerecsosn recle i laatiosne ta cbolensta cinosn m ata inneadg ine thm eis pnret’ss csu re r elenat insteen. Ttiohnes n aonnd-G A e xApPe m ec taatiosnusre fosr th aere fu ptureres, ae l onf w hte dic toh p arorev foidrw ae ardd- lodo i tokninagl in sstaigtehm ets inntots th w ithe uinn thdee m erly inagn treinngd osf S ine thcetio cno 2m p7 Aa onf thye’s S beucsuinr i teess Asc. Tt ohf 1is9 p3re3s asn redle Saescetio dno 2e1sE n oof tht ceo Snesc t iuuter i te asn E ox f ecr ohf aannyg see Accut or i tef 1s9 fo3r s4a. Tleh. Wee w ob crdass “et osf C otim antefe,” “preronjeccet,” “in C ate n l adn,” “edx Inpveecst,” “btoer M alie vteeria,” “talsrg Aest,” “a pnreticvipioautes,” alyn adn snim ilao ur enxcpereds, insvioenssto arsre a inntedn thdee gde ton ideeranl ptifyu fobrw alic crda-lono akcincge sstaste am e liv en w ets . Abcctuaasl ret osf thuelts 2 m a0 1y8 d ini f evr m ae stetm eria l yn frot cm tho m m ue s en foityrw a m erde- lotinogk cinogn sfetaretenm ec en ctsa d l auned to in vvaeriosutosr m a fa ctetoriarsls. T thhroeureg ahre a s linigkn o i fcna Lni l yt ris’sk w es abnsdite u ant w w w .inc e rta invtieess into pr. l iyh.caorm am . Tcheeu cticoanl refesreenacrceh c aan l w id l b dee hveeldlo topdm ea yn bt. Tehgeinren cinagn a t
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