Eli Lilly 2012 Annual Report Download - page 136

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32
product withdrawal that occurred in 2011 in its published non-GAAP earnings, the committee chose to include the
negative impact on sales and EPS for both 2011 and 2012 when determining EPS for purposes of paying the
2011-2012 PA.
For the 2011-2012 PA payout calculations, the committee made the following adjustments to reported EPS:
• For 2012: (i) Eliminated the income received from the early payment of the exenatide revenue-sharing
obligation; (ii) Added back the planned income from exenatide for the portion of the year after the early
payment;
• For 2010 and 2011: Eliminated one-time accounting charges for acquired in-process research and
development;
• For 2010: Eliminated the impact of U.S. health care reform
• For 2010, 2011, and 2012: Eliminated the impact of significant asset impairment and restructuring charges.
The adjustments were intended to align award payments more closely with underlying business growth trends and
eliminate volatile swings (up or down) caused by the unusual items. This is demonstrated by the 2010, 2011, and
2012 adjustments:
EPS Percent Growth vs. Prior Years
20%
15%
10%
5%
0% EPS growth - as reported
-5% EPS growth - adjusted
non-GAAP
-10%
-15%
-20%
-25%
2010 2011 2012
Reconciliations of these adjustments to our EPS and our published non-GAAP EPS are below.
2012 2011 % Growth
2012 vs. 2011 2010 % Growth
2011 vs. 2010
EPS as reported $3.66 $3.90 (6.2)% $4.58 (14.8)%
Eliminate IPR&D charges for acquisitions and in-
licensing transactions — $0.23 $0.03
Eliminate asset impairments, restructuring and
other special charges (including Xigris withdrawal) $0.16 $0.29 $0.13
Eliminate income from early payment of Amylin
financial obligation $(0.43)
Non-GAAP EPS $3.39 $4.41 (23.1)% $4.74 (7.0)%
Health care reform adjustment — $0.24
Xigris withdrawal adjustment $(0.01) $(0.05) —
Pro-rata portion of Amylin Net Income $0.09 — —
Non-GAAP EPS—adjusted $3.47 $4.36 (20.4)% $4.98 (12.4)%
Numbers reflected may not add due to rounding
Equity Incentive Grant Mechanics and Timing
The committee approves target grant values for equity incentives prior to the grant date. On the grant date, those
values are converted to shares based on:
• The closing price of company stock on the grant date.