Eli Lilly 2015 Annual Report Download - page 56
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F44
FINANCIAL REPORT
The fair value of any contingent consideration liability that results from a business combination is determined
using a market approach based on quoted market values, significant other observable inputs for identical or
comparable assets or liabilities, or a discounted cash flow analysis. Estimating the fair value of contingent
consideration requires the use of significant estimates and judgments, including, but not limited to, revenue and
the discount rate.
Financial Statement Impact
As of December 31, 2015, a 5 percent change in the contingent consideration liability would result in a change
in income before income taxes of $33.5 million.
LEGAL AND REGULATORY MATTERS
Information relating to certain legal proceedings can be found in Note 15 to the consolidated financial
statements and is incorporated here by reference.
FINANCIAL EXPECTATIONS FOR 2016
For the full year of 2016, we expect EPS to be in the range of $2.83 to $2.93. We anticipate that total revenue
will be between $20.2 billion and $20.7 billion. Excluding the unfavorable impact of foreign exchange rates,
we expect revenue growth from a number of established products including Humalog, Trajenta, Cialis, Forteo,
Strattera, Erbitux, and animal health products, as well as higher revenues from new products including
Cyramza, Trulicity, Jardiance, Portrazza, and Basaglar. We expect this revenue growth to be partially offset by
lower revenue from Alimta as a result of increased competitive pressures.
We anticipate that gross margin as a percent of revenue will be approximately 74 percent in 2016. Research
and development expenses are expected to be in the range of $4.8 billion to $5.0 billion. Other—net, (income)
expense is expected to be income of up to $75 million. Marketing, selling, and administrative expenses are
expected to be in the range of $6.0 billion to $6.2 billion.
The 2016 tax rate is expected to be approximately 21 percent.
Capital expenditures are expected to be approximately $1.1 billion.
Amortization associated with the transfer of Erbitux commercialization rights included in our 2016 financial
guidance is subject to final acquisition accounting adjustments.
Various risks and uncertainties, including those discussed in "Forward-Looking Statements" and “Risk
Factors,” may cause our actual results to differ materially from these forward-looking statements.