2017 Q4 Form 10-K Financial Statement

#000173910419000006 Filed on February 20, 2019

View on sec.gov

Income Statement

Concept 2017 Q4 2017 Q3 2017 Q2
Revenue $754.3M $697.1M $732.8M
YoY Change
Cost Of Revenue $405.0M $376.2M $374.0M
YoY Change
Gross Profit $349.3M $320.9M $358.8M
YoY Change
Gross Profit Margin 46.31% 46.03% 48.96%
Selling, General & Admin $196.7M $194.7M
YoY Change
% of Gross Profit 56.31% 60.67%
Research & Development $61.90M $61.90M
YoY Change
% of Gross Profit 17.72% 19.29%
Depreciation & Amortization $87.10M $75.20M $156.1M
YoY Change
% of Gross Profit 24.94% 23.43% 43.51%
Operating Expenses $258.8M $256.6M $257.8M
YoY Change
Operating Profit $90.50M $64.30M $101.0M
YoY Change
Interest Expense $0.00 $0.00 $0.00
YoY Change
% of Operating Profit 0.0% 0.0% 0.0%
Other Income/Expense, Net -$200.0K $1.900M
YoY Change
Pretax Income -$155.4M -$9.100M -$15.20M
YoY Change
Income Tax $6.100M $11.60M $15.00M
% Of Pretax Income
Net Earnings -$161.5M -$20.70M -$30.20M
YoY Change
Net Earnings / Revenue -21.41% -2.97% -4.12%
Basic Earnings Per Share
Diluted Earnings Per Share -$460.5K -$56.62K
COMMON SHARES
Basic Shares Outstanding 365.3M shares
Diluted Shares Outstanding

Balance Sheet

Concept 2017 Q4 2017 Q3 2017 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $323.0M
YoY Change
Cash & Equivalents $323.4M $343.6M
Short-Term Investments
Other Short-Term Assets $136.0M
YoY Change
Inventory $1.062B
Prepaid Expenses
Receivables $567.4M
Other Receivables $34.50M
Total Short-Term Assets $2.124B
YoY Change
LONG-TERM ASSETS
Property, Plant & Equipment $920.3M
YoY Change
Goodwill $2.969B
YoY Change
Intangibles $2.673B
YoY Change
Long-Term Investments $12.00M
YoY Change
Other Assets $242.0M
YoY Change
Total Long-Term Assets $6.817B
YoY Change
TOTAL ASSETS
Total Short-Term Assets $2.124B
Total Long-Term Assets $6.817B
Total Assets $8.940B
YoY Change
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $203.8M
YoY Change
Accrued Expenses $89.00M
YoY Change
Deferred Revenue $165.5M
YoY Change
Short-Term Debt $0.00
YoY Change
Long-Term Debt Due $0.00
YoY Change
Total Short-Term Liabilities $643.1M
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt $0.00
YoY Change
Other Long-Term Liabilities $126.0M
YoY Change
Total Long-Term Liabilities $126.0M
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities $643.1M
Total Long-Term Liabilities $126.0M
Total Liabilities $1.160B
YoY Change
SHAREHOLDERS EQUITY
Retained Earnings $0.00
YoY Change
Common Stock $0.00
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $7.780B $7.963B
YoY Change
Total Liabilities & Shareholders Equity $8.940B
YoY Change

Cashflow Statement

Concept 2017 Q4 2017 Q3 2017 Q2
OPERATING ACTIVITIES
Net Income -$161.5M -$20.70M -$30.20M
YoY Change
Depreciation, Depletion And Amortization $87.10M $75.20M $156.1M
YoY Change
Cash From Operating Activities $6.700M $76.50M $90.60M
YoY Change
INVESTING ACTIVITIES
Capital Expenditures -$66.90M -$21.70M -$10.00M
YoY Change
Acquisitions
YoY Change
Other Investing Activities $31.40M -$3.600M -$893.8M
YoY Change
Cash From Investing Activities -$35.50M -$25.30M -$903.8M
YoY Change
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 4.000M 31.60M 811.9M
YoY Change
NET CHANGE
Cash From Operating Activities 6.700M 76.50M 90.60M
Cash From Investing Activities -35.50M -25.30M -903.8M
Cash From Financing Activities 4.000M 31.60M 811.9M
Net Change In Cash -24.80M 82.80M -1.300M
YoY Change
FREE CASH FLOW
Cash From Operating Activities $6.700M $76.50M $90.60M
Capital Expenditures -$66.90M -$21.70M -$10.00M
Free Cash Flow $73.60M $98.20M $100.6M
YoY Change

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19600000 USD
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22100000 USD
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20900000 USD
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7900000 USD
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29000000 USD
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197900000 USD
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195800000 USD
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196000000 USD
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198000000 USD
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38000000 USD
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24000000 USD
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20100000 USD
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47100000 USD
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47500000 USD
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Payment terms differ by jurisdiction and customer, but payment terms in most of our major jurisdictions typically range from 30 to 100 days from date of shipment.
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-weight:bold;">Basis of Presentation</font><font style="font-family:Arial;font-size:10pt;"> </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The accompanying consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The accounts of all wholly-owned and majority-owned subsidiaries are included in the consolidated financial statements. All intercompany balances and transactions have been eliminated. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates. We issued our financial statements by filing with the Securities and Exchange Commission and have evaluated subsequent events up to the time of the filing. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">During the period ended December 31, 2018, certain combined balance sheet amounts related to the prior year have been revised to correct the sales rebates and discounts liability, which did not correctly reflect an accrual for rebates related to product held in the wholesalers' pipeline. &#160;In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 99, </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Materiality</font><font style="font-family:Arial;font-size:10pt;">, and Accounting Standards Codification (ASC) 250,</font><font style="font-family:Arial;font-size:10pt;font-style:italic;"> Presentation of Financial Statements</font><font style="font-family:Arial;font-size:10pt;">, we assessed the materiality of this correction and concluded that the accrual for the rebate related to product held in the wholesalers' pipeline was not material to prior periods, and therefore, amendments of previously filed reports are not required.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">As such, in accordance with ASC 250, we revised the previously reported combined balance sheet and combined statements of equity. The adjustment, which originates in periods prior to those presented, resulted in a &#160;</font><font style="font-family:Arial;font-size:10pt;">$10.5 million</font><font style="font-family:Arial;font-size:10pt;"> increase as of December 31, 2017 in the accrual for sales rebates and discounts of </font><font style="font-family:Arial;font-size:10pt;">$155.0 million</font><font style="font-family:Arial;font-size:10pt;">, total current liabilities of </font><font style="font-family:Arial;font-size:10pt;">$632.6 million</font><font style="font-family:Arial;font-size:10pt;"> and total liabilities of </font><font style="font-family:Arial;font-size:10pt;">$1,149.5 million</font><font style="font-family:Arial;font-size:10pt;">. In addition, previously reported amounts at December 31, 2017 and December 31, 2016 of net parent company investment of </font><font style="font-family:Arial;font-size:10pt;">$8,047.4 million</font><font style="font-family:Arial;font-size:10pt;"> and </font><font style="font-family:Arial;font-size:10pt;">$7,484.8 million</font><font style="font-family:Arial;font-size:10pt;">, respectively, and total equity of </font><font style="font-family:Arial;font-size:10pt;">$7,790.8 million</font><font style="font-family:Arial;font-size:10pt;"> and </font><font style="font-family:Arial;font-size:10pt;">$7,027.9 million</font><font style="font-family:Arial;font-size:10pt;">, respectively, have been reduced by </font><font style="font-family:Arial;font-size:10pt;">$10.5 million</font><font style="font-family:Arial;font-size:10pt;"> to reflect the correction above. &#160;</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">For the periods after separation, the financial statements are prepared on a consolidated basis and reflect the results of operations, comprehensive income, financial position, equity and cash flows resulting from our operations as an independent company. For periods prior to the Separation, our financial statements are combined, have been prepared on a standalone basis, and are derived from Lilly's consolidated financial statements and accounting records. The consolidated and combined financial statements reflect the financial position, results of operations and cash flows related to the animal health businesses that were transferred to Elanco Parent and are prepared in conformity with GAAP. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The combined financial statements include the attribution of certain assets and liabilities that historically have been held at the Lilly corporate level but which are specifically identifiable or attributable to the businesses that have been transferred to Elanco Parent. All intercompany transactions and accounts within Elanco have been eliminated. All transactions between us and Lilly are considered to be effectively settled in the combined financial statements at the time the intercompany transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity and in the combined balance sheets as net parent company investment.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Prior to the separation, these combined financial statements include an allocation of expenses related to certain Lilly corporate functions, including executive oversight, treasury, legal, finance, human resources, tax, internal audit, financial reporting, information technology and investor relations, prior to IPO. These expenses have been allocated to us based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of revenue, headcount and other measures. We consider the expenses methodology and results to be reasonable for all periods presented. However, the allocations may not be indicative of the actual expense that would have been incurred had we operated as an independent, publicly traded company for the periods presented. It is impractical to estimate what the standalone costs of Elanco would have been in the historical periods. After the separation, a TSA between Lilly and Elanco went into effect. Under the terms of the TSA, we will be able to use Lilly Services for a fixed term established on a service-by-service basis. We are paying Lilly mutually agreed upon fees for the Lilly Services provided under the TSA. Our consolidated and combined financial statements reflect the charges for Lilly Services after the IPO. See Note 19 for additional details.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The income tax amounts in the combined financial statements have been calculated based on a separate return methodology and presented as if our operations were separate taxpayers in the respective jurisdictions. We file income tax returns in the United States (U.S.) federal jurisdiction and various state, local and non-U.S. jurisdictions. Certain of these income tax returns are filed on a consolidated or combined basis with Eli Lilly and Company and/or its subsidiaries.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Lilly maintains various benefit and combined stock-based compensation plans at a corporate level and other benefit plans at a country level. Our employees participate in such programs and the portion of the cost of those plans related to our employees is included in our financial statements. However, the consolidated and combined balance sheets do not include any equity issued related to stock-based compensation plans or any net benefit plan obligations unless the benefit plan covers only our dedicated employees or where the legal obligation associated with the benefit plan will transfer to Elanco.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Prior to Separation, the equity balance in the combined financial statements represents the excess of total assets over liabilities, including intercompany balances between us and Lilly (net parent company investment) and accumulated other comprehensive loss. Net parent company investment is primarily impacted by contributions from Lilly which are the result of treasury activities and net funding provided by or distributed to Lilly. See Note 19 for further information.</font></div></div>
CY2018 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">During the period ended December 31, 2018, certain combined balance sheet amounts related to the prior year have been revised to correct the sales rebates and discounts liability, which did not correctly reflect an accrual for rebates related to product held in the wholesalers' pipeline. &#160;In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 99, </font><font style="font-family:Arial;font-size:10pt;font-style:italic;">Materiality</font><font style="font-family:Arial;font-size:10pt;">, and Accounting Standards Codification (ASC) 250,</font><font style="font-family:Arial;font-size:10pt;font-style:italic;"> Presentation of Financial Statements</font><font style="font-family:Arial;font-size:10pt;">, we assessed the materiality of this correction and concluded that the accrual for the rebate related to product held in the wholesalers' pipeline was not material to prior periods, and therefore, amendments of previously filed reports are not required.</font></div></div>

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