2019 Q1 Form 10-Q Financial Statement
#000173910419000010 Filed on May 14, 2019
Income Statement
Concept | 2019 Q1 | 2018 Q1 |
---|---|---|
Revenue | $731.1M | $736.2M |
YoY Change | -0.69% | 4.46% |
Cost Of Revenue | $343.8M | $360.0M |
YoY Change | -4.5% | 6.32% |
Gross Profit | $387.3M | $376.2M |
YoY Change | 2.95% | 2.73% |
Gross Profit Margin | 52.97% | 51.1% |
Selling, General & Admin | $181.1M | $180.0M |
YoY Change | 0.61% | |
% of Gross Profit | 46.76% | 47.85% |
Research & Development | $64.10M | $65.20M |
YoY Change | -1.69% | |
% of Gross Profit | 16.55% | 17.33% |
Depreciation & Amortization | $75.20M | $74.30M |
YoY Change | 1.21% | |
% of Gross Profit | 19.42% | 19.75% |
Operating Expenses | $245.2M | $245.2M |
YoY Change | 0.0% | -5.07% |
Operating Profit | $142.1M | $131.0M |
YoY Change | 8.47% | 21.41% |
Interest Expense | $20.80M | $0.00 |
YoY Change | ||
% of Operating Profit | 14.64% | 0.0% |
Other Income/Expense, Net | -$2.600M | -$1.900M |
YoY Change | 36.84% | |
Pretax Income | $44.80M | $77.50M |
YoY Change | -42.19% | -246.5% |
Income Tax | $13.30M | $4.800M |
% Of Pretax Income | 29.69% | 6.19% |
Net Earnings | $31.50M | $72.70M |
YoY Change | -56.67% | -173.96% |
Net Earnings / Revenue | 4.31% | 9.88% |
Basic Earnings Per Share | $0.09 | $0.25 |
Diluted Earnings Per Share | $0.09 | $0.25 |
COMMON SHARES | ||
Basic Shares Outstanding | 365.7M shares | 293.3M shares |
Diluted Shares Outstanding | 366.0M shares | 293.3M shares |
Balance Sheet
Concept | 2019 Q1 | 2018 Q1 |
---|---|---|
SHORT-TERM ASSETS | ||
Cash & Short-Term Investments | $272.0M | |
YoY Change | ||
Cash & Equivalents | $272.1M | $263.4M |
Short-Term Investments | ||
Other Short-Term Assets | $144.0M | |
YoY Change | ||
Inventory | $1.036B | |
Prepaid Expenses | ||
Receivables | $684.1M | |
Other Receivables | $107.8M | |
Total Short-Term Assets | $2.278B | |
YoY Change | ||
LONG-TERM ASSETS | ||
Property, Plant & Equipment | $930.2M | |
YoY Change | ||
Goodwill | $2.933B | |
YoY Change | ||
Intangibles | $2.387B | |
YoY Change | ||
Long-Term Investments | $15.70M | |
YoY Change | ||
Other Assets | $219.3M | |
YoY Change | ||
Total Long-Term Assets | $6.469B | |
YoY Change | ||
TOTAL ASSETS | ||
Total Short-Term Assets | $2.278B | |
Total Long-Term Assets | $6.469B | |
Total Assets | $8.747B | |
YoY Change | ||
SHORT-TERM LIABILITIES | ||
YoY Change | ||
Accounts Payable | $252.1M | |
YoY Change | ||
Accrued Expenses | $86.00M | |
YoY Change | ||
Deferred Revenue | $171.7M | |
YoY Change | ||
Short-Term Debt | $0.00 | |
YoY Change | ||
Long-Term Debt Due | $29.00M | |
YoY Change | ||
Total Short-Term Liabilities | $708.2M | |
YoY Change | ||
LONG-TERM LIABILITIES | ||
Long-Term Debt | $2.437B | |
YoY Change | ||
Other Long-Term Liabilities | $168.4M | |
YoY Change | ||
Total Long-Term Liabilities | $2.605B | |
YoY Change | ||
TOTAL LIABILITIES | ||
Total Short-Term Liabilities | $708.2M | |
Total Long-Term Liabilities | $2.605B | |
Total Liabilities | $3.551B | |
YoY Change | ||
SHAREHOLDERS EQUITY | ||
Retained Earnings | $47.90M | |
YoY Change | ||
Common Stock | $0.00 | |
YoY Change | ||
Preferred Stock | ||
YoY Change | ||
Treasury Stock (at cost) | ||
YoY Change | ||
Treasury Stock Shares | ||
Shareholders Equity | $5.196B | $7.902B |
YoY Change | ||
Total Liabilities & Shareholders Equity | $8.747B | |
YoY Change |
Cashflow Statement
Concept | 2019 Q1 | 2018 Q1 |
---|---|---|
OPERATING ACTIVITIES | ||
Net Income | $31.50M | $72.70M |
YoY Change | -56.67% | -173.96% |
Depreciation, Depletion And Amortization | $75.20M | $74.30M |
YoY Change | 1.21% | |
Cash From Operating Activities | $8.100M | $47.00M |
YoY Change | -82.77% | |
INVESTING ACTIVITIES | ||
Capital Expenditures | $28.00M | $32.70M |
YoY Change | -14.37% | |
Acquisitions | ||
YoY Change | ||
Other Investing Activities | $500.0K | $1.700M |
YoY Change | -70.59% | |
Cash From Investing Activities | -$31.00M | -$34.40M |
YoY Change | -9.88% | |
FINANCING ACTIVITIES | ||
Cash Dividend Paid | ||
YoY Change | ||
Common Stock Issuance & Retirement, Net | ||
YoY Change | ||
Debt Paid & Issued, Net | ||
YoY Change | ||
Cash From Financing Activities | -$339.5M | -$76.50M |
YoY Change | 343.79% | |
NET CHANGE | ||
Cash From Operating Activities | $8.100M | $47.00M |
Cash From Investing Activities | -$31.00M | -$34.40M |
Cash From Financing Activities | -$339.5M | -$76.50M |
Net Change In Cash | -$376.9M | -$60.00M |
YoY Change | 528.17% | |
FREE CASH FLOW | ||
Cash From Operating Activities | $8.100M | $47.00M |
Capital Expenditures | $28.00M | $32.70M |
Free Cash Flow | -$19.90M | $14.30M |
YoY Change | -239.16% |
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CY2019Q1 | us-gaap |
Lessee Operating Lease Liability Payments Due Year Two
LesseeOperatingLeaseLiabilityPaymentsDueYearTwo
|
19600000 | USD |
CY2019Q1 | us-gaap |
Lessee Operating Lease Liability Payments Remainder Of Fiscal Year
LesseeOperatingLeaseLiabilityPaymentsRemainderOfFiscalYear
|
24600000 | USD |
CY2019Q1 | us-gaap |
Lessee Operating Lease Liability Undiscounted Excess Amount
LesseeOperatingLeaseLiabilityUndiscountedExcessAmount
|
9600000 | USD |
CY2018Q4 | us-gaap |
Liabilities
Liabilities
|
3759200000 | USD |
CY2019Q1 | us-gaap |
Liabilities
Liabilities
|
3551200000 | USD |
CY2018Q4 | us-gaap |
Liabilities And Stockholders Equity
LiabilitiesAndStockholdersEquity
|
8956700000 | USD |
CY2019Q1 | us-gaap |
Liabilities And Stockholders Equity
LiabilitiesAndStockholdersEquity
|
8747400000 | USD |
CY2018Q4 | us-gaap |
Liabilities Current
LiabilitiesCurrent
|
970700000 | USD |
CY2019Q1 | us-gaap |
Liabilities Current
LiabilitiesCurrent
|
708200000 | USD |
CY2018Q4 | us-gaap |
Other Receivables Net Current
OtherReceivablesNetCurrent
|
57600000 | USD |
CY2019Q1 | us-gaap |
Other Receivables Net Current
OtherReceivablesNetCurrent
|
107800000 | USD |
CY2018Q1 | us-gaap |
Payments For Proceeds From Other Investing Activities
PaymentsForProceedsFromOtherInvestingActivities
|
1700000 | USD |
CY2019Q1 | us-gaap |
Payments For Proceeds From Other Investing Activities
PaymentsForProceedsFromOtherInvestingActivities
|
500000 | USD |
CY2018Q1 | us-gaap |
Payments For Restructuring
PaymentsForRestructuring
|
20300000 | USD |
CY2018Q4 | us-gaap |
Litigation Reserve
LitigationReserve
|
0 | USD |
CY2019Q1 | us-gaap |
Litigation Reserve
LitigationReserve
|
0 | USD |
CY2018Q4 | us-gaap |
Long Term Debt
LongTermDebt
|
2472300000 | USD |
CY2019Q1 | us-gaap |
Long Term Debt
LongTermDebt
|
2465600000 | USD |
CY2018Q4 | us-gaap |
Long Term Debt Current
LongTermDebtCurrent
|
29000000 | USD |
CY2019Q1 | us-gaap |
Long Term Debt Current
LongTermDebtCurrent
|
29000000 | USD |
CY2018Q4 | us-gaap |
Long Term Debt Noncurrent
LongTermDebtNoncurrent
|
2443300000 | USD |
CY2019Q1 | us-gaap |
Long Term Debt Noncurrent
LongTermDebtNoncurrent
|
2436600000 | USD |
CY2018Q1 | us-gaap |
Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
|
-76500000 | USD |
CY2019Q1 | us-gaap |
Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
|
-339500000 | USD |
CY2018Q1 | us-gaap |
Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
|
-34400000 | USD |
CY2019Q1 | us-gaap |
Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
|
-28500000 | USD |
CY2018Q1 | us-gaap |
Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
|
47000000 | USD |
CY2019Q1 | us-gaap |
Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
|
5600000 | USD |
CY2018Q1 | us-gaap |
Net Income Loss
NetIncomeLoss
|
72700000 | USD |
CY2019Q1 | us-gaap |
Net Income Loss
NetIncomeLoss
|
31500000 | USD |
CY2018Q4 | us-gaap |
Noncurrent Assets
NoncurrentAssets
|
985900000 | USD |
CY2019Q1 | us-gaap |
Noncurrent Assets
NoncurrentAssets
|
1006900000 | USD |
CY2018Q1 | us-gaap |
Nonoperating Income Expense
NonoperatingIncomeExpense
|
-1900000 | USD |
CY2019Q1 | us-gaap |
Nonoperating Income Expense
NonoperatingIncomeExpense
|
-2600000 | USD |
CY2019Q1 | us-gaap |
Number Of Countries In Which Entity Operates
NumberOfCountriesInWhichEntityOperates
|
90 | country |
CY2019Q1 | us-gaap |
Number Of Operating Segments
NumberOfOperatingSegments
|
1 | segment |
CY2019Q1 | us-gaap |
Operating Lease Cost
OperatingLeaseCost
|
5700000 | USD |
CY2019Q1 | us-gaap |
Operating Lease Liability
OperatingLeaseLiability
|
81200000 | USD |
CY2019Q1 | us-gaap |
Operating Lease Liability Current
OperatingLeaseLiabilityCurrent
|
21800000 | USD |
CY2019Q1 | us-gaap |
Operating Lease Liability Noncurrent
OperatingLeaseLiabilityNoncurrent
|
59400000 | USD |
CY2019Q1 | us-gaap |
Operating Lease Payments
OperatingLeasePayments
|
6600000 | USD |
CY2019Q1 | us-gaap |
Operating Lease Right Of Use Asset
OperatingLeaseRightOfUseAsset
|
80700000 | USD |
CY2019Q1 | us-gaap |
Operating Lease Weighted Average Discount Rate Percent
OperatingLeaseWeightedAverageDiscountRatePercent
|
0.042 | |
CY2019Q1 | us-gaap |
Operating Lease Weighted Average Remaining Lease Term1
OperatingLeaseWeightedAverageRemainingLeaseTerm1
|
P5Y | |
CY2018Q4 | us-gaap |
Other Assets Noncurrent
OtherAssetsNoncurrent
|
118400000 | USD |
CY2019Q1 | us-gaap |
Other Assets Noncurrent
OtherAssetsNoncurrent
|
219300000 | USD |
CY2018Q1 | us-gaap |
Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax
|
119200000 | USD |
CY2019Q1 | us-gaap |
Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
OtherComprehensiveIncomeLossForeignCurrencyTransactionAndTranslationAdjustmentNetOfTax
|
-30200000 | USD |
CY2018Q1 | us-gaap |
Other Comprehensive Income Loss Net Of Tax
OtherComprehensiveIncomeLossNetOfTax
|
118600000 | USD |
CY2019Q1 | us-gaap |
Other Comprehensive Income Loss Net Of Tax
OtherComprehensiveIncomeLossNetOfTax
|
-28200000 | USD |
CY2018Q1 | us-gaap |
Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
OtherComprehensiveIncomeLossPensionAndOtherPostretirementBenefitPlansAdjustmentNetOfTax
|
600000 | USD |
CY2019Q1 | us-gaap |
Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
OtherComprehensiveIncomeLossPensionAndOtherPostretirementBenefitPlansAdjustmentNetOfTax
|
-2000000 | USD |
CY2018Q4 | us-gaap |
Other Liabilities Current
OtherLiabilitiesCurrent
|
199000000 | USD |
CY2019Q1 | us-gaap |
Other Liabilities Current
OtherLiabilitiesCurrent
|
191200000 | USD |
CY2018Q4 | us-gaap |
Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
|
121500000 | USD |
CY2019Q1 | us-gaap |
Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
|
168400000 | USD |
CY2018Q1 | us-gaap |
Other Operating Activities Cash Flow Statement
OtherOperatingActivitiesCashFlowStatement
|
1400000 | USD |
CY2019Q1 | us-gaap |
Other Operating Activities Cash Flow Statement
OtherOperatingActivitiesCashFlowStatement
|
-9400000 | USD |
CY2019Q1 | us-gaap |
Payments For Restructuring
PaymentsForRestructuring
|
7600000 | USD |
CY2018Q1 | us-gaap |
Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
|
32700000 | USD |
CY2019Q1 | us-gaap |
Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
|
28000000 | USD |
CY2018Q4 | us-gaap |
Pension And Other Postretirement Defined Benefit Plans Liabilities Noncurrent
PensionAndOtherPostretirementDefinedBenefitPlansLiabilitiesNoncurrent
|
109100000 | USD |
CY2019Q1 | us-gaap |
Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
|
366000000 | shares |
CY2019Q1 | us-gaap |
Pension And Other Postretirement Defined Benefit Plans Liabilities Noncurrent
PensionAndOtherPostretirementDefinedBenefitPlansLiabilitiesNoncurrent
|
106200000 | USD |
CY2018Q4 | us-gaap |
Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
|
113900000 | USD |
CY2019Q1 | us-gaap |
Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
|
114800000 | USD |
CY2018Q1 | us-gaap |
Proceeds From Payments For Other Financing Activities
ProceedsFromPaymentsForOtherFinancingActivities
|
-400000 | USD |
CY2019Q1 | us-gaap |
Proceeds From Payments For Other Financing Activities
ProceedsFromPaymentsForOtherFinancingActivities
|
-500000 | USD |
CY2018Q4 | us-gaap |
Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
|
922400000 | USD |
CY2019Q1 | us-gaap |
Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
|
930200000 | USD |
CY2018Q1 | us-gaap |
Repayments Of Long Term Lines Of Credit
RepaymentsOfLongTermLinesOfCredit
|
0 | USD |
CY2019Q1 | us-gaap |
Repayments Of Long Term Lines Of Credit
RepaymentsOfLongTermLinesOfCredit
|
7500000 | USD |
CY2018Q1 | us-gaap |
Research And Development Expense
ResearchAndDevelopmentExpense
|
65200000 | USD |
CY2019Q1 | us-gaap |
Research And Development Expense
ResearchAndDevelopmentExpense
|
64100000 | USD |
CY2018Q1 | us-gaap |
Restricted Cash Current
RestrictedCashCurrent
|
0 | USD |
CY2018Q4 | us-gaap |
Restricted Cash Current
RestrictedCashCurrent
|
202700000 | USD |
CY2019Q1 | us-gaap |
Restricted Cash Current
RestrictedCashCurrent
|
28500000 | USD |
CY2018Q1 | us-gaap |
Restructuring Charges
RestructuringCharges
|
100000 | USD |
CY2019Q1 | us-gaap |
Restructuring Charges
RestructuringCharges
|
500000 | USD |
CY2017Q4 | us-gaap |
Restructuring Reserve
RestructuringReserve
|
78000000 | USD |
CY2018Q1 | us-gaap |
Restructuring Reserve
RestructuringReserve
|
57600000 | USD |
CY2018Q4 | us-gaap |
Restructuring Reserve
RestructuringReserve
|
44400000 | USD |
CY2019Q1 | us-gaap |
Restructuring Reserve
RestructuringReserve
|
37300000 | USD |
CY2018Q1 | us-gaap |
Restructuring Reserve Accrual Adjustment1
RestructuringReserveAccrualAdjustment1
|
-200000 | USD |
CY2018Q1 | us-gaap |
Restructuring Settlement And Impairment Provisions
RestructuringSettlementAndImpairmentProvisions
|
2400000 | USD |
CY2019Q1 | us-gaap |
Restructuring Settlement And Impairment Provisions
RestructuringSettlementAndImpairmentProvisions
|
24900000 | USD |
CY2018Q4 | us-gaap |
Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
|
16400000 | USD |
CY2019Q1 | us-gaap |
Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
|
47900000 | USD |
CY2018Q1 | us-gaap |
Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
|
736200000 | USD |
CY2019Q1 | us-gaap |
Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
|
731100000 | USD |
CY2019Q1 | us-gaap |
Revenue Performance Obligation Description Of Timing
RevenuePerformanceObligationDescriptionOfTiming
|
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. | |
CY2019Q1 | us-gaap |
Right Of Use Asset Obtained In Exchange For Operating Lease Liability
RightOfUseAssetObtainedInExchangeForOperatingLeaseLiability
|
100000 | USD |
CY2018Q1 | us-gaap |
Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
|
180000000 | USD |
CY2019Q1 | us-gaap |
Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
|
181100000 | USD |
CY2018Q1 | us-gaap |
Severance Costs1
SeveranceCosts1
|
100000 | USD |
CY2019Q1 | us-gaap |
Severance Costs1
SeveranceCosts1
|
500000 | USD |
CY2018Q1 | us-gaap |
Share Based Compensation
ShareBasedCompensation
|
6900000 | USD |
CY2019Q1 | us-gaap |
Share Based Compensation
ShareBasedCompensation
|
7700000 | USD |
CY2019Q1 | us-gaap |
Short Term Lease Cost
ShortTermLeaseCost
|
200000 | USD |
CY2017Q4 | us-gaap |
Stockholders Equity
StockholdersEquity
|
7780300000 | USD |
CY2018Q1 | us-gaap |
Stockholders Equity
StockholdersEquity
|
7902100000 | USD |
CY2018Q4 | us-gaap |
Stockholders Equity
StockholdersEquity
|
5197500000 | USD |
CY2019Q1 | us-gaap |
Stockholders Equity
StockholdersEquity
|
5196200000 | USD |
CY2018Q3 | us-gaap |
Stockholders Equity Note Stock Split Conversion Ratio1
StockholdersEquityNoteStockSplitConversionRatio1
|
2932900 | |
CY2019Q1 | us-gaap |
Variable Lease Cost
VariableLeaseCost
|
500000 | USD |
CY2018Q1 | us-gaap |
Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
|
293300000 | shares |
CY2018Q1 | us-gaap |
Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
|
293300000 | shares |
CY2019Q1 | us-gaap |
Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
|
365700000 | shares |
CY2019Q1 | us-gaap |
Basis Of Accounting
BasisOfAccounting
|
<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;">Note 2. Basis of Presentation</font><font style="font-family:inherit;font-size:10pt;"> </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We have prepared the accompanying unaudited condensed consolidated and combined financial statements in accordance with the requirements of Form 10-Q and, therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States (GAAP). In our opinion, the financial statements reflect all adjustments (including those that are normal and recurring) that are necessary for a fair presentation of the results of operations for the periods shown. In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Certain reclassifications have been made to prior periods in the unaudited condensed consolidated and combined financial statements and accompanying notes to conform with current presentation. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our combined financial statements and accompanying notes for the year ended December 31, 2018 included in our Annual Report on Form 10-K filed with the SEC on February 20, 2019.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;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:12px;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 condensed consolidated and combined statement of equity as net parent company investment.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Prior to 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 Transitional Services Agreement (TSA) between Lilly and Elanco went into effect. Under the terms of the TSA, we will be able to use these 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 15 for additional details.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;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:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Prior to Separation, Lilly maintained various benefit and combined stock-based compensation plans at a corporate level and other benefit plans at a country level. Our employees participated in such programs and the portion of the cost of those plans related to our employees is included in our financial statements. However, the condensed 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 transferred to Elanco. Upon Lilly's full divestiture of Elanco in March 2019, all Lilly share-based awards held by our employees were converted into awards that will be settled in Elanco shares.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;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 Elanco and Lilly (net parent company investment) and accumulated other comprehensive income/(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 15 for further information.</font></div></div> | |
CY2019Q1 | 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:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Certain reclassifications have been made to prior periods in the unaudited condensed consolidated and combined financial statements and accompanying notes to conform with current presentation.</font></div></div> |