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Lilly Reports Third-Quarter 2013 Results

                   Lilly Reports Third-Quarter 2013 Results

PR Newswire

INDIANAPOLIS, Oct. 23, 2013

INDIANAPOLIS, Oct. 23, 2013 /PRNewswire/ --

  oWorldwide revenue increased 6 percent, driven by solid growth for
    Cymbalta, insulins, Animal Health, Alimta, Cialis and Trajenta.
  oHigher revenue and ongoing cost containment drove strong operating income
    growth.
  oEarnings per share totaled $1.11 for the third quarter of 2013.
  o2013 earnings per share guidance narrowed to the range of $4.33 - $4.38
    (reported), or $4.10 - $4.15 (non-GAAP).
  oCompany reaffirms commitment to return cash to shareholders through its
    dividend and share repurchase program.

Eli Lilly and Company (NYSE: LLY) today announced financial results for the
third quarter of 2013.

$ in millions, except per share data Third Quarter      %
                                     2013      2012     Growth
Total Revenue – Reported             $5,772.6  $5,443.3 6%
Net Income – Reported                1,203.1   1,326.6  (9)%
EPS – Reported
                                     1.11      1.18     (6)%

Net Income – non-GAAP                1,203.1   888.3    35%
EPS – non-GAAP                       1.11      0.79     41%

Certain financial information for 2013 and 2012 is presented on both a
reported and a non-GAAP basis. Some numbers in this press release may not add
due to rounding. Reported results were prepared in accordance with generally
accepted accounting principles (GAAP) and include all revenue and expenses
recognized during the period. Non-GAAP measures exclude the items described in
the reconciliation tables later in the release. The non-GAAP measures are
presented in order to provide additional insights into the underlying trends
in the company's business. The company's 2013 financial guidance is also being
provided on both a reported and a non-GAAP basis.

"As we navigate through a period of expiring patents for some of our largest
products, Lilly continues to deliver solid financial results and to advance
our late-stage pipeline, with four regulatory filings completed this year
alone," said John C. Lechleiter, Ph.D., Lilly's chairman, president and chief
executive officer. "We are successfully executing our strategy which will
enable us to return to growth after 2014 by bringing to the market new
medicines that make a real difference for patients."

"We remain committed to our innovation strategy and believe it will drive
growth and expand margins post-2014," added Derica Rice, Lilly executive vice
president, global services and chief financial officer. "We will also return
substantial cash to shareholders by maintaining our dividend at least at its
current level and by repurchasing shares under our recently-authorized $5
billion program."

Key Events Over the Last Three Months

  oDulaglutide was submitted for regulatory review in both the U.S. and
    Europe as a potential treatment for type 2 diabetes.
  oThe U.S. rolling submission was completed for ramucirumab as a
    single-agent treatment for patients with advanced gastric cancer who have
    had disease progression after initial chemotherapy. A submission for
    ramucirumab for the same indication was also made in Europe.
  oTop-line results were announced from two global Phase III studies of
    ramucirumab. In the first study, ramucirumab, in combination with
    paclitaxel in patients with advanced gastric cancer, met its primary
    endpoint of improved overall survival and a secondary endpoint of improved
    progression-free survival. A second study of ramucirumab in women with
    locally recurrent or metastatic breast cancer did not meet its primary
    endpoint of progression-free survival.
  oA recently completed Phase III study for necitumumab met its primary
    endpoint, finding that patients with stage IV metastatic squamous
    non-small cell lung cancer experienced increased overall survival when
    administered necitumumab in combination with gemcitabine and cisplatin as
    a first-line treatment, as compared to chemotherapy alone.
  oThe company announced plans to supplement its annual dividend with share
    repurchases totaling $5 billion over time.
  oThe company expressed its disappointment with the Centers for Medicare &
    Medicaid Services final decision to provide Coverage with Evidence
    Development for beta-amyloid imaging agents, including Amyvid™. The
    company believes the Medicare coverage decision for these agents is a
    significant setback for patients and the Alzheimer's disease community.

Third-Quarter Reported Results
In the third quarter of 2013, worldwide total revenue was $5.773 billion, an
increase of 6 percent compared with the third quarter of 2012. Revenue growth
was comprised of 3 percent due to higher volume and 5 percent due to higher
prices, partially offset by a decrease of 2 percent due to the unfavorable
impact of foreign exchange rates. The increase in volume was driven by
Humalog^®, Alimta^®, Trajenta^® and Forteo^®, as well as Animal Health,
partially offset by volume declines for Zyprexa^® and Cymbalta^®. Total
revenue in the U.S. increased 11 percent to $3.312 billion driven by increased
prices, primarily for Cymbalta. Total revenue outside the U.S. was relatively
flat at $2.461 billion, as higher volume was largely offset by the unfavorable
impact of the depreciation of the Japanese yen.

Gross margin increased 8 percent to $4.575 billion in the third quarter of
2013, as growth in other products offset the loss of patent exclusivity for
Zyprexa. Gross margin as a percent of total revenue was 79.2 percent, an
increase of 1.3 percentage points compared with the third quarter of 2012. The
increase in gross margin percent was due to higher prices and lower
manufacturing costs, partially offset by the impact of foreign exchange rates
on international inventories sold.

Total operating expense in the third quarter of 2013, defined as the sum of
research and development, marketing, selling and administrative expenses was
$3.030 billion, a decrease of 2 percent compared with the third quarter of
2012. Marketing, selling and administrative expenses decreased 6 percent to
$1.652 billion, due primarily to ongoing cost containment efforts, including
the previously-announced reduction in U.S. sales and marketing activities
related to the upcoming loss of patent exclusivity for Cymbalta and Evista^®.
Research and development expenses increased 3 percent to $1.377 billion, or
approximately 24 percent of total revenue, driven by increased investment in
early stage discovery and development .

In the third quarter of 2012, the company recognized asset impairment,
restructuring and other special charges of $53.3 million, primarily related to
the decision to stop development of a delivery device platform. There was no
similar charge in the third quarter of 2013.

Operating income in the third quarter of 2013 was $1.545 billion, an increase
of $458.5 million, or 42 percent, compared to the third quarter of 2012, due
primarily to higher gross margin and lower operating expenses.

Other income (expense) was expense of $31.3 million in the third quarter of
2013, compared with income of $788.5 million in the third quarter of 2012. The
decrease in other income (expense) was driven by income of $787.8 million
recognized in the third quarter of 2012 for the early payment of the exenatide
revenue-sharing obligation from Amylin Pharmaceuticals.

The effective tax rate was 20.5 percent in the third quarter of 2013, compared
with an effective tax rate of 29.2 percent in the third quarter of 2012. The
decrease in the third quarter 2013 effective tax rate reflects both the tax
impact of the payment received from Amylin in the third quarter of 2012, and,
to a lesser extent, the reinstatement of the R&D tax credit in the U.S.
effective January 1, 2013.

In the third quarter of 2013, net income and earnings per share decreased to
$1.203 billion and $1.11, respectively, compared with third-quarter 2012 net
income of $1.327 billion and earnings per share of $1.18. The decreases in net
income and earnings per share were driven by the early payment of the
exenatide revenue-sharing obligation in the third quarter of 2012, partially
offset by higher operating income and a lower effective tax rate in the third
quarter of 2013. Earnings per share also benefited from a lower number of
shares outstanding in the third quarter of 2013 compared to the third quarter
of 2012.

Third-Quarter 2013 non-GAAP Measures
On a non-GAAP basis, third-quarter 2013 operating income increased $405.2
million, or 36 percent, to $1.545 billion, due to higher gross margin and
lower operating expenses. The effective tax rate decreased to 20.5 percent,
compared with 22.1 percent in the third quarter of 2012, primarily driven by
the reinstatement of the R&D tax credit in the U.S. effective January 1, 2013.
Net income and earnings per share increased to $1.203 billion and $1.11,
respectively, compared with $888.3 million and $0.79 during the third quarter
of 2012.

The increases in net income and earnings per share were driven by higher
operating income, and to a lesser extent, a lower effective tax rate. Earnings
per share also benefited from a lower number of shares outstanding in the
third quarter of 2013 compared to the third quarter of 2012.

Non-GAAP measures exclude items totaling $0.39 per share of income in the
third quarter of 2012. For further detail, see the reconciliation below as
well as the Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted
Information table later in this press release.

                                                        Third Quarter
                                                        2013    2012  % Change
Earnings per share (reported)                           $1.11   $1.18 (6)%
                                                               
Asset impairment, restructuring and other special
charges                                                 -       .04

Income related to termination of the exenatide                 
collaboration with Amylin
                                                        -       (.43)
Earnings per share (non-GAAP)                          $1.11   $0.79 41%

Year-to-Date Results
For the first nine months of 2013, worldwide total revenue was $17.304
billion, an increase of 4 percent compared with the same period in 2012.
Reported net income and earnings per share were $3.957 billion and $3.64,
respectively. Net income and earnings per share, on a non-GAAP basis, were
$3.706 billion and $3.41, respectively.

Non-GAAP measures exclude items totaling $0.23 and $0.38 per share of income
for the first nine months of 2013 and 2012, respectively. For further detail,
see the reconciliation below as well as the Reconciliation of GAAP Reported to
Selected Non-GAAP Adjusted Information table later in this press release.

                                                         Year-to-date
                                                         2013   2012  % Change
Earnings per share (reported)                  $3.64  $2.92 25%
Asset impairment, restructuring and other special              
charges
                                                         .06    .05
Income related to termination of the exenatide                 
collaboration with Amylin
                                                         (.29)  (.43)
Earnings per share (non-GAAP)                           $3.41  $2.54 34%



Revenue Highlights
                                           
                                % Change                          % Change
(Dollars in  Third Quarter      Over/(Under) Year-to-Date         Over/(Under)
millions)
             2013      2012     2012         2013       2012      2012
Cymbalta     $1,375.8  $1,235.8    11%       $4,201.2   $3,573.7     18%
Alimta       690.5     643.6       7%        1,976.8    1,909.9      4%
Humalog      616.0     575.8       7%        1,877.4    1,779.5      6%
Cialis^®     526.7     482.1       9%        1,571.1    1,413.4      11%
Humulin^®    307.0     285.4       8%        946.3      896.1        6%
Forteo       306.7     288.7       6%        885.2      836.4        6%
Zyprexa      278.7     374.5       (26)%     846.7      1,316.6      (36)%
Evista       255.3     247.0       3%        774.6      769.2        1%
Strattera^®  173.2     145.6       19%       508.1      457.5        11%
Effient^®    124.9     109.7       14%       378.1      336.6        12%
Animal       530.3     479.4       11%       1,573.1    1,482.4      6%
Health
Total        $5,772.6  $5,443.3    6%        $17,304.3  $16,646.0    4%
Revenue

Cymbalta
For the third quarter of 2013, Cymbalta generated $1.376 billion in revenue,
an increase of 11 percent compared with the third quarter of 2012. U.S. sales
of Cymbalta increased 15 percent, to $1.109 billion, driven by higher prices,
partially offset by lower volume resulting from a reduction in inventory
levels in both the wholesale and retail channels. The company will lose U.S.
patent exclusivity for Cymbalta on December 11, 2013. Sales of Cymbalta
outside the U.S. were $266.6 million, a decrease of 2 percent, driven
primarily by lower prices and, to a lesser extent, the unfavorable impact of
foreign exchange rates, partially offset by increased volume.

Alimta
For the third quarter of 2013, Alimta generated sales of $690.5 million, an
increase of 7 percent compared with the third quarter of 2012. U.S. sales of
Alimta increased 7 percent, to $310.0 million, driven by the favorable impact
of buying patterns and, to a lesser extent, higher prices. Sales outside the
U.S. increased 7 percent, to $380.5 million, driven by increased volume,
partially offset by the unfavorable impact of foreign exchange rates.

Humalog
For the third quarter of 2013, worldwide Humalog sales increased 7 percent, to
$616.0 million. Sales in the U.S. increased 6 percent to $357.8 million,
driven by increased demand, partially offset by lower net effective selling
prices. Sales outside the U.S. increased 8 percent to $258.2 million, driven
by increased volume, partially offset by the unfavorable impact of foreign
exchange rates.

Cialis
Cialis sales for the third quarter of 2013 increased 9 percent to $526.7
million. U.S. sales of Cialis were $234.0 million in the third quarter, a 14
percent increase compared with the third quarter of 2012, driven by higher
prices. Sales of Cialis outside the U.S. increased 6 percent, to $292.7
million, driven by increased volume and, to a lesser extent, higher prices,
partially offset by the unfavorable impact of foreign exchange rates.

Humulin
Worldwide Humulin sales increased 8 percent in the third quarter of 2013, to
$307.0 million. U.S. sales increased 22 percent to $161.4 million, driven by
higher prices and, to a lesser extent, higher volume. Sales outside the U.S.
decreased 5 percent, to $145.6 million, driven by decreased volume and the
unfavorable impact of foreign exchange rates, partially offset by higher
prices.

Forteo
Third-quarter 2013 sales of Forteo were $306.7 million, a 6 percent increase
compared with the third quarter of 2012. U.S. sales of Forteo were relatively
flat at $127.9 million, as higher prices were offset by lower volume. Sales
outside the U.S. increased 11 percent, to $178.8 million, due to increased
volume, primarily in Japan, partially offset by the unfavorable impact of
foreign exchange rates.

Zyprexa
In the third quarter of 2013, Zyprexa sales totaled $278.7 million, a decrease
of 26 percent compared with the third quarter of 2012 due to the loss of
patent exclusivity in 2011 in the U.S. and most major international markets
outside of Japan. U.S. sales of Zyprexa decreased 51 percent to $32.9 million.
Zyprexa sales in international markets decreased 20 percent, to $245.8
million. Zyprexa sales in Japan were approximately $120 million and were
negatively impacted by the continued weakness of the Japanese yen.

Evista
Evista sales for the third quarter of 2013 increased 3 percent to $255.3
million. U.S. sales of Evista increased 14 percent to $191.8 million, driven
by higher prices, partially offset by lower demand. Sales outside the U.S.
decreased 19 percent to $63.5 million, driven by the unfavorable impact of
foreign exchange rates and lower prices, partially offset by higher volume in
Japan.

Strattera
During the third quarter of 2013, Strattera generated $173.2 million of sales,
an increase of 19 percent compared with the third quarter of 2012. U.S. sales
increased 23 percent to $111.1 million, driven primarily by higher prices.
Sales outside the U.S. increased 12 percent to $62.1 million, driven by
increased volume in Japan, partially offset by lower prices and the
unfavorable impact of foreign exchange rates.

Effient
Effient sales were $124.9 million in the third quarter of 2013, an increase of
14 percent compared with the third quarter of 2012. U.S. Effient sales
increased 15 percent to $92.7 million, driven by higher prices. Sales outside
the U.S. increased 10 percent to $32.2 million, driven by higher volume and
the favorable impact of foreign exchange rates.

Animal Health
Worldwide sales of animal health products in the third quarter of 2013 were
$530.3 million, an increase of 11 percent compared with the third quarter of
2012. U.S. sales grew 11 percent, to $305.0 million, due primarily to
increased demand. The increase in U.S. demand reflects the favorable impact
from the withdrawal of a competitor's food animal product from the U.S.
market. Sales outside the U.S. increased 11 percent, to $225.3 million, driven
primarily by increased volume in both food and companion animal products and,
to a lesser extent, higher prices for food animal products, partially offset
by the unfavorable impact of foreign exchange rates.

2013 Financial Guidance
The company has narrowed its 2013 earnings per share guidance and now expects
full-year 2013 earnings per share to be in the range of $4.33 to $4.38 on a
reported basis, or $4.10 to $4.15 on a non-GAAP basis. The company has also
revised its capital expenditure estimate for 2013, as outlined below, but all
other elements of its 2013 financial guidance remain unchanged.

                                           2013            2012     

                                           Expectations    Results  % Change
Earnings per share (reported)              $4.33 to $4.38  $3.66    18% to 20%
Asset impairment, restructuring and other                 
 special charges
                                           .06             0.16
Income related to termination of the                      
exenatide
 collaboration with Amylin              (0.29)          (0.43)
Earnings per share (non-GAAP)              $4.10 to $4.15  $3.39    21% to 22%

The company still anticipates 2013 revenue of between $22.6 billion and $23.4
billion. The company expects overall revenue growth in 2013, driven by a
portfolio of products including Humalog, Humulin, Cialis, Strattera, Forteo,
Alimta, Cymbalta outside the U.S., Effient, Trajenta and Axiron^®, as well as
animal health products. In addition, significant revenue growth is expected in
the emerging markets, particularly China, while a weaker Japanese yen will
dampen revenue growth in Japan. For the fourth quarter of 2013, the company
estimates that U.S. sales of Cymbalta will be approximately $500 million,
reflecting the loss of U.S. patent exclusivity on December 11, 2013. In
addition, this estimate includes substantial reserves for expected future
returns of the product. This estimate is subject to variability based upon a
variety of factors, including product demand prior to the loss of patent
exclusivity, as well as the speed and magnitude of revenue erosion after the
loss of patent exclusivity.

The company still anticipates that gross margin as a percent of revenue will
be approximately 79 percent.

Marketing, selling and administrative expenses are still expected in the range
of $7.0 billion to $7.2 billion. Research and development expenses are still
expected to be in the range of $5.3 billion to $5.5 billion.

On a reported basis, other income (expense) is still expected to be in a range
between $440 million and $590 million of income in 2013. On a non-GAAP basis,
other income (expense) is still expected to be in a range between $50 million
of expense to $100 million of income, which excludes $495.4 million of income
recognized upon the transfer of exenatide commercial rights outside the U.S.
to Amylin.

On a reported basis, the 2013 tax rate is still expected to be approximately
20.5 percent. On a non-GAAP basis, the 2013 tax rate is still expected to be
approximately 19.0 percent. Both tax rates for 2013 include the one-time
impact associated with the R&D tax credit for 2012 that was recorded in 2013
resulting from the delay in the enactment of the American Taxpayer Relief Act
of 2012.

Operating cash flows are still expected to be more than sufficient to allow
for capital expenditures now anticipated to be approximately $1.0 billion,
fund potential business development activity and pay the company's dividend.
In addition, the company has completed its previously-announced $1.5 billion
share repurchase program and will soon begin its new $5 billion share
repurchase program, which will be completed over time.

Webcast of Conference Call
As previously announced, investors and the general public can access a live
webcast of the third-quarter 2013 financial results conference call through a
link on Lilly's website at www.lilly.com. The conference call will be held
today from 9:00 a.m. to 10:00 a.m. Eastern Daylight Time (EDT) and will be
available for replay via the website.

Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of pharmaceutical products by applying the latest research from its
own worldwide laboratories and from collaborations with eminent scientific
organizations. Headquartered in Indianapolis, Ind., Lilly provides answers –
through medicines and information – for some of the world's most urgent
medical needs. Additional information about Lilly is available at
www.lilly.com.

F-LLY

This press release contains management's current intentions and expectations
for the future, all of which are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words "estimate", "project", "intend", "expect",
"believe", "target" and similar expressions are intended to identify
forward-looking statements. Actual results may differ materially due to
various factors. There are significant risks and uncertainties in
pharmaceutical research and development. There can be no guarantees with
respect to pipeline products that the products will receive the necessary
clinical and manufacturing regulatory approvals or that they will prove to be
commercially successful. Pharmaceutical products can develop unexpected safety
or efficacy concerns. The company's results may also be affected by such
factors as competitive developments affecting current products; market uptake
of recently launched products; the timing of anticipated regulatory approvals
and launches of new products; regulatory actions regarding currently marketed
products; issues with product supply; regulatory changes or other
developments; regulatory compliance problems or government investigations;
patent disputes; changes in patent law or regulations related to data-package
exclusivity; other litigation involving current or future products; the impact
of governmental actions regarding pricing, importation, and reimbursement for
pharmaceuticals, including U.S. health care reform and deficit-reduction
measures; changes in tax laws, including the American Taxpayer Relief Act of
2012; asset impairments and restructuring charges; acquisitions and business
development transactions; and the impact of exchange rates and global
macroeconomic conditions. For additional information about the factors that
could cause actual results to differ materially from forward-looking
statements, please see the company's latest Form 10-Q and Form 10-K filed with
the U.S. Securities and Exchange Commission. You should not place undue
reliance on forward-looking statements, which speak only as of the date of
this release. Except as is required by law, the company expressly disclaims
any obligation to publicly release any revisions to forward-looking statements
to reflect events after the date of this release.



Alimta^® (pemetrexed, Lilly)
Amyvid™ ((Florbetapir F 18 Injection, Lilly)
Axiron^® (testosterone, Acrux Corp.)
Cialis^® (tadalafil, Lilly)
Cymbalta^® (duloxetine hydrochloride, Lilly)
Effient^® (prasugrel, Lilly)
Evista^® (raloxifene hydrochloride, Lilly)
Forteo^® (teriparatide of recombinant DNA origin injection, Lilly)
Humalog^® (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin^® (human insulin of recombinant DNA origin, Lilly)
Strattera^® (atomoxetine hydrochloride, Lilly)
Trajenta^® (linagliptin, Boehringer Ingelheim)
Zyprexa^® (olanzapine, Lilly)



Eli Lilly and Company Employment Information
                          September 30, 2013  December 31, 2012
Worldwide Employees 37,810             38,350



Eli Lilly and Company
Operating Results (Unaudited) – REPORTED
(Dollars in millions, except per share data)
                   Three Months Ended                Nine Months Ended
                   September 30,                     September 30,
                   2013         2012      %          2013        2012      %
                                          Chg.                             Chg.
Total Revenue    $ 5,772.6   $  5,443.3   6%       $ 17,304.3  $ 16,646.0  4%
Cost of sales      1,198.1      1,203.6   0%         3,521.6     3,548.2   (1)%
Research and       1,377.4      1,342.8   3%         4,055.9     3,815.0   6%
development
Marketing,
selling and        1,652.4      1,757.4   (6)%       5,172.0     5,536.0   (7)%
administrative
Asset
impairments,                                                          
restructuring
and other          -            53.3      NM         85.2        77.1      11%
special charges
Operating income   1,544.7      1,086.2   42%        4,469.6     3,669.7   22%
Net interest       (7.6)        (21.3)               (34.9)      (56.3)
income (expense)
 Other income   -            787.8                495.4       787.8
– Special
 Net other      (23.7)       22.0                 49.3        (5.5)
income (expense)
Other income       (31.3)       788.5     NM         509.8       726.0     (30)%
(expense)
Income before      1,513.4      1,874.7   (19)%      4,979.4     4,395.7   13%
income taxes
Income taxes       310.3        548.1     (43)%      1,022.1     1,134.4   (10)%
Net income       $ 1,203.1   $  1,326.6   (9)%     $ 3,957.3   $ 3,261.3   21%
Earnings per     $ 1.11      $  1.18      (6)%     $ 3.64      $ 2.92      25%
share – diluted
Dividends paid   $ .49       $  .49       0%       $ 1.47      $ 1.47      0%
per share

                                                              
Weighted-average
shares                                                       
 outstanding
(thousands) –      1,084,257    1,119,641            1,086,692   1,118,420
diluted

NM – not meaningful



Eli Lilly and Company
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted
Information (Unaudited)
(Dollars in millions, except per share data)
                Three Months Ended                  Three Months Ended

                September 30, 2013                  September 30, 2012
                GAAP     Adjustments Non-GAAP       GAAP     Adjustments Non-GAAP
                Reported             Adjusted^(a)   Reported             Adjusted^(a)
Total Revenue $ 5,772.6  $     -     $   5,772.6  $ 5,443.3  $  -        $   5,443.3
Cost of sales   1,198.1        -         1,198.1    1,203.6     -            1,203.6
Operating       3,029.8        -         3,029.8    3,100.2     -            3,100.2
Expenses^(b)
Asset
impairments,
restructuring   -              -         -          53.3        (53.3)       -
and other
special
charges^(c)
Other income    (31.3)         -         (31.3)     788.5       (787.8)      0.7
(expense)^(d)
Income taxes    310.3          -         310.3      548.1       (296.2)      251.9
Net income      1,203.1        -         1,203.1    1,326.6     (438.3)      888.3
Earnings per    1.11           -         1.11       1.18        (.39)        .79
share – diluted



Numbers do not add due to rounding.
        We use non-GAAP financial measures that differ from financial
        statements reported in conformity with U.S. generally accepted
        accounting principles ("GAAP"). The items that we exclude when we
        provide non-GAAP measures or expectations are typically highly
        variable, difficult to predict, and of a size that could have a
        substantial impact on our reported operations for a period. We believe
        that these non-GAAP measures provide useful information to investors.
        Among other things, they may help investors evaluate our ongoing
(a)  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 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 measures in addition to, not
        as a substitute for or superior to, measures of financial performance
        prepared in accordance with GAAP.
(b) Operating expenses include research and development, marketing,
        selling and administrative expenses.
        Certain GAAP reported measures have been adjusted to eliminate asset
        impairments, restructuring and other special charges. During the
(c) three months ended September 30, 2012, amounts totaling $53.3 million
        (pretax), or $0.04 per share (after-tax), of expense were eliminated
        primarily related to the asset impairment of a delivery device
        platform.
        Certain GAAP reported measures have been adjusted to eliminate a
        portion of other income (expense). During the three months ended
(d)  September 30, 2012, amounts totaling $787.8 million (pretax), or $0.43
        per share (after-tax) were eliminated from other income related to the
        termination of the exenatide collaboration with Amylin.



Eli Lilly and Company
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted
Information (Unaudited)
(Dollars in millions, except per share data)
                Nine Months Ended                   Nine Months Ended

                September 30, 2013                  September 30, 2012
                GAAP     Adjustments Non-GAAP       GAAP     Adjustments Non-GAAP
                Reported             Adjusted^(a)   Reported             Adjusted^(a)
Total Revenue $ 17,304.3    -        $  17,304.3  $ 16,646.0 $  -        $  16,646.0
Cost of sales   3,521.6     -           3,521.6     3,548.2     -           3,548.2
Operating       9,227.9     -           9,227.9     9,351.0     -           9,351.0
Expenses^(b)
Asset
impairments,

restructuring   85.2        (85.2)      -           77.1        (77.1)      -
and other
 special
charges^(c)
Other income    509.8       (495.4)     14.4        726.0       (787.8)     (61.8)
(expense)^(d)
Income taxes    1,022.1     (158.6)     863.5       1,134.4     (288.2)     846.2
Net income      3,957.3     (251.6)     3,705.7     3,261.3     (422.5)     2,838.8
Earnings per    3.64        (0.23)      3.41        2.92        (.38)       2.54
share – diluted



        We use non-GAAP financial measures that differ from financial
        statements reported in conformity with U.S. generally accepted
        accounting principles ("GAAP"). The items that we exclude when we
        provide non-GAAP measures or expectations are typically highly
        variable, difficult to predict, and of a size that could have a
        substantial impact on our reported operations for a period. We believe
        that these non-GAAP measures provide useful information to investors.
        Among other things, they may help investors evaluate our ongoing
(a) 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 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 measures in addition to, not
        as a substitute for or superior to, measures of financial performance
        prepared in accordance with GAAP.
(b)  Operating expenses include research and development, marketing,
        selling and administrative expenses.
        Certain GAAP reported measures have been adjusted to eliminate asset
        impairments, restructuring and other special charges. During the nine
        months ended September 30, 2013, amounts totaling $85.2 million
        (pretax), or $0.06 per share (after-tax), of expense were eliminated
        primarily related to the anticipated closure of a packaging and
        distribution facility in Germany as well as severance costs for
(c)  actions taken to reduce cost structure and global workforce. During
        the nine months ended September 30, 2012, amounts totaling $23.8
        million (pretax), or $0.01 per share (after-tax), of expense were
        eliminated primarily related to the withdrawal of Xigris and amounts
        totaling $53.3 million (pretax), or $0.04 per share (after-tax), of
        expense were eliminated related to an asset impairment associated with
        a delivery device platform.
        Certain GAAP reported measures have been adjusted to eliminate a
        portion of other income (expense). During the nine months ended
        September 30, 2013, amounts totaling $495.4 million (pretax), or $0.29
        per share (after-tax), of income were eliminated related to the
(d) termination of the exenatide collaboration with Amylin. During the
        nine months ended September 30, 2012, amounts totaling $787.8 million
        (pretax), or $0.43 per share (after-tax) of income were eliminated
        related to the to the termination of the exenatide collaboration with
        Amylin.

Refer to: (317) 276-5795 – Mark Taylor (Media)
          (317) 433-9899 – Ed Sagebiel (Media)
          (317) 655-6874 – Philip Johnson (Investors)

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SOURCE Eli Lilly and Company

Website: http://www.lilly.com