Read Lillys first-quarter earnings release (http: //investor.lilly.com/financials.cfm). (Note; Under financial information, click on quarterly results. Then click on Lilly Reports First-Quarter 2011 Results.

1. Using GAAP, examine Lillys gross margin in dollars and as a percentage of sales for the current quarter versus the previous quarter. Is this a positive trend?

2. Using GAAP and non-GAAP measures, examine Lillys operating profit in dollars and as percentage of sales. Which items does Lilly exclude form earnings in computing non-GAAP operating earnings? Do you have agreed that these items should be excluded in evaluating the earnings of Lilly?

3. Do you think that the analysts forecast included or excluded these items?

4. How do you explain the drop in Lillys stock price?

5. The financial report includes a listing of key products and their growth in revenues in 2011 , as well as summary of some reasons. The prior year includes a similar listing and summary. Comment on the change from 2010 and 2011 by product , and briefly discuss the underlying factors responsible for the most significant shifts.