EXHIBIT 99. ATTACHMENT TO FORM 10-Q: CONTINGENT PAYMENT
OBLIGATION UNITS
In connection with the acquisition of Hybritech Incorporated by
the Company on March 18, 1986, the Company issued Contingent
Payment Obligation Units (CPUs). The following information is
provided relative to the CPUs.
Hybritech Sales and Gross Profits (Unaudited)
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THIRD QUARTER NINE MONTHS
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1995 1994* 1993* 1995 1994* 1993*
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(Millions) (Millions)
Sales $24.6 $29.8 $33.5 $74.9 $94.9 $113.9
Gross profits $13.2 $14.7 $16.2 $40.2 $46.8 $ 60.4
*Includes Pacific Biotech, Inc., another subsidiary of Eli Lilly
and Company.
Sales for the third quarter were $24.6 million compared with
$29.8 million during the same period in 1994, a decrease of 17
percent. Sales declines were experienced in the Company's
largest selling product, the prostate cancer test, TandemR
Prostate Specific Antigen (PSA), which continues to experience
increased competition.
Gross profits for the third quarter were $13.2 million compared
with $14.7 million in the same period last year.
In addition, the previously announced sale of Pacific Biotech
Inc. in January, 1995 contributed to the decline in sales and
gross profits.
The Company signed a definitive agreement in September 1995 to
sell Hybritech to Beckman Instruments, Inc. This action follows
the Company's announcement in January 1994 that it would divest
Hybritech as part of its plan to separate its medical devices
and diagnostics businesses from its core pharmaceutical
business. The transaction is expected to close January 2, 1996,
and will have no effect on the CPU's which will expire without
payment.
Computation of Contingent Payment Obligation Unit Payment
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CPU holders are entitled to receive cash payments based upon the
annual sales and gross profits of Hybritech over the period
ending December 31, 1995 if certain performance criteria are
achieved. The total amount payable for each year will equal the
sum of 6 percent of Hybritech's sales and 20 percent of
Hybritech's gross profits for that year, less a deductible
amount. Sales are defined in the Indenture governing the CPUs
to include net sales of products and royalties but to exclude
contract revenues. Gross profits are the excess of sales over
costs of products sold and do not represent the net income of
Hybritech. The deductible amount was $11 million for 1986 and
increases by 35 percent in each subsequent year. The deductible
for 1995 is $163.8 million. The total amount payable, if any,
is then divided by 12,933,894 to determine the payment per CPU.
The maximum payment that may be made on each CPU if the criteria
are achieved cannot, however, exceed $22. No payments have been
made to date.