Eli Lilly 2007 Annual Report Download - page 47

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Changes in certain components of shareholders’ equity were as follows:
Additional Common Stock in Treasury
Paid-in Retained Deferred Shares
Capital Earnings Costs—ESOP (in thousands) Amount
Balance at January 1, 2005 $3,1194 $ 9,7246 $(1119) 943 $ 1038
Net income  1,9796
Cash dividends declared per share: $154  (1,6770)
Retirement of treasury shares  (3817) (6,874) (3860)
Purchase for treasury  6,704 3779
Issuance of stock under employee stock plans  1729 161 84
Stock-based compensation  4035
ESOP transactions 97 56
Balance at December 31, 2005  3,3238 10,0272 (1063) 934 1041
Net income  2,6627
Cash dividends declared per share: $163  (1,7632)
Retirement of treasury shares  (1291) (2,297) (1306)
Purchase for treasury  2,145 1221
Issuance of stock under employee stock
plans—net 62 128 58
Stock-based compensation  3593
ESOP transactions 117 56
Balance at December 31, 2006  3,5719 10,9267 (1007) 910 1014
Net income  2,9530
Cash dividends declared per share: $175  (1,9039)
Retirement of treasury shares  (39) (76) (39)
Issuance of stock under employee stock
plans—net (552) 65 30
Stock-based compensation  2820
ESOP transactions 104 55
FIN 48 implementation (Note 11)  (86)
Balance at December 31, 2007  $3,8052 $11,9672 $ (952) 899 $ 1005
As of December 31, 2007, we have purchased $258 billion of our announced $30 billion share repurchase
program We acquired approximately 21 million and 67 million shares in 2006 and 2005, respectively, under this
program No shares were repurchased in 2007
We have 5 million authorized shares of preferred stock As of December 31, 2007 and 2006, no preferred stock
has been issued
We have funded an employee benet trust with 40 million shares of Lilly common stock to provide a source of
funds to assist us in meeting our obligations under various employee benet plans The funding had no net impact
on shareholders’ equity as we consolidate the employee benet trust The cost basis of the shares held in the
trust was $264 billion and is shown as a reduction in shareholders’ equity, which offsets the resulting increases
of $261 billion in additional paid-in capital and $25 million in common stock Any dividend transactions between
us and the trust are eliminated Stock held by the trust is not considered outstanding in the computation of earn-
ings per share The assets of the trust were not used to fund any of our obligations under these employee benet
plans in 2007, 2006, or 2005
We have an ESOP as a funding vehicle for the existing employee savings plan The ESOP used the proceeds of a
loan from us to purchase shares of common stock from the treasury The ESOP issued $200 million of third-party
debt, repayment of which was guaranteed by us (see Note 6) The proceeds were used to purchase shares of our
common stock on the open market Shares of common stock held by the ESOP will be allocated to participating
employees annually through 2017 as part of our savings plan contribution The fair value of shares allocated each
period is recognized as compensation expense