Eli Lilly 2007 Annual Report Download - page 53

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FINANCIALS
51
If the health-care-cost trend rates were to be increased by one percentage point each future year, the December
31, 2007, accumulated postretirement benefi t obligation would increase by $226.6 million (14.0 percent) and the ag-
gregate of the service cost and interest cost components of the 2007 annual expense would increase by $27.8 million
(16.2 percent). A one-percentage-point decrease in these rates would decrease the December 31, 2007, accumulated
postretirement benefi t obligation by $187.9 million (11.6 percent) and the aggregate of the 2007 service cost and inter-
est cost by $22.7 million (13.2 percent).
The following represents the amounts recognized in other comprehensive income in 2007:
Defi ned Benefi t Retiree Health
Pension Plans Benefi t Plans Total
Plan amendments during period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32.7 $(227.7) $(195.0)
Amortization of prior service cost (benefi t) included in
net income
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7.7) 15.7 8.0
Net change in unrecognized prior service cost (benefi t)
not recognized in net income during period . . . . . . . . . . . . . . . . 25.0 (212.0) (187.0)
Actuarial gain arising during period . . . . . . . . . . . . . . . . . . . . . . . . . . . (515.3) (16.5) (531.8)
Amortization of net actuarial loss included in net income . . . . . . . . . (130.0) (95.0) (225.0)
Net change in unrecognized net actuarial loss not included
in net income during period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (645.3) (111.5) (756.8)
Total other comprehensive income during period . . . . . . . . . . . . . $(620.3) $(323.5) $(943.8)
We have defi ned contribution savings plans that cover our eligible employees worldwide. The purpose of these
defi ned contribution plans is generally to provide additional fi nancial security during retirement by providing em-
ployees with an incentive to save. Our contributions to the plan are based on employee contributions and the level
of our match. Expenses under the plans totaled $112.3 million, $106.5 million, and $96.1 million for the years 2007,
2006, and 2005, respectively.
We provide certain other postemployment benefi ts primarily related to disability benefi ts and accrue for the
related cost over the service lives of employees. Expenses associated with these benefi t plans in 2007, 2006, and
2005 were not signifi cant.
Our U.S. defi ned benefi t pension and retiree health benefi t plan investment allocation strategy currently
comprises approximately 85 percent to 95 percent growth investments and 5 percent to 15 percent fi xed-income
investments. Within the growth investment classifi cation, the plan asset strategy encompasses equity and equity-
like instruments that are expected to represent approximately 75 percent of our plan asset portfolio of both public
and private market investments. The largest component of these equity and equity-like instruments is public equity
securities that are well diversifi ed and invested in U.S. and international small-to-large companies. The remaining
portion of the growth investment classifi cation is represented by other alternative growth investments.
Our defi ned benefi t pension plan and retiree health plan asset allocations as of December 31 are as follows:
Percentage of Percentage of
Pension Plan Assets Retiree Health Plan Assets
(Percents) 2007 2006 2007 2006
Asset Category
Equity securities and equity-like instruments . . . . . . . . . 75 78 78 80
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 9 11 10
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 — —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 12 11 10
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100 100
In 2008, we expect to contribute approximately $70 million to our defi ned benefi t pension plans to satisfy mini-
mum funding requirements for the year. In addition, we expect to contribute approximately $110 million of additional
discretionary funding in 2008 to our defi ned benefi t plans. We do not expect to make any contributions to our post-
retirement health benefi t plans during 2008.