Eli Lilly 2008 Annual Report Download - page 55

FINANCIALS
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Note 10: Shareholders’ Equity
Changes in certain components of shareholders’ equity were as follows:
Additional Common Stock in Treasury
Paid-in Retained Deferred Costs— Shares
Capital Earnings ESOP (in thousands) Amount
Balance at January 1, 2006. . . . . . . . . . . $3,323.8 $ 9,866.7 $ (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 10,766.2 (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 12) . . . . . . (8.6)
Balance at December 31, 2007 . . . . . . . . 3,805.2 11,806.7 (95.2) 899 100.5
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,071.9)
Cash dividends declared per
share: $1.90 . . . . . . . . . . . . . . . . . . . . . (2,079.9)
Retirement of treasury shares . . . . . . . . (10.9) (170) (11.1)
Issuance of stock under employee
stock plans—net . . . . . . . . . . . . . . . . . (84.9) 160 9.8
Stock-based compensation . . . . . . . . . . 255.3
ESOP transactions. . . . . . . . . . . . . . . . . . 11.9 8.9
Balance at December 31, 2008. . . . . . . . $3,976.6 $ 7,654.9 $ (86.3) 889 $ 99.2
As of December 31, 2008, we have purchased $2.58 billion of our announced $3.0 billion share repurchase
program. We acquired approximately 2.1 million shares in 2006 under this program. No shares were repurchased
in 2008 or 2007.
We have 5 million authorized shares of preferred stock. As of December 31, 2008 and 2007, no preferred stock
has been issued.
We have funded an employee benefi 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 benefi t plans. The funding had no net impact
on shareholders’ equity as we consolidate the employee benefi 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 $25.0 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 earnings
per share. The assets of the trust were not used to fund any of our obligations under these employee benefi t plans
in 2008, 2007, or 2006. In the fi rst quarter of 2009, we contributed an additional 10.0 million shares to the trust.
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 $200.0 million of third-
party debt, repayment of which was guaranteed by us (see Note 7). The proceeds were used to purchase shares of