Eli Lilly 2009 Annual Report Download - page 82

Download and view the complete annual report

Please find page 82 of the 2009 Eli Lilly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 172

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

company announcements such as mergers and acquisitions, and typically have little correlation to overall
market directional movements. Our hedge fund investments are made through limited partnership
interests primarily in fund of funds structures to ensure diversification across many strategies and many
individual managers.
Private equity-like investment funds typically have low liquidity and are made through long-term partner-
ships or joint ventures that invest in pools of capital invested in primarily non-publicly traded entities.
Underlying investments include venture capital (early stage investing), buyout, and special situation
investing. Private equity management firms typically acquire and then reorganize private companies to
create increased long term value. Private equity-like funds usually have a limited life of approximately
10-15 years, and require a minimum investment commitment from their limited partners. Our private
investments are made both directly into funds and through fund of funds structures to ensure broad
diversification of management styles and assets across the portfolio.
Fixed income investments are primarily made in investment grade fixed income securities in U.S. Treasur-
ies and Agencies, investment grade corporates, mortgage-backed securities and commercial mortgage-
backed obligations.
Other assets include cash and cash equivalents and mark-to-market value of derivatives.
The cash value of the trust-owned insurance contract is invested in investment grade publicly traded
equity and fixed income securities.
The fair values of our defined benefit pension plan and retiree health plan assets as of December 31, 2009
by asset category are as follows:
Asset Category 2008 Total 2009 Total
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Fair Value Measurements Using
Defined Benefit Pension Plans
Public equity securities
U.S. . . . . . . . .............. $ 437.7 $ 864.7 $ 354.4 $ 510.3 $ —
International . .............. 1,532.6 2,160.2 1,105.9 1,050.4 3.9
Fixed income . . .............. 493.0 600.5 76.0 521.0 3.5
Private alternative investments
Hedge funds . .............. 1,387.1 1,381.5 — — 1,381.5
Equity-like funds . . . . . . . . . . . . 699.7 743.6 — — 743.6
Other . . . . . . . . .............. 246.0 258.0 241.8 16.2 —
Total . . . . . . . . . .............. $4,796.1 $6,008.5 $1,778.1 $2,097.9 $2,132.5
Retiree Health Benefit Plans
Public equity securities
U.S. . . . . . . . .............. $ 43.6 $ 87.0 $ 34.8 $ 52.2 $ —
International . .............. 98.6 154.0 85.8 67.8 0.4
Fixed income . . .............. 43.4 46.9 — 46.5 0.4
Private alternative investments
Hedge funds . .............. 137.1 140.9 — — 140.9
Equity-like funds . . . . . . . . . . . . 64.9 63.6 — — 63.6
Cash value of trust owned
insurance contract . . . . . . . . . . 490.9 675.7 — 675.7 —
Other . . . . . . . . .............. 27.1 12.6 12.0 0.6 —
Total . . . . . . . . . .............. $ 905.6 $1,180.7 $ 132.6 $ 842.8 $ 205.3
We determine fair values based on a market approach using quoted market values, significant other
observable inputs for identical or comparable assets or liabilities, or discounted cash flow analyses.
70
FORM 10-K