Eli Lilly 2012 Annual Report Download - page 75

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63
A summary of the fair value of available-for-sale securities in an unrealized gain or loss position and the
amount of unrealized gains and losses (pretax) in accumulated other comprehensive loss follows:
2012 2011
Unrealized gross gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 140.5 $ 103.0
Unrealized gross losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.0 80.0
Fair value of securities in an unrealized gain position. . . . . . . . . . . . . . . . . . . . . . . . 5,246.0 2,498.9
Fair value of securities in an unrealized loss position. . . . . . . . . . . . . . . . . . . . . . . . 2,102.0 2,164.4
Other-than-temporary impairment losses on fixed income securities of $12.2 million, $26.8 million, and
$12.0 million were recognized in the consolidated statements of operations for the years ended December 31,
2012, 2011, and 2010, respectively. The amount of credit losses represents the difference between the present
value of cash flows expected to be collected on these securities and the amortized cost. Factors considered in
assessing the credit loss were the position in the capital structure, vintage and amount of collateral,
delinquency rates, current credit support, and geographic concentration.
The securities in an unrealized loss position include fixed-rate debt securities of varying maturities. The value
of fixed income securities is sensitive to changes in the yield curve and other market conditions.
Approximately 90 percent of the securities in a loss position are investment-grade debt securities. At this
time, there is no indication of default on interest or principal payments for debt securities other than those for
which an other-than-temporary impairment charge has been recorded. We do not intend to sell and it is not
more likely than not we will be required to sell the securities in a loss position before the market values
recover or the underlying cash flows have been received, and we have concluded that no additional other-
than-temporary loss is required to be charged to earnings as of December 31, 2012.
Activity related to our available-for-sale investment portfolio was as follows:
2012 2011 2010
Proceeds from sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,529.8 $ 2,268.3 $ 760.3
Realized gross gains on sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.3 140.0 110.7
Realized gross losses on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.9 9.9 4.8
Note 7: Goodwill and Other Intangibles
Goodwill and other indefinite-lived intangible assets at December 31 were as follows:
2012 2011
Indefinite-lived intangible assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,501.3 $ 1,434.7
In-process research and development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.0 474.9
Total indefinite-lived intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,566.3 $ 1,909.6
Substantially all of our goodwill balance is attributable to the human pharmaceutical business segment. No
impairments occurred with respect to the carrying value of goodwill for the years ended December 31, 2012,
2011, or 2010.
IPR&D consists of the acquisition date fair value of products under development acquired in business
combinations that have not yet achieved regulatory approval for marketing adjusted for subsequent
impairments. As discussed in Note 1, we use the "income method" to calculate the fair value of the IPR&D
assets, which is a Level 3 fair value measurement.
In 2012, we recorded impairment charges of $205.0 million related to liprotamase as a result of changes in
key assumptions used in the valuation, based upon additional communications with the FDA regarding the
clinical trial that would be required for resubmission, and our expectations for the product. The remaining
reduction of IPR&D in 2012 was primarily due to the reclassification of the $190.0 million Amyvid intangible
asset from indefinite to finite-lived upon receiving FDA approval for marketing.
In 2011, we recorded impairment charges of $151.5 million due primarily to the impairment of the IPR&D
assets related to Amyvid and liprotamase. The impairment of Amyvid was due to a delay in product launch and