Eli Lilly 2013 Annual Report Download - page 45

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Our current noncancelable contractual obligations that will require future cash payments are as follows (in
millions):
Payments Due by Period
Total
Less Than
1 Year
1-3
Years
3-5
Years
More Than
5 Years
Long-term debt, including interest
payments(1) . . . . . . . . . . . . . . . . . . . . . . . . $7,589.0 $ 1,136.3 $ 495.3 $ 1,473.0 $ 4,484.4
Capital lease obligations . . . . . . . . . . . . . . 27.3 10.3 13.8 3.2 —
Operating leases . . . . . . . . . . . . . . . . . . . . 620.0 136.5 218.4 147.2 117.9
Purchase obligations(2) . . . . . . . . . . . . . . . . 13,199.5 12,310.1 455.8 279.0 154.6
Other long-term liabilities reflected on our
balance sheet(3) . . . . . . . . . . . . . . . . . . . . . 1,989.2 — 861.5 260.5 867.2
Other(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476.9 476.9 — — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,901.9 $ 14,070.1 $ 2,044.8 $ 2,162.9 $ 5,624.1
1 Our long-term debt obligations include both our expected principal and interest obligations and our interest rate swaps. We used the
interest rate forward curve at December 31, 2013, to compute the amount of the contractual obligation for interest on the variable rate
debt instruments and swaps.
2 We have included the following:
• Purchase obligations consist primarily of all open purchase orders as of December 31, 2013. Some of these purchase
orders may be cancelable; however, for purposes of this disclosure, we have not distinguished between cancelable and
noncancelable purchase obligations.
• Contractual payment obligations with each of our significant vendors, which are noncancelable and are not contingent.
3 We have included long-term liabilities consisting primarily of our nonqualified supplemental pension funding requirements and deferred
compensation liabilities. We excluded long-term income taxes payable of $1.08 billion, because we cannot reasonably estimate the
timing of future cash outflows associated with those liabilities.
4 This category consists of various miscellaneous items expected to be paid in the next year, none of which are individually material. We
excluded unfunded commitments of $142.2 million, because we cannot reasonably estimate the timing of future cash outflows
associated with those commitments.
The contractual obligations table is current as of December 31, 2013. We expect the amount of these
obligations to change materially over time as new contracts are initiated and existing contracts are completed,
terminated, or modified.
APPLICATION OF CRITICAL ACCOUNTING ESTIMATES
In preparing our financial statements in accordance with accounting principles generally accepted in the
United States (GAAP), we must often make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues, expenses, and related disclosures. Some of those judgments can be subjective
and complex, and consequently actual results could differ from those estimates. For any given individual
estimate or assumption we make, it is possible that other people applying reasonable judgment to the same
facts and circumstances could develop different estimates. We believe that, given current facts and
circumstances, it is unlikely that applying any such other reasonable judgment would cause a material
adverse effect on our consolidated results of operations, financial position, or liquidity for the periods
presented in this report. Our most critical accounting estimates have been discussed with our audit committee
and are described below.
Revenue Recognition and Sales Return, Rebate, and Discount Accruals
We recognize revenue from sales of products at the time title of goods passes to the buyer and the buyer
assumes the risks and rewards of ownership. Provisions for returns, rebates, and discounts are established in
the same period the related sales are recorded.
We regularly review the supply levels of our significant products sold to major wholesalers in the U.S. and in
major markets outside the U.S., primarily by reviewing periodic inventory reports supplied by our major