Eli Lilly 2003 Annual Report Download - page 41

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FINANCIALS
39
Cash payments of income taxes totaled $614.0 million, $864.0 million, and $320.0 million in 2003, 2002, and
2001, respectively. The increase in cash payments of income taxes in 2002 is primarily attributable to the resolu-
tion of an IRS examination.
Following is a reconciliation of the effective income tax rate applicable to income before income taxes:
2003 2002 2001
United States federal statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . 35.0% 35.0% 35.0%
Add (deduct)
International operations, including Puerto Rico . . . . . . . . . . . . . . . (15.7) (12.6) (13.9)
General business credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.7) (0.7) (1.1)
Sundry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 — 0.7
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.5% 21.7% 20.7%
Note 12: Retirement Benefi ts
We used a measurement date of December 31 to develop the change in benefi t obligation, change in plan assets,
funded status, and amounts recognized in the consolidated balance sheets at December 31 for our defi ned benefi t
pension and retiree health benefi t plans, which were as follows:
Defi ned Benefi t Pension Plans Retiree Health Benefi ts
2003 2002 2003 2002
Change in benefi t obligation
Benefi t obligation at beginning of year . . . . . . . . . . . . . . . . $3,941.1 $3,598.7 $911.6 $928.2
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196.2 170.2 38.2 34.0
Interest cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266.1 254.3 60.4 64.5
Actuarial loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.7 61.8 136.8 104.6
Benefi ts paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (247.3) (234.9) (75.5) (73.5)
Retiree health plan changes . . . . . . . . . . . . . . . . . . . . . . . . — — — (151.0)
Reduction in discount rate, foreign currency
exchange rate changes, and other adjustments. . . . . . 386.8 91.0 87.3 4.8
Benefi t obligation at end of year . . . . . . . . . . . . . . . . . . . . . 4,648.6 3,941.1 1,158.8 911.6
Change in plan assets
Fair value of plan assets at beginning of year . . . . . . . . . . 3,161.3 3,182.1 415.0 373.4
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . 579.2 (224.9) 75.3 (46.1)
Employer contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149.1 402.7 139.1 161.1
Benefi ts paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (247.3) (234.9) (75.5) (73.5)
Foreign currency exchange rate
changes and other adjustments . . . . . . . . . . . . . . . . . . . 57.8 36.3 — 0.1
Fair value of plan assets at end of year . . . . . . . . . . . . . . . 3,700.1 3,161.3 553.9 415.0
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (948.5) (779.8) (604.9) (496.6)
Unrecognized net actuarial loss . . . . . . . . . . . . . . . . . . . . . 2,286.1 2,028.0 847.4 698.9
Unrecognized prior service cost (benefi t) . . . . . . . . . . . . . 72.1 78.3 (132.6) (148.6)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,409.7 $1,326.5 $109.9 $ 53.7
Amounts recognized in the consolidated
balance sheet consisted of
Prepaid pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,613.3 $1,515.4 $192.3 $127.3
Accrued benefi t liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . (422.6) (398.1) (82.4) (73.6)
Accumulated other comprehensive income
before income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219.0 209.2 — —
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,409.7 $1,326.5 $109.9 $ 53.7