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FI NA NCI A L S
22
Consolidated Statements of Cash Flows
ELI LILLY AND COMPANY AND SUBSIDIARIES
(Dollars in millions) Year Ended December 31 2005 2004 2003
Cash Flows From Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,979.6 $ 1,810.1 $ 2,560.8
Adjustments To Reconcile Net Income
To Cash Flows From Operating Activities
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 726.4 597.5 548.5
Change in deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (347.5) 772.4 130.9
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . 403.5 53.0 —
Acquired in-process research and development, net of tax . . . . . — 381.7 —
Asset impairments, restructuring, and other
special charges, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,128.7 374.3 261.7
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30.0) 171.5 61.0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,860.7 4,160.5 3,562.9
Changes in operating assets and liabilities . . . . . . . . . . . . . . . . . . .
Receivables—increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (286.4) (240.8) (195.1)
Inventories—(increase) decrease . . . . . . . . . . . . . . . . . . . . . . . . 72.1 (111.6) (170.8)
Other assets—increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (269.4) (765.2) (211.9)
Accounts payable and other liabilities—increase (decrease). . (1,463.4) (173.4) 661.6
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,947.1) (1,291.0) 83.8
Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . 1,913.6 2,869.5 3,646.7
Cash Flows From Investing Activities
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . (1,298.1) (1,898.1) (1,706.6)
Disposals of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 20.5 61.2
Net change in short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . 62.7 (1,119.0) 774.0
Proceeds from sales and maturities of noncurrent investments . . . 545.1 14,849.3 6,762.4
Purchase of noncurrent investments . . . . . . . . . . . . . . . . . . . . . . . . . . (1,183.1) (11,967.7) (7,005.3)
Purchase of in-process research and development . . . . . . . . . . . . . . — (29.9) —
Cash paid for acquisition of Applied Molecular Evolution,
net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (71.7) —
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (353.6) (468.2) (217.2)
Net Cash Used in Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . (2,215.9) (684.8) (1,331.5)
Cash Flows From Financing Activities
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,654.9) (1,539.8) (1,443.0)
Purchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (377.9) — (276.8)
Issuances of common stock under stock plans . . . . . . . . . . . . . . . . . . 105.9 117.9 99.3
Net change in short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . (1,988.7) 1,478.2 (247.3)
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . 3,000.0 1,000.0 830.0
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,004.7) (839.2) (540.0)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.8 (13.4) (.5)
Net Cash (Used for) Provided by Financing Activities . . . . . . . . . . . (1,880.5) 203.7 (1,578.3)
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . (175.8) 220.6 73.5
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . (2,358.6) 2,609.0 810.4
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . 5,365.3 2,756.3 1,945.9
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . $ 3,006.7 $ 5,365.3 $ 2,756.3
See notes to consolidated financial statements.