Eli Lilly 2010 Annual Report Download - page 76

FORM 10-K
We recognize both accrued interest and penalties related to unrecognized tax benefits in income tax expense. During
the years ended December 31, 2010, 2009, and 2008, we recognized income tax expense (benefits) of $38.3 million,
$(1.9) million, and $(118.0) million, respectively, related to interest and penalties. At December 31, 2010 and 2009,
our accruals for the payment of interest and penalties totaled $221.0 million and $166.7 million, respectively.
Substantially all of the expense (benefit) and accruals relate to interest.
Note 14: Retirement Benefits
We use a measurement date of December 31 to develop the change in benefit obligation, change in plan assets,
funded status, and amounts recognized in the consolidated balance sheets at December 31 for our defined benefit
pension and retiree health benefit plans, which were as follows:
Defined Benefit
Pension Plans Retiree Health Benefit Plans
2010 2009 2010 2009
Change in benefit obligation
Benefit obligation at beginning of year ............................ $ 7,553.9 $ 6,353.7 $2,032.8 $1,796.3
Service cost .................................................. 219.2 242.1 56.5 53.7
Interest cost .................................................. 431.6 417.5 121.4 119.6
Actuarial loss ................................................. 342.2 819.9 10.0 162.0
Benefits paid ................................................. (387.8) (351.7) (98.0) (94.5)
Plan amendments ............................................. 0.3 0.0 (64.2) (8.4)
Foreign currency exchange rate changes and other adjustments ..... (44.4) 72.4 30.0 4.1
Benefit obligation at end of year ................................. 8,115.0 7,553.9 2,088.5 2,032.8
Change in plan assets
Fair value of plan assets at beginning of year ...................... 6,008.5 4,796.1 1,180.7 905.6
Actual return on plan assets .................................... 818.3 1,033.8 152.2 278.9
Employer contribution ......................................... 563.5 447.6 92.8 90.7
Benefits paid ................................................. (387.8) (351.7) (98.0) (94.5)
Foreign currency exchange rate changes and other adjustments ..... (19.5) 82.7 0.0 0.0
Fair value of plan assets at end of year ........................... 6,983.0 6,008.5 1,327.7 1,180.7
Funded status ................................................ (1,132.0) (1,545.4) (760.8) (852.1)
Unrecognized net actuarial loss ................................. 3,796.6 3,804.3 1,235.3 1,340.5
Unrecognized prior service cost (benefit) .......................... 56.1 65.1 (261.1) (234.1)
Net amount recognized ........................................ $ 2,720.7 $ 2,324.0 $ 213.4 $ 254.3
Amounts recognized in the consolidated balance sheet consisted of
Prepaid expenses and other .................................... $ 58.5 $ 0.0 $ 0.0 $ 0.0
Other current liabilities ........................................ (54.7) (56.8) (9.2) (6.0)
Accrued retirement benefit ..................................... (1,135.8) (1,488.6) (751.6) (846.1)
Accumulated other comprehensive loss before income taxes ........ 3,852.7 3,869.4 974.2 1,106.4
Net amount recognized ........................................ $ 2,720.7 $ 2,324.0 $ 213.4 $ 254.3
The unrecognized net actuarial loss and unrecognized prior service cost (benefit) have not yet been recognized in net
periodic pension costs and are included in accumulated other comprehensive loss at December 31, 2010.
In 2011, we expect to recognize from accumulated other comprehensive loss as components of net periodic benefit
cost, $220.4 million of unrecognized net actuarial loss and $6.3 million of unrecognized prior service benefit related
to our defined benefit pension plans, and $83.3 million of unrecognized net actuarial loss and $40.1 million of
unrecognized prior service benefit related to our retiree health benefit plans. We do not expect any plan assets to be
returned to us in 2011.
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