Eli Lilly 2010 Annual Report Download - page 84

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FORM 10-K
Note 16: Other Comprehensive Income (Loss)
The accumulated balances related to each component of other comprehensive income (loss) were as follows:
Foreign
Currency
Translation
Gains (Losses)
Unrealized
Net Gains
on Securities
Defined
Benefit
Pension and
Retiree Health
Benefit Plans
Effective
Portion of
Cash Flow
Hedges
Accumulated
Other
Comprehensive
Loss
Beginning balance at January 1, 2010 ........ $835.8 $ 75.4 $(3,264.3) $(118.8) $(2,471.9)
Other comprehensive income (loss) .......... (325.1) 53.5 88.5 (15.1) (198.2)
Balance at December 31, 2010 .............. $510.7 $128.9 $(3,175.8) $(133.9) $(2,670.1)
The amounts above are net of income taxes. The income taxes associated with the unrecognized net actuarial losses
and prior service costs on our defined benefit pension and retiree health benefit plans (Note 14) were an expense of
$60.4 million for 2010. The income taxes associated with the net unrealized gains on securities was an expense of
$27.3 million for 2010. The income taxes related to the other components of comprehensive income (loss) were not
significant, as income taxes were not provided for foreign currency translation.
The unrealized gains (losses) on securities is net of reclassification adjustments of net gains (losses) of $27.6
million, $19.0 million, and $(1.7) million, net of tax, in 2010, 2009, and 2008, respectively, for net realized gains
(losses) on sales of securities included in net income. The effective portion of cash flow hedges is net of
reclassification adjustments of $0.0 and $0.0 for 2010 and 2009, respectively, and $9.6 million in 2008, net of tax, for
realized losses on foreign currency options and $5.8 million, $6.7 million, and $7.9 million, net of tax, in 2010, 2009,
and 2008, respectively, for interest expense on interest rate swaps designated as cash flow hedges.
Generally, the assets and liabilities of foreign operations are translated into U.S. dollars using the current exchange
rate. For those operations, changes in exchange rates generally do not affect cash flows; therefore, resulting
translation adjustments are made in shareholders’ equity rather than in income.
72