Eli Lilly 2011 Annual Report Download - page 28

FORM 10-K
or to the public. While we have invested heavily in the protection of data and information technology, there can
be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect
our business.
•We face other risks to our business and operating results. Our business is subject to a number of other risks and
uncertainties, including:
— Economic factors over which we have no control, including changes in inflation, interest rates, and foreign
currency exchange rates, can affect our results of operations.
— Changes in tax laws, including laws related to the remittance of foreign earnings or investments in foreign
countries with favorable tax rates, and settlements of federal, state, and foreign tax audits, can affect our
results of operations. The Obama Administration has proposed changes to the manner in which the U.S.
would tax the international income of U.S.-based companies. There have also been tax proposals under
discussion or introduced in the U.S. Congress that could change the manner in and rate at which income of
U.S. companies would be taxed. While it is uncertain how the U.S. Congress may address U.S. tax policy
matters in the future, reform of U.S. taxation, including taxation of international income, will continue to be
a topic of discussion for the U.S. Congress and the Administration. A significant change to the U.S. tax
system, including changes to the taxation of international income, could have a material adverse effect on
our results of operations.
— Changes in accounting standards promulgated by the Financial Accounting Standards Board and the
Securities and Exchange Commission can affect our financial statements.
— Our financial statements can also be affected by internal factors, such as changes in business strategies
and the impact of restructurings, asset impairments, technology acquisition and disposition transactions,
and business combinations.
We undertake no duty to update forward-looking statements.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our principal domestic and international executive offices are located in Indianapolis. At December 31, 2011, we
owned 12 production and distribution sites in the U.S. and Puerto Rico. Together with the corporate administrative
offices, these facilities contain an aggregate of approximately 13.4 million square feet of floor area dedicated to
production, distribution, and administration. Major production sites include Indianapolis and Clinton, Indiana;
Carolina, Puerto Rico; and Branchburg, New Jersey.
We own production and distribution sites in 11 countries outside the U.S. and Puerto Rico, containing an aggregate of
approximately 3.4 million square feet of floor area. Major production sites include facilities in France, Ireland, the
United Kingdom, Spain, Italy, Mexico, and Brazil.
Our U.S. research and development facilities consist of approximately 3.5 million square feet and are located
primarily in Indianapolis, with smaller sites in San Diego and New York City. We also have smaller research and
development facilities in the United Kingdom, Canada, and Spain.
We believe that none of our properties is subject to any encumbrance, easement, or other restriction that would
detract materially from its value or impair its use in the operation of the business. The buildings we own are of
varying ages and in good condition.
Item 3. Legal Proceedings
We are a party to various currently pending legal actions, government investigations, and environmental
proceedings, and we anticipate that such actions could be brought against us in the future. The most significant of
these matters are described below or, as noted, in Item 7, “Management’s Discussion and Analysis—Legal and
Regulatory Matters.” While it is not possible to determine the outcome of the legal actions, investigations and
proceedings brought against us, we believe that, except as otherwise specifically noted in Item 7, the resolution of all
such matters will not have a material adverse effect on our consolidated financial position or liquidity, but could be
material to our consolidated results of operations in any one accounting period.
Legal Proceedings Described in Management’s Discussion and Analysis
See Item 7, “Management’s Discussion and Analysis—Legal and Regulatory Matters,” for information on various
legal proceedings, including but not limited to:
• The U.S. patent litigation involving Alimta and Strattera
• The Zyprexa product liability and related litigation, including claims brought on behalf of state Medicaid
agencies and private healthcare payers
• The Byetta product liability litigation.
That information is incorporated into this Item by reference.
14