Eli Lilly 2011 Annual Report Download - page 64

FORM 10-K
Other-than-temporary impairment losses on fixed income securities of $26.8 million, $12.0 million, and $22.4 million
were recognized in the statement of operations for the years ended December 31, 2011, 2010, and 2009, respectively.
These losses primarily relate to credit losses on other securities for the year ended December 31, 2011 and on
certain mortgage-backed securities for the years ended December 31, 2010 and 2009. The amount of credit losses
represents the difference between the present value of cash flows expected to be collected on these securities and
the amortized cost. Factors considered in assessing the credit loss were the position in the capital structure, vintage
and amount of collateral, delinquency rates, current credit support, and geographic concentration.
The securities in an unrealized loss position include fixed-rate debt securities of varying maturities. The value of
fixed income securities is sensitive to changes in the yield curve and other market conditions. Approximately
90 percent of the securities in a loss position are investment-grade debt securities. At this time, there is no
indication of default on interest or principal payments for debt securities other than those for which an other-than-
temporary impairment charge has been recorded. We do not intend to sell and it is not more likely than not we will
be required to sell the securities in a loss position before the market values recover or the underlying cash flows
have been received, and we have concluded that no additional other-than-temporary loss is required to be charged
to earnings as of December 31, 2011.
The net adjustment to unrealized gains and losses (net of tax) on available-for-sale securities decreased other
comprehensive income (loss) by $114.1 million for the year ended December 31, 2011 and increased other
comprehensive income (loss) by $53.5 million and $186.6 million for the years ended December 31, 2010 and 2009,
respectively. Activity related to our available-for-sale investment portfolio was as follows:
2011 2010 2009
Proceeds from sales ......................................................... $2,268.3 $760.3 $1,227.4
Realized gross gains on sales ................................................. 140.0 110.7 68.9
Realized gross losses on sales ................................................ 9.9 4.8 6.8
Note 7: Goodwill and Other Intangibles
Goodwill at December 31 was as follows:
2011 2010
Goodwill ................................................................... $1,434.7 $1,423.9
Substantially all of our goodwill balance is attributable to the human pharmaceutical business segment. See Note 3
for a further discussion of goodwill resulting from recent business combinations. No impairments occurred with
respect to the carrying value of goodwill for the years ended December 31, 2011, 2010, or 2009.
The components of other intangible assets at December 31 were as follows:
2011 2010
Description
Carrying
Amount—
Gross Accumulated Amortization
Carrying
Amount—
Net
Carrying
Amount—
Gross Accumulated Amortization
Carrying
Amount—
Net
Finite-lived intangible assets
Marketed products ..................... $4,624.9 $(1,481.2) $3,143.7 $3,789.1 $(1,023.4) $2,765.7
Other ................................. 117.3 (42.5) 74.8 62.5 (31.3) 31.2
Total finite-lived intangible assets .......... 4,742.2 (1,523.7) 3,218.5 3,851.6 (1,054.7) 2,796.9
Indefinite-lived intangible assets
In-process research and development ..... 474.9 0.0 474.9 598.0 0.0 598.0
Total other intangible assets ............... $5,217.1 $(1,523.7) $3,693.4 $4,449.6 $(1,054.7) $3,394.9
Marketed products consists of the amortized cost of the rights to assets acquired in business combinations and
approved for marketing in a significant global jurisdiction (U.S., Europe, and Japan) and capitalized milestone
payments. Other intangibles consist primarily of the amortized cost of licensed platform technologies that have
alternative future uses in research and development, manufacturing technologies, and customer relationships from
business combinations. IPR&D consists of the acquisition date fair value of intangible assets acquired in business
combinations that have not yet achieved regulatory approval for marketing. See Note 3 for a further discussion of
indefinite-lived intangible assets acquired in recent business combinations.
The remaining weighted-average amortization period for finite-lived intangible assets is approximately 9 years.
Amortization expense for 2011, 2010, and 2009 was $469.0 million, $385.7 million, and $277.0 million, respectively.
The estimated amortization expense for our current finite-lived intangible assets for each of the five succeeding
years approximates $530 million in 2012, $460 million in 2013, $410 million in 2014, $380 million in 2015, and
$330 million in 2016. Amortization expense is included in either cost of sales or marketing, selling, and
administrative depending on the nature of the intangible asset being amortized.
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