Eli Lilly 2013 Annual Report Download - page 64

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50
asset impairment associated with the decision to stop development of a delivery device platform, and $20.0
million resulting from a change in our estimates of returned product related to the withdrawal of Xigris™ from
the market during the fourth quarter of 2011.
For the year ended December 31, 2011, we incurred $149.6 million of asset impairments and other special
charges primarily consisting of $85.0 million for returned product and contractual commitments related to the
withdrawal of Xigris from the market and $56.1 million related to our decision to vacate certain leased
premises.
Note 6: Inventories
Inventories at December 31 consisted of the following:
2013 2012
Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 968.1 $ 834.4
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,868.3 1,735.8
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259.0 256.1
3,095.4 2,826.3
Reduction to LIFO cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (166.6) (182.5)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,928.8 $ 2,643.8
Inventories valued under the LIFO method comprised $1.02 billion and $994.3 million of total inventories at
December 31, 2013 and 2012, respectively.
Note 7: Financial Instruments
Financial instruments that potentially subject us to credit risk consist principally of trade receivables and
interest-bearing investments. Wholesale distributors of life-sciences products account for a substantial portion
of trade receivables; collateral is generally not required. The risk associated with this concentration is
mitigated by our ongoing credit-review procedures and insurance. A large portion of our cash is held by a few
major financial institutions. We monitor our exposures with these institutions and do not expect any of these
institutions to fail to meet their obligations. Major financial institutions represent the largest component of our
investments in corporate debt securities. In accordance with documented corporate policies, we monitor the
amount of credit exposure to any one financial institution or corporate issuer. We are exposed to credit-related
losses in the event of nonperformance by counterparties to risk-management instruments but do not expect
any counterparties to fail to meet their obligations given their high credit ratings.
At December 31, 2013, we had outstanding foreign currency forward commitments to purchase 462.6 million
U.S. dollars and sell 337.6 million euro; commitments to purchase 520.7 million euro and sell 716.8 million
U.S. dollars; commitments to purchase 180.7 million British pounds and sell 216.0 million euro; and
commitments to purchase 234.4 million U.S. dollars and sell 24.35 billion Japanese yen, which will all settle
within 30 days.
At December 31, 2013, substantially all of our total debt is at a fixed rate. We have converted approximately
65 percent of our fixed-rate debt to floating rates through the use of interest rate swaps.
During 2013 we entered into forward-starting interest rate swaps with a notional amount of $500.0 million and
maturities not exceeding 30 years to hedge a portion of the cash flows associated with the planned
refinancing of our $1.00 billion March 2014 debt maturity.