Eli Lilly 2013 Annual Report Download - page 70

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56
Note 9: Property and Equipment
At December 31, property and equipment consisted of the following:
2013 2012
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 198.7 $ 201.4
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,489.9 6,373.8
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,752.7 7,542.9
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,205.4 799.9
15,646.7 14,918.0
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,671.2) (7,157.8)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,975.5 $ 7,760.2
Depreciation expense for the years ended December 31, 2013, 2012, and 2011 was $774.8 million,
$754.0 million, and $732.4 million, respectively. Interest costs of $24.1 million, $21.0 million, and $25.7 million
were capitalized as part of property and equipment for the years ended December 31, 2013, 2012, and 2011,
respectively. Total rental expense for all leases, including contingent rentals (not material), amounted to
$227.2 million, $262.2 million, and $267.4 million for the years ended December 31, 2013, 2012, and 2011,
respectively. Assets under capital leases included in property and equipment, net on the consolidated balance
sheets, capital lease obligations entered into, and future minimum rental commitments are not material.
Note 10: Borrowings
Long-term debt at December 31 consisted of the following:
2013 2012
4.20 to 7.13 percent notes (due 2014-2037) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,887.3 $ 4,887.3
Other, including capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1 37.4
Fair value adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298.5 606.6
5,212.9 5,531.3
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,012.6) (11.9)
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,200.3 $ 5,519.4
Current maturities of long-term debt of $1.51 billion were repaid during the year ended December 31, 2012.
The aggregate amounts of maturities on long-term debt for the next five years are $1.01 billion in 2014,
$9.5 million in 2015, $205.6 million in 2016, $1.00 billion in 2017, and $200.3 million in 2018.
At December 31, 2013, we have $1.36 billion of unused committed bank credit facilities, $1.20 billion of which
is a revolving credit facility that backs our commercial paper program and matures in April 2015. There were
no amounts outstanding under the revolving credit facility during the year ended December 31, 2013.
Compensating balances and commitment fees are not material, and there are no conditions that are probable
of occurring under which the lines may be withdrawn.
We have converted approximately 65 percent of all fixed-rate debt to floating rates through the use of interest
rate swaps. The weighted-average effective borrowing rates based on debt obligations and interest rates at
December 31, 2013 and 2012, including the effects of interest rate swaps for hedged debt obligations, were
3.10 percent and 3.20 percent, respectively.
For the years ended December 31, 2013, 2012, and 2011, cash payments for interest on borrowings totaled
$139.7 million, $171.9 million, and $167.4 million, respectively, net of capitalized interest.
In accordance with the requirements of derivatives and hedging guidance, the portion of our fixed-rate debt
obligations that is hedged, as a fair value hedge, is reflected in the consolidated balance sheets as an amount
equal to the sum of the debt’s carrying value plus the fair value adjustment representing changes in fair value
of the hedged debt attributable to movements in market interest rates subsequent to the inception of the
hedge.