Liabilities

As with other industrial enterprises, Lilly's operations are subject to various complex and changing federal, state, and local environmental laws. Lilly makes every effort to minimize its impact on the environment, and to comply with all applicable environmental laws and regulations. Still, over the years, Lilly has incurred some environmental liability.

The company has been designated as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund, with respect to fewer than 10 sites where the company had varying degrees of involvement. Lilly is in various stages of negotiation and/or remediation at each of these sites. Lilly has contributed or expects to contribute approximately $22 million with respect to sites subject to Superfund. The company also continues to clean up its own properties, taking into account, when applicable, available information regarding site conditions, potential clean-up methods, estimated costs and the extent to which other parties can be expected to contribute to those costs. Lilly expects to spend approximately $72.5 million to clean up its U.S. properties. In addition, Lilly implements waste-handling mechanisms and procedures that reduce the possibility of incurring such liability in the future.