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PFIZER INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
(State of Incorporation)
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13-5315170
(I.R.S. Employer Identification No.)
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| Large Accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
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Three Months Ended
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Six Months Ended
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(MILLIONS, EXCEPT PER COMMON SHARE DATA)
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July 4,
2010
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June 28,
2009
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July 4,
2010
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June 28,
2009
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Revenues
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$ | 17,327 | $ | 10,984 | $ | 34,077 | $ | 21,851 | ||||||||
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Costs and expenses:
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||||||||||||||||
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Cost of sales(a)
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3,795 | 1,756 | 8,101 | 3,164 | ||||||||||||
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Selling, informational and administrative expenses(a)
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4,807 | 3,350 | 9,243 | 6,226 | ||||||||||||
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Research and development expenses(a)
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2,187 | 1,695 | 4,413 | 3,400 | ||||||||||||
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Amortization of intangible assets
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1,407 | 583 | 2,816 | 1,161 | ||||||||||||
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Acquisition-related in-process research and development charges
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–– | 20 | 74 | 20 | ||||||||||||
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Restructuring charges and certain acquisition-related costs
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886 | 459 | 1,592 | 1,013 | ||||||||||||
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Other deductions––net
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271 | 72 | 685 | 15 | ||||||||||||
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Income from continuing operations before provision for taxes on income
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3,974 | 3,049 | 7,153 | 6,852 | ||||||||||||
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Provision for taxes on income
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1,488 | 786 | 2,634 | 1,860 | ||||||||||||
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Income from continuing operations
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2,486 | 2,263 | 4,519 | 4,992 | ||||||||||||
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Discontinued operations––net of tax
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(1 | ) | 3 | 1 | 4 | |||||||||||
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Net income before allocation to noncontrolling interests
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2,485 | 2,266 | 4,520 | 4,996 | ||||||||||||
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Less: Net income attributable to noncontrolling interests
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10 | 5 | 19 | 6 | ||||||||||||
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Net income attributable to Pfizer Inc.
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$ | 2,475 | $ | 2,261 | $ | 4,501 | $ | 4,990 | ||||||||
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Earnings per share––basic:
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||||||||||||||||
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Income from continuing operations attributable to Pfizer Inc.
common shareholders
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$ | 0.31 | $ | 0.34 | $ | 0.56 | $ | 0.74 | ||||||||
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Discontinued operations––net of tax
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–– | –– | –– | — | ||||||||||||
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Net income attributable to Pfizer Inc. common shareholders
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$ | 0.31 | $ | 0.34 | $ | 0.56 | $ | 0.74 | ||||||||
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Earnings per share––diluted:
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||||||||||||||||
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Income from continuing operations attributable to Pfizer Inc.
common shareholders
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$ | 0.31 | $ | 0.34 | $ | 0.56 | $ | 0.74 | ||||||||
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Discontinued operations––net of tax
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–– | –– | –– | — | ||||||||||||
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Net income attributable to Pfizer Inc. common shareholders
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$ | 0.31 | $ | 0.34 | $ | 0.56 | $ | 0.74 | ||||||||
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Weighted-average shares used to calculate earnings per common share:
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||||||||||||||||
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Basic
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8,046 | 6,728 | 8,053 | 6,726 | ||||||||||||
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Diluted
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8,072 | 6,752 | 8,085 | 6,752 | ||||||||||||
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Cash dividends paid per common share
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$ | 0.18 | $ | 0.16 | $ | 0.36 | $ | 0.48 | ||||||||
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(a)
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Exclusive of amortization of intangible assets, except as disclosed inNote 9B. Goodwill and Other Intangible Assets: Other Intangible Assets.
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(millions of dollars)
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July 4,
2010*
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Dec. 31,
2009**
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||||||
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Assets
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||||||||
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Cash and cash equivalents
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$ | 1,877 | $ | 1,978 | ||||
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Short-term investments
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17,391 | 23,991 | ||||||
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Accounts receivable, less allowance for doubtful accounts
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14,012 | 14,645 | ||||||
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Short-term loans
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515 | 1,195 | ||||||
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Inventories
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9,511 | 12,403 | ||||||
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Current deferred tax assets and other current assets
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7,113 | 6,962 | ||||||
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Assets held for sale
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682 | 496 | ||||||
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Total current assets
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51,101 | 61,670 | ||||||
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Long-term investments and loans
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10,524 | 13,122 | ||||||
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Property, plant and equipment, less accumulated depreciation
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20,041 | 22,780 | ||||||
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Goodwill
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43,142 | 42,376 | ||||||
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Identifiable intangible assets, less accumulated amortization
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62,231 | 68,015 | ||||||
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Noncurrent deferred tax assets and other noncurrent assets
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4,032 | 4,986 | ||||||
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Total assets
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$ | 191,071 | $ | 212,949 | ||||
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Liabilities and Shareholders’ Equity
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Short-term borrowings, including current portion of long-term debt
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$ | 5,509 | $ | 5,469 | ||||
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Accounts payable
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3,078 | 4,370 | ||||||
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Dividends payable
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1,450 | 1,454 | ||||||
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Income taxes payable
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727 | 10,107 | ||||||
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Accrued compensation and related items
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1,789 | 2,242 | ||||||
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Current deferred tax liabilities and other current liabilities
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12,128 | 13,583 | ||||||
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Total current liabilities
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24,681 | 37,225 | ||||||
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Long-term debt
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37,765 | 43,193 | ||||||
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Pension benefit obligations
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5,969 | 6,392 | ||||||
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Postretirement benefit obligations
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3,246 | 3,243 | ||||||
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Noncurrent deferred tax liabilities
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17,344 | 17,839 | ||||||
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Other taxes payable
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9,538 | 9,000 | ||||||
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Other noncurrent liabilities
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5,650 | 5,611 | ||||||
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Total liabilities
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104,193 | 122,503 | ||||||
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Preferred stock
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56 | 61 | ||||||
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Common stock
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443 | 443 | ||||||
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Additional paid-in capital
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70,568 | 70,497 | ||||||
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Employee benefit trusts
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(25 | ) | (333 | ) | ||||
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Treasury stock
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(22,206 | ) | (21,632 | ) | ||||
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Retained earnings
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42,010 | 40,426 | ||||||
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Accumulated other comprehensive (loss)/income
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(4,407 | ) | 552 | |||||
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Total Pfizer Inc. shareholders’ equity
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86,439 | 90,014 | ||||||
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Equity attributable to noncontrolling interests
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439 | 432 | ||||||
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Total shareholders’ equity
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86,878 | 90,446 | ||||||
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Total liabilities and shareholders’ equity
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$ | 191,071 | $ | 212,949 | ||||
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*
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Unaudited.
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**
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Condensed from audited financial statements.
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Six Months Ended
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(millions of dollars)
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July 4,
2010
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June 28,
2009
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Operating Activities:
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Net income before allocation to noncontrolling interests
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$ | 4,520 | $ | 4,996 | ||||
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Adjustments to reconcile net income before allocation to noncontrolling interests to net
cash (used in)/provided by operating activities:
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Depreciation and amortization
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4,264 | 2,014 | ||||||
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Share-based compensation expense
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243 | 169 | ||||||
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Asset write-offs and impairment charges
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833 | 270 | ||||||
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Acquisition-related in-process research and development charges
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74 | 20 | ||||||
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Deferred taxes from continuing operations
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1,610 | 731 | ||||||
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Other non-cash adjustments
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(92 | ) | (292 | ) | ||||
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Changes in assets and liabilities, net of acquisitions and divestitures
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(12,939 | ) | (247 | ) | ||||
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Net cash (used in)/provided by operating activities
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(1,487 | ) | 7,661 | |||||
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Investing Activities:
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Purchases of property, plant and equipment
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(678 | ) | (522 | ) | ||||
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Purchases of short-term investments
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(3,531 | ) | (38,900 | ) | ||||
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Proceeds from redemptions and sales of short-term investments
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11,048 | 14,251 | ||||||
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Purchases of long-term investments
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(1,481 | ) | (5,266 | ) | ||||
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Proceeds from redemptions and sales of long-term investments
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3,156 | 3,484 | ||||||
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Other investing activities
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519 | 346 | ||||||
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Net cash provided by/(used in) investing activities
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9,033 | (26,607 | ) | |||||
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Financing Activities:
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||||||||
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Increase in short-term borrowings
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3,169 | 21,754 | ||||||
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Principal payments on short-term borrowings
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(7,321 | ) | (22,493 | ) | ||||
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Proceeds from issuances of long-term debt
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–– | 23,996 | ||||||
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Principal payments on long-term debt
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(2 | ) | (908 | ) | ||||
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Purchases of common stock
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(500 | ) | –– | |||||
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Cash dividends paid
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(2,995 | ) | (3,200 | ) | ||||
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Other financing activities
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77 | (106 | ) | |||||
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Net cash (used in)/provided by financing activities
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(7,572 | ) | 19,043 | |||||
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Effect of exchange-rate changes on cash and cash equivalents
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(75 | ) | 25 | |||||
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Net (decrease)/increase in cash and cash equivalents
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(101 | ) | 122 | |||||
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Cash and cash equivalents at beginning of period
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1,978 | 2,122 | ||||||
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Cash and cash equivalents at end of period
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$ | 1,877 | $ | 2,244 | ||||
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Supplemental Cash Flow Information:
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Cash paid during the period for:
|
||||||||
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Income taxes
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$ | 11,311 | $ | 1,109 | ||||
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Interest
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1,342 | 299 | ||||||
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●
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An amendment to the recognition and measurement guidance for the transfers of financial assets.
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●
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An amendment to the guidelines for determining the primary beneficiary in a variable interest entity.
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(millions of dollars)
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Amounts Recognized
as of Acquisition
Date(a)
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Measurement
Period
Adjustments
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Amounts Recognized
as of Acquisition Date
(as adjusted)
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|||||||||
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Working capital, excluding inventories
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$ | 16,342 | $ | 73 | $ | 16,415 | ||||||
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Inventories
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8,388 | (172 | ) | 8,216 | ||||||||
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Property, plant and equipment
|
10,054 | (198 | ) | 9,856 | ||||||||
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Identifiable intangible assets, excluding
in-process research and development(b)
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37,595 | (517 | ) | 37,078 | ||||||||
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In-process research and development(b)
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14,918 | (875 | ) | 14,043 | ||||||||
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Other noncurrent assets
|
2,394 | –– | 2,394 | |||||||||
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Long-term debt
|
(11,187 | ) | –– | (11,187 | ) | |||||||
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Benefit obligations
|
(3,211 | ) | 36 | (3,175 | ) | |||||||
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Net tax accounts(c)
|
(24,773 | ) | (105 | ) | (24,878 | ) | ||||||
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Other noncurrent liabilities
|
(1,908 | ) | (75 | ) | (1,983 | ) | ||||||
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Total identifiable net assets
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48,612 | (1,833 | ) | 46,779 | ||||||||
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Goodwill(d)
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19,954 | 1,833 | 21,787 | |||||||||
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Net assets acquired
|
68,566 | –– | 68,566 | |||||||||
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Less: Amounts attributable to
noncontrolling interests
|
(330 | ) | –– | (330 | ) | |||||||
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Total consideration transferred
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$ | 68,236 | $ | –– | $ | 68,236 | ||||||
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(a)
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As previously reported in Pfizer’s 2009 Annual Report on Form 10-K.
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(b)
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The measurement period adjustments for Identifiable intangible assets primarily consist of adjustments recorded to reflect changes in the estimated fair value of certain acquired intangibles, principally in-process research and development assets. These adjustments were made largely to better reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not result from intervening events subsequent to the acquisition date.
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(c)
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The measurement period adjustments for Net tax accounts primarily reflect the tax impact of the pre-tax measurement period adjustments offset by adjustments to uncertain tax positions following receipt of additional information from taxing authorities about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not result from intervening events subsequent to the acquisition date.
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(d)
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Goodwill recognized as of the acquisition date (as adjusted) totaled $18,670 million for our Biopharmaceutical segment and $3,117 million for our Diversified segment. These amounts are not yet finalized and are subject to change.
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●
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Amounts for intangibles and inventory, pending finalization of valuation efforts.
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●
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Amounts for legal contingencies, pending the finalization of our examination and evaluation of the portfolio of filed cases.
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●
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Amounts for income tax assets, receivables and liabilities pending the filing of Wyeth pre-acquisition tax returns, including all required disclosures and documentation, as well as the receipt of information from taxing authorities, which may change certain estimates and assumptions used.
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●
|
The allocation of goodwill among reporting units.
|
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Three Months Ended
|
Six Months Ended
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(millions of dollars)
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
||||||||||||
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Transaction costs(a)
|
$ | 4 | $ | 184 | $ | 13 | $ | 553 | ||||||||
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Integration costs(b)
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211 | 101 | 419 | 129 | ||||||||||||
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Restructuring charges(c)
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671 | 174 | 1,160 | 331 | ||||||||||||
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Restructuring charges and certain acquisition-related costs
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886 | 459 | 1,592 | 1,013 | ||||||||||||
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Additional depreciation––asset restructuring(d)
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215 | 61 | 308 | 151 | ||||||||||||
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Implementation costs(e)
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–– | 95 | –– | 179 | ||||||||||||
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Total
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$ | 1,101 | $ | 615 | $ | 1,900 | $ | 1,343 | ||||||||
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(a)
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Transaction costs represent external costs directly related to our acquisition of Wyeth and primarily include expenditures for banking, legal, accounting and other similar services. Substantially all of the costs incurred in the second quarter and first six months of 2009 were fees related to a $22.5 billion bridge term loan credit agreement entered into with certain financial institutions on March 12, 2009 to partially fund our acquisition of Wyeth. The bridge term loan credit agreement was terminated in June 2009 as a result of our issuance of approximately $24.0 billion of senior unsecured notes in the first half of 2009.
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(b)
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Integration costs represent external, incremental costs directly related to integrating Wyeth and primarily include expenditures for consulting and systems integration.
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(c)
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Restructuring charges include the following:
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Costs Incurred
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|||||||||||||||||||||||||||||
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Three Months Ended
|
Six Months Ended
|
Activity
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Accrual
|
||||||||||||||||||||||||||
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(millions of dollars)
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
2005-2010 |
Through
July 4,
2010(1)
|
As of
July 4,
2010(2)
|
||||||||||||||||||||||
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Employee termination costs
|
$ | 118 | $ | 29 | $ | 576 | $ | 164 | $ | 8,297 | $ | 6,000 | $ | 2,297 | |||||||||||||||
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Asset impairments
|
497 | 73 | 503 | 91 | 1,955 | 1,955 | –– | ||||||||||||||||||||||
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Other
|
56 | 72 | 81 | 76 | 791 | 657 | 134 | ||||||||||||||||||||||
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Total restructuring charges
|
$ | 671 | $ | 174 | $ | 1,160 | $ | 331 | $ | 11,043 | $ | 8,612 | $ | 2,431 | |||||||||||||||
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(1)
|
Includes adjustments for foreign currency translation.
|
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(2)
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Included in Current deferred tax liabilities and other current liabilities ($1.6 billion) and Other noncurrent liabilities ($831 million).
|
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(d)
|
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions and are included in our condensed consolidated statements of income as follows:
|
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Three Months Ended
|
Six Months Ended
|
||||||||||||||||
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(millions of dollars)
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
|||||||||||||
|
Cost of sales
|
$ | 113 | $ | 32 | $ | 126 | $ | 95 | |||||||||
|
Selling, informational and administrative expenses
|
102 | 8 | 162 | 14 | |||||||||||||
|
Research and development expenses
|
–– | 21 | 20 | 42 | |||||||||||||
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Total
|
$ | 215 | $ | 61 | $ | 308 | $ | 151 | |||||||||
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(e)
|
Implementation costs in the three months and six months ended June 28, 2009 represent external, incremental costs directly related to implementing cost-reduction initiatives prior to our acquisition of Wyeth, and primarily include expenditures related to system and process standardization and the expansion of shared services. For the three months ended June 28, 2009, implementation costs are included in Cost of sales ($13 million), Selling, informational and administrative expenses ($77 million), Research and development expenses ($11 million) and Other deductions––net ($6 million income). For the six months ended June 28, 2009, implementation costs are included in Cost of sales ($26 million), Selling, informational and administrative expenses ($117 million), Research and development expenses ($31 million) and Other deductions––net ($5 million).
|
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●
|
higher charges, incurred as a result of our acquisition of Wyeth, and the mix of jurisdictions in which those charges were incurred, and
|
|
●
|
the expiration of the U.S. research and development tax credit.
|
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
||||||||||||
|
Net income before allocation to noncontrolling interests
|
$ | 2,485 | $ | 2,266 | $ | 4,520 | $ | 4,996 | ||||||||
|
Other comprehensive income/(loss):
|
||||||||||||||||
|
Currency translation adjustment and other
|
(2,144 | ) | 2,638 | (4,891 | ) | 2,254 | ||||||||||
|
Net unrealized losses on derivative financial instruments
|
(375 | ) | (144 | ) | (241 | ) | (167 | ) | ||||||||
|
Net unrealized gains/(losses) on available-for-sale securities
|
(97 | ) | 81 | (112 | ) | 226 | ||||||||||
|
Benefit plan adjustments
|
167 | 18 | 284 | 177 | ||||||||||||
|
Total other comprehensive income/(loss)
|
(2,449 | ) | 2,593 | (4,960 | ) | 2,490 | ||||||||||
|
Total comprehensive income/(loss) before allocation to
noncontrolling interests
|
36 | 4,859 | (440 | ) | 7,486 | |||||||||||
|
Less: Comprehensive income attributable to
noncontrolling interests
|
27 | 12 | 18 | 14 | ||||||||||||
|
Comprehensive income/(loss) attributable to Pfizer Inc.
|
$ | 9 | $ | 4,847 | $ | (458 | ) | $ | 7,472 | |||||||
|
(millions of dollars)
|
July 4,
2010
|
Dec. 31,
2009
|
||||||
|
Selected financial assets measured at fair value on a recurring basis(a) :
|
||||||||
|
Trading securities(b)
|
$ | 162 | $ | 184 | ||||
|
Available-for-sale debt securities(c)
|
24,110 | 32,338 | ||||||
|
Available-for-sale money market funds(d)
|
1,458 | 2,569 | ||||||
|
Available-for-sale equity securities, excluding money market funds(c)
|
183 | 281 | ||||||
|
Derivative financial instruments in receivable positions(e):
|
||||||||
|
Foreign currency swaps
|
113 | 798 | ||||||
|
Interest rate swaps
|
534 | 276 | ||||||
|
Foreign currency forward-exchange contracts
|
404 | 502 | ||||||
|
Total
|
26,964 | 36,948 | ||||||
|
Other selected financial assets(f):
|
||||||||
|
Short-term loans, carried at cost(g)
|
515 | 1,195 | ||||||
|
Held-to-maturity debt securities, carried at amortized cost(c)
|
1,351 | 812 | ||||||
|
Private equity securities, carried at cost or equity method(h)
|
830 | 811 | ||||||
|
Long-term loans, carried at cost(g)
|
925 | 784 | ||||||
|
Total
|
3,621 | 3,602 | ||||||
|
Total selected financial assets(i)
|
$ | 30,585 | $ | 40,550 | ||||
|
Financial liabilities measured at fair value on a recurring basis(a):
|
||||||||
|
Derivative financial instruments in a liability position(j):
|
||||||||
|
Foreign currency swaps
|
$ | 1,555 | $ | 528 | ||||
|
Foreign currency forward-exchange contracts
|
267 | 237 | ||||||
|
Interest rate swaps
|
4 | 25 | ||||||
|
Total
|
1,826 | 790 | ||||||
|
Other financial liabilities(k):
|
||||||||
|
Short-term borrowings, carried at historical proceeds, as adjusted(f), (l)
|
5,509 | 5,469 | ||||||
|
Long-term debt, carried at historical proceeds, as adjusted(m), (n)
|
37,765 | 43,193 | ||||||
|
Total
|
43,274 | 48,662 | ||||||
|
Total selected financial liabilities
|
$ | 45,100 | $ | 49,452 | ||||
|
(a)
|
Fair values are determined based on valuation techniques categorized as follows: Level 1 means the use of quoted prices for identical instruments in active markets; Level 2 means the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; Level 3 means the use of unobservable inputs. Virtually all of our financial assets and liabilities measured at fair value on a recurring basis use Level 2 inputs in the calculation of fair value, except that included in available-for-sale equity securities, excluding money market funds, are $83 million as of July 4, 2010 and $77 million as of December 31, 2009 of investments that use Level 1 inputs in the calculation of fair value. None of our financial assets and liabilities measured at fair value on a recurring basis are valued using Level 3 inputs as of July 4, 2010 or December 31, 2009.
|
|
(b)
|
Trading securities are held in trust for legacy business acquisition severance benefits.
|
|
(c)
|
Gross unrealized gains and losses are not significant.
|
|
(d)
|
Includes approximately $1.2 billion of money market funds held in escrow to secure certain of Wyeth’s payment obligations under its 1999 Nationwide Class Action Settlement Agreement, which relates to litigation against Wyeth concerning its former weight-loss products, Redux and Pondimin (see Note 7G. Financial Instruments: Guarantee).
|
|
(e)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $193 million as of July 4, 2010; and foreign currency swaps with fair values of $106 million and foreign currency forward-exchange contracts with fair values of $100 million as of December 31, 2009.
|
|
(f)
|
The differences between the estimated fair values and carrying values of our financial assets and liabilities not measured at fair value on a recurring basis were not significant as of July 4, 2010 or December 31, 2009.
|
|
(g)
|
Our short-term and long-term loans are due from companies with highly rated securities (Standard & Poor’s (S&P) ratings of mostly AA or better).
|
|
(h)
|
Our private equity securities represent investments in the life sciences sector.
|
|
(i)
|
The decrease in selected financial assets is primarily due to the use of proceeds of short-term investments for tax payments made in the first quarter of 2010, associated with certain business decisions executed to finance the Wyeth acquisition.
|
|
(j)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency swaps with fair values of $230 million and foreign currency forward-exchange contracts with fair values of $79 million as of July 4, 2010; and foreign currency forward-exchange contracts with fair values of $122 million and foreign currency swaps with fair values of $3 million as of December 31, 2009.
|
|
(k)
|
The carrying amounts may include adjustments for discount or premium amortization or for the effect of interest rate swaps designated as hedges.
|
|
(l)
|
Includes foreign currency borrowings with fair values of $1.8 billion as of July 4, 2010 and $1.1 billion as of December 31, 2009, which are used as hedging instruments.
|
|
(m)
|
Includes foreign currency debt with fair value of $820 million as of July 4, 2010 and $2.1 billion as of December 31, 2009, which is used as a hedging instrument.
|
|
(n)
|
The fair value of our long-term debt is $42.5 billion as of July 4, 2010 and $46.2 billion as of December 31, 2009.
|
|
●
|
Trading equity securities––quoted market prices.
|
|
●
|
Trading debt securities––observable market interest rates.
|
|
●
|
Available-for-sale debt securities––third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and credit-adjusted interest rate yield curves.
|
|
●
|
Available-for-sale money market funds––observable Net Asset Value prices.
|
|
●
|
Available-for-sale equity securities, excluding money market funds––third-party pricing services that principally use a composite of observable prices.
|
|
●
|
Derivative financial instruments (assets and liabilities)––third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data. Where applicable, these models discount future cash flow amounts using market-based observable inputs including interest rate yield curves, foreign exchange rates, and forward and spot prices for currencies. The credit risk impact to our derivative financial instruments was not significant.
|
|
●
|
Held-to-maturity debt securities––third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and credit-adjusted interest rate yield curves.
|
|
●
|
Short-term and long-term loans––third-party model that discounts future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
|
|
●
|
Private equity securities––application of the implied volatility associated with an observable biotech index to the carrying amount of our portfolio and, to a lesser extent, performance multiples of comparable securities adjusted for company-specific information.
|
|
●
|
Short-term borrowings and long-term debt––third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and our own credit rating.
|
|
(millions of dollars)
|
July 4,
2010
|
Dec. 31,
2009
|
||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$ | 1,104 | $ | 666 | ||||
|
Short-term investments
|
17,391 | 23,991 | ||||||
|
Short-term loans
|
515 | 1,195 | ||||||
|
Long-term investments and loans
|
10,524 | 13,122 | ||||||
|
Current deferred tax assets and other current assets(a)
|
411 | 526 | ||||||
|
Noncurrent deferred tax assets and other noncurrent assets(b)
|
640 | 1,050 | ||||||
|
Total
|
$ | 30,585 | $ | 40,550 | ||||
|
Liabilities
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
$ | 5,509 | $ | 5,469 | ||||
|
Current deferred tax liabilities and other current liabilities(c)
|
318 | 369 | ||||||
|
Long-term debt
|
37,765 | 43,193 | ||||||
|
Other noncurrent liabilities(d)
|
1,508 | 421 | ||||||
|
Total
|
$ | 45,100 | $ | 49,452 | ||||
|
(a)
|
As of July 4, 2010, derivative instruments at fair value include foreign currency forward-exchange contracts ($404 million) and foreign currency swaps ($7 million) and as of December 31, 2009, include foreign currency forward-exchange contracts ($503 million) and foreign currency swaps ($23 million).
|
|
(b)
|
As of July 4, 2010, derivative instruments at fair value include interest rate swaps ($534 million) and foreign currency swaps ($106 million) and as of December 31, 2009, include foreign currency swaps ($774 million) and interest rate swaps ($276 million).
|
|
(c)
|
As of July 4, 2010, derivative instruments at fair value include foreign currency forward-exchange contracts ($267 million), foreign currency swaps ($47 million) and interest rate swaps ($4 million) and as of December 31, 2009, include foreign currency forward-exchange contracts ($237 million) and foreign currency swaps ($132 million).
|
|
(d)
|
As of July 4, 2010, derivative instruments at fair value include foreign currency swaps ($1.5 billion) and as of December 31, 2009, include foreign currency swaps ($396 million) and interest rate swaps ($25 million).
|
|
Years
|
||||||||||||
|
(millions of dollars)
|
Within 1
|
Over 1
to 5
|
Total as of
July 4,
2010
|
|||||||||
|
Available-for-sale debt securities:
|
||||||||||||
|
Western European and other government debt
|
$ | 10,874 | $ | 2,499 | $ | 13,373 | ||||||
|
Corporate debt(a)
|
1,320 | 1,629 | 2,949 | |||||||||
|
Western European and other government agency debt
|
2,317 | 176 | 2,493 | |||||||||
|
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association asset-backed securities
|
–– | 2,208 | 2,208 | |||||||||
|
Supranational debt
|
1,368 | 150 | 1,518 | |||||||||
|
Reverse repurchase agreements(b)
|
921 | –– | 921 | |||||||||
|
U.S. government Federal Deposit Insurance Corporation guaranteed debt
|
–– | 541 | 541 | |||||||||
|
Certificates of deposit
|
56 | –– | 56 | |||||||||
|
Other asset-backed securities
|
28 | 23 | 51 | |||||||||
|
Held-to-maturity debt securities:
|
||||||||||||
|
Certificates of deposit and other
|
1,344 | 7 | 1,351 | |||||||||
|
Total debt securities
|
$ | 18,228 | $ | 7,233 | $ | 25,461 | ||||||
|
Trading securities
|
162 | |||||||||||
|
Available-for-sale money market funds(c)
|
1,458 | |||||||||||
|
Available-for-sale equity securities, excluding money market funds
|
183 | |||||||||||
|
Total
|
$ | 27,264 | ||||||||||
|
(a)
|
Largely issued by above-investment-grade institutions in the financial services sector.
|
|
(b)
|
Very short-term agreements involving U.S. government securities.
|
|
(c)
|
Consisting of securities issued by the U.S. government and its agencies or instrumentalities and reverse repurchase agreements involving the same investments held.
|
|
Gains/(Losses)
|
||||||||||||||||
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
||||||||||||
|
Derivative Financial Instruments in Fair Value Hedge Relationships
|
||||||||||||||||
|
Interest rate swaps
|
||||||||||||||||
|
Recognized in OID(a)
|
$ | 1 | $ | (3 | ) | $ | 1 | $ | (7 | ) | ||||||
|
Foreign currency swaps
|
||||||||||||||||
|
Recognized in OID(a)
|
1 | 1 | –– | –– | ||||||||||||
|
Derivative Financial Instruments in Cash Flow Hedge Relationships
|
||||||||||||||||
|
U.S. Treasury interest rate locks
|
||||||||||||||||
|
Recognized in OID(a)
|
$ | –– | $ | –– | $ | –– | $ | (11 | ) | |||||||
|
Recognized in OCI(a), (b)
|
–– | –– | –– | (15 | ) | |||||||||||
|
Reclassified from OCI to OID(a), (b)
|
–– | –– | –– | –– | ||||||||||||
|
Foreign currency swaps
|
||||||||||||||||
|
Recognized in OID(a)
|
–– | –– | –– | –– | ||||||||||||
|
Recognized in OCI(a), (b)
|
(1,219 | ) | (66 | ) | (1,657 | ) | (85 | ) | ||||||||
|
Reclassified from OCI to OID(a), (b)
|
(627 | ) | 155 | (1,255 | ) | 155 | ||||||||||
|
Foreign currency forward exchange contracts
|
||||||||||||||||
|
Recognized in OID(a)
|
–– | –– | –– | –– | ||||||||||||
|
Recognized in OCI(a), (b)
|
(1 | ) | 5 | (1 | ) | 8 | ||||||||||
|
Reclassified from OCI to OID(a), (b)
|
1 | 4 | 2 | 14 | ||||||||||||
|
Derivative Financial Instruments in Net Investment Hedge Relationships
|
||||||||||||||||
|
Foreign currency swaps
|
||||||||||||||||
|
Recognized in OID(a)
|
$ | (1 | ) | $ | –– | $ | (1 | ) | $ | (1 | ) | |||||
|
Recognized in OCI(a), (b)
|
(50 | ) | (15 | ) | (40 | ) | 38 | |||||||||
|
Derivative Financial Instruments Not Designated as Hedges
|
||||||||||||||||
|
Foreign currency swaps
|
||||||||||||||||
|
Recognized in OID(a)
|
$ | (4 | ) | $ | 18 | $ | –– | $ | 13 | |||||||
|
Foreign currency forward-exchange contracts
|
||||||||||||||||
|
Recognized in OID(a)
|
(473 | ) | (185 | ) | (1,363 | ) | (441 | ) | ||||||||
|
Non-Derivative Financial Instruments in Net Investment Hedge Relationships
|
||||||||||||||||
|
Foreign currency short-term borrowings
|
||||||||||||||||
|
Recognized in OID(a)
|
$ | –– | $ | –– | $ | –– | $ | –– | ||||||||
|
Recognized in OCI(a), (b)
|
(130 | ) | (23 | ) | (99 | ) | 88 | |||||||||
|
Foreign currency long-term debt
|
||||||||||||||||
|
Recognized in OID(a)
|
–– | –– | –– | –– | ||||||||||||
|
Recognized in OCI(a), (b)
|
(51 | ) | (46 | ) | (34 | ) | 111 | |||||||||
|
(a)
|
OID = Other (income)/deductions––net. OCI = Other comprehensive income/(expense), included in the balance sheet account Accumulated other comprehensive (loss)/income.
|
|
(b)
|
Amounts presented represent the effective portion of the gain or loss. For derivative financial instruments in cash flow hedge relationships, the effective portion is included in Other comprehensive income/(expense) – Net unrealized gains/(losses) on derivative financial instruments. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in Other comprehensive income/(expense)––Currency translation adjustment.
|
|
(millions of dollars)
|
July 4,
2010
|
Dec. 31,
2009
|
||||||
|
Finished goods
|
$ | 4,230 | $ | 5,249 | ||||
|
Work-in-process
|
4,083 | 5,776 | ||||||
|
Raw materials and supplies
|
1,198 | 1,378 | ||||||
|
Total inventories(a)
|
$ | 9,511 | $ | 12,403 | ||||
|
(a)
|
The decrease in total inventories is primarily due to the inventory sold during the first six months of 2010 that was acquired from Wyeth and had been recorded at fair value, as well as operational reductions and the impact of foreign exchange. Certain amounts of inventories are in excess of one year’s supply. These excess amounts are primarily attributable to biologics inventory acquired from Wyeth and recorded at fair value and the quantities are generally consistent with the normal operating cycle of such inventory. There are no recoverability issues associated with these quantities.
|
|
(millions of dollars)
|
Biopharmaceutical
|
Diversified
|
Other
|
(a)
|
Total
|
||||||||||||
|
Balance, December 31, 2009
|
$ | 22,165 | $ | 173 | $ | 20,038 | $ | 42,376 | |||||||||
|
Additions
|
–– | 19 | 1,833 |
(b)
|
1,852 | ||||||||||||
|
Other(c)
|
(752 | ) | (7 | ) | (327 | ) | (1,086 | ) | |||||||||
|
Allocation of Other goodwill(a)
|
18,435 | 3,109 | (21,544 | ) | –– | ||||||||||||
|
Balance, July 4, 2010
|
$ | 39,848 | $ | 3,294 | $ | –– | $ | 43,142 | |||||||||
|
(a)
|
The Other goodwill relates to our acquisition of Wyeth and is subject to change until we complete the recording of the assets acquired and liabilities assumed from Wyeth (see Note 3. Acquisition of Wyeth). In the second quarter of 2010 the Wyeth goodwill was allocated among the Biopharmaceutical and Diversified segments. This allocation has not yet been finalized and is subject to change, which could be significant. We will finalize the allocation as we obtain the information necessary to complete the analyses, but no later than one year from the acquisition date.
|
|
(b)
|
Reflects the impact of measurement period adjustments (see Note 3. Acquisition of Wyeth).
|
|
(c)
|
Primarily reflects the impact of foreign exchange.
|
|
July 4, 2010
|
December 31, 2009
|
|||||||||||||||||||||||
|
(millions of dollars)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Identifiable
Intangible
Assets, less
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Identifiable
Intangible
Assets, less Accumulated
Amortization
|
||||||||||||||||||
|
Finite-lived intangible assets:
|
||||||||||||||||||||||||
|
Developed technology rights
|
$ | 67,432 | $ | (23,393 | ) | $ | 44,039 | $ | 68,870 | $ | (21,223 | ) | $ | 47,647 | ||||||||||
|
Brands
|
1,620 | (590 | ) | 1,030 | 1,637 | (535 | ) | 1,102 | ||||||||||||||||
|
License agreements
|
632 | (190 | ) | 442 | 622 | (119 | ) | 503 | ||||||||||||||||
|
Trademarks
|
107 | (70 | ) | 37 | 113 | (73 | ) | 40 | ||||||||||||||||
|
Other
|
424 | (234 | ) | 190 | 488 | (231 | ) | 257 | ||||||||||||||||
|
Total amortized finite-lived intangible assets
|
70,215 | (24,477 | ) | 45,738 | 71,730 | (22,181 | ) | 49,549 | ||||||||||||||||
|
Indefinite-lived intangible assets:
|
||||||||||||||||||||||||
|
Brands
|
12,380 | –– | 12,380 | 12,562 | –– | 12,562 | ||||||||||||||||||
|
In-process research and development(a)
|
4,044 | –– | 4,044 | 5,834 | –– | 5,834 | ||||||||||||||||||
|
Trademarks
|
69 | –– | 69 | 70 | –– | 70 | ||||||||||||||||||
|
Total indefinite-lived intangible assets
|
16,493 | –– | 16,493 | 18,466 | –– | 18,466 | ||||||||||||||||||
|
Total identifiable intangible assets(b)
|
$ | 86,708 | $ | (24,477 | ) | $ | 62,231 | $ | 90,196 | $ | (22,181 | ) | $ | 68,015 | ||||||||||
|
(a)
|
Decrease is related to the impact of measurement period adjustments in the first six months of 2010 (see Note 3. Acquisition of Wyeth) and impairments recorded in the second quarter of 2010 related to IPR&D assets that we acquired as part of our acquisition of Wyeth. As a result of our review of the projects, based on developments in the second quarter of 2010, we recorded an impairment charge of $200 million ($125 million after-tax) in Other deductions––net.
|
|
(b)
|
Decrease is primarily related to amortization of finite-lived intangible assets, the impact of measurement period adjustments (see Note 3. Acquisition of Wyeth), and the impact of foreign exchange.
|
|
Pension Plans
|
||||||||||||||||||||||||||||||||
|
U.S. Qualified
|
U.S. Supplemental
(Non-Qualified)
|
International
|
Postretirement
Plans
|
|||||||||||||||||||||||||||||
|
(millions of dollars)
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
||||||||||||||||||||||||
|
For the Three Months Ended:
|
||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 89 | $ | 52 | $ | 7 | $ | 5 | $ | 57 | $ | 42 | $ | 21 | $ | 7 | ||||||||||||||||
|
Interest cost
|
188 | 116 | 21 | 12 | 105 | 77 | 54 | 31 | ||||||||||||||||||||||||
|
Expected return on plan assets
|
(200 | ) | (116 | ) | — | — | (107 | ) | (86 | ) | (8 | ) | (7 | ) | ||||||||||||||||||
|
Amortization of:
|
||||||||||||||||||||||||||||||||
|
Actuarial losses
|
38 | 53 | 8 | 8 | 16 | 6 | — | 5 | ||||||||||||||||||||||||
|
Prior service costs/(credits)
|
1 | — | — | — | (1 | ) | (1 | ) | (5 | ) | (1 | ) | ||||||||||||||||||||
|
Curtailments and settlements––net
|
(36 | ) | 30 | (8 | ) | 6 | (6 | ) | (1 | ) | (2 | ) | — | |||||||||||||||||||
|
Special termination benefits
|
36 | 6 | 62 | — | 2 | 1 | 6 | 3 | ||||||||||||||||||||||||
|
Net periodic benefit costs
|
$ | 116 | $ | 141 | $ | 90 | $ | 31 | $ | 66 | $ | 38 | $ | 66 | $ | 38 | ||||||||||||||||
|
For the Six Months Ended:
|
||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 183 | $ | 111 | $ | 15 | $ | 10 | $ | 117 | $ | 87 | $ | 43 | $ | 15 | ||||||||||||||||
|
Interest cost
|
379 | 235 | 40 | 25 | 216 | 155 | 108 | 61 | ||||||||||||||||||||||||
|
Expected return on plan assets
|
(402 | ) | (234 | ) | — | — | (219 | ) | (172 | ) | (16 | ) | (13 | ) | ||||||||||||||||||
|
Amortization of:
|
||||||||||||||||||||||||||||||||
|
Actuarial losses
|
76 | 110 | 15 | 16 | 33 | 12 | — | 9 | ||||||||||||||||||||||||
|
Prior service costs/(credits)
|
1 | 1 | (1 | ) | (1 | ) | (2 | ) | (2 | ) | (9 | ) | (2 | ) | ||||||||||||||||||
|
Curtailments and settlements––net
|
(69 | ) | 54 | (9 | ) | 13 | (5 | ) | 1 | (2 | ) | 5 | ||||||||||||||||||||
|
Special termination benefits
|
50 | 19 | 152 | — | 3 | 2 | 12 | 15 | ||||||||||||||||||||||||
|
Net periodic benefit costs
|
$ | 218 | $ | 296 | $ | 212 | $ | 63 | $ | 143 | $ | 83 | $ | 136 | $ | 90 | ||||||||||||||||
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
|
(in millions)
|
July 4,
2010
|
June 28,
2009
|
July 4,
2010
|
June 28,
2009
|
||||||||||||
|
EPS Numerator––Basic:
|
||||||||||||||||
|
Income from continuing operations attributable to Pfizer Inc.
|
$ | 2,476 | $ | 2,258 | $ | 4,500 | $ | 4,986 | ||||||||
|
Less: Preferred stock dividends––net of tax
|
1 | 1 | 1 | 1 | ||||||||||||
|
Income from continuing operations attributable to Pfizer Inc. common
shareholders
|
2,475 | 2,257 | 4,499 | 4,985 | ||||||||||||
|
Discontinued operations––net of tax
|
||||||||||||||||