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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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40
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41
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79
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79
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79
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79
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80
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80
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80
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80
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81
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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(MILLIONS, EXCEPT PER COMMON SHARE DATA)
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Oct. 2,
2011
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Oct. 3,
2010
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Oct. 2,
2011
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Oct. 3,
2010
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||||||||||||
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||||||||||||||||
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Revenues
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$ | 17,193 | $ | 15,995 | $ | 50,679 | $ | 49,703 | ||||||||
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Costs and expenses:
|
||||||||||||||||
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Cost of sales(a)
|
3,679 | 3,790 | 11,177 | 11,676 | ||||||||||||
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Selling, informational and administrative expenses(a)
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4,621 | 4,599 | 14,097 | 13,776 | ||||||||||||
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Research and development expenses(a)
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2,188 | 2,188 | 6,516 | 6,590 | ||||||||||||
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Amortization of intangible assets
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1,397 | 1,156 | 4,168 | 3,972 | ||||||||||||
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Acquisition-related in-process research and development
charges
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–– | –– | –– | 74 | ||||||||||||
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Restructuring charges and certain acquisition-related costs
|
1,101 | 499 | 2,474 | 2,090 | ||||||||||||
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Other deductions––net
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538 | 2,349 | 1,778 | 3,036 | ||||||||||||
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Income from continuing operations before provision for taxes on income
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3,669 | 1,414 | 10,469 | 8,489 | ||||||||||||
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Provision for taxes on income
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1,235 | 558 | 3,223 | 3,165 | ||||||||||||
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Income from continuing operations
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2,434 | 856 | 7,246 | 5,324 | ||||||||||||
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Discontinued operations:
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||||||||||||||||
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(Loss)/income from discontinued operations––net of tax
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(13 | ) | 26 | 39 | 76 | |||||||||||
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Gain/(loss) on sale of discontinued operations––net of tax
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1,328 | (11 | ) | 1,316 | (9 | ) | ||||||||||
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Discontinued operations––net of tax
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1,315 | 15 | 1,355 | 67 | ||||||||||||
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Net income before allocation to noncontrolling interests
|
3,749 | 871 | 8,601 | 5,391 | ||||||||||||
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Less: net income attributable to noncontrolling interests
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11 | 5 | 31 | 24 | ||||||||||||
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Net income attributable to Pfizer Inc.
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$ | 3,738 | $ | 866 | $ | 8,570 | $ | 5,367 | ||||||||
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Earnings per share––basic:(b)
|
||||||||||||||||
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Income from continuing operations attributable to Pfizer Inc.
common shareholders
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$ | 0.31 | $ | 0.11 | $ | 0.92 | $ | 0.66 | ||||||||
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Discontinued operations––net of tax
|
0.17 | –– | 0.17 | 0.01 | ||||||||||||
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Net income attributable to Pfizer Inc. common shareholders
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$ | 0.48 | $ | 0.11 | $ | 1.09 | $ | 0.67 | ||||||||
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Earnings per share––diluted:(b)
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||||||||||||||||
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Income from continuing operations attributable to Pfizer Inc.
common shareholders
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$ | 0.31 | $ | 0.11 | $ | 0.91 | $ | 0.66 | ||||||||
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Discontinued operations––net of tax
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0.17 | –– | 0.17 | 0.01 | ||||||||||||
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Net income attributable to Pfizer Inc. common shareholders
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$ | 0.48 | $ | 0.11 | $ | 1.08 | $ | 0.66 | ||||||||
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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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7,770 | 8,027 | 7,877 | 8,045 | ||||||||||||
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Diluted
|
7,810 | 8,057 | 7,925 | 8,079 | ||||||||||||
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Cash dividends paid per common share
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$ | 0.20 | $ | 0.18 | $ | 0.60 | $ | 0.54 | ||||||||
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(a)
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Exclusive of amortization of intangible assets, except as disclosed in Note 11B. Goodwill and Other Intangible Assets: Other Intangible Assets.
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(b)
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EPS amounts may not add due to rounding.
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(millions of dollars)
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Oct. 2,
2011
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Dec. 31,
2010
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||||||
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(Unaudited)
|
||||||||
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Assets
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||||||||
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Cash and cash equivalents
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$ | 3,706 | $ | 1,735 | ||||
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Short-term investments
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25,257 | 26,277 | ||||||
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Accounts receivable, less allowance for doubtful accounts
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15,749 | 14,426 | ||||||
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Short-term loans
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184 | 467 | ||||||
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Inventories
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8,426 | 8,275 | ||||||
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Taxes and other current assets
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9,288 | 8,394 | ||||||
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Assets of discontinued operations and other assets held for sale
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122 | 1,439 | ||||||
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Total current assets
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62,732 | 61,013 | ||||||
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Long-term investments and loans
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9,468 | 9,747 | ||||||
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Property, plant and equipment, less accumulated depreciation
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17,721 | 18,645 | ||||||
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Goodwill
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45,409 | 43,928 | ||||||
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Identifiable intangible assets, less accumulated amortization
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55,597 | 57,555 | ||||||
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Taxes and other noncurrent assets
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5,205 | 4,126 | ||||||
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Total assets
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$ | 196,132 | $ | 195,014 | ||||
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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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$ | 5,637 | $ | 5,603 | ||||
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Accounts payable
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3,765 | 3,994 | ||||||
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Dividends payable
|
–– | 1,601 | ||||||
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Income taxes payable
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2,215 | 951 | ||||||
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Accrued compensation and related items
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1,999 | 2,080 | ||||||
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Other current liabilities
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14,240 | 14,256 | ||||||
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Liabilities of discontinued operations
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–– | 151 | ||||||
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Total current liabilities
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27,856 | 28,636 | ||||||
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Long-term debt
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35,399 | 38,410 | ||||||
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Pension benefit obligations
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5,734 | 6,194 | ||||||
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Postretirement benefit obligations
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3,059 | 3,035 | ||||||
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Noncurrent deferred tax liabilities
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20,415 | 18,628 | ||||||
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Other taxes payable
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6,900 | 6,245 | ||||||
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Other noncurrent liabilities
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6,239 | 5,601 | ||||||
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Total liabilities
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105,602 | 106,749 | ||||||
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Commitments and Contingencies
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||||||||
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Preferred stock
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46 | 52 | ||||||
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Common stock
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445 | 444 | ||||||
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Additional paid-in capital
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71,235 | 70,760 | ||||||
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Employee benefit trusts
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(3 | ) | (7 | ) | ||||
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Treasury stock
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(28,586 | ) | (22,712 | ) | ||||
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Retained earnings
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48,121 | 42,716 | ||||||
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Accumulated other comprehensive loss
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(1,211 | ) | (3,440 | ) | ||||
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Total Pfizer Inc. shareholders’ equity
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90,047 | 87,813 | ||||||
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Equity attributable to noncontrolling interests
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483 | 452 | ||||||
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Total shareholders’ equity
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90,530 | 88,265 | ||||||
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Total liabilities and shareholders’ equity
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$ | 196,132 | $ | 195,014 | ||||
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Nine Months Ended
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||||||||
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(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
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||||||
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Operating Activities:
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||||||||
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Net income before allocation to noncontrolling interests
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$ | 8,601 | $ | 5,391 | ||||
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Adjustments to reconcile net income before allocation to noncontrolling interests to net
cash provided by operating activities:
|
||||||||
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Depreciation and amortization
|
6,656 | 6,493 | ||||||
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Share-based compensation expense
|
347 | 351 | ||||||
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Asset write-offs and impairment charges
|
773 | 2,956 | ||||||
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Acquisition-related in-process research and development charges
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–– | 74 | ||||||
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(Gain)/loss on sale of discontinued operations
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(1,683 | ) | 9 | |||||
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Deferred taxes from continuing operations
|
693 | 1,277 | ||||||
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Other deferred taxes
|
175 | –– | ||||||
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Other non-cash adjustments
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26 | (135 | ) | |||||
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Benefit plan contributions in excess of expense
|
(283 | ) | (706 | ) | ||||
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Other changes in assets and liabilities, net of acquisitions and divestitures
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(326 | ) | (10,514 | ) | ||||
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Net cash provided by operating activities
|
14,979 | 5,196 | ||||||
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Investing Activities:
|
||||||||
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Purchases of property, plant and equipment
|
(1,062 | ) | (966 | ) | ||||
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Purchases of short-term investments
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(13,456 | ) | (5,018 | ) | ||||
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Proceeds from redemptions and sales of short-term investments––net
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17,458 | 9,493 | ||||||
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Purchases of long-term investments
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(3,446 | ) | (2,674 | ) | ||||
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Proceeds from redemptions and sales of long-term investments
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2,001 | 3,822 | ||||||
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Acquisitions, net of cash acquired
|
(3,188 | ) | –– | |||||
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Proceeds from sale of business
|
2,376 | –– | ||||||
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Other investing activities
|
618 | 496 | ||||||
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Net cash provided by investing activities
|
1,301 | 5,153 | ||||||
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Financing Activities:
|
||||||||
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Increase in short-term borrowings
|
9,613 | 4,686 | ||||||
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Principal payments on short-term borrowings––net
|
(10,069 | ) | (9,265 | ) | ||||
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Principal payments on long-term debt
|
(3,486 | ) | (4 | ) | ||||
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Purchases of common stock
|
(5,789 | ) | (1,000 | ) | ||||
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Cash dividends paid
|
(4,710 | ) | (4,544 | ) | ||||
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Other financing activities
|
84 | 32 | ||||||
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Net cash used in financing activities
|
(14,357 | ) | (10,095 | ) | ||||
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Effect of exchange-rate changes on cash and cash equivalents
|
48 | (56 | ) | |||||
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Net increase in cash and cash equivalents
|
1,971 | 198 | ||||||
|
Cash and cash equivalents at beginning of period
|
1,735 | 1,978 | ||||||
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Cash and cash equivalents at end of period
|
$ | 3,706 | $ | 2,176 | ||||
|
Supplemental Cash Flow Information:
Cash paid during the period for:
|
||||||||
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Income taxes
|
$ | 1,539 | $ | 11,519 | ||||
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Interest
|
1,872 | 2,039 | ||||||
|
●
|
New guidelines that address the recognition and presentation of the annual fee paid by pharmaceutical companies beginning on January 1, 2011 to the U.S. Treasury as a result of U.S. Healthcare Legislation. As a result of adopting this new standard, we are recording the annual fee ratably throughout the year in the Selling, informational and administrative expenses line item in our condensed consolidated statement of income.
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●
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An amendment to the guidelines that address the accounting for multiple-deliverable arrangements to enable companies to account for certain products or services separately rather than as a combined unit.
|
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(millions of dollars)
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Amounts
Recognized as of
Acquisition Date
(Provisional)
|
|||
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Working capital, excluding inventories
|
$ | 174 | ||
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Inventories
|
340 | |||
|
Property, plant and equipment
|
412 | |||
|
Identifiable intangible assets, excluding in-process research and development
|
1,822 | |||
|
In-process research and development
|
312 | |||
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Net tax accounts
|
(389 | ) | ||
|
All other long-term assets and liabilities, net
|
101 | |||
|
Total identifiable net assets
|
2,772 | |||
|
Goodwill
|
783 | |||
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Net assets acquired/total consideration transferred
|
$ | 3,555 | ||
|
●
|
the expected synergies and other benefits that we believe will result from combining the operations of King with the operations of Pfizer;
|
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●
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any intangible assets that do not qualify for separate recognition, as well as future, yet unidentified projects and products; and
|
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●
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the value of the going-concern element of King’s existing businesses (the higher rate of return on the assembled collection of net assets versus if Pfizer had acquired all of the net assets separately).
|
|
●
|
Amounts for intangibles and inventory, pending finalization of valuation efforts;
|
|
●
|
Amounts for income tax assets, receivables and liabilities pending the filing of King’s pre-acquisition tax returns and the receipt of information from taxing authorities, which may change certain estimates and assumptions used; and
|
|
●
|
The allocation of goodwill among reporting units.
|
|
Pro Forma Consolidated Results
|
||||||||||||
|
Three Months
Ended
|
Nine Months Ended
|
|||||||||||
|
(millions of dollars, except per share data)
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
|||||||||
|
Revenues
|
$ | 16,335 | $ | 50,788 | $ | 50,749 | ||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
854 | 8,769 | 5,163 | |||||||||
|
Diluted earnings per share attributable to Pfizer Inc. common shareholders
|
0.11 | 1.11 | 0.64 | |||||||||
|
●
|
Elimination of King’s historical intangible asset amortization expense (approximately $18 million in the third quarter of 2010, $6 million in the first nine months of 2011 and $98 million in the first nine months of 2010).
|
|
●
|
Additional amortization expense (approximately $48 million in the third quarter of 2010, $15 million in the first nine months of 2011 and $136 million in the first nine months of 2010) related to the fair value of identifiable intangible assets acquired.
|
|
●
|
Additional depreciation expense (approximately $9 million in the third quarter of 2010, $3 million in the first nine months of 2011 and $26 million in the first nine months of 2010) related to the fair value adjustment to property, plant and equipment acquired.
|
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●
|
Adjustment related to the fair value adjustments to acquisition-date inventory estimated to have been sold (addition of $33 million charge in the third quarter of 2010, elimination of $146 million charge in the first nine months of 2011 and addition of $146 million charge in the first nine months of 2010).
|
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●
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Adjustment for acquisition-related costs directly attributable to the acquisition (addition of $11 million of charges in the third quarter of 2010, elimination of $205 million of charges in the first nine months of 2011 and addition of $205 million of charges in the first nine months of 2010, reflecting charges incurred by both King and Pfizer).
|
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Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
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(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
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Revenues
|
$ | 116 | $ | 176 | $ | 507 | $ | 545 | ||||||||
|
Pre-tax (loss)/income from discontinued operations
|
$ | (7 | ) | $ | 29 | $ | 78 | $ | 106 | |||||||
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Provision for taxes on income(a)
|
6 | 3 | 39 | 30 | ||||||||||||
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(Loss)/income from discontinued operations––net of tax
|
(13 | ) | 26 | 39 | 76 | |||||||||||
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Pre-tax gain/(loss) on sale of discontinued operations
|
1,695 | (12 | ) | 1,683 | (9 | ) | ||||||||||
|
Provision/(benefit) for taxes on income(b)
|
367 | (1 | ) | 367 | –– | |||||||||||
|
Discontinued operations––net of tax
|
$ | 1,315 | $ | 15 | $ | 1,355 | $ | 67 | ||||||||
|
(a)
|
Includes a deferred tax expense of $13 million for the first nine months of 2011.
|
|
(b)
|
Includes a deferred tax expense of $162 million for the third quarter and first nine months of 2011.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Accounts receivable
|
$ | –– | $ | 186 | ||||
|
Inventories
|
–– | 130 | ||||||
|
Taxes and other current assets
|
12 | 47 | ||||||
|
Property, plant and equipment
|
110 | 1,009 | ||||||
|
Goodwill
|
–– | 19 | ||||||
|
Identifiable intangible assets
|
–– | 3 | ||||||
|
Taxes and other noncurrent assets
|
–– | 45 | ||||||
|
Assets of discontinued operations and other assets held for sale
|
$ | 122 | $ | 1,439 | ||||
|
Current liabilities
|
$ | –– | $ | 124 | ||||
|
Other liabilities
|
–– | 27 | ||||||
|
Liabilities of discontinued operations
|
$ | –– | $ | 151 | ||||
|
●
|
for our cost-reduction and productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems; and
|
|
●
|
for our acquisition activity, we typically incur costs that can include transaction costs, integration costs (such as expenditures for consulting and the integration of systems and processes) and restructuring charges, related to employees, assets and activities that will not continue in the combined company.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Transaction costs(a)
|
$ | 5 | $ | –– | $ | 28 | $ | 13 | ||||||||
|
Integration costs(b)
|
187 | 231 | 567 | 650 | ||||||||||||
|
Restructuring charges(c):
|
||||||||||||||||
|
Employee termination costs
|
770 | 27 | 1,626 | 603 | ||||||||||||
|
Asset impairments
|
99 | 174 | 157 | 677 | ||||||||||||
|
Other
|
40 | 67 | 96 | 147 | ||||||||||||
|
Restructuring charges and certain acquisition-related costs
|
1,101 | 499 | 2,474 | 2,090 | ||||||||||||
|
Additional depreciation––asset restructuring(d):
|
||||||||||||||||
|
Cost of sales
|
68 | 241 | 411 | 367 | ||||||||||||
|
Selling, informational and administrative expenses
|
39 | 27 | 69 | 190 | ||||||||||||
|
Research and development expenses
|
146 | 25 | 378 | 45 | ||||||||||||
|
Total additional depreciation––asset restructuring
|
253 | 293 | 858 | 602 | ||||||||||||
|
Implementation costs(e):
|
||||||||||||||||
| Selling, informational and administrative expenses | 11 | –– | 11 | –– | ||||||||||||
|
Research and development expenses
|
8 | –– | 28 | –– | ||||||||||||
|
Total implementation costs
|
19 | –– | 39 | –– | ||||||||||||
|
Total costs associated with cost-reduction and productivity initiatives and
acquisition activity
|
$ | 1,373 | $ | 792 | $ | 3,371 | $ | 2,692 | ||||||||
|
(a)
|
Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services.
|
|
(b)
|
Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes.
|
|
(c)
|
From the beginning of our cost-reduction and transformation initiatives in 2005 through October 2, 2011, Employee termination costs represent the expected reduction of the workforce by approximately 57,800 employees, mainly in manufacturing and sales and research, of which approximately 41,000 employees have been terminated as of October 2, 2011. Employee termination costs are generally recorded when the actions are probable and estimable and include accrued severance benefits, pension and postretirement benefits, many of which may be paid out during periods after termination. Asset impairments primarily include charges to write down property, plant and equipment to fair value. Other primarily includes costs to exit certain assets and activities.
|
|
|
●
|
For the three months ended October 2, 2011, Primary Care operating segment ($473 million), Specialty Care and Oncology operating segment ($186 million), Established Products and Emerging Markets operating segment ($65 million), Animal Health and Consumer Healthcare operating segment ($30 million), Nutrition operating segment ($2 million), research and development operations ($47 million income), manufacturing operations ($47 million) and Corporate ($153 million).
|
|
|
●
|
For the nine months ended October 2, 2011, Primary Care operating segment ($606 million), Specialty Care and Oncology operating segment ($228 million), Established Products and Emerging Markets operating segment ($80 million), Animal Health and Consumer Healthcare operating segment ($44 million), Nutrition operating segment ($4 million), research and development operations ($426 million), manufacturing operations ($203 million) and Corporate ($288 million).
|
|
|
●
|
For the three months ended October 3, 2010, Primary Care operating segment ($14 million), Specialty Care and Oncology operating segment ($53 million), Established Products and Emerging Markets operating segment ($14 million), Nutrition operating segment ($1 million), research and development operations ($17 million), manufacturing operations ($161 million) and Corporate ($8 million).
|
|
|
●
|
For the nine months ended October 3, 2010, Primary Care operating segment ($1 million), Specialty Care and Oncology operating segment ($99 million), Established Products and Emerging Markets operating segment ($23 million), Animal Health and Consumer Healthcare operating segment ($33 million), Nutrition operating segment ($12 million income), research and development operations ($239 million), manufacturing operations ($970 million) and Corporate ($74 million).
|
|
(d)
|
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
|
|
(e)
|
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and productivity initiatives.
|
|
Costs Incurred
|
Activity
|
Accrual
|
||||||||||
|
(millions of dollars)
|
2005-2011 |
Through
Oct. 2,
2011(a)
|
As of
Oct. 2,
2011(b)
|
|||||||||
|
Employee termination costs
|
$ | 10,437 | $ | 7,720 | $ | 2,717 | ||||||
|
Asset impairments
|
2,465 | 2,465 | –– | |||||||||
|
Other
|
996 | 889 | 107 | |||||||||
|
Total restructuring charges
|
$ | 13,898 | $ | 11,074 | $ | 2,824 | ||||||
|
(a)
|
Includes adjustments for foreign currency translation.
|
|
(b)
|
Included in Other current liabilities ($1.7 billion) and Other noncurrent liabilities ($1.1 billion).
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Interest income(a)
|
$ | (110 | ) | $ | (100 | ) | $ | (332 | ) | $ | (297 | ) | ||||
|
Interest expense(a)
|
423 | 427 | 1,285 | 1,338 | ||||||||||||
|
Net interest expense
|
313 | 327 | 953 | 1,041 | ||||||||||||
|
Royalty-related income
|
(135 | ) | (158 | ) | (447 | ) | (395 | ) | ||||||||
|
Net losses/(gains) on asset disposals
|
18 | (13 | ) | (8 | ) | (243 | ) | |||||||||
|
Certain legal matters, net(b)
|
132 | 712 | 619 | 886 | ||||||||||||
|
Certain asset impairment charges(c)
|
105 | 1,478 | 585 | 1,710 | ||||||||||||
|
Other, net
|
105 | 3 | 76 | 37 | ||||||||||||
|
Other deductions––net
|
$ | 538 | $ | 2,349 | $ | 1,778 | $ | 3,036 | ||||||||
|
(a)
|
Interest income increased in both periods of 2011 primarily due to higher cash balances. Interest expense decreased in both periods of 2011 due to lower long- and short-term debt balances and the conversion of some fixed-rate liabilities to floating-rate liabilities.
|
|
(b)
|
In the first nine months of 2011, primarily relates to charges for hormone-replacement therapy litigation (see Note 14. Legal Proceedings and Contingencies). In both periods of 2010, primarily includes a charge for asbestos litigation related to our wholly owned subsidiary, Quigley Company, Inc. (See Note 14. Legal Proceedings and Contingencies).
|
|
(c)
|
Substantially all of these asset impairment charges are related to intangible assets, including in-process research and development (IPR&D) assets, that were acquired as part of our acquisition of Wyeth. The impairment charges are determined by comparing the estimated fair value of the assets as of the date of the impairment to their carrying values as of the same date. In the first nine months of 2011, we recorded impairment charges of $585 million, which included approximately $440 million of IPR&D assets, primarily related to two compounds for the treatment of certain autoimmune and inflammatory diseases, and approximately $145 million of Developed Technology Rights. These impairment charges reflect, among other things, the impact of new scientific findings and updated commercial forecasts. In the first nine months of 2010, we recorded impairment charges of $1.7 billion, which include (i) approximately $900 million of IPR&D assets, primarily Prevnar/Prevenar 13 Adult, a compound for the prevention of pneumococcal disease in adults age 50 and older, and Neratinib, a compound for the treatment of breast cancer; (ii) approximately $600 million of indefinite-lived Brands, related to Third Age, infant formulas for the first 12-36 months of age, and Robitussin, a cough suppressant; and (iii) approximately $200 million of Developed Technology Rights, primarily Protonix, a product that treats erosive gastroesophageal reflux disease. These impairment charges, most of which occurred in the third quarter of 2010, reflect, among other things, the following: for IPR&D assets, the impact of changes to the development programs, the projected development and regulatory timeframes and the risk associated with these assets; for Brand assets, the current competitive environment and planned investment support; and, for Developed Technology Rights, an increased competitive environment.
|
|
●
|
the extension of the U.S. research and development credit, which was signed into law on December 17, 2010;
|
|
●
|
the decrease and jurisdictional mix of certain impairment charges related to assets acquired in connection with the Wyeth acquisition; and
|
|
●
|
the change in the jurisdictional mix of earnings.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Net income before allocation to noncontrolling interests
|
$ | 3,749 | $ | 871 | $ | 8,601 | $ | 5,391 | ||||||||
|
Other comprehensive income/(loss):
|
||||||||||||||||
|
Currency translation adjustment and other
|
(68 | ) | 786 | 2,479 | (4,105 | ) | ||||||||||
|
Net unrealized (losses)/gains on derivative financial instruments
|
(230 | ) | (59 | ) | (354 | ) | (300 | ) | ||||||||
|
Net unrealized (losses)/gains on available-for-sale securities
|
(36 | ) | 26 | (48 | ) | (86 | ) | |||||||||
|
Benefit plan adjustments
|
72 | (45 | ) | 151 | 239 | |||||||||||
|
Total other comprehensive (loss)/income
|
(262 | ) | 708 | 2,228 | (4,252 | ) | ||||||||||
|
Total comprehensive income before allocation to noncontrolling interests
|
3,487 | 1,579 | 10,829 | 1,139 | ||||||||||||
|
Less: comprehensive income attributable to noncontrolling interests
|
7 | 5 | 35 | 23 | ||||||||||||
|
Comprehensive income attributable to Pfizer Inc.
|
$ | 3,480 | $ | 1,574 | $ | 10,794 | $ | 1,116 | ||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Selected financial assets measured at fair value on a recurring basis(a) :
|
||||||||
|
Trading securities
|
$ | 148 | $ | 173 | ||||
|
Available-for-sale debt securities(b)
|
31,368 | 32,699 | ||||||
|
Available-for-sale money market funds
|
1,320 | 1,217 | ||||||
|
Available-for-sale equity securities, excluding money market funds(b)
|
317 | 230 | ||||||
|
Derivative financial instruments in receivable positions(c):
|
||||||||
|
Interest rate swaps
|
963 | 603 | ||||||
|
Foreign currency swaps
|
133 | 128 | ||||||
|
Foreign currency forward-exchange contracts
|
123 | 494 | ||||||
|
Total
|
34,372 | 35,544 | ||||||
|
Other selected financial assets(d):
|
||||||||
|
Held-to-maturity debt securities, carried at amortized cost(b)
|
1,204 | 1,178 | ||||||
|
Private equity securities, carried at cost or equity method
|
1,016 | 1,134 | ||||||
|
Short-term loans, carried at cost
|
184 | 467 | ||||||
|
Long-term loans, carried at cost
|
383 | 299 | ||||||
|
Total
|
2,787 | 3,078 | ||||||
|
Total selected financial assets(e)
|
$ | 37,159 | $ | 38,622 | ||||
|
Selected financial liabilities measured at fair value on a recurring basis(a):
|
||||||||
|
Derivative financial instruments in a liability position(f):
|
||||||||
|
Foreign currency swaps
|
$ | 1,671 | $ | 623 | ||||
|
Foreign currency forward-exchange contracts
|
426 | 257 | ||||||
|
Interest rate swaps
|
15 | 4 | ||||||
|
Total
|
2,112 | 884 | ||||||
|
Other selected financial liabilities:
|
||||||||
|
Short-term borrowings, carried at historical proceeds, as adjusted(d)
|
5,637 | 5,603 | ||||||
|
Long-term debt, carried at historical proceeds, as adjusted(g), (h)
|
35,399 | 38,410 | ||||||
|
Total
|
41,036 | 44,013 | ||||||
|
Total selected financial liabilities
|
$ | 43,148 | $ | 44,897 | ||||
|
(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. 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 $84 million as of October 2, 2011 and $105 million as of December 31, 2010 of investments that use Level 1 inputs in the calculation of fair value and $26 million that use Level 3 inputs as of October 2, 2011.
|
|
(b)
|
Gross unrealized gains and losses are not significant.
|
|
(c)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $68 million and foreign currency swaps with fair values of $27 million at October 2, 2011; and foreign currency forward-exchange contracts with fair values of $326 million and foreign currency swaps with fair values of $17 million at December 31, 2010.
|
|
(d)
|
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 at October 2, 2011 or December 31, 2010.
|
|
(e)
|
The decrease in selected financial assets is primarily due to redemptions of investments, the proceeds from which were used to fund our acquisition of King (see Note 3. Acquisition of King Pharmaceuticals, Inc.)
|
|
(f)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $113 million and foreign currency swaps with fair values of $82 million at October 2, 2011; and foreign currency forward-exchange contracts with fair values of $186 million and foreign currency swaps with fair values of $93 million at December 31, 2010.
|
|
(g)
|
Includes foreign currency debt with fair values of $919 million at October 2, 2011 and $880 million at December 31, 2010, which are used to hedge the exposure of certain foreign currency denominated net investments.
|
|
(h)
|
The fair value of our long-term debt is $40.1 billion at October 2, 2011 and $42.3 billion at December 31, 2010.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$ | 1,031 | $ | 906 | ||||
|
Short-term investments
|
25,257 | 26,277 | ||||||
|
Short-term loans
|
184 | 467 | ||||||
|
Long-term investments and loans
|
9,468 | 9,747 | ||||||
|
Taxes and other current assets(a)
|
232 | 515 | ||||||
|
Taxes and other noncurrent assets(b)
|
987 | 710 | ||||||
|
Total selected financial assets
|
$ | 37,159 | $ | 38,622 | ||||
|
Liabilities
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
$ | 5,637 | $ | 5,603 | ||||
|
Other current liabilities(c)
|
701 | 339 | ||||||
|
Long-term debt
|
35,399 | 38,410 | ||||||
|
Other noncurrent liabilities(d)
|
1,411 | 545 | ||||||
|
Total selected financial liabilities
|
$ | 43,148 | $ | 44,897 | ||||
|
(a)
|
At October 2, 2011, derivative instruments at fair value include foreign currency forward-exchange contracts ($123 million), foreign currency swaps ($88 million) and interest rate swaps ($21 million) and at December 31, 2010, include foreign currency forward-exchange contracts ($494 million) and foreign currency swaps ($21 million).
|
|
(b)
|
At October 2, 2011, derivative instruments at fair value include interest rate swaps ($942 million) and foreign currency swaps ($45 million) and at December 31, 2010, include interest rate swaps ($603 million) and foreign currency swaps ($107 million).
|
|
(c)
|
At October 2, 2011, derivative instruments at fair value include foreign currency forward-exchange contracts ($426 million) and foreign currency swaps ($275 million) and at December 31, 2010, include foreign currency forward-exchange contracts ($257 million), foreign currency swaps ($79 million) and interest rate swaps ($3 million).
|
|
(d)
|
At October 2, 2011, derivative instruments at fair value include foreign currency swaps ($1.4 billion) and interest rate swaps ($15 million) and at December 31, 2010, include foreign currency swaps ($544 million) and interest rate swaps ($1 million).
|
|
Years
|
||||||||||||||||
|
(millions of dollars)
|
Within 1
|
Over 1
to 5
|
Over 10
|
Total at
Oct. 2,
2011
|
||||||||||||
|
Available-for-sale debt securities:
|
||||||||||||||||
|
Western European, U.S., Scandinavian and other government debt
|
$ | 15,215 | $ | 1,361 | $ | –– | $ | 16,576 | ||||||||
|
Corporate debt
|
1,675 | 2,495 | –– | 4,170 | ||||||||||||
|
Western European, Scandinavian and other government agency debt
|
3,661 | 253 | –– | 3,914 | ||||||||||||
|
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association asset-backed securities
|
–– | 2,240 | –– | 2,240 | ||||||||||||
|
Supranational debt
|
2,338 | 514 | 2,852 | |||||||||||||
|
Reverse repurchase agreements
|
783 | –– | –– | 783 | ||||||||||||
|
U.S. government Federal Deposit Insurance Corporation
guaranteed debt
|
623 | 13 | 16 | 652 | ||||||||||||
|
Other asset-backed securities
|
2 | 74 | 10 | 86 | ||||||||||||
|
Certificates of deposit
|
95 | –– | –– | 95 | ||||||||||||
|
Held-to-maturity debt securities:
|
||||||||||||||||
|
Certificates of deposit and other
|
1,198 | 6 | –– | 1,204 | ||||||||||||
|
Total debt securities
|
$ | 25,590 | $ | 6,956 | $ | 26 | $ | 32,572 | ||||||||
|
Amount of
Gains/(Losses)
Recognized in OID(a) (b) (c)
|
Amount of
Gains/(Losses)
Recognized in OCI
(Effective Portion)(a) (d)
|
Amount of
Gains/(Losses)
Reclassified from
OCI into OID
(Effective Portion)(a) (d)
|
||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||||||||
|
Three Months Ended:
|
||||||||||||||||||||||||
|
Derivative Financial Instruments in Fair Value
Hedge Relationships(b)
|
||||||||||||||||||||||||
|
Interest rate swaps
|
$ | –– | $ | –– | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency swaps
|
(1 | ) | (1 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Derivative Financial Instruments in Cash Flow
Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | –– | $ | –– | $ | (1,047 | ) | $ | 656 | $ | (654 | ) | $ | 815 | ||||||||||
|
Foreign currency forward-exchange contracts
|
–– | –– | 1 | (1 | ) | 1 | –– | |||||||||||||||||
|
Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | (1 | ) | $ | 1 | $ | (118 | ) | $ | (39 | ) | $ | –– | $ | –– | |||||||||
|
Derivative Financial Instruments Not
Designated as Hedges
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 29 | $ | 6 | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency forward-exchange contracts
|
(75 | ) | 419 | –– | –– | –– | –– | |||||||||||||||||
|
Non-Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency short-term borrowings
|
$ | –– | $ | –– | $ | –– | $ | (96 | ) | $ | –– | $ | –– | |||||||||||
|
Foreign currency long-term debt
|
–– | –– | (42 | ) | (38 | ) | –– | –– | ||||||||||||||||
|
Total
|
$ | (48 | ) | $ | 425 | $ | (1,206 | ) | $ | 482 | $ | (653 | ) | $ | 815 | |||||||||
|
Nine Months Ended:
|
||||||||||||||||||||||||
|
Derivative Financial Instruments in Fair Value
Hedge Relationships(b)
|
||||||||||||||||||||||||
|
Interest rate swaps
|
$ | –– | $ | –– | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency swaps
|
(1 | ) | (1 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Derivative Financial Instruments in Cash Flow
Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | –– | $ | –– | $ | (516 | ) | $ | (1,000 | ) | $ | 76 | $ | (440 | ) | |||||||||
|
Foreign currency forward-exchange contracts
|
–– | –– | 4 | (2 | ) | 5 | 2 | |||||||||||||||||
|
Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 14 | $ | –– | $ | (1,076 | ) | $ | (78 | ) | $ | –– | $ | –– | ||||||||||
|
Derivative Financial Instruments Not
Designated as Hedges
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 72 | $ | 6 | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency forward-exchange contracts
|
(392 | ) | (943 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Non-Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency short-term borrowings
|
$ | –– | $ | –– | $ | 940 | $ | (195 | ) | $ | –– | $ | –– | |||||||||||
|
Foreign currency long-term debt
|
–– | –– | (47 | ) | (72 | ) | –– | –– | ||||||||||||||||
|
Total
|
$ | (307 | ) | $ | (938 | ) | $ | (695 | ) | $ | (1,347 | ) | $ | 81 | $ | (438 | ) | |||||||
|
(a)
|
OID = Other (income)/deductions—net, included in the income statement account, Other deductions—net. OCI = Other comprehensive income/(loss), included in the balance sheet account Accumulated other comprehensive loss.
|
|
(b)
|
Also includes gains and losses attributable to the hedged risk in fair value hedge relationships.
|
|
(c)
|
There was no significant ineffectiveness in the third quarter and first nine months of 2011 or 2010.
|
|
(d)
|
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/(loss)––Net unrealized (losses)/gains 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/(loss)––Currency translation adjustment and other.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Finished goods
|
$ | 3,975 | $ | 3,665 | ||||
|
Work-in-process
|
3,577 | 3,727 | ||||||
|
Raw materials and supplies
|
874 | 883 | ||||||
|
Total inventories(a)
|
$ | 8,426 | $ | 8,275 | ||||
|
(a)
|
Certain amounts of inventories are in excess of one year’s supply. There are no recoverability issues associated with these amounts.
|
|
(millions of dollars)
|
Primary Care | Specialty Care and Oncology | Established Products and Emerging Markets | Animal Health and Consumer Healthcare | Nutrition | To be
allocated(a)
|
Total | |||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||
|
Balance, December 31, 2010
|
$ | 2,449 | $ | 496 | $ | 40,983 | $ | 43,928 | ||||||||||||||||||||
|
Additions(b)
|
— | — | 825 | 825 | ||||||||||||||||||||||||
|
Other(c)
|
15 | 11 | 630 | 656 | ||||||||||||||||||||||||
|
Balance, October 2, 2011
|
$ | $ | 2,464 | $ | 507 | $ | 42,438 | $ | 45,409 | |||||||||||||||||||
|
(a)
|
The amount to be allocated includes the former Biopharmaceutical goodwill (see below), as well as newly acquired goodwill, substantially all from our acquisition of King, for which the allocation to reporting units is pending (see Note 3. Acquisition of King Pharmaceuticals, Inc. for additional information).
|
|
(b)
|
Substantially all of the amount relates to our acquisition of King and is subject to change until we complete the recording of the assets acquired and liabilities assumed from King (see Note 3. Acquisition of King Pharmaceuticals, Inc.). The allocation of King goodwill among our reporting units has not yet been completed, but will be completed within one year of the acquisition date.
|
|
(c)
|
Primarily reflects the impact of foreign exchange.
|
|
Oct. 2, 2011
|
December 31, 2010
|
|||||||||||||||||||||||
|
(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
|
$ | 71,288 | $ | (30,932 | ) | $ | 40,356 | $ | 68,432 | $ | (26,223 | ) | $ | 42,209 | ||||||||||
|
Brands
|
1,693 | (569 | ) | 1,124 | 1,626 | (607 | ) | 1,019 | ||||||||||||||||
|
License agreements
|
589 | (284 | ) | 305 | 637 | (248 | ) | 389 | ||||||||||||||||
|
Trademarks and other
|
558 | (441 | ) | 117 | 533 | (324 | ) | 209 | ||||||||||||||||
|
Total amortized finite-lived intangible assets
|
74,128 | (32,226 | ) | 41,902 | 71,228 | (27,402 | ) | 43,826 | ||||||||||||||||
|
Indefinite-lived intangible assets:
|
||||||||||||||||||||||||
|
Brands
|
10,291 | — | 10,291 | 10,219 | — | 10,219 | ||||||||||||||||||
|
In-process research and development
|
3,332 | — | 3,332 | 3,438 | — | 3,438 | ||||||||||||||||||
|
Trademarks
|
72 | — | 72 | 72 | — | 72 | ||||||||||||||||||
|
Total indefinite-lived intangible assets
|
13,695 | — | 13,695 | </ | ||||||||||||||||||||