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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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60
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61
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Three Months Ended
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(millions, except per common share data)
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April 3,
2011
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April 4,
2010
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||||||
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Revenues
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$ | 16,502 | $ | 16,576 | ||||
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Costs and expenses:
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||||||||
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Cost of sales(a)
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3,693 | 4,202 | ||||||
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Selling, informational and administrative expenses(a)
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4,503 | 4,403 | ||||||
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Research and development expenses(a)
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2,091 | 2,221 | ||||||
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Amortization of intangible assets
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1,376 | 1,409 | ||||||
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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
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894 | 706 | ||||||
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Other deductions––net
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827 | 412 | ||||||
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Income from continuing operations before provision for taxes on income
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3,118 | 3,149 | ||||||
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Provision for taxes on income
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894 | 1,135 | ||||||
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Income from continuing operations
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2,224 | 2,014 | ||||||
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Discontinued operations:
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||||||||
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Income from operations––net of tax
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10 | 19 | ||||||
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Gain on sale of discontinued operations––net of tax
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- | 2 | ||||||
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Discontinued operations––net of tax
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10 | 21 | ||||||
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Net income before allocation to noncontrolling interests
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2,234 | 2,035 | ||||||
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Less: Net income attributable to noncontrolling interests
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12 | 9 | ||||||
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Net income attributable to Pfizer Inc.
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$ | 2,222 | $ | 2,026 | ||||
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Earnings per common share––basic:
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||||||||
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Income from continuing operations attributable to Pfizer Inc. common shareholders
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$ | 0.28 | $ | 0.25 | ||||
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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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$ | 0.28 | $ | 0.25 | ||||
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Earnings per common share––diluted:
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||||||||
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Income from continuing operations attributable to Pfizer Inc. common shareholders
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$ | 0.28 | $ | 0.25 | ||||
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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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$ | 0.28 | $ | 0.25 | ||||
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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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7,982 | 8,061 | ||||||
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Diluted
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8,035 | 8,101 | ||||||
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Cash dividends paid per common share
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$ | 0.20 | $ | 0.18 | ||||
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(a)
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Exclusive of amortization of intangible assets, except as disclosed in Note 11.B Goodwill and Other Intangible Assets: Other Intangible Assets.
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(millions of dollars)
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April 3,
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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$ | 730 | $ | 1,735 | ||||
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Short-term investments
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23,279 | 26,277 | ||||||
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Accounts receivable, less allowance for doubtful accounts
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15,182 | 14,426 | ||||||
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Short-term loans
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406 | 467 | ||||||
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Inventories
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8,467 | 8,275 | ||||||
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Taxes and other current assets
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8,755 | 8,394 | ||||||
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Assets of discontinued operations and other assets held for sale
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1,425 | 1,439 | ||||||
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Total current assets
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58,244 | 61,013 | ||||||
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Long-term investments and loans
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9,811 | 9,747 | ||||||
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Property, plant and equipment, less accumulated depreciation
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18,833 | 18,645 | ||||||
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Goodwill
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44,853 | 43,928 | ||||||
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Identifiable intangible assets, less accumulated amortization
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58,497 | 57,555 | ||||||
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Taxes and other noncurrent assets
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4,718 | 4,126 | ||||||
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Total assets
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$ | 194,956 | $ | 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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$ | 6,093 | $ | 5,603 | ||||
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Accounts payable
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3,750 | 3,994 | ||||||
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Dividends payable
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1 | 1,601 | ||||||
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Income taxes payable
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1,958 | 951 | ||||||
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Accrued compensation and related items
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1,849 | 2,080 | ||||||
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Other current liabilities
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15,338 | 14,256 | ||||||
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Liabilities of discontinued operations
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182 | 151 | ||||||
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Total current liabilities
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29,171 | 28,636 | ||||||
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Long-term debt
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35,308 | 38,410 | ||||||
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Pension benefit obligations
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5,929 | 6,194 | ||||||
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Postretirement benefit obligations
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3,041 | 3,035 | ||||||
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Noncurrent deferred tax liabilities
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19,414 | 18,628 | ||||||
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Other taxes payable
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6,590 | 6,245 | ||||||
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Other noncurrent liabilities
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4,970 | 5,601 | ||||||
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Total liabilities
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104,423 | 106,749 | ||||||
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Preferred stock
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49 | 52 | ||||||
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Common stock
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444 | 444 | ||||||
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Additional paid-in capital
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70,925 | 70,760 | ||||||
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Employee benefit trusts
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(6 | ) | (7 | ) | ||||
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Treasury stock
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(24,215 | ) | (22,712 | ) | ||||
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Retained earnings
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44,926 | 42,716 | ||||||
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Accumulated other comprehensive loss
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(2,056 | ) | (3,440 | ) | ||||
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Total Pfizer Inc. shareholders’ equity
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90,067 | 87,813 | ||||||
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Equity attributable to noncontrolling interests
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466 | 452 | ||||||
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Total shareholders’ equity
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90,533 | 88,265 | ||||||
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Total liabilities and shareholders’ equity
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$ | 194,956 | $ | 195,014 | ||||
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Three Months Ended
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(millions of dollars)
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April 3,
2011
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April 4,
2010
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Operating Activities:
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Net income before allocation to noncontrolling interests
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$ | 2,234 | $ | 2,035 | ||||
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Adjustments to reconcile net income before allocation to noncontrolling interests to net
cash provided by/(used in) operating activities:
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Depreciation and amortization
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2,104 | 2,051 | ||||||
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Share-based compensation expense
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122 | 138 | ||||||
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Asset write-offs and impairment charges
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165 | 59 | ||||||
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Acquisition-related in-process research and development charges
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- | 74 | ||||||
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Deferred taxes from continuing operations
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(120 | ) | 840 | |||||
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Other non-cash adjustments
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(2 | ) | 260 | |||||
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Benefit plan contributions (in excess of)/less than expense
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(383 | ) | 163 | |||||
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Other changes in assets and liabilities, net of acquisitions and divestitures
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522 | (11,980 | ) | |||||
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Net cash provided by/(used in) operating activities
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4,642 | (6,360 | ) | |||||
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Investing Activities:
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Purchases of property, plant and equipment
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(250 | ) | (305 | ) | ||||
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Purchases of short-term investments
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(3,352 | ) | (2,178 | ) | ||||
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Proceeds from redemptions and sales of short-term investments, net
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8,406 | 11,388 | ||||||
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Purchases of long-term investments
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(1,932 | ) | (858 | ) | ||||
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Proceeds from redemptions and sales of long-term investments
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888 | 1,127 | ||||||
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Acquisitions, net of cash acquired
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(3,169 | ) | - | |||||
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Other investing activities
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134 | 220 | ||||||
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Net cash provided by investing activities
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725 | 9,394 | ||||||
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Financing Activities:
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||||||||
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Increase in short-term borrowings
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2,682 | 1,892 | ||||||
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Principal payments on short-term borrowings, net
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(2,220 | ) | (3,663 | ) | ||||
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Principal payments on long-term debt
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(3,878 | ) | (9 | ) | ||||
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Purchases of common stock
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(1,430 | ) | - | |||||
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Cash dividends paid
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(1,591 | ) | (1,441 | ) | ||||
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Other financing activities
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33 | 10 | ||||||
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Net cash used in financing activities
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(6,404 | ) | (3,211 | ) | ||||
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Effect of exchange-rate changes on cash and cash equivalents
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32 | (42 | ) | |||||
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Net decrease in cash and cash equivalents
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(1,005 | ) | (219 | ) | ||||
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Cash and cash equivalents at beginning of period
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1,735 | 1,978 | ||||||
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Cash and cash equivalents at end of period
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$ | 730 | $ | 1,759 | ||||
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Supplemental Cash Flow Information:
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Cash (refunded)/paid for income taxes
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$ | (134 | ) | $ | 10,547 | |||
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Cash paid for interest
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687 | 792 | ||||||
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●
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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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|||
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Working capital, excluding inventories
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$ | 210 | ||
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Inventories
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340 | |||
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Property, plant and equipment
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413 | |||
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Identifiable intangible assets, excluding in-process research and development
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1,781 | |||
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In-process research and development
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301 | |||
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Net tax accounts
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(384 | ) | ||
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All other long-term assets and liabilities, net
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114 | |||
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Total identifiable net assets
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2,775 | |||
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Goodwill
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780 | |||
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Net assets acquired/total consideration transferred
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$ | 3,555 | ||
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●
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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).
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●
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Amounts for intangibles, inventory and property, plant and equipment (PP&E), pending finalization of valuation efforts for acquired intangible assets as well as the completion of certain physical inventory counts and the confirmation of the physical existence and condition of certain PP&E assets.
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●
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Amounts for environmental contingencies, pending the finalization of our assessment and valuation of environmental matters.
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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 King’s pre-acquisition tax returns and the receipt of information from taxing authorities, which may change certain estimates and assumptions used.
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●
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The allocation of goodwill among reporting units.
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(millions of dollars)
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King’s Operations
Included in Pfizer’s First
Quarter 2011 Results
|
|||
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Revenues
|
$ | 224 | ||
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Loss from continuing operations attributable to Pfizer Inc. common shareholders(a)
|
(69 | ) | ||
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(a)
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Includes purchase accounting adjustments related to the fair value adjustments for acquisition-date inventory estimated to have been sold ($57 million pre-tax), amortization of identifiable intangible assets acquired from King ($29 million pre-tax) and restructuring and integration costs ($95 million pre-tax).
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Pro Forma Consolidated Results
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||||||||
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Three Months Ended
|
||||||||
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(millions of dollars, except per share data)
|
April 3,
2011
|
April 4,
2010
|
||||||
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Revenues
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$ | 16,611 | $ | 16,949 | ||||
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Income from continuing operations attributable to Pfizer Inc. common shareholders
|
2,313 | 1,910 | ||||||
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Diluted earnings per share attributable to Pfizer Inc. common shareholders
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0.29 | 0.24 | ||||||
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●
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Elimination of King’s historical intangible asset amortization expense ($6 million in 2011 and $41 million in 2010).
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●
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Additional amortization expense (approximately $14 million in 2011 and $43 million in 2010) related to the fair value of identifiable intangible assets acquired.
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●
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Additional depreciation expense (approximately $1 million in 2011 and $3 million in 2010) related to the fair value adjustment to property, plant and equipment acquired.
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●
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Adjustment related to the fair value adjustments to acquisition-date inventory estimated to have been sold (elimination of $57 million charge in 2011 and addition of $57 million charge in 2010).
|
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●
|
Adjustment for acquisition-related costs directly attributable to the acquisition (elimination of $117 million of charges in 2011 and addition of $117 million of charges in 2010, reflecting charges incurred by both King and Pfizer).
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Three Months Ended
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||||||||
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(millions of dollars)
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April 3,
2011
|
April 4,
2010
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||||||
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Revenues
|
$ | 177 | $ | 174 | ||||
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Pre-tax income from discontinued operations
|
$ | 28 | $ | 30 | ||||
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Provision for taxes
|
(18 | ) | (11 | ) | ||||
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Income from discontinued operations––net of tax
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10 | 19 | ||||||
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Pre-tax gain on sale of discontinued operations
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–– | 3 | ||||||
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Provision for income taxes
|
–– | (1 | ) | |||||
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Discontinued operations––net of tax
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$ | 10 | $ | 21 | ||||
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(millions of dollars)
|
April 3,
2011
|
Dec. 31,
2010
|
||||||
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Accounts receivable
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$ | 179 | $ | 186 | ||||
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Inventories
|
144 | 130 | ||||||
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Taxes and other current assets
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39 | 47 | ||||||
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Property, plant and equipment
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993 | 1,009 | ||||||
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Goodwill
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19 | 19 | ||||||
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Identifiable intangible assets
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6 | 3 | ||||||
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Taxes and other noncurrent assets
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45 | 45 | ||||||
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Assets of discontinued operations and other assets held for sale
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$ | 1,425 | $ | 1,439 | ||||
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Current liabilities
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$ | 133 | $ | 124 | ||||
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Other liabilities
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49 | 27 | ||||||
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Liabilities of discontinued operations
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$ | 182 | $ | 151 | ||||
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●
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for our cost-reduction 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
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●
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for our acquisition activity, we typically incur costs that can include transaction costs, integration costs (such as expenditures for consulting and systems integration) and restructuring charges, related to employees, assets and activities that will not continue in the combined company.
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Three Months Ended
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||||||||
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(millions of dollars)
|
April 3,
2011
|
April 4,
2010
|
||||||
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Transaction costs(a)
|
$ | 10 | $ | 9 | ||||
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Integration costs(b)
|
179 | 208 | ||||||
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Restructuring charges(c):
|
||||||||
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Employee termination costs
|
667 | 458 | ||||||
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Asset impairments
|
25 | 6 | ||||||
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Other
|
13 | 25 | ||||||
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Restructuring charges and certain acquisition-related costs
|
894 | 706 | ||||||
|
Additional depreciation––asset restructuring (d)
|
||||||||
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Cost of sales
|
172 | 13 | ||||||
|
Selling, informational and administrative expenses
|
7 | 60 | ||||||
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Research and development expenses
|
64 | 20 | ||||||
|
Total additional depreciation––asset restructuring
|
243 | 93 | ||||||
|
Implementation costs(e)
|
||||||||
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Research and development expenses
|
10 | –– | ||||||
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Total implementation costs
|
10 | –– | ||||||
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Total costs associated with cost-reduction initiatives and acquisition activity
|
$ | 1,147 | $ | 799 | ||||
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(a)
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Transaction costs represent external costs directly related to business combinations and primarily include expenditures for banking, legal, accounting and other similar services.
|
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(b)
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Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and systems integration.
|
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(c)
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From the beginning of our cost-reduction and transformation initiatives in 2005 through April 3, 2011, Employee termination costs represent the expected reduction of the workforce by approximately 53,500 employees, mainly in manufacturing and sales and research of which approximately 37,900 employees have been terminated as of April 3, 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. These restructuring charges in 2011 are associated with the following: Primary Care operating segment ($46 million), Specialty Care and Oncology operating segment ($35 million), Established Products and Emerging Markets operating segment ($3 million), Animal Health and Consumer Healthcare operating segment ($10 million), Nutrition operating segment ($2 million), Worldwide Research and Development ($422 million) and Corporate ($187 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 related to acquisitions.
|
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(e)
|
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction initiatives.
|
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Costs Incurred
|
Activity
|
Accrual
|
||||||||||
|
(millions of dollars)
|
2005-2011 |
Through
April 3,
2011(a)
|
As of
April 3,
2011(b)
|
|||||||||
|
Employee termination costs
|
$ | 9,478 | $ | 7,160 | $ | 2,318 | ||||||
|
Asset impairments
|
2,333 | 2,333 | –– | |||||||||
|
Other
|
914 | 822 | 92 | |||||||||
|
Total restructuring charges
|
$ | 12,725 | $ | 10,315 | $ | 2,410 | ||||||
|
(a)
|
Includes adjustments for foreign currency translation.
|
|
(b)
|
Included in Other current liabilities ($1.7 billion) and Other noncurrent liabilities ($700 million).
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 3,
2011
|
April 4,
2010
|
||||||
|
Interest income(a)
|
$ | (105 | ) | $ | (112 | ) | ||
|
Interest expense(a)
|
458 | 522 | ||||||
|
Net interest expense
|
353 | 410 | ||||||
|
Royalty-related income
|
(171 | ) | (142 | ) | ||||
|
Net gain on asset disposals
|
(12 | ) | (45 | ) | ||||
|
Certain legal matters, net(b)
|
501 | 137 | ||||||
|
Certain asset impairment charges(c)
|
157 | –– | ||||||
|
Other, net
|
(1 | ) | 52 | |||||
|
Other deductions––net
|
$ | 827 | $ | 412 | ||||
|
(a)
|
Interest income decreased in 2011 due to lower interest rates. Interest expense decreased in 2011 due to lower long- and short-term debt balances and the conversion of some fixed-rate liabilities to floating-rate liabilities.
|
|
(b)
|
In 2011, primarily relates to a charge for hormone-replacement therapy litigation (see Note 14. Legal Proceedings and Contingencies).
|
|
(c)
|
In 2011, relates to an IPR&D compound acquired as part of our acquisition of Wyeth.
|
|
●
|
the extension of the U.S. research and development credit, which was signed into law on December 17, 2010;
|
|
●
|
the change in the jurisdictional mix of earnings; and
|
|
●
|
the tax impact of the charges incurred for certain legal matters (see Note 14. Legal Proceedings and Contingencies).
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 3,
2011
|
April 4,
2010
|
||||||
|
Net income before allocation to noncontrolling interests
|
$ | 2,234 | $ | 2,035 | ||||
|
Other comprehensive income/(loss):
|
||||||||
|
Currency translation adjustment and other
|
1,541 | (2,749 | ) | |||||
|
Net unrealized (losses)/gains on derivative financial instruments
|
(135 | ) | 134 | |||||
|
Net unrealized losses on available-for-sale securities
|
(24 | ) | (15 | ) | ||||
|
Benefit plan adjustments
|
2 | 117 | ||||||
|
Total other comprehensive income/(loss)
|
1,384 | (2,513 | ) | |||||
|
Total comprehensive income/(loss) before allocation to noncontrolling interests
|
3,618 | (478 | ) | |||||
|
Less: Comprehensive income/(loss) attributable to noncontrolling interests
|
16 | (10 | ) | |||||
|
Comprehensive income/(loss) attributable to Pfizer Inc.
|
$ | 3,602 | $ | (468 | ) | |||
|
(millions of dollars)
|
April 3,
2011
|
Dec. 31,
2010
|
||||||
|
Selected financial assets measured at fair value on a recurring basis (a) :
|
||||||||
|
Trading securities
|
$ | 155 | $ | 173 | ||||
|
Available-for-sale debt securities(b)
|
29,482 | 32,699 | ||||||
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Available-for-sale money market funds
|
1,396 | 1,217 | ||||||
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Available-for-sale equity securities, excluding money market funds(b)
|
343 | 230 | ||||||
|
Derivative financial instruments in receivable positions(c):
|
||||||||
|
Interest rate swaps
|
339 | 603 | ||||||
|
Foreign currency swaps
|
268 | 128 | ||||||
|
Foreign currency forward-exchange contracts
|
134 | 494 | ||||||
|
Total
|
32,117 | 35,544 | ||||||
|
Other selected financial assets(d):
|
||||||||
|
Held-to-maturity debt securities, carried at amortized cost(b)
|
848 | 1,178 | ||||||
|
Private equity securities, carried at cost or equity method
|
1,156 | 1,134 | ||||||
|
Short-term loans, carried at cost
|
406 | 467 | ||||||
|
Long-term loans, carried at cost
|
237 | 299 | ||||||
|
Total
|
2,647 | 3,078 | ||||||
|
Total selected financial assets (e)
|
$ | 34,764 | $ | 38,622 | ||||
|
Financial liabilities measured at fair value on a recurring basis(a):
|
||||||||
|
Derivative financial instruments in a liability position(f):
|
||||||||
|
Foreign currency swaps
|
$ | 572 | $ | 623 | ||||
|
Foreign currency forward-exchange contracts
|
304 | 257 | ||||||
|
Interest rate swaps
|
7 | 4 | ||||||
|
Total
|
883 | 884 | ||||||
|
Other financial liabilities:
|
||||||||
|
Short-term borrowings, carried at historical proceeds, as adjusted(d), (g)
|
6,093 | 5,603 | ||||||
|
Long-term debt, carried at historical proceeds, as adjusted(h), (i)
|
35,308 | 38,410 | ||||||
|
Total
|
41,401 | 44,013 | ||||||
|
Total selected financial liabilities
|
$ | 42,284 | $ | 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 $109 million as of April 3, 2011 and $105 million as of December 31, 2010 of investments that use Level 1 inputs in the calculation of fair value, and $125 million that use Level 3 inputs as of April 3, 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 swaps with fair values of $70 million and foreign currency forward-exchange contracts with fair values of $69 million at April 3, 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 April 3, 2011 or December 31, 2010.
|
|
(e)
|
The decrease in selected financial assets is primarily due to sales 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 $107 million and foreign currency swaps with fair values of $37 million at April 3, 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 borrowings with fair values of $920 million at April 3, 2011 and $2.0 billion at December 31, 2010, which are used to hedge the exposure of certain foreign currency denominated net investments.
|
|
(h)
|
Includes foreign currency debt with fair values of $838 million at April 3, 2011 and $880 million at December 31, 2010, which are used to hedge the exposure of certain foreign currency denominated net investments.
|
|
(i)
|
The fair value of our long-term debt is $38.7 billion at April 3, 2011 and $42.3 billion at December 31, 2010.
|
|
(millions of dollars)
|
April 3,
2011
|
Dec. 31,
2010
|
||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$ | 527 | $ | 906 | ||||
|
Short-term investments
|
23,279 | 26,277 | ||||||
|
Short-term loans
|
406 | 467 | ||||||
|
Long-term investments and loans
|
9,811 | 9,747 | ||||||
|
Taxes and other current assets(a)
|
324 | 515 | ||||||
|
Taxes and other noncurrent assets(b)
|
417 | 710 | ||||||
|
Total selected financial assets
|
$ | 34,764 | $ | 38,622 | ||||
|
Liabilities
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
$ | 6,093 | $ | 5,603 | ||||
|
Other current liabilities(c)
|
435 | 339 | ||||||
|
Long-term debt
|
35,308 | 38,410 | ||||||
|
Other noncurrent liabilities(d)
|
448 | 545 | ||||||
|
Total selected financial liabilities
|
$ | 42,284 | $ | 44,897 | ||||
|
(a)
|
At April 3, 2011, derivative instruments at fair value include foreign currency swaps ($153 million), foreign currency forward-exchange contracts ($134 million) and interest rate swaps ($37 million) and at December 31, 2010, include foreign currency forward-exchange contracts ($494 million) and foreign currency swaps ($21 million).
|
|
(b)
|
At April 3, 2011, derivative instruments at fair value include foreign currency swaps ($115 million) and interest rate swaps ($302 million) and at December 31, 2010, include interest rate swaps ($603 million) and foreign currency swaps ($107 million).
|
|
(c)
|
At April 3, 2011, derivative instruments at fair value include foreign currency forward-exchange contracts ($304 million), foreign currency swaps ($129 million) and interest rate swaps ($2 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 April 3, 2011, derivative instruments at fair value include foreign currency swaps ($443 million) and interest rate swaps ($5 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
April 3,
2011
|
||||||||||||
|
Available-for-sale debt securities:
|
||||||||||||||||
|
Western European and other government debt
|
$ | 17,725 | $ | 969 | $ | –– | $ | 18,694 | ||||||||
|
Corporate debt
|
1,372 | 2,447 | –– | 3,819 | ||||||||||||
|
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association asset-backed securities
|
–– | 2,627 | –– | 2,627 | ||||||||||||
|
Western European and other government agency debt
|
1,487 | 168 | 62 | 1,717 | ||||||||||||
|
Supranational debt
|
937 | 647 | –– | 1,584 | ||||||||||||
|
Reverse repurchase agreements
|
759 | –– | –– | 759 | ||||||||||||
|
U.S. government Federal Deposit Insurance Corporation
guaranteed debt
|
–– | 155 | –– | 155 | ||||||||||||
|
Other asset-backed securities
|
16 | 25 | 48 | 89 | ||||||||||||
|
Certificates of deposit
|
38 | –– | –– | 38 | ||||||||||||
|
Held-to-maturity debt securities:
|
||||||||||||||||
|
Certificates of deposit and other
|
712 | 136 | — | 848 | ||||||||||||
|
Total debt securities
|
$ | 23,046 | $ | 7,174 | $ | 110 | $ | 30,330 | ||||||||
|
Trading securities
|
155 | |||||||||||||||
|
Available-for-sale money market funds
|
1,396 | |||||||||||||||
|
Available-for-sale equity securities, excluding money market funds
|
343 | |||||||||||||||
|
Total
|
$ | 32,224 | ||||||||||||||
|
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)
|
April 3,
2011
|
April 4,
2010
|
April 3,
2011
|
April 4,
2010
|
April 3,
2011
|
April 4,
2010
|
||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||||||
|
Derivative Financial Instruments in Fair Value
Hedge Relationships(b)
|
||||||||||||||||||||||||
|
Interest rate swaps
|
$ | –– | $ | –– | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency swaps
|
(1 | ) | –– | –– | –– | –– | –– | |||||||||||||||||
|
Derivative Financial Instruments in Cash Flow
Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | –– | $ | –– | $ | 305 | $ | (438 | ) | $ | 506 | $ | (628 | ) | ||||||||||
|
Foreign currency forward-exchange contracts
|
–– | –– | 2 | –– | 4 | 1 | ||||||||||||||||||
|
Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 2 | $ | 1 | $ | 33 | $ | 11 | $ | –– | $ | –– | ||||||||||||
|
Derivative Financial Instruments Not
Designated as Hedges
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 30 | $ | 4 | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency forward-exchange contracts
|
(197 | ) | (890 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Non-Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency short-term borrowings
|
$ | –– | $ | –– | $ | 43 | $ | 31 | $ | –– | $ | –– | ||||||||||||
|
Foreign currency long-term debt
|
–– | –– | 28 | 16 | –– | –– | ||||||||||||||||||
|
Total
|
$ | (166 | ) | $ | (885 | ) | $ | 411 | $ | (380 | ) | $ | 510 | $ | (627 | ) | ||||||||
|
(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 first quarters 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)
|
April 3,
2011
|
Dec. 31,
2010
|
||||||
|
Finished goods
|
$ | 3,739 | $ | 3,665 | ||||
|
Work-in-process
|
3,909 | 3,727 | ||||||
|
Raw materials and supplies
|
819 | 883 | ||||||
|
Total inventories(a)
|
$ | 8,467 | $ | 8,275 | ||||
|
(a)
|
Certain amounts of inventories are in excess of one year’s supply. There are no recoverability issues associated with these quantities.
|
|
(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)
|
–– | –– | 780 | 780 | ||||||||||||||||||||||||
|
Other(c)
|
12 | 5 | 128 | 145 | ||||||||||||||||||||||||
|
Balance, April 3, 2011
|
$ | $ | $ | $ | 2,461 | $ | 501 | $ | 41,891 | $ | 44,853 | |||||||||||||||||
|
(a)
|
The amount to be allocated includes the former Biopharmaceutical goodwill (see below), as well as newly acquired goodwill 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)
|
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.
|
|
April 3, 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
|
$ | 71,003 | $ | (28,029 | ) | $ | 42,974 | $ | 68,432 | $ | (26,223 | ) | $ | 42,209 | ||||||||||
|
Brands
|
1,635 | (628 | ) | 1,007 | 1,626 | (607 | ) | 1,019 | ||||||||||||||||
|
License agreements
|
637 | (277 | ) | 360 | 637 | (248 | ) | 389 | ||||||||||||||||
|
Trademarks and other
|
541 | (337 | ) | 204 | 533 | (324 | ) | 209 | ||||||||||||||||
|
Total amortized finite-lived intangible assets
|
73,816 | (29,271 | ) | 44,545 | 71,228 | (27,402 | ) | 43,826 | ||||||||||||||||
|
Indefinite-lived intangible assets:
|
||||||||||||||||||||||||
|
Brands
|
10,287 | –– | 10,287 | 10,219 | — | 10,219 | ||||||||||||||||||
|
In-process research and development
|
3,593 | –– | 3,593 | 3,438 | — | 3,438 | ||||||||||||||||||
|
Trademarks
|
72 | –– | 72 | 72 | — | 72 | ||||||||||||||||||
|
Total indefinite-lived intangible assets
|
13,952 | –– | 13,952 | 13,729 | — | 13,729 | ||||||||||||||||||
|
Total identifiable intangible assets(a)
|
$ | 87,768 | $ | (29,271 | ) | $ | 58,497 | $ | 84,957 | $ | (27,402 | ) | $ | 57,555 | ||||||||||
|
(a)
|
The increase is primarily related to the assets acquired as part of the acquisition of King (see Note 3. Acquisition of King Pharmaceuticals, Inc.) and the impact of foreign exchange, partially offset by amortization of intangible assets.
|
|
●
|
Developed Technology Rights: Specialty Care (62%); Primary Care (17%); Established Products (17%); Animal Health (2%); Oncology (1%) and Nutrition (1%)
|
|
●
|
Finite-Lived Brands: Consumer Healthcare (56%); Established Products (30%); and Animal Health (14%)
|
|
●
|
Indefinite-Lived Brands: Consumer Healthcare (51%); Established Products (27%); and Nutrition (22%)
|
|
●
|
IPR&D: Specialty Care (70%); Worldwide Research and Development (18%); Primary Care (6%); Oncology (3%); Established Products (2%); and Consumer Healthcare (1%)
|
|
Pension Plans
|
||||||||||||||||||||||||||||||||
|
U.S.
Qualified
|
U.S.
Supplemental
(Non-Qualified)
|
International
|
Postretirement
Plans
|
|||||||||||||||||||||||||||||
|
(millions of dollars)
|
April 3,
2011
|
April 4,
2010
|
April 3,
2011
|
April 4,
2010
|
April 3,
2011
|
April 4,
2010
|
April 3,
2011
|
April 4,
2010
|
||||||||||||||||||||||||
|
For the Three Months Ended:
|
||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 90 | $ | 94 | $ | 9 | $ | 8 | $ | 62 | $ | 60 | $ | 17 | $ | 22 | ||||||||||||||||
|
Interest cost
|
185 | 191 | 19 | 19 | 111 | 111 | 49 | 54 | ||||||||||||||||||||||||
|
Expected return on plan assets
|
(221 | ) | (202 | ) | –– | –– | (109 | ) | (112 | ) | (9 | ) | (8 | ) | ||||||||||||||||||
|
Amortization of:
|
||||||||||||||||||||||||||||||||
|
Actuarial losses
|
35 | 38 | 9 | 7 | 21 | 17 | 4 | –– | ||||||||||||||||||||||||
|
Prior service credits
|
(2 | ) | –– | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (14 | ) | (4 | ) | |||||||||||||||||
|
Curtailments and settlements––net
|
17 | (33 | ) | 12 | (1 | ) | (2 | ) | 1 | (6 | ) | –– | ||||||||||||||||||||
|
Special termination benefits
|
5 | 14 | 7 | 90 | 3 | 1 | –– | 6 | ||||||||||||||||||||||||
|
Net periodic benefit costs
|
$ | 109 | $ | 102 | $ | 55 | $ | 122 | $ | 85 | $ | 77 | $ | 41 | $ | 70 | ||||||||||||||||
|
Three Months Ended
|
||||||||
|
(millions)
|
April 3,
2011
|
April 4,
2010
|
||||||
|
EPS Numerator––Basic:
|
||||||||
|
Income from continuing operations
|
$ | 2,224 | $ | 2,014 | ||||
|
Less: Net income attributable to noncontrolling interests
|
12 | 9 | ||||||
|
Income from continuing operations attributable to Pfizer Inc.
|
2,212 | 2,005 | ||||||
|
Less: Preferred stock dividends––net of tax
|
–– | 1 | ||||||
|
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
2,212 | 2,004 | ||||||
|
Discontinued operations––net of tax
|
10 | 21 | ||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 2,222 | $ | 2,025 | ||||
|
EPS Numerator––Diluted:
|
||||||||
|
Income from continuing operations attributable to Pfizer Inc. common shareholders and
assumed conversions
|
$ | 2,212 | $ | 2,005 | ||||
|
Discontinued operations––net of tax
|
10 | 21 | ||||||
|
Net income attributable to Pfizer Inc. common shareholders and assumed conversions
|
$ | 2,222 | $ | 2,026 | ||||
|
EPS Denominator:
|
||||||||
|
Weighted-average number of common shares outstanding––Basic
|
7,982 | 8,061 | ||||||
|
Common-share equivalents: stock options, stock issuable under employee
compensation plans and convertible preferred stock
|
53 | 40 | ||||||
|
Weighted-average number of common shares outstanding––Diluted
|
8,035 | 8,101 | ||||||
|
Stock options that had exercise prices greater than the average market price of our
common stock issuable under employee compensation plans(a)
|
290 | 366 | ||||||
|
(a)
|
These common stock equivalents were outstanding during the first quarters of 2011 and 2010, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.
|
|
●
|
Primary Care operating segment (PC)––includes revenues and earnings, as defined by management, from human pharmaceutical products primarily prescribed by primary-care physicians, and may include products in the following therapeutic and disease areas: Alzheimer’s disease, diabetes, cardiovascular (excluding pulmonary arterial hypertension), major depressive disorder, genitourinary, osteoporosis, pain and respiratory. Examples of products in this unit include Celebrex, Lipitor, Lyrica, Premarin, Pristiq and Viagra. All revenues and earnings for such products are allocated to the Primary Care unit, except those generated in emerging markets and those that are managed by the Established Products unit.
|
|
●
|
Specialty Care and Oncology operating segment (SC&O)––comprises the Specialty Care business unit and the Oncology business unit.
|
|
|
●
|
Specialty Care––includes revenues and earnings, as defined by management, from human pharmaceutical products primarily prescribed by physicians who are specialists, and may include products in the following therapeutic and disease areas: antibacterials, antifungals, antivirals, bone, inflammation, growth hormones, multiple sclerosis, ophthalmology, pulmonary arterial hypertension, psychosis and vaccines. Examples of products in this unit include, Enbrel, Genotropin, Geodon, the Prevnar/Prevenar franchise, Xalatan and Zyvox. All revenues and earnings for such products are allocated to the Specialty Care unit, except those generated in emerging markets and those that are managed by the Established Products unit.
|
|
|
●
|
Oncology––includes revenues and earnings, as defined by management, from human pharmaceutical products addressing oncology and oncology-related illnesses. Examples of products in this unit include Aromasin, Sutent and Torisel. All revenues and earnings for such products are allocated to the Oncology unit, except those generated in emerging markets and those that are managed by the Established Products unit.
|
|
●
|
Established Products and Emerging Markets operating segment (EP&EM)––comprises the Established Products business unit and the Emerging Markets business unit.
|
|
|
●
|
Established Products––generally includes revenues and earnings, as defined by management, from human pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products are transferred to this unit in the beginning of the fiscal year following losing patent protection or marketing exclusivity. In certain situations, products may be transferred to this unit at a different point than the beginning of the fiscal year following losing patent protection or marketing exclusivity in order to maximize their value. This unit also excludes revenues and earnings generated in emerging markets. Examples of products in this unit include Arthrotec, Effexor XR, Medrol, Norvasc, Protonix, Relpax and Zosyn/Tazocin.
|
|
|
●
|
Emerging Markets––includes revenues and earnings, as defined by management, from all human pharmaceutical products sold in emerging markets, including Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe and Turkey.
|
|
●
|
Animal Health and Consumer Healthcare operating segment (AH&CH)—comprises the Animal Health business unit and the Consumer Healthcare business unit.
|
|
|
●
|
Animal Health––includes worldwide revenues and earnings, as defined by management, from products to prevent and treat disease in livestock and companion animals, including vaccines, paraciticides and anti-infectives.
|
|
|
●
|
Consumer Healthcare––generally includes worldwide revenues and earnings, as defined by management, from non-prescription medicines and vitamins, including products in the following therapeutic categories: GI-topicals, dietary supplements, pain management and respiratory. Examples of products in Consumer Healthcare are Advil, Caltrate, Centrum, ChapStick and Robitussin.
|
|
●
|
Nutrition operating segment (Nutri)––generally includes revenues and earnings, as defined by management, from a full line of infant and toddler nutritional products sold outside of North America.
|
|
●
|
Worldwide Research and Development (WRD), which is generally responsible for human health research projects until proof-of-concept is achieved and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. This organization also has responsibility for certain science-based platform services, which provide technical expertise and other services to the various research and development projects.
|
|
●
|
Pfizer Medical (Pfizer Medical), which is responsible for all human-health-related regulatory submissions and interactions with regulatory agencies. This organization is also responsible for the collection, evaluation and reporting of all safety event information related to our human health products and for conducting clinical trial audits and readiness reviews and for providing Pfizer-related medical information to healthcare providers.
|
|
●
|
Corporate, which is responsible for platform functions such as finance, global real estate operations, human resources, legal, science and technology, worldwide procurement, worldwide public affairs and policy and worldwide technology. These costs include payroll charges and associated operating expenses, as well as interest income and expense.
|
|
●
|
Certain transactions and events such as (1) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (2) acquisition-related activities, where we incur costs for restructuring, integration, implementation and executing the transaction; and (3) certain significant items, which include non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and sales of assets or businesses.
|
|
Revenues
|
Earnings(a)
|
|||||||||||||||
|
Three Months Ended
|
||||||||||||||||
|
(millions of dollars)
|
April 3,
2011
|
April 4,
2010
|
April 3,
2011
|
April 4,
2010
|
||||||||||||
|
Primary Care
|
$ | 5,441 | $ | 5,866 | $ | 3,546 | $ | 4,083 | ||||||||
|
Specialty Care and Oncology
|
4,238 | 3,882 | 2,873 | 2,661 | ||||||||||||
|
Established Products and Emerging Markets
|
4,545 | 4,758 | 2,490 | 2,992 | ||||||||||||
|
Animal Health and Consumer Healthcare
|
1,727 | 1,509 | 489 | 397 | ||||||||||||
|
Total reportable segments
|
15,951 | 16,015 | 9,398 | 10,133 | ||||||||||||
|
Nutrition and other business activities(b)
|
551 | 561 | (722 | ) | (793 | ) | ||||||||||
|
Reconciling Items:
|
||||||||||||||||
|
Corporate(c)
|
–– | –– | (1,660 | ) | (1,879 | ) | ||||||||||
|
Purchase accounting adjustments(d)
|
–– | –– | (1,785 | ) | (2,839 | ) | ||||||||||
|
Acquisition-related costs(e)
|
–– | –– | (575 | ) | (799 | ) | ||||||||||
|
Certain significant items(f)
|
–– | –– | (1,208 | ) | (183 | ) | ||||||||||
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Other unallocated(g)
|
–– | –– | (330 | ) | (491 | ) | ||||||||||
| $ | 16,502 | $ | 16,576 | $ | 3,118 | $ | 3,149 | |||||||||
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(a)
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Income from continuing operations before provision for taxes on income.
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(b)
|
Other business activities includes the revenues and operating results of Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales operation, and the research and development costs managed by our Worldwide Research and Development organization and our Pfizer Medical organization.
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(c)
|
Corporate includes, among other things, administration expenses, interest income/(expense), certain performance-based and all share-based compensation expenses.
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(d)
|
Significant impacts of purchase accounting include charges related to the fair value adjustments to inventory, intangible assets and property, plant and equipment.
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(e)
|
Acquisition-related costs can include costs associated with acquiring, integrating and restructuring newly acquired businesses, such as transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring (see Note 5. Costs Associated with Cost-Reduction Initiatives and Acquisition Activity for additional information).
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(f)
|
Certain significant items are substantive, unusual items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis. Such items primarily include restructuring charges and implementation costs associated with our productivity initiatives that are not associated with an acquisition, the impact of certain tax and/or legal settlements and certain asset impairments.
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|
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For the first quarter of 2011, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $572 million, (ii) charges for certain legal matters of $472 million, (iii) certain asset impairment charges of $157 million and (iv) other charges of $7 million (see Note 5. Costs Associated with Cost-Reduction Initiatives and Acquisition Activity and Note 6. Other (Income)/Deductions––Net for additional information).
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|
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For the first quarter of 2010, certain significant items includes: (i) charges for certain legal matters of $142 million, and (ii) other charges of $41 million.
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(g)
|
Includes overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.
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|
Three Months Ended
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||||||||
|
(millions of dollars)
|
April 3,
2011
|
April 4,
2010
|
||||||
|
Revenues from biopharmaceutical products:
|
||||||||
|
Lipitor
|
$ | 2,385 | $ | 2,757 | ||||
|
Prevnar/Prevenar 13
|
996 | 286 | ||||||
|
Enbrel(a)
|
870 | 802 | ||||||
|
Lyrica
|
826 | 723 | ||||||
|
Celebrex
|
591 | 570 | ||||||
|
Viagra
|
470 | 479 | ||||||
|
Xalatan/Xalacom
|
392 | 422 | ||||||